making acquisitions
driving performance
realising value
melrose plc  
annual report 2010
melrose plc annual report 2010
wwwmelroseplcnet
melrose plc  
annual report 2010 annual report 2010 melrose plc annual report 2010 melrose plc
how we performed contents
business performance
01 financial highlights 
02 group at a glance 
04 chairman’s statement 
06 chief executive’s review
 08 energy business review 
 11 lifting business review 
 14 dynacast business review 
 16 other industrial business review
19 finance director’s review 
26 board of directors 
28 directors’ report 
governance
36 corporate governance report 
40 remuneration report 
44  statement of directors’ responsibilities
financials
45 financial contents 
46  independent auditor’s report –
consolidated statements 
47 consolidated income statement 
48  consolidated statement
of comprehensive income 
49  consolidated statement of cash flows 
50 consolidated balance sheet 
51  consolidated statement of 
changes in equity 
52 notes to the accounts 
88  independent auditor’s report –
company statements 
89  company balance sheet for 
melrose plc 
90  notes to the company balance sheet
shareholder information
97   notice of annual general meeting 
100  company and shareholder information
“   these are excellent results from businesses  
well positioned to enjoy superior growth in the 
years to come we are proud of the fact that 
overall group profits have not declined through 
this sharp recession and at the current share 
price melrose has created over £1 billion of 
shareholder value since flotation in 2003
  we are considering the sale of dynacast and 
looking for our next acquisition but will only 
proceed if we believe it creates shareholder 
value looking ahead we are confident of  
further progress in 2011 and beyond” 
  christopher miller
chairman 
designed and produced by merchant 
wwwmerchantcouk
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and carbonneutral® melrose plc 01
business performance governance financials shareholder information
annual report 2010 
financial highlights
1
 
revenue
year ended 31 december 2010
£1 3795m
2009 £12985m
headline
2
 operating profit 
year ended 31 december 2010
£1 969m
2009 £1497m
headline
2
 basic earnings per share
year ended 31 december 2010
254p
2009 166p
  headline
2
 2010 profit before tax 
of £1708 million 2009 £1186 million  
an increase of 44 
  headline
2
 2010 earnings per share 
of 254p 2009 166p up 53
  headline
2
 operating profit margin in the 
second half of 2010 of 149
  revenue up 6 year on year and 15 
in the second half of 2010
  profit before tax of £1553 million 
2009 £820 million an increase of 89
  basic earnings per share after exceptional 
items and intangible asset amortisation  
of 284p 2009 110p up 158 
  net debt of £2874 million 2009 
£3217 million reduced by £343 million  
net debt is now 125x ebitda
3
 
2009 176x
  final dividend increased by 46 to 
70p per share 2009 48p
  full year dividend increased by 43 
to 110p per share 2009 77p
  since flotation over £1 billion shareholder 
value created at current market price 
  dynacast sale process underway
the singapore flyer is currently the tallest  
ferris wheel in the world it is forty two stories 
high with a total height of 165m 541ft  
bridon supplied 24 backstay cable assemblies 
and 112 spoke cable assemblies
1 continuing operations only unless otherwise stated
2 before exceptional costs exceptional income and intangible asset amortisation
3  headline
2
 operating profit before depreciation and amortisation  02 melrose plc annual report 2010 
group  
at a glance
melrose’s strategy is to acquire businesses  
it understands improve them by a mixture  
of investment and changed management focus  
and in a three to five year time frame realise  
the value created and return it to shareholders  
in the most efficient way possible
division
more information see page 16
more information see page 8
energy
world number one independent  
supplier of turbogenerators and  
leading supplier of other electricity 
generating machinery switchgear 
transformers and power infrastructure 
equipment strong aftermarket 
service capabilities
more information see page 11
more information see page 14
lifting
top three supplier worldwide  
for wire and wire rope and leading 
supplier worldwide of lifting fittings  
and blocks and custom engineered 
material handling products
dynacast
global design and manufacturer of 
precision engineered diecast metal 
components and assemblies
other industrial
truth 
harris 
mpc 
weber knapp 
prelok
key strengths
  expertise to design and manufacture an extensive 
range of high quality multipole low medium and high 
voltage generators and electric motors
  comprehensive and integrated aftermarket support 
tailored to meet customers’ needs throughout the 
operating life of their equipment
  switchgear and transformer products in service with 
all uk energy supply authorities
  hydropower generators to produce environmentally 
green energy
  generators and electric motors for ship power 
and propulsion
  strategically located around the world
  comprehensive and competitive range of solutions in 
steel wire wire and fibre rope and strand
  technical expertise to support customers demanding 
applications training installation and testing
  world’s leading supplier of accessories used in lifting 
and material handling applications
  strategically located around the world
  precision engineered diecast zinc aluminium 
and magnesium alloy components
   full service capability
   concept and design engineering
  rapid prototyping
  machine building capability
  market leading design and engineering capabilities
  indepth aftermarket service supply capabilities
   leading innovative product development and 
technology choice for customers
   trusted longstanding quality brand names
brush aftermarket provides 
dedicated customer support 
replacement parts repair servicing 
and product training for generators 
and control equipment 
crosby’s mckissick
®
 oilfield drilling 
block has a height of 12ft and a 
capacity of 350 tonnes for the lifting 
and lowering of drilling pipes
seatbelt component made by 
dynacast using an automated  
vision system designed to  
check twenty different safety  
critical components
mpc’s automated manufacture and 
assembly cell for the production  
of wheel arch claddings for 
equipment supplied to leading  
car manufacturers  melrose plc 03
business performance governance financials shareholder information
annual report 2010 
1 energy  £4275m  31 
2 lifting  £4227m  31 
3 dynacast  £2757m  20 
4 other industrial  £2536m  18
1 energy  £737m  35 
2 lifting  £667m  31 
3 dynacast  £430m  20 
4 other industrial  £287m  14
1 energy  3277 29 
2 lifting  2917  26 
3 dynacast  2647  24 
4 other industrial  2300  21
1
2
4
3
1
2
4
3
1
2
4
3
revenue  headline 
operating profit 
average number  
of employees
products major customers financial data
  power generation equipment with 10 kw to 
250 mw electric generators
  synchronous motors induction motors 
submersible and traction motors
  power management and excitation systems
  generator control and protection panels
  generator terminal cubicles
  medium voltage ac and dc traction switchgear
  power and system transformers
   aftermarket servicing
  general electric
  pratt  whitney
  wartsila
  hitachi
   l3
  converteam
  rollsroyce
  scottish  southern electricity 
  scottish power
  uk power networks
   network rail and london underground
  wire rope fibre rope and wire
  lifting hooks connectors clamps 
and hoist rings
   material handling products
  monorail systems
  chain hoists
  industrial carts and trailers 
  global crane original equipment 
manufacturers “oems” and mining oems 
  major oil companies
  global oil field exploration and 
construction contractors
   construction companies
  lifting products distributors 
  automotive components
   telecommunications
   electronic components
  consumer products
  diecasting machines
  pg gillette
  autoliv
  valeo
  dell
  trw
  motorola
  avago
  apple
  mgi
  huf
  window and door hardware 
  balers shears waste compactors 
and auto shredders
  automotive trims and mouldings
   food packaging containers and 
transit trolleys
  widgets for bottles and cans
 sealing products
  ergonomic office and desk equipment
  us hardware industry oems
  waste and scrap processors
  manufacturers and distributors in 
various industries and retailers
revenue
£4275m
2009 £4183m
headline operating profit
£737m
2009 £610m
revenue
£4227m
2009 £4190m
headline operating profit
£667m
2009 £625m
revenue
£2757m
2009 £2087m
headline operating profit
£430m
2009 £213m
revenue
£2536m
2009 £2525m
headline operating profit
£287m
2009 £206m 04 melrose plc annual report 2010 
chairman’s 
statement
i am pleased to report melrose’s eighth set of annual results 
since flotation in 2003 over this period melrose’s market 
capitalisation has grown from £13 million at flotation to  
£15 billion as at the date of this report this has been achieved 
with a net investment
1
 by our shareholders of c£450 million and 
so at the current share price over £1 billion of shareholder value 
has been created since flotation
results for the group
these accounts report the results for the group for the year  
to 31 december 2010 and comparatives for the previous year 
revenue for the year was £13795 million 2009 £12985 million 
headline profit before tax before exceptional costs exceptional 
income and intangible asset amortisation was £1708 million 
2009 £1186 million and headline basic earnings per share 
were 254p 2009 166p profit before tax was £1553 million 
2009 £820 million and the basic earnings per share were 
284p 2009 110p
further explanation of these results is provided in the finance 
director’s review
dividends
the board intends to propose a final dividend of 70p per share 
2009 48p together with the interim dividend of 40p per 
share 2009 29p paid on 1 october 2010 this gives a total for 
the year of 110p per share 2009 77p an increase of 43 
this reflects both the highly successful performance in 2010 
and the board’s confidence in the future
trading
the trading performance of our businesses in 2010 has  
been outstanding 
“ in the first half of the year the  
group story was one of substantially 
increased operating margins on 
essentially flat turnover in the  
second half of the year this has  
been augmented by the return  
of topline growth”
1 value of equity issued less returns of capital and dividends
headline profit before tax
£1708m
2009 £1186m
headline basic earnings per share
254p
2009 166p
total 2010 dividend 
110p
2009 7 7p melrose plc 05
business performance governance financials shareholder information
annual report 2010 
in the first half of the year the group story was one of 
substantially increased operating margins on essentially flat 
turnover in the second half of the year this has been augmented 
by the return of topline growth this combination has produced 
an increase of 32 in annual headline operating profit and  
an even higher 53 increase in the year’s headline earnings  
per share due to reductions in tax and net financing costs 
group headline operating margins are now at 143 up from 
115 last year and in the second half of the year we have 
virtually achieved the margin target of 15 we set on the 
acquisition of fki
much of this profit growth has come from fki businesses 
acquired in july 2008 but also from dynacast our principal 
early cycle business which saw strong sales growth particularly 
in the first half of the year order books for the group remain 
strong going into 2011
cash generation in 2010 remained extremely strong over 100 
of profits were turned into cash generating headline operating 
cash after capital expenditure of £2025 million and working 
capital remained under strict control even in the face of improving 
sales capital expenditure which had been somewhat curtailed 
during the downturn is now back on a rising trend – we expect 
this to exceed depreciation over the next few years as our 
investment plans are implemented we see opportunities for 
profitable investment in all of our businesses
dynacast
dynacast has been owned since may 2005 and the board 
considers this to be an appropriate time to seek to realise the 
value created since then a sale process has commenced  
and we are hopeful of a satisfactory outcome shareholders 
however can be confident that this excellent business will only 
be sold at a price which fully reflects the quality of its prospects 
in the event a sale is successful it is our intention to return the 
proceeds to shareholders
strategy and outlook
much has been achieved in the period since the acquisition  
of fki with our existing businesses and management and 
employees are to be congratulated on this performance 
however there remains much opportunity for more to  
be achieved
none of our major businesses has yet regained the levels of 
sales reached in the recent past nor do we believe they have 
reached their potential in terms of profitability our strategy  
of selling businesses at the appropriate moment in their 
improvement cycle remains in place and this moment has not 
arrived for the majority of our businesses demand though 
stronger in europe and south east asia than north america 
continues to be good and current order books lead us to be 
optimistic on the sales outlook for 2011 our ability to pass  
on raw material price increases together with many initiatives 
on the cost front mean we are also hopeful of further 
improvements in operating margins
we are well placed operationally and financially to take on 
another substantial acquisition we are as selective as ever  
with our criteria and although it is impossible to be precise 
about timing we are confident of identifying a value enhancing 
opportunity in due course
in the meantime the inherent strengths of our businesses and 
their management teams gives the board confidence of further 
progress in 2011
christopher miller 
9 march 2011
“ we are well placed operationally and 
financially to take on another substantial 
acquisition we are as selective as ever 
with our criteria and although it is 
impossible to be precise about timing 
we are confident of identifying a value 
enhancing opportunity in due course”  06 melrose plc annual report 2010 
i am very pleased with the trading performance of the group  
in 2010 as we move back into a period of sales growth though 
it is worth noting that profits have increased in the group 
notwithstanding the severe global downturn of the last  
few years
in the first half of the year the profit increase was achieved 
largely through lower costs on flat sales whereas in the second 
half the profit growth was driven by increasing sales as the 
order books particularly from our later cycle businesses  
started to kick in this has resulted in a steady and gratifying 
improvement in headline operating profit margins a key melrose 
performance indicator to 149 in the second half of the year 
this is significant in that it demonstrates the transition to 
increasing revenue driving profit growth rather than cost 
reduction the group is well placed to benefit from this in that 
many of its businesses operate in industries and regions with 
strong long term growth characteristics as a result during the 
second half of 2010 the group has stepped up its capital 
expenditure programme significantly
whilst there are concerns about the effect of raw material price 
increases on the global economy individually our businesses  
all benefit from strong positions in their markets and we are 
confident that absent to an overall decline in the global 
economy the group will not be adversely affected
the energy division had an excellent year in 2010 although the 
global power generation market started to recover during the 
year it was not until well into the second half of the year that 
brush turbogenerators’ generator sales started to gather 
momentum reflecting the later cycle nature of its business  
in addition the acquisition of gms in the year has greatly 
boosted brush turbogenerators’ presence in the higher margin 
aftermarket business and this represents a major strategic 
opportunity for brush we continue to target growth in higher 
margin aftermarket sales and are confident that we will continue 
to see further success in this area over the months to come 
“ the energy division had an excellent 
year in 2010 although the global 
power generation market started to 
recover during the year it was not until 
well into the second half of the year 
that brush turbogenerators’ generator 
sales started to gather momentum 
reflecting the later cycle nature of 
its business”
chief 
executive’s 
review
revenue 
full year
£1 3795m
2009 £12985m
headline operating profit margin  
second half
149
2009 130
headline basic earnings per share growth 
53
2010 254p versus 2009 166p melrose plc 07
business performance governance financials shareholder information
annual report 2010 
the continuing strength of the order book allied to the efficiency 
gains being achieved especially in relation to the absorption of 
brush transformers’ operations gives us confidence that 2011 
will be another good year
in the lifting division bridon’s profit in 2010 fell marginally short 
of its record profit in 2009 whilst a number of bridon’s markets 
saw some recovery in the year the offshore oil and gas industry 
remained subdued exacerbated by the moratorium on 
deepwater drilling following the horizon oil spill in the gulf of 
mexico during the year bridon launched a number of exciting 
new products designed to meet the increasingly demanding 
applications required by its customers and continued to invest  
in the upgrading of its manufacturing and research and 
development facilities with general market conditions 
continuing to improve and the expectation that the offshore oil 
and gas market will start to recover in the second half of 2011 
allied to the benefits from the new products and higher capital 
spending bridon looks forward to a year of progress crosby 
recovered sharply in 2010 following a difficult 2009 both sales 
and profit grew strongly partly as a result of a general pick up  
in market conditions but also as a result of the hard work put in 
during 2009 to work closely with its well established distributor 
base and continue to focus on developing new products 
thereby resulting in gains in market share with major advances 
being made in expanding in the far east and increasing orders 
in its established north american and european markets 
crosby looks forward to a successful outcome in 2011
dynacast performed exceptionally well in 2010 with revenue and 
profit recovering strongly after a difficult 2009 some of the cost 
savings made during the downturn have been retained as sales 
have recovered and this has resulted in a highly encouraging 
return on sales in the year of over 15 per cent sales in all three 
of dynacast’s main geographic regions grew strongly in the year 
and new tool sales a key indicator of future growth reached  
a record high in asia during the year as market conditions 
continue to show improvement dynacast is confident of a 
further year of progress
the other industrial division performed well in 2010 – profit  
was up substantially on the back of a modest increase in sales 
mpc in particular had an exceptional year as the benefits of a 
focused programme of technically differentiated new products 
supported by capital investment started to come on stream  
this has led to a strong business relationship with jaguar land 
rover which we have been pleased to support with capital 
investment we look forward to another year of progress from 
this division
in february 2011 brush traction logistex uk and madico  
were sold for a total consideration of £207 million
outlook
melrose group companies operate in markets that are forecast 
to continue to expand and to have good medium and long term 
growth characteristics this combined with an ongoing benefit 
from tight cost control gives us confidence that we will continue 
to see progress over the years to come
on the back of healthy order books supported by an aggressive 
capital investment programme and a healthy pipeline of exciting 
new product introductions we look forward to a further year of 
progress for the group in 2011
david roper 
9 march 2011
“ on the back of healthy order 
books supported by an aggressive 
capital investment programme and 
a healthy pipeline of exciting new 
product introductions we look forward 
to a further year of progress for the 
group in 2011 ” 08 melrose plc annual report 2010 
energy 
review
market leading manufacturers
of electricity generating equipment
switchgear and transformers
 
 
 
energy businesses
brush turbogenerators 
wwwbrusheu
brush gms 
wwwbrushgmscom
hawker siddeley switchgear 
wwwhssltdcom
marelli motori 
wwwmarellimotoricom
harrington generators 
wwwhgigeneratorscom
 
1 europe 66 
2 north america 21 
3 asia 8
4 rest of world 5 
1
2
4
3
generators
brush turbogenerators is the world’s largest independent 
manufacturer of electricity generating equipment for the power 
generation industrial oil and gas and offshore sectors from its 
four plants in the uk holland the czech republic and the usa 
it designs manufactures and services generators principally in 
the 10 mw to 250 mw range for both gas and steam turbine 
applications and supplies a globally diverse customer base  
in addition brush turbogenerators designs and manufactures 
systems and power transformers under the brush name for  
uk electrical utilities and for the oil and gas sector primarily  
in the middle east
brush turbogenerators performed very well in 2010 with a 
particularly strong second half of the year revenue was nearly 
10 per cent higher than in 2009 and headline operating profit 
was approximately one third higher resulting in a most healthy 
and satisfying outcome in return on sales one of melrose’s  
key performance indicators
revenue 
year ended 31 december 2010
£427 5m
2009 £4183m
headline operating profit 
year ended 31 december 2010
£737m
2009 £610m
revenue by geographical destination  
year ended 31 december 2010
sectors served power generation plants oil and gas utilities 
industrial marine rail telecommunications construction 
commercial military hydropower cogeneration uninterrupted 
power supply and aftermarket
one of the four stator frames supplied by brush to the bohunice nuclear power plant in the slovak republic brush also supplied five rewound generator rotors  
as part of the modernisation of the plant which was completed in september 2010 melrose plc 09
business performance governance financials shareholder information
annual report 2010 
sectors served power generation plants oil and gas utilities 
industrial marine rail telecommunications construction 
commercial military hydropower cogeneration uninterrupted 
power supply and aftermarket
aftermarket sales performed well and produced a 25 per cent 
increase in the year aided by the contribution from the 
acquisition in february 2010 of gms a us company based  
in pennsylvania gms has exceeded its first year targets for 
both orders and sales 
the global power generation market began a slow recovery  
in 2010 resulting in brush turbogenerators’ newbuild sales 
increasing by 3 per cent in 2010 over 2009 these sales  
were delivered on a far leaner and more efficient cost base 
producing a significant improvement in operating margins  
and backed up by excellent cash generation
significant progress was also made in the year in implementing 
the new brush manufacturing strategy a combination of 
targeted capital investment in core facilities outsourcing of 
noncore operations and a factory management philosophy 
based on value stream principles has reduced average 
generator manufacturing lead times by 15 per cent 
furthermore this improved performance is being carried  
out off an inventory base which is half what it was when fki  
was acquired in 2008
as reported in the interim statement last august the  
operations of brush transformers were absorbed into  
brush turbogenerators in july 2010
the integration of the transformers business proceeded 
according to plan and was largely completed during 2010 
resulting in significant operational gains which will be reflected 
in brush turbogenerators’ performance in 2011 the softness  
in the uk demand for transformers experienced in the first half 
of 2010 has continued into the second half of the year 
harrington the specialist generator manufacturer based in the 
uk saw a small fall in sales in 2010 following the 30 per cent 
decline in 2009 there is evidence to suggest that the uk  
small generator market bottomed out in 2010 as orders 
increased by 14 per cent primarily in the last quarter of the  
year the transition of the business to more specialised 
applications is on track and harrington enters 2011 with  
a healthy order book
outlook
brush turbogenerators entered 2011 with a newbuild order 
book of £132 million representing well over half of its budgeted 
newbuild sales for 2011 these sales allied to the improved 
operational efficiency of the plants together with the increased 
proportion of higher margin aftermarket business and the 
benefits from the integration of brush transformers give us 
confidence that brush turbogenerators will have another  
good year in 2011
“ sales were delivered on a far leaner 
and more efficient cost base 
producing a significant improvement 
in operating margins and backed  
up by excellent cash generation”
brush turbogenerators
brush is in the process of supplying four waterhydrogen 
cooled generators as part of an extension to the nuclear 
power plant situated at mochovce slovak republic  
the picture shows one of the generators on test at the  
brush factory in the czech republic all four brush generators 
will be installed by 2013 together with new hydrogen and 
water systems for cooling the generators oil systems for 
lubrication and static excitation systems for power supply
marelli motori “marelli”
marelli based in italy is one of the world’s leading 
manufacturers of industrial generators and electric motors  
with a product portfolio ranging from 02 kw to 72 mw  
with five overseas offices in germany uk malaysia usa  
and south africa it serves worldwide markets for power 
generation marine oil and gas and industrial manufacturing
sales in 2010 were marginally below 2009 and headline 
operating profit in the year was affected by adverse sales mix 
and increasing raw material costs during 2010 sales shifted 
away from higher margin larger specialist machines towards 
more standard machines reflecting the impact of the economic 
downturn which hit the marine sector particularly hard marelli 
once again confirmed its cash generating abilities by converting 
135 of its headline operating profit into cash
the building of the malaysian plant is well underway and should 
be fully operational by the middle of this year this plant will 
make the smaller more standard generators thereby enabling 
marelli’s italian operation to focus on manufacturing larger more 
sophisticated machines
more information about brush turbogenerators is available  
online at wwwbrusheu 10 melrose plc annual report 2010 
energy 
review continued 
hss
part of the hss ‘fit and forget’ family of products the 
horizon fills the market need for outdoor groundmounted 
circuit breakers designed for a 38kv application the horizon 
can be used with other hss products to provide cost 
effective and compact substations or breathe new life into 
existing substations by replacing old and obsolete equipment
more information about hss is available online at 
wwwhssltdcom
more information about marelli is available online at 
wwwmarellimotoricom
marelli
in 2010 marelli supplied and installed a mediumvoltage 
highspeed vertical hydropower synchronous generator  
to a hydropower plant in bürglen switzerland the generator  
is fitted with water cooled sleeve bearings able to withstand 
static and hydraulic loads and has a rated power of 3700 kva 
and a rated speed of 1000 rpm the generator weighs 19 
tonnes and is able to satisfy the electric power requirements 
of over 900 family houses
outlook
the positive momentum in orders experienced in 2010 has 
continued into the new year and gives us confidence that 2011 
will be a year of progress at marelli
hawker siddeley switchgear “hss”
hss produces a wide range of indoor and outdoor medium 
voltage switchgear selling into the global power distribution  
and transit markets based in the uk where it has both a 
manufacturing and a rd facility hss also has manufacturing 
plants in australia and china
hss produced another good trading result in 2010 with  
further encouraging progress in operating margins assisted  
by continuing focus on operational efficiency improvements 
during the year in addition tight control of working capital 
resulted in a creditable cash generation performance
both uk and australian operations recorded healthy sales  
and an encouraging order intake during the year on the back  
of a focused product development programme designed to 
expand the reach and the range of hss’s core products  
the indoor and outdoor power distribution markets remained 
strong supported by the further development of the uk and 
overseas mass transit markets where hss secured significant 
business on a number of high profile infrastructure projects
the facility in shanghai is now fully operational supplying  
circuit breakers into hss’s uk operation this will now be 
further developed to support the company’s growth strategy  
in south east asia with particular regard to the growth of 
metropolitan systems throughout the region this presents  
a significant opportunity for hss
outlook
on the back of positive trading momentum at the end of 2010 
and with a strong opening order book in 2011 hss looks 
forward to a good year melrose plc 11
business performance governance financials shareholder information
annual report 2010 
world leading suppliers of wire
wire rope products lifting fittings
and blocks
lifting businesses
 
 
 
 
1
2
4
3
1 europe 26 
2 north america 49 
3 asia 14
4 rest of world 11 
bridon
bridon designs and manufactures a comprehensive range  
of lifting and stabilising solutions for applications in wire rope  
fibre rope steel wire and strand the company services global 
customers in the oil and gas mining industrial marine and 
infrastructure sectors
as foreshadowed in the interim statement in august bridon’s 
profit in 2010 fell short of the record profit recorded in 2009 
which benefited particularly from strong orders in the later  
cycle offshore oil and gas business headline operating margins 
in the second half of 2010 were weaker due to lower sales in this 
business and low margin contracts in bridon’s structures business 
whilst a number of bridon’s markets experienced some 
recovery in 2010 market conditions in the offshore oil and gas 
industry remained subdued throughout the year by contrast the 
onshore oil and gas sector did see some recovery 
lifting 
review
bridon 
wwwbridoncom
crosby 
wwwthecrosbygroupcom
acco 
wwwaccomhscom
bridon cables and end fittings were used to support the infinity bridge  
in stocktonontees see page 12 for further details 
revenue 
year ended 31 december 2010
£4227m
2009 £4190m
headline operating profit 
year ended 31 december 2010
£667m
2009 £625m
revenue by geographical destination  
year ended 31 december 2010
sectors served onshore and offshore oil and gas deep shaft 
and surface mining petrochemical alternative energy general 
industrial and construction markets fishing and marine 
infrastructure eg bridges and sports stadia and material 
handling industries 12 melrose plc annual report 2010 
lifting 
review continued
general demand in the offshore market was weak in the 
aftermath of the global recession and this was exacerbated  
by the moratorium on deep water drilling following the horizon  
oil spill in the gulf of mexico indeed the impact of the spill  
was felt in markets beyond north america as the regulatory 
authorities continued to scrutinise safety issues connected  
with deep water drilling
by contrast the mining market continued to improve for both 
deep shaft and surface mining as a result of the renewed 
demand for commodities which has led to increased orders  
in most markets
the commercial construction markets in north america the 
middle east and europe remained subdued in 2010 as a result 
many industrial crane companies have been cautious in placing 
orders although activity has continued at reasonable levels in 
china and other parts of asia however industrial production 
has increased in some countries which has driven demand for 
industrial ropes
bridon’s focus on leading technology product development 
accelerated in 2010 with the introduction of eleven new products 
designed to meet the increasingly demanding applications 
required by its customers new product introductions in 2010 
included the 2g big hydra an enhanced multilayer winch rope 
for the oil and gas industry which provides greater strength and 
rotational stability to meet the growing challenges of deepsea 
deployment and the tiger big bristar rope used in the surface 
mining industry for dragline applications improvements have 
also been made to bridon’s industrial and crane range with the 
introduction of a new high strength dyform 8 bristar rope which 
offers improved design and plastic sheathing resulting in 
significantly increased fatigue resistance 
bridon continues to invest in the upgrading of its manufacturing 
and research and development facilities the programme to 
improve the wire mill in doncaster designed to increase 
manufacturing efficiencies and significantly reduce carbon 
emissions and other environmental waste is due for completion 
in the second half of 2011 the £3 million investment in  
the company’s german factory necessary to increase 
manufacturing capability for large multistrand ropes is on 
schedule to complete shortly further substantial capital 
investment is also planned over the next two years
outlook
although bridon expects demand in the offshore oil and gas 
market to remain subdued in the first half of 2011 it is expected 
that this market will start to see some recovery in the second 
half of the year particularly in light of the continuing strength  
in the price of oil the higher oil price will also benefit bridon’s 
mining business positively affecting activity levels in the 
canadian tar sands 
“ bridon’s focus on leading technology 
product development accelerated in 
2010 with the introduction of eleven 
new products designed to meet the 
increasingly demanding applications 
required by its customers”
bridon
the infinity bridge is a public pedestrian 
and cycle footbridge across the river tees 
in the borough of stocktonontees 
bridon manufactured the locked coil cable 
assemblies and end fittings for this 
awardwinning bridge the design utilises 
two tied arches and is supported using 
bridon galfan
®
 locked coil cables fitted 
with stylite
®
 architectural sockets 
the largest of the arches is tied using 
90mm diameter cable assemblies and  
the deck is hung from the arches using  
44 x 30mm diameter cables the total 
length of the bridge is 237 metres
more information about bridon is available 
online at wwwbridoncom melrose plc 13
business performance governance financials shareholder information
annual report 2010 
more information about crosby is available online at 
wwwthecrosbygroupcom
whilst the outlook for bridon’s construction market remains 
uncertain global manufacturing particularly in the far east  
is likely to continue to increase during 2011 bringing modest 
growth to bridon’s industrial business
bridon’s strategy to lead technology development through high 
quality manufacturing and innovative technical solutions in the 
wire and fibre rope industry leaves it well placed to benefit from 
market recovery
crosby
crosby is a world leader in the design manufacture and sale  
of lifting fittings and blocks to the oil and gas construction and 
mining sectors serviced primarily through a global network  
of specialist distributors 
the recovery in crosby’s trading performance from a difficult 
2009 reported in the interim statement has continued on the 
back of an ongoing improvement in order bookings throughout 
the year crosby’s sales in the second half of 2010 were over  
20 per cent higher than in the second half of 2009 the low  
point in crosby’s sales cycle and this has resulted in a very 
encouraging recovery in crosby’s profit and operating margins
during the year crosby continued to focus and build upon its 
broad product mix of lifting fittings sold through its traditional 
distributor base market share gains have been achieved as a 
result of working closely with its distributors and focusing on 
technical training and endcustomer service and support  
this model has proved very successful in north america  
and is beginning to gain traction in other parts of the world
an integral part of this model is a continuing focus on new 
product development during the year crosby introduced a 
number of new product lines and also made refinements to 
existing products the split nut design used in crane blocks  
to enable quick removal and easy inspection has become 
widely accepted in its market in addition crosby is in the 
process of introducing a new eapplications system soon  
to be available on services such as the apple ipad designed  
to provide customers with realtime information regarding the 
installation and usage of crosby products
the expansion of the crosby franchise beyond north america 
and europe where it has a powerful presence remains a  
high priority in addition to the rationalisation of the 
manufacturing base in europe further investment was made  
in strengthening the sales and marketing team with a view to 
increasing penetration including territories such as india and 
the middle east 
crosby continues to expand its capabilities in china by 
extending its network of distributors – sales volume has 
increased by an average of 35 per cent per annum over the  
past few years this effort has been greatly assisted by the  
new crane block and sheave centre based in hangzhou  
china which has resulted in shorter delivery lead times to 
customers although at an early stage crosby has started 
stocking inventory in brazil in order to take advantage of the  
fast growing offshore oil exploration opportunities
crosby
in october 2010 crosby supplied  
an integral piece of the system  
used in rescuing thirty three chilean  
coal miners from their sixty nine  
day underground imprisonment 
through a local distributor crosby  
provided the key link between the  
wire rope used to hoist the miners  
out of the mine and the capsule in  
which they made the trip to safety  
a crosby s421 wedge socket  
was used to connect the 24mm wire  
rope to the 600kg rescue capsule 
outlook
on the back of a growing order book in its established north 
american and european markets and significant advances 
being made in penetrating newer regions we look forward to  
a further year of good progress 14 melrose plc annual report 2010 
dynacast 
review
global designer and manufacturer  
of precision engineered diecast 
metal components and assemblies
dynacast is a global manufacturer of precision engineered 
products including diecast metal components that can be 
machined plated and assembled to customer specifications 
the products are manufactured using proprietary diecasting 
technology and are supplied to a wide range of end markets 
including automotive healthcare telecommunications 
consumer electronics hardware computers and peripherals
after a very challenging 2009 dynacast staged an outstanding 
recovery in 2010 revenue was 32 per cent higher than in the 
previous year and headline operating profit more than doubled 
particularly pleasing was the improvement in the return on  
sales in the year to over 15 per cent a large proportion of the 
costs that were taken out of the business to deal with the 
downturn have since returned as volumes have grown  
however it is expected that there will be some permanent 
saving resulting in increased profitability
 
 
 
1
2
3
4
dynacast businesses
dynacast 
wwwdynacastcom
techmire 
wwwtechmirecom
fishercast 
wwwfishercastcouk
the dynacast tv lamp bracket functions as a grip for the colour wheel inside  
samsung’s digital light protection dlp highdefinition flat screen television 
the lamp bracket is made of aluminium alloy to deliver high strength and low 
product weight
1 europe 41 
2 north america 33 
3 asia 25
4 rest of world 1
revenue 
year ended 31 december 2010
£2757m
2009 £2087m
headline operating profit 
year ended 31 december 2010
£430m
2009 £213m
revenue by geographical destination  
year ended 31 december 2010
sectors served automotive telecommunications consumer 
electronics computing healthcare and construction melrose plc 15
business performance governance financials shareholder information
annual report 2010 
zinc is the major raw material used in the manufacture of 
dynacast’s products and the lme price increased from an 
average of us 1658 per tonne in 2009 to us 2156 per  
tonne in 2010 accounting for approximately £12 million of  
the increase in revenue in 2010 dynacast benefits from an 
established metal cost passthrough mechanism such that  
this price increase had little impact on profit during the period
the underlying adjusted for metal and foreign currency sales 
increase in europe in 2010 over the previous year was over  
30 per cent with particularly strong performances in germany 
austria and spain sales to gillette were up significantly as a 
result of the introduction of the new fusion proglide razor
north america having been the hardest hit of dynacast’s 
regions in 2009 as a result of the severe downturns in the 
automotive and construction sectors saw a gradual recovery  
in 2010 with sales picking up during the year management 
closed the montreal diecasting facility and transferred the 
production to other dynacast plants in north america and 
europe after adjusting for this effect and foreign currency  
and metal prices underlying sales in the region rose by  
13 per cent over 2009 
in asia where the downturn in dynacast’s sales was not as 
pronounced as in europe and north america the underlying 
sales growth in 2010 was a most encouraging 23 per cent 
china continues to be the growth engine in asia with dynacast 
shanghai leading the way with underlying revenue and headline 
operating profit growth in the year of 48 per cent and 153 per 
cent respectively over 2009 the new 4500 square metre 
factory which opened in dongguan south china in 2009  
has continued to develop rapidly in view of the exciting growth 
potential in this region dynacast invested in a greenfield facility 
in batam indonesia which operates as a satellite unit of 
dynacast singapore and commenced production in the  
second half of 2010
in 2010 there has been pleasing development of dynacast’s 
international business development team which operates 
centrally to target sales to large multinational companies  
which can then source product from any of dynacast’s  
factories worldwide
new tool sales which are a key indicator of future growth 
recovered in 2010 and although more modest in the more 
developed economies were at a record high in asia in the year 
which bodes well for 2011 and beyond
outlook
having recovered dramatically from the downturn in 2009 
through positive management actions on costs and improving 
markets dynacast remains well positioned to continue to 
produce good returns
dynacast 
the telecommunications connector acts as a housing for  
a midsize video jack a video patching system product from  
a company called adc a company that provides connections 
for wireless cable broadcast and enterprise networks around 
the world the connector replaces six separate components 
significantly improving quality as well as reducing production 
costs for dynacast customers
more information about dynacast is available online at 
wwwdynacastcom
“ after a very challenging 2009 
dynacast staged an outstanding 
recovery in 2010 revenue was  
32 per cent higher than in the 
previous year and headline 
operating profit more than doubled” 16 melrose plc annual report 2010 
other  
industrial 
review
market leading manufacturers  
across the housing construction 
automotive scrap processing  
and other industrial sectors
the equipment pictured shows a harris bsh301223 b4 guillotine shear based in alabama usa this was sold to a customer involved in the processing  
of miscellaneous steel scrap pipe plate and selected sections of freight rail cars and ship scrap with 1118 metric tonnes of cutting force and a capacity  
to produce up to 463 metric tonnes of scrap material per hour this shear epitomises harris’ lead in the manufacture of recycling equipment in the industry  
and remains at the leading edge of technology and innovation
truth
truth designs and manufactures a wide range of quality 
components for north american producers of fenestration 
products including windows and patio doors utilised in both  
the new construction and the repair and remodel residential 
markets most of truth’s products are manufactured in plants  
in minnesota usa and ontario canada with some lower 
margin products outsourced to china
truth reported a creditable trading result for 2010 as previously 
reported the dramatic recovery in truth’s trading performance 
from the low point in the first half of 2009 started levelling off in 
the first half of 2010 as distribution pipelines were replenished 
although since that time us housing indicators have improved 
they nevertheless remain significantly below average truth has 
done well to continue to raise its operating margins despite  
increasing pressure from substantial increases in the cost  
of materials a testament to its leading market position in  
north america
 
 
 
1
2
4
3
other industrial businesses
truth 
wwwtruthcom
harris 
wwwharrisequipcom
mpc
wwwmckechnieplasticscouk
weber knapp 
wwwweberknappcom
prelok 
wwwprelokcom
1 europe 43 
2 north america 53 
3 asia 3
4 rest of world 1
revenue 
year ended 31 december 2010
£2536m
2009 £2525m
headline operating profit 
year ended 31 december 2010
£287m
2009 £206m
revenue by geographical destination  
year ended 31 december 2010 
sectors served businesses serve a diverse range of sectors 
including housing construction retail scrap processing fibre 
recycling automotive consumer packaging brewing food 
distribution power tools industrial medical office furniture  
and general engineering melrose plc 17
business performance governance financials shareholder information
annual report 2010 
truth continued to increase its market share during the  
year both through organic sales growth and new product 
development management’s focus during the year has centred 
on the control of labour costs productivity quality service levels 
and customer satisfaction together with constant attention to 
working capital management
the major strategic initiative to outsource the manufacturing  
of lower margin products to china continues to make good 
progress and this has resulted in more capacity being made 
available for the efficient production of higher margin casement 
units in truth’s minnesota plant
outlook
notwithstanding the appalling weather conditions in a large  
part of the us at the beginning of 2011 which has made 
comparisons to last year very difficult to assess there is a 
feeling that although us housing remains sluggish truth will 
show moderate sales growth in the year in view of the efficiency 
gains continuing to be made in the business and its growth in 
market share truth should continue to improve its performance 
in 2011 and is very well placed to benefit when the us housing 
market recovers
harris
harris is a market leader in the scrap and waste recycling 
industries operating from two plants in georgia usa  
the company designs manufactures and services a full  
range of equipment solutions and serves the scrap metal  
and fibre recycling industries
harris performed well in 2010 although revenue declined 
slightly in the year headline operating profit was over  
15 per cent higher than in 2009 as a result of improved 
efficiency and lower costs resulting in a healthy improvement  
in operating margin demand for scrap recycling machines 
recovered in 2010 with order intake being 50 per cent  
higher than in 2009
harris continued to invest in design and engineering in 2010 
through its new product development group during the year 
harris introduced four new products that boast higher 
throughput but with approximately half the energy consumption 
these new products present a strong value proposition in  
the market
during the year harris decided to build on its strong reputation 
in the scrap and waste recycling industries by expanding its 
presence in latin america in order to take advantage of the 
rapidly growing markets in that region
in addition during the year harris continued to add resources  
to its growing aftermarket business this has grown from 
approximately 20 per cent of harris’ sales in 2008 to 34 per cent 
in 2010
outlook
harris should have another year of progress in 2011 but based 
on the current order book this is expected to be weighted to 
the second half of the year
truth
truth hardware’s marvel™ power operator system for 
windows and skylights is a sleek new design that is simple  
to install easy to operate and above all reliable and affordable 
rated to lift skylight sashes weighing up to 90 lbs the marvel 
system has an optional hand held remote control and roof 
mounted rain sensor to add convenience and peace of mind 
more information about truth is available online at 
wwwtruthcom
“ truth continued to increase its 
market share during the year both 
through organic sales growth and 
new product development” 18 melrose plc annual report 2010 
mpc
mpc designs and manufactures engineered plastic injection 
moulded and extruded components and metal pressings for 
sectors including food and beverage packaging automotive 
construction and industrial
the recovery signalled in the interim statement has continued  
and for the year ended 31 december 2010 mpc reported an 
increase in sales of approximately 35 per cent over 2009 and  
a near doubling of headline operating profit the heavy focus  
on technically differentiated new product introductions has  
been rewarded with strong sales increases in the year to  
the automotive building and consumer durable sectors  
for example mpc worked closely with wavin in the development 
of a universal inspection chamber to prevent access to drainage 
systems of external contaminants into surrounding land
during 2010 in order to achieve its new product development 
objectives mpc recruited a number of engineers specifically  
to focus on design and testing together with the customers  
to help bring onstream the new valueengineered products 
exploitation of manufacturing niches that use new materials  
and technologies will remain a priority as the business  
moves forward
mpc
the advanced multimaterial injection moulded cell has been designed and developed in support of various jaguar and land 
rover vehicle platforms the robotic equipment shown below is used in the production of door cladding and exterior body trims 
quick change robotics technology allows for flexible use across a number of similar components which means that mpc can 
supply these parts for both three and five door vehicles
more information about mpc is available online at 
wwwmckechnieplasticscouk
“ mpc’s new business order book 
remains very strong with a number 
of key projects due to go live  
in 2011 ”
other industrial 
review continued
outlook
mpc’s new business order book remains very strong with  
a number of key projects due to go live in 2011 this together  
with the solid recovery being seen in uk manufacturing allied  
to healthy exports provides confidence for a successful 
outcome for the year melrose plc 19
business performance governance financials shareholder information
annual report 2010 
the year to 31 december 2010 is the first full year since the  
fki acquisition for which the prior year performance provides  
a meaningful comparative
in addition no businesses are shown as discontinued in 2010 
and hence the 2009 and 2010 results have not been adjusted 
from previously announced numbers
group trading results – continuing operations
the continuing operations at 31 december 2010 include  
four trading divisions namely energy lifting dynacast and 
other industrial
to help understand the results of the continuing operations the 
term ‘headline’ has been used this refers to results calculated 
before exceptional costs exceptional income and intangible 
asset amortisation as this is considered by the melrose plc 
board to be the best measure of performance
for the year ended 31 december 2010 the group achieved 
revenue from continuing operations of £13795 million 2009 
£12985 million representing a 6 increase over the previous 
year during the second six months of 2010 group revenue 
increased by 15 compared to the same period in 2009 –  
a significant improvement from the 1 fall in the first six months  
of 2010
headline operating profit in the year ended 31 december 2010 
was £1969 million 2009 £1497 million which was up by 32 
on the previous year a significantly faster pace of growth than 
for group revenue this was achieved by an increase in the 
headline operating profit margin defined as the percentage of 
headline operating profit to revenue from 115 in 2009 to 
143 in 2010 indeed in the second half of 2010 the margin 
increased to 149 just below our long term stated target of 
15 the reasons for this performance are highlighted in the 
chief executive’s review
“ during the second six months  
of 2010 group revenue increased  
by 15 compared to the same  
period in 2009 – a significant 
improvement from the 1 fall  
in the first six months of 2010 
headline operating profit in the year 
ended 31 december 2010 was 
£1969 million 2009 £1497 million 
which was up by 32 on the  
previous year”
finance  
director’s  
review
headline
 
operating profit
£1969m
2009 £1497m
net debt to headline ebitda
1 25 times
2009 176 times
working capital 
84 of sales
2009 88 of sales 20 melrose plc
finance director’s review 
continued
annual report 2010 
the most comprehensive measure of performance is headline 
earnings per share “eps” as this also includes both net finance 
costs and headline tax as a consequence of improvements in 
both of these costs compared to the previous year the headline 
eps in 2010 of 254p 2009 166p has increased by 53  
the diluted headline eps which recognises the current value of 
the melrose 2009 incentive share scheme as at 31 december 
2010 was 241p for the year ended 31 december 2010 2009 
163p representing a 5 dilution factor 2009 2
after exceptional costs exceptional income and intangible  
asset amortisation group operating profit was £1814 million 
2009 £1131 million group operating margin was 131  
2009 87 and eps was 284p 2009 110p
trading results by division – continuing operations
the performance of each of these divisions is discussed in 
detail in the chief executive’s review
central costs comprise £86 million 2009 £89 million of melrose 
plc corporate costs and an ltip accrual of £66 million 2009 
£68 million this accrual includes an amount of £18 million 
2009 £18 million in respect of the melrose 2009 incentive share 
scheme this annual accrual was calculated in accordance  
with ifrs 2 using a standard pricing model when the scheme 
was established and is constant until the date of crystallisation  
in addition an increase in the provision for the cash based  
senior management incentive schemes of £48 million 2009  
£50 million was charged this scheme is for senior operational 
management and is designed to reward improvement in  
business performance mainly over the period to 2014
finance costs and income
the net finance cost in 2010 was £261 million 2009 
£311 million
net interest on external bank loans overdrafts and cash 
balances was £179 million 2009 £203 million which is largely 
protected from interest rate changes by a number of interest 
rate swaps which fix the interest rate on £3787 million us 
5460 million and €333 million of term debt more detail on 
these swaps is given in the finance cost risk management 
section of this review the net interest expense on external loans 
has reduced during the year this is because us 80 million  
of the term loan was repaid in 2009 following the sale of the 
logistex businesses and also the margin charged to melrose 
by the bank syndicate has become lower due to the reduction  
in leverage in 2010 the group had a blended interest rate of 
335 2009 349
also included in the net finance cost is a £23 million 2009  
£21 million amortisation charge for the initial costs of raising  
the £750 million committed loan facility a net interest cost on 
pension plans in excess of the expected return on their assets 
of £41 million 2009 £66 million and the unwind of discounts  
on long term provisions of £17 million 2009 £16 million
earnings per share and number of shares in issue
the board believe that headline eps gives the best reflection of 
performance in the year as it strips out the impact of exceptional 
costs exceptional income and intangible asset amortisation 
the headline eps for the year to 31 december 2010 was 254p 
2009 166p which represents a 53 increase on the prior 
year the diluted headline eps for the year ended 31 december 
2010 was 241p 2009 163p this represents a 5 dilution 
factor 2009 2 to recognise the current value in number  
of shares of the melrose 2009 incentive share scheme 
in accordance with ias 33 two further basic eps numbers  
are disclosed on the face of the income statement one for 
continuing operations which is 284p 2009 110p and one that 
also includes discontinued operations of which there are none 
in 2010 and therefore is also 284p 2009 160p 
exceptional costs and income
melrose has continued to undertake significant action to improve 
the operational and financial performance of the group  
to achieve this exceptional costs and exceptional income have 
been incurred and along with intangible asset amortisation 
these have been highlighted on the face of the income statement 
exceptional operating costs amounted to £103 million 2009 
£239 million exceptional income to £214 million 2009  
£140 million and intangible asset amortisation to £266 million 
2009 £267 million exceptional operating costs and income 
consist of the following items
exceptional operating costs
total 
£m
restructuring costs 59
defined benefit pension plan disposal 40
acquisitions and disposals of businesses 04
total 103
exceptional operating income
total 
£m
pension curtailment gain 131 
fki captive insurance commutation gain 56 
net release of provisions 27 
total 214 
the group incurred £59 million of costs relating to  
restructuring programmes which include the integration of  
the transformers business into the turbogenerators business 
within the energy division
trading results by division – continuing operations
2010 
revenue 
£m
2010 
headline  
operating  
profitloss 
£m
2010 
headline  
operating  
profit margin
2009 
revenue 
£m
2009 
headline  
operating  
profitloss 
£m
2009 
headline  
operating  
profit margin
energy 4275 737 172 4183 610 146
lifting 4227 667 158 4190 625 149
dynacast 2757 430 156 2087 213 102
other industrial 2536 287 113 2525 206 82
central – corporate – 86 na – 89 na
central – ltips
1
– 66 na – 68 na
group 13795 1969 143 12985 1497 115
1 long term incentive plans melrose plc 21
business performance governance financials shareholder information
annual report 2010 
in addition the group entered into a buyout arrangement to  
sell the liabilities of the bridon group senior executive plan 
for £40 million in excess of ias 19 carrying value of plan  
net liabilities
in accordance with ifrs 3 revised 2008 the £02 million of 
costs incurred in the acquisition of generator  motor services 
of pennsylvania llc are shown as exceptional costs in these 
financial statements the prelok france business previously 
shown within the other industrial division was disposed of for  
a loss of £02 million
during the year it was announced to members of the fki uk 
pension plan that it would be closed to the accrual of future 
benefits on 28 february 2011 resulting in a curtailment gain  
of £131 million
in addition a gain of £56 million was generated by the 
commutation of certain insurance policies within the fki captive 
insurance company 
during 2010 provisions created as part of the fki fair value 
exercise were reassessed based on latest information and this 
resulted in a net release of £27 million the credit for which has 
been shown in exceptional income
acquisition during the period
on 12 february 2010 the group acquired 100 of the  
issued share capital of generator  motor services of 
pennsylvania llc “gms” a company operating in north 
america supplying aftermarket services to the turbogenerator 
industry the consideration for gms was £80 million in addition 
acquisition costs of £02 million were incurred and expensed  
in the income statement in accordance with ifrs 3 revised 
2008 gms is now reported within the energy division
disposal of businesses – post 31 december 2010
three smaller businesses have been disposed of in the two 
months following 31 december 2010 namely brush traction 
logistex uk and madico all of which were held within the other 
industrial division
the net proceeds for these businesses were £207 million  
and the businesses contributed £58 million to revenue and 
£6 million to headline operating profit in 2010
in addition £22 million of pension liabilities went with the 
logistex uk business including a small deficit and with the 
brush traction disposal over £100 million of parent company 
guarantees and bonds were transferred to the buyer
cash generation and management
a key performance measure for melrose is the percentage  
of profit conversion to cash this represents the amount of  
cash post working capital movement and capital expenditure 
that is generated from headline operating profit in the year to  
31 december 2010 103 2009 149 of headline operating 
profit has been converted to cash this means that the long 
term melrose headline operating profit conversion to cash from 
2003 to 2010 is now 122 and since acquiring fki is 136
the headline cash generation since acquiring fki has been 
achieved across all divisions as shown in the table at the bottom 
of the page
this has enabled melrose to generate £969 million of cash from 
trading after all costs including tax in the year to 31 december 
2010 importantly since the acquisition of fki on 1 july 2008 
£3419 million of cash has been generated from trading after all 
costs including tax in addition £485 million of cash net of 
costs has been generated from disposals and £1005 million 
has been paid to shareholders this has meant that at constant 
exchange rates net debt has reduced by £2785 million 60 
since the acquisition of fki on 1 july 2008
movement in net debt
2010 
full year 
£m
since fki 
acquisition 
1 july 2008 
£m
opening net debtcash 3217 223 
acquired net debt – 4717
net cash flow of acquisitions 91 203
net cash flow from disposals 01 485 
cash generated from trading  
 after all costs including tax 969 3419 
amount paid to shareholders 438 1005
foreign exchange movement 72 1053
other noncash movement 24 23
closing net debt 2874 2874
the detail of the cash flow from trading is shown below
cash generated from trading  
including discontinued operations
2010 
full year 
£m
since fki 
acquisition 
1 july 2008 
£m
headline operating profit 1969 4406 
depreciation and computer  
 software amortisation 329 879 
working capital movement 31 1514 
net capital expenditure 304 808
headline operating cash flow  
 post capex 2025 5991 
headline operating profit conversion  
 to cash  103 136 
net interest and net tax paid 438 978
defined benefit pension contributions 275 756
other including restructuring costs 343 838
cash generated from trading  
 after all costs including tax 969 3419 
the balance sheet leverage calculated as net debt divided by 
headline operating profit before depreciation and amortisation 
was 125x at 31 december 2010 this is a 29 reduction from 
leverage of 176x at 31 december 2009 and it has more than 
halved compared to leverage of 265x two years ago
cash generation and management 
since fki acquisition energy lifting dynacast
other  
industrial central
total  
continuing discontinued total
headline operating profitloss £m 1656 1649 797 599 428 4273 133 4406
headline operating cash  
generation post capex £m 2132 1850 1053 702 240 5497 494 5991
headline operating profit  
conversion to cash 129 112 132 117 56 129 371 136 22 melrose plc
finance director’s review 
continued
annual report 2010 
capital expenditure
the pay back on capital projects is a key part of the melrose 
strategy to improve operational performance by division the 
capital expenditure in the year was as follows
energy lifting dynacast
other 
industrial central total
capital  
 expenditure £m 94 98 70 55 02 319
depreciation £m 80 94 77 71 07 329
capital expenditure  
 to depreciation   
 ratio full year 12x 10x 09x 08x 03x 10x
capital expenditure   
 to depreciation   
 ratio second  
 half year 15x 16x 14x 11x 03x 14x
melrose six year   
 20052010   
 average annual   
 multiple 12x
the capital spend to depreciation ratio was 10x in 2010 
compared with 07x in 2009 indeed in the second half of 2010 
it increased to 14x this illustrates that the group is returning to 
its investment phase where the board authorises capital and 
restructuring projects which will improve the value of the 
businesses the six year melrose average annual capital  
spend is in excess of depreciation at 12x
working capital management
the board continues to allow each division to have the correct 
amount of working capital to achieve the most suitable balance 
between commercial and financial efficiency to ensure this 
happens working capital days cover targets are set for each 
business unit for inventory trade receivables and trade payables
even in this year of growth a working capital cash inflow of 
£31 million was achieved which means that working capital 
has become more efficient in the year during melrose’s 
ownership of fki the cash generated from working capital  
at constant exchange rates is now £1514 million which 
represents a 57 reduction in net working capital a further 
measure of improvement is that the percentage of net working 
capital to sales for the melrose group has now reduced to 84 
at 31 december 2010 compared to 154 on acquisition of fki
tax
as expected the headline income statement tax rate in 2010 
was 26 2009 30
this is consistent with the group’s natural tax rate based on the 
mix of 2010 contributions of profit by country and the standard 
statutory tax rate in those countries as adjusted for specific 
known factors the overall effect on the group of higher tax 
rates in north america and certain european countries is offset 
by the benefit that continues to arise from lower tax rates in the 
far east and other european countries
the rate after exceptional items and intangible asset 
amortisation is 9 2009 33 which is lower than the  
headline rate due mostly to the recognition of exceptional us 
deferred tax assets of £235 million as an exceptional credit 
these deferred tax assets are recognised now because 
sufficient future taxable profits are now expected to arise  
to benefit from future likely tax deductions and losses
the headline cash tax rate of 16 2009 3 is again low  
due to the benefit arising from the utilisation of tax losses and 
other deferred tax assets in the medium term the headline 
cash tax rate is expected to trend toward the headline income 
statement rate
the total amount of tax losses in the group has increased 
slightly due to the recalculation of prior year positions this is 
largely offset by the utilisation of losses and other deferred  
tax assets against current year profits the tax losses are  
as follows
tax losses
recognised  
£m
unrecognised 
£m
total 
£m
uk – 2145 2145 
north america – 13 13 
rest of world – 359 359 
total 2010 – 2517 2517 
total 2009 136 2378 2514 
the group’s net deferred tax liability is £819 million 2009 
£1032 million a £1028 million 2009 £1129 million deferred 
tax liability is provided in respect of brand names and customer 
relationships acquired this liability does not represent a future 
cash tax payment and will unwind as the brand names and 
customer relationships are amortised
assets and liabilities
the summary melrose group assets and liabilities are  
shown below
31 december 
2010 
£m
31 december 
2009 
£m
fixed assets including computer software 2561 2543 
intangible assets excluding goodwill 3811 4031 
goodwill 7981 7792 
net working capital 1159 1143 
retirement benefit obligations 1196 1691
provisions 1187 1442
deferred tax and current tax 1343 1525
other 83 01
total 11703 10850 
these assets and liabilities are funded by
31 december 
2010 
£m
31 december 
2009 
£m
net debt 2874 3217
equity 8829 7633
total 11703 10850
the increase in total equity is primarily related to the profit for 
the year of £1413 million the actuarial gain on defined benefit 
pension plans of £138 million less dividends paid to 
shareholders of £438 million melrose plc 23
business performance governance financials shareholder information
annual report 2010 
goodwill intangible assets and impairment review
the total value of goodwill as at 31 december 2010 is  
£7981 million 2009 £7792 million and the remaining intangible 
assets £3811 million 2009 £4031 million these items are split 
by division as follows
 
energy 
£m
lifting 
£m
dynacast 
£m
other 
industrial 
£m
 
total  
£m
goodwill 2521 2997 2076 387 7981
intangible assets  
 excluding goodwill 1291 2125 205 190 3811
net other assets 465 481 285 292 1523
total carrying value 4277 5603 2566 869 13315
the noncurrent assets have been tested for impairment  
as at 31 december 2010 the board is comfortable that no 
impairment is required
pensions
the group has a number of defined benefit and defined 
contribution plans the ias 19 deficit of the defined benefit 
pension plans as at 31 december 2010 was £1196 million 
2009 £1691 million
the current market value of the assets of the fki uk pension 
plan the most significant plan in the group is insufficient to 
satisfy the liabilities to members when they are valued on a 
basis consistent with ias 19 the net accounting deficit on  
this plan was £786 million at 31 december 2010 2009  
£1101 million this plan had assets at 31 december 2010  
of £5492 million 2009 £5087 million and liabilities of  
£6278 million 2009 £6188 million 
the other uk defined benefit pension plan of significant size  
in the group namely the mckechnie uk pension plan was in 
surplus of £19 million at 31 december 2010 2009 deficit of 
£121 million this plan had assets at 31 december 2010  
of £1438 million 2009 £1281 million and liabilities of  
£1419 million 2009 £1402 million
in addition a us defined benefit plan for fki exists  
at 31 december 2010 this had assets of £1933 million  
2009 £1744 million liabilities of £2131 million 2009  
£1914 million and consequently a deficit of £198 million  
2009 £170 million 
the assumptions used to calculate the ias 19 value of the 
pension plans within the melrose group are considered carefully 
by the board of directors for the fki uk pension plan a male 
aged 65 in 2010 is expected to live for a further 202 years  
this is assumed to increase by 25 years 12 for a male aged 
65 in 2035 a summary of the key assumptions of the fki uk 
pension plan are shown below
2010 
assumption 

2009 
assumption 

discount rate 555 575
inflation 345 345
salary increases 400 395
it is noted that a 01 percentage point decrease in the discount 
rate would increase the pension liability on the fki uk pension 
plan by £95 million and a 01 percentage point increase to 
inflation would increase the liability on this plan by £35 million 
furthermore an increase by one year in the expected life of a 
65 year old male member would increase the pension liabilities 
on this plan by £173 million
the long term strategy for the uk plans is to focus on the cash 
flows required to fund the liabilities as they fall due these cash 
flows extend many years into the future and the ultimate 
objective is that the total pool of assets derived from future 
company contributions and the investment strategy allows each 
cash payment to members to be made when due the melrose 
group contributes £185 million to the fki uk pension plan and 
£46 million to the mckechnie uk pension plan per annum
in addition the strategy includes reducing the volatility of 
liabilities whenever commercially viable
the mckechnie uk pension plan is closed both to new 
members and current members’ future service the fki uk 
pension plan is closed to new members and on 28 february 
2011 it closed to current members’ future service resulting in  
a curtailment gain of £131 million this gain was included in 
exceptional income so as not to distort headline performance 
further post retirement benefits were terminated during 2010  
on us retiree benefit plans reducing liabilities by £34 million
in addition on 5 march 2010 the group sold the assets  
£174 million and liabilities £189 million of the bridon group 
senior executive plan to aegon trustee solutions at a premium 
to the ias 19 net liabilities of £40 million which is shown in 
exceptional costs the trustees are in the process of winding  
up this plan 24 melrose plc
finance director’s review 
continued
annual report 2010 
risk management
the financial risks the group faces have been considered  
and policies have been implemented to best deal with each  
risk the four most significant financial risks are considered  
to be liquidity risk finance cost risk exchange rate risk and 
commodity cost risk these are discussed in turn
liquidity risk management
the group’s net debt position continued to improve during the 
year ending 31 december 2010 at £2874 million compared  
with £3217 million a year earlier this decrease in net debt 
resulted from strong operational cash generation more cash 
was generated than profit and is despite an exchange rate 
translation loss on foreign currency denominated net debt  
of £72 million 
the group has a multicurrency committed facility that provides 
a term loan and revolving credit facility through to april 2013 
these facilities have reduced from £750 million at inception in 
april 2008 to approximately £739 million as at 31 december 
2010 the term loan is fully drawn down having originally been 
set at £500 million and has since been reduced by applying the 
proceeds from the disposal of the logistex businesses in 2009 
the term loan is subject to a 15 repayment amortisation and 
as a result of the repayments arising from the logistex 
proceeds the first scheduled repayment of approximately  
£3 million is not now due until april 2012 the last repayment 
prior to maturity of £25 million is due in october 2012  
the revolving credit facility of £250 million is not subject to  
any such repayments and the undrawn facility headroom at  
31 december 2010 was £2346 million 2009 £2249 million  
in addition there are a number of small uncommitted overdraft 
and borrowing facilities made available to the group  
these uncommitted facilities are lightly used
in 2008 the term loan portion of this facility was converted into 
currency loans comprising us 6860 million €583 million and 
£500 million in 2009 the group used disposal proceeds to 
repay us 800 million of the us dollar loans equivalent to 9 
of the term loan leaving us 6060 million €583 million and 
£500 million outstanding at 31 december 2010 consequently 
using the exchange rates as at 31 december 2010 the term 
loan is now equivalent to £4888 million 
the facility has two financial covenants a net debt to headline 
ebitda headline operating profit before depreciation and 
amortisation covenant and an interest cover covenant the first 
covenant which now calculates net debt at average exchange 
rates during the period is set at 30x for december 2010 
reducing by 025x each year until 2013 at these exchange  
rates the net debt to headline ebitda at 31 december 2010 
was 127x compared to 125x at balance sheet rates allowing 
significant headroom compared to the covenant test  
the interest cover covenant remains at 35x throughout the life 
of the facility at 31 december 2010 the actual interest cover 
was 97x which also affords comfortable headroom compared 
to the covenant test covenant tests are performed each june 
and december
cash deposits and marketable securities amounted to  
£1957 million at 31 december 2010 2009 £1475 million  
and are offset against gross debt of £4831 million 2009 
£4692 million to arrive at the net debt position of £2874 million 
2009 £3217 million in combination with the undrawn committed 
facility headroom of £2346 million 2009 £2249 million the 
board considers that the group has sufficient access to liquidity 
for its current needs
in accordance with the reporting requirements on going 
concern issued by the financial reporting council the directors 
acknowledge that the economic environment causes uncertainty 
as to the trading outcome for 2011 the group has committed 
borrowing facilities until april 2013 in addition the breadth of 
the end markets that the melrose group companies trade in 
both by sector and geographically gives some balance to 
various market and economic cycle risks furthermore as a 
result of the consistent cash generation record which has 
allowed net debt at constant exchange rates to reduce by 60 
since july 2008 the financial headroom has significantly 
improved the group’s forecasts take into account reasonable 
possible changes to trading performances as a consequence 
the board believes that the group can manage its business 
risks successfully and accordingly the group financial 
statements have been prepared on a going concern basis 
finance cost risk management
the group maintained a net debt position throughout 2010  
the group protects 78 of its gross debt from exposure to 
changes in interest rates by holding a number of interest rate 
swaps to fix £3787 million us 5460 million and €333 million 
of term debt under the terms of these swaps the group has 
fixed the underlying interest rate at 21 for us dollars and 
26 for the euro through to early 2013 at 31 december 2010 
this produced a blended interest rate of 335 2009 349 on 
the £750 million facility calculated after inclusion of the current 
15 margin but before amortisation of arrangement fees and 
nonutilisation fees melrose plc 25
business performance governance financials shareholder information
annual report 2010 
exchange rate risk management
the group trades in various countries around the world and  
is exposed to many different foreign currencies the group 
therefore carries an exchange rate risk that can be categorised 
into three types as described below the board policy is 
designed to protect against some of the cash risks but not the 
noncash risks the most common cash risk is the transaction 
risk the group takes when it invoices a sale in a different 
currency to the one in which its cost of sale is incurred this is 
addressed by taking out forward cover against approximately 
60 to 80 of the anticipated cash flows over the following 
twelve months placed on a rolling quarterly basis or for 100  
of each committed contract this does not eliminate the cash 
risk but does bring some certainty to it
exchange rates used in the period
average  
rate
closing  
rate
us dollar
2010 155 156
2009 157 162
euro
2010 117 116
2009 112 113
the effect on the key headline numbers in 2010 for the 
continuing group due to the translation movement of exchange 
rates from 2009 to 2010 is shown below the table illustrates 
the translation movement in revenue and headline operating 
profit if the 2009 average exchange rates had been used to 
calculate the 2010 results rather than the 2010 average 
exchange rates
the translation difference in 2010 £m
revenue increase 52
headline operating profit increase 12
for reference guidelines to show the net translation exchange 
risks that the group currently carries and an indication of the 
short term exchange rate risk which shows both translation 
exchange risk and unhedged transaction exchange rate risk is 
as follows
sensitivity of profit to translation and unhedged  
transaction exchange risk
increase  
in headline 
operating profit 
£m
for every 10 cent strengthening of the  
 us dollar against sterling 50
for every 10 cent strengthening of the  
 euro against sterling 50
the long term exchange rate risk which ignores any hedging 
instruments in place is as follows
sensitivity of profit to translation and  
full transaction exchange rate risk
increase  
in headline 
operating profit 
£m
for every 10 cent strengthening of the  
 us dollar against sterling 104
for every 10 cent strengthening of the  
 euro against sterling 90
no exchange instruments are used to protect against translation 
risk however when the group has net debt the hedge of 
having a multicurrency debt facility funding these foreign 
currency trading units protects against some of this risk
the most significant exchange risk that the group takes arises 
when a significant business that is predominantly based in a 
foreign currency is sold the proceeds for those businesses will 
most likely be received in a foreign currency and therefore an 
exchange risk arises if these proceeds are converted back to 
sterling for instance to pay a dividend to shareholders 
protection against this risk is taken on a casebycase basis 
commodity cost risk management
as melrose owns engineering businesses across various 
sectors the cumulative expenditure on commodities is 
important the group addresses the risk of base commodity 
costs increasing by wherever possible passing on the cost 
increases to customers or by having suitable purchase 
agreements with its suppliers which sometimes fix the price 
over some months into the future on occasions melrose  
does enter into financial instruments on commodities when  
this is considered to be the most efficient way of protecting 
against movements 
geoffrey martin 
9 march 2011 26 melrose plc annual report 2010 
board of directors
geoffrey martin 
group finance director
christopher miller 
executive chairman
david roper 
chief executive
simon peckham 
chief operating officer
age 59 he qualified as a chartered accountant with coopers  
lybrand following which he was an associate director of  
hanson plc in september 1988 he joined the board of wassall plc 
as its chief executive between october 2000 and may 2003  
he was involved in private investment activities mr miller was 
appointed as an executive director of melrose on 29 may 2003  
he is currently nonexecutive director of tmo renewables limited
age 60 he qualified as a chartered accountant with peat marwick 
mitchell following which he worked in the corporate finance 
divisions of sg warburg  co limited bzw and dillon read in 
september 1988 he was appointed to the board of wassall plc 
and became its deputy chief executive in 1993 between october 
2000 and may 2003 he was involved in private investment activities 
and served as a nonexecutive director on the boards of two 
companies mr roper was appointed as an executive director  
of melrose on 29 may 2003
age 48 he qualified as a solicitor in 1986 in 1990 he joined wassall 
plc and became an executive director of wassall plc in 1999 
from october 2000 until may 2003 he worked for the equity 
finance division of the royal bank of scotland and was involved  
in several high profile transactions mr peckham was appointed as 
an executive director of melrose on 29 may 2003
age 43 he qualified as a chartered accountant with coopers  
lybrand where he worked within the corporate finance and audit 
departments in 1996 he joined royal doulton plc and was group 
finance director from october 2000 until june 2005 during this 
time he was involved in projects including raising public equity 
debt refinancings and the restructuring and outsourcing of the 
manufacturing and supply chain mr martin was appointed as an 
executive director of melrose on 7 july 2005 melrose plc 27
business performance governance financials shareholder information
annual report 2010 
miles templeman 
senior nonexecutive  
director
perry crosthwaite 
nonexecutive director
john grant 
nonexecutive director
age 63 he has been a director of several consumer goods and 
retailing companies he was managing director of threshers 
offlicences between 1985 and 1988 and managing director of 
whitbread beer company between 1990 and 2001 mr templeman 
was chief executive officer of hp bulmer holdings plc from 
january 2003 to july 2003 and nonexecutive chairman of 
restaurant chain yo sushi between 2003 and 2008 he has also 
held a number of other nonexecutive directorships and was 
appointed as a nonexecutive director of melrose on 8 october 
2003 since october 2004 mr templeman has held the position  
of director general of the institute of directors he is currently 
nonexecutive chairman of shepherd neame the kentish  
family brewer
age 62 he has over 30 years’ experience as a director in the city  
of london he was a founding director of henderson crosthwaite 
institutional brokers limited serving on the board until its 
acquisition by investec bank in 1998 he became a director of 
investec bank uk limited and chairman of the investment 
banking division until his retirement in 2004 mr crosthwaite was 
appointed as a nonexecutive director of melrose on 26 july 2005 
he is currently chairman of jupiter green investment trust plc and 
a nonexecutive director of toluna plc investec limited and 
investec plc
age 65 mr grant spent his executive career in a variety of senior 
international roles within the automotive industry and other 
engineering businesses he was chief executive of ascot plc 
between 1997 and 2000 prior to that mr grant was group finance 
director of lucas industries plc subsequently lucasvarity plc 
between 1992 and 1996 he previously held several senior strategy 
and finance positions with ford motor company in europe and the 
usa mr grant was appointed as a nonexecutive director of 
melrose on 1 august 2006 he is currently chairman of gas turbine 
efficiency plc and torotrak plc and nonexecutive director of  
mhp sa and pace plc 
audit committee 
miles templeman chairman
perry crosthwaite 
john grant
during 2010 the audit committee  
met three times
remuneration committee 
perry crosthwaite chairman
miles templeman 
john grant
during 2010 the remuneration committee  
met twice
nomination committee 
miles templeman chairman
perry crosthwaite 
john grant
christopher miller 
during 2010 the nomination committee  
met twice
more information see pages 37 38 more information see page 38 more information see page 38 28 melrose plc annual report 2010 
directors’ report
business reviews
during the year in many of the group’s business units focus 
has been placed on the development of new product lines this 
has helped to ensure that businesses remain at the forefront  
of technological advances within defined market sectors and 
continue to meet specific customer demand
the group continues to invest in the building of new factory 
facilities particularly in the far east with hawker siddeley 
switchgear dynacast and marelli opening or in the process  
of opening new plants in china indonesia and malaysia 
respectively elsewhere investment in the group’s factories 
continues at bridon a programme to upgrade the wire mill in 
doncaster is due for completion next year with further 
investment also planned at their german north american and 
chinese facilities in order to increase manufacturing capability
an emphasis has also been placed on developing leaner 
manufacturing processes where possible and exploring 
outsourcing opportunities to other areas of the world 
predominantly the far east truth made the decision to 
outsource more of its lower margin products to china during 
2009 and the benefits of this began to materialise in 2010  
over time truth plan to further develop this strategy 
within brush focus was placed on the aftermarket business and 
this resulted in a 25 increase in aftermarket sales when 
compared to 2009 this performance was assisted by the 
purchase of generator  motor services of pennsylvania llc 
“gms” a us company based in pittsburgh in february 2010
the development of growth opportunities in emerging markets 
continued to be a key focus within the group during the year 
especially in china indonesia malaysia and other parts of asia 
some business units are also exploring the opportunities for 
growth within south america to capitalise on the rapidly growing 
sales opportunities that may be available within these markets
the cost base of all business units was kept under constant 
review during 2010 businesses have continued to build on the 
various cost reduction initiatives introduced in 2009 with several 
restructuring projects taking place the group also continues to 
regularly review its pension and benefit liabilities and reduce 
volatility where possible a decision has recently been taken to 
close the largest defined benefit scheme of the group the fki 
uk pension plan to future accrual on 28 february 2011 this 
decision is expected to result in the funding deficit of this scheme 
being removed earlier than may have otherwise been expected
the directors remain focused on identifying the next business 
opportunity in order to create further value for shareholders
the chairman’s statement on pages 4 and 5 together with  
the chief executive’s review on pages 6 and 7 business reviews 
on pages 8 to 18 and finance director’s review on pages 19  
to 25 describe the principal activities operations financial 
performance financial position and likely future prospects  
of the group the results of the group are set out in detail  
in the financial statements on pages 47 to 51 and in the 
accompanying notes
the company is required by the companies act 2006 to set out 
in this report a fair review of the development and performance 
of the group during the year the position of the group at the 
end of the year and a description of the principal risks and 
uncertainties facing the group the information that fulfils these 
requirements can be found within the chief executive’s review 
business reviews finance director’s review and in this 
directors’ report the finance director’s review also discusses 
the key performance indicators that management use 
the directors of melrose plc present their report and the 
audited financial statements of the group for the year ended  
31 december 2010
strategy and principal activities 
melrose plc has a strategy to acquire industrial businesses 
enhance their performance and realise their value in the  
medium term further details of each part of the strategy are 
shown below
    acquisition strategy
melrose aims to acquire industrial businesses that in the 
opinion of the directors have the potential to improve both 
financially and operationally and create value for shareholders 
in order for this acquisition strategy to be successful businesses 
are targeted that have strong headline fundamentals such as 
high quality products or a leading market share to generate 
sustainable cash flows and achieve profit growth
  the executive directors have extensive experience of 
identifying and evaluating acquisition opportunities in both 
quoted and unquoted companies within the uk and overseas
    performance improvement strategy
the company is not a passive investor in the businesses that 
it acquires the directors and senior management team have 
a handson relationship with each acquired company by 
working closely with their divisional senior management teams 
in developing the long term strategic plans of the business as 
well as having regular input on restructuring decisions capital 
expenditure and working capital management the company 
is fully committed to investing within the businesses it acquires 
in order to fully exploit their operational and strategic 
strengths a natural part of this process involves the disposal 
of noncore businesses
  generally melrose will retain acquired companies for a period  
of between three to five years
    disposal strategy
once the performance improvement strategy has been 
completed at the appropriate time each business will be 
disposed of in order to return any value creation to shareholders
  the directors are experienced in being able to recognise the 
appropriate time in the business cycle for disposal in order  
to provide funding for future acquisitions and return funds  
to investors
the company has already delivered significant value to 
shareholders for example the acquisition of the mckechnie 
group in may 2005 and its subsequent restructure resulted in 
the sale of two mckechnie divisions in 2007 two years after 
they were acquired which allowed the company to repay  
£173 million of debt and return £220 million to shareholders
the largest acquisition by the group to date has been that of 
fki plc in july 2008 for a total consideration of £9704 million 
this increased the size of the melrose group by approximately 
six times there has been significant ongoing restructuring 
within fki since acquisition including the disposal of several 
noncore businesses in june 2009 the company sold  
its north america operations of the logistex division for  
us 40 million the european operations of logistex  
were also sold for €30 million in august 2009 
post year end the company has disposed of three noncore 
businesses being madico logistex uk and brush traction for 
£207 million  business performance governance financials shareholder information
melrose plc 29 annual report 2010 
the company has taken out an insurance policy in respect  
of those liabilities for which the directors may not be 
indemnified neither the indemnity nor the insurance provides 
cover in the event that a director is proved to have acted 
dishonestly or fraudulently
directors’ responsibilities
the statement of directors’ responsibilities in relation to the 
consolidated financial statements is set out on page 44
share capital
details of the structure of the company’s share capital and 
rights attached to the company’s shares are set out on this  
and the following page in compliance with the requirements  
of section 992 of the companies act 2006
no changes were made to the share capital of the company 
during the year the number of ordinary shares and 2009 
incentive shares in issue at the beginning and end of the year  
is shown below
 ordinary  
 shares
 2009  
 incentive   
 shares
1 january 2010 and  
 31 december 2010 497586779 50000
the ordinary shares and 2009 incentive shares represent 
952 and 48 respectively of the total nominal value of all 
shares in issue
ordinary shares
the ordinary shares have a nominal value of 02p and are 
traded on the london stock exchange
incentive shares
the 2009 incentive shares of £100 each have been awarded  
to directors and senior managers within the company together 
with ogier employee benefit trustee limited as trustee of  
the melrose plc employee benefit trust and replaced the 
share incentive scheme introduced in 2007 the rights attaching 
to the 2009 incentive shares are identical to those originally 
attached to the 2007 incentive scheme with the exception that 
the company may pay a dividend on the 2009 incentive shares  
as an alternative to converting them into ordinary shares and 
the award holders may not request early conversion in 2010 
andor 2011 
participants are entitled to either a cash dividend or a number 
of ordinary shares in the company based on an increase  
in shareholder value between the period of july 2007 and  
may 2012
the 2009 incentive shares do not confer a right to be paid  
an interim or final dividend or to vote at a general meeting  
on winding up the holders are entitled to participate in the 
company’s assets equal to an amount to which they would 
have been entitled if their 2009 incentive shares had crystallised 
as at the date of winding up further details of the 2009 
incentive shares can be found in the remuneration report  
on pages 40 and 41
further rights and obligations attaching to shares
the following summary is based on the company’s current 
articles as adopted at the agm on 13 may 2010
the subsidiary undertakings principally affecting the profits  
or net assets of the group in the year are listed in note 3 to  
the melrose plc uk company accounts
financial results
the group’s profit for the financial year attributable to members 
was £1411 million 2009 £795 million in addition there  
were minority interest gains of £02 million 2009 losses  
of £02 million
shareholder dividend
the directors are pleased to recommend the payment of a  
final dividend of 70p on 16 may 2011 to ordinary shareholders 
on the register at the close of business on 15 april 2011  
this dividend recommendation of the directors will be put  
to shareholders at the forthcoming annual general meeting 
“agm” of the company to be held on 12 may 2011
it is the intention of the board to maintain a progressive  
dividend policy where appropriate going forward
directors’ appointment and powers
the directors of the company as at the date of this report 
together with their biographical details are given on pages 26 
and 27 there were no changes to the board during the year
the company’s articles of association “the articles” give the 
directors power to appoint and replace directors under the 
terms of reference of the nomination committee any 
appointment must be recommended by the nomination 
committee for approval by the board the articles also require 
directors to retire and resubmit themselves for election at the 
first agm following their appointment furthermore at each 
agm one third of the directors are subject to retirement by 
rotation and must therefore submit themselves for reelection
the directors are responsible for managing the business of  
the company and may exercise all the power of the company 
subject to the provisions of relevant statutes to any directions 
given by special resolution and to the company’s articles 
powers relating to the issuing of shares and powers to purchase 
the company’s own shares are also included in the current 
articles and such authorities are submitted for approval by  
the shareholders at the agm each year
pursuant to sections 693 and 701 of the companies act 2006 
and a special resolution passed at the agm in 2010 the 
company is authorised to purchase its own shares limited to  
an aggregate maximum number of 49758677 ordinary shares 
the company has not purchased any ordinary shares pursuant 
to this authority the resolutions being proposed at this year’s 
agm include a resolution to renew this authority
directors’ interests and remuneration
information on directors’ beneficial interests including those  
of connected persons within the meaning of section 252 of the 
companies act 2006 in the shares of the company is shown  
in the remuneration report on pages 40 to 43
no director had a material interest at any time during the year in 
any contract other than a service contract with the company 
or any of its subsidiary undertakings
directors’ indemnities
the directors have the benefit of an indemnity from the 
company in respect of liabilities incurred as a result of their 
office this indemnity is provided under the articles and satisfies 
the indemnity provisions of the companies act 2006 30 melrose plc annual report 2010 
directors’ report 
continued
transfer of shares
subject to the articles any member may transfer all or any of 
his shares in any form which the board may approve and the 
transfer shall be executed by or on behalf of the transferor 
subject to the articles and the requirements of any relevant 
investment exchange the board may in its absolute discretion 
refuse to register a transfer of a share which is not a fully paid 
share or on which the company has a lien the board may also 
decline to register a transfer unless the transfer is i in respect 
of only one class of shares ii in favour of not more than four 
joint transferees or renouncees iii duly stamped if required 
and iv delivered for registration to the registered office or such 
other place as the board may decide accompanied by the 
certificate for the shares to which it relates and such other 
evidence as the board may reasonably require to prove the  
title of the transferor 
substantial shareholdings 
as at 9 march 2011 the company has been advised of the 
following substantial interests in the ordinary share capital  
of the company 
shareholder
 direct  
 holding
 indirect  
 holding 
blackrock investment  
 management – 53943970 1084
standard life investments 25677592 18609404 890
ameriprise financial – 38609973 776
lloyds banking group plc 2719814 26277830 583
artemis investment management 24866258 – 499
legal  general group plc 19835016 – 399
ignis investment services limited – 19793953 398
newton investment  
 management limited – 15078604 303
corporate governance
the corporate governance report is included as a separate 
report on pages 36 to 39
risks and uncertainties
the group operates a variety of risk management processes 
designed to take into account the identification management 
and mitigation of business risk where both short term and long 
term considerations are monitored
due to the fact that melrose operates within such a wide range 
of specialised engineering markets across a range of customers 
suppliers labour markets and economic conditions the 
directors believe that many of the business risks are diversified 
the fact that a large proportion of the group’s business units 
operate within different parts of the world reduces the impact  
of local economic conditions that may be experienced
the directors have identified a variety of financial risks that may 
affect the group from time to time these include liquidity risk 
finance cost risk exchange rate risk and commodity costs  
the financial risk management objectives and policies in relation 
to the use of financial instruments are described in the finance 
director’s review on pages 19 to 25
other risks that have been identified within the group relate to 
the financial viability of key customers product and employer’s 
liability claims management of health and safety environmental 
matters and intellectual property risks further information in 
relation to these risks is provided within some of the remaining 
sections of the directors’ report additionally any key 
commercial and economic risks are covered in each of the 
business reviews on pages 8 to 18
voting
only ordinary shares have voting rights attached in a general 
meeting of the company subject to the provisions of the current 
articles and to any special rights or restrictions as to voting 
attached to any other class of shares in the company of which 
there are currently none
    on a show of hands every member present shall have one 
vote and 
    on a poll every member who is present in person or by proxy 
shall have one vote for every share of which he is the holder
the company’s articles were amended at last year’s agm to 
take account of shareholders’ rights regulations in relation to 
proxy voting as such the articles now provide that each proxy 
appointed by a member has one vote on a show of hands 
unless the proxy is appointed by more than one member in 
which case the proxy has one vote for and one vote against if 
the proxy has been instructed by one or more members to vote 
for the resolution and by one or more members to vote against 
the resolution
no member shall be entitled to vote at any general meeting or 
class meeting in respect of any shares held by him if any call or 
other sum then payable by him remains unpaid currently all 
issued shares are fully paid 
the melrose plc employee benefit trustee holds 25279 
ordinary shares at a nominal value of 02p per share resulting 
from the crystallisation of the original incentive scheme in 
august 2007 the fki employee benefit trust holds a further 
158114 ordinary shares at a nominal value of 02p per share 
arising from the melrose acquisition of fki plc the remuneration 
committee may direct how the voting rights of those shares  
are exercised 
deadlines for voting rights 
full details of the deadlines for exercising voting rights in  
respect of the resolutions to be considered at the agm to be 
held on 12 may 2011 are set out in the notice of agm on pages 
97 to 99
dividends and distributions 
subject to the provisions of the companies act 2006 the 
company may by ordinary resolution declare a dividend to be 
paid to the members but no dividend shall exceed the amount 
recommended by the board the board may pay interim 
dividends and also any fixed rate dividend whenever the 
financial position of the company in the opinion of the board 
justifies its payment all dividends shall be apportioned and paid 
pro rata according to the amounts paid up on the shares 
the board may deduct from a dividend or other amounts 
payable to a person in respect of their shares amounts due from 
him to the company on account of a call or otherwise in relation 
to such shares
liquidation 
under the current articles if the company is in liquidation the 
liquidator may on obtaining any sanction required by law
    divide amongst the members in kind the whole or any part of 
the assets of the company or
    vest the whole or any part of the assets in trust for the benefit 
of members as the liquidator shall determine business performance governance financials shareholder information
melrose plc 31 annual report 2010 
payments to suppliers 
melrose has decided not to utilise standard protocols in respect 
of payments to suppliers given the international nature of the 
group’s operations it is the responsibility of each business unit 
to agree the exact terms and conditions of transactions with 
their suppliers and these arrangements are adhered to 
provided that suppliers meet their contractual commitments 
the company as a holding company did not have any material 
amounts owing to trade creditors at 31 december 2010
intellectual property
each business unit is responsible for the protection and 
enforcement of its intellectual property “ip” rights through  
the use of external agents and it is therefore managed on a 
decentralised basis however the directors recognise the 
importance of ip within the group and seek to protect and 
enforce such rights where necessary internal ip audits are 
conducted by the group on a periodic basis within each of  
the business units
employment policies
due to the diverse nature of the group business units  
are required to manage their employment matters on a 
decentralised basis and therefore responsibility for the adoption 
of employment policies and practices sits at a local business 
unit level this position ensures that policies and procedures 
meet both site and local regulatory requirements taking into 
account the size and nature of the businesses
each business unit is responsible for setting and measuring its 
own key performance indicators “kpis” and as such these vary 
throughout the group however such measurements will 
generally include absenteeism punctuality headcount and 
employee relations issues any concerns or adverse trends  
are responded to in a timely manner 
the group recognises its responsibilities for the fair treatment  
of all its employees in accordance with legislation applicable to 
the territories within which it operates having regard to their 
skills and abilities the group gives full and fair consideration to 
applications for employment received from disabled persons 
further and so far as particular disabilities permit the group  
will give employees disabled during their period of employment 
continued employment in the same job or if this is not 
practicable a suitable alternative job equal opportunities for 
appropriate training career development and promotion are 
available to all employees regardless of any physical disability 
gender religion race nationality sexual orientation or age
employee involvement consultation and development
the directors attach great importance to good labour relations 
employee involvement and employee development the nature 
of the group’s activities places the responsibility for employment 
practices with local management in a manner appropriate  
to each business 
a culture of clear communication and employee consultation  
is inherent in the group’s businesses employee briefing 
sessions are held on a regular basis to communicate strategy 
key changes financial results achievements and other 
important issues affecting operations regular appraisals 
employee surveys notice boards intranet sites team meetings 
suggestion boxes and newsletters are also used to 
communicate with employees 
various procedures are in place within the group to provide 
internal control and risk management and these are explained  
in more detail within the corporate governance report on  
pages 36 to 39
key customers
the company seeks to limit the risk of business failure within its 
key customer base through an ongoing review process which 
has particular regard for the financial strength of such key 
business customers however the company considers that the 
loss of any one key customer would not have a material effect 
on the group’s results even though it is acknowledged that 
such a loss could be material to an individual business unit
significant agreements and change of control
with the exception of the group’s banking facilities the 2009 
incentive share scheme and the divisional long term incentive 
schemes there are no other agreements that take effect alter 
or terminate upon a change of control of the company following 
a takeover bid that are considered to be significant in terms of 
their potential impact on the business of the group as a whole 
on 9 march 2011
upon the acquisition of fki plc the group arranged a 
syndicated £750 million facility comprising a term loan and 
revolving credit facility maturing in april 2013 in the event of a 
change of control of the company following a takeover bid the 
company and lenders under this facility are obliged to enter into 
negotiations to determine whether and if so how to continue 
with the facility there is no obligation for the lenders to continue 
to make the facility available for more than 30 days beyond any 
change of control failure to reach agreement with parties on 
revised terms could require an acquirer to put in place 
replacement facilities
in the event of a takeover of the company the 2009 incentive 
shares convert into ordinary shares or an entitlement to a 
dividend paid in cash the conversion being based upon the 
offer price of the company’s ordinary shares as calculated on 
the date of the change of control of the company if part or the 
entire offer price is not in cash the remuneration committee 
will determine the value of the noncash element having been 
advised by an investment bank of repute that such valuation is 
fair and reasonable
product and employer’s liability claims
the group seeks to assess its ongoing risks in relation to 
potential future liabilities arising from insurance claims via  
the use of external actuarial projections to measure material 
exposures an analysis of historic claims experience is used to 
analyse risks in relation to less significant exposures actuarial 
projections and claims history experience are regularly analysed 
by management and key issues trends and statistics are also 
discussed at board level
risks within the group relate to potential future liabilities arising 
from product disease including asbestos employer’s liability and 
workers’ compensation claims provisions in relation to such risks 
are recognised in the group’s balance sheet where appropriate 
note 30 to the consolidated financial statements provides further 
information with regard to contingent product liabilities
a number of businesses have iso 9001 and iso 16949 
certifications for their quality management systems which also 
helps to ensure their products and processes are of a recognised 
quality reducing the risk of product claims some business units 
are also certified to international health and safety standards via 
iso 18001 which helps to further ensure that risks in relation to 
employer’s liability claims are kept to a minimum 32 melrose plc annual report 2010 
directors’ report 
continued
pensions
companies within the group operate various pension schemes 
around the world the following defined benefit schemes are 
material to the group
as at 31 december 2010
name of plan status
 assets 
 £m
 liabilities
 £m
 number  
 of  
 members
fki uk  
pension  
plan
closed to new members  
in october 2001  
closed to the accrual  
of future benefits on  
28 february 2011
 5492  
 2009  
 5087
 6278  
 2009  
 6188
 10753  
 2009  
 10953
fki us  
pension  
plan
closed to new members  
in april 2003 closed for  
future accrual in 2009
 1933  
 2009  
 1744
 2131  
 2009  
 1914
 8123  
 2009  
 8532
mckechnie 
uk pension 
plan
closed to new members  
in 2003 closed for future  
accrual in 2005
 1438  
 2009  
 1281
 1419  
 2009  
 1402
 3311  
 2009  
 3362
the fki uk pension plan “fki uk plan” is a uk defined benefit 
pension plan with fki limited as its principal employer  
the primary liability for funding rests with the participating 
employers which currently pay £185 million annually into the 
fki uk plan this is expected to remove the funding deficit by 
31 december 2022 when the contribution levels were last 
formally assessed as at 31 december 2008 the fki uk plan 
closed to future accrual on 28 february 2011 and this is 
expected to lead to the funding deficit being removed earlier 
than would otherwise have been the case
the fki us pension plan is a defined benefit pension plan 
covering several of fki’s us business units the primary liability 
for funding the fki us pension plan rests with the participating 
employers the company and trustees have reviewed the 
funding requirements of the fki us pension plan based on its  
1 january 2009 actuarial valuation and no pension contributions 
are required as it is expected that the deficit will be eliminated 
over time via excess asset returns unlike the uk pension plans 
deferred member liabilities do not increase by inflation each year
the mckechnie uk pension plan “mckechnie uk plan” is a uk 
defined benefit pension plan with mckechnie limited as its 
principal employer the primary liability for funding rests with the 
participating employers the company and trustees reviewed 
the funding of the mckechnie uk plan as part of the actuarial 
valuation as at 31 december 2008 and it was agreed that the 
participating employers would contribute £46 million annually 
into the mckechnie uk plan the company has guaranteed the 
funding of the mckechnie uk plan on an ongoing basis 
health and safety
the directors regard health and safety and the efficient 
management of such risks as a key priority within the group 
they regularly review health and safety performance statistics 
within each of the business units the group has a policy to 
ensure that the directors are made aware of any serious health 
and safety incidents wherever they occur in the world as soon 
as possible to ensure that suitable investigations and corrective 
action can be taken without delay health and safety is also 
covered at every quarterly board meeting of the group
each business unit is responsible for setting its own health and 
safety policies and procedures in accordance with local health 
and safety legislation most businesses strive to achieve best 
practice in terms of what is suitable and practical for the size 
and nature of their operations several of the group’s business 
employee engagement at brush turbogenerators’ 
loughborough site was a key priority in 2010 and they joined 
the ‘innovate workplaces’ scheme initiated by unite the largest 
union in the uk brush and other participating companies are 
committed to creating site committees and to actively 
addressing employee issues to assist in developing 
organisational performance and communication following the 
development of a focus group and a subsequent employee 
survey it was decided to introduce a quarterly employee 
magazine falcon news in march 2010 designed to encourage 
networking between different parts of the business and to keep 
all employees updated on a variety of company issues 
extensive training is available to all staff and is actively 
encouraged to ensure a high standard of skill is maintained 
across the group crosstraining programmes are also in place 
at a number of units the importance of training extends beyond 
onthejob training and also focuses on enhancing personal 
development apprenticeship programmes are in place at the 
majority of sites which help to assist with succession planning 
in locations where there is an ageing workforce employees are 
encouraged to think in an innovative manner across the group 
within the business unit of harris the ‘new product 
development group’ was formed last year an inhouse initiative 
designed to encourage employees to deliver new products to 
market thus enhancing teamwork and transfer of knowledge 
within the workforce it resulted in four new products being 
launched in 2010 which were substantially more efficient in 
terms of energy use than prior production models and thus  
also provided environmental benefits
a training academy has recently been introduced at the  
brush turbogenerators site in loughborough to ensure that 
classroom style facilities are made available to enhance the 
skills of existing employees and to ensure that future apprentices 
can benefit from a structured learning environment these new 
training facilities are also being used to carry out employee 
training courses in relation to the growing aftermarket customer 
service team in order to further improve customer focus 
elsewhere within brush turbogenerators the plant in the czech 
republic has plans to implement a variety of training initiatives 
during the year to include opportunities for selected managers 
to study open university courses as well as training in relation 
to work related knowledge leadership and project management
various other business units have training and employee 
development initiatives planned for 2011 at bridon a new 
‘bridon leader’ management development programme is 
underway designed to enhance leadership skills within the 
business other employee initiatives taking place within some  
of the business units include executive team development 
programmes the roll out of local level employee communication 
surveys cultural and behavioural change programmes and  
a variety of succession planning initiatives 
a significant number of employees are members of unions  
and some businesses operate works councils both of which 
are used for consultation and dissemination of information  
as appropriate
the directors have monthly meetings with divisional senior 
management and visit the sites on an adhoc basis to 
communicate with the wider group financial results for the  
half year and full year are discussed with the group’s senior 
management team and group developments are 
communicated to the businesses as appropriate employee 
involvement in and commitment to the group’s profitability is 
encouraged through appropriate bonus schemes business performance governance financials shareholder information
melrose plc 33 annual report 2010 
the environment
the directors fully understand the importance of the group’s 
environmental responsibilities and are committed to ensuring 
that its operations have a minimum adverse effect on  
the environment many of the group’s business units are 
developing environmental policies and procedures in line with 
best practice guidelines via ongoing improvements to local 
processes to reduce the impact of their activities a number of 
the business units have achieved or are currently in the process 
of achieving the high standards required to obtain iso 14001 
environmental management systems certification in addition 
the uk subsidiaries comply with the uk packaging waste 
regulations and reach registration evaluation authorisation 
and restriction of chemicals as appropriate 
although there are no standardised environmental kpis 
currently used within the group each of the business units fully 
understand the importance of monitoring the impact of their 
operations on the environment a range of kpis are used as 
environmental measures including energy consumption carbon 
dioxide co 2 emissions water consumption water contamination 
waste disposal solid and liquid waste generation recycling and 
volatile organic compound emissions environmental 
performance is measured via the use of kpis in order that each 
of the business units can plan for yearonyear improvements
a variety of business units have made substantial capital 
investments during the year with regard to environmental 
initiatives to reduce energy consumption water usage and 
waste at bridon’s doncaster site steps have been taken to 
substantially reduce the use of hydrochloric acid as a pickling 
agent by the end of 2012 this in turn will reduce the amount  
of waste created by the cleaning process as well as preserving 
local water supplies in conjunction with this strategy bridon are 
also investing in a new “triple rinse system” to conserve water 
used to rinse product and recover acid other environmental 
initiatives at bridon include the utilisation of variable speed 
drives on pumps within the effluent plant which had previously 
operated on a constant full power setting thus substantially 
reducing the amount of electricity required to operate such 
machinery this initiative will be further developed during 2011 
via the introduction of variable speed drives on pumps used 
within bridon’s bore hole extraction process
at truth investment was made last year in a project to rebuild 
waste water treatment facilities to more efficiently control the 
treatment of waste water and reduce consumption levels  
truth also recruited an environmental engineer to further  
build on the ‘best in class’ environmental reputation it has 
established over the past few years
within the brush turbogenerators factory at loughborough 
efforts have been made during the last couple of years to 
reduce the amount of volatile organic compounds solvent 
emissions being expelled from the various paint processes  
the most significant benefits of this initiative have been achieved 
through the increased use of water based paints and lower 
solvent content products
each of the business units have made their employees aware  
of the role they play in ensuring the environmental impact of the 
company is kept to a minimum and in safeguarding the future  
of the environment for example the brush turbogenerators 
plant in the czech republic joined the “green company” 
project a couple of years ago this is an initiative designed to 
develop the principles of the eu waste electrical and electronic 
equipment directive to set collection recycling and recovery 
targets for all types of electrical equipment activities under this 
scheme were extended last year to include the recycling of 
units already hold iso 18001 certification the internationally 
recognised assessment standard for occupational health and 
safety management systems both brush turbogenerators 
loughborough site and harris us achieved this status during 
the year following rigorous health and safety audits at brush 
turbogenerators this process also led to a variety of health and 
safety training courses being organised at director and team 
unit manager level together with the introduction of additional 
refresher courses for activities such as manual handling and 
fork lift truck usage at bridon they have a medium term 
strategy to achieve iso 18001 international health and safety 
standards for all their sites 
at truth’s factory in minnesota usa investment was made to 
replace the salt paint stripping system towards the end of 2009 
the new system became operational during the early part of 
2010 and resulted in considerable improvements to onsite 
health and safety the original equipment required regular 
cleaning to remove sludge from the tank the new system  
has minimal cleaning requirements and therefore substantially 
reduces the health and safety risks associated with this type  
of work
divisional managers within each business unit have 
responsibilities to ensure that health and safety remains a key 
focus and to ensure that active procedures and monitoring 
systems are in place to provide substance to written policies 
detailed health and safety plans are set by most businesses each 
year to determine annual targets and improvement initiatives 
all business units have an established health and safety 
committee “hs committee” structure in place such 
committees meet on a regular basis and are made up of 
representatives from both management and shop floor level 
personnel each of the hs committees have wide ranging 
responsibilities which vary from business unit to business unit 
and include the review of reported incidents and the monitoring 
of incident trends these hs committees are also responsible 
for ensuring that corrective measures are implemented when 
accidents occur and that all incidents whether or not they are 
deemed reportable under local legislation are given due attention 
one of the key responsibilities for these hs committees is to 
carry out regular tours of the premises in which they work in 
order to ensure compliance with local policies and procedures 
these tours also identify potential hazards for which counter 
measures can be identified to prevent accidents from 
happening each hs committee recommendation is followed 
up at the next committee meeting to ensure that issues are 
resolved additionally operations are audited by the hs 
committees at least annually and reports of performance and 
recommended improvements are prepared and circulated to the 
divisional senior management teams divisional managers are 
provided with detailed health and safety reports on a frequent 
basis to ensure that such matters are given high visibility and 
that improvements are authorised and implemented quickly 
although there are no standardised health and safety kpis 
currently used across the group the business units have 
established kpi measures suitable for use within their  
individual businesses as a minimum requirement these kpi 
measurements include monitoring the number of incidents  
and lost time injuries going forward the company is working 
with each of its business units to develop group wide health 
and safety kpis in order to gain consistency in terms of 
measurement and analysis once kpi measurements have  
been agreed each business unit will be given annual reduction 
targets to achieve  34 melrose plc annual report 2010 
directors’ report 
continued
development that occurred in 2010 the associated costs were 
expensed during the year rather than being capitalised in line 
with the group’s accounting policies on page 54 the group  
will continue to invest in research and development that has  
a suitable return
corporate social responsibility
the group recognises that its operations potentially impact a 
wide variety of stakeholders in terms of social environmental 
and ethical matters including employees customers suppliers 
and local communities 
many of the group’s business units have social and  
ethical policies with responsibility for communication and 
implementation resting with relevant senior managers  
such policies apply and extend to local law and standards  
and as a minimum include equal opportunities and anti
discrimination policies
applications for employment by disabled persons are always 
fully considered by the group taking into account job specific 
requirements and applicant aptitude it is the policy of the group 
that in recruitment training career development and promotion 
the treatment of disabled persons should as far as possible be 
identical to that of other employees
the group regards employee training and advancement as an 
essential element of industrial relations disputes and days lost 
through strike action are negligible 
the majority of the businesses provided community support 
during the year with efforts ranging from charitable donations to 
voluntary assistance and fund raising support is given to local 
schools by offering traineeships and work experience to students 
the company will continue to invest in its businesses during its 
ownership enhancing their reputation within the markets and 
communities in which they operate
charitable and political donations
the group paid £21550 2009 £8757 to uk charities during 
the year principally to local charities serving the communities  
in which the group operates there were no political donations 
made during the year 2009 nil 
auditor
under the companies audit investigation and community 
enterprise act 2004 auditors have the right to access all 
information necessary for the performance of their duties as 
auditor and the duties of directors in this regard are clarified
so far as each director is aware there is no relevant audit 
information of which the auditor is unaware and the directors 
have taken all the steps which they ought to have taken as 
directors to make themselves aware of any relevant audit 
information and to establish that the company’s auditor is  
aware of that information
this confirmation is given and should be interpreted in 
accordance with the provisions of section 418 of the companies 
act 2006
deloitte llp have expressed their willingness to continue in 
office as auditor accordingly a resolution will be proposed at 
the agm of the company to reappoint deloitte llp as auditor 
of the company and to authorise the directors to determine 
their remuneration
going concern
the group’s business activities together with the factors likely 
to affect its future development performance and position are 
fluorescent light tubes and to encourage employees to correctly 
dispose of old electrical appliances and batteries 
besides the various high profile environmental investments 
commissioned during the year a variety of small scale local 
initiatives were also introduced at bridon’s factory in doncaster 
the introduction of movement detectors to control the use of 
lighting in unused areas of the factory has resulted in electricity 
savings each month this initiative is due to be rolled out in  
other areas of the factory shortly an analysis at the brush 
turbogenerators site in holland is underway to identify locations 
of high gas and energy consumption within the plant in order to 
set reduction targets
looking forward into 2011 various environmental improvement 
initiatives are planned some of which build on the initiatives 
introduced in 2010 at bridon’s factory in doncaster a feasibility 
study was carried out in partnership with the carbon trust last 
year to consider what opportunities may exist in relation to the 
reduction of electricity usage via the process of heat recovery 
this involves channelling energy created via the various furnaces 
and galvanising systems into steam which in turn can be used 
for processing heat thus reducing the need for gas to power 
the factory’s boiler systems the research process will continue 
through the year 
in april 2010 the carbon reduction commitment energy 
efficiency scheme “crc” a new mandatory climate change 
and energy saving scheme was introduced in the uk crc is 
part of the uk’s strategy for improving energy efficiency and 
reducing co2 emissions as set out in the climate change act 
2008 and requires uk companies to purchase carbon 
allowances based on their energy usage the group believes 
that the introduction of the crc scheme will further complement 
each of the uk business units in striving to reduce their carbon 
footprint and assist in the measurement and ongoing reduction 
of energy usage the company has been proactive in preparing 
for both the scheme’s implementation and ongoing compliance 
as part of this process external consultants have been appointed 
to act as the group’s crc advisors 
a group registration in the crc was successfully obtained in 
2010 for those businesses identified as qualifying and requiring 
registration several business units were exempt from registration 
because they already had climate change agreements in place
environmental liabilities
the directors seek to ensure that all environmental risks  
are closely managed by external environmental specialists  
in conjunction with internal management the environmental  
laws of certain jurisdictions impose obligations to remediate 
contaminated sites in relation to sites both currently and 
previously owned by the group
the company secretary is made aware of all major environmental 
liabilities that may occur within any of the business units the 
board are also regularly updated on such matters all costs 
incurred by the group with regard to environmental liabilities are 
monitored with provisions being made as appropriate 
research and development
continuous investment is made within the group in relation to  
the research and development of new designs products and 
processes this helps to ensure that each business unit  
remains at the forefront of technological advances and is able  
to meet the everchanging demands of its customers details  
of some of the new products currently being introduced to  
the market are included within the chief executive’s review  
on pages 6 to 18 due to the nature of the research and  business performance governance financials shareholder information
melrose plc 35 annual report 2010 
the directors consider appropriate to deal with fractions  
and overseas requirements and otherwise up to a maximum 
nominal value of £49758 representing approximately  
5 per cent of the company’s issued ordinary share capital  
as at 9 march 2011 which is in accordance with the relevant 
guidelines for the company
if approved the section 551 authority and the section 570 
authority will expire at the conclusion of next year’s agm or if 
earlier at the close of business on 30 june 2012 the directors 
have no present intention of exercising the section 551 authority 
or the section 570 authority
resolution 10 will seek to renew the authority conferred on the 
company to purchase its own shares pursuant to sections 693 
and 701 of the companies act 2006 this authority is limited to 
an aggregate maximum number of 49758677 ordinary shares 
representing approximately 10 per cent of the company’s 
issued ordinary share capital as at 9 march 2011 this power 
will expire at the conclusion of next year’s agm or if earlier at 
the close of business on 30 june 2012 the maximum price 
which may be paid for an ordinary share will be an amount 
which is not more than 5 per cent above the average of the 
middle market quotation for an ordinary share as derived from 
the london stock exchange plc’s daily official list for the five 
business days immediately preceding the day on which the 
ordinary share is purchased the directors have no present 
intention of exercising all or any of the powers conferred by this 
resolution and will only exercise their authority if it is in the 
interests of shareholders generally
resolution 11 will seek shareholder approval to allow the 
company to continue to call general meetings other than 
agms on 14 clear days’ notice changes made to the 
companies act 2006 by the companies shareholders’ rights 
regulations 2009 the “shareholders’ rights regulations” have 
increased the notice period required for general meetings of the 
company to 21 days unless shareholders approve a shorter 
notice period subject to a minimum period of 14 clear days 
agms will continue to be held on at least 21 clear days’ notice
the approval will be effective until the company’s next agm 
when it is intended that a similar resolution will be proposed 
note that the changes to the companies act 2006 mean that in 
order to be able to call a general meeting on less than 21 clear 
days’ notice the company must make a means of electronic 
voting available to all shareholders for that meeting
recommendations
the board believes that each of the resolutions to be  
proposed at the agm is in the best interests of the company 
and its shareholders as a whole accordingly the directors 
unanimously recommend that members vote in favour of all  
of the resolutions proposed as they intend to do in respect  
of their own beneficial holdings
disclosures in the directors’ report
the corporate governance report business reviews and 
finance director’s review form part of the directors’ report
approved by the board of directors and signed on its behalf by
garry barnes 
secretary 
9 march 2011
set out in the business reviews on pages 8 to 18 the financial 
position of the group its cash flows liquidity position and 
borrowing facilities are described in the finance director’s 
review on pages 19 to 25 in addition notes 19 and 24 to the 
consolidated financial statements include the group’s policies 
and processes for managing its capital exposures to liquidity 
risk and financial risk management objectives as well as  
details of its financial instruments and hedging credit risk 
exposure is discussed in notes 16 and 24 to the consolidated 
financial statements
the group prepares regular business forecasts and monitors 
projected facility headroom and compliance with its banking 
covenants which are reviewed by the board forecasts are then 
adjusted for sensitivities which address the principal risks to 
which the group is exposed such as fluctuations in exchange 
rates between sterling and both the us dollar and the euro and 
best estimates of the possible impact of the macroeconomic 
environment on the group’s underlying trading results 
consideration is then given to the potential actions available  
to management to mitigate the impact of one or more of  
the sensitivities 
taking all this into consideration the group should be able  
to operate within the level of its current facility and remain 
covenant compliant for the foreseeable future being a period  
of at least twelve months from the date of approval of these 
financial statements 
after making appropriate enquiries the directors have a reasonable 
expectation that the company and the group have adequate 
resources to continue in operational existence for the foreseeable 
future accordingly they continue to adopt the going concern 
basis in preparing the annual report and financial statements
annual general meeting “agm”
the agm of the company will be held at barbersurgeons’ hall 
monkwell square wood street london ec2y 5bl at 1100am 
on 12 may 2011
resolutions dealing with the following special business will be 
proposed at the agm
resolution 8 will seek shareholder approval to renew the 
directors’ authority to allot shares or grant rights to subscribe 
for or convert any securities into shares pursuant to section 551 
of the companies act 2006 the “section 551 authority”  
the authority contained in paragraph a of the resolution  
will be limited to an aggregate nominal amount of £331724 
representing approximately one third of the company’s issued 
ordinary share capital as at 9 march 2011 
in line with guidance issued by the association of british insurers 
paragraph b of this resolution would give the directors authority 
to allot shares or grant rights to subscribe for or convert any 
securities into shares in connection with a rights issue up to an 
aggregate nominal amount equal to £663449 representing 
approximately twothirds of the company’s issued ordinary share 
capital as at 9 march 2011 as reduced by the nominal amount 
of any shares issued under paragraph a of this resolution
the company does not hold any treasury shares
resolution 9 will seek to renew the authority conferred on the 
board to allot equity securities of the company or sell any 
shares which the company may elect to hold in treasury for 
cash pursuant to section 570 of the companies act 2006 the 
“section 570 authority” without first offering them to existing 
shareholders in proportion to their existing shareholdings 
the authority is limited to allotments or sales in connection  
with preemptive offers subject to any arrangements that   36 melrose plc
corporate governance report
annual report 2010 
statement of compliance
the company supports the principles contained in the 2008 
combined code on corporate governance issued by the 
financial reporting council “the combined code”
the board is accountable to the company’s shareholders for 
good governance throughout the year ended 31 december 
2010 the company has complied with the provisions of section 
1 of the combined code and with the requirements of the 
disclosure and transparency rules “dtr” on audit committees 
and corporate governance statements the statements below 
describe how the company has applied the principles identified 
in the combined code and dtr directives 
the company is currently reviewing the uk corporate 
governance code in relation to financial years from 1 january 
2011 in light of amendments made to it by the financial 
reporting council during 2010 which will apply to financial  
years beginning on or after 29 june 2010
the board
members christopher miller executive chairman 
 david roper chief executive 
 simon peckham chief operating officer 
 geoffrey martin group finance director 
 miles templeman senior nonexecutive director 
 perry crosthwaite nonexecutive director 
 john grant nonexecutive director
all of the above directors served throughout the year
main responsibilities
    effectively and properly manage and control the company 
via a formal schedule of matters reserved for its decision
   determine and review company strategy and policy
    consider acquisitions disposals and asset requests for major 
capital expenditure
   review trading performance
   ensure that adequate funding and personnel are in place
   maintain sound internal control systems and
    report to shareholders and give consideration to all other 
significant financial matters
board responsibilities are undertaken in conjunction with senior 
management who in turn are responsible for the daytoday 
conduct of the group’s operations and for reporting to the 
board on items of significance and progress against objectives 
the board meets regularly during the year as well as on an 
adhoc basis as required by time critical business needs  
there were four scheduled board meetings held during the  
year and the attendance of each of the directors is shown  
on page 38 
board balance independence and performance
the board believes that the directors possess diverse business 
experience in areas complementary to the activities of the 
company biographies of the directors are shown on pages  
26 to 27 these biographies identify any other appointments  
held by the directors the only executive director to hold 
nonexecutive director appointments elsewhere is  
mr christopher miller who is a nonexecutive director of tmo 
renewables limited and is allowed to retain the remuneration 
he receives from that appointment
in accordance with the provisions of the combined code 
consideration has been given to the independence of all the 
nonexecutive directors and the board considers all the 
nonexecutive directors to be independent the nonexecutive 
directors are not entitled to any bonus or shares under the 2009 
incentive share scheme performance of the board and each 
committee is evaluated annually the chairman has held 
meetings with the directors including the senior independent 
nonexecutive director mr miles templeman to discuss the 
performance of individual executive directors and the board as 
a whole it was considered that the individual directors and the 
board as a whole were operating effectively directors 
determine whether there are any training requirements by 
completing an evaluation questionnaire during the year that  
is designed to identify any failures in the performance of the 
board and each of its committees the findings of the 2010 
evaluations were reviewed by the company secretary and 
feedback was provided to the board
all directors receive a formal and tailored induction shortly after 
their appointment directors are advised that they have access 
to the advice and services of the company secretary garry 
barnes who is responsible for ensuring that board procedures 
are followed and that applicable rules and regulations are 
complied with the board may seek independent legal and 
financial advice in the furtherance of their duties at the 
company’s expense 
a pack of briefing papers and an agenda are provided to each 
director in advance of each scheduled board or standing 
committee meeting the directors are able to seek further 
clarification and information on any matter from any other 
director or employee of the group whenever necessary 
decisions are taken by the board in conjunction with the 
recommendations of its committees and advice from external 
consultants advisors and senior management
director terms and conditions
the terms and conditions of the executive directors’ service 
contracts and the nonexecutive directors’ appointments are 
available for inspection at the company’s registered office  
the nonexecutive directors’ appointment letters are also 
available on the company’s website wwwmelroseplcnet
rotation of directors
in accordance with the company’s articles of association  
one third or the number nearest to but not less than one third 
of directors are required to retire and submit themselves for 
reelection at each annual general meeting “agm” of the 
company it is the policy of the board that nonexecutive 
directors are appointed for an initial term of three years 
following which their appointment will be reviewed
the directors proposed for reelection at the agm on  
12 may 2011 are mr simon peckham mr perry crosthwaite  
and mr geoffrey martin the board and nomination committee 
have carefully considered the time commitments required and 
the contribution made by each director both the nomination 
committee and the board are of the belief that the performance 
of each executive and nonexecutive director continues to be 
effective and that each director demonstrates commitment  
to his role  financials shareholder information
melrose plc 37 annual report 2010 
governance business performance
chairman and chief executive
the roles of the chairman and chief executive of the company 
are and will remain separate and distinct from one another in 
accordance with best practice and board policy
the chairman alone is responsible for the leadership of  
the board and for ensuring effective communication with 
shareholders together with the other executive directors  
the chief executive is responsible for strategic direction  
and decisions involving the daytoday management of the 
company these respective responsibilities are set out in writing 
and have been approved by the board who consider that the 
respective roles and responsibilities are clearly understood  
by both individuals and by the board as a whole 
committees of the board
in accordance with the provisions of the combined code the 
board has three standing committees the audit remuneration 
and nomination committees each of these includes the  
three independent nonexecutive directors the duties of the 
committees are set out in formal terms of reference these are 
available from the company secretary and on the company’s 
website wwwmelroseplcnet the company secretary acts as 
secretary to each of the committees 
audit committee
members miles templeman chairman 
 perry crosthwaite 
 john grant
main responsibilities
    review and monitor the integrity of the financial statements 
of the group including its half yearly accounts the annual 
report interim management and preliminary statements and 
any other formal announcements relating to the financial 
performance of the group
    keep under review the effectiveness of the group’s financial 
reporting internal controls risk management systems and 
compliance controls
    focus and challenge the consistency of accounting policies 
methods used to account for significant or unusual 
transactions and compliance with accounting standards
    review the group’s arrangements for its employees to raise 
concerns in confidence about possible wrongdoing in financial 
reporting in accordance with the company’s whistleblowing 
policy and
    develop implement and monitor the group’s policy on 
external audit and for overseeing the objectivity and 
effectiveness of the auditor
the board
christopher miller – executive chairman
david roper – chief executive
simon peckham – chief operating officer
geoffrey martin – group finance director
miles templeman – senior nonexecutive director
perry crosthwaite – nonexecutive director
john grant – nonexecutive director
remuneration committee
perry crosthwaite – chairman
miles templeman 
john grant
nomination committee
miles templeman – chairman
perry crosthwaite 
john grant 
christopher miller
audit committee
miles templeman – chairman
perry crosthwaite 
john grant
each member of the audit committee brings relevant financial 
experience from senior executive and nonexecutive positions 
as described in their biographies on pages 26 and 27
the audit committee invites the group finance director the 
head of financial reporting and senior representatives of the 
external and internal auditors to attend meetings as appropriate 
to the business being considered the audit committee has the 
right to invite any other employees to attend meetings where 
this is considered appropriate in addition the audit committee 
meets at least once per year with both the external and internal 
auditors without management present 
the audit committee is expected to meet not less than three 
times a year and the audit committee met three times during 
2010 the attendance of its members along with the group 
finance director is shown in the table on page 38
group auditor
the group’s external auditor is recommended for re
appointment by the audit committee who also assess the 
appropriateness of the scope of audit work performed and 
provides recommendations in respect of their remuneration  
the audit committee receives regular reports from the  
group’s external auditor 
the audit committee has a policy on the engagement of the 
external auditor for the supply of nonaudit services and the 
committee is aware of the audit and nonaudit services 
including taxation and transaction advice which have been 
provided by deloitte llp during 2010 a significant proportion  
of the nonaudit services related to nonrecurring work some of 
which was in connection with the provision of tax advisory and 
transaction related services the provision of nonaudit services 
was considered to be appropriate given the external auditor’s 
depth of knowledge of the affairs and financial practices of the 
group the audit committee is satisfied that notwithstanding 
nonaudit work deloitte llp has retained objectivity and 
independence during the year the audit committee will 
continue to monitor its policy in this regard and accepts that 
nonaudit work should be controlled to ensure that it does not 
compromise the independence of the auditor
deloitte llp was appointed in 2003 at each year end deloitte 
llp submits a letter setting out how it believes its independence 
and objectivity have been maintained and they are required to 
rotate the audit partners responsible for the group and subsidiary 
audits every five years the group’s audit signing partner changed 
as part of that rotation process in 2010 there are no contractual 
obligations that restrict the group’s capacity to recommend  
a particular firm for appointment as auditor 38 melrose plc
corporate governance report 
continued
annual report 2010 
main responsibilities
    keep the size structure and composition of the board under 
regular review and recommend to the board any adjustments 
as may be necessary from time to time
    give full consideration to succession planning to ensure an 
optimum balance of executive and nonexecutive directors  
in terms of skills and experience
    keep under review the leadership needs of the business and
    keep uptodate and fully informed about strategic issues and 
commercial changes affecting the company and the market  
in which it operates
the nomination committee is expected to meet not less  
than twice a year and during 2010 the nomination committee 
met twice the attendance of its members is shown in the  
table below
the nomination committee uses external search consultants  
as appropriate
attendance at meetings
the table below shows the attendance of each of the directors 
at the scheduled and significant meetings of the board and its 
standing committees held during the year the quorum 
necessary for the transaction of business by the board and 
each of its standing committees is two briefing papers and 
meeting agendas are provided to each director in advance of 
each meeting decisions are taken by the board in conjunction 
with the recommendations of its committees and advice from 
external advisors and senior management as appropriate  
the representations of any director who is unable to attend  
a meeting of the board or a standing committee are duly 
considered by those directors in attendance
 board audit remuneration nomination
number of meetings
1
4 3 2 2
christopher miller 4 na na 2
david roper 4 na na na
simon peckham 4 na na na
geoffrey martin 4 3
2
 na na
miles templeman 4 3 2 2
perry crosthwaite 3 2 1 1
john grant 4 3 2 2
1  in addition adhoc meetings are held from time to time which are attended by a quorum  
of directors and are convened to deal with specific items of business
2 mr martin attends by invitation
internal control and risk management
objectives and policy
the objective of the directors and senior management is to 
safeguard and increase the value of the business and assets  
of the group achievement of this objective requires the 
development of policies and appropriate internal control 
frameworks to ensure the group’s resources are managed 
properly and any key risks are identified and mitigated  
where possible
the board is ultimately responsible for the group’s overall system 
of internal control and for reviewing its effectiveness while the 
role of management is to implement the policies set by the board 
in respect of risk management and controls the directors 
recognise that the systems and processes established by the 
board are designed to manage rather than eliminate the risk of 
failure to achieve business objectives and cannot provide absolute 
assurance against material financial misstatement or loss 
internal audit programme
due to the size and complexity of the group it is appropriate  
for an internal audit programme to be used within the business  
bm howarth an external firm provides internal audit services  
to the group a rotation programme is in place such that every 
business unit will have an internal audit at least once every three 
years with the largest sites reviewed at least once every two 
years the internal auditors’ remit includes assessment of the 
effectiveness of internal control systems compliance with the 
group’s policies and procedures manual and a review of the 
businesses’ balance sheets a report of key findings and 
recommendations is presented to the group finance director 
head of financial reporting and group operations controller 
followed by a meeting to discuss key findings and resulting 
action points the rotation programme allows divisional 
management’s actions and responses to be followed up  
on a timely basis
review of the internal audit process and scope of work covered 
by the internal auditor is the responsibility of the audit committee 
to ensure their objectives level of authority and resources are 
appropriate for the nature of the businesses under review  
a report of significant findings is presented by the internal 
auditor to the committee at each meeting and implementation 
of recommendations by the board is followed up at the 
subsequent committee meeting
remuneration committee
members perry crosthwaite chairman 
  miles templeman
  john grant
main responsibilities
    consider and make recommendations to the board of the 
company on the framework for the remuneration of the 
company’s executive directors the company secretary  
and other senior employees
    ensure that the remuneration of the executive directors and 
senior employees are provided with appropriate incentives to 
encourage enhanced performance and that they are rewarded 
for their individual contributions to the success of the company
    approve the structure of and determine targets for any 
performance related pay schemes operated by the company 
including long term incentive plans and
    annually review remuneration trends across the group 
and obtain reliable and up to date information about the 
remuneration of directors and senior employees in  
other companies
in developing its recommendations the committee has given 
due consideration to schedule 8 of part 15 of the companies 
act 2006
the remuneration committee is expected to meet not less than 
twice a year and during 2010 the remuneration committee met 
twice the attendance of its members is shown in the table on 
this page the report to shareholders on how directors are 
remunerated together with details of individual directors’ 
remuneration is shown in the remuneration report on pages  
40 to 43
nomination committee
members miles templeman chairman 
  perry crosthwaite 
  john grant 
  christopher miller financials shareholder information
melrose plc 39 annual report 2010 
business performance governance
the board confirms that from the review of internal controls  
it has not determined any significant failings or weaknesses that 
it considers require remedial action the board also confirms 
that it has not been advised of any material weaknesses in the 
internal control systems that relate to financial reporting
whistleblowing and bribery and corruption policies
the group is currently in the process of revising its bribery and 
corruption policy in light of the bribery act 2010 “2010 act”  
as part of this process a group risk assessment is currently 
being carried out to ensure the company has good systems in 
place to prevent bribery taking place in any areas of its business 
and to ensure full compliance with the 2010 act an ongoing 
audit process together with suitable induction and training 
initiatives are currently being finalised for roll out within each  
of the business units
the group’s bribery and corruption policy requires all 
employees to act with honesty integrity and transparency and 
to conduct themselves in a lawful ethical and professional 
manner all employees agents consultants contractors and 
agency workers of melrose plc its subsidiaries and associated 
companies in which it has a majority interest are forbidden from 
offering or soliciting any bribe or similar inducement there is 
also an obligation to report any offer of a bribe or unorthodox 
payment the company also encourages application of its 
policy by joint venture partners and suppliers 
responsibility for anticorruption policies and procedures rests 
with the board of directors they are tasked with ensuring that 
adequate internal financial controls and record keeping is in 
place within the group in order to minimise the risk of bribery 
and corruption
the group also has a whistleblowing policy which sits alongside 
the bribery and corruption policy this is designed to enable 
individuals to make protected disclosures to their divisional 
human resources manager group company secretary or 
senior nonexecutive director if they have concerns about 
possible improprieties in financial reporting or other 
malpractices within their business
communications with shareholders
the company seeks to build on a mutual understanding  
of objectives with its institutional shareholders via the  
executive directors through regular meetings and presentations 
following announcements of its annual and interim results  
miles templeman senior nonexecutive director is available  
to meet institutional shareholders should there be unresolved 
matters they wish to bring to his attention the views of key 
analysts and major shareholders are fed back to the board 
directly by individual directors and via the company’s brokers 
ensuring all members of the board develop an understanding  
of the views of major shareholders corporate information is 
available on the company’s website wwwmelroseplcnet 
the board welcomes the attendance of shareholders at the 
agm the number of proxy votes cast for and against each of the 
resolutions proposed is announced at the agm and a summary 
will be provided shortly after the agm on the company’s website
by order of the board
garry barnes 
secretary 
9 march 2011
the board is committed to satisfying the internal control 
guidance for directors set out in the revised version of the 
turnbull guidance on internal control in accordance with this 
guidance there is an ongoing process regularly reviewed by 
the directors for identifying evaluating managing and 
mitigating where possible the significant risks faced by the 
group this process for reviewing the group’s internal controls 
is consistent with prior years and has been in place throughout 
the 2010 financial year and up to the date of approval of the 
annual report
managing and controlling risk
the group has policies which address a number of key 
business risks including financial treasury health and safety 
and environmental risks the group’s financial risk management 
objectives and policies are described in the finance director’s 
review on pages 19 to 25 other key risks which could adversely 
affect the group are described in the chief executive’s review 
on pages 6 and 7 business reviews on pages 8 to 18 and 
directors’ report on pages 28 to 35 these policies and further 
detailed business unit specific policies are made available to 
employees through manuals and also via specific employee 
briefings and other communications as appropriate 
the group operates on a decentralised basis and the board 
has established an organisational structure with clear reporting 
procedures lines of responsibility and delegated authority 
divisional senior management plant managers and financial 
controllers have been delegated responsibility by the board for 
the establishment and implementation of detailed control 
systems as appropriate for their business 
an established programme of regular review is in place at the 
businesses and a culture of continuous improvement is 
encouraged by the board through regular meetings with senior 
management review of operating performance and progress 
against business plans the ongoing process of review provides 
assurance that the control environment is operating as intended 
the audit committee also monitors the effectiveness of the 
internal control processes implemented across the group through 
review of the key findings presented by the external and internal 
auditors and discussions with senior management on an adhoc 
basis the board is responsible for considering the audit 
committee’s recommendations in respect of internal controls and 
risk management and ensuring implementation by management 
of those recommendations it deems appropriate for the business 
internal financial controls
the group has a comprehensive system for assessing the 
effectiveness of the group’s systems of internal financial 
controls including strategic business planning and regular 
monitoring and reporting of financial performance a detailed 
annual budget is prepared by senior management and 
thereafter is reviewed and formally adopted by the board  
the budget and other targets are regularly updated via a rolling 
forecast process and regular business review meetings are  
held involving senior management to assess performance  
the results of these reviews are in turn reported to and 
discussed by the board at each meeting
as discussed in the audit committee section on pages 37  
and 38 of this report bm howarth is the group’s internal 
auditor nineteen business units have been visited during the 
year and the directors are pleased to report that there were no 
material deficiencies and that the majority of recommendations 
presented in the internal auditor reports have now been  
or are in the process of being implemented a further twenty 
seven business units are planned for review during 2011  40 melrose plc annual report 2010 
remuneration report
the salaries of all executive directors and the senior 
management team are reviewed by the remuneration 
committee prior to the beginning of each year base salaries  
for 2010 were reviewed in december 2009 in january 2010 
each of the executive directors received an inflationary increase 
of three per cent each of the nonexecutive directors received 
an increase of £10000 from january 2010 in order to align 
them with the market rate for such positions
the executive directors also receive a company car allowance 
fuel allowance private medical insurance life insurance and 
permanent health insurance cover mr martin also receives paid 
train travel to and from london and accommodation for working 
in london
annual bonuses
bonus scheme arrangements are in place for executive 
directors and senior management annual bonuses are 
awarded to the executive directors and senior management 
contingent on the achievement of a number of challenging 
objectives including improvements in operating performance 
earnings per share “eps” working capital overhead cost 
control and liability management the maximum bonus payable 
is 100 of base salary the chairman does not participate in 
the annual bonus scheme
long term incentives 
long term incentives are granted to directors and other senior 
employees in order to promote the success of the company 
the long term incentive arrangements currently in place  
are structured to ensure that participants are only rewarded  
for growth in the underlying value of the business in order  
to align the interests of the directors with those of the 
company’s shareholders
during 2010 the group operated the following long term 
incentive schemes
   2009 incentive share scheme
   divisional long term incentive plans
   fki cash long term incentive plan 
2009 incentive share scheme
the 2009 incentive share scheme the “2009 scheme”  
was approved by shareholders at a general meeting held in 
may 2009 it replaced the 2007 incentive share scheme and 
continues to ensure the interests of the executive directors  
and senior employees are aligned with those of shareholders  
by only rewarding participants if shareholder value is created 
the executive directors and five other senior employees are  
the only participants in the 2009 scheme
participants of the 2009 scheme are entitled to either a  
cash dividend or a number of ordinary shares equal in value  
to 10 per cent of the increase in shareholder value from  
18 july 2007 to 31 may 2012 or earlier upon a takeover of the 
company the “trigger date” the increase in shareholder value 
is calculated as the difference between the market capitalisation 
on the trigger date determined by reference to the average 
market price of an ordinary share over 40 business days prior 
to the trigger date or the offer price as appropriate and the net 
invested capital in the company the net invested capital is the 
issued share capital at 18 july 2007 plus any amounts paid up 
for the issue of new ordinary shares less all dividend payments 
or other distributions made by the company in respect of its 
ordinary shares as adjusted in line with the movement in the 
rpi plus two per cent per annum 
introduction and compliance
this report has been prepared by the remuneration committee 
on behalf of the board in accordance with the requirements of 
schedule 8 of part 15 of the companies act 2006 and the 
listing rules of the financial services authority a resolution 
inviting shareholders to approve the report will be put to the 
annual general meeting on 12 may 2011 
biographies of the directors are shown on pages 26 and 27 
these biographies identify any other significant appointments 
held by the directors 
unaudited information
remuneration committee
the remuneration committee is chaired by mr perry 
crosthwaite an independent nonexecutive director mr miles 
templeman and mr john grant the other two independent 
nonexecutive directors complete the committee
the terms of reference of the remuneration committee are 
posted on the corporate governance section of the company’s 
website wwwmelroseplcnet and are also available from the 
company secretary page 38 of the corporate governance 
report sets out the function of the remuneration committee
remuneration policy 
the remuneration policy in place for the current and  
subsequent financial years is described below
executive directors and other senior employees
the board establishes the remuneration policy based on  
the recommendations of the remuneration committee  
the remuneration policy adopted by the company requires  
the package offered to any executive director or senior 
employee to be sufficient to attract retain and motivate 
management of a suitable quality but not to be more than is 
necessary for this purpose it is intended that performance 
related pay should comprise a significant proportion of the  
total remuneration package 
nonexecutive directors
the executive directors are responsible for proposing the 
nonexecutive directors’ fees in proposing such fees they  
take account of fees paid to nonexecutive directors of similar 
sized listed companies within the company’s listing sector  
any decision on fee changes is taken by the executive directors 
as a whole and nonexecutive directors do not take part in 
discussions on their own remuneration nonexecutive directors 
do not receive other taxable benefits or pension contributions 
from the group
the remuneration package 
remuneration packages are reviewed annually generally 
effective from 1 january the remuneration committee and its 
advisors use a number of third party remuneration surveys from 
which to obtain remuneration data in order to carry out 
benchmarking exercises
the remuneration package for all executive directors comprises 
base salary and benefits annual bonus long term incentive 
arrangements and pension contributions as described within 
this report some senior employees of the group are also 
entitled to bonuses and long term incentive arrangements as 
noted below 
base salary and benefits
the remuneration committee gives consideration to both the 
performance of the individual during the period of review and  
of current market salaries for equivalent roles and is based  
on independently sourced market information  financials shareholder information
melrose plc 41 annual report 2010 
business performance governance
details of the directors’ contracts and letters of appointment are 
as set out below
executive directors date of contract  notice period
christopher miller 15 october 2003 12 months
david roper 15 october 2003 12 months
simon peckham 15 october 2003 12 months
geoffrey martin 5 december 2005 12 months
nonexecutive directors letter of appointment
 end of  
 appointment period
miles templeman 11 november 2009 27 october 2012
perry crosthwaite 18 june 2008 25 july 2011
john grant 27 august 2009 31 july 2012
directors’ shareholdings
ordinary shares
the directors’ beneficial interests including interests of 
connected persons within the meaning of section 252 of the 
companies act 2006 in the ordinary shares of the company 
as at 31 december 2010 are shown below none of the 
directors had any nonbeneficial interest at any time in the 
financial year none of the directors who held office at the end 
of the financial year had any beneficial interest in the shares of 
other group companies
number of ordinary shares of 02p of melrose plc
director
 1 january  
 2010 
 purchased  
 during  
 the year
 31 december  
 2010
christopher miller
1
5702464 – 5702464
david roper 2462292 – 2462292
simon peckham 1948067 – 1948067
geoffrey martin 711580 – 711580
miles templeman 354122 44665 398787
perry crosthwaite 131250 – 131250
john grant 153806 – 153806
total 11463581 44665 11508246
1  the interest of mr christopher miller includes 2750000 ordinary shares of 02p  
31 december 2009 2750000 held by harris  sheldon investments limited a company 
which is connected with mr christopher miller within the meaning of section 252 of the 
companies act 2006
2009 incentive shares
the directors also had a beneficial interest in the company’s 
2009 incentive shares nominal value £100 at 31 december 
2010 as follows 
director
 number of 2009 incentive shares of melrose plc 
 as at 1 january 2010 and 31 december 2010 
christopher miller 12000
david roper 12000
simon peckham  12000
geoffrey martin  7500
miles templeman nil
perry crosthwaite nil
john grant nil
there were no options over 2009 incentive shares outstanding 
as at 31 december 2010
the company’s articles of association provide that the 
entitlement may be settled by payment of a cash dividend as  
an alternative to conversion to ordinary shares
as at 31 december 2010 the fair value attributable to the 2009 
incentive shares including those held by the employee benefit 
trust was calculated as £707 million 2009 £210 million of 
which £615 million 2009 £183 million was attributable to the 
executive directors details of the directors’ beneficial interest in 
the 2009 incentive shares are shown in the table of directors’ 
shareholdings later in this report
the melrose employee benefit trust currently holds 500 of the 
2009 incentive shares and in due course may transfer these 
shares or grant options over them to executive directors and
or senior employees 
divisional long term incentive plans 
divisional long term incentive plans have been implemented for 
certain divisional senior managers it is the intention of the 
board that participants will receive a cash payment upon the 
sale of a division or based upon financial performance as 
measured by growth in operating profit from the date of the fki 
acquisition on 1 july 2008 to december 2014 
fki cash long term incentive plan 
a cash long term incentive plan exists for senior management  
of the fki businesses this has in the past operated over rolling 
three year performance periods and was discretionary based 
on performance targets for the relevant business unit for each  
plan year
pension
no director is a member of any group pension arrangement 
the executive directors may elect to receive a company 
contribution to their individual pension arrangement or a 
supplement to base salary in lieu of a pension arrangement 
company contributions are calculated on base salary only
service contracts 
consistent with the best practice guidance provided by the 
combined code the company’s policy is for directors’ service 
contracts to be terminable on a maximum of one year’s notice 
directors’ service contracts do not provide for predetermined 
compensation in the event of termination any payments made 
would be subject to normal contractual principles including 
mitigation as appropriate the length of service for any one 
executive director is not defined and is subject to the 
requirements under the rotation rules in the companies  
act 2006 
the nonexecutive directors do not have service contracts  
but have letters of appointment for an initial period of three 
years which may be renewed by mutual agreement generally  
a nonexecutive director may be appointed for up to a further  
two periods of three years after the initial three year period  
has expired the terms of appointment do not contain any 
contractual provisions regarding a notice period or the right  
to receive compensation in the event of early termination 42 melrose plc annual report 2010 
remuneration report 
continued
total shareholder return 
the ordinary share capital of the company was admitted to the official list and to trading on the london stock exchange on  
9 december 2005 the performance of the company’s ordinary shares compared with the ftse all share index and the ftse 
industrial engineering index for the period since the company became fully listed on the london stock exchange is shown in the 
graph below
0
40
80
120
160
200
240
280
320
£
dec
05
dec
06
jun
06
dec
07
jun
07
dec
08
jun
08
dec
09
jun
09
dec
10
jun
10
ftse industrial engineering index melrose return ftse all share index
the total shareholder return graph shows the value as at december 2010 of £100 invested in the company in december 2005 
compared with £100 invested in the ftse all share index and the ftse industrial engineering index these are considered the 
most relevant indices given the company is part of the ftse all share index and the underlying businesses of the company 
operate in the industrial engineering sector
the source data for the above chart assumes that the £220 million of cash returned to shareholders in august 2007 following the 
mckechnie aerospace and psm fasteners disposals was reinvested to purchase shares in the company this results in an 
adjustment factor on the price and this factor is used in ongoing calculations of shareholder return for the company as ordinarily  
a return of capital would reduce the share price and an analysis of returns going forward would not reflect value already returned to 
shareholders the benefit of any cash distribution is thereby reflected within the shareholder return performance of the company  financials shareholder information
melrose plc 43 annual report 2010 
audited information 
directors’ remuneration 
emoluments during 2010
directors
 salaries 
 fees 
 £
 bonus  
 £
 taxable  
 benefits 
 £
 in lieu of  
 pension  
 contributions
1
 
£
 2010 
 total  
 emoluments  
 £
 pension 
 contributions
1
 £
 2010 
 total 
 remuneration 
 £
 2009  
 total  
 remuneration 
 £
christopher miller
2
 386250 – 19415 57937 463602 – 463602 450585
david roper 386250 386250 18904 57937 849341 – 849341 712372
simon peckham 386250 386250 18916 9625 801041 48312 849353 711927
geoffrey martin 309000 309000 53789 5700 677489 40650 718139 585701
miles templeman
3
60000 – – – 60000 – 60000 50000
perry crosthwaite
4
60000 – – – 60000 – 60000 50000
john grant 55000 – – – 55000 – 55000 45000
total 1642750 1081500 111024 131199 2966473 88962 3055435 2605585
1  of the £220161 attributable to pension contributions £131199 was paid as a supplement to base salary in lieu of pension arrangements the balance of £88962 was paid into the individual 
directors’ nominated private pension schemes
2 mr miller is a nonexecutive director of tmo renewables limited his fees for the year were £45600 this amount is retained by mr miller and therefore excluded from the table above
3 includes £5000 per annum in recognition of chairmanship of the audit and nomination committees
4 includes £5000 per annum in recognition of chairmanship of the remuneration committee
this report was approved by the board on 9 march 2011 and signed on its behalf by
perry crosthwaite 
chairman of the remuneration committee 
9 march 2011
business performance governance 44 melrose plc annual report 2010 
statement of directors’ responsibilities
the directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the company’s 
transactions and disclose with reasonable accuracy at any time 
the financial position of the company and enable them to 
ensure that the financial statements comply with the companies 
act 2006 they are also responsible for safeguarding the assets 
of the company and hence for taking reasonable steps for the 
prevention and detection of fraud and other irregularities
the directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
company’s website legislation in the united kingdom 
governing the preparation and dissemination of financial 
statements may differ from legislation in other jurisdictions
directors’ responsibility statement 
the directors confirm that to the best of their knowledge
   the financial statements prepared in accordance with the 
relevant financial reporting framework give a true and fair  
view of the assets liabilities financial position and profit or 
loss of the company and the undertakings included in the 
consolidation taken as a whole and
   the chairman’s statement chief executive’s review finance 
director’s report and directors’ report include a fair review  
of the development and performance of the business and the 
position of the company and the undertakings included in  
the consolidation taken as a whole together with a description 
of the principal risks and uncertainties that they face
by order of the board
 
geoffrey martin simon peckham 
group finance director chief operating officer 
9 march 2011 9 march 2011
the directors are responsible for preparing the annual report 
and the financial statements in accordance with applicable law 
and regulations
company law requires the directors to prepare financial 
statements for each financial year under that law the directors 
are required to prepare the group financial statements in 
accordance with international financial reporting standards 
“ifrss” as adopted by the european union and article 4 of the 
ias regulation and have chosen to prepare the parent company 
financial statements in accordance with united kingdom 
generally accepted accounting practice united kingdom 
accounting standards and applicable law under company law 
the directors must not approve the accounts unless they are 
satisfied that they give a true and fair view of the state of affairs 
of the company and of the profit or loss of the company for  
that period 
in preparing the parent company financial statements  
the directors are required to
   select suitable accounting policies and then apply 
them consistently
   make judgements and accounting estimates that are 
reasonable and prudent
   state whether applicable uk accounting standards have 
been followed subject to any material departures disclosed 
and explained in the financial statements and
   prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the company will 
continue in business
in preparing the group financial statements international 
accounting standard 1 requires that directors
   properly select and apply accounting policies
   present information including accounting policies in a manner 
that provides relevant reliable comparable and 
understandable information
   provide additional disclosures when compliance with the 
specific requirements in ifrss are insufficient to enable users 
to understand the impact of particular transactions other 
events and conditions on the entity’s financial position and 
financial performance and
   make an assessment of the company’s ability to continue 
as a going concern business performance governance financials shareholder information
melrose plc 45 annual report 2010 
financial contents
consolidated statements
 independent auditor’s report – consolidated statements 46
consolidated income statement 47
consolidated statement of comprehensive income 48
consolidated statement of cash flows 49
consolidated balance sheet 50
consolidated statement of changes in equity 51
notes to the accounts
note
1  corporate information 52
2  summary of significant accounting policies 52
3   critical accounting judgements and key sources  
of estimation uncertainty 58
4  revenue  59
5  segment information 59
6  exceptional costs and income 62
7  revenues and expenses 63
8  tax   65
9  discontinued operations 66
10 dividends 66
11  earnings per share 67
12 goodwill and other intangible assets 68
13 property plant and equipment 70
14  interests in joint ventures 70
15 inventories 71
16 trade and other receivables 71
17  cash and cash equivalents 72
18 trade and other payables 72
19 interestbearing loans and borrowings 73
20 provisions 74
21 deferred tax 75
22 sharebased payments 75
23 retirement benefit obligations 76
24 financial instruments and risk management 80
25 issued capital and reserves 84
26 cash flow statement 85
27 commitments and contingencies 86
28 related parties 86
29 post balance sheet events 87
30 contingent liabilities 87
 company statements
  independent auditor’s report – company statements 88
 company balance sheet for melrose plc 89
 
 
 
 
 notes to the company balance sheet
 note
 1 significant accounting policies 90
 2 profit for the year 91
 3 investment in subsidiaries 92
 4 tangible fixed assets 94
 5 derivative financial instruments 94
 6 debtors 94
 7 creditors 94
 8 bank loans 95
 9 provisions for liabilities and charges 95
 10 issued share capital 95
 11 reserves 96
 12 hedging reserve 96
 13 reconciliation of movements in shareholders’ funds 96
 14 related party transactions 96 46 melrose plc annual report 2010 
independent auditor’s report – consolidated statements
opinion on other matter prescribed by the companies 
act 2006
in our opinion the information given in the directors’ report  
for the financial year for which the consolidated financial 
statements are prepared is consistent with the consolidated 
financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following
under the companies act 2006 we are required to report to you 
if in our opinion
   certain disclosures of directors’ remuneration specified by law 
are not made or
   we have not received all the information and explanations we 
require for our audit
under the listing rules we are required to review
   the directors’ statement contained within the directors’ 
report in relation to going concern 
   the part of the corporate governance statement relating to 
the company’s compliance with the nine provisions of the 
june 2008 combined code specified for our review and
   certain elements of the report to shareholders by the board 
on directors’ remuneration
other matter
we have reported separately on the company financial 
statements of melrose plc for the year ended 31 december 
2010 and on the information in the directors’ remuneration 
report that is described as having been audited 
nigel mercer aca senior statutory auditor 
for and on behalf of deloitte llp
chartered accountants and statutory auditor 
london uk 
9 march 2011
independent auditor’s report to the members  
of melrose plc 
we have audited the consolidated financial statements of 
melrose plc for the year ended 31 december 2010 which 
comprise the consolidated income statement the consolidated 
statement of comprehensive income the consolidated 
statement of cash flows the consolidated balance sheet the 
consolidated statement of changes in equity and the related 
notes 1 to 30 the financial reporting framework that has been 
applied in their preparation is applicable law and international 
financial reporting standards “ifrss” as adopted by the 
european union
this report is made solely to the company’s members  
as a body in accordance with chapter 3 of part 16 of the 
companies act 2006 our audit work has been undertaken so 
that we might state to the company’s members those matters 
we are required to state to them in an auditor’s report and for no 
other purpose to the fullest extent permitted by law we do not 
accept or assume responsibility to anyone other than the 
company and the company’s members as a body for our audit 
work for this report or for the opinions we have formed
respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ 
responsibilities the directors are responsible for the preparation 
of the consolidated financial statements and for being satisfied 
that they give a true and fair view our responsibility is to audit 
and express an opinion on the consolidated financial statements 
in accordance with applicable law and international standards 
on auditing uk and ireland those standards require us to 
comply with the auditing practices board’s ethical standards 
for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts  
and disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free  
from material misstatement whether caused by fraud or  
error this includes an assessment of whether the accounting 
policies are appropriate to the group’s circumstances and  
have been consistently applied and adequately disclosed  
the reasonableness of significant accounting estimates  
made by the directors and the overall presentation of the 
financial statements 
opinion on financial statements
in our opinion the consolidated financial statements
   give a true and fair view of the state of the group’s affairs as at 
31 december 2010 and of its profit for the year then ended
   have been properly prepared in accordance with ifrss as 
adopted by the european union and
   have been prepared in accordance with the requirements of 
the companies act 2006 and article 4 of the ias regulation business performance governance financials shareholder information
melrose plc 47 annual report 2010 
consolidated income statement
 notes
 year ended
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
revenue 45 13795 12985 
cost of sales 9885 9703
gross profit 3910 3282 
headline
1
 operating expenses 1937 1789
share of results of joint ventures 14 04 04 
intangible asset amortisation 266 267
exceptional costs 6 103 239
exceptional income 6 214 140 
total net operating expenses 7 2096 2151
operating profit 1814 1131 
headline
1
 operating profit 5 1969 1497 
finance costs 7 354 362
finance income 47 93 51 
profit before tax 1553 820 
headline
1
 profit before tax
1708 
1186 
headline
1
 tax 444 361
exceptional tax
2
 304 88 
total tax 8
140
273
profit for the year from continuing operations 1413 547 
headline
1
 profit for the year from continuing operations 1264 825 
discontinued operations
profit for the year from discontinued operations 9 – 246 
profit for the year
1413 
793 
attributable to
equity holders of the parent 1411 795 
noncontrolling interests 02 02
1413 793 
earnings per share
from continuing operations
– basic 11 284p 110p
– fully diluted 11 270p 108p
– headline
1
 basic 11 254p 166p
– headline
1
 fully diluted 11 241p 163p
from continuing and discontinued operations
– basic 11 284p 160p
– fully diluted 11 270p 156p
1 before exceptional costs exceptional income and intangible asset amortisation 
2 includes exceptional tax and tax on exceptional items and intangible asset amortisation 48 melrose plc annual report 2010 
 notes
 year ended
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
profit for the year 1413 793 
currency translation on net investments 25 80 328
currency translation on noncontrolling interests 01 02
transfer to income statement from equity of cumulative translation differences  
 on disposal of foreign operations 25 01 114
lossesgains on cash flow hedges 25 78 59 
transfer to income statement on cash flow hedges 25 05 118 
actuarial gainloss on retirement benefit obligations 23 138 899
reversal of limit on pension plan surplus 23 – 141 
other comprehensive incomeexpense before tax 135 1025
tax relating to components of other comprehensive incomeexpense 8 79 130 
other comprehensive incomeexpense after tax 214 895
total comprehensive incomeexpense for the year 1627 102
attributable to
equity holders of the parent 1624 98
noncontrolling interests 03 04
1627 102
consolidated statement of comprehensive income business performance governance financials shareholder information
melrose plc 49 annual report 2010 
 notes
 year ended
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
net cash from operating activities from continuing operations 26 1179 1768 
net cash used in operating activities from discontinued operations 26 – 20
net cash from operating activities 1179 1748 
investing activities
disposal of businesses 01 492 
net cash disposed – 06
purchase of property plant and equipment 295 229
proceeds on disposal of property plant and equipment 03 10 
purchase of computer software 12 09
dividends received from joint ventures 14 03 02 
dividends paid to noncontrolling interests 02 02
interest received 93 38 
acquisition of subsidiaries and noncontrolling interests 91 –
net cash used infrom investing activities from continuing operations 302 296 
net cash used in investing activities from discontinued operations 26 – 13
net cash used infrom investing activities 302 283 
financing activities
net movement on borrowings 05 1858
repayment of obligations under finance leases 11 01
dividends paid 10 438 356
net cash used in financing activities from continuing operations 454 2215
net cash used in financing activities from discontinued operations 26 – – 
net cash used in financing activities 454 2215
net increasedecrease in cash and cash equivalents 423 184
cash and cash equivalents at beginning of year 26 1475 1677 
effect of foreign exchange rate changes 26 59 18
cash and cash equivalents at end of year 1726 1957 1475 
consolidated statement of cash flows 50 melrose plc annual report 2010 
 notes
 31 december
 2010
 £m
 31 december  
 2009
 £m
noncurrent assets
goodwill and other intangible assets 12 11816 11843 
property plant and equipment 13 2537 2523 
interests in joint ventures – 03 
derivative financial assets 24 – 06 
deferred tax assets 21 330 221 
trade and other receivables 16 19 – 
14702 14596 
current assets
inventories 15 2163 2226 
trade and other receivables 16 2577 2130 
derivative financial assets 24 39 20 
cash and cash equivalents 17 1957 1475 
6736 5851 
total assets 5 21438 20447 
current liabilities
trade and other payables 18 3553 3195 
interestbearing loans and borrowings 19 03 13 
derivative financial liabilities 24 83 28 
current tax liabilities 524 493 
provisions 20 359 446 
4522 4175 
net current assets 2214 1676 
noncurrent liabilities
trade and other payables 18 47 18 
interestbearing loans and borrowings 19 4828 4679 
derivative financial liabilities 24 39 02 
deferred tax liabilities 21 1149 1253 
retirement benefit obligations 23 1196 1691 
provisions 20 828 996 
8087 8639 
total liabilities 5 12609 12814 
net assets 8829 7633 
equity 
share capital 25 11 11 
share premium account 2791 2791 
merger reserve 2851 2851 
capital redemption reserve 2201 2201 
hedging and translation reserves 25 710 716 
retained earnings 251 954
equity attributable to holders of the parent 8815 7616 
noncontrolling interests 14 17 
total equity 8829 7633 
the financial statements were approved and authorised for issue by the board of directors on 9 march 2011 and were signed on its 
behalf by
 
geoffrey martin simon peckham 
group finance director chief operating officer
consolidated balance sheet business performance governance financials shareholder information
melrose plc 51 annual report 2010 
reserves
 share  
 capital 
 £m
 share  
 premium 
 account 
 £m
 merger  
 reserve 
 £m
 capital  
 redemption 
 reserve 
 £m
 hedging  
 and 
 translation 
 reserves 
 £m
 retained  
 earnings 
 £m
 equity  
 attributable  
 to holders of  
  the parent 
 £m
 non 
 controlling 
 interests 
 £m
 total  
 equity 
 £m
at 1 january 2009 11 2791 2851 2201 1004 806 8052 23 8075 
profitloss for the year – – – – – 795 795 02 793 
other comprehensive expense – – – – 288 605 893 02 895
total comprehensive expenseincome – – – – 288 190 98 04 102
dividends paid – – – – – 356 356 02 358
credit to equity for equitysettled  
 sharebased payments – – – – – 18 18 – 18
at 31 december 2009 11 2791 2851 2201 716 954 7616 17 7633 
profit for the year – – – – – 1411 1411 02 1413 
other comprehensive  
 expenseincome – – – – 06 219 213 01 214
total comprehensive expenseincome – – – – 06 1630 1624 03 1627
dividends paid – – – – – 438 438 02 440
credit to equity for equitysettled  
 sharebased payments – – – – – 18 18 – 18
acquisition of noncontrolling interest – – – – – 05 05 04 09
at 31 december 2010 11 2791 2851 2201 710 251 8815 14 8829 
consolidated statement of changes in equity 52 melrose plc annual report 2010 
notes to the accounts
1 corporate information
the consolidated financial statements of melrose plc “the 
group” for the year ended 31 december 2010 were authorised 
in accordance with a resolution of the directors of melrose plc 
on 9 march 2011
melrose plc “the company” is a company incorporated in the 
united kingdom under the companies act 2006 the address 
of the registered office is given on page 100 the nature of the 
group’s operations and its principal activities are set out in  
note 5
these financial statements are presented in pounds sterling 
which is the currency of the primary economic environment in 
which the company is based foreign operations are included 
in accordance with the policies set out in note 2
11 new standards and interpretations affecting 
amounts presentation or disclosure reported in  
the current period
during the period the group adopted a number of new or 
revised standards and interpretations none of which 
significantly affected the amounts reported in these financial 
statements details of the standards and interpretations that 
were adopted are set out in section 12
12 new standards and interpretations adopted with 
no significant effect on financial statements
the following new and revised standards and interpretations 
have been adopted in these financial statements their adoption 
has not had any significant impact on the amounts reported in 
these financial statements but may impact the accounting for 
future transactions and arrangements
amendments to ifrs 2 sharebased payments – group 
cashsettled sharebased payment transactions 
revised ias 28 2008 investments in associates 
ifric 17 distributions of noncash assets to owners 
13 new standards and interpretations in issue but 
not yet effective
at the date of authorisation of these financial statements the 
following standards and interpretations are in issue but not  
yet effective
amendments to ifrs 7 transfer of financial assets 
amendments to ifrs 9 financial instruments 
amendments to ias 12 deferred tax –  
recovery of underlying assets 
revised ias 24 2009 related party disclosures 
amendments to ias 32 classification of rights issues 
amendments to ifric 14 prepayments of a minimum  
funding requirement 
ifric 19 extinguishing financial liabilities with  
equity instruments 
annual improvements to ifrss 2010
the directors do not anticipate that the adoption of these 
standards and interpretations will have a material impact on the 
group’s financial statements in the period of initial application 
2 summary of significant accounting policies
basis of accounting
the consolidated financial statements have been prepared in 
accordance with international financial reporting standards 
“ifrss” the financial statements have also been prepared in 
accordance with ifrss adopted for use in the european union 
and therefore comply with article 4 of the eu ias regulation
the consolidated financial statements have been prepared  
on a historical cost basis except for the revaluation of certain 
financial instruments which are recognised at fair value 
historical cost is generally based on the fair value of the 
consideration given in exchange for these assets the principal 
accounting policies adopted are consistent with the prior year 
and are set out below 
basis of consolidation
the group financial statements include the results of the parent 
undertaking and all of its subsidiary undertakings the results  
of businesses acquired during the period are included from the 
effective date of acquisition and for those sold during the period 
to the effective date of disposal
noncontrolling interests in subsidiaries are identified separately 
from the group’s equity therein the interest of noncontrolling 
shareholders is initially measured at the noncontrolling interests 
proportion of the share of the fair value of the acquiree’s 
identifiable net assets subsequent to acquisition the carrying 
amount of noncontrolling interests is the amount of those 
interests at initial recognition plus the noncontrolling interests’ 
share of subsequent changes in equity total comprehensive 
income is attributed to noncontrolling interests even if this 
results in the noncontrolling interests having a deficit balance
where group accounting policies are not adopted in the 
financial statements of subsidiary undertakings appropriate 
adjustments are made in the group financial statements
all intergroup balances and transactions including unrealised 
profits arising from intragroup transactions have been 
eliminated in full
going concern
the directors have at the time of approving the financial 
statements a reasonable expectation that the company and 
the group have adequate resources to continue in operational 
existence for the foreseeable future thus they continue to 
adopt the going concern basis of accounting in preparing  
the financial statements further detail is contained in the 
directors’ statement of going concern on page 34 and 35  
of the directors’ report
business combinations and goodwill
the acquisition of subsidiaries is accounted for using the 
purchase method the cost of acquisition is measured at the 
fair value of assets given the liabilities incurred or assumed  
at the date of exchange of control and equity instruments  
issued by the group in exchange for control of the acquiree 
costs directly attributable to business combinations are 
recognised as an expense in the income statement as incurred 
the acquired identifiable assets and liabilities are measured at 
their fair value at the date of acquisition except those where 
specific guidance is provided by ifrss noncurrent assets and 
directly attributable liabilities that are classified as held for sale in 
accordance with ifrs 5 “noncurrent assets held for sale and 
discontinued operations” are recognised and measured at fair 
value less costs to sell also deferred tax assets and liabilities  business performance governance financials shareholder information
melrose plc 53 annual report 2010 
are recognised and measured in accordance with ias 12 
“income taxes” liabilities and assets related to employee benefit 
arrangements are recognised and measured in accordance with 
ias 19 “employee benefits” and liabilities or equity instruments 
related to the replacement by the group of an acquiree’s 
sharebased payments awards are measured in accordance 
with ifrs 2 “sharebased payments” any excess of the cost  
of the acquisition over the fair values of the identifiable net 
assets acquired is recognised as goodwill 
if the initial accounting for a business combination is incomplete 
by the end of the reporting period in which the combination 
occurs the group reports provisional amounts where 
appropriate those provisional amounts are adjusted during  
the measurement period see below or additional assets or 
liabilities recognised to reflect new information obtained about 
facts and circumstances that existed as of the acquisition date 
that if known would have affected the amounts recognised at 
that date
the measurement period is the period from the date of 
acquisition to the date the group obtains complete information 
about facts and circumstances that existed as of the acquisition 
date and is subject to a maximum period of one year
goodwill on acquisition is initially measured at cost being the 
excess of the cost of the business combination over the 
acquirer’s interest in the net fair value of the identifiable assets 
liabilities and contingent liabilities following initial recognition 
goodwill is measured at cost less any accumulated impairment 
losses goodwill is reviewed for impairment annually or more 
frequently if events or changes in circumstances indicate that 
the carrying value may be impaired
as at the acquisition date any goodwill acquired is allocated  
to each of the cashgenerating units acquired impairment is 
determined by assessing the recoverable amount of the 
cashgenerating unit to which goodwill relates where the 
recoverable amount of the cashgenerating unit is less than  
the carrying amount an impairment loss is recognised in  
the income statement and is not subsequently reversed  
when there is a disposal of a cashgenerating unit goodwill 
relating to the operation disposed of is taken into account in 
determining the gain or loss on disposal of that operation  
the amount of goodwill allocated to a partial disposal is 
measured on the basis of the relative values of the operation 
disposed of and the operation retained
joint ventures
a joint venture is an entity which is not a subsidiary undertaking 
but the interest of the group is that of a partner in a business 
over which the group exercises joint control the results assets 
and liabilities of joint ventures are accounted for using  
the equity method of accounting
revenue
revenue is recognised when the significant risks and rewards  
of ownership of goods have passed to the buyer and can be 
reliably measured revenue is measured at the fair value of the 
consideration received or receivable and represents amounts 
receivable for goods provided in the normal course of business 
net of discounts customs duties and sales taxes
where percentage of completion accounting is applied and 
where the outcome of a longterm contract can be estimated 
reliably revenue and costs are recognised by reference to the 
stage of completion of the contract activity at the balance sheet 
date this is normally measured by the proportion that contract 
costs incurred for work performed to date bear to the estimated 
total contract costs except where this would not be 
representative of the stage of completion variations in contract 
work claims and incentive payments are included to the extent 
that they have been agreed with the customer
where the outcome of a longterm contract cannot be 
estimated reliably contract revenue is recognised to the extent 
of contract costs incurred where it is probable they will be 
recoverable contract costs are recognised as expenses in the 
period in which they are incurred
when it is probable that total contract costs will exceed total 
contract revenue the expected loss is recognised as an 
expense immediately 
interest income is recognised when it is probable that the 
economic benefits will flow to the group and the amount of 
revenue can be measured reliably interest income is accrued 
on a time basis by reference to the principal outstanding and 
the effective interest applicable
exceptional costsincome
exceptional costsincome are those costsincome of a 
significant and nonrecurring nature or those associated  
with significant restructuring programmes or acquisitions  
or disposals
operating profit
operating profit is stated after exceptional operating costs  
and income intangible asset amortisation and the group’s 
share of results of joint ventures but before finance income  
and finance costs
borrowing costs
borrowing costs directly attributable to the acquisition 
construction or production of qualifying assets which are 
assets that necessarily take a substantial period of time to get 
ready for their intended use or sale are added to the cost of 
those assets until such time as the assets are substantially 
ready for their intended use or sale 
investment income earned on the temporary investment  
of specific borrowings pending their expenditure on qualifying 
assets is deducted from the borrowing costs eligible  
for capitalisation
all other borrowing costs are recognised in the income 
statement in the period in which they are incurred
issue costs of loans
the finance cost recognised in the income statement in  
respect of the issue costs of capital instruments is allocated  
to periods over the terms of the instrument using the effective 
interest rate method
property plant and equipment
property plant and equipment are stated at cost less 
accumulated depreciation and any impairment in value
the initial cost of an asset comprises its purchase price or 
construction cost and any costs directly attributable to bringing 
the asset into operation the purchase price or construction 
cost is the aggregate amount paid and the fair value of any 
other consideration given to acquire the asset the capitalised 
value of a finance lease is also included within property plant 
and equipment
2 summary of significant accounting  
policies continued 54 melrose plc annual report 2010 
notes to the accounts 
continued
depreciation is calculated on a straightline basis over the 
estimated useful life of the asset as follows
freehold land nil
freehold buildings and long  
leasehold property
 over expected economic  
 life not exceeding 50 years
short leasehold property over the term of the lease
plant and equipment 312 years
the estimated useful lives of property plant and equipment are 
reviewed on an annual basis and if necessary changes in 
useful lives are accounted for prospectively
the carrying values of property plant and equipment are 
reviewed for impairment when events or changes in 
circumstances indicate that the carrying value may not be 
recoverable if any such indication exists an impairment review 
is performed and where the carrying values exceed the 
estimated recoverable amount the assets are written down to 
their recoverable amount the recoverable amount of property 
plant and equipment is the greater of net selling price and value 
in use in assessing value in use the estimated future cash flows 
are discounted to their present value using a pretax discount 
rate that reflects current market assessments of the time value 
of money and the risks specific to the asset for an asset that 
does not generate largely independent cash inflows the 
recoverable amount is determined for the cashgenerating unit 
to which the asset belongs
an item of property plant and equipment is derecognised upon 
disposal or when no future economic benefits are expected  
to arise from the continued use of the asset any gain or loss 
arising on derecognition of the asset calculated as the 
difference between the net disposal proceeds or costs and  
the carrying amount of the item is included in the income 
statement in the year that the item is derecognised
intangible assets
intangible assets are stated at cost less accumulated 
amortisation and accumulated impairment losses
on acquisition of businesses separately identifiable  
intangible assets are determined in relation to the specific 
circumstances of the business acquired and are valued  
on an appropriate basis
access to the use of patented technology and trade names are 
valued using a “relief from royalty” method which determines the 
net present value of future additional cash flows arising from the 
use of the intangible asset
customer relationships are valued on the basis of the net 
present value of the future additional cash flows arising from 
customer relationships with appropriate allowance for attrition  
of customers
the estimated useful lives of intangible assets are
patented technology 5 years or less
customer relationships 10 years or less
trade names 20 years or less
computer software is initially recorded at cost where these 
assets have been acquired through a business combination 
this will be the fair value allocated in the acquisition accounting 
where these have been acquired other than through a business 
combination the initial cost is the aggregate amount paid  
and the fair value of any other consideration given to acquire  
the asset
computer software assets are amortised over their estimated 
useful lives up to five years on a straightline basis
intangible assets are tested for impairment annually or more 
frequently whenever events or changes in circumstances 
indicate that the carrying value may not be recoverable 
impairment losses are measured on a similar basis to property 
plant and equipment useful lives are also examined on an 
annual basis and adjustments where applicable are made  
on a prospective basis
research and development costs
research costs are expensed as incurred
costs relating to clearly defined and identifiable development 
projects are capitalised when there is a technical degree of 
exploitation adequacy of resources and a potential market  
or development possibility in the undertaking that are 
recognisable and where it is the intention to produce market  
or execute the project a correlation must also exist between 
the costs incurred and future benefits and those costs can  
be measured reliably capitalised expenses are expensed on  
a straightline basis over their useful lives costs not meeting 
such criteria are expensed as incurred
inventories
inventories are valued at the lower of cost and net realisable 
value cost includes all direct expenditure and appropriate 
production overhead expenditure incurred in bringing goods  
to their current state under normal operating conditions  
net realisable value is based on estimated selling price less 
costs expected to be incurred to completion and disposal 
provisions have been made for obsolescence or other  
expected losses where necessary
trade and other receivables
trade receivables and other receivables are measured and 
carried at amortised cost using the effective interest method 
less any impairment the carrying amount of other receivables 
is reduced by the impairment loss directly and a charge is 
recorded in the income statement for trade receivables the 
carrying amount is reduced through the use of an allowance 
account subsequent recoveries of amounts previously written 
off are credited against the allowance account and changes in 
the carrying amount of the allowance account are recognised  
in the income statement
trade receivables that are assessed not to be impaired 
individually are also assessed for impairment on a collective 
basis objective evidence of impairment for a portfolio of 
receivables could include the group’s past experience of 
collecting payments an increase in the number of delayed 
payments in the portfolio past the average credit period as well 
as observable changes in national or local economic conditions 
that correlate with default on receivables 
2 summary of significant accounting  
policies continued business performance governance financials shareholder information
melrose plc 55 annual report 2010 
cash and cash equivalents
cash and cash equivalents in the balance sheet comprise cash 
in hand and current balances with banks and similar institutions 
and shortterm deposits which are readily convertible to cash 
which are subject to insignificant risks of changes in value
for the purpose of the cash flow statement cash and cash 
equivalents consist of cash and cash equivalents as defined 
above net of outstanding bank overdrafts
interestbearing loans and borrowings
all loans and borrowings are initially recognised at fair value of 
the consideration received net of issue costs associated with 
the borrowings
after initial recognition interestbearing loans and borrowings 
are subsequently measured at amortised cost using the 
effective interest method amortised cost is calculated by  
taking into account any issue costs and any discount or 
premium on settlement
gains and losses are recognised in the income statement when 
the liabilities are derecognised or impaired as well as through 
the amortisation process
leases
finance leases which transfer to the group substantially all  
the risks and benefits incidental to ownership of the leased  
item are capitalised at the inception of the lease at the fair value 
of the lease or if lower at the present value of the minimum 
lease payments the corresponding liability to the lessor is 
included in the balance sheet as a finance lease obligation 
lease payments are apportioned between the finance charges 
and reduction of the lease liability so as to achieve a constant 
rate of interest on the remaining balance of the liability 
finance charges are charged directly against income 
capitalised leased assets are depreciated over the shorter  
of the estimated useful life of the asset or the lease term
operating lease payments are recognised as an expense in  
the income statement on a straightline basis over the lease 
term rental income from operating leases is recognised on  
a straightline basis over the term of the relevant lease
other financial liabilities 
other financial liabilities are initially measured at fair value  
net of transaction costs they are subsequently measured at 
amortised cost using the effective interest method with interest 
expense recognised on an effective yield basis the effective 
interest method is a method of calculating the amortised cost  
of a financial liability and of allocating interest expense over  
the relevant periods the effective interest rate is the rate that 
discounts estimated future cash payments throughout the 
expected life of the financial liability or where appropriate a 
shorter period to the net carrying amount on initial recognition 
the group derecognises financial liabilities when the group’s 
obligations are discharged cancelled or they expire
derivative financial instruments and hedging
the group uses derivative financial instruments to manage its 
exposure to interest rate foreign exchange rate and commodity 
risks arising from operating and financing activities the group 
does not hold or issue derivative financial instruments for trading 
purposes details of derivative financial instruments are 
disclosed in note 24 of the financial statements movements on 
the hedging reserve in equity are detailed in note 25
derivative financial instruments are recognised and stated at fair 
value their fair value is recalculated at each reporting date  
the accounting treatment for the resulting gain or loss will 
depend on whether the derivative meets the criteria to qualify  
for hedge accounting
where derivatives do not meet the criteria to qualify for hedge 
accounting any gains or losses on the revaluation to fair value 
at the period end are recognised immediately in the income 
statement where derivatives do meet the criteria to qualify for 
hedge accounting recognition of any resulting gain or loss on 
revaluation depends on the nature of the hedge relationship and 
the item being hedged
derivative financial instruments with maturity dates of less than 
one year from the period end date are classified as current in 
the balance sheet 
hedge accounting
in order to qualify for hedge accounting the group is required 
to document from inception the relationship between the  
item being hedged and the hedging instrument and to show 
that the hedge will be highly effective on an ongoing basis  
this effectiveness testing is performed at each period end  
to ensure that the hedge remains highly effective
hedge accounting is discontinued when the group revokes  
the hedging relationship the hedge instrument expires or  
is sold terminated exercised or no longer qualifies for  
hedge accounting 
the group designates certain hedging instruments as either 
fair value hedges cash flow hedges or hedges of net 
investments in foreign operations
fair value hedge
derivative financial instruments are classified as fair value 
hedges when they hedge the group’s exposure to changes in 
the fair value of a recognised asset or liability changes in the 
fair value of derivatives that are designated and qualify as fair 
value hedges are recorded in the income statement 
immediately together with any changes in the fair value of the 
hedged item that is attributable to the hedged risk 
cash flow hedge
derivative financial instruments are classified as cash flow 
hedges when they hedge the group’s exposure to the variability 
in cash flows that are either attributable to a particular risk 
associated with a recognised asset or liability or a highly 
probable forecasted cash flow 
the effective portion of any gain or loss from revaluing the 
derivative financial instrument is recognised in the statement of 
comprehensive income and accumulated in equity the gain or 
loss relating to the ineffective portion is recognised immediately 
in the income statement 
2 summary of significant accounting  
policies continued 56 melrose plc
notes to the accounts 
continued
annual report 2010 
amounts previously recognised in the statement of 
comprehensive income and accumulated in equity are recycled 
to the income statement in the periods when the hedged item is 
recognised in the income statement or the hedged relationship 
is discontinued however when the forecast transaction that is 
hedged results in the recognition of a nonfinancial asset or a 
nonfinancial liability the gains and losses previously deferred  
in equity are transferred from equity and included in the initial 
measurement of the cost of the nonfinancial asset or non
financial liability
hedges of net investments in foreign operations
derivative financial instruments are classified as net investment 
hedges when they hedge the group’s net investment in foreign 
operations the effective element of any foreign exchange  
gain or loss from revaluing the derivative at a reporting period 
end is recognised in the statement of comprehensive income 
any ineffective element is recognised immediately in the  
income statement
gains and losses accumulated in equity are recognised 
immediately in the income statement when the foreign operation 
is disposed of or the hedged relationship is discontinued
provisions
provisions are recognised when the group has a present 
obligation legal or constructive as a result of a past event it is 
probable that an outflow of resources embodying economic 
benefits will be required to settle the obligation and a reliable 
estimate can be made of the amount of the obligation if the 
effect of the time value of money is material provisions are 
determined by discounting the expected future cash flows at  
a rate that reflects the current market assessment of the time 
value of money and where appropriate the risks specific to the 
liability where discounting is used the increase in the provision 
due to the passage of time is recognised as a finance cost
environmental liabilities
liabilities for environmental costs are recognised when 
environmental assessments or cleanups are probable and the 
associated costs can be reasonably estimated generally the 
timing of these provisions coincides with the commitment to a 
formal plan of action the amount recognised is the best 
estimate of the expenditure required where the liability will not 
be settled for a number of years the amount recognised is the 
present value of the estimated future expenditure
employee benefits
wages salaries bonuses social security contributions paid 
annual leave and sick leave are accrued in the year in which the 
associated services are rendered by employees of the group 
the accounting policy for pensions and other retirement 
benefits is described below
the group also operates long term incentive plans ltips for 
certain employees the expected settlement costs of these 
plans are expensed on a straightline basis over the life of  
the plans
pensions and other retirement benefits
the group operates defined benefit pension plans and defined 
contribution plans some of which require contributions to be 
made to administered funds separate from the group in some 
jurisdictions funds are not administered separately from the 
group but appropriate liabilities are recognised in the  
balance sheet
for the defined benefit pension and retirement benefit plans 
plan assets are measured at fair value and plan liabilities are 
measured on an actuarial basis using the projected unit credit 
method and discounted at an interest rate equivalent to the 
current rate of return on a high quality corporate bond of 
equivalent currency and term to the plan liabilities any assets 
resulting from this calculation are limited to past service cost 
plus the present value of available refunds and reductions in 
future contributions to the plan
the service cost of providing pension and other retirement 
benefits to employees for the period is charged to the  
income statement
a charge representing the unwinding of the discount on the plan 
liabilities during the period is included within finance costs
a credit representing the expected return on the plan assets 
during the period is included within finance costs this credit is 
based on the market value of the plan assets and expected 
rates of return at the beginning of the year
actuarial gains and losses may result from differences between 
the expected return and the actual return on plan assets 
differences between the actuarial assumptions underlying the 
plan liabilities and actual experience during the period or 
changes in the actuarial assumptions used in the valuation of 
the plan liabilities actuarial gains and losses and taxation 
thereon are recognised in full in the period in which they occur 
in the statement of comprehensive income
for defined contribution plans contributions payable are 
charged to the income statement as they fall due as an 
operating expense
foreign currencies
the individual financial statements of each group company  
are presented in the currency of the primary economic 
environment in which it operates its functional currency  
for the purpose of the consolidated financial statements  
the results and financial position of each group company are 
expressed in pounds sterling which is the functional currency 
of the company and the presentation currency for the 
consolidated financial statements
in preparing the financial statements of the individual 
companies transactions in currencies other than the entity’s 
functional currency foreign currencies are recorded at the rates 
of exchange prevailing on the dates of the transactions at each 
balance sheet date monetary assets and liabilities that are 
denominated in foreign currencies are retranslated at the rates 
prevailing on the balance sheet date nonmonetary items 
carried at fair value that are denominated in foreign currencies 
are translated at the rates prevailing at the date when the fair 
value was determined nonmonetary items that are measured 
in terms of historical cost in a foreign currency are not retranslated
exchange differences arising on the settlement of monetary 
items and on the retranslation of monetary items are included 
in the income statement for the period exchange differences 
arising on the retranslation of nonmonetary items carried at fair 
value are included in the income statement for the period 
except for differences arising on the retranslation of non
monetary items in respect of which gains and losses are 
recognised directly in equity for such nonmonetary items any 
exchange component of that gain or loss is also recognised 
directly in equity
for the purpose of presenting consolidated financial statements 
the assets and liabilities of the group’s foreign operations are 
translated at exchange rates prevailing on the balance sheet 
2 summary of significant accounting  
policies continued business performance governance financials shareholder information
melrose plc 57 annual report 2010 
date income and expense items are translated at the average 
exchange rates for the period unless exchange rates fluctuate 
significantly during that period in which case the exchange 
rates at the date of transactions are used exchange differences 
arising if any are recognised in the statement of comprehensive 
income and accumulated in equity attributed to noncontrolling 
interests as appropriate such translation differences are 
recognised as income or as expenses in the period in which  
the related operation is disposed of any exchange differences 
that have previously been attributed to noncontrolling  
interests are derecognised but they are not reclassified  
to the income statement
goodwill and fair value adjustments arising on the acquisition  
of a foreign entity are treated as assets and liabilities of the 
foreign entity and translated at the rate prevailing at the balance 
sheet date
taxation
the tax expense is based on the taxable profits for the period 
and represents the sum of the tax paid or currently payable and 
deferred tax
taxable profit differs from net profit as reported in the income 
statement because it excludes items of income or expense that 
are taxable or deductible in other years and it further excludes 
items that are never taxable or deductible the group’s liability 
for current tax is calculated using tax rates that have been 
enacted or substantively enacted by the balance sheet date
deferred tax is provided using the liability method on all 
temporary differences at the balance sheet date between the 
tax bases of assets and liabilities and their carrying amounts for 
financial reporting purposes
deferred tax liabilities are recognised for all taxable temporary 
differences except
   where the deferred tax liability arises on goodwill that is not 
tax deductible or the initial recognition of an asset or liability in 
a transaction that is not a business combination and at the 
time of the transaction affects neither the accounting profit 
nor taxable profit or loss and
    where the timing of the reversal of the temporary differences 
associated with investments in subsidiaries and interests  
in joint ventures can be controlled and it is probable that  
the temporary differences will not reverse in the  
foreseeable future
deferred tax assets are recognised for all deductible temporary 
differences carryforward of unused tax assets and unused tax 
losses to the extent that it is probable that taxable profit will be 
available against which the deductible temporary differences 
and carryforward of unused tax assets and unused tax losses 
can be utilised except
    where the deferred tax asset arises from the initial recognition 
of an asset or liability in a transaction that is not a business 
combination and at the time of the transaction affects neither 
the accounting profit nor taxable profit or loss and
    in respect of deductible temporary differences associated 
with investments in subsidiaries and interests in joint ventures 
deferred tax assets are only recognised to the extent that it is 
probable that the temporary differences will reverse in the 
foreseeable future and taxable profit will be available against 
which the temporary differences can be utilised
the carrying amount of deferred tax assets is reviewed at each 
balance sheet date and reduced to the extent that it is no 
longer probable that sufficient taxable profit will be available to 
allow all or part of the deferred tax asset to be utilised
deferred tax assets and liabilities are measured at the tax rates 
that are expected to apply to the year when the asset is realised 
or the liability is settled based on tax rates and tax laws that 
have been enacted or substantially enacted at the relevant 
balance sheet date
tax relating to items recognised directly in equity is recognised 
in the statement of comprehensive income and not in the 
income statement
revenues expenses and assets are recognised net of the 
amount of sales tax except
    where the sales tax incurred on a purchase of goods and 
services is not recoverable from the taxation authority in 
which case the sales tax is recognised as part of the cost  
of acquisition of the asset or as part of the expense item as 
applicable and
    where receivables and payables are stated with the amount 
of sales tax included
the net amount of sales tax recoverable from or payable to the 
taxation authority is included as part of receivables or payables 
in the balance sheet
sharebased payments
the group has applied the requirements of ifrs 2 “share
based payments” the group issues equitysettled sharebased 
payments to certain employees equitysettled sharebased 
payments are measured at fair value excluding the effect of 
nonmarket based vesting conditions at the date of grant the 
fair value determined at the grant date of the equitysettled 
sharebased payments is expensed on a straightline basis over 
the vesting period based on the group’s estimate of shares that 
will eventually vest and adjusted for the effect of nonmarket 
based vesting conditions
fair value is measured by use of the black scholes pricing 
model the expected life used in the model has been  
adjusted based on management’s best estimate for the  
effects of nontransferability exercise restrictions and 
behavioural considerations
noncurrent assets and businesses held for sale
noncurrent assets and businesses classified as held for sale 
are measured at the lower of carrying amount and fair value less 
costs to sell
noncurrent assets and businesses are classified as held  
for sale if their carrying amount will be recovered principally 
through a sale transaction rather than through continuing use 
this condition is regarded as having been met only when the 
sale is highly probable and the asset or business is available for 
immediate sale in its present condition management must be 
committed to the sale which should be expected to qualify for 
recognition as a completed sale within one year from the date  
of classification
2 summary of significant accounting  
policies continued 58 melrose plc
notes to the accounts 
continued
annual report 2010 
3 critical accounting judgements and key 
sources of estimation uncertainty
in applying the group’s accounting policies as set out in note 2 
management has made critical accounting judgements in the 
quantification of provisions the impairment of goodwill and 
intangible assets and the valuation of retirement benefit 
obligations taxation and financial instruments due to the 
inherent uncertainty involved in making assumptions and 
estimates actual outcomes will differ from those assumptions 
and estimates an analysis of the key sources of estimation 
uncertainty at the balance sheet date that have a significant  
risk of causing a material adjustment to the carrying amount  
of assets and liabilities within the next financial year is  
provided below
provisions
the quantification of certain liabilities within provisions 
environmental remediation obligations and future legal costs in 
relation to certain claims have been estimated using the best 
information available however such liabilities depend on the 
actions of third parties and on the specific circumstances 
pertaining to each obligation neither of which is controlled by 
the group
impairment of noncurrent assets
goodwill and intangible assets are tested for impairment 
whenever events or circumstances indicate that their carrying 
amounts might be impaired and at least annually such events 
and circumstances include the effects of restructuring initiated 
by management 
to determine whether goodwill and intangible assets are 
impaired requires an estimation of the value in use of the 
cashgenerating units to which goodwill has been allocated 
the value in use calculation requires management to estimate 
the future cash flows expected to arise from the cash
generating unit and a suitable discount rate in order to calculate 
present value the carrying amount of goodwill and other 
intangible assets at the balance sheet date was £11816 million 
31 december 2009 £11843 million at 31 december 2010 
the group recognised no impairment loss in respect of  
these assets 
retirement benefit obligations
in assessing the group’s obligations relating to retirement 
benefits management made key assumptions relating to 
current and future mortality discount rates and inflation
taxation
the group is subject to income tax in most of the jurisdictions  
in which it operates management is required to exercise 
judgement in determining the group’s provision for income 
taxes management’s judgement is required in estimating tax 
provisions where additional current tax may become payable in 
the future following the audit by the tax authorities of previously
filed tax returns management’s judgement is also required as to 
whether a deferred tax asset should be recognised based on 
the availability of future taxable profits
financial instruments
derivative financial instruments are recognised as assets and 
liabilities in the group’s balance sheet measured at their fair 
value at the balance sheet date the fair value of derivatives 
continually changes in response to changes in prevailing market 
conditions where permissible under ias 39 the group uses 
hedge accounting to mitigate the impact of changes in the fair 
value of derivatives on the income statement but the group’s 
results may be affected by changes in the fair values of 
derivatives where hedge accounting cannot be applied  
or due to hedge ineffectiveness business performance governance financials shareholder information
melrose plc 59 annual report 2010 
4 revenue
an analysis of the group’s revenue as defined by ias 18 is as follows
 notes
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
revenue from the sale of goods 13579 12656
revenue recognised on longterm contracts 216 329
revenue 5 13795 12985
finance income 7 93 51
total revenue from continuing operations as defined by ias 18 13888 13036
discontinued operations
revenue from the sale of goods – 838
revenue recognised on longterm contracts – 1018
total revenue from discontinued operations as defined by ias 18 59 – 1856
total revenue as defined by ias 18 13888 14892
5 segment information
ifrs 8 “operating segments” requires operating segments to be identified on the basis of internal reports about components  
of the group that are regularly reported to the group’s board in order to allocate resources to the segments and assess their 
performance the group’s reportable operating segments under ifrs 8 are as follows
 energy
 lifting
 dynacast
 other industrial
the energy segment incorporates the turbogenerators now including the transformers business unit marelli and switchgear 
business units all specialist suppliers of energy industrial products to the global market the lifting segment consists primarily  
of the businesses of bridon and crosby serving oil and gas production mining petrochemical alternative energy and general 
construction markets the dynacast segment only includes the dynacast business which is a supplier of diecast parts and 
components to a range of industries other industrial incorporates all other operating businesses details of the significant 
companies included within the other industrial segment are set out in the business review on page 16
there are two central cost centres which are also separately reported to the board
 central – corporate
 central – ltips
1
1 long term incentive plans
the central corporate cost centre contains the melrose group head office costs whilst the central ltips cost centre contains  
the costs associated with the 2009 melrose incentive share scheme and the divisional management ltip schemes that are in 
operation across the group
transfer prices between business units are set on an arm’s length basis in a manner similar to transactions with third parties
the group’s geographical segments are determined by the location of the group’s noncurrent assets and for revenue the 
location of external customers intersegment sales are not material and have not been included in the segment information 60 melrose plc
notes to the accounts 
continued
annual report 2010 
5 segment information continued
the following tables present revenue and profit information and certain asset and liability information regarding the group’s 
operating segments for the year ended 31 december 2010 and the comparative period note 6 gives details of exceptional costs 
and income
segment revenues and results
segment revenue from external customers
 notes
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
energy 4275 4183
lifting 4227 4190
dynacast 2757 2087
other industrial 2536 2525
total continuing operations 4 13795 12985
discontinued operations 9 – 1856
total revenue 13795 14841
segment result
 notes
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
energy 737 610 
lifting 667 625 
dynacast 430 213 
other industrial 287 206 
central – corporate 86 89
central – ltips
1
66 68
headline
2
 operating profit 1969 1497 
intangible asset amortisation 266 267
exceptional costs 6 103 239
exceptional income 6 214 140 
operating profit 1814 1131 
finance costs 7 354 362
finance income 7 93 51 
profit before tax 1553 820 
tax 8 140 273
profit for the year from discontinued operations 9 – 246 
profit for the year 1413 793 
1 long term incentive plans
2 as defined on the income statement business performance governance financials shareholder information
melrose plc 61 annual report 2010 
5 segment information continued
total assets total liabilities
 31 december
 2010
 £m
 31 december  
 2009
 £m
 31 december
 2010
 £m
 31 december  
 2009
 £m
energy 6437 6497 2160 2421
lifting 7504 7302 1901 1755
dynacast 3453 3291 887 873
other industrial 1610 1493 741 893
central – corporate 2434 1864 6795 6795
central – ltips
1
– – 125 77
total 21438 20447 12609 12814
1 long term incentive plans
capital expenditure
1
depreciation
1
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
energy 94 96 80 75
lifting 98 63 94 92
dynacast 70 37 77 88
other industrial 55 41 71 74
central – corporate 02 01 07 07
total continuing operations 319 238 329 336
discontinued operations – 13 – 24
total 319 251 329 360
1 including computer software
geographical information
the group operates in various geographical areas around the world the group’s country of domicile is the uk and the group’s 
revenues and noncurrent assets in europe and north america are also considered to be material
the group’s revenue from external customers and information about its segment assets noncurrent assets excluding interests in 
joint ventures derivative financial assets deferred tax assets and noncurrent trade and other receivables by geographical location 
are detailed below
revenue
1
 from external customers
2
noncurrent assets
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 31 december
 2010
 £m
 31 december  
 2009
 £m
uk 1998 2018 3694 3778
europe 4164 3643 4201 4359
north america 5254 5003 5940 5724
other 2379 2321 518 505
total 13795 12985 14353 14366
1 revenue is presented by destination the comparative revenue numbers have been restated to show revenue by destination rather than by origin as previously disclosed
2 from continuing operations 62 melrose plc
notes to the accounts 
continued
annual report 2010 
6 exceptional costs and income
exceptional costs
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
defined benefit pension plan disposal 40 – 
acquisitions and disposals of businesses 04 – 
restructuring costs 59 85
labour related oneoff costs – 154
total exceptional costs 103 239
during the year the group entered into a buyout arrangement to dispose of the liabilities of the bridon group senior executive plan 
for £40 million in excess of the ias 19 carrying value of plan net liabilities
on 12 february 2010 the group acquired 100 of the share capital of generator  motor services of pennsylvania llc see note 
12 and in accordance with ifrs 3 revised 2008 the £02 million of costs incurred on acquisition have been recognised in the 
income statement also during the year the prelok france business previously shown within the “other industrial” division was 
disposed of a net loss of £02 million was incurred which included disposal expenses of £01 million and a cumulative exchange 
gain of £01 million recycled from equity
during the year the group incurred £59 million of costs relating to restructuring programmes which include the integration of the 
transformers business into the turbogenerators business within the energy division during 2009 the group incurred £85 million 
of costs relating to restructuring programmes which included plant closures
during 2009 the group also incurred £154 million of labour related oneoff costs relating primarily to headcount reductions in 
response to the economic downturn
exceptional income
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
continuing operations
pension curtailment gain 131 –
fki captive insurance commutation gain 56 –
net release of provisions 27 50
us retiree benefit plan closures – 90
total exceptional income 214 140
during the year it was announced to members of the fki uk pension plan that it would be closed to the accrual of future benefits 
on 28 february 2011 resulting in a curtailment gain of £131 million
in 2010 a gain of £56 million was generated by the commutation of certain insurance policies within the fki captive  
insurance company
the net release of provisions of £27 million during the year represents the release of a provision set up on the acquisition of fki net 
of an additional environmental and legal provision see note 20 in 2009 a review of fair value provisions at the balance sheet date 
identified £50 million of liabilities in excess of the amount deemed required
in 2009 certain us retiree benefit plans were closed resulting in a release of the future retirement benefit obligations relating to 
continuing operations of £90 million business performance governance financials shareholder information
melrose plc 63 annual report 2010 
7 revenues and expenses
continuing operations discontinued operations total
net operating expenses comprise
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
selling and distribution costs 872 781 – 119 872 900
administration expenses 1331 1275 – 102 1331 1377
share of results of joint ventures note 14 04 04 – – 04 04
other operating costs – exceptional 103 239 – 19 103 258
other operating income – exceptional 214 140 – 77 214 217
total net operating expenses 2096 2151 – 163 2096 2314
continuing operations discontinued operations total
operating profit is stated after charging
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
depreciation and impairment 320 327 – 24 320 351
cost of inventories 9885 9703 – 1483 9885 11186
amortisation of other intangible assets note 12 266 267 – – 266 267
amortisation of computer software note 12 09 09 – – 09 09
operating lease expense 119 86 – 07 119 93
staff costs 3675 3538 – 340 3675 3878
research and development costs 24 24 – 06 24 30
loss on disposal of property plant and equipment 03 04 – – 03 04
the analysis of auditor remuneration is as follows
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
fees payable to the company’s auditor for the audit of the company’s annual accounts 06 06
fees payable to the company’s auditor and their associates for other services to the group
– the audit of the company’s subsidiaries pursuant to legislation 08 08 
total audit fees 14 14
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
tax services 13 16
corporate finance services 11 01
other 02 02
total nonaudit fees 26 19
fees for the audit of the company’s accounts represent fees payable to deloitte llp in respect of the audit of the company’s 
individual financial statements and the group’s consolidated financial statements corporate finance services include due diligence 
and other transaction related services 64 melrose plc
notes to the accounts 
continued
annual report 2010 
7 revenues and expenses continued
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
staff costs during the year including directors
wages and salaries 3049 2870
social security costs 439 444
pension costs
– defined benefit plans note 23 43 73
– defined contribution plans note 23 144 151
total continuing staff costs 3675 3538
discontinued staff costs – 340
total staff costs 3675 3878
 year ended 
 31 december
 2010 
 number
 year ended
 31 december  
 2009 
 number
average number of persons employed including directors
energy 3277 3558
lifting 2917 2886
dynacast 2647 2141
other industrial 2300 2415
central – corporate 33 29
total continuing operations 11174 11029
discontinued operations – 1473
total average number of persons employed 11174 12502
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
finance costs and income
interest on bank loans and overdrafts 272 254
amortisation of costs of raising finance 23 21
interest on obligations under finance leases 01 01
fair value loss on financial instruments transferred from equity – 04
net finance cost of pensions 41 66
unwind of discount on provisions note 20 17 16
total finance costs 354 362
finance income note 4 93 51 
total continuing operations 261 311
discontinued operations note 9 – 04
total net finance costs 261 315
the finance cost of pensions is the interest cost on benefit obligations of £573 million net of the expected return on plan assets of 
£532 million 2009 £552 million and £486 million respectively business performance governance financials shareholder information
melrose plc 65 annual report 2010 
8 tax
continuing operations discontinued operations total
analysis of chargecredit in year
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
current tax 288 262 – 16 288 278 
deferred tax note 21 148 11 – 41 148 52 
total income tax charge 140 273 – 57 140 330 
tax charge on headline
1
 operating profit after 
 finance costs and finance income 444 361 – 22 444 383
tax on net exceptional incomecosts 43 13 – 35 43 22
exceptional tax credit 235 – – – 235 – 
tax in respect of intangible asset amortisation 112 75 – – 112 75
total income tax charge 140 273 – 57 140 330 
1 as defined on the income statement
the tax charge for the year ended 31 december 2010 includes an exceptional tax credit of £235 million that relates to the 
recognition of a deferred tax asset that is considered to be recoverable
of the total tax charge for the year ended 31 december 2009 £57 million related to trading in discontinued divisions disposed  
of during 2009 no tax charge or credit arose on the profit including the cumulative exchange movement recycled from equity  
of £97 million on the disposal of the relevant subsidiaries 
the tax for the current year is lower 2009 higher than the average standard rate of corporation tax in the uk for the year of  
280 2009 280 the differences are explained in the following table
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
profit on ordinary activities before tax
continuing operations 1553 820 
discontinued operations note 9 – 206 
1553 1026 
tax on profit on ordinary activities at uk corporate tax rate 280 2009 280 435 287 
tax effect of
net permanent differences – 20 
net non deductible exceptional items 12 12 
adjustment in respect of foreign tax rates 02 14 
effect of uk rate change on deferred tax liability 38 – 
timing differences not previously recognised in deferred tax 29 58
prior year tax adjustments 03 55 
exceptional tax credit 235 – 
total tax charge for the year 140 330 
in addition to the amount charged to the income statement a credit of £79 million 2009 £130 million has been recognised 
directly in the statement of comprehensive income this represents a tax credit of £81 million 2009 £153 million in respect of 
retirement benefit obligations and a tax charge of £02 million 2009 £23 million in respect of movements on cash flow hedges 66 melrose plc
notes to the accounts 
continued
annual report 2010 
9 discontinued operations
financial performance of discontinued operations in the prior year includes the logistex us logistex europe rhombus and 
welland forge businesses which were all disposed of during 2009
 notes
 year ended
 31 december  
 2009
 £m
revenue 45 1856 
operating costs before exceptional items 1704
headline
1
 operating profit 152
reported as exceptional items
labour related oneoff costs 19
us retiree benefit plan closures 77 
net finance costs 7 04
profit before tax 206 
tax charge 8 57
profit after tax 149 
cumulative exchange difference recycled on disposals 25 114 
loss on disposal of net assets 17
profit for the year from discontinued operations 246 
1 as defined on the income statement
10 dividends
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
second interim dividend for the year ended 31 december 2009 of 480p 2008 nil 239 –
final dividend for the year ended 31 december 2009 paid of nil 2008 425p – 211
interim dividend for the year ended 31 december 2010 paid of 400p 2009 290p 199 145
438 356
proposed second interim dividend for year ended 31 december 2010 of nil 2009 480p – 239
proposed final dividend for the year ended 31 december 2010 of 700p 2009 nil 348 –
a final dividend of 70p was proposed by the board on 9 march 2011 and in accordance with ias 10 has not been included as a 
liability in these financial statements business performance governance financials shareholder information
melrose plc 67 annual report 2010 
11 earnings per share
earnings
 year ended 
 31 december
 2010
 £m
 year ended
 31 december  
 2009
 £m
profit for the purposes of earnings per share 1411 795 
less profit for the year from discontinued operations note 9 – 246
earnings for basis of earnings per share from continuing operations 1411 549 
exceptional costs note 6 103 239 
exceptional income note 6 214 140
intangible asset amortisation 266 267 
exceptional tax and tax on exceptional items and intangible asset amortisation 304 88 
earnings for basis of headline
1
 earnings per share from continuing operations 1262 827 
1 as defined on the income statement  
 number number
weighted average number of ordinary shares for the purposes of basic earnings per share million 4976 4976
further shares for the purposes of fully diluted earnings per share million 253 104
weighted average number of ordinary shares for the purposes of diluted earnings per share million 5229 5080
earnings per share
 year ended 
 31 december
 2010
 pence
 year ended
 31 december  
 2009
 pence
basic earnings per share
from continuing and discontinued operations 284 160
from continuing operations 284 110
from discontinued operations – 50
fully diluted earnings per share
from continuing and discontinued operations 270 156
from continuing operations 270 108
from discontinued operations – 48
headline
1
 basic earnings per share
from continuing operations 254 166
headline
1
 fully diluted earnings per share
from continuing operations 241 163
1 as defined on the income statement 68 melrose plc
notes to the accounts 
continued
annual report 2010 
12 goodwill and other intangible assets
 goodwill 
 £m
 other 
 intangible
 assets
 £m
 computer
 software
 £m
 total 
 £m
cost
at 1 january 2009 8294 4779 35 13108 
additions – – 09 09 
disposals – – 07 07
disposal of businesses – – 13 13
exchange adjustments 502 281 01 782
at 31 december 2009 7792 4498 25 12315 
acquisitions 78 07 – 85 
additions – – 12 12 
disposals – – 07 07
exchange adjustments 111 42 – 153 
at 31 december 2010 7981 4547 30 12558 
amortisation
at 1 january 2009 – 219 15 234
charge for period – 267 09 276
disposals – – 07 07 
disposal of businesses – – 12 12 
exchange adjustments – 19 – 19 
at 31 december 2009 – 467 05 472
charge for the period – 266 09 275
disposals – – 07 07 
exchange adjustments – 03 01 02
at 31 december 2010 – 736 06 742
net book value  
at 31 december 2010 7981 3811 24 11816 
at 31 december 2009 7792 4031 20 11843 
other intangible assets include patented technology customer relationships and trade names 
goodwill has been allocated to the business segments each of which comprises several cashgenerating units as follows
 31 december
 2010
 £m
 31 december  
 2009
 £m
energy 2521 2451
lifting 2997 2926
dynacast 2076 2035
other industrial 387 380
7981 7792
the group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be impaired
the recoverable amounts of the cashgenerating units are determined from value in use calculations the key assumptions for the 
value in use calculations are those regarding the discount rates growth rates and expected changes to selling prices and direct 
costs during the period the group estimates discount rates using pretax rates that reflect current market assessments of the time 
value of money and the risks specific to each cashgenerating unit the growth rates are based on a prudent estimate of long term 
industry growth forecasts changes in selling prices and direct costs are based on past practices and expectations of future 
changes in the market
the group prepares cash flow forecasts derived from financial budgets approved by management and extrapolates cash flows 
based on estimated growth rates of between 2 and 3 2009 2 and 3 this rate does not exceed the average long term 
growth rate for the relevant markets the pretax discount rate applied is between 8 and 10 2009 7 and 9 depending on 
the risk elements associated with each cashgenerating unit no impairment was identified and a reasonable possible change in the 
assumptions applied would not result in any impairment business performance governance financials shareholder information
melrose plc 69 annual report 2010 
acquisition of subsidiaries
on 12 february 2010 the group acquired 100 of the issued share capital and obtained control of generator  motor services  
of pennsylvania llc “gms” a company operating in north america gms is a supplier of aftermarket services to the 
turbogenerator industry
the following assets and liabilities were acquired
 acquiree’s 
 carrying 
 amount
 £m
 fair value  
 adjustments
 £m
 fair value
 £m
property plant and equipment 04 01 03 
intangible assets – 07 07 
trade and other receivables 10 06 04 
trade and other payables 02 04 06
provisions – 03 03
deferred tax liabilities – 03 03
total identifiable assets 12 10 02 
goodwill 78 
total consideration 80 
satisfied by
cash consideration 80 
the adjustments to the carrying values on the acquisition above have been included to represent the fair value of the assets and 
liabilities acquired
the gms business contributed £72 million to revenue and £15 million to headline operating profit during the period from 
acquisition to 31 december 2010
acquisition costs of £02 million have been incurred and these have been expensed as exceptional costs in the income statement 
see note 6
the goodwill arising on the gms acquisition is attributable to the anticipated profitability of the incremental distribution of the 
company’s products and expected synergies 
acquisition of noncontrolling interest
on 20 september 2010 the group acquired the 20 noncontrolling interest of the bridon hangzhou ropes company limited 
within the lifting division for cash consideration of £09 million
12 goodwill and other intangible assets continued 70 melrose plc
notes to the accounts 
continued
annual report 2010 
13 property plant and equipment
 land and  
 buildings 
 £m
 plant and  
 equipment 
 £m
 total
 £m
cost
at 1 january 2009 1233 2290 3523 
additions 44 192 236 
disposals 04 47 51
disposal of businesses 84 37 121
exchange adjustments 63 140 203
at 31 december 2009 1126 2258 3384 
acquisitions – 03 03 
additions 38 269 307 
disposals – 63 63
disposal of businesses – 05 05
exchange adjustments 11 39 50 
at 31 december 2010 1175 2501 3676 
accumulated depreciation and impairment
at 1 january 2009 38 566 604
charge for the period 32 304 336
impairments – 04 04
disposals – 37 37 
disposal of businesses 03 09 12 
exchange adjustments 03 31 34 
at 31 december 2009 64 797 861
charge for the period 34 286 320
disposals – 57 57 
disposal of businesses – 02 02 
exchange adjustments 03 14 17
at 31 december 2010 101 1038 1139
net book value  
at 31 december 2010 1074 1463 2537 
at 31 december 2009 1062 1461 2523 
14 interests in joint ventures
 31 december
 2010
 £m
 31 december  
 2009
 £m
aggregated amounts relating to joint ventures
total assets 04 30 
total liabilities 08 27
interests in joint ventures 04 03 
share of joint venture revenues 08 37 
share of results of joint ventures 04 04 
dividends received 03 02
interests in joint ventures moved to a net liability position during the year and has therefore been recognised in current liabilities
a list of all the significant investments in subsidiaries including the name country of incorporation and proportion of ownership 
interest is given in note 3 to the company’s separate financial statements business performance governance financials shareholder information
melrose plc 71 annual report 2010 
15 inventories
 31 december
 2010
 £m
 31 december  
 2009
 £m
raw materials 543 542
work in progress 796 885
finished goods 824 799
2163 2226
the directors consider that there is no material difference between the balance sheet value of inventories and their replacement cost
longterm contracts
 31 december
 2010
 £m
 31 december  
 2009
 £m
contracts in progress at the balance sheet date
amounts due from contract customers included in trade and other receivables 49 41 
amounts due to contract customers included in trade and other payables 52 124
03 83
contract costs incurred plus recognised profit less recognised losses to date 261 197 
less progress billings 264 280
03 83
the average life of longterm contracts is 23 years
16 trade and other receivables
current
 31 december
 2010
 £m
 31 december  
 2009
 £m
trade receivables 2315 1976 
allowance for doubtful receivables 66 81
other receivables 131 125 
prepayments 197 110 
2577 2130 
trade receivables are noninterest bearing credit terms offered to customers vary upon the country of operation but are generally 
between 30 and 90 days
noncurrent
 31 december
 2010
 £m
 31 december  
 2009
 £m
other receivables  19 –
an allowance has been made for estimated irrecoverable amounts made with reference to past default experience and 
management’s assessment of credit worthiness an analysis of which is as follows
 energy
 £m
 lifting
 £m
 dynacast
 £m
 other  
 industrial
 £m
 central
 £m
 total
 £m
at 1 january 2009 41 20 24 24 02 111 
income statement charge 04 06 06 05 – 21 
utilised 15 12 06 13 01 47
exchange differences 02 – 01 01 – 04
at 31 december 2009 28 14 23 15 01 81 
income statement charge 02 03 04 02 01 12 
utilised 08 06 08 07 – 29
exchange differences – – 01 01 – 02 
at 31 december 2010 22 11 20 11 02 66  72 melrose plc
notes to the accounts 
continued
annual report 2010 
the concentration of credit risk is limited due to the number of customers being many and because they are unrelated  
to each other 
ageing of impaired trade receivables past due
 31 december
 2010
 £m
 31 december  
 2009
 £m
0 – 30 days 13 11
31 – 60 days 09 10
60 days 44 60
66 81
included in the group’s trade receivables balance are overdue trade receivables with a carrying amount of £434 million  
31 december 2009 £442 million against which an appropriate provision of £66 million 31 december 2009 £81 million is held
the balance deemed recoverable of £368 million 31 december 2009 £361 million is past due as follows
 31 december
 2010
 £m
 31 december  
 2009
 £m
0 – 30 days 259 287
31 – 60 days 65 45
60 days 44 29
368 361
the directors consider that the carrying amount of trade and other receivables including amounts not past due and not impaired 
approximates to their fair value
17 cash and cash equivalents
 31 december
 2010
 £m
 31 december  
 2009
 £m
cash and cash equivalents 1957 1475
cash and cash equivalents comprises cash at bank and in hand which earns interest at floating rates based on daily bank deposit 
rates and shortterm deposits which are made for varying periods of between one day and one month and earn interest at the 
respective shortterm deposit rates the carrying amount of these assets is considered to be equal to their fair value
18 trade and other payables
current
 31 december
 2010
 £m
 31 december  
 2009
 £m
trade payables 1605 1268
other payables 878 961
other taxes and social security 115 88
accruals 955 878
3553 3195
trade payables are noninterest bearing normal settlement terms vary by country but are usually between 30 and 90 days  
other payables are noninterest bearing and have an average term of approximately 60 days
noncurrent
 31 december
 2010
 £m
 31 december  
 2009
 £m
other payables 33 03
accruals 14 15
47 18
the directors consider that the carrying amount of trade and other payables approximates to their fair value
16 trade and other receivables continued business performance governance financials shareholder information
melrose plc 73 annual report 2010 
19 interestbearing loans and borrowings
this note provides information about the contractual terms of the group’s interestbearing loans and borrowings details of the 
group’s exposure to credit liquidity interest rate and foreign currency risk are included in note 24
current noncurrent total
 31 december
 2010
 £m
 31 december  
 2009
 £m
 31 december
 2010
 £m
 31 december  
 2009
 £m
 31 december
 2010
 £m
 31 december  
 2009
 £m
fixed rate obligations
bank borrowings – euro loan austria
1
03 03 – 05 03 08 
03 03 – 05 03 08 
floating rate obligations
bank borrowings – us dollar loan
2
– – 3885 3741 3885 3741 
bank borrowings – euro loan
3
– – 503 516 503 516 
bank borrowings – sterling loan
4
– – 500 500 500 500 
finance leases – 10 – – – 10 
– 10 4888 4757 4888 4767 
unamortised finance costs – – 60 83 60 83
total interestbearing loans and borrowings 03 13 4828 4679 4831 4692
1 interest rate 15 final maturity july 2011
2 interest rate libor 15 final maturity april 2013
3 interest rate euribor 15 final maturity april 2013
4  interest rate libor 15 final maturity april 2013
the group utilises a £750 million multicurrency committed bank facility that provides term loan and revolving credit facilities 
through to 22 april 2013 a number of group companies act as guarantors to this facility drawdowns bear interest at interbank 
rates of interest plus a margin determined by reference to the group’s performance under its debt cover covenant ratio and ranges 
between 125 and 235 the margin as at 31 december 2010 was 15
throughout the year the group remained compliant with all covenants under these facilities the term loan facility is fully drawn 
down having originally been set at £500 million in 2009 the group repaid and cancelled us 80 million of this term loan facility 
following the disposal of the logistex businesses at 31 december 2010 the undrawn amount of the £250 million revolving credit 
facility was £2346 million 31 december 2009 £2249 million with £154 million 31 december 2009 £251 million being utilised  
for letters of credit
the interest rate sensitivity analysis after taking into account hedging interest rate derivatives is described in note 24
maturity of financial liabilities
the maturity profile of anticipated future cash flows including interest in relation to the group’s non derivative financial liabilities  
on an undiscounted basis and which therefore differs from both the carrying value and fair value is shown in the table below 
interest on floating rate debt is based on the relevant libor curve for us dollar and sterling balances and euribor curve for  
euro balances interest on hedging interest rate swaps is based on the relevant forward libor curve for us dollar amounts and 
euribor curve for euro and is illustrated as a net cash flow
 bank loans
 £m
 finance  
 lease  
 obligations 
 £m
 total  
 interestbearing  
 loans and  
 borrowings 
 £m 
 other  
 financial  
 liabilities  
 £m
 derivative  
 financial  
 liabilities 
 £m
 total  
 financial  
 liabilities 
 £m
within one year 103 – 103 3553 83 3739 
in one to two years 408 – 408 47 37 492 
in two to three years 4662 – 4662 – 02 4664 
effect of financing rates 342 – 342 – – 342
at 31 december 2010 4831 – 4831 3600 122 8553 
within one year 149 10 159 3195 28 3382 
in one to two years 201 – 201 18 01 220 
in two to three years 533 – 533 – – 533 
after three years 4564 – 4564 – 01 4565 
effect of financing rates 765 – 765 – – 765
at 31 december 2009 4682 10 4692 3213 30 7935  74 melrose plc
notes to the accounts 
continued
annual report 2010 
20 provisions
 
 surplus
 leasehold 
 property costs 
 £m
 environmental  
 and  
 legal costs 
 £m
 incentive  
 scheme  
 related 
 £m
 fki
 captive  
 insurance 
 £m
 other 
 £m
 total 
 £m
at 31 december 2009 304 566 77 202 293 1442 
acquired – – – – 03 03 
disposal – – – – 02 02
utilised 64 55 – 47 158 324
release
1
– – – 56 82 138
arising in the year
2
04 55 48 – 53 160 
unwind of discount note 7 12 05 – – – 17 
exchange differences 08 06 – 11 04 29 
at 31 december 2010 264 577 125 110 111 1187 
current 52 201 – – 106 359 
noncurrent 212 376 125 110 05 828 
264 577 125 110 111 1187 
1  includes amounts recognised within exceptional income of £56 million relating to the commutation of certain insurance policies held in the fki captive insurance company and £82 million 
released following the reassessment of an onerous contract provision set up during the fair value exercise on the acquisition of fki
2  includes new provisions in the surplus leasehold property costs and other provision categories relating to restructuring programmes which include the integration of the transformers business 
into the turbogenerators business also includes an increase of a legal provision of £55 million relating to a business acquired in the fki acquisition and the £48 million increase to divisional 
senior management long term incentive plans
the provision for surplus leasehold property costs is the estimated net rentals payable over the period of the leases together with 
any dilapidation costs 
environmental and legal provisions relate to the estimated remediation costs of pollution soil and groundwater contamination at 
certain sites and estimated future costs and settlements in relation to legal claims 
incentive scheme related provisions are in respect of long term incentive plans for divisional senior management
the fki captive insurance provision relates to known and actuarial assessments of future claims covered by the captive  
including but not limited to public and product liability employer’s liability in the uk workers’ compensation in the us and us 
automotive claims 
other provisions relate primarily to onerous contracts and restructuring costs to be incurred 
where appropriate provisions have been discounted using a discount rate of 3 31 december 2009 3 – 6 business performance governance financials shareholder information
melrose plc 75 annual report 2010 
21 deferred tax
the following are the major deferred tax assets and liabilities recognised by the group and movements thereon during the current 
and prior reporting period
deferred tax 
assets deferred tax liabilities
 notes
 tax losses  
 and other  
 assets
 £m
 accelerated  
 capital  
 allowances  
 and other  
 liabilities 
 £m
 deferred  
 tax on  
 intangible  
 assets 
 £m
 total deferred  
 tax liabilities 
 £m
 total net 
 deferred tax 
 £m
at 1 january 2009 298 85 1277 1362 1064
chargecredit to income 8 107 20 75 55 52
creditcharge to equity 74 23 – 23 51 
disposal 20 – – – 20
exchange differences 24 04 73 77 53 
at 31 december 2009 221 124 1129 1253 1032
credit to income 8 26 10 112 122 148 
creditcharge to equity 81 02 – 02 79 
acquisition – 03 – 03 03
exchange differences 02 02 11 13 11
at 31 december 2010 330 121 1028 1149 819
as at 31 december 2010 the group has gross unused losses of £2517 million 31 december 2009 £2514 million available for 
offset against future profits none of which have been recognised within the balance sheet due to the divisional and geographic 
split of anticipated future profit streams 31 december 2009 recognised asset £38 million these losses may be carried forward 
indefinitely subject to certain continuity of business requirements an asset of £330 million 31 december 2009 £183 million has 
been recognised in respect of other timing differences
a significant part of the retirement benefit obligations recognised in the group accounts relates to the mckechnie uk pension plan 
the fki uk pension plan and the fki us pension plan a deferred tax asset of £129 million 31 december 2009 £74 million has 
been recognised on these obligations to the extent that they are expected to generate tax deductions against foreseeable profits
as at 31 december 2010 the aggregate amount of temporary differences associated with undistributed earnings of subsidiaries  
for which deferred tax liabilities have not been recognised was £45 million 31 december 2009 £40 million no liability has been 
recognised in respect of these differences because the group is in a position to control the timing of the reversal of the temporary 
differences and it is probable that such differences will not reverse in the foreseeable future
22 sharebased payments
melrose 2009 incentive share scheme
the company has 50000 2009 incentive shares held by directors employees and the melrose plc employee benefit trust  
further details of the scheme are provided in the remuneration report on pages 40 and 41
the estimated fair value attributable to the 2009 incentive shares formerly the 2007 incentive shares using a black scholes option 
pricing model at 31 december 2010 was £707 million 31 december 2009 £210 million 
the inputs into the black scholes model used to fair value the scheme when it was originally established in 2007 were as follows
 valuation  
 assumptions
weighted average share price £167
weighted average exercise price £100
expected volatility 250
expected life as at inception 48yrs
risk free interest 20
expected dividend yield 32
expected volatility was determined by calculating the historical volatility of the company’s share price 
the group recognised an ifrs 2 accrual of £18 million 2009 £18 million in relation to the melrose 2009 incentive share scheme  
in 2010  76 melrose plc
notes to the accounts 
continued
annual report 2010 
23 retirement benefit obligations
melrose holds several pension plans covering many of its employees and operating in several jurisdictions
the most significant defined benefit plans are
  the fki uk pension plan this is defined benefit in type and is a funded plan where the future liabilities for members’ benefits are 
provided for by the accumulation of assets held externally to the group in separate trustee administered funds
   the mckechnie uk pension plan this is defined benefit in type and is a funded plan other than £33 million of unfunded 
liabilities where the future liabilities for members’ benefits are provided for by the accumulation of assets held externally to  
the group in separate trustee administered funds
  the fki us pension plan this is defined benefit in type and is a funded plan where the future liabilities for members’ benefits 
are provided for by the accumulation of assets held externally to the group in separate trustee administered funds
other plans include the cleco logistex uk plan the dynacast us defined benefit plan and a number of funded and unfunded 
defined benefit arrangements across europe
further details of the status of the significant plans are disclosed in the directors’ report on page 32
the cost of these plans is determined in accordance with ias 19 with the advice of independent professionally qualified actuaries 
on the basis of formal actuarial valuations using the projected unit credit method in line with normal practice these valuations are 
undertaken triennially in the uk and annually in the us
the valuations are based on the uk full actuarial valuations as of 31 december 2008 updated at 31 december 2010 by independent 
actuaries and us full actuarial valuations as of 1 january 2010 updated at 31 december 2010 by independent actuaries
the group also operates unfunded retiree medical and welfare benefit plans principally in the us 
during the year it was announced to members that the fki uk pension plan would be closed to the accrual of future benefit as of 
28 february 2011 resulting in a curtailment gain of £131 million
the group also entered into a buyout arrangement to dispose of the liabilities of the bridon group senior executive plan formerly 
part of the fki uk pension plans for £40 million in excess of the carrying value of the plan net liabilities 
the company contributes £185 million per annum to the fki uk pension plan and £46 million per annum to the mckechnie uk 
pension plan
in addition to this there are a number of defined contribution plans across the group contributions during the year were  
£144 million 2009 £151 million
actuarial assumptions
the major weighted average assumptions used by the actuaries in calculating the group’s pension plan assets and liabilities are  
as set out below
31 december 2010
 fki uk  
 plan 
  pa
 mckechnie 
 uk plan 
  pa 
 fki us  
 pension  
 plan 
  pa
 us retiree  
 benefit  
 plans 
  pa
 other  
 plans
  pa
rate of increase in salaries 400 395 350 na 300
rate of increase in pensions in payment 330 345 na na 322
discount rate 555 555 510 510 544
rpi inflation assumption 345 345 275 na 341
31 december 2009
 fki uk  
 plan 
  pa
 mckechnie 
 uk plan 
  pa 
 fki us  
 pension  
 plan 
  pa
 us retiree  
 benefit  
 plans 
  pa
 other  
 plans
  pa
rate of increase in salaries 395 395 325 na 300
rate of increase in pensions in payment 330 345 na na 317
discount rate 575 575 580 580 572
rpi inflation assumption 345 345 275 na 324
in addition to this for certain deferred members it has been determined that inflation will be based upon the consumer price  
index “cpi” rather than the retail price index “rpi” this results in an inflation rate 085 lower than rpi for those members  
the resulting reduction in the present value of plan liabilities of £123 million is included in the consolidated statement of  
comprehensive income business performance governance financials shareholder information
melrose plc 77 annual report 2010 
23 retirement benefit obligations continued
mortality
fki uk pension plan 
mortality assumptions for the most significant plan in the group the fki uk pension plan as at 31 december 2010 are based on 
90 of the “heavy” self administered pension scheme saps tables reflecting the plan membership being largely employed in the 
industrial sector future improvements are in line with 80 60 for women of the long cohort subject to a minimum underpin  
of 1 pa
the assumptions are that a member currently aged 65 will live on average for a further 202 years if they are male and for a  
further 236 years if they are female for a member who retires in 2035 at age 65 the assumptions are that they will live for a  
further 227 years after retirement if they are male and for a further 259 years after retirement if they are female
the mortality assumptions are in line with those adopted for the triennial valuation results as at 31 december 2008
sensitivities
sensitivities around movements in the principal assumptions of the discount rate inflation rate and mortality are discussed in the 
finance director’s review on page 23
balance sheet disclosures
the amount recognised in the balance sheet arising from net liabilities in respect of defined benefit plans is as follows
 31 december 
 2010 
 £m
 31 december  
 2009 
 £m
 31 december  
 2008 
 £m
 31 december  
 2007 
 £m
 31 december  
 2006 
 £m
plan liabilities 10394 10335 9397 1484 1479
plan assets 9198 8644 8105 1232 925 
limit on pension plan surplus – – 141 – –
net liabilities 1196 1691 1433 252 554
the five year history of experience adjustments is as follows
 31 december 
 2010 
 £m
 31 december  
 2009 
 £m
 31 december  
 2008 
 £m
 31 december  
 2007 
 £m
 31 december  
 2006 
 £m
experience adjustments on plan liabilities 238 1309 707 12 05
experience adjustments on plan assets 376 410 789 23 17 
the plan liabilities and assets at 31 december 2010 were split by plan as follows
 fki uk  
 plan 
 £m
 mckechnie 
 uk plan 
 £m 
 fki us  
 pension  
 plan 
 £m
 us retiree  
 benefit  
 plans 
 £m
 other  
 plans
 £m
 total
 £m
plan liabilities 6278 1419 2131 11 555 10394
plan assets 5492 1438 1933 – 335 9198 
net liabilitiesassets 786 19 198 11 220 1196
this amount is presented in the balance sheet
 31 december 
 2010 
 £m
 31 december  
 2009 
 £m
 31 december  
 2008 
 £m
 31 december  
 2007 
 £m
 31 december  
 2006 
 £m
net liabilities
– unfunded plans 210 242 452 41 109
– funded plans 986 1449 840 211 445
limit on pension plan surplus – – 141 – –
1196 1691 1433 252 554 78 melrose plc
notes to the accounts 
continued
annual report 2010 
expected returns and fair value of assets
expected return fair value of assets
 31 december 
 2010 
 
 31 december  
 2009 
 
 31 december 
 2010 
 £m
 31 december  
 2009 
 £m
equity instruments 84 85 4111 3121
debt instruments 51 48 4305 4407
other assets 34 61 782 1116
weighted averagetotal 64 63 9198 8644
the expected return on plan assets at 31 december 2010 is based on market expectations at 1 january 2011 for returns on assets 
over the entire life of the obligation
there is no self investment other than in tracker funds either in the group’s own financial instruments or property or other assets 
used by the group
movements in the present value of defined benefit obligations during the year
 year ended  
 31 december 
 2010 
 £m
 year ended  
 31 december 
 2009 
 £m
at beginning of year 10335 9397 
disposal of pension plan 183 18
current service cost 43 73 
interest cost 573 552 
actuarial losses 238 1309 
benefits paid 528 483
plan curtailments 165 235
currency lossesgains 81 260
at end of year 10394 10335 
movements in the fair value of plan assets during the year
 year ended  
 31 december 
 2010 
 £m
 year ended  
 31 december 
 2009 
 £m
at beginning of year 8644 8105 
disposal of pension plan 223 – 
settlement contribution on disposal 49 – 
expected return on assets 532 486 
actuarial gains 376 410 
contributions 275 321 
benefits paid 528 483
currency gainslosses 73 195
at end of year 9198 8644 
the actual return on plan assets was a gain of £908 million 2009 gain of £896 million
23 retirement benefit obligations continued business performance governance financials shareholder information
melrose plc 79 annual report 2010 
23 retirement benefit obligations continued
income statement disclosures
amounts recognised in income in respect of these defined benefit plans are as follows
 year ended  
 31 december 
 2010 
 £m
 year ended  
 31 december 
 2009 
 £m
in arriving at operating profit included within cost of sales 
selling and distribution costs and administration expenses
– current service cost 43 73 
– effects of curtailments and settlements 34 34
included within net finance costs
– interest cost 573 552 
– expected return on assets 532 486
included within exceptional items
– net effects of curtailment and settlements 91 90
included within profit from discontinued operations
– effects of curtailments and settlements – 111
statement of comprehensive income disclosures
the amount recognised in the statement of comprehensive income is as follows
 year ended  
 31 december 
 2010 
 £m
 year ended  
 31 december 
 2009 
 £m
actuarial losses on plan liabilities 238 1309
actuarial gains on plan assets 376 410 
138 899
reversal of limit on pension plan surplus – 141 
138 758
the cumulative amount of actuarial gains and losses recognised in the statement of comprehensive income is a total loss of  
£774 million 2009 loss of £912 million 80 melrose plc
notes to the accounts 
continued
annual report 2010 
24 financial instruments and risk management
the table below sets out the group’s accounting classification of each category of financial assets and liabilities and their fair values 
at 31 december 2010 and 31 december 2009
 energy
 £m
 lifting
 £m
 dynacast
 £m
 other  
 industrial
 £m
 central
 £m
 total
 £m
31 december 2010
financial assets
cash and cash equivalents – – – – 1957 1957 
trade receivables 884 655 412 296 02 2249 
derivative financial assets 23 04 06 01 05 39 
financial liabilities
bank loans – – 03 – 4828 4831
derivative financial liabilities 06 10 01 – 105 122
other financial liabilities 1095 819 651 610 425 3600
31 december 2009
financial assets
cash and cash equivalents – – – – 1475 1475 
trade receivables 720 600 341 230 04 1895 
derivative financial assets 06 04 05 – 11 26 
financial liabilities
bank loans – – 08 – 4674 4682
finance lease obligations – 10 – – – 10
derivative financial liabilities 14 11 02 – 03 30
other financial liabilities 1021 688 604 482 418 3213
credit risk
the group considers its maximum exposure to credit risk to be as follows
 energy
 £m
 lifting
 £m
 dynacast
 £m
 other  
 industrial
 £m
 central
 £m
 total
 £m
31 december 2010
financial assets
cash and cash equivalents – – – – 1957 1957
trade receivables 884 655 412 296 02 2249
derivative financial assets 23 04 06 01 05 39
31 december 2009
financial assets
cash and cash equivalents – – – – 1475 1475
trade receivables 720 600 341 230 04 1895
derivative financial assets 06 04 05 – 11 26
the group’s principal financial assets are cash and shortterm deposits trade receivables and derivative financial assets which 
represent the group’s maximum exposure to credit risk in relation to financial assets
the group’s credit risk on cash and cash equivalents and derivative financial instruments is limited because the counterparties are 
banks with high creditratings assigned by international creditrating agencies the group’s credit risk is primarily attributable to its 
trade receivables the amounts presented in the balance sheet are net of allowances for doubtful receivables estimated by the 
group’s management based on prior experience and their assessment of the current economic environment note 16 provides 
further details regarding the recovery of trade receivables
liquidity risk
the group’s policy for managing liquidity risk is set out in the finance director’s review on page 24 business performance governance financials shareholder information
melrose plc 81 annual report 2010 
fair values
the directors consider that the financial assets and liabilities have fair values not materially different to the carrying values
foreign exchange contracts
as at 31 december 2010 the group held foreign exchange forward contracts to mitigate expected exchange fluctuations on  
cash flows on sales to customers and purchases from suppliers these instruments operate as cash flow hedges unless the 
amounts involved are small the terms of the material currency pairs with total principals in excess of £1 million equivalent are  
as follows 
 31 december
 2010
 selling currency
 millions
 31 december
 2010
 average hedged 
 rate
 31 december
 2009
 selling currency
 millions
 31 december
 2009
 average hedged 
 rate
sell australian dollarbuy sterling aud  46 gbpaud 169 aud  46 gbpaud 190
sell canadian dollarbuy sterling cad  61 gbpcad 162  –  –
sell canadian dollarbuy us dollar  –  – cad  57 usdcad  109
sell czech korunabuy euro czk  1600 eurczk  2489 czk  841 eurczk  2790
sell eurobuy czech koruna eur  415 eurczk  2534 eur  525 eurczk  2637
sell eurobuy sterling eur  164 gbpeur  118 eur  340 gbpeur  113
sell eurobuy us dollar eur  14 eurusd  134  –  –
sell norwegian kronebuy sterling nok  117 gbpnok  958 nok  159 gbpnok  957
sell polish zlotybuy sterling pln  103 gbppln  470 pln  194 gbppln  468
sell singapore dollarbuy us dollar sgd  52 usdsgd  137  –  –
sell south african randbuy euro zar  302 eurzar  978  –  –
sell south african randbuy sterling zar  164 gbpzar  1154  –  –
sell sterlingbuy czech koruna gbp  322 gbpczk  2989 gbp  196 gbpczk  2971
sell sterlingbuy euro gbp  118 gbpeur  117 gbp  253 gbpeur  111
sell sterling buy us dollar gbp  13 gbpusd  157 gbp  241 gbpusd  164
sell uae dirhambuy sterling aed  75 gbpaed  564  –  –
sell us dollarbuy canadian dollar usd  138 usdcad  104 usd  157 usdcad  108
sell us dollarbuy chinese renminbi usd  163 usdcny  656 usd  61 usdcny  677
sell us dollar buy czech koruna usd  42 usdczk  1906  –  –
sell us dollarbuy euro usd  71 eurusd  136 usd  62 eurusd  147
sell us dollarbuy korean won  –  – usd  20 usdkrw 118430
sell us dollarbuy malaysian ringgit usd  80 usdmyr  315  –  –
sell us dollarbuy singapore dollar usd  140 usdsgd  135 usd  114 usdsgd  143
sell us dollarbuy sterling usd  675 gbpusd  154 usd  646 gbpusd  164
the foreign exchange contracts all mature between january 2011 and march 2012
the fair value of the contracts at 31 december 2010 was a net asset of £15 million 31 december 2009 net liability of £12 million
commodity swap contracts
as at 31 december 2010 the group held three copper swap contracts that were designated as cash flow hedges these swap 
contracts lock the group into fixed copper prices to protect against fluctuations in the market price of copper the terms of the 
contracts are
commodity swaps commodity total quantity maturity pricing
group pays copper 80 tonnes 4 january 2011 fixed price of us dollar 8063 per tonne
group receives copper 80 tonnes 4 january 2011 average lme price for the month
group pays copper 80 tonnes 2 february 2011 fixed price of us dollar 8348 per tonne
group receives copper 80 tonnes 2 february 2011 average lme price for the month
group pays copper 80 tonnes 2 march 2011 fixed price of us dollar 8200 per tonne
group receives copper 80 tonnes 2 march 2011 average lme price for the month
the fair value of the contracts at 31 december 2010 was a net asset of £02 million 31 december 2009 nil
24 financial instruments and risk management continued 82 melrose plc
notes to the accounts 
continued
annual report 2010 
hedge of net investments in foreign entities
included in interestbearing loans at 31 december 2010 were the following amounts which were designated as hedges of  
net investments in the group’s subsidiaries in europe and the usa and were being used to reduce the exposure to foreign 
exchange risks 
borrowings in local currency
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
us dollar 3885 3741
euro 503 516
interest rate sensitivity analysis
a one percentage point rise in market interest rates for all currencies would decrease profit before tax by the following amounts 
assuming the net debt as at the balance sheet date was outstanding for the whole year
 year ended 
 31 december 
 2010 
 £m
 year ended 
 31 december 
 2009 
 £m
sterling 01 01
us dollar – 03
euro 02 02
03 06
interest rate risk management
the group’s policy for managing interest rate risk is set out in the finance director’s review
in january 2009 the group entered into a number of interest rate swaps to hedge 5460 million of us dollar denominated bank 
debt into fixed rates of interest under the terms of these swaps the group will pay an average rate of 21 pa plus a 20 margin 
annually in arrears and receive 3 month us dollar libor plus 20 quarterly in arrears these swaps all mature in january 2013 
in april 2009 the group also took out an interest rate swap to hedge €333 million of euro denominated debt into fixed rates of 
interest the swap is structured in a similar way to the us dollar interest rate swaps with the group paying 26 plus a 20 margin 
annually in arrears and receiving 3 month euribor plus 20 quarterly in arrears this swap matures in april 2013 
a corresponding amount of debt drawn under the £500 million term loan is matched with these swaps
these interest rate swaps have been designated as cash flow hedges and were highly effective throughout 2010 the fair value  
of the contracts at 31 december 2010 was a net liability of £100 million 31 december 2009 net asset of £08 million
foreign currency risk
the group’s policy for managing foreign currency risk is set out in the finance director’s review
24 financial instruments and risk management continued business performance governance financials shareholder information
melrose plc 83 annual report 2010 
foreign currency sensitivity analysis
currency risks are defined by ifrs 7 as the risk that the fair value or future cash flows of a financial asset or liability will fluctuate 
because of changes in foreign exchange rates
the following table details the transactional impact of hypothetical changes in foreign exchange rates on financial assets and 
liabilities at the balance sheet date illustrating the increase in group operating profit caused by a 10 cent strengthening of the us 
dollar and euro against sterling and a 10 strengthening of the czech koruna against sterling compared to the year end spot rate 
the analysis assumes that all other variables in particular other foreign currency exchange rates remain constant the group 
operates in a range of different currencies and those with a material impact are noted here 
 year ended 
 31 december 
 2010 
 £m
 year ended 
 31 december 
 2009 
 £m
us dollar 18 16
euro 27 12
czech koruna 07 04
the following table details the impact of hypothetical changes in foreign exchange rates on financial assets and liabilities at the 
balance sheet date illustrating the decreaseincrease in group equity caused by a 10 cent strengthening of the us dollar and 
euro against sterling and a 10 strengthening of the czech koruna against sterling the analysis assumes that all other variables 
in particular other foreign currency exchange rates remain constant the group operates in a range of different currencies and 
those with a material impact are noted here
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
us dollar 16 04
euro 04 05
czech koruna 01 01 
in addition the change in equity due to a 10 cent strengthening of the us dollar and euro against sterling for the translation of net 
investment hedging instruments would be a decrease of £266 million and £47 million respectively however there would be no 
effect on equity because there would be an offset in the currency translation of the foreign operation
fair value measurements recognised in the balance sheet 
foreign currency forward contract fair values are measured using quoted forward exchange rates and yield curves derived from 
quoted interest rates matching the maturities of the contracts
commodity swap fair values are measured using quoted forward commodity prices
interest rate swap contract fair values are measured using yield curves derived from quoted interest rates the fair value is  
shown below
 31 december  
 2010 
 current 
 £m
 31 december 
 2010 
 noncurrent 
 £m
 31 december  
 2010 
 total 
 £m
 31 december  
 2009 
 current 
 £m
 31 december 
 2009 
 noncurrent 
 £m
 31 december  
 2009 
 total 
 £m
derivative financial assets
foreign currency forward contracts 37 – 37 17 – 17 
commodity swaps 02 – 02 – – – 
interest rate swaps – – – 03 06 09 
39 – 39 20 06 26 
derivative financial liabilities
foreign currency forward contracts 22 – 22 28 01 29
interest rate swaps 61 39 100 – 01 01
83 39 122 28 02 30
the fair value of these are derived from inputs other than quoted prices that are observable for the asset or liability either directly 
ie as prices or indirectly ie derived from prices and they therefore are categorised within level 2 of the fair value hierarchy set 
out in ifrs 7
24 financial instruments and risk management continued 84 melrose plc
notes to the accounts 
continued
annual report 2010 
25 issued capital and reserves
share capital
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
allotted calledup and fully paid 
497586779 31 december 2009 497586779 ordinary shares of 02p each 10 10
50000 31 december 2009 50000 2009 incentive shares of £1 each 01 01
11 11
the rights of each class of share are described in the directors’ report on pages 29 and 30
own shares
the trustee of the melrose plc employee benefit trust “ebt” holds 500 2009 incentive shares of £1 each 31 december 2009 
500 in melrose plc the melrose plc ebt also holds 25279 ordinary shares of 02p each in melrose plc 31 december 2009 
25279 relating to unallocated shares following the crystallisation of the original incentive scheme in august 2007 the fki ebt 
holds 158114 ordinary shares of 02p each in melrose plc 31 december 2009 158114 which arose upon disposal of its fki plc 
shares when fki plc was acquired by melrose plc
hedging and translation reserves
the foreign currency translation reserve is used to record exchange differences arising from the translation of the financial 
statements of foreign subsidiaries it is also used to record the foreign exchange movements of instruments designated as  
net investment hedges
hedging and translation reserves
 hedging  
 reserve 
 £m
 translation 
 reserve 
 £m
 total 
 £m
at 1 january 2009 155 1159 1004 
currency translation on net investments – 328 328
gains on cash flow hedges 59 – 59 
taxation adjustments to equity 23 – 23
transfer to income statement on cash flow hedges 118 – 118 
transfer to income statement on disposal of foreign operations – 114 114
at 31 december 2009 01 717 716 
currency translation on net investments – 80 80 
losses on cash flow hedges 78 – 78
taxation adjustments to equity 02 – 02
transfer to income statement on cash flow hedges 05 – 05
transfer to income statement on disposal of foreign operations – 01 01
at 31 december 2010 86 796 710 
  business performance governance financials shareholder information
melrose plc 85 annual report 2010 
26 cash flow statement
 year ended 
 31 december 
 2010 
 £m
 year ended 
 31 december 
 2009 
 £m
reconciliation of headline
1
 operating profit to cash generated by continuing operations
headline
1
 operating profit from continuing operations 1969 1497 
adjustments for
depreciation of property plant and equipment 320 327 
amortisation of computer software 09 09 
restructuring costs paid and decrease in other provisions 344 334
operating cash flows before movements in working capital 1954 1499 
decrease in inventories 112 798 
increasedecrease in receivables 433 661 
increasedecrease in payables 352 658
cash generated by operations 1985 2300 
tax paid 272 34
interest paid 259 134
defined benefit pension contributions paid 275 320
incentive scheme payments – 44
net cash from operating activities from continuing operations 1179 1768 
1 as defined on the income statement
 year ended 
 31 december 
 2010 
 £m
 year ended 
 31 december 
 2009 
 £m
cash flow from discontinued operations
cash generated from discontinued operations – 20
tax received – 01 
defined benefit pension contributions paid – 01
net cash used in operating activities from discontinued operations – 20
investments in joint ventures – 02
purchase of property plant and equipment – 13
proceeds on disposal of property plant and equipment – 02 
net cash used in investing activities from discontinued operations – 13
net cash used in financing activities from discontinued operations – – 
net debt reconciliation
 at  
 31 december  
 2009 
 £m
 cash flow 
 £m
 foreign  
 exchange  
 difference 
 £m
 acquisitions 
 £m
 disposals  
 £m
 other  
 noncash 
 movements 
 £m
 at  
 31 december 
 2010 
 £m
cash 1475 515 59 91 01 – 1957 
debt due within one year 03 05 – – – 05 03
debt due after one year 4679 – 131 – – 18 4828
leases 10 11 – – – 01 – 
net debt 3217 531 72 91 01 24 2874 86 melrose plc
notes to the accounts 
continued
annual report 2010 
27 commitments and contingencies
future total minimum lease payments under finance leases and hire purchase contracts were as follows
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
amounts payable
within one year – 10
after one year but within five years – –
total minimum lease payments – 10
less amounts representing finance charges – –
– 10
future total minimum rentals payable under noncancellable operating leases as at 31 december 2010 were as follows
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
amounts payable
within one year 112 96
after one year but within five years 277 229
over five years 206 175
595 500
capital commitments
at 31 december 2010 there were commitments of £72 million 31 december 2009 £81 million relating to the acquisition of new 
plant and machinery
28 related parties
transactions between the company and its subsidiaries which are related parties have been eliminated on consolidation and are 
not disclosed in this note
the group did not enter into any significant transactions in the ordinary course of business with joint ventures during the current or 
prior year
sales to and purchases from related parties are priced as arms length transactions and generally are settled on 30 day terms 
remuneration of key management personnel
the remuneration of the directors who are the key management personnel of the group is set out below in aggregate for each of 
the categories specified in ias 24 “related party disclosures” further information about the remuneration of individual directors is 
provided in the audited part of the directors’ remuneration report on page 43
 year ended 
 31 december 
 2010 
 £m
 year ended 
 31 december 
 2009 
 £m
shortterm employee benefits 31 26
sharebased payments 16 16
47 42 business performance governance financials shareholder information
melrose plc 87 annual report 2010 
29 post balance sheet events
since 31 december 2010 the group has disposed of three of the smaller businesses namely brush traction logistex uk and 
madico generating aggregated sales proceeds of £207 million
30 contingent liabilities
two bridon companies that the group acquired as part of the acquisition of fki plc are defendants with their american distributor 
in an action in the us federal court in houston texas commenced by noble drilling services inc a purchaser of wire anchor lines 
that were manufactured by bridon prior to its acquisition by the group sold by its distributor and used by noble to moor certain of 
its mobile semisubmersible offshore drilling rigs in the gulf of mexico noble has claimed approximately us 94 million in damages 
plus loss of goodwill alleging that certain ropes were defective and broke during hurricane ike in 2008 no adequate breakdown  
of noble’s claim has been provided to date in a separate case pending in the same court the lessee of the same offshore drilling 
rigs anadarko petroleum corp has sued noble for approximately us 24 million in damages plus removal of debris claiming that 
the rigs were unseaworthy in breach of the terms of its agreement with noble to operate the rigs noble in turn has asserted 
identical claims to those asserted in the first action alleging that if noble is found liable to anadarko bridon and its distributor 
should be liable for any damages that noble suffers
the two cases were recently consolidated and remain in the earliest procedural stages as the discovery process has just 
commenced accordingly it is too early in the case to assess the merits of noble’s claims bridon has insurance coverage of up  
to us 160 million at current exchange rates that may be available to respond and bridon’s insurers have been indemnifying its 
defence costs to date bridon intends to vigorously defend against the claims asserted against it since 2008 bridon has  
provided us 75 million in respect of this claim
in addition as a result of the acquisition of the dynacast mckechnie and fki businesses certain further contingent legal 
environmental and tax liabilities were identified whilst it is difficult to reasonably estimate the ultimate outcome of these claims  
the directors’ best estimate of the outcome of these claims has been included in the balance sheet
the group has contingent liabilities representing guarantees and contract bonds given in the ordinary course of business  
on behalf of trading subsidiaries no losses are anticipated to arise on these contingent liabilities 88 melrose plc annual report 2010 
independent auditor’s report – company statements
independent auditor’s report to the members  
of melrose plc
we have audited the company financial statements of melrose 
plc for the year ended 31 december 2010 which comprise the 
balance sheet and the related notes 1 to 14 the financial 
reporting framework that has been applied in their preparation  
is applicable law and united kingdom accounting standards 
united kingdom generally accepted accounting practice
this report is made solely to the company’s members as a 
body in accordance with chapter 3 of part 16 of the 
companies act 2006 our audit work has been undertaken  
so that we might state to the company’s members those 
matters we are required to state to them in an auditor’s report 
and for no other purpose to the fullest extent permitted by law 
we do not accept or assume responsibility to anyone other than 
the company and the company’s members as a body for our 
audit work for this report or for the opinions we have formed
respective responsibilities of directors and auditor
as explained more fully in the statement of directors’ 
responsibilities the directors are responsible for the 
preparation of the company financial statements and for being 
satisfied that they give a true and fair view our responsibility  
is to audit and express an opinion on the company financial 
statements in accordance with applicable law and international 
standards on auditing uk and ireland those standards 
require us to comply with the auditing practices board’s ethical 
standards for auditors
scope of the audit of the financial statements
an audit involves obtaining evidence about the amounts and 
disclosures in the financial statements sufficient to give 
reasonable assurance that the financial statements are free  
from material misstatement whether caused by fraud or error 
this includes an assessment of whether the accounting policies 
are appropriate to the company’s circumstances and have  
been consistently applied and adequately disclosed the 
reasonableness of significant accounting estimates made by the 
directors and the overall presentation of the financial statements
opinion on financial statements
in our opinion the company financial statements
  give a true and fair view of the state of the company’s affairs 
as at 31 december 2010
  have been properly prepared in accordance with united 
kingdom generally accepted accounting practice and
  have been prepared in accordance with the requirements 
of the companies act 2006
opinion on other matters prescribed by the  
companies act 2006
in our opinion
  the part of the directors’ remuneration report to be audited 
has been properly prepared in accordance with the 
companies act 2006 and
  the information given in the directors’ report for the financial 
year for which the financial statements are prepared is 
consistent with the company financial statements
matters on which we are required to report by exception
we have nothing to report in respect of the following matters 
where the companies act 2006 requires us to report to you if  
in our opinion
  adequate accounting records have not been kept by the 
company or returns adequate for our audit have not been 
received from branches not visited by us or
  the company financial statements and the part of the 
directors’ remuneration report to be audited are not in 
agreement with the accounting records and returns or
  certain disclosures of directors’ remuneration specified by 
law are not made or
  we have not received all the information and explanations we 
require for our audit
other matter
we have reported separately on the group financial statements 
of melrose plc for the year ended 31 december 2010
nigel mercer aca senior statutory auditor 
for and on behalf of deloitte llp
chartered accountants and statutory auditor 
london uk 
9 march 2011 business performance governance financials shareholder information
melrose plc 89 annual report 2010 
company balance sheet for melrose plc
 notes
 31 december
 2010
 £m
 31 december  
 2009
 £m
fixed assets
investment in subsidiaries 3 8919 8849 
tangible fixed assets 4 01 03 
derivative financial instruments 5 – 06 
8920 8858 
current assets
debtors 6 11099 6441 
cash at bank and in hand – 275 
derivative financial instruments 5 – 02 
11099 6718 
creditors amounts falling due within one year
creditors 7 1932 2509
bank overdrafts 49 – 
derivative financial instruments 5 61 – 
2042 2509
net current assets 9057 4209 
total assets less current liabilities 17977 13067 
creditors amounts falling due after more than one year
bank loans 78 4828 4674
derivative financial instruments 5 39 – 
provision for liabilities and charges 9 125 77
net assets 12985 8316 
capital and reserves 
share capital 10 11 11 
share premium account 11 2791 2791 
merger reserve 11 2851 2851 
capital redemption reserve 11 2201 2201 
retained earnings 11 5231 454 
hedging reserve 12 100 08 
shareholders’ funds 13 12985 8316 
the financial statements were approved by the board of directors on 9 march 2011 and were signed on its behalf by
 
geoffrey martin simon peckham 
group finance director chief operating officer
registered number 4763064 90 melrose plc annual report 2010 
notes to the company balance sheet
1 significant accounting policies
basis of accounting 
the separate financial statements of the company are 
presented as required by the companies act 2006 they have 
been prepared under the historical cost convention except for 
the revaluation of certain financial instruments which are 
recognised at fair value and in accordance with applicable 
united kingdom generally accepted accounting practice  
“uk gaap” and law
the principal accounting policies are summarised below  
they have all been applied consistently throughout the year  
and the preceding year 
going concern
the directors have at the time of approving the financial 
statements a reasonable expectation that the company has 
adequate resources to continue in operational existence for  
the foreseeable future thus they continue to adopt the going 
concern basis of accounting in preparing the financial statements 
further detail is contained in the directors’ statement of going 
concern on page 34 and 35 of the directors’ report
investments
fixed asset investments in subsidiaries are shown at cost less 
provision for impairment
for investments in subsidiaries acquired for consideration 
including the issue of shares qualifying for merger relief cost  
is measured at the fair value of the consideration paid  
any premium is ignored
bank borrowings
interestbearing bank loans and overdrafts are recorded at the 
proceeds received net of direct issue costs finance charges 
including direct issue costs are accounted for on an accruals 
basis in the profit and loss account using the effective interest 
rate method and are added to the carrying amount of the 
investment to the extent that they are not settled in the period  
in which they arise
tangible fixed assets
tangible fixed assets are stated at cost less accumulated 
depreciation and any impairment in value the initial cost of  
an asset comprises its purchase price or construction cost  
and any costs directly attributable to bringing the asset into 
operation the purchase price or construction cost is the 
aggregate amount paid and the fair value of any other 
consideration given to acquire the asset 
depreciation of fixtures and fittings is calculated on a straight
line basis over the useful economic life of the assets being three 
to twelve years the estimated useful lives are reviewed on an 
annual basis and if necessary changes in useful lives are 
accounted for prospectively
a tangible fixed asset is derecognised upon disposal or when 
no future economic benefits are expected to arise from the 
continued use of the asset any gain or loss arising on 
derecognition of the asset calculated as the difference between 
the net disposal proceeds and the carrying amount of the item 
is included in the profit and loss account in the year the item  
is derecognised
cash and cash equivalents
cash and cash equivalents in the balance sheet comprise cash 
in hand and current balances with banks and similar institutions 
and shortterm deposits which are readily convertible to cash 
and are subject to insignificant risks of changes in value
derivative financial instruments and hedging
derivative financial instruments are initially recognised in the 
balance sheet at cost and subsequently remeasured to their 
fair value the method of recognising the resulting gain or loss is 
dependent on whether the derivative contract is designed to 
hedge a specific risk and qualifies for hedge accounting on the 
date a derivative contract is entered into the company 
designates derivatives which qualify as hedges for accounting 
purposes as either a a hedge of the fair value of a recognised 
asset or liability fair value hedge or b a hedge of a forecast 
transaction or firm commitment cash flow hedge or c a hedge 
of a net investment in a foreign operation
changes in the fair value of derivatives which are fair value 
hedges and that are highly effective are recognised in the profit 
and loss account along with any changes in the fair value of 
the hedged asset or liability that is attributable to the hedged 
risk changes in the fair value of derivatives in cash flow hedges 
are recognised in equity where the forecasted transaction or 
firm commitment results in the recognition of an asset or liability 
the gains and losses previously included in equity are included 
in the initial measurement of the asset or liability otherwise 
amounts recorded in equity are transferred to the profit and 
loss account and classified as revenue or expense in the same 
period in which the forecasted transaction affects the profit and 
loss account
hedges of net investments in foreign operations are accounted 
for similarly to cash flow hedges the company hedges certain 
net investments in foreign operations with foreign currency 
borrowings all foreign exchange gains or losses arising on 
translation are recognised in equity and included in cumulative 
translation differences and are recycled through the profit and 
loss account upon derecognition of the hedged item
certain derivative instruments while providing effective 
economic hedges under the company’s policies do not  
qualify for hedge accounting changes in the fair value of any 
derivative instruments that do not qualify for cash flow hedge 
accounting are recognised immediately in the profit and  
loss account business performance governance financials shareholder information
melrose plc 91 annual report 2010 
1 significant accounting policies continued
sharebased payments
the company has applied the requirements of frs 20 
“sharebased payments” the company issues equitysettled 
sharebased payments to certain employees equitysettled 
sharebased payments are measured at fair value excluding the 
effect of nonmarket based vesting conditions at the date of 
grant the fair value determined at the grant date of the 
equitysettled sharebased payments is expensed on a 
straightline basis over the vesting period based on the 
company’s estimate of the shares that will eventually vest and 
adjusted for the effect of non marketbased vesting conditions
fair value is measured by use of the black scholes pricing 
model the expected life used in the model has been  
adjusted based on management’s best estimate for the  
effects of nontransferability exercise restrictions and 
behavioural considerations
cash flow statement
the company has taken advantage of the exemption from 
preparing a cash flow statement under the terms of frs 1 
revised “cash flow statements” because it prepares a 
consolidated cash flow statement which is shown on page  
49 of the group financial statements
taxation
current tax including uk corporation tax and foreign tax is 
provided at amounts expected to be paid or recovered using 
the tax rates and laws that have been enacted or substantively 
enacted by the balance sheet date
deferred tax is recognised in respect of all timing differences 
that have originated but not reversed at the balance sheet date 
where transactions or events that result in an obligation to pay 
more tax in the future or a right to pay less tax in the future have 
occurred at the balance sheet date timing differences are 
differences between the company’s taxable profits and its 
results as stated in the financial statements that arise from the 
inclusion of gains and losses in tax assessments in periods 
different from those in which they are recognised in the  
financial statements
foreign currencies
monetary assets and liabilities in foreign currencies are 
translated into sterling at the rates of exchange ruling at the year 
end or if hedged at the forward contract rate transactions in 
foreign currencies are translated into sterling at the exchange 
rates ruling at the dates of the transactions or if hedged at the 
forward contract rate profits and losses on exchange arising in 
the normal course of trading and realised exchange differences 
arising on the conversion of foreign currency assets and 
liabilities are recognised within the profit and loss account 
2 profit for the year
as permitted by section 408 of the companies act 2006 the 
company has elected not to present its own profit and loss 
account for the year melrose plc reported a profit for the 
financial year ended 31 december 2010 of £5197 million 2009 
£329 million the company paid a dividend of £438 million 
2009 £356 million during the year
the company has unused tax losses of approximately  
£197 million 31 december 2009 £202 million available to 
carry forward and offset against future profits no deferred tax 
asset has been recognised in respect of these losses due  
to uncertainty over future taxable profits arising in the 
foreseeable future 
the estimated value of the deferred tax asset not  
recognised at 27 31 december 2009 28 is £53 million  
31 december 2009 £56 million
the auditor’s remuneration for audit services to the company is 
disclosed in note 7 to the group consolidated financial statements 92 melrose plc
notes to the company balance sheet 
continued
annual report 2010 
3 investment in subsidiaries
 £m
at 1 january 2010 8849
additions 111
disposal 41
at 31 december 2010 8919
during the year the company increased its investment in eachairn aerospace holdings limited by a total of £111 million  
in addition a £41 million reduction in investments was recognised following the liquidation of mozart jersey no 2 limited a wholly 
owned subsidiary of the company further subsidiary reorganisations also took place during the year which had no impact on the 
company’s carrying value of investments in subsidiaries
the company has investments in the following subsidiaries which principally affected the profits and net assets of the group 
the following subsidiaries are directly owned by melrose plc
subsidiaries country of incorporation principal activity holding 
dynacast holdings limited great britain holding company 100
dynacast international limited great britain holding company 100
fki limited formerly fki plc great britain holding company 100
melrose management resources limited great britain dormant 100
melrose overseas holdings limited great britain holding company 100
melrose uk holdings limited great britain holding company 100
mckechnie holdings uk limited great britain holding company 100
eachairn aerospace holdings limited great britain holding company 100
mckechnie ep holdings limited great britain holding company 100
melrose north america inc usa holding company 100 business performance governance financials shareholder information
melrose plc 93 annual report 2010 
3 investment in subsidiaries continued
other significant indirectly owned subsidiaries of the group are
subsidiaries country of incorporation principal activity equity interest 
energy
brush electrical machines limited great britain engineering company 100
brush hma bv netherlands engineering company 100
brush sem sro czech republic engineering company 100
brush transformers limited great britain engineering company 100
harrington generators international limited great britain engineering company 100
hawker siddeley switchgear limited great britain engineering company 100
marelli motori spa italy engineering company 100
generator  motor services of pennsylvania llc usa engineering company 100
lifting
bridonamerican corporation usa engineering company 100
bridon international limited great britain engineering company 100
bridon new zealand limited new zealand engineering company 100
crosby europe nv belgium engineering company 100
the crosby group llc usa engineering company 100
dynacast
dynacast singapore pte limited singapore engineering company 100
dynacast canada inc canada engineering company 100
dynacast deutschland gmbh and co kg germany engineering company 100
dynacast espana sa spain engineering company 97
dynacast inc usa engineering company 100
dynacast österreich gmbh austria engineering company 100
shanghai dynacast automotive casting limited china engineering company 100
shanghai dynacast electronic components limited china engineering company 100
fishercast uk limited great britain engineering company 100
dynacast limited canada engineering company 100
other industrial
logistex limited
1
great britain engineering company 100
mckechnie engineered plastics limited great britain engineering company 100
mckechnie specialist products limited great britain engineering company 100
the harris waste management group inc usa engineering company 100
truth hardware corporation usa engineering company 100
weberknapp company usa engineering company 100
group
fki engineering limited great britain holding company 100
crosby canada inc formerly fki industries canada limited canada holding company 100
fki industries inc usa holding company 100
west house insurance limited guernsey captive insurance company 100
mckechnie management services limited great britain management services company 100
1 disposed 11 february 2011 94 melrose plc
notes to the company balance sheet 
continued
annual report 2010 
4 tangible fixed assets
 fixtures  
 and fittings 
 £m
cost
at 1 january 2010 and 31 december 2010 07
depreciation
at 1 january 2010 04
charge for the period 02
at 31 december 2010 06
net book value
at 31 december 2010 01
at 31 december 2009 03
5 derivative financial instruments 
 31 december  
 2010 
 current 
 £m
 31 december 
 2010 
 noncurrent 
 £m
 31 december  
 2010 
 total 
 £m
 31 december  
 2009 
 current 
 £m
 31 december 
 2009 
 noncurrent 
 £m
 31 december  
 2009 
 total 
 £m
derivative financial assets
interest rate swaps – – – 02 06 08
– – – 02 06 08
derivative financial liabilities
interest rate swaps 61 39 100 – – –
61 39 100 – – –
details of the interest rate swaps are provided in note 24 to the group consolidated financial statements on pages 80 to 83
6 debtors 
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
amounts falling due within one year
amounts owed by group undertakings 11097 6437
prepayments 02 04
11099 6441
7 creditors 
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
amounts falling due within one year
amounts owed to group undertakings 1726 2346
accruals and other payables 206 163
1932 2509
amounts falling due after more than one year
bank loans 4828 4674
4828 4674 business performance governance financials shareholder information
melrose plc 95 annual report 2010 
8 bank loans
 interest rate  
 
 final
 maturity
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
noncurrent bank loans
denominated in the following currencies
bank borrowings – us dollar loan libor  15 april 2013 3885 3741
bank borrowings – euro loan euribor  15 april 2013 503 516
bank borrowings – sterling loan libor  15 april 2013 500 500
4888 4757
unamortised finance costs 60 83
4828 4674
the bank borrowings are drawn under a five year multicurrency committed bank facility a number of group companies act as 
guarantors to this facility drawdowns bear interest at interbank rates of interest plus a margin of 15 as at 31 december 2010 
this margin is determined by reference to the group’s performance under its debt cover ratio covenant and ranges between  
125 and 235
the interest rate repricing profile of financial liabilities after taking into account hedging interest rate derivatives is described  
in note 24 of the group consolidated financial statements
9 provisions for liabilities and charges
 incentive  
 plan related 
 £m
at 1 january 2010 77
additional provision in the year 48
at 31 december 2010 125
the provision relates to cash long term incentive plans for divisional senior management and is considered to be noncurrent
10 issued share capital
share capital
 31 december 
 2010 
 £m
 31 december 
 2009 
 £m
allotted calledup and fully paid 
497586779 31 december 2009 497586779 ordinary shares of 02p each 10 10
50000 31 december 2009 50000 2009 incentive shares of £1 each 01 01
11 11
the rights of each class of share in issue are described in the directors’ report on pages 29 and 30
own shares
the trustee of the melrose plc employee benefit trust “ebt” holds 500 2009 incentive shares of £1 each 31 december 2009 
500 in melrose plc the melrose plc ebt also holds 25279 ordinary shares of 02p each in melrose plc 31 december 2009 
25279 ordinary shares relating to unallocated shares following the crystallisation of the original incentive scheme in august 2007 
the fki ebt holds 158114 ordinary shares of 02p each in melrose plc 31 december 2009 158114 ordinary shares which 
arose upon disposal of its fki plc shares when fki plc was acquired by melrose plc 96 melrose plc
notes to the company balance sheet 
continued
annual report 2010 
11 reserves
reserves
 share  
 premium 
 account 
 £m
 merger  
 reserve 
 £m
 capital 
 redemption 
 reserve 
 £m
 retained 
 earnings 
 £m
at 1 january 2009 2791 2851 2201 463
dividends paid – – – 356
profit for the year – – – 329
credit to equity for equitysettled sharebased payments – – – 18
at 31 december 2009 2791 2851 2201 454
dividends paid – – – 438
profit for the year – – – 5197
credit to equity for equitysettled sharebased payments – – – 18
at 31 december 2010 2791 2851 2201 5231
details of sharebased payments are given in note 22 to the group consolidated financial statements
12 hedging reserve
 £m
at 1 january 2009 –
gains on cash flow hedges 08
at 31 december 2009 08
losses on cash flow hedges 108
at 31 december 2010 100
13 reconciliation of movements in shareholders’ funds
 £m
at 1 january 2009 8317
dividends paid 356
profit for the year 329
increase in hedging reserve 08
credit to equity for equitysettled sharebased payments 18
at 31 december 2009 8316
dividends paid 438
profit for the year 5197
decrease in hedging reserve 108
credit to equity for equitysettled sharebased payments 18
at 31 december 2010 12985
14 related party transactions
the company has taken the exemption in frs 8 “related party transactions” not to disclose intercompany balances and 
transactions in the year business performance governance
melrose plc 97 annual report 2010 
financials shareholder information
notice of annual general meeting
this document is important and requires your immediate attention if you are in any doubt  
as to the action you should take you should consult your stockbroker bank solicitor 
accountant fund manager or other appropriate independent financial advisor
if you have sold or otherwise transferred all of your shares  
in melrose plc you should send this document as soon as 
possible to the purchaser or transferee or to the stockbroker 
bank or other agent through whom the sale or transfer was 
effected for delivery to the purchaser or transferee
notice is hereby given that the eighth annual general meeting  
of the company will be held at barbersurgeons’ hall monkwell 
square wood street london ec2y 5bl at 1100 am on  
12 may 2011 for the following purposes resolutions 1 to 8  
will be proposed as ordinary resolutions and resolutions 9 to 11 
as special resolutions 
ordinary resolutions
1  to receive the company’s audited financial statements for 
the financial year ended 31 december 2010 together with 
the directors’ report and the auditor’s report on those 
financial statements
2  to approve the directors’ remuneration report contained  
in the company’s annual report and financial statements 
for the year ended 31 december 2010
3  to declare a final dividend of 70p per ordinary share for the 
year ended 31 december 2010
4  to reelect mr simon peckham who retires by rotation  
as a director of the company
5  to reelect mr perry crosthwaite who retires by rotation  
as a director of the company
6  to reelect mr geoffrey martin who retires by rotation  
as a director of the company
7  to reappoint deloitte llp as auditor of the company  
to hold office from the conclusion of this meeting until the 
conclusion of the next annual general meeting of the 
company at which accounts are laid and to authorise  
the directors to determine their remuneration
8  that in substitution for all existing authorities the directors 
be generally and unconditionally authorised to exercise all 
the powers of the company to allot shares in the company 
and grant rights to subscribe for or to convert any security 
into shares in the company
 a up to an aggregate nominal amount of £331724 and
 b  comprising equity securities as defined in section  
5601 of the companies act 2006 the “act” up to an 
aggregate nominal amount of £663449 such amount  
to be reduced by the aggregate nominal amount of any 
allotments or grants made under paragraph a of this 
resolution 8 in connection with an offer by way of a  
rights issue
  i  to ordinary shareholders in proportion as nearly as 
may be practicable to their existing holdings and
  ii  to holders of other equity securities as required by the 
rights of those securities or subject to such rights as 
the directors otherwise consider necessary
    and so that the directors may impose any limits or 
restrictions and make any arrangements which they 
consider necessary or appropriate to deal with treasury 
shares fractional entitlements record dates legal 
regulatory or practical problems in or under the laws of  
any territory or any other matter 
  such authorities to apply until the end of the company’s next 
annual general meeting after this resolution is passed or if 
earlier until the close of business on 30 june 2012 but in 
each case so that the company may make offers and enter 
into agreements before the authority expires which would or 
might require shares to be allotted or rights to subscribe for 
or convert securities into shares to be granted after the 
authority expires and the directors may allot shares or grant 
rights under any such offer or agreement as if the authority 
had not expired
special resolutions
9  that in substitution for all existing powers and subject to  
the passing of resolution 8 the directors be generally 
empowered to allot equity securities as defined in the act 
for cash pursuant to the authority granted by resolution 8 
andor to sell ordinary shares of 02 pence each in the 
capital of the company “ordinary shares” held by the 
company as treasury shares for cash in each case free  
of the restriction in section 5611 of the act such power to 
be limited
 a  to the allotment of equity securities and sale of treasury 
shares for cash in connection with an offer of equity 
securities but in the case of an allotment pursuant to  
the authority granted by paragraph b of resolution 8 
such power shall be limited to the allotment of equity 
securities in connection with an offer by way of a rights 
issue only
  i  to ordinary shareholders in proportion as nearly as 
may be practicable to their existing holdings and
  ii  to holders of other equity securities as required by 
the rights of those securities or subject to such rights 
as the directors otherwise consider necessary 
   and so that the directors may impose any limits or 
restrictions and make any arrangements which they 
consider necessary or appropriate to deal with treasury 
shares fractional entitlements record dates legal 
regulatory or practical problems in or under the laws  
of any territory or any other matter and
 b  to the allotment otherwise than in the circumstances set 
out in paragraph a of this resolution 9 of equity 
securities pursuant to the authority granted by paragraph 
a of resolution 8 andor the sale of treasury shares for 
cash up to a nominal amount of £49758
  such power to apply until the end of the company’s next 
annual general meeting after this resolution is passed or if 
earlier until the close of business on 30 june 2012 but so 
that the company may make offers and enter into 
agreements before the power expires which would or 
might require equity securities to be allotted and treasury 
shares to be sold after the power expires and the directors 
may allot equity securities and sell treasury shares under 
any such offer or agreement as if the power had not expired  98 melrose plc annual report 2010 
notice of annual general meeting 
continued
10  that the company be generally and unconditionally 
authorised to make one or more market purchases within 
the meaning of section 693 of the act of ordinary shares 
provided that
 a  the maximum aggregate number of ordinary shares 
authorised to be purchased is 49758677 representing 
10 of the issued ordinary share capital
 b  the minimum price which may be paid for an ordinary 
share is 02 pence
 c  the maximum price which may be paid for an ordinary 
share is not more than the higher of
  i  105 per cent of the average of the middle market 
quotation for an ordinary share as derived from the 
london stock exchange plc’s daily official list for the 
five business days immediately preceding the day on 
which the ordinary share is purchased and
  ii  the higher of the price of the last independent trade 
and the highest current independent bid on the 
trading venue where the purchase is carried out
  in each case exclusive of expenses
 d  this authority will expire at the end of the next annual 
general meeting of the company following the passing 
of this resolution or if earlier at the close of business  
on 30 june 2012 
 e  the company may make a contract to purchase ordinary 
shares under this authority before expiry of the authority 
which will or may be executed wholly or partly after the 
expiry of that authority and may make a purchase of 
ordinary shares in pursuance of any such contract and
 f  any ordinary shares purchased pursuant to this 
authority may either be held as treasury shares or 
cancelled by the company depending on which course 
of action is considered by the directors to be in the best 
interests of shareholders at the time
11  that a general meeting other than an annual general 
meeting may be called on not less than 14 clear days’ notice
by order of the board registered office 
precision house 
garry barnes arden road
company secretary alcester
5 april 2011 b49 6hn
notes
1  the holders of ordinary shares and 2009 incentive shares 
in the company are entitled to attend the annual general 
meeting but only holders of ordinary shares are entitled to 
vote a member entitled to attend and vote may appoint a 
proxy to exercise all or any of its rights to attend speak and 
vote at a general meeting of the company such a member 
may appoint more than one proxy provided that each proxy 
is appointed to exercise the rights attached to different 
shares a proxy need not be a member of the company
2  a form of proxy is enclosed with this notice to be effective 
a form of proxy must be completed and returned together 
with any power of attorney or authority under which it is 
completed or a certified copy of such power or authority so 
that it is received by the company’s registrars at the address 
specified on the form of proxy not less than 48 hours 
excluding any part of a day that is not a working day before 
the time for holding the meeting returning a completed 
form of proxy will not preclude a member from attending the 
meeting and voting in person 
3  any person to whom this notice is sent who is a person 
nominated under section 146 of the companies act 2006 
the “act” to enjoy information rights a “nominated person” 
may under an agreement between him and the shareholder 
by whom he was nominated have a right to be appointed 
or to have someone else appointed as a proxy for the 
annual general meeting if a nominated person has no such 
proxy appointment right or does not wish to exercise it he 
may under any such agreement have a right to give 
instructions to the shareholder as to the exercise of voting 
rights the statement of the rights of shareholders in relation 
to the appointment of proxies in paragraphs 1 and 2 above 
does not apply to nominated persons the rights described 
in paragraphs 1 and 2 can only be exercised by shareholders 
of the company
4  to be entitled to attend and vote at the annual general 
meeting and for the purposes of the determination by the 
company of the number of votes they may cast members 
must be entered on the company’s register of members by 
600 pm on 10 may 2011 or in the event of an adjournment 
on the date which is two days before the time of the 
adjourned meeting changes to entries on the register of 
members after this time shall be disregarded in determining 
the rights of any person to attend or vote at the meeting
5  as at 4 april 2011 being the last business day prior to the 
publication of this notice the company’s issued share 
capital consists of 497586779 ordinary shares carrying 
one vote each and 50000 2009 incentive shares which do 
not carry votes therefore the total voting rights in the 
company as at 4 april 2011 are 497586779
6  crest members who wish to appoint a proxy or proxies 
through the crest electronic proxy appointment service 
may do so by using the procedures described in the crest 
manual crest personal members or other crest 
sponsored members and those crest members who have 
appointed a service providers should refer to their crest 
sponsor or voting service providers who will be able to 
take the appropriate action on their behalf business performance governance
melrose plc 99 annual report 2010 
financials shareholder information
7  in order for a proxy appointment or instruction made using 
the crest service to be valid the appropriate crest 
message a “crest proxy instruction” must be properly 
authenticated in accordance with euroclear uk  ireland 
limited’s specifications and must contain the information 
required for such instruction as described in the crest 
manual available via wwweuroclearcomcrest  
the message regardless of whether it constitutes the 
appointment of a proxy or is an amendment to the 
instruction given to a previously appointed proxy must  
in order to be valid be transmitted so as to be received by 
the issuer’s agent id ra19 by 1100am on 10 may 2011  
for this purpose the time of receipt will be taken to be the 
time as determined by the time stamp applied to the 
message by the crest application host from which the 
issuer’s agent is able to retrieve the message by enquiry to 
crest in the manner prescribed by crest after this time 
any change of instructions to proxies appointed through 
crest should be communicated to the appointee through 
other means
8  crest members and where applicable their crest 
sponsors or voting service providers should note that 
euroclear uk  ireland limited does not make available 
special procedures in crest for any particular message 
normal system timings and limitations will therefore apply 
in relation to the input of crest proxy instructions it is the 
responsibility of the crest member concerned to take  
or if the crest member is a crest personal member  
or sponsored member or has appointed a voting service 
provider to procure that his crest sponsor or voting 
service providers takes such action as shall be necessary 
to ensure that a message is transmitted by means of the 
crest system by any particular time in this connection 
crest members and where applicable their crest 
sponsors or voting system providers are referred in 
particular to those sections of the crest manual 
concerning practical limitations of the crest system  
and timings
9  the company may treat as invalid a crest proxy 
instruction in the circumstances set out in regulation 355
a of the uncertificated securities regulations 2001
10  any corporation which is a member can appoint one or 
more corporate representatives who may exercise on its 
behalf all of its powers as a member provided that they do 
not do so in relation to the same shares
11  under section 527 of the act members meeting the 
threshold requirements set out in that section have the right 
to require the company to publish on a website a statement 
setting out any matter relating to i the audit of the 
company’s accounts including the auditor’s report and the 
conduct of the audit that are to be laid before the annual 
general meeting or ii any circumstance connected with an 
auditor of the company ceasing to hold office since the 
previous meeting at which annual accounts and reports 
were laid in accordance with section 437 of the act the 
company may not require the shareholders requesting any 
such website publication to pay its expenses in complying 
with sections 527 or 528 of the act where the company is 
required to place a statement on a website under section 
527 of the act it must forward the statement to the 
company’s auditor not later than the time when it makes the 
statement available on the website the business which may 
be dealt with at the annual general meeting includes any 
statement that the company has been required under 
section 527 of the act to publish on a website
12  any member attending the meeting has the right to ask 
questions the company must cause to be answered any 
such question relating to the business being dealt with at the 
meeting but no such answer need be given if a to do so 
would interfere unduly with the preparation for the meeting 
or involve the disclosure of confidential information b the 
answer has already been given on a website in the form of 
an answer to a question or c it is undesirable in the 
interests of the company or the good order of the meeting 
that the question be answered
13  a copy of this notice and other information required  
by section 311a of the act can be found at  
wwwmelroseplcnet
14  you may not use an electronic address provided in either 
this notice of annual general meeting or any related 
documents including the proxy form to communicate  
with the company for any purposes other than those 
expressly stated
15  the following documents will be available for inspection at 
the company’s registered office during normal business 
hours saturdays sundays and public holidays excepted 
from the date of this notice until the date of the annual 
general meeting and at the place of the annual general 
meeting for 15 minutes prior to and during the meeting
 a  copies of all service agreements under which directors 
of the company are employed by the company or any 
subsidiaries and
 b  a copy of the terms of appointment of the nonexecutive 
directors of the company  100 melrose plc annual report 2010 
company and shareholder information
as at 31 december 2010 there were 7577 holders of ordinary shares in the company their shareholdings are analysed  
as follows 
size of shareholding
number of 
shareholders
 percentage of  
total number  
of shareholders
number of  
ordinary shares
percentage of  
ordinary shares
1 – 5000 6752 8911 4951356 099
5001 – 50000 462 610 6098597 123
50001 – 100000 59 078 4269033 086
100001 – 500000 169 223 42128877 847
over 500000 135 178 440138916 8845
total 7577 10000 497586779 10000
financial calendar 2011
exdividend date for final dividend 13 april 2011
record date for final dividend 15 april 2011
annual general meeting 12 may 2011
payment of final dividend 16 may 2011
announcement of interim results august 2011
intended payment of interim dividend november 2011
preliminary announcement of 2011 results march 2012
directors 
christopher miller 
david roper 
simon peckham 
geoffrey martin 
miles templeman 
perry crosthwaite 
john grant
company secretary 
garry barnes
head office 
leconfield house 
curzon street 
london  
w1j 5ja
tel 44 0 20 7647 4500 
fax 44 0 20 7647 4501 
wwwmelroseplcnet
registered office 
precision house  
arden road 
alcester 
warwickshire 
b49 6hn
tel  44 0 1789 761020 
fax  44 0 1789 761057
registered number 
4763064
bankers 
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barclays bank plc  
commerzbank ag  
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auditor
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lancing 
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monday to friday annual report 2010 melrose plc annual report 2010 melrose plc
how we performed contents
business performance
01 financial highlights 
02 group at a glance 
04 chairman’s statement 
06 chief executive’s review
 08 energy business review 
 11 lifting business review 
 14 dynacast business review 
 16 other industrial business review
19 finance director’s review 
26 board of directors 
28 directors’ report 
governance
36 corporate governance report 
40 remuneration report 
44  statement of directors’ responsibilities
financials
45 financial contents 
46  independent auditor’s report –
consolidated statements 
47 consolidated income statement 
48  consolidated statement
of comprehensive income 
49  consolidated statement of cash flows 
50 consolidated balance sheet 
51  consolidated statement of 
changes in equity 
52 notes to the accounts 
88  independent auditor’s report –
company statements 
89  company balance sheet for 
melrose plc 
90  notes to the company balance sheet
shareholder information
97   notice of annual general meeting 
100  company and shareholder information
“   these are excellent results from businesses  
well positioned to enjoy superior growth in the 
years to come we are proud of the fact that 
overall group profits have not declined through 
this sharp recession and at the current share 
price melrose has created over £1 billion of 
shareholder value since flotation in 2003
  we are considering the sale of dynacast and 
looking for our next acquisition but will only 
proceed if we believe it creates shareholder 
value looking ahead we are confident of  
further progress in 2011 and beyond” 
  christopher miller
chairman 
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melrose plc  
annual report 2010
melrose plc annual report 2010
wwwmelroseplcnet
melrose plc  
annual report 2010


Summary:
 04 melrose plc annual report 2010 
chairman’s 
statement
i am pleased to report melrose’s eighth set of annual results 
since flotation in 2003 over this period melrose’s market 
capitalisation has grown from £13 million at flotation to  
£15 billion as at the date of this report this has been achieved 
with a net investment
1
 by our shareholders of c£450 million and 
so at the current share price over £1 billion of shareholder value 
has been created since flotation
results for the group
these accounts report the results for the group for the year  
to 31 december 2010 and comparatives for the previous year 
revenue for the year was £13795 million 2009 £12985 million 
headline profit before tax before exceptional costs exceptional 
income and intangible asset amortisation was £1708 million 
2009 £1186 million and headline basic earnings per share 
were 254p 2009 166p profit before tax was £1553 million 
2009 £820 million and the basic earnings per share were 
284p 2009 110p
further explanation of these results is provided in the finance 
director’s review
dividends
the board intends to propose a final dividend of 70p per share 
2009 48p together with the interim dividend of 40p per 
share 2009 29p paid on 1 october 2010 this gives a total for 
the year of 110p per share 2009 77p an increase of 43 
this reflects both the highly successful performance in 2010 
and the board’s confidence in the future
trading
the trading performance of our businesses in 2010 has  
been outstanding 
“ in the first half of the year the  
group story was one of substantially 
increased operating margins on 
essentially flat turnover in the  
second half of the year this has  
been augmented by the return  
of topline growth”
1 value of equity issued less returns of capital and dividends
headline profit before tax
£1708m
2009 £1186m
headline basic earnings per share
254p
2009 166p
total 2010 dividend 
110p
2009 7 7p melrose plc 05
business performance governance financials shareholder information
annual report 2010 
in the first half of the year the group story was one of 
substantially increased operating margins on essentially flat 
turnover in the second half of the year this has been augmented 
by the return of topline growth this combination has produced 
an increase of 32 in annual headline operating profit and  
an even higher 53 increase in the year’s headline earnings  
per share due to reductions in tax and net financing costs 
group headline operating margins are now at 143 up from 
115 last year and in the second half of the year we have 
virtually achieved the margin target of 15 we set on the 
acquisition of fki
much of this profit growth has come from fki businesses 
acquired in july 2008 but also from dynacast our principal 
early cycle business which saw strong sales growth particularly 
in the first half of the year order books for the group remain 
strong going into 2011
cash generation in 2010 remained extremely strong over 100 
of profits were turned into cash generating headline operating 
cash after capital expenditure of £2025 million and working 
capital remained under strict control even in the face of improving 
sales capital expenditure which had been somewhat curtailed 
during the downturn is now back on a rising trend – we expect 
this to exceed depreciation over the next few years as our 
investment plans are implemented we see opportunities for 
profitable investment in all of our businesses
dynacast
dynacast has been owned since may 2005 and the board 
considers this to be an appropriate time to seek to realise the 
value created since then a sale process has commenced  
and we are hopeful of a satisfactory outcome shareholders 
however can be confident that this excellent business will only 
be sold at a price which fully reflects the quality of its prospects 
in the event a sale is successful it is our intention to return the 
proceeds to shareholders
strategy and outlook
much has been achieved in the period since the acquisition  
of fki with our existing businesses and management and 
employees are to be congratulated on this performance 
however there remains much opportunity for more to  
be achieved
none of our major businesses has yet regained the levels of 
sales reached in the recent past nor do we believe they have 
reached their potential in terms of profitability our strategy  
of selling businesses at the appropriate moment in their 
improvement cycle remains in place and this moment has not 
arrived for the majority of our businesses demand though 
stronger in europe and south east asia than north america 
continues to be good and current order books lead us to be 
optimistic on the sales outlook for 2011 our ability to pass  
on raw material price increases together with many initiatives 
on the cost front mean we are also hopeful of further 
improvements in operating margins
we are well placed operationally and financially to take on 
another substantial acquisition we are as selective as ever  
with our criteria and although it is impossible to be precise 
about timing we are confident of identifying a value enhancing 
opportunity in due course
in the meantime the inherent strengths of our businesses and 
their management teams gives the board confidence of further 
progress in 2011
christopher miller 
9 march 2011
“ we are well placed operationally and 
financially to take on another substantial 
acquisition we are as selective as ever 
with our criteria and although it is 
impossible to be precise about timing 
we are confident of identifying a value 
enhancing opportunity in due course”