annual report and 
accounts 2013 download the 2013 meggitt plc annual report  
and accounts from wwwmeggittcom
quick reference
contents
0134  strategic report
01  group overview
02  financial highlights
03  chairman’s statement
04 chief executive’s review
06  group strategy
06   business model
07   market matrix and investment cycle
0811  market review
1214  meggitt divisions
1517  principal risks and uncertainties
1821  key performance indicators
2230  chief financial officer’s review
3134 corporate responsibility
3570 governance reports
35  chairman’s introduction
3637  board of directors
3842 corporate governance report
4345 audit committee report
46 nominations committee report
4767  directors’ remuneration report
6870  directors’ report
71129 financial statements
 
 group financial statements
7173  independent auditors’ report to the members  
of meggitt plc
74  consolidated income statement
75  consolidated statement of comprehensive income
76  consolidated balance sheet
77  consolidated statement of changes in equity
78 consolidated cash flow statement
79121  notes to the consolidated financial statements
 company financial statements
122  independent auditors’ report to the members  
of meggitt plc
123  company balance sheet
124129  notes to the financial statements of the company
130132 supplementary information
130 fiveyear record
131132  investor information
what is meggitt 
 
 
 
›› 01
how do we 
manage risk 
 
›› 15 
how did we 
perform in 2013 
 
›› 02
›› 22
what are our key 
performance 
indicators 
›› 18 
what is our 
strategy and 
business model 
›› 04
›› 06
how do we 
perform as 
corporate 
citizens
›› 31
what are our 
markets and  
what drives  
them
›› 08
who runs meggitt 
and how do we 
reward them 
›› 36
›› 47 1
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
group overview
headquartered in the uk meggitt plc is a global 
engineering group specialising in smart engineering 
for extreme environments—components and  
subsystems providing critical functionality in 
challenging applications within civil aerospace 
military and energy markets
a workforce of over 10500 people is employed 
across facilities in asia europe and north america 
and in regional bases in brazil india and the  
middle east
meggitt’s civil aerospace interests cover large 
commercial jets regional aircraft business jets 
helicopters and general aviation 
its military markets encompass all aircraft types 
land systems naval platforms and aerial land
based and marine threat simulation for personnel 
training and weapons systems development 
training extends to law enforcement and security 
organisations
the group’s growing presence in energy is driven  
by control valves for industrial gas turbines heat 
transfer engineering for oil and gas platforms and 
offshore gas processing and storage and sensing 
and monitoring capabilities deployed in rotating 
power generation equipment to promote safety and 
reduce maintenance costs fuel consumption and 
carbon emissions
the transfer of meggitt’s core technologies to  
other markets includes sensing materials for 
breakthrough medical devices 
revenue by market
total revenue £ millions
16373
employees by region
number of employees 
10715
revenue by destination
total revenue £ millions
16373
total rd as a   
of revenue

  civil aerospace
 7362  45

  military 
 6164  38

  energy and other 
 2847  17

  usa
 8117  50

  uk
 1658  10

  rest of europe 
 3651  22

  rest of world
 2947  18

  north america
 5514  51

  uk
 2797  26

  mainland europe 
 1589  15

  rest of world
 815  8
13 82
12 76
11 76
10 72
09 74 financial highlights 2
meggitt’s 2013 results continued to demonstrate the breadth and 
resilience of its portfolio our equipment is installed on over 
60000 aircraft worldwide—a growing fleet—with a stable 
aftermarket revenue stream stretching out for many decades 
our excellent win rate on the many new aircraft programmes 
entering service which drove our investment in research and 
development of £1349m 82 of revenue gives us confidence in 
making further good progress in the years to come 
1
  the definition of ‘underlying’ is provided in notes 
10 and 15 to the consolidated financial 
statements on pages 91 and 94 respectively the 
figures for prior years have been restated as 
explained in note 44 on page 120 to the 
consolidated financial statements
revenue
£ millions 
16373
underlying profit before tax 
£ millions
1
 
 
3778
free cash flow
£ millions
1104
dividends per share
pence  
1275
underlying earnings per share
pence
1
 
375
13 1104
12 1824
11 1930
10 1633
09 1550
13 1275
12 1180
11 1050
10 920
09 845
13 16373
12 16058
11 14553
10 11620
09 11505
13 3778
12 3660
11 3253
10 2637
09 2442
13 375
12 365
11 321
10 286
09 264
›› see page 22 
›› see page 27 
›› see page 24 
›› see page 27 
›› see page 28 
2
meggitt plc report and accounts 2013 meggitt plc report and accounts 2013 3 chairman’s statement
oxford university’s said business school 
the meggitt production system the 
group’s wideranging continuous 
improvement initiative embodies a faculty 
of operational excellence for the large 
number of employees touched by it 
as a leading employer of engineers and 
manufacturing experts we are naturally 
committed to maintaining the industry 
pipeline of expertise this will undoubtedly 
be stimulated by the opportunities arising 
from the uk government’s commitment to 
cofunding investment in the aerospace 
and defence industry as a business we  
are picking up the baton developing  
young talent sponsoring students with 
engineering aspirations through the 
arkwright scholarship trust in turn  
they are benefiting from mentoring by 
engineering graduates from our own 
highly successful international graduate 
development programme in which we take 
care to engage bright minds early in very 
challenging engineering projects 
we are also enhancing the professional 
development of established meggitt 
engineers as an integrated group 
careers can now develop beyond business 
units and divisions we have entered into  
a partnership with the institution of 
mechanical engineers to provide 
continuous training management and 
leadership development and we are taking 
care of our subject matter experts 
ensuring that those who wish to remain 
expert in their fields have career paths as 
promising as those who move into 
management roles this includes plans  
for a technical fellowship programme  
to reward those at the pinnacle of 
achievement in their chosen field
doing business the right way
we have grown meggitt with great 
determination based on clearcut 
principles and practice there is zero 
tolerance for anything other than the fair 
and impartial conduct of business that is 
fully compliant with applicable laws and 
regulations worldwide and integrity in 
every business relationship 
meggitt was one of the first companies  
to commit to comprehensive integrity 
policies programmes and practice within 
its aerospace and defence business 
operations when we signed a statement  
of adherence to the global principles of 
business ethics for the aerospace and 
defense industry as chairman of the 
group’s ethics and trade compliance 
committee i am proud to say our 
programmes lead the industry
board of directors
in may meggitt group finance director 
stephen young succeeded terry twigger 
as chief executive terry spent 12 years—
nine with stephen—quadrupling group 
revenue and increasing profitability 
fivefold doug webb who succeeds 
stephen has held senior financial 
positions across a broad range of 
industries before joining meggitt doug 
was chief financial officer of london 
stock exchange group plc 
david robins will be retiring from the 
board following the agm on 7 may 2014 
after 12 years of service as a non
executive director during which time  
he acted as senior independent director 
and chairman of the remuneration 
committee
looking ahead
meggitt delivered a creditable set of 
results in 2013 despite some operational 
challenges and weakness in some 
markets most notably the highly profitable 
civil aftermarket 
sequestration of us defence funding 
continues to generate uncertainty 
however our flexible manufacturing base 
enables us to redirect activity where 
demand remains strong while retrofit 
upgrade and outsourcing opportunities 
continue for meggitt as in the past from 
greater utilisation and extension of 
existing programmes
we look forward to making further 
progress in 2014 and beyond driven by a 
highly resourceful workforce underpinned 
by a resilient installed base of equipment 
highly cashgenerative business model 
and robust balance sheet 
sir colin terry chairman
it is more than a decade since i joined 
meggitt as a nonexecutive director 
becoming chairman in 2004 since then 
the group has become progressively 
integrated revenue has increased 
threefold and employee numbers have 
doubled we have enjoyed growth 
organically and by acquisition which has 
brought new capabilities and reinforced 
meggitt’s smart engineering for extreme 
environments 
investing for growth
meggitt continues to expand its market 
positions and capabilities through 
investment in research and development 
facilities and most important of all its 
people they are the backbone of our 
business and i would like to take this 
opportunity to thank them for their hard 
work in a challenging year 
we benefit from a talented workforce 
across all disciplines which we build on 
with groupwide career opportunities and 
training at all levels we place special 
emphasis on leadership development—
executive influencing training in vital 
frontline supervision plus strategy 
development work for future meggitt 
leaders within programmes tailored by 
we have grown meggitt with 
great determination based on 
clearcut principles and 
practice—the fair and impartial 
conduct of business that is 
fully compliant with applicable 
laws and regulations 
worldwide and integrity in 
every business relationship 
3
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports 4
meggitt plc report and accounts 2013
chief executive’s review
we have emerged from an 
intensive bid cycle resulting  
in technology sales into a 
significant number of new 
aircraft programmes many 
involve a full suite of meggitt 
capabilities exceeding the 
shipset content of their 
predecessors this is a very 
strong indicator of future 
revenue growth 
group strategy
in my first annual report and accounts 
since becoming meggitt’s chief executive 
i am delighted to reaffirm my 
commitment to the strategy i was integral 
in developing since joining the group as 
finance director in 2004 
meggitt’s strategy comprises four 
elements
 delivering innovation
we focus on highlyengineered 
components and subsystems capable  
of withstanding increasingly harsh 
environments such as in the next
generation aeroengines our products 
must operate in extremes of pressure 
temperature impact vibration and 
contamination in applications where 
certification requirements are 
demanding 
we invest in manufacturing technologies 
such as automation and additive 
manufacturing targeting product 
technology investment in areas where we 
see the greatest growth potential our 
power business for example continues to 
provide more electric solutions for our 
customers and we are embedding this 
capability increasingly across a broad 
range of meggitt products 
at the same time we seek to leverage 
shipset content by combining the group’s 
capabilities most recently we deployed 
our sensing systems in tyre pressure 
monitoring for brake control systems and 
integrated polymers and composites with 
fluid control technology valves to create 
complete airborne fuel systems
we supplement organic growth with 
targeted acquisitions increasing our 
range of capabilities and improving our 
market position
  securing positions on new 
platforms
our leadingedge capabilities intellectual 
property and longstanding track record of 
delivering reliable products enable us  
to secure strong positions on new 
programmes including the recently 
announced wheels and brakes contract 
on the dassault 5x longrange business 
jet
because our products span multiple 
platforms across civil aerospace military 
and energy markets we are not 
dependent on single programmes 
customers regions or segments 
we target specialist applications within 
these markets generating revenue from 
original equipment and maintenance 
overhaul spares and repair services for 
the life of programmes which can last  
for decades 
our customers’ technology roadmaps 
guide our investments this is 
underpinned by rigorous product 
development programme management 
increased manufacturing capacity and 
regional support for original equipment 
manufacturers and their operators 
we have longstanding relationships with 
major customers whether creating a 
critical component or subsystem for an 
aircraft engine or a heat exchanger for a 
floating offshore gas storage and 
processing vessel we work together at 
the start of design phases to ensure 
demonstrable earlystage solutions
  a c h i e v i n g o p er a ti o n a l 
excellence
because superior performance on quality 
cost and delivery are the building blocks 
of future growth we are intensifying our 
investment in facilities production 
systems programme management  
and people 
 organic excludes the effect of acquisitions 
disposals and foreign exchange 5
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
during 2013 we consolidated six factories 
into three larger more efficient facilities 
we moved a further two businesses to 
new expanded sites to meet growth 
requirements we also launched the 
meggitt production system mps at 16 of 
our facilities with a further 16 scheduled 
for 2014 and the remainder during 2015 
mps—our single global approach to 
continuous improvement—will create the 
sustainable delivery and quality culture 
that confers competitive advantage 
beyond our technological expertise it 
reinforces our commitment to developing 
our people and doing business the right 
way further strengthening our customer 
partnerships at the same time meggitt 
will become more costcompetitive we 
will reduce working capital we will 
reduce the cost of poor quality and as 
mps requires close relationships with 
suppliers who share our management 
standards and continuous improvement 
philosophy our supply chain will become 
leaner and more effective we have 
already seen significant operational 
improvements with ontime delivery up 
by 10 and defective parts per million 
our key performance indicator for 
quality down by 54
  p r o v i d i ng t h r o ug h l if e  
product support 
once selected on a new platform meggitt 
often becomes the sole source for a given 
component for the life of the programme 
our equipment typically operates in harsh 
environments generating a regular 
requirement for spares and repairs this 
produces an annuitylike income stream 
over the life of the programme—often 
several decades
we continue to invest in our product 
support capability in 2013 we opened our 
new repair and overhaul centre in 
singapore doubling our capacity and 
introducing more meggitt product lines 
and launched a major review of the best 
way to deploy meggitt’s growing 
aftermarket capability to our global 
customer base
after the bid cycle
we have emerged from an intensive bid 
cycle resulting in technology sales into a 
significant number of new aircraft 
programmes many involve a full suite of 
meggitt capabilities exceeding the 
shipset content of their predecessors 
this is a very strong indicator of future 
revenue growth
this accounts for r  d spend in 2013 
which at 82 of revenue was at a record 
level as we convert these new contracts 
into sustainable revenue streams 
we are now moving into a major execution 
phase which requires us to deliver new 
programmes on time and to specification 
and to meet new tougher requirements in 
terms of quality cost and delivery the 
necessary improvement in operational 
performance will be supported by mps  
and the recent appointment of a chief 
operating officer 
performance in 2013
revenue growth in 2013 was weaker than 
anticipated a year ago this was due 
mainly to currency movements a slower 
than expected recovery in civil aftermarket 
revenue and uncertainties around defence 
spending particularly in the us supply 
chain and operational issues while now 
under control had an impact on revenues 
and costs in the second half offset by good 
progress made in resolving legacy 
contract issues against this challenging 
background total revenue rose 2 in the 
year organic 1 with underlying 
earnings per share up 3 to 375p net 
debt decreased further to 5646m 2012 
6425m and net debt to ebitda reduced to 
12x 2012 13x the recommended final 
dividend of 880p per share 2012 820p 
takes the full year dividend to 1275p 2012 
1180p an increase of 8 
outlook
the outlook for our civil markets remains 
good with further growth in aircraft 
deliveries anticipated in 2014 and beyond 
during the latter half of 2013 air traffic 
growth accelerated to above the long term 
trend rate of 5 and we believe that the 
destocking seen over the last couple of 
years is coming to an end we therefore 
maintain our view that civil original 
equipment and aftermarket revenues will 
grow at an average of 7 to 8 and 8 to 9 
respectively both on an organic basis over 
the medium term aftermarket revenue 
will likely grow at less than this rate in 
2014 as the gradual recovery continues
we anticipate a modest decline in military 
revenue in 2014 reflecting the substantial 
completion of the bradley fighting vehicle 
and kc135 fuel tank retrofit contracts 
looking further ahead uncertainty around 
military budgets notably in the us 
persists as such while we remain 
confident in delivering an average 
compound organic revenue growth rate of 
2 in our military markets over the 
medium term this will be subject to 
modest reductions if sequestration 
impacts future budget cycles as initially 
envisaged 
energy driven by continued strong 
demand for our printed circuit heat 
exchangers and new product introductions 
in the conditionmonitoring market should 
deliver organic revenue growth averaging 
greater than 10 over the medium term 
other markets should continue to see 
modest growth
on this basis we expect to make further 
good progress by delivering midsingle 
digit organic revenue growth in 2014 
weighted towards the second half and 6 to 
7 average organic revenue growth in the 
medium term
 
stephen young chief executive 6
meggitt plc report and accounts 2013
group strategy
our model delivers financial strength and stability throughout the 
cycle we deliver innovation investing in multiple technologies 
across our primary aerospace defence and energy markets 
revenues are derived from the successful execution of original 
equipment programmes and aftermarket products and services  
that flow from them
business model
objective deliver strong and sustainable 
financial returns to shareholders through 
leading positions in aerospace defence 
and energy markets
to see how meggitt’s strategy fundamentals 
are reflected at divisional level see next page
the results of strategy implementation are 
outlined in the chief financial officer’s review 
on pages 22 to 30
deliver innovation
invest in leadingedge 
capabilities 
focus on components 
and subsystems 
for harsh environments
deliver through organic 
investment and 
acquisitions
secure positions  
on new platforms
use differentiated technology  
and longstanding knowhow
spread risk across platforms  
and market segments
codevelop programmes  
with customers
provide throughlife  
product support
provide installed meggitt 
product with spares repairs 
and maintenance services 
throughout programme life  
for secure and predictable 
cash payback over 
long term
achieve 
operational excellence
continuously improve quality
cost and delivery
strengthen customer  
partnerships
maintain culture of strong  
and ethical performance
››
see p26
››
see p23
››
see p25
››
see p11
customers 7
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
market matrix
civil
original equipment
aftermarket
military
original equipment
aftermarket
energy
other
meggitt aircraft
braking systems
meggitt control
systems
meggitt polymers 
 composites
meggitt sensing
systems 
meggitt equipment 
group
10 of group revenue 3—10 of group revenue 1—3 of group revenue
meggitt benefits from a balanced portfolio capabilitybased 
business units deploy technological knowhow and intellectual 
property across all our markets so we are not dependent on single 
customers individual programmes or market segments
investment cycle
we develop technology for applications involving product lifecycles 
measured in decades products must perform without fail in 
environmental extremes requiring regular replacement or overhaul 
generating strong returns from our initial investment over many years
our business model requires significant cash investment in the 
development phase of programmes and for our wheels and brakes 
business the production phase also we then make strong positive 
cashflow in the inservice phase resulting in cash breakeven 
typically between years 11 and 18
as our products are developed in line with our customers’ 
technology goals we have performed strongly in the recent bid 
cycle securing positions on key platforms and refreshing the 
longterm aftermarket pipeline 
our nearterm business is weighted therefore towards investment 
in new development programmes the source of sustainable growth 
over the long term
typical product lifecycle years
cumulative 
cash flow £
wheels and brakes
civil
military
development in production mature
5
0
10 15 20 25 30 35 40 market review 8
civil aerospace
civil aerospace accounts for 45 of group 
revenue with products and subsystems 
installed on almost every jet airliner 
regional aircraft and business jet in 
service the global fleet of civil aircraft on 
which meggitt has content continues to 
grow totalling over 41000 aircraft today
new aircraft deliveries drive sales of 
original equipment and aircraft utilisation 
generates demand for spare parts and 
repairs over many decades 
original equipment
aircraft deliveries encompass large jets 
100 seats regional aircraft 100 seats 
and business jets 
large jet deliveries in 2013 stood at a 
record 1279 8 higher than in 2012 
continued growth is underpinned by an 
order book at the two major civil aircraft 
manufacturers boeing and airbus 
stretching out for seven years at current 
production levels bolstered by new 
aircraft manufacturers investing in the 
large jet market including bombardier 
sukhoi and comac the high level of 
demand for new aircraft deliveries is 
driven primarily by high oil prices the 
relatively low cost of debt and the wave of 
newer more fuelefficient aircraft coming 
to market including boeing’s 787 and 
737max and airbus’ a350xwb and 
a320neo
regional aircraft deliveries of 263 
represented an 11 increase on 2012 with 
growth driven by 70plus seat aircraft 
growth looks set to continue over the 
medium term mirroring the growing 
internationalisation of the regional aircraft 
fleet beyond the us 
business jet deliveries totalled 637 an 8 
decrease on 2012 deliveries are still 50 
below the peak of 2008 however 
inventories are continuing to decline and 
corporate profitability historically a good 
driver of business jet demand is forecast 
to rise in the coming years as with 
regional aircraft the fleet is becoming 
more global—customers in the americas 
comprise 76 of the global business jet 
fleet but order trends suggest this will 
move to less than 60 over the next 
decade over the medium term we see 
deliveries continuing to recover driven by 
an improved economic growth outlook in 
developed economies and the large 
number of new aircraft models
meggitt’s principal markets civil aerospace 
45 of revenue military 38 and energy 
11 are characterised by long lifecycles  
and the requirement for smart engineering  
for extreme environments this capability 
ranges from thermal management condition 
monitoring and wheel brake and brake control 
systems to highintegrity electronics and fire 
protection systems some of these capabilities 
have applications beyond our core markets 
making up the remaining 6 of group revenues 
revenue by market
£ millions

  civil
 7362  45

  military 
 6164  38

  energy  other 
 2847  17
16373
8
meggitt plc report and accounts 2013 meggitt plc report and accounts 2013 9
meggitt performance
meggitt’s original equipment oe revenue  
grew organically by 11 in 2013 large jet 
deliveries drive the majority of our oe 
revenues involving the supply of products 
and subsystems on engines and airframes 
across thermal and fluid control fire 
protection conditionmonitoring and 
highintegrity electronics our largest 
exposure to regional aircraft and business 
jets is through our wheels and brakes 
business which provides most original 
equipment free of charge to civil aircraft 
manufacturers the strong oe performance 
is also driven in part by our high shipset 
values on new aircraft programmes with  
order books and delivery forecasts for these 
programmes giving us confidence in future 
growth prospects with a medium term 
growth target of 78 per annum 
aftermarket
the civil aerospace aftermarket is driven 
primarily by aircraft utilisation which in 
the case of large jets and regional aircraft 
is measured using available seat 
kilometres asks we use takeoffs and 
landings as a proxy for business jet 
performance 
asks in the commercial aircraft fleet grew 
modestly in the first half of 2013 
accelerating to give a fullyear growth 
number of 45 close to the 5 long term 
average the middle east and africa saw 
particularly strong growth with the us 
market showing a steady recovery 
regional aircraft utilisation picked up 
noticeably driven by the recovery in north 
america business jet utilisation in the  
us and europe continued to exhibit the 
gradual improvement seen for the last two 
years with takeoffs and landings in 2013 
up 1 versus 2012 we would normally 
expect our aftermarket revenues to follow 
these leading indicators after a lag of a  
few months
meggitt performance
meggitts organic aftermarket revenue was 
flat for the year but up 3 in the fourth 
quarter which is below the growth rate we 
would expect given the rise in aircraft 
utilisation over the course of the year this 
is primarily due to a continuation of the 
destocking seen in 2012 also the bulk of 
ask growth has been met by new aircraft 
typically under warranty for three to five 
years after initial delivery holding back 
growth in aftermarket demand the rate of 
new aircraft deliveries has also driven a 
higher than normal rate of older aircraft 
cannibalisation and created a surplus of 
spare parts 
regional aircraft and business jets are 
important contributors to the group’s 
aftermarket revenue and the recovery in 
regional aircraft utilisation in 2013 helped 
offset the effects of destocking at a 
significant large business jet customer 
aircraft utilisation remains very 
encouraging with asks now tracking 
above the long term average this gives us 
confidence in our medium term view of 
annual growth in aftermarket revenue of 8 
to 9 after some of the current cyclical 
factors reduce in impact
available seat kilometres asks
billions
3
6
5
0
1
2
4
7
1970
1971
1972
1973
1974
1975
1976
1977
1978
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989 
1990
1991
1992
1993
1994
1995
1996
1997
1998
2001 
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2000
1999 
1979 
source meggitt management estimates
9
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
2012 2013 2014 2015 2016 2017 2018 
300
900
600
1500
1800
1200
1189
1279
1350
1410
1462
1507
1537
source meggitt management estimates
large jet delivery forecast
2012 2013 2014 2015 2016 2017 2018
100
200
300
400
237
263
258
271
278
292
307
source meggitt management estimates
regional aircraft delivery forecast
2012 2013 2014 2015 2016 2017 2018
200
600
400
1000
1200
800
670
637
675
771
846
910
1002
source meggitt management estimates
business jet delivery forecast
 strategic report financial statements supplementary information governance reports market review continued 10
military
military accounts for 38 of group 
revenue meggitt has equipment on over 
20000 aircraft and a variety of ground 
vehicles naval vessels and training 
installations worldwide during 2013 61 
of our military revenue came from us 
customers with 23 from europe and 16 
from the rest of the world 
defence budgets in some key markets 
were under pressure in 2013 notably in 
the us where the effect of continuing 
resolution plus sequestration affected 
spending levels and the timing and size of 
orders however european markets were 
stable and parts of the middle east and 
asia saw budget growth the us defence 
budget remains constrained although the 
bipartisan budget act of december 2013 
alleviated some pressure by reducing the 
proposed cuts in 2014 and 2015 by 22 
billion and 9 billion respectively 
global defence spending is likely to remain 
restrained as the operational tempo in 
afghanistan slows down this is likely to 
reduce equipment utilisation levels 
limiting the demand for spare parts and 
repairs however opportunities remain for 
reset and upgrade of repatriated 
equipment and supplying new products as 
a significant tranche of military assets 
reaches the end of their useful lives 
meggitt performance
meggitt’s military revenue declined 
organically by 3 in 2013—a very creditable 
performance given the market backdrop 
within this sales to the us declined by 6 
sales to europe increased by 12 and sales 
to the rest of the world increased by 4 
our exposure to a broad range of fixed and 
rotary wing aircraft ground vehicles 
training facilities and naval vessels across 
original equipment and aftermarket 
spares and repairs has enabled us to 
demonstrate resilience in a challenging 
environment over the last couple of years 
we expect to continue to do so over the 
medium term we have enjoyed 
considerable success for example 
securing retrofit programmes such as 
blastproof fuel tanks for the bradley 
fighting vehicle fleet and fuel bladders for 
the kc135 tanker aircraft while we have 
now completed the bradley retrofit 
contract and the kc135 contract is winding 
down there are further opportunities for 
ground vehicle fuel tank retrofits and good 
growth in platforms on which we have 
content such as the a400m p8 poseidon 
and f35 joint strike fighter accordingly 
we are targeting 2 organic revenue 
growth in the medium term excluding the 
impact of sequestration 
energy
our energy business accounted for 11 of 
group revenue in 2013 we target power 
generation and oil and gas markets with 
conditionmonitoring hardware and 
software control valves and printed circuit 
heat exchanger technology
the market for condition monitoring and 
control valves has continued to grow as 
high input costs drive operators to extract 
greater efficiency from their assets as 
newer more capable monitoring 
technologies come to market operators 
will maximise their asset utilisation and 
minimise unplanned downtime by 
retrofitting new conditionmonitoring 
systems onto existing plant and machinery
the oil and gas heat transfer market 
remains robust exploration and production 
companies are increasingly turning to 
extraction sites which are further offshore 
and in deeper water necessitating the 
commissioning of new equipment designed 
to operate in these increasingly harsh 
environments these factors have resulted 
in good growth in activity for floating 
production storage and offload fpso and 
floating liquefied natural gas flng 
vessels markets which are set to grow 
further in the coming years
meggitt performance
meggitt’s energy revenue grew 5 in 2013 
sales to power generation customers  
were broadly flat and sales to oil and gas 
customers principally through our heatric 
printed circuit heat exchanger business 
grew 11 
we saw good growth in our industrial 
valves business growth in our energy 
conditionmonitoring segment was 
however hampered by a key raw material 
shortage and some production issues 
following the opening of our new facility  
in southern california in october these 
issues are now under control and we look 
forward to resuming growth in this 
business augmented by the enhanced 
functionality of our vibrosight
®
 condition
monitoring system which provides more 
information better analysis and new 
decision support features to operators of 
rotating machinery
our heatric business continued to grow 
nicely in 2013 with good progress made 
against the significant contract wins we 
have enjoyed in the last few years this 
business is characterised by large 
infrequent orders resulting in uneven 
growth we are confident however that 
heightened activity levels in the fpso and 
flng markets will deliver further strong 
growth over the next few years from the 
£600 million pipeline of opportunities in 
which we are actively engaged 
our confidence in our positioning in  
this market is reflected in our medium 
term growth target of greater than 10 
per annum
military revenue by region
total revenue £ millions
6164

  usa
 3790  61

  europe 
 1440  23

  rest of world 
 934  16
10
meggitt plc report and accounts 2013 meggitt plc report and accounts 2013 11
over time meggitt believes the technology could be present in 
many of its product lines enabling more precise use of raw 
materials providing additional functionality and lowering 
inventory as small complex products are printed on demand 
for now meggitt is content to create a supply chain ready  
to design and certify a product for a military jet on point to 
respond to its customers as the technology processes mature 
and customers’ own alm strategies coalesce
f
êted as the next disruptive technology in an evergrowing 
mound of press cuttings meggitt is already using 3d 
printing additive layer manufacturing—alm for 
aerospace components to ensure the approach is not dispersed 
and shallow the group’s research and technology team is 
coordinating a project to ensure meggitt’s inhouse capability 
counts creating its own powders forging its own design 
methodology and over the longer term making its own 
manufacturing equipment  
i want to build a complete valve out of 
components made through 3d printing 
strap it on a test engine and run it for 
4000 hours
stewart chapman
engineering director 
meggitt control systems dunstable uk
strategy insight
deliver innovation
11
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports strategic report financial statements supplementary information governance reports 12
meggitt plc report and accounts 2013
meggitt divisions
a leading supplier of aircraft wheels  
brakes and brake control systems
a leading supplier of pneumatic fluid control 
thermal management and electromechanical 
equipment and subsystems
capabilities
• wheels and brakes 
•  control—brake nose wheel steering and landing gear
• monitoring systems
• aftermarket services
growth strategy
•  enhance complete landing gear subsystems capability
•  secure sole source positions where possible on new  
aircraft programmes
• grow share of aftermarket 
•  increase competitiveness implementing meggitt production 
system and increasing use of lowcost manufacturing 
facilities
capabilities
•  heat management 
• control valves and subsystems
• electromechanical controls
• environmental control
• fuel handling
growth strategy
•   develop lightweight control systems for extreme  
temperature and pressure environments to improve 
aircraft performance
•  develop more products to increase the reliability and  
efficiency of industrial gas turbines developing our ability  
to service them internationally
•  increase competitiveness implementing meggitt production 
system and increasing use of lowcost manufacturing 
facilities
markets
markets
meggitt aircraft braking systems
meggitt control systems
 of group 
revenue 
underlying  
operating 
profit 
£ millions  
202 
1224
 of group 
revenue 
underlying  
operating 
profit 
£ millions  
125 
504
revenue  
£ millions 
3304 
revenue  
£ millions 
2056
civil aerospace
civil aerospace
energy industrial 
and marine
fixed and rotary wing  
military aircraft
military aircraft and  
ground vehicles
ground fuelling 13
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
a leading specialist in fuel containment engineered 
aircraft sealing solutions and technical polymers 
electrothermal ice protection and complex 
composite structures and assemblies
a leading provider of highperformance sensing  
and conditionmonitoring solutions for highvalue 
rotating machinery and other assets
capabilities
•  lifesaving fuel containment technologies for aerospace  
and ground vehicles
• lightweight integral fuel tank sealants
•  smart electrothermal ice protection with energysaving 
proportional control
• complex composite structures
• airframe engine and oil  gas sealing solutions
growth strategy
•  extend leading position in fuel tanks developing complete 
fuel subsystems for helicopters and ground combat vehicles
•  develop more sealing solutions and electrothermal ice 
protection technology to secure attractive positions on civil 
and military fixed wing aircraft 
•  increase competitiveness implementing meggitt production 
system and increasing use of lowcost manufacturing 
facilities
capabilities
•  highperformance sensing in extreme environments 
•  conditionmonitoring for air and landbased machinery
growth strategy
•  accelerate growth in energy segment launching innovative 
new products and expanding sales and aftermarket services 
in highgrowth regional markets
•  develop leadingedge sensing and conditionmonitoring  
technologies for attractive aerospace applications
•  deploy advanced sensing knowledge and intellectual  
property for highgrowth medical ultrasound applications
•  increase competitiveness implementing meggitt production  
system and increasing use of lowcost manufacturing 
facilities
markets
markets
meggitt polymers  composites
meggitt sensing systems
 of group 
revenue 
underlying  
operating 
profit 
£ millions  
111 
302
 of group 
revenue 
underlying  
operating 
profit 
£ millions  
147 
343
revenue  
£ millions 
1810
revenue  
£ millions 
2404
civil aerospace
civil aerospace
missile systems  
and uavs
energy
military aircraft and  
ground vehicles
military fixed wing and rotary 
aircraft ships missiles
nuclear marine heavy 
transportation and  
oil and gas sectors
test and measurement 14
meggitt plc report and accounts 2013
meggitt divisions continued
growth strategy
•  fire protection deploy integrated fire detection and 
suppression systems to secure sole source positions on new 
platforms and continue to develop environmentallyfriendly 
aircraft fire protection systems 
•  heat transfer build on marketleading position in compact 
and highpressure heat exchangers for highgrowth energy 
markets
•  power exploit capabilities in power generation conversion 
and storage for more electric aircraft 
•  avionics continue to build our position in stateoftheart 
secondary flight displays
•  training grow our marketleading position in live and virtual 
training systems for international customers in defence and 
law enforcement markets 
•  combat support provide smart thermal management 
solutions for military electronics systems and extend 
automatic ammunition handling capability into larger calibre 
weapons 
•  increase competitiveness implementing meggitt production 
system and increasing use of lowcost manufacturing 
facilities
created to enable a set of strong technologically
distinct businesses to market their offerings to 
specialist customers while benefiting from the 
wider meggitt group’s investment in shared services 
and common processes
capabilities
• aircraft fire protection and control systems
• avionics
•  combat systems ammunitionhandling military electronics 
cooling and countermeasure launch and recovery systems
• livefire and simulation training
•  heat transfer equipment for offshore oil and gas 
• power generation
• linear motion control
• aircraft safety and security
• automotive and industrial control electronics
 
markets
meggitt equipment group
 of group 
revenue 
underlying  
operating 
profit 
£ millions  
415 
1599
revenue  
£ millions 
6799
civil aerospace
energy
fixed and rotary wing  
military aircraft 
automotive and industrial
defence and security 15 principal risks and uncertainties
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
principal risks and uncertainties
types of risk
we categorise and monitor risk across 
strategic operational business 
environment and financial categories 
• strategic risk includes for example 
risks arising from making poor 
business decisions or substandard 
execution of business objectives
• operational risk covers risk in our 
business processes and programme 
risk relating to technical quality 
project management or organisational 
risk
• business environment risk arises 
when external forces could significantly 
change the fundamentals driving our 
overall objectives and strategies
• financial risk encompasses key 
financial functions including the 
provision of adequate liquidity to meet 
our obligations and management of 
currency interest rate credit and other 
financial risks 
meggitt’s risk management framework includes  
a formal process for identifying assessing and 
responding to risk to support the delivery of the 
group’s strategy and business objectives 
risk management operates at all levels 
throughout meggitt the board has overall 
responsibility for risk management including 
maintaining the group’s risk governance structure 
and an appropriate internal control framework 
willis risk advisory services have been appointed 
to assist with a review of the existing risk 
management processes against international 
standards and guidelines and to advise on process 
improvements reporting and assurance
during 2013 the board approved an updated risk 
management policy a group risk management 
strategy and updated formats for regular board 
reports and the group risk register this was 
supported by process and guidance documentation 
detailing the revised groupwide framework the 
implementation of an improved reporting and 
communication process will ensure the revised 
risk management framework is embedded 
properly across the group
risk disclosure
following our strategic review of the risk 
management process in 2013 we have 
evaluated our risk disclosure and have 
focused this report on our most 
significant risks as a result some of the 
risks we disclosed in 2012 are no longer 
included risks relating to catastrophic 
events the environment health and 
safety acquisitions contract risk and 
organisational structure general 
financial risks are no longer disclosed 
here but are described in the chief 
financial officer’s review on pages 29 to 
30 including foreign exchange risk to 
reported results
the risks outlined overleaf which are not 
presented in order of priority are those 
the group believes are the principal ones 
it currently faces however additional 
risks of which the group is unaware or 
risks the group currently considers to be 
less significant could have an adverse 
impact
change in risk in year
no change 
higher risk 
lower risk 16
meggitt plc report and accounts 2013
principal risks and uncertainties continued
risk description and impact how we manage it
strategic
  b u s i n e s s m o de l failure to respond to fundamental 
changes in the civil and military 
aftermarket
impact decreased revenue  
and profit
• longterm agreements are in place 
• customerfacing organisation restructured and boosted
• investing in research and development to maintain and enhance  
meggitt’s intellectual property
• ongoing strategic review of aftermarket including evaluation of  
operational model
• implementing meggitt production system mps aftermarket module  
across the group
• investment in maintenance repair and overhaul facilities 
operational
  q ualit y e s c a p e 
equipment failure
defective product leading to 
inservice failure accidents the 
grounding of aircraft and prolonged 
production shutdowns for meggitt 
and its customers
impact decreased revenue  
and profit damage to reputation  
and operational performance
• welldeveloped verification validation and system safety analysis policy  
and processes in place
• quality and customer audits and industry certifications 
• upgrading crisis management plans
• implementing mps across the group
• implementing an enhanced supplier quality assurance process
  c u s t o m e r 
satisfaction
failure to meet customers’ cost 
quality and delivery standards or 
qualify as preferred suppliers 
impact failure to win future 
programmes decreased revenue  
and profit
• achieve supplier “gold” status or equivalent with key customers 
• step change in performance enabled through quality and delivery initiative  
now covered under the implementation of mps
• implementation of programme lifecycle management process initiated 
• programme management reorganised to increase capability and focus on 
programme delivery and governance
• developing our commercial function and engineering capability 
  i t s y s t e m s 
failure
prolonged malfunction of critical 
systems such as sap due to 
badlyexecuted implementation 
poor maintenance change control 
business continuity and backup 
procedures the failure of 
thirdparties to meet service level 
agreements or cyber attack 
impact decreased revenue  
and profits damage to  
operational performance
• rolling programme of system upgrades including sap implementation  
to replace legacy systems
• programme of it security enhancements ongoing
• reviewing existing systems third party service providers and risks  
including resilience and disaster recovery processes and taking mitigating 
action where appropriate
deliver innovation
secure positions  
on new platforms
achieve operational 
excellence
provide throughlife 
product support
strategic objectives   17
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
risk description and impact how we manage it
 supply chain failure or inability of critical 
suppliers to supply unique 
products capabilities or services 
which causes the group to be 
unable to satisfy customers or meet 
contractual requirements 
impact decreased revenue  
and profit damage to  
reputation
• group procurement reviewing supply chain risk management framework 
• buffer inventory maintained for critical and solesource suppliers 
• counterfeit and fraudulent parts policy implemented at highrisk facilities 
• implementing integrated commercial and procurement approach to contractual 
terms and conditions 
  p ro je c t 
programme 
management
failure to meet new product 
development and programme 
milestones and certification 
requirements 
impact significant financial 
penalties leading to decreased 
profit damage to reputation
• implementation of programme lifecycle management process initiated and  
a range of engineering support applications developed
• structured approach to maturing technologies implemented
• deliver applied research and technology objectives in line with group strategy
• programme management reorganised to increase capability and focus on 
programme delivery and governance 
• step change in performance enabled by quality and delivery initiative which  
is now covered under implementation of mps
  l e gal a n d 
regulatory 
significant breach of increasingly 
complex trade compliance bribery 
and corruption and ethics laws or 
violating the terms of meggitt’s 2013 
consent agreement with the us 
department of state 
impact damage to reputation  
loss of supplier accreditations 
suspension of activity fines from 
civil and criminal proceedings
• substantial investment in measures to ensure compliance with 2013 us 
department of state consent agreement together with continuing investment 
in other compliance programmes means that the board considers that this risk 
has decreased during the year
• trade compliance ethics and anticorruption policies approved by board 
• implementing a trade compliance global it solution
• regular monitoring by the ethics and trade compliance committee
• continue with trade compliance programme including external audits and 
comprehensive ethics programme including training anticorruption policy 
external audits and ethics line 
• implementing import compliance programme in americas and europeasia
  it and physical 
security 
failure to protect intellectual 
property or other sensitive 
information arising from cyber 
attack or physical theft of it and 
business assets
impact compromised market 
position damage to reputation 
financial or contractual liabilities
• ongoing development of it security strategy and enhancing it security 
infrastructure policies and procedures
• groupwide intellectual property protection programme in place 
• implementing physical security strategy including audits prioritising higher 
risk environments and regions
business 
environment 
  p ro duc t dem an d significant variation in demand for 
products should military and civil 
business downcycles coincide a 
serious political economic or 
terrorist event take place or an 
industry consolidation materially 
change the competitive landscape 
impact volatility in underlying 
profitability 
• monitoring of external economic and commercial environment and long  
lead indicators
• focus on balanced portfolio including expansion of energyrelated businesses
• regular communication of strategy to shareholders
• maintenance of sufficient headroom in committed bank facilities and against 
bank covenants
• maintain appropriate costbase contingency plans  key performance indicators 18
the group uses a mix of financial and nonfinancial key 
performance indicators kpis to measure execution against  
its strategic objectives to ensure we deliver value to our 
shareholders over the cycle financial kpis balance shortterm 
measures underlying pbt and free cash flow in the year with 
longerterm measures organic revenue growth return on 
trading assets and underlying eps growth nonfinancial kpis 
focus on investment in rd to drive future revenues the health 
and safety of our employees and raising standards of 
operational performance to satisfy our customers 
 organic revenue growth
definition and basis of calculation
revenue growth calculated by measuring current and prior year revenue at constant 
currency excluding revenue from any businesses acquired or disposed of in those 
periods to measure revenue at constant currency current year revenue is restated 
using translation and transaction exchange rates prevailing in the prior year see page 
27 for a reconciliation of organic revenue to revenue
organic revenue growth better represents underlying business performance and has 
replaced the previously reported revenue growth kpi which did not exclude the impact 
of currency or mergers and acquisitions
target
midsingle digit in 2014 6 to 7 over the medium term
result
achieved 14 2012 58 average achieved over last five years 11  
average achieved over three years since target was set 64 see page 22  
for details
directors’ incentive plans
organic revenue growth is proposed as a performance measure for the 2014  
long term incentive plan ltip see pages 50 to 51 for details 
 underlying pbt
definition and basis of calculation
underlying pbt is reconciled to statutory measures in note 10 of the group financial 
statements prior year figures have been restated for the impacts of ias 19 revised 
and the treatment of net interest expense on retirement benefit obligations as 
described in note 44 of the group financial statements
target
we do not publish profit targets
result
achieved £3778 million 2012 £3660 million as restated see page 24 for details
directors’ incentive plans
underlying pbt is a performance measure in the 2013 and 2014 short term incentive 
plan stip for the purpose of these plans underlying pbt figures are measured at 
constant currency see pages 49 and 51 for details
15
0
5
10
5
10
15
2009 2010 2011 2012 2013

400
100
0
200
300
400
2009 2010 2011 2012 2013
£’m
deliver innovation
secure positions  
on new platforms
achieve operational 
excellence
provide throughlife 
product support
strategic objectives  
18
meggitt plc report and accounts 2013  return on trading assets
definition and basis of calculation
underlying operating profit after tax expressed as a percentage of average trading 
assets underlying operating profit is defined and reconciled to statutory measures  
in note 10 of the group financial statements 
trading assets are defined as net assets adjusted to exclude goodwill other intangible 
assets arising on the acquisition of businesses net debt retirement benefit 
obligations derivative financial instruments and deferred tax 
average trading assets are calculated as the average of trading assets at the start and 
end of the year 
return on trading assets measures performance by linking operating performance  
to management of working capital and capital investment it replaces the previously 
reported return on sales kpi
target
slight reduction in the shortterm due to projected high level of investment needed  
to execute high volume of new platform contracts secured in recent years target is to 
achieve an average return on trading assets of 345 over the next three years 
result
achieved 360 2012 408 average achieved over last five years 369 see page 
28 for details 
directors’ incentive plans
return on trading assets is proposed as a measure for the 2014 ltip for the purpose 
of this plan underlying operating profit after tax and trading assets are measured at 
constant currency see pages 50 to 51 for details
 underlying eps growth
definition and basis of calculation
the percentage change in underlying earnings per share eps from the previous year 
underlying eps is reconciled to statutory measures in note 15 of the group financial 
statements 
target
we do not publish profit targets however the proposed 2014 ltip includes eps targets 
equivalent to growth ranging from 5 to 10 per annum over the next three years
result
achieved 27 2012 137 average achieved over last five years 72 see page 27 
for details 
directors’ incentive plans
underlying eps is a performance measure used in the 2013 ltip and is proposed as a 
measure for the 2014 ltip for the purpose of these plans underlying eps is adjusted 
to exclude the impact of scrip dividends see pages 50 to 51 for details 
10
0
20
30
40
50
2009 2010 2011 2012 2013

2
2
6
10
16
0
4
8
14
12
2009 2010 2011 2012 2013

19 19
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports key performance indicators continued 20
 free cash flow
definition and basis of calculation
cash generated excluding amounts in respect of acquisition of businesses disposal of 
businesses and paid to shareholders see page 29 for a reconciliation of free cash flow 
to statutory measures
free cash flow replaces the previously reported cash conversion kpi
target
we do not publish free cash flow targets 
result
achieved £1104 million 2012 £1824 million see page 28 for details 
directors’ incentive plans
free cash flow as defined above is a performance measure in the 2014 stip free 
cash flow adjusted to exclude capital expenditure was a measure in the 2013 stip  
for the purpose of these plans actual and target free cash flow figures are measured 
at constant currency see pages 49 and 51 for details
 rd investment
definition and basis of calculation
investment in research and development rd expressed as a percentage of revenue 
investment is measured as total expenditure in the year and is not adjusted for 
amounts capitalised or amortised investment is measured gross of funding received 
from customers 
target
investment of 6 to 8 per annum this range reflects investment fluctuation within the 
industry cycle
result
achieved 82 2012 76 average achieved over last five years 76 see page 28  
for details 
directors’ incentive plans
rd investment is not a specific measure used in any directors incentive plans 
however the 2014 ltip proposes to include measures focussed on rd  
programme management see pages 50 to 51 for details
 accidentincident rate
definition and basis of calculation
the number of injuries reportable under local laws and regulations multiplied by 
100000 divided by the average employee headcount during the year the method of 
calculation was revised in 2012 and it has not been practical to restate figures prior to 
2011 on this basis 
target
yearonyear improvement with an ultimate goal of nil
result
2013 317 2012 397 see page 33 for details 
directors’ incentive plans
health and safety performance is included in the personal objectives of two executive 
directors
50
0
100
200
150
250
2009 2010 2011 2012 2013
£’m
2
0
4
6
8
10
2009 2010 2011 2012 2013

100
0
200
300
400
500
2011 2012 2013

20
meggitt plc report and accounts 2013 21
  reduction in defective  
parts per million dppm
definition and basis of calculation
defective parts per million dppm for the year expressed as a percentage 
improvement from that achieved at 31 december 2011 the date at which the meggitt 
production system introduced this consistent method of measurement dppm is 
defined as the number of defective parts returned by customers in the year multiplied 
by 1000000 and divided by the total number of parts delivered 
figures include the results of disposed businesses up to the date of sale and include 
the results of acquired businesses from the later of the start of the financial year 
following acquisition and the date the information is first available
this new kpi monitors the success of the meggitt production system
target
to achieve the levels of performance excellence eg sometimes referred to as 
supplier gold expected by our customers we use simple ontime delivery and  
dppm measures aggregated at a group level to track overall progress towards  
these objectives given the complexity and variety of customer metrics driven by  
the large number of customers we serve we also track performance as reported  
by our customers through their own supplier scorecards
result
cumulative improvement since 31 december 2011 54 2012 32 see page 5  
for details 
directors’ incentive plans
dppm is a measure used in the 2013 stip and is proposed as a measure for the 2014 
ltip for the purpose of these plans it is measured by reference to the number of  
sites achieving individual targeted reductions in dppm see pages 49 to 51 for details
  o n  tim e de l i v er y  
improvement
definition and basis of calculation
average ontime delivery achieved in the year expressed as a percentage  
improvement from that achieved at 31 december 2011 the date at which the  
meggitt production system introduced this consistent method of measurement 
calculated as the 12month average of the number of parts delivered on delivery  
dates agreed with customers divided by the total number of parts delivered 
figures include the results of disposed businesses up to the date of sale and include 
the results of acquired businesses from the later of the start of the financial year 
following acquisition and the date the information is first available
this new kpi monitors the success of the meggitt production system
target
to achieve the levels of performance excellence eg sometimes referred to as 
supplier gold expected by our customers we use simple ontime delivery and  
dppm measures aggregated at a group level to track overall progress towards  
these objectives given the complexity and variety of customer metrics driven by  
the large number of customers we serve we also track performance as reported  
by our customers through their own supplier scorecards
result
cumulative improvement since 31 december 2011 101 2012 36 see page 5  
for details
directors’ incentive plans
ontime delivery is a measure used in the 2013 stip and is proposed as a measure  
for the 2014 ltip for the purpose of these plans it is measured by reference to the 
number of sites achieving individual targeted ontime delivery figures see pages 49  
to 51 for details
80
100
0
60
40
20
2012 2013

3
0
6
9
12
15
2012 2013

21
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports 22
meggitt plc report and accounts 2013
chief financial officer’s review
revenue 
total revenue increased by 2 to  
£16373 million as table 2 see page 24 
demonstrates softness in civil aftermarket 
and military were compensated for by 
strong growth in civil original equipment 
oe organic growth was 1 after 
adjusting for the effects of acquisitions 
disposals and foreign exchange 
total civil aerospace revenue grew 3 
organic 4 with strong organic growth 
in oe of 11 predominantly on large jets 
compensating for lower than expected 
growth in aftermarket am the am 
weakness was largely as a result of the 
continuation of the destocking seen in 
2012 although the growth trend improved 
as the year progressed with organic 
growth of 2 and 3 respectively in  
q3 and q4 
total military revenue declined by 1 
organic 3 reflecting the anticipated 
effect of the drawdown from afghanistan 
a slowdown in orders in our defence 
systems business and the substantial 
completion of two large retrofit 
programmes partly offset by good 
growth in our training business 
particularly outside the us
total energy revenue increased by 5 in 
2013 organic 5 the favourable 
demand environment for our printed 
circuit heat exchangers continued with 
heatric growing 11 in the year although 
order and milestone timing impacted 
revenue in the second half we saw good 
growth in demand for our innovative valve 
technology for the power generation 
market our revenue from energy 
condition monitoring was negatively 
impacted in the second half by the 
previously announced operational 
challenges encountered during the 
consolidation of our two usbased sensor 
businesses into a new west coast facility 
and shortage of an important raw 
material however the market remains 
robust and we are confident that these 
issues are now under control our 
medium term expectation remains that 
our energy businesses will grow at 
greater than 10 per annum over the  
next few years
total revenue from other markets grew 
9 in 2013 organic 1 after adjusting 
for the piezotech acquisition with good 
growth in medical revenue offsetting 
weakness in laboratory test and 
measurement equipment
overall performance
ongoing demand growth in civil original equipment and 
energy was tempered by softness in civil aftermarket and 
military and operational challenges in the year caused a 
further drag on growth revenue grew 2 and underlying 
profit before tax grew 3 driving a 3 increase in 
underlying eps to 375p with a strong order book and an 
improving trend in civil aftermarket there is good 
momentum going into 2014 
doug webb chief financial officer
 financial highlights table 1
   2013 2012
1
 reported organic
   £’m £’m  change  change
 revenue  16373 16058 2 1
 underlying
2

  ebitda
3
  4793 4662 3 2
  operating profit  3972 3921 1 0
  profit before tax   3778 3660 3 2
  earnings per share ‘eps’  375p 365p 3 
 statutory
  operating profit  3003 3214 7
  profit before tax   2694 2813 4
  earnings per share ‘eps’  294p 301p 2
 free cash flow
4 
 1104 1824 39
 net debt  5646 6425 12
1
  restated for the effects of adopting ias 19 revised and also for underlying profit 
measures the treatment of pension interest see note 44 of the group financial statements 
for further details
2
  underlying profit and eps are defined and reconciled to statutory measures in notes 10 and 
15 respectively of the group financial statements
3
  underlying ebitda represents underlying operating profit adjusted to add back 
depreciation and amortisation
4
  free cash flow is defined and reconciled to statutory measures in note 40 of the group 
financial statements 23
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
with the flexibility to withstand the stresses and strains of 
takeoff and landing 
 
virtually every us military aircraft carries the ballistically
resistant and crashworthy fuel tanks we introduced 25 years 
ago today we’re making a name for ourselves in iedresistant 
fuel tanks for ground vehicles  
 
that’s why when we make the leap from component to system 
the makers of a helicopter certified to the most stringent safety 
requirements of the federal aviation administration know our 
landing will be sure
m
eggitt has won a longterm contract starting now and 
running until 2030 for the sikorsky s92
®
 helicopter 
sponson fuel system it is based on an innovative 
combination of meggitt’s extreme environment composites fuel 
and fluid control technologies of course innovation gets you 
the attention but you won’t go far in our markets without the 
trust built up from industry relationships and experience 
spanning decades  
  
we launched our longlife lightweight bladder fuel cell 
technology 30 years ago pioneering inner liners that do not dry 
out and become fatally brittle when empty for extended periods 
if it was a flexible fuel tank you wanted 
our name was on it now after 
collaborating with experts from our 
control systems division we can put 
meggitt’s name to complete fuel systems 
that’s what organic growth is all about  
building value from within 
john skubina
vice president  
meggitt polymers  composites
strategy insight
secure positions  
on new platforms chief financial officer’s review continued 24
meggitt plc report and accounts 2013
meggitt control systems mcs designs 
and manufactures products which 
manage the flow of liquids and gases 
around gas turbines both aerospace and 
industrial and control the temperature 
of oil fuel and air in aircraft its valve 
business also supplies industrial and 
airport ground fuelling products the 
division represents 13 of group revenue 
and generated 53 of its revenue from oe 
and 47 from the aftermarket 
mcs reported revenue declined 4 in 
2013 on an organic basis including 
adjusting for the disposal of the meggitt 
addison business during 2013 and the 
meggitt simi business in 2012 mcs 
revenue grew 2 with strong civil oe 
8 and energy 14 growth more 
than offsetting modest declines in civil 
am 2 and military 4 the strong 
growth in civil oe was driven by large 
jets reflecting the increased deliveries by 
the major manufacturers civil am 
weakness resulted from a continuation of 
the destocking seen in 2012 operating 
margins improved from 232 to 245 
benefiting from favourable progress on a 
legacy product liability issue and 
following the disposal of the relatively 
lower margin cabin air conditioning 
business during the year
meggitt polymers  composites mpc 
has a strong military focus representing 
60 of its revenue it supplies flexible 
bladder fuel tanks ice protection 
products and composite assemblies for a 
range of fixed wing and rotary aircraft and 
complex seals packages for civil and 
military platforms these market 
segments are linked by their dependence 
on similar materials technology and 
manufacturing processes mpc 
represents 11 of group revenue
in the interim management statement in 
november 2013 
operational highlights table 3 
meggitt aircraft braking systems mabs 
provides wheels brakes and brake control 
systems for over 30000 inservice aircraft 
and continues to develop innovative 
technology for new programmes including 
tyre pressure monitoring autobraking 
capability and steering and landing gear 
control systems across a broad range of 
programmes the division targets sole 
source programmes and is particularly 
strong in regional aircraft and business 
jets mabs represents 20 of group 
revenue generating 86 of its revenue 
from the aftermarket and 14 from  
oe sales
mabs civil am revenue 65 of divisional 
total grew by 3 in 2013 with growth in 
regional aircraft and large jets offsetting a 
modest decline in business jets resulting 
from a significant destocking at one of our 
major customers civil oe saw strong 
growth mainly from the sale of electronic 
brake control systems and a380 
components military revenue saw a 
modest increase owing in part to good 
growth in blackhawk spares for the us 
dod operating margins moved from  
376 to 370 reflecting the growth in 
lower margin military and civil oe sales 
profit 
the board’s preferred measure of the 
group’s trading performance is underlying 
profit underlying operating profit for the 
year grew 1 to £3972 million 2012 
£3921 million headwinds included the 
mix effect of civil oe growing faster than 
civil am increased investment in the 
meggitt production system and some 
previously announced operational 
challenges encountered in the third 
quarter these were offset by good 
progress on a legacy product liability issue 
and renegotiation of a lossmaking 
contract both of which had previously 
been provided for resulting in an operating 
margin of 243 2012 244
underlying net finance costs decreased  
to £194 million 2012 £261 million as  
a result of cash generation and lower 
interest rates including the benefit from 
the refinancing of maturing fixed rate 
private placement notes by lower rate  
bank debt  
underlying profit before tax increased by 
3 to £3778 million 2012 £3660 million 
on a statutory basis profit before tax 
decreased by 7 to £3003 million 2012 
£3214 million largely as a result of a 
£200 million exceptional charge to cover 
costs associated with the supply from a 
vendor of nonconforming raw material in 
one of our businesses as communicated 
 operational highlights table 3
 revenue underlying operating profit
2
    organic     organic 
 2013 2012 growth
 
growth
1 
 2013 2012 growth growth
1
 
 £’m £’m     £’m £’m  
 3304 3112 62 47 aircraft braking systems 1224 1171 45 35
 2056 2149 43 16 control systems 504 498 12 71
 1810 1872 33 46 polymers  composites 302 338 107 124
 2404 2402 01 22 sensing systems 343 362 52 135
 6799 6523 42 27 equipment group 1599 1552 30 21
 16373 16058 20 14  3972 3921 13 04
1
 organic growth excludes the impact of ma and currency and is reconciled in table 4
2
 restated for the effects of adopting ias 19 revised and the treatment of pension interest see note 44 of the group financial statements for further details
 revenue growth table 2
    2013  organic
    revenue growth growth
    £’m    
civil oe   3003 7 11
civil am   4359 1 0
total civil   7362 3 4
military   6164 1 3
energy   1731 5 5
other   1116 9 1
total   16373 2 1 25
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
gathering and morning meetings hadn’t he seen all this 
before but then as each new doubt started to form in his  
mind there’d be a twist that defused it something that neatly 
turned the nicebuttheoretical into a sustainable practical 
powerful improvement  
 
four days in and lee knew he’d been wrong about mps all along 
it is different and lee couldn’t be more pleased to admit it
m
eggitt production system does turn a workplace on  
its head management team leaders production 
supervisors all must support the people who make 
things and get them out of the door but lee barnes is referring 
to his own personal mps journey  
 
at first mps just didn’t add up for lee wasn’t he already focused 
on supporting the shopfloor where was the time for all the kpi 
i’ve seen my world turned upside  
down by the meggitt production system 
—and it’s all the better for it 
lee barnes
production manager meggitt avionics
strategy insight
achieve operational 
excellence chief financial officer’s review continued 26
meggitt plc report and accounts 2013
a third of new airliner deliveries are 
destined for the asia pacific over the next 
decade so opening our new aftermarket 
facility in singapore couldn’t be more 
timely or its scope more appropriate 
walk down our central aisle and when 
you reach the end you will have seen 
virtually all meggitt’s capability
adrian plevin
vice president and general manager
meggitt aerospace asia pacific
w
e ask the airline operators to send their products home 
for maintenance that’s because as the maker of those 
products we have the control data at our fingertips to 
provide optimal repairs and advice and beyond skilled 
maintenance meggitt’s approach to the aftermarket is about 
going the extra mile making special logistics arrangements 
training technicians to get the best from our products and even 
adding capability for thirdparty repairs when our customers 
ask us to  
 
we work with the world’s premier carriers who have selected 
us as their strategic partner and we work with owneroperators 
distributors and parts brokers all benefit from the failsafe 
service that arises from our consistent management and 
production processes  
 
that’s because our people are fundamental to the dynamic 
process that places customers at the heart of our operations  
 
the meggitt production system—which encapsulates the group’s 
approach to lean manufacturing and continuous improvement 
—is enhancing this enabling us to respond with ease to rising 
demand from the region—and the industry as a whole—in an era 
of unprecedented new programmes in short we’re ready
strategy insight
provide throughlife 
product support 27
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
 organic growth table 4
 revenue underlying profit before tax
 2013 2012 growth
  
 2013 2012 growth 
 £’m £’m     £’m £’m  
 16373 16058 20 reported   3778 3660 32
 443 531  impact of ma
1
   33 80
 190   impact of currency
2
   84 
 1574 0 15527 14 organic   3661 3580 23
1
  excludes the results of businesses acquired or disposed of during the current and prior year
2
 restates the current year using 2012 translation and transaction exchange rates
reported revenue in mpc declined 3 
organic 5 civil revenue grew by 11 
on an organic basis with sales of polymer 
seals for large jets and composites for 
helicopters growing particularly strongly 
as expected military revenue declined 
following substantial completion of the 
kc135 and bradley fuel tank retrofit 
contracts during the second half these 
programmes contributed £165 million to 
revenue during 2013 2012 £296 million 
operating margins moved from 181 to 
167 reflecting strong growth in the 
lower margin civil oe products replacing 
military work and lower sales of higher 
margin iceprotection products
meggitt sensing systems mss designs 
and manufactures highly engineered 
sensors to measure a variety of 
parameters such as vibration 
temperature pressure fluid level and 
flow its products are designed to operate 
effectively in the extreme conditions of 
temperature vibration and contamination 
that exist in an aircraft or on groundbased 
turbines sensors are combined into 
broader electronics packages providing 
condition data to engine operators and 
maintenance providers contributing to 
improved safety and lower operating 
costs mss has migrated these products 
into other specialist markets requiring 
similar capabilities such as test and 
measurement automotive crash test and 
medical pacemakers it has also teamed 
with mabs winning a number of new 
commercial tyre pressure monitoring 
system contracts this progresses the 
strategy to apply our conditionmonitoring 
capability beyond engines to structural 
parts of aircraft where we see a 
considerable market opportunity mss 
represents 15 of group revenue and 
generated 80 of its revenue from oe and 
20 from the aftermarket mss revenue is 
split 39 civil aerospace 19 military and 
42 energy and other of which the 
majority is energy
mss reported revenue was flat in the year 
organic 2 stripping out the effect of 
the piezotech acquisition with growth in 
military and medical products largely 
offsetting a decline in energy where the 
shortage of tourmaline limited the sales of 
some high margin components mss also 
experienced operational challenges 
associated with the consolidation of two 
us factories into one new facility in the 
second half a solution to the tourmaline 
shortage is in process and will be 
substantially complete by the end of the 
first half civil oe revenue saw good 
growth offset by a decline in civil am 
operating margins declined to 143 
2012 151 as a result of the operational 
challenges and oeam mix
meggitt equipment group meg 
comprises a technologically diverse 
range of businesses including pacsci 
each of which has differentiated 
capabilities and a specific focus ranging 
from fire protection systems through to 
sophisticated electronics and electro
mechanical components and sub
systems the division represents 41  
of group revenue and generates 
approximately 70 of its revenue from  
oe and 30 from the aftermarket
reported revenue in meg was up 4 on 
last year organic 3 including 
adjusting for the sale of sunbank in 
december 2013 and the acquisition of 
precision micro in 2012 civil aerospace 
increased by 4 on an organic basis 
driven mainly by demand for large jet oe 
products and energy grew 11 as a 
result of continued good performance at 
our heatric printed circuit heat exchanger 
business energy revenue growth was 
skewed towards the first half reflecting 
the exceptional growth in the second half 
of 2012 military revenue was broadly flat 
in the year with good growth in the 
training businesses offsetting a decline  
in defence systems operating margins 
remained broadly flat at 235 2012 
238 with incremental synergies from 
the pacsci acquisition and the 
renegotiation of a lossmaking contract 
against which a provision had been held 
largely offsetting unfavourable mix
taxation
meggitt’s underlying tax rate benefited 
from a oneoff research and development 
credit in the us reducing slightly to 21 
2012 22 we continue to expect an 
underlying rate of 22 in the medium 
term based on our current business mix 
cash tax paid as a percentage of 
underlying profit was 12 2012 9 the 
rate of cash tax paid is lower than our 
underlying tax rate due to tax deductible 
items which do not affect underlying 
profit including goodwill amortisation 
and tax relief on retirement benefit deficit 
reduction payments
our statutory tax rate which includes 
items excluded from underlying profit 
was 14 2012 16 
earnings per share eps
underlying eps increased by 3 to 375 
pence 2012 365 pence an increase in 
shares in issue which includes the 21 
take up of scrip dividend on 2013 dividend 
payments offset the benefits of the lower 
tax rate and resulted in eps growth being 
in line with the growth in underlying profit 
before tax 
statutory eps declined 2 to 294 pence 
2012 301 pence the decline is smaller 
than that in statutory profit before tax 
with the reduction in statutory tax rate 
more than offsetting the higher number of 
shares in issue 
dividends
the board has increased the 
recommended final dividend to 880 pence 
2012 820 pence which would result in 
an 8 increase in the fullyear dividend to 
1275 pence 2012 1180 pence chief financial officer’s review continued 28
meggitt plc report and accounts 2013
meggitt invested a further £357 million 
2012 £361 million in supplying equipment 
free of charge to new aircraft and making 
programme participation contributions 
mostly in mabs and we expect this to grow 
in the medium term as new regional 
aircraft and business jets equipped with our 
wheels and brakes are delivered
our leading edge capabilities incorporating 
high levels of embedded intellectual 
property and our lengthy pedigree in our 
chosen markets enable us to secure 
strong positions on new programmes such 
as the dassault falcon 5x announced in 
the second half of 2013 we target 
specialist applications where we can 
generate revenue from original equipment 
with annuitylike maintenance overhaul 
spares and repair revenue for the life of 
programmes which can last for decades 
as our products are spread over multiple 
platforms and markets we are not 
dependent on single programmes 
customers or regions 
capital expenditure on property plant 
and equipment and other intangible 
assets increased to £669 million 2012 
£632 million there has been substantial 
investment in our manufacturing facilities 
during 2013 we have consolidated six 
factories into three larger more efficient 
facilities and have built additional 
capacity in some of our businesses to 
meet future growth requirements 
examples of capacity growth include 
further investment at our heatric printed 
circuit heat exchanger business in the uk 
and new larger facilities for our power 
storage business in north america and 
our sensor business in denmark we have 
also continued to invest in the rollout of a 
common erp system across the group 
we believe superior performance on 
quality and delivery are the building blocks 
of future growth as our customers 
continue to raise the bar we are 
intensifying our investment in facilities 
production systems programme 
management and people these 
investments ensure that we will continue 
to meet our customer expectations and 
will further strengthen our customer 
partnerships
building future growth
the key pillars of our strategy are to 
deliver innovation secure positions on 
new platforms in our chosen markets 
develop and sustain a culture of 
operational excellence and provide our 
customers with worldclass throughlife 
support
innovation and technology development 
are aimed at adding new capabilities to 
our portfolio in response to customer 
requirements during 2013 investment in 
rd totalled £1349 million or 82 of 
revenue 2012 £1220 million 76 of 
which 18 was funded by customers this 
is our highest ever level of rd and 
above our normal range of 68 of 
revenue reflecting the very strong 
winrate on new programmes areas of 
focus in 2013 included advancement on a 
number of wheel and brake technologies 
including electrically actuated braking 
and tyre pressure monitoring systems 
developing our helicopter fuel system 
technology in line with sikorsky’s 
requirements on the s92 programme and 
the development of an environmentally 
responsible fire suppression technology 
to replace the use of halon as a 
suppressant in aerospace applications 
we also continue to invest in transferring 
our core aerospace technologies across 
adjacent markets and developing 
manufacturing techniques including 
additive manufacturing to enhance our 
prototyping and manufacturing 
capabilities
 analysis of rd costs table 5
 2013 2012 
 £’m £’m
 total rd expenditure 1349 1220
  of revenue 82 76
 customerfunded rd 245 249
 capitalised 702 522
 amortisation 169 116
  charge to income  
statement 571 565
2013 saw the launch of our global 
approach to continuous improvement—
the meggitt production system—which is 
already delivering tangible improvements 
in quality and delivery and which will 
over the long term create a sustainable 
competitive advantage based on our 
manufacturing and programme 
management capabilities we will also 
become more cost competitive through 
the reduction in rework costs and  
working capital
finally we continue to invest in our 
product support capability in 2013 we 
opened our new repair and overhaul 
centre in singapore doubling our capacity 
and adding more meggitt product lines 
and launched a major review of the 
optimal way to deploy meggitt’s growing 
aftermarket capability to our global 
customer base
cash flow and borrowings
free cash flow of £1104m 2012 1824m 
reflects continued investment in rd and 
capital expenditure as well as higher 
working capital due to the lower than 
anticipated revenue growth delayed 
customer receipts and the timing of 
milestones in our heatric business
net cash generated of £632 million 2012 
£1167 million reflects the increases in 
rd capital expenditure and working 
capital referred to above partially offset 
by net proceeds from ma of £259 
million 2012 £52 million net debt 
decreased by 12 to £5646 million 2012 
£6425 million
to reflect the board’s focus on efficient 
deployment of manageable capital we 
have introduced a new return on trading 
assets rota key performance indicator 
which we track at both group and 
individual business level rota moved to 
360 in 2013 2012 408 reflecting the 
investments in rd capital expenditure 
and working capital during the year 29
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
 movement in net debt £’m table 6
      2013 2012
 cash flow from operations before exceptional operating costs  3619 4088
 exceptional operating costs excluding ma costs    153 124
 interest and tax       634 625
 capitalised development costsprogramme participation costs   1059 883
 capital expenditure    669 632
 free cash flow       1104 1824
 net proceeds from ma      259 52 
 net amounts payable to shareholders     731 709
 net cash generated      632 1167
 debt acquired with businesses    03 04
 currency movements       27 339
 other noncash movements      123 43
 opening net debt    6425 7884
 closing net debt     5646 6425
single bank accounts for more than 6 of 
the group’s total credit facilities and the 
credit rating of lenders is monitored by 
our treasury department our largest six 
lenders are bank of america barclays 
hsbc jp morgan bank of tokyo
mitsubishi and sumitomo mitsui banking 
corporation we also seek to maintain at 
least £200 million of undrawn committed 
facilities net of cash as a buffer
b setoff arrangements
the group utilises setoff and netting 
arrangements where possible to reduce 
the potential effect of counterparty 
defaults all treasury transactions are 
settled on a net basis where possible and 
surplus cash is generally deposited with 
our lenders up to the level of their current 
exposure to us
c refinancing risk
we seek to ensure the maturity of our 
facilities is staggered and refinancings 
are concluded in good time typically 
more than 12 months before expiry
d currency risk
to ensure we mitigate headroom erosion 
due to currency movements our credit 
facilities are denominated in us dollars 
the currency in which most of our 
borrowings are held 
 net debt by drawn currency £’m table 8
 2013 2012
 sterling 212 191
 us dollar 4629 5921
 euro 539 102
 swiss franc 789 886
 other 99 89
 net debt 5646 6425
e covenant risk 
meggitt’s committed credit facilities 
contain two financial ratio covenants—
interest cover and net debt to ebitda 
the covenant calculations are drafted to 
protect us from potential volatility caused 
by accounting standard changes sudden 
movements in exchange rates and 
exceptional items this is achieved by 
measuring ebitda on a frozen gaap 
basis retranslating net debt and ebitda 
at similar average exchange rates for the 
year and excluding exceptional items from 
the definition of ebitda we continue to 
have considerable headroom on both key 
financial covenant measures 
 covenant ratios table 9
  covenant 2013 2012
 net debtebitda ≤35x 12x 13x
 interest cover ≥30x 220x 162x
interest risk
meggitt seeks to reduce the volatility 
caused by interest rate fluctuations on net 
debt our us private placements are 
subject to fixed interest rates whereas 
borrowings under our syndicated bank 
credit facilities are at floating rates to 
manage interest rate volatility we use 
interest rate derivatives to either convert 
floating rate interest into fixed rate or vice 
versa our policy is to maintain at least 
25 of net debt at fixed rates with a 
weighted average maturity of two years or 
more at 31 december 2013 the 
percentage of net debt at fixed rates was 
46 2012 43 and the weighted 
average period to maturity of the first 
25 was 54 years 2012 54 years 
foreign exchange risk
the group is exposed to both translation 
and transaction impacts due to changes 
in foreign exchange rates these risks 
principally relate to the us dollarsterling 
rate although exposure also exists in 
relation to other currency pairs including 
the us dollarswiss franc and us  
dollareuro 
the results of overseas businesses are 
translated into sterling at weighted average 
exchange rates compared to 2012 the 
group’s underlying profit before tax for  
the year benefited by £47 million from 
currency translation of which £34 million 
arose on us dollar denominated profits and 
debt structure and financing
the group’s borrowings comprise a 
combination of us private placement debt 
and syndicated bank credit facilities 
during the year the group repaid out of 
existing facilities expiring us 180 
million private placement notes there 
were no other changes in facilities 
available to the group in the year as at  
31 december 2013 the group had 
undrawn committed credit facilities of 
£504 million after taking account of 
surplus cash 2012 £557 million more 
than 96 of the group’s existing 
committed facilities expire after 2015
 facility headroom £’m table 7
2013 2014 2015 2016 2017 2018
1500
1200
900
600
300
00
headroom £504 million
net debt 
£565 million
 fixed rate       floating rate
debt financing risks
the group seeks to minimise debt 
financing risk as follows
a concentration of risk
we raise funds through private placement 
issuances and committed bank facilities 
to reduce reliance on any one market 
bank financing is sourced from around 15 
international institutions spread across 
north america europe and asia no  chief financial officer’s review continued 30
meggitt plc report and accounts 2013
 exchange rates us£ table 10
 2013 2012
 average translation rates 157 159
 average transaction rates 162 166
 yearend rates 166 163
postretirement benefit schemes
the group’s principal defined benefit 
pension schemes are in the uk and us 
and are closed to new members 
the total pension scheme deficits reduced 
to £1898 million 2012 £2412 million 
net of deferred tax the deficits reduced 
to £1399 million 2012 £1693 million 
the main drivers of the reduction were
•  net deficit reduction payments of  
£267 million 2012 £228 million 
regulations in the uk and us require 
repayment of deficits over time in the 
uk the 2012 triennial actuarial 
valuation was finalised during 2013 and 
a repayment plan agreed with the 
trustees under this agreement the 
group commenced making increased 
deficit payments from april 2013 with 
amounts due to gradually increase over 
the period to 2024 in the us the level 
of deficit payments is principally driven 
by regulations amounts required to be 
paid decreased slightly in the year and 
are expected to remain relatively flat in 
2014 overall the group expects deficit 
contributions to increase to £306 
million in 2014
•  an actuarial gain on scheme assets of 
£255 million 2012 £288 million 
principally driven by the continued 
global recovery in equity markets
meggitt has two other principal post
retirement benefit schemes providing 
medical and life assurance benefits to 
certain us employees the group’s 
exposure to increases in future medical 
costs provided under these plans is 
capped both schemes are unfunded and 
have a combined deficit of £483 million 
2012 £585 million the main driver of 
the reduction was the increase in aa 
corporate bond rates used to measure 
scheme liabilities deficit payments 
during the year were £07 million 2012 
£22 million
in 2013 the group adopted ias 19 
revised 2011 which changed the 
calculation of certain items of pension 
expense in addition the definition of 
underlying profit measures was amended 
to exclude net pensions interest details 
of these changes are provided in note 44 
of the group financial statements
going concern
the group’s business activities are 
described on pages 8 to 14 which include 
those factors most likely to affect its 
future development performance and 
position the financial position of the 
group is set out in this report and 
additional information is provided in the 
financial statements including note 3 
financial risk management note 28 
bank and other borrowings and note 30 
derivative financial instruments details 
of the principal risks and uncertainties to 
which the group is exposed and the 
mitigation plans in place are set out on 
pages 15 to 17
the group describes in the strategic 
report on pages 4 to 7 its cash generative 
business model designed to deliver 
organic revenue growth of 67 in the 
medium term and its resilience to oneoff 
global shock events the group continues 
to be cash generative even at the current 
peak in the investment cycle has 
considerable headroom against existing 
bank facilities and covenants and there is 
no material facility expiry before 2016 
accordingly after making enquiries the 
directors have formed a judgement at the 
time of approving the financial 
statements that there is a reasonable 
expectation that the group and the 
company have adequate resources to 
continue in operational existence for the 
foreseeable future for this reason the 
directors continue to adopt the going 
concern basis in preparing the group and 
company financial statements
the balance on other currencies each five 
cent weakening of the us dollar versus the 
2013 average rate of £1157 will adversely 
impact 2014 revenue by approximately 
£35 million with the converse also being  
true the sensitivity of 2014 underlying 
profit before tax to a five cent move in  
the translation rate is approximately  
£80 million
the net assets of overseas businesses 
are translated into sterling at year end 
exchange rates the resultant exchange 
rate exposure is mitigated through 
holding our net debt principally in the 
currencies of those businesses
transaction risk arises where revenues 
andor costs of our businesses are 
denominated in a currency other than 
their own we hedge known and some 
anticipated transaction currency 
exposures based on historical experience 
and projections our policy is to hedge at 
least 70 of the next 12 months’ 
anticipated exposure and to permit the 
placing of cover up to five years ahead 
compared to 2012 the group’s underlying 
profit before tax for the year benefited by 
£37 million from currency transaction 
movements of which £16 million relates 
to us dollarsterling exposure and the 
balance to other currency pairs each five 
cent movement of the us dollar versus 
the 2013 average hedged rate of £1  
162 impacts underlying profit before  
tax by approximately £25 million at  
31 december 2013 £ cover for 
estimated 2014 exposure was 100 
hedged at an average rate of 153 and  
we have covered approximately 50 of 
our £ exposures for the next three 
subsequent years at an average rate  
of 156
 defined benefit pension scheme  summary £’m table 11
      2013 2012
 opening net deficit    2412 2654
 service cost     127 123
 group cash contributions    394 351
  net deficit reduction payments    267 228
  other amounts charged to income statement
1
    114 137
  actuarial gains – schemes’ assets    255 288
  actuarial gainslosses – schemes’ liabilities    106 186
 currency movements    – 49
 closing net deficit    1898 2412
 assets     6884 6347
 liabilities    8782 8759
 closing net deficit     1898 2412
 funding status     78 72
1
  comprises past service costs administration expenses borne directly by schemes and net finance costs 31
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
we recognise our responsibility to 
shareholders employees customers 
suppliers and the wider community to 
conduct our operations in a safe 
responsible and sustainable manner we 
are committed to ensuring compliance with 
all relevant national laws and regulations 
and aim to continually improve our financial 
social and environmental performance
policy
we are committed to
•  upholding sound corporate governance 
principles
•  providing a supportive rewarding and 
safe working environment with modern 
operational practices
•  conducting business relationships in an 
ethical manner
•  minimising the environmental impact of 
products and processes and 
maintaining internationallyaccredited 
environmental management systems
•  independent audits in key compliance 
areas
•  acting as a responsible supplier and 
encouraging our contractors and 
suppliers to do the same
•  supporting our local communities and
•  professional and comprehensive 
employee training programmes
governance and compliance
health safety and environment hse 
ethics and business conduct and trade 
compliance are managed by a highly 
experienced team of functional 
specialists under the leadership of the 
corporate affairs director divisional 
presidents and site directors are 
responsible for implementing policies  
and programmes locally 
the board has approved policies on 
corporate responsibility health and 
safety environment ethics and business 
conduct and trade compliance and these 
are available on our website 
the board has an ethics and trade 
compliance committee which meets 
quarterly to discuss these programmes in 
detail hse matters are reviewed and 
discussed at every board meeting 
2013 activity
environment
meggitt strives to achieve the highest level 
of environmental performance throughout 
our businesses based on standards and 
procedures set by group leadership to 
achieve the goals of our environmental 
policy meggitt’s environmental 
management programme includes setting 
environmental targets communicating 
regulatory developments training and 
informationsharing data analysis and 
internal and external auditing of 
environmental management systems  
and practices
our global environmental audit 
programme supported by external 
consultants includes a comprehensive 
review of applicable regulatory 
requirements and best practice standards 
at all manufacturing facilities every  
three years in total 11 sites were  
audited in 2013 
78 of our manufacturing facilities had 
achieved iso 14001 standard certification 
by the end of 2013 all facilities should 
achieve certification by the end of 2014 
performance
table 1 shows our performance for  
key environmental metrics site 
consolidations which reduced floor space 
and gas efficiency initiatives completed at 
our aircraft braking systems facilities in 
akron usa and coventry uk contributed 
to a drop in gas consumption relative to 
revenue in 2013 
the fall in water consumption relative to 
revenue is attributable to water 
conservation measures implemented at 
many of our facilities for example water 
recirculating systems installed at our 
north hollywood us facility resulted in a 
57 decrease in water consumption on 
2012 one of our facilities in oregon us 
installed thermostaticallycontrolled 
water recirculation systems saving 50 of 
the water normally used in mouldcooling 
tanks 
the rise in total waste was due primarily 
to nonrecyclable construction debris as  
a result of site consolidations and from 
waste produced by the precision micro 
facilities acquired in 2012 
although site consolidations generate 
additional waste our site consolidation 
projects always include plans to minimise 
our environmental impact and waste our 
contractors for the site consolidation at 
orange county us diverted more than 
70 of waste generated to a recycling 
facility and were selected partly on the 
basis of their environmental and waste 
management credentials
environmental metrics
1 
table 1
    2013 change 2012
utilities 
electricity – gwh  192  188
mwh per £m revenue 120 1 119
natural gas – gwh  183   199
mwh per £m revenue 115 9 126
carbon dioxide co
2

1
 – tonnes at 2012 rates 133661   134444
tonnes per £m revenue 836 2 849
waste – tonnes  14182   12861
tonnes per £m revenue 887 9 812
water – cubic metres  744196   806941
cubic metres per £m revenue 466 9 510
1
 metrics per £m are calculated using revenue converted at constant exchange rates co 2 emissions 
are calculated using conversion factors published in the 2012 guidelines to defradecc’s ghg 
conversion factors for company reporting conversion factors capture only co 2 emissions from 
scope 1 and 2 emissions 
corporate responsibility 32
meggitt plc report and accounts 2013
corporate responsibility continued
performance against fiveyear targets
table 2 shows our performance against 
internally set fiveyear targets we have 
met our target for co
2
 emissions one year 
early and will be setting a new fiveyear 
target using 2014 as the baseline year our 
performance is on track to meet targets 
for most metrics but acquisitions facility 
consolidations and increased production 
of carbon brakes has impacted our 
progress on electricity reduction and 
waste recycled 
greenhouse gas emissions ghg
table 3 shows ghg emissions data 
required to be reported under the large 
and mediumsized companies and groups 
accounts and reports regulation 2008 
as amended in august 2013 the sites 
reporting ghg data are the same as those 
consolidated in the group’s financial 
statements 
saving energy 
in 2013 we continued to seek 
improvements in our operations and 
processes to achieve reductions in energy 
consumption and improve efficiencies for 
example
• significant lighting heating and 
ventilation system upgrades were made 
as part of the site consolidation at 
orange county us
•  several facilities have replaced 
inefficient air compressors with 
energyefficient variable speed drive 
compressors resulting in a saving of 
approximately 1250 tonnes of carbon 
per year 
•  several facilities continued to upgrade 
offices and production floors with 
highefficiency compact fluorescent 
lighting saving approximately 200 
tonnes of carbon per year one of our 
facilities in oregon us only illuminates 
office and production floor space when 
occupied after installing wireless 
activity sensors 
• the carbon refurbishment programme 
at our facility in akron us has 
continued to expand in 2013 with a 54 
increase in carbon discs recovered and 
refurbished from 2012 reductions to 
processing time and associated energy 
consumption of around 75 resulted in 
savings of approximately 1600 tonnes of 
co
2
 in 2013 
reach
compliance with the european community 
regulation on registration evaluation 
authorisation and restriction of chemicals 
reach is managed by the group’s reach 
steering committee which continues to 
address the risks associated with the 
potential obsolescence of chemicals used 
by aerospace manufacturers we 
continuously track substances regulated 
under reach and work closely with our 
chemical suppliers to ensure substances 
are registered and will be approved for 
continued use or a suitable alternative 
identified 
obsolescence
in 2013 our obsolescence review board 
orb was instrumental in addressing the 
potential impact of new us legislation on 
conflict minerals establishing protocols 
for understanding how materials are 
sourced and their paths into our 
manufacturing facilities and products 
the orb developed a counterfeit and 
fraudulent material avoidance policy 
requiring our businesses to develop a 
process that will protect our supply chain 
from counterfeit parts we continued to 
collaborate with several customers and 
suppliers to identify and test alternatives 
to address the increasingly restricted use 
of particular substances following global 
regulatory developments including 
reach described above 
targets table 2
  five year target  achieved 
  performance period improvement over as at 
 baseline year financial years performance period 31122013
co2 emissions 2009 to 31 december 2014 15 1520
gas 2011 to 31 december 2016 15 1353
electricity 2011 to 31 december 2016 15 526
water consumption 2011 to 31 december 2016 10 352
waste to landfill 2011 to 31 december 2016 10 822
waste recycled 2011 to 31 december 2016 10 1048
ghg emissions
1
 data table 3
     2013
2
     tonnes of co 2
combustion of fuel and operation of facilities
3
    34323
electricity heat steam and cooling purchased for own use   100080
    134403
intensity measurement
emissions reported above normalized to tonnes per £m revenue   841
1 
global ghg emissions were calculated using conversion factors published in the 2012 guidelines to 
defradecc’s ghg conversion factors for company reporting conversion factors capture all 
relevant ghg emissions from the categories specified the difference between table 3 and the co2 
emissions in table 1 is that those in table 3 include ch4 and n2 o emissions 
2 
2012 data not available because the regulatory requirement to collect this data only came into force 
for the financial year ended 31 december 2013 comparative data will be provided in future years
3
 does not include ghg emissions generated from meggittowned and operated vehicles or refrigerant 
gases as these emissions are not material to the group’s ghg emissions 33
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
health and safety
strong supportive leadership is essential 
to a sustainable safety culture and in our 
2013 employee engagement survey we 
received plaudits for our safety culture 
however regrettably we have to report 
that in october 2013 one of our employees 
died in an incident involving a test 
laboratory autoclave at our facility in 
rockmart us an investigation is 
underway by regulatory authorities to 
determine the cause and we are providing 
our full support
in 2013 we continued to implement 
measures to improve safety in the 
workplace these included
•  groupwide online health and safety 
awareness training for all employees
•  integrated daily health and safety 
inspections and reviews as part of the 
meggitt production system
•  a behavioural health and safety 
programme implemented at our facility 
in loughborough uk which contributed 
to a 75 improvement in its reporting 
of injuries diseases and dangerous 
occurrences regulations riddor 
frequency and lost time incident rates 
and lost days we plan to roll out this 
programme to a number of sites across 
the group in 2014
•  continued implementation of the 
movesmart® programme at our facility 
in rockmartus designed to reduce the 
number of musculoskeletal injuries 
•  improved reporting and investigation of 
nearmiss accidents and unsafe 
conditions with special emphasis on 
rootcause analysis and developing 
timely corrective action plans and 
•  continued dissemination of information 
and best practice through intragroup 
hse conferences health and safety 
alerts and allemployee safety bulletins
these measures have resulted in 
improvements in health and safety 
performance across the group and 
outstanding achievements at some of our 
sites we experienced a significant 
reduction in reportable incidents and 
associated incident rates across the 
group as shown in table 4 in 2013 80 
of our manufacturing facilities achieved at 
least a bronze meggitt safety star award 
reflecting a 25 improvement in health 
and safety performance over the three
year average performance for years 2009 
to 2011 of those 20 facilities will receive 
a platinum safety star award for 
outstanding performance in achieving no 
workrelated lost time accidents and 
incurring no lost work days in 2013 
ethics and business conduct  
and trade compliance
our ethics and business conduct 
programme commits us to conducting 
business fairly impartially and in 
compliance with laws and regulations and 
acting with integrity and honesty in our 
business relationships
in 2013 we provided training on promoting 
mutual respect the uk bribery act and 
preventing harassment in the workplace 
and held two inhouse ethics conferences 
where facilitybased ethics coordinators 
reviewed and provided feedback on the 
ethics programme as a result of this 
feedback we launched a web application 
for the ethics line which allows questions 
or concerns to be submitted by email and 
agreed to update our ethics guide 
the board revised our ethics and 
business conduct policy and code of 
conduct this year along with the anti
corruption policy and we launched a 
distributors’ policy 
we have a highlydeveloped trade 
compliance programme based on the 
nunnwolfowitz task force report of 
2000 the influential report on export 
compliance best practice and guidelines 
issued by the regulatory authorities 
during 2013 we continued to implement 
our global trade management software 
solution to enhance our trade compliance 
programme and began implementation of 
our enhanced import compliance 
programme at several us facilities we 
also implemented phase 1 of the us 
government’s export control reform 
programme 
local communities and 
charitable donations
individual meggitt facilities work with the 
local community and support charities at 
their discretion education business 
partnerships and the uk government’s 
stem science technology engineering 
and mathematics initiative were 
supported locally meggitt’s headquarters 
based in dorset uk continued to sponsor 
the arkwright scholarship trust the 
institute of mechanical engineers’ 
schools aerospace challenge the local 
community foundation and the poole 
hospital staff excellence awards
our employees
learning career development employee 
engagement strong leadership and 
effective teamwork are vital components 
of meggitt’s performance culture 
in 2013 we undertook our second 
allemployee survey 62 of our 
workforce participated—1500 more than 
last time overall engagement levels are 
7 higher than the global benchmark 
people are proud to work for meggitt and 
would recommend us as an employer 
reportable accidents and incidents table 4
    2013 change 2012
reportable accidents and incidents
1
  35 19 43
reportable accidentincident rate
2
  317 20 397
1
 reportable accidents and incidents are those directly reportable to a regulatory authority
2
 accidentincident rates are the number of reportable accidentsincidents per 100000 employees 34
meggitt plc report and accounts 2013
corporate responsibility continued
provide opportunities for their training 
career development and promotion and to 
continue wherever possible to employ staff 
who become disabled 
we require all meggitt employees 
through our ethics training programme 
and statement of values to treat all 
colleagues fairly and with respect 
table 6 shows the number of female 
employees at all levels of the workforce 
the board’s approach to diversity is 
discussed in the nominations committee 
report see page 46
table 6 
level  of females 
 at 31 december 2013
board of directors 10
executive board 9
senior executives 9
all employees 29
human rights
respect for human rights is at the heart of 
meggitt’s code of conduct which we apply 
across all our businesses 
employee consultation 
the group regards employee 
communication as a vital business 
function communication and consultation 
is carried out at facilities by operations 
directors and other line managers using a 
variety of forums including daily meetings 
on shop floors monthly allemployee 
‘town hall’ meetings team briefings and 
works councils we respect all employee 
relations regulations 
corporate communications take a variety 
of forms including presentations from the 
chief executive via audiovisual media 
global webenabled conferences 
publications such as the meggitt review 
and a variety of electronicallydistributed 
newsletters results presentations are 
disseminated across the group which 
enhance our employees’ understanding  
of the financial and economic factors 
affecting its performance 
the directors encourage employees to 
become shareholders to improve active 
participation in and commitment to the 
group’s success this policy has been 
pursued for all uk employees through  
the share incentive plan and the 
sharesave scheme
strategic report
this 2013 strategic report on pages 1  
to 34 is hereby signed on behalf of the 
board of directors
 
stephen young 
chief executive
3 march 2014
our employees continued 
various initiatives are underway many of 
which have overt goals to improve or 
sustain engagement investment in learning 
and development is one of these we 
continue to increase the amount of 
corporate training where people from 
different businesses get to meet share 
views and learn together the most 
significant investment is in the meggitt 
production system mps our single global 
approach to the application of ‘lean’ tools 
and other continuous improvement 
practices the purpose of mps is to ensure 
that everything we do and everyone who 
does it supports the front line of our 
business 
in 2013 we launched a stateofthe art 
human resources information system in 
part to facilitate performance and talent 
management processes advanced 
analytical tools will enable us to finetune 
our personnel requirements groupwide 
while ensuring that professional 
development can be managed effectively 
for all employees individual goals are 
now more easily connected to the strategy 
of business units and the group as a 
whole the human resources information 
system is a lever for behavioural change 
that leads to the kind of performance 
culture employees want to play a part in 
equal opportunities
the group supports equal employment 
opportunities and opposes all forms of 
unlawful or unfair discrimination it is group 
policy to give full and fair consideration to 
job applications from disabled people to 
 aircraft braking systems 1195 11
 control systems 1173 11
 polymers  composites 1965 18
 sensing systems 1654 15
 equipment group 4116 39
 crossgroup facilities 612 6
1
  as at 31 december 2013
 less than 5 4641 43
 between 5 and 10 2495 23
 between 10 and 15 1167 11
 between 15 and 20   821 8
 between 20 and 25   443 4
 over 25 1148 11
 north america 5514 51
 uk 2797 26
 mainland europe 1589 15
 rest of world   815 8
employees by division
1
number of employees
10715
employees by length of service years
1
number of employees
10715
employees by region
1
number of employees
10715
analysis of employees table 5  35 corporate governance report
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
chairman’s introduction
throughout the financial year ended 31 december 2013 and to 
the date of this report we have complied with the provisions set 
out in the uk corporate governance code 2012 published by the 
financial reporting council the “code” the company has 
applied the main and supporting principles set out in the code 
an explanation of how the main principles have been applied is 
set out in this report and in the directors’ remuneration report 
the nominations committee report and the audit committee 
report a number of new disclosure requirements are reflected 
in this report in particular as required under the large and 
mediumsized companies and groups accounts and reports 
amendment regulations 2013 and the code
the board is committed to maintaining high standards of 
corporate governance which are fundamental to discharging our 
responsibilities as chairman i encourage open and transparent 
discussion and constructive challenge it is my responsibility to 
ensure that meggitt is governed and managed in the best 
interests of shareholders and wider stakeholders in this report 
we set out our governance framework and explain how sound 
and effective corporate governance practices support our 
strategy of creating longterm sustainable growth
leadership
in 2013 terry twigger retired from the board having served as 
chief executive for over 12 years he was replaced by stephen 
young who was until that time group finance director with 
effect from 1 may 2013 in early june we appointed doug webb 
as chief financial officer on behalf of the board i would like to 
thank terry for his contribution to the success of meggitt and 
welcome stephen and doug to their new roles i am pleased to 
report that we have seen a smooth transition during the 
succession period stephen and doug have visited our facilities 
customers and shareholders emphasising our continued 
commitment to returns to shareholders and to improving 
operational performance and customer service through 
initiatives such as the meggitt production system
effectiveness
after our successful external board evaluation in 2012 we 
returned to an internal evaluation in 2013 using lessons learned 
from the external process the main findings and 
recommendations of the evaluations in 2013 were to enhance our 
strategy reviews and risk management process and continue to 
improve the annual board schedule including site visits and 
operational and functional presentations a full description of the 
process and outcome of this year’s formal and rigorous review is 
on page 41
accountability
the board led by executive management has enhanced our risk 
management process and reporting in 2013 we have 
consolidated our key risks detailed in the annual report our 
shareholders can read about the most significant risks and 
uncertainties and the revised risk management process on  
pages 15 to 17
the board and audit committee have sought to improve this 
annual report and to ensure that it is fair balanced and 
understandable
remuneration
during the year the remuneration committee reviewed the 
directors’ remuneration package and prepared the group’s 
remuneration policy for inclusion in this year’s directors’ 
remuneration report and submission to shareholders for 
approval at the agm in 2014 the directors’ remuneration report 
pages 47 to 67 provides a detailed review of the committee’s 
2013 activity vesting outcomes and remuneration policy and 
proposals for 2014 and beyond
sir colin terry
chairman of the board of directors
3 march 2014 36 board of directors
meggitt plc report and accounts 2013
doug webb guy berruyer david robins
philip cox 
meggitt’s board is characterised by 
worldclass experience of uk 
mainland european and north 
american businesses spanning 
multiple sectors—many with  
global reach 
stephen young david williams brenda reichelderfer 
sir colin terry philip green paul heiden  37
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
committee membership
  audit committee
  nominations committee
‡  remuneration committee
§  ethics and trade compliance committee
◊ finance committee 
sir colin terry kbe cb dl freng
nonexecutive chairman   § 
appointed 2004    nationality british
skills and experience
chartered engineer with extensive civil aerospace 
military and industrial experience
current appointments
chairman of the uk military aviation authority 
safety advisory committee nonexecutive director 
and chairman of the audit committee of fox marble 
holdings plc and nonexecutive chairman of 
aviamedia tech limited
president of soldiers sailors airmen and families 
association in buckinghamshire of which he is 
deputy lieutenant
previous appointments
37 years in royal air force reaching rank of air 
marshal since retiring was group managing 
director of inflite engineering services chairman 
of the engineering council uk president of the 
royal aeronautical society and the council of 
european aerospace societies
stephen young
chief executive   § ◊
appointed 2013    nationality british
skills and experience
chartered management accountant with wide 
experience in all financial disciplines gained from 
national and multinational businesses across 
multiple sectors
current appointments
nonexecutive director audit committee chairman 
and member of risk and remuneration committees 
of derwent london plc
previous appointments
meggitt’s group finance director for over nine 
years before appointment to chief executive in may 
2013 senior financial positions held previously 
include group finance director thistle hotels plc 
and group finance director of the automobile 
association
doug webb 
chief financial officer  § ◊
appointed 2013    nationality british
skills and experience 
chartered accountant who has held senior 
international financial positions in defence 
aerospace engineering technology and financial 
services
current appointments
nonexecutive director and chairman of segro 
plc’s audit committee and member of the hundred 
group of financial directors
previous appointments
chief financial officer london stock exchange 
group plc chief financial officer qinetiq group plc 
and various senior financial roles in the uk and us 
for logica now cgi
philip green
group corporate affairs director  § ◊ 
appointed 2001    nationality british
skills and experience
fellow of the institute of chartered secretaries  
and administrators with significant legal and 
compliance experience 
current appointments
member of the gc100 and the dorset employment 
and skills board
previous appointments
meggitt’s company secretary from 1994 to 2006 
after 14 years at british aerospace in company 
secretarial roles
david williams
nonexecutive director    ‡ 
senior independent director
appointed 2006    nationality british
skills and experience
chartered accountant with significant experience  
in senior financial roles 
current appointments
joint chairman of mondi plc and mondi limited  
and nonexecutive director and audit committee 
chairman of dp world limited 
previous appointments
senior financial roles including 15 years as finance 
director of bunzl plc nonexecutive director and 
audit committee chairman of tullow oil plc until 
may 2012 
guy berruyer
nonexecutive director    ‡
appointed 2012    nationality french
skills and experience
trained as electrical engineer at the école 
polytechnique fédérale de lausanne and holds 
harvard business school mba brings significant 
experience to board as serving ftse100 chief 
executive 
current appointments
group chief executive of the sage group plc 
previous appointments
chief executive of sage group plc’s french division 
early career spent with software and hardware 
vendors in french and european management roles
philip cox cbe
nonexecutive director    ‡
appointed 2012    nationality british
skills and experience
senior management experience across a range  
of sectors from manufacturing to energy
current appointments
nonexecutive director senior independent director 
and audit committee chairman of wm morrison 
supermarkets plc and nonexecutive director of  
ppl corporation a uslisted energy utility company
previous appointments
chief executive officer international power plc 
senior vice president operational planning 
invensys plc finance director of siebe plc 
nonexecutive director and chairman of audit 
committee of  wincanton plc
paul heiden
nonexecutive director    ‡
appointed 2010    nationality british
skills and experience
chartered accountant with considerable 
experience in senior executive and financial roles 
in aerospace 
current appointments
nonexecutive director and chairman of the audit 
committee of london stock exchange group plc 
and chairman of intelligent energy holdings plc
previous appointments
chief executive of fki plc from 2003 to 2008 senior 
positions including director industrial business 
and finance director of rollsroyce plc and senior 
financial positions with peat marwick mitchell and 
co hanson plc and mercury communications 
nonexecutive director of uu plc bunzl plc 
essentra plc and chairman of talaris topco 
limited
brenda reichelderfer
nonexecutive director    ‡
appointed 2011    nationality american
skills and experience
skilled engineer and business leader with 
considerable us aerospace and industrial 
experience 
current appointments
senior vice president and managing director of 
private equity sector consulting firm trivista 
member of technology transfer group of missile 
defense agency and nonexecutive director of 
federal signal corporation and wencor aerospace
previous appointments
senior vice president director of engineering and 
chief technology officer having served as group 
president at two operating divisions of itt 
industries corporation
david robins
nonexecutive director
appointed 2002    nationality british
skills and experience
extensive knowledge and experience of the 
interaction between businesses and capital markets 
developed over a long career spanning investment 
banking and venture capital
current appointments
chairman of the asian total return investment 
company plc and fidelity japanese values plc 
deputy chairman of oriel securities ltd and a 
director of svg capital limited pemberton capital 
advisors llp and a venture capitalbacked company
previous appointments
until december 2000 chairman and chief executive 
of ing barings before which spent 18 years at 
phillips  drew and ubs becoming executive vice 
president and regional head of ubs europe 38 corporate governance report continued
meggitt plc report and accounts 2013
leadership
our governance framework
board of directors
sir colin terry chairman
three executive directors
six nonexecutive directors
creating and delivering  
sustainable shareholder value
board committees
remuneration 
five independent  
nonexecutive directors
determines the reward strategy for the 
executive directors and senior 
management to align their interests with 
those of the shareholders
audit
five independent  
nonexecutive directors
monitors the integrity of the group’s 
financial statements and the effectiveness 
of the external and internal auditors
nominations 
chairman chief executive and five 
independent nonexecutive directors
ensures the board and senior management 
team have the appropriate skills knowledge 
and experience to operate effectively and to 
deliver the group’s strategy
ethics and trade compliance
chairman and three  
executive directors
ensures the implementation and application 
of the ethics and business conduct and 
trade compliance policies and programmes
management committees
executive board
three executive directors the chief 
operating officer and four senior 
executives
assists the chief executive with the 
development and implementation of the 
group’s strategy the management of the 
business and the discharge of 
responsibilities delegated by the board
operations board
the chief operating officer  
and five divisional directors
assists the chief operating officer to 
manage the group’s operations and 
discharge the responsibilities delegated 
by the executive board
commercial committee
three executive directors chief 
operating officer and one executive 
board member
reviewsapproves bids and proposals  
and any other commercial activity
finance
three executive directors
approves treasuryrelated activity 
insurance and other matters delegated 
to it by the board 39
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
in advance of any board meetings impacted by the absence of 
directors the chairman discussed the matters to be covered at 
the meeting with and ascertained the views of those directors 
chairman
•  sir colin terry met the independence criteria on appointment 
as chairman on 1 july 2004
•  the roles of the chairman and chief executive are separate 
and a clear division of responsibilities has been approved and 
agreed in writing by the board these were reviewed and 
updated by the board in 2013
•  the chairman is responsible for setting the board’s agenda 
and ensuring that adequate time is available for discussion of 
agenda items including strategic issues leading the board 
and ensuring its effectiveness
•  the chairman facilitates the contribution of nonexecutive 
directors and oversees the relationship between them and the 
executive directors the chairman holds meetings with other 
nonexecutive directors without executive directors present
•  the chairman is responsible for ensuring directors receive 
accurate timely and clear information and is satisfied that 
effective communication principally by the chief executive  
and chief financial officer is undertaken with shareholders
•  the chairman agrees a personalised approach to the training 
and development of each director and reviews this regularly
senior independent director
the role of mr williams as senior independent director is to
•  make himself available to shareholders if they have concerns 
that cannot be resolved through normal channels
•  chair the nominations committee when it is considering the 
chairman of the board’s succession and
•  meet with the nonexecutive directors at least once a year  
to appraise the chairman’s performance
nonexecutive directors
•  the nonexecutive directors play a full part by constructively 
challenging and contributing to the development of the group’s 
strategy 
•  the nonexecutive directors scrutinise the performance of 
executive management and monitor the reporting of the 
group’s performance the integrity of financial information  
and the effectiveness of financial controls and risk 
management systems
•  the nonexecutive directors are responsible for determining 
appropriate levels of remuneration for the executive directors 
and participating in the selection and recruitment of new 
directors and succession planning
•  the terms and conditions of appointment of nonexecutive 
directors are available for inspection at the company’s 
registered office during normal business hours 
the role of the board 
the board retains full and effective control of the group and  
is collectively responsible for its success it sets the group’s 
strategy ensures appropriate resources are in place to achieve 
the group’s objectives and reviews performance regularly
the board is responsible for setting the group’s values and 
standards and for ensuring obligations to shareholders 
employees and others are met 
there is a schedule of matters reserved for the board last 
updated in 2012 which sets out the matters on which the board 
must make the final decision these include for example 
changes to the group’s capital structure acquisitions and 
disposals above a certain threshold approval of results 
announcements annual reports and dividends if a decision is 
not reserved for the board then authority lies in accordance 
with an authorisation policy with a board committee 
management committee the chief executive or other executive 
director divisional president or site directorgeneral manager
board membership and attendance during 2013
the board met nine times in 2013 seven scheduled meetings 
shown in the table below and two unscheduled meetings in 
advance of any board meetings impacted by the absence of 
directors the chairman discussed the matters to be covered at 
the meeting with and ascertained the views of those directors 
sending their apologies
   meetings  
   eligible meetings 
name title  to attend
1
 attended
sir colin terry chairman  7 7
mr g s berruyer nonexecutive director  7 7
mr p g cox
2
 nonexecutive director  7 7
mr p e green
1
 corporate affairs director  7 6
mr p heiden
2
 nonexecutive director  7 7
ms b l reichelderfer nonexecutive director  7 7
mr d a robins
1
 nonexecutive director  7 6
mr t twigger chief executive to 1 may 2013 3 3
mr d r webb chief financial officer  
 from 6 june 2013  4 4
mr d m williams nonexecutive director  7 7
mr s g young group finance director  
 to 1 may 2013 
 chief executive  
 from 1 may 2013   7 7
1
  all of the directors attended the scheduled meetings during the year 
with the exception of mr green who sent his apologies for the meeting 
held in june 2013 as he was undergoing medical treatment and mr 
robins who was unable to attend the meeting held in february 2013 
owing to overseas travel 
2
  there were also two unscheduled meetings held during the year which 
were attended by all of the directors eligible to attend except mr cox 
and mr heiden who sent their apologies for one unscheduled meeting 
in january 2013  40 corporate governance report continued
meggitt plc report and accounts 2013
effectiveness
composition
the board considers it has a good balance of executive  
and nonexecutive directors is of an appropriate size and 
includes the independence skills experience and knowledge  
to enable the directors to discharge their respective duties and 
responsibilities effectively all of the nonexecutive directors  
are considered independent under the code with the exception 
of mr robins who has served on the board for over nine years  
mr robins is retiring from the board after the 2014 agm
all nonexecutive directors are asked to join the audit 
remuneration and nominations committees on appointment 
chairmanship of committees is considered during discussions 
on composition and succession no one other than committee 
chairmen and members are entitled to attend the meetings 
although others may be invited committee chairmen members 
and regular meeting invitees are noted in the respective 
committee reports below 
each of these committees has specific written terms of 
reference issued by the board and adopted by the relevant 
committee these are available on our website all committee 
chairmen report orally on the proceedings of their committees 
at the next meeting of the board where appropriate the 
committee chairmen also make recommendations to the board 
in respect of appropriate matters for example the fairness 
balance and understandability of the annual report further 
details of the composition and operation of these committees 
are set out in the audit committee report the nominations 
committee report and directors’ remuneration report 
appointments to the board
there is a formal rigorous and transparent procedure for the 
appointment of new directors to the board full details are 
available in the nominations committee report set out on page 
46 which also provides details of the role and activities of the 
nominations committee 
commitment
the letters of appointment for the chairman and nonexecutive 
directors set out the expected time commitment required of 
them and are available for inspection by any person during 
normal business hours at the company’s registered office and  
at the agm other significant commitments of the chairman  
and nonexecutive directors are disclosed on appointment and 
require approval thereafter
in 2013 the chairman became chairman of aviamediatech 
limited sir colin confirms that he continues to have sufficient 
time to discharge his role as chairman of the board
company secretary
the appointment and removal of the company secretary is  
a matter for the board 
the work of the board in 2013
during the year the board approved the acquisition of piezotech 
llc and the disposal of meggitt addison inc and the sunbank 
family of companies llc it also approved the appointment of  
mr young as chief executive and mr webb as chief financial 
officer it received regular reports from executive management 
on strategy and business performance financial performance 
including treasury activity and corporate affairs including risk 
legal and compliance the board visited a number of facilities 
during the year across all business divisions the board 
received and discussed
•  an update on group strategy including market and competitive 
environment and strategic priorities
•  the group budget for 2014 
•  business unit and functional updates and presentations on 
senior executive succession operations it security and 
investor relations
•  reports on internal control risk management and going 
concern and
•  reports on the activities of its committees
the board reviewed and approved
•  the 2012 annual report and accounts the 2012 fullyear 
results announcement and the 2013 interim results 
announcement
•  interim management statements released in may and 
november
•  recommendations to shareholders on the final dividend 
payment in respect of the year ended 31 december 2012 and 
the interim dividend payment for the year ended 31 december 
2013
•  fees payable to the group’s auditors and a recommendation to 
shareholders on their reappointment 
•  amended terms of reference for the role of chairman and 
chief executive and
•  revisions to the group’s ethics and business conduct policy 
code of conduct and anticorruption policy
since the yearend up to the date of the annual report the board 
has approved the 2013 annual report and accounts the 2013 
fullyear results announcement and the proposed final dividend 
in respect of the year ended 31 december 2013
during the year no unresolved concerns were recorded in the 
board’s minutes 41
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
accountability 
financial and business reporting
the financial statements contain an explanation of the directors’ 
responsibilities in preparing the annual report and the financial 
statements page 70 and a statement by the auditors concerning 
their responsibilities page 73 the directors also report that the 
business is a going concern page 30 detail on how the group 
generates and preserves value over the longer term the 
business model and the group’s strategy for delivering its 
objectives in the strategic report pages 1 to 34
internal control and risk management
the board is responsible for the group’s system of internal 
control and for maintaining and reviewing its financial and 
operational effectiveness the system of internal control is 
designed to manage but not to eliminate the risk of failure to 
achieve business objectives and to provide reasonable but not 
absolute assurance against material misstatement or loss the 
group’s system of internal controls includes 
•  an ongoing risk management process for identifying 
evaluating and managing the significant risks faced by the 
group that was in place for 2013 and up to the date of approval 
of the annual report this process is regularly reviewed by the 
board and accords with the turnbull guidance the risk 
management process is described in more detail on pages 15 
to 17
•  an effective internal audit function which primarily performs 
business unit reviews by rotation including finance it hr 
ethics and the bid process
•  compliance programmes and external audits including trade 
compliance ethics anticorruption health safety and 
environmental
•   a business performance review process including financial 
operational and compliance performance
•  process controls including the bid process programme 
execution financial and it security
• the forecasting budget and strategic plan processes
•  a whistleblowing line to enable employees to raise concerns 
and
• group insurance and business continuity programmes
the board and audit committee applied the following processes 
in 2013 and up to the date of approval of the annual report in 
order to review the effectiveness of the system of internal 
controls
• reviews of the risk management process and risk register
•  written and verbal reports to the audit committee from 
internal and external audit on progress with internal control 
activities including
 –  reviews of business processes and activities including 
action plans to address any identified control weaknesses or 
recommendations for improvements to controls or 
processes
 –  the results of internal audits
 –  internal control recommendations made by the external 
auditors and 
 –  followup actions from previous internal control 
recommendations 
development
the board is supplied with the information it needs to discharge 
its duties all new directors receive an appropriate induction to 
the business including meetings with other directors senior 
management auditors brokers and other professional advisors 
as appropriate site visits and a comprehensive induction pack 
we will continue to enhance the induction process as feedback  
is received and incorporated from recently recruited directors 
the company secretary facilitates the induction of new directors 
and assists with professional development where required
directors are encouraged to update their skills regularly and 
their training needs are assessed as part of the board evaluation 
process their knowledge and familiarity with the group is 
facilitated by access to senior management reports on the 
business and visits to the group’s operating facilities resources 
are available to all directors for the purposes of developing and 
updating their knowledge and capabilities
information and support
the chairman is responsible for ensuring the directors receive 
accurate timely and clear information the company secretary 
is responsible for ensuring good information flows within the 
board and committees and between senior management and 
nonexecutive directors the board members have regular 
discussions about their information and support requirements 
and are involved in setting the annual board schedule
the board and its committees have been provided with sufficient 
resources to undertake their duties all directors have had 
access to the advice and services of the company secretary  
who is responsible to the board for advising on all governance 
matters the board allows all directors to take external 
independent professional advice at the group’s expense
board performance evaluation
in 2013 the board evaluated its own effectiveness together  
with the effectiveness of the chairman individual directors its 
committees auditors and remuneration advisers and agreed  
its objectives for 2014 the effectiveness reviews covered 
strategy risk management the annual board schedule 
composition succession the appointment process diversity 
remuneration audit and open channels of communication
the evaluation in 2013 was undertaken internally applying 
lessons learned from the externally facilitated review in 2012 
the 2013 evaluation was carried out using questionnaires and 
group and individual discussions the board continues to be 
thoroughly engaged with the review process with the main 
findings and recommendations of the 2013 evaluation identifying 
the need to enhance strategy reviews and the risk management 
process and implement continued improvements to the annual 
board schedule adding more facility visits and operational and 
functional presentations  42 corporate governance report continued
meggitt plc report and accounts 2013
constructive use of the annual general meeting
the board uses the agm to communicate with its shareholders
proxy appointment forms for each resolution provide 
shareholders with the option to direct their proxy to vote for or 
against resolutions or to withhold their vote all proxy votes for 
against and withheld are counted by the company’s registrars 
and the level of voting for against and withheld on each 
resolution is made available after the meeting and on the group’s 
website the proxy form and the voting results announcement 
make it clear that a vote withheld is not a vote in law and will not 
be counted in the calculation of the proportion of votes for and 
against the resolution
separate resolutions are proposed at the agm on substantially 
separate issues and there is a resolution relating to the financial 
statements the notice of agm and related papers are sent to 
shareholders at least 20 working days before the meeting
the respective chairmen of the audit remuneration and 
nominations committees are available at the agm to respond  
to questions it is usual for all other directors to attend
at the agm to be held on 7 may 2014 shareholders’ consent  
will be sought on the following special business in addition to 
routine business
i  approval of the remuneration policy
ii approval of a new long term incentive plan and
iii authority to convene general meetings on 14 clear days’  
  notice in accordance with the articles on the terms set out  
  in the notice of meeting
all directors are subject to election by shareholders at the first 
agm after their appointment and have been subject to reelection 
annually since 2012 in compliance with the code in 2014 all 
directors will be subject to election or reelection except for  
mr robins who will retire from the board at the end of the agm 
on 7 may 2014 
by order of the board
 
m l thomas
company secretary
3 march 2014
•  regular compliance reports from the corporate affairs 
director
•  regular reports on the state of the business from the chief 
executive and chief financial officer
•  a presentation on it security activities and plans
•  review and approval of the strategic plan and budget
•  written report to the audit committee on the effectiveness of 
whistleblowing procedures and
•  annual report on insurance coverage
the board monitors executive management’s action plans to 
implement improvements in internal controls that have been 
identified following the abovementioned reviews and reports 
the board confirms that it has not been advised of any significant 
failings or weaknesses in the group’s internal controls
remuneration
a separate remuneration committee report is set out on pages 
47 to 67 and provides details of our remuneration policy and  
how it has been implemented together with the activities of the 
remuneration committee 
relations with shareholders
the group values its dialogue with institutional and private 
investors 
the board communicates with private investors via direct 
communication with investor relations and the company 
secretary material distributed or made available on the investor 
relations section of our website and at the agm see below
effective communication with fund managers institutional 
investors and analysts about the group’s strategy performance 
and policies is promoted by meetings involving the chief 
executive and chief financial officer the board receives  
reports from the chief executive and chief financial officer  
and the head of investor relations on the views of shareholders 
which are discussed
the chairman and other nonexecutive directors are available  
to attend meetings with shareholders and a number of such 
meetings on corporate governance took place in 2013 directors’ 
understanding of major shareholders’ views is enhanced by 
reports from the head of investor relations our brokers and 
attending analysts’ briefings analysts’ notes on the group are 
made available to all directors
in 2013 a consultation was undertaken with significant 
shareholders covering a revised proposed remuneration 
package and policy the process and outcome of this 
consultation are described on page 56 43 audit committee report
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
responsibilities
the responsibilities of the audit committee include
•  monitoring the integrity of the group’s financial statements 
and judgements made by executive management reviewing 
the group’s financial reporting and accounting policies 
including financial information contained in formal 
announcements and reviewing trading statements relating to 
the group’s performance
•  recommending the financial statements to the board for 
approval and since 2013 advising the board that the annual 
report taken as a whole is fair balanced and understandable 
providing the information necessary for shareholders to assess 
the group’s performance business model and strategy
•  reviewing the appointment performance and independence of 
the external auditors and the role and effectiveness of the 
internal audit function in 2013 the audit partner rotated from 
mr maitland to mr paynter
•  reviewing the process for handling allegations from 
whistleblowers 
•  reviewing reports from executive management and internal 
and external audit on the effectiveness of systems for internal 
financial controls financial reporting and financial risk 
management the board has overall responsibility for internal 
controls and risk management see page 15 and
•  reviewing the committee’s own effectiveness
work of the committee
the audit committee reviewed
•  the financial information contained in the 2012 annual report 
and 2012 fullyear and 2013 interim results announcements 
and recommended them to the board for approval
•  2013 external audit fees and recommended them to the board  
for approval
•  the external audit strategy memorandum and interim audit 
clearance report for 2013
•  the independence effectiveness and reappointment of the 
external auditors 
• the internal audit plan for 2014 and regular update reports
• the group’s whistleblowing procedures
•  technical accounting and governance updates provided by  
the group financial controller company secretary and the 
external auditors
• a tax update from the group head of tax and treasury
•  the nonaudit services policy and approved and published  
the policy on the audit committee section of our website and
•  the effectiveness of the committee and internal audit
since the year end the committee has approved the 2013 annual 
report and accounts and fullyear results announcement and 
recommended them to the board for approval and provided 
advice to the board that the 2013 annual report and accounts 
taken as a whole is fair balanced and understandable the 
committee provided this advice having approved and monitored an 
enhanced review and verification process of the annual report 
undertaken by management and provided confirmation to the 
board that this process was both followed and effective 
chairman’s introduction
i am pleased to present the report of the audit committee for 2013 
i chair the audit committee and as a fellow of the icaew audit 
committee chairman of dp world limited and former finance 
director at bunzl plc i bring recent and relevant financial 
experience to the committee my fellow committee members 
throughout 2013 were guy berruyer philip cox paul heiden and 
brenda reichelderfer who attended all three committee meetings 
during the year by invitation there were a number of other regular 
attendees including the chief financial officer the group financial 
controller and the internal and external auditors the chairman of 
the board the chief executive the corporate affairs director and 
david robins also attended by invitation 
the key role of the audit committee is to provide confidence in 
the integrity of our processes and procedures relating to internal 
financial control and corporate reporting the board relies on 
the committee to review financial reporting and to appoint and 
oversee the work of the internal and external auditors 
the work of the committee in 2013 is described below in detail 
and included providing advice to the board on whether these 
accounts are fair balanced and understandable
committee membership and attendance
    meetings  
    eligible  meetings 
name   to attend attended
mr d m williams committee chairman 3 3
mr g s berruyer   3 3
mr p g cox   3 3
mr p heiden   3 3
ms b l reichelderfer   3 3
terms of reference
the committee operates within agreed terms of reference last 
updated in 2012 and scheduled for review in 2014 which are 
available on our website 44 audit committee report continued
meggitt plc report and accounts 2013
significant judgements relating to the financial statements
the table below summarises the significant judgements considered by the committee in respect of the group’s financial statements
significant judgements action
goodwill and other intangible 
assets arising on an 
acquisition
the principal judgements are management’s determination of the level at which impairment testing 
should be performed including the change in the year whereby certain business units are now 
aggregated as cash generating units ‘cgu’s the achievability of cgu business plans and therefore 
future cash flows and the appropriateness of the discount rates applied to future cash flows the 
committee addressed this through consideration of a report from management setting out the basis 
for the assumptions and providing a sensitivity analysis on key assumptions and an analysis of the 
headroom for each cgu the committee agreed the assumptions made by management were 
appropriate and that no impairment was required
development costs  
and programme  
participation costs
the committee considered the method of testing for potential impairment used by management the 
reasonableness of assumptions used on specific programmes with limited headroom and the aggregation 
of related intangible assets at an aircraft platform level the committee addressed this through 
consideration of a report from management covering these areas exposure to different platforms and  
a sensitivity analysis on specific programmes the committee concluded that the assumptions made by 
management were reasonable and the carrying value of deferred costs appropriate
provision for environmental 
and legal matters
the key areas reviewed by the committee were the ongoing environmental liabilities relating to 
historic sites the impact of the administrative settlement with the us government regarding historic 
export violations and other litigation matters the committee considered a report from management 
setting out the basis for the judgements made on each of these items and the extent to which this was 
supported by third party legal and other specialist advice additionally the board met separately with 
internal legal counsel and received reports from the group corporate affairs director regarding the 
above matters and these discussions were shared with the audit committee the committee agreed 
with the judgements made by management 
provision for onerous 
contracts
the key areas reviewed by the committee were the issue relating to the supply from a vendor of 
nonconforming raw material identified in the year and judgements made by management relating to 
selling prices product quantities and unit costs on a small number of onerous production contracts 
the committee considered a report from management setting out the bases for the judgements made 
on each of these items additionally sensitivities were discussed on assumptions which were not 
contractually agreed at the balance sheet date the committee agreed with the accounting treatment 
adopted 
retirement benefit  
obligations
assumptions on mortality inflation and the rates at which scheme liabilities are discounted can have a 
significant impact on the value at which retirement benefit obligations are included in the financial 
statements the committee considered a report from management setting out the basis on which the 
2013 assumptions had been determined and benchmarking the group’s assumptions used in the 2012 
consolidated financial statements against those disclosed by other large corporate entities the 
committee concluded that the assumptions recommended and which were supported by third party 
actuarial advice were appropriate
income taxes judgements have to be made by management on the tax treatment of a number of transactions in 
advance of the ultimate tax determination being known in determining the appropriateness of the 
estimates made the committee considered a report from management setting out the basis for the 
judgements and also met with the group’s independent tax advisors deloitte llp during the year the 
committee also discussed with management the basis for determining the extent to which deferred 
tax assets and liabilities were offset against one another in both the current and prior accounting 
period the committee concluded that the position taken was appropriate
treatment of exceptional 
operating items
the audit committee discussed the treatment and disclosure of items included within exceptional 
operating items in particular the committee discussed the treatment of the issue relating to the 
supply from a vendor of nonconforming raw material and agreed that the nature of the item and its 
significance was such that it should be treated as an exceptional operating item the committee also 
considered the treatment of other exceptional items and noted they were treated appropriately and 
consistently year on year the committee concluded that the treatment and disclosure of exceptional 
operating items was appropriate
the committee also discussed each of the above judgements with the external auditors in reaching their conclusions 45
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
fee fees paid related to services permitted to be provided by 
pwc under the group’s policy on nonaudit services 
the group’s policy on nonaudit services covers which services 
can be provided and which generally cannot be provided for 
example internal audit services tax planning the full policy is 
disclosed on our website
on balance the committee is satisfied that the overall levels of 
auditrelated and nonaudit fees are not material relative to the 
income of the office of pwc conducting the audit or pwc as a 
whole and therefore the objectivity and independence of the 
external auditors was not compromised
internal audit
the committee agrees the annual internal audit plan which is 
developed according to a risk assessment process and ensures 
that adequate resources are available to execute the plan at 
each meeting the committee receives a status update on the 
audit programme and reviews discusses and challenges any 
significant issues arising and monitors implementation by the 
business of the recommendations made all significant group 
sites are visited by internal audit at least every three years in 
2013 internal audits were carried out at a number of group sites 
including pre and postsap implementation audits and the 
annual audit of the finance shared service centres it was also 
agreed that additional it areas would be added to the scope of 
internal audit in 2014
the committee met internal audit without executive 
management present no concerns were raised at the meeting 
and it was confirmed that internal audit had been able to carry 
out their work and offer constructive challenge to executive 
management during the year 
the committee considered the effectiveness of internal audit  
and confirmed that they were satisfied 
whistleblowing
the committee is responsible for reviewing the process for 
handling allegations from whistleblowers and has confirmed that 
it is satisfied with the group’s process whistleblowing is covered 
under our ethics and business conduct policy which is available 
on our website
the group sponsors an independently operated and monitored 
ethics line enabling employees to report concerns about 
possible misconduct with proportionate and independent 
investigation and appropriate followup action whistleblowing 
reports are reviewed regularly by the ethics and trade 
compliance committee of the board and the audit committee is 
responsible for reviewing whistleblowing procedures annually 
on behalf of the audit committee
david williams
chairman of the audit committee
3 march 2014
key areas of oversight
external audit
the external auditors are pricewaterhousecoopers llp pwc 
who were appointed as group auditors on 2 october 2003 after  
a competitive tender there are no contractual obligations 
restricting the committee’s choice of external auditors
the lead audit partner is mr a paynter whose appointment in  
this role commenced with the audit for the financial year ended  
31 december 2013 mr paynter has had no previous involvement 
with the group in any capacity
the committee assessed the effectiveness of pwc and the 
external audit process using a questionnaire and a committee 
discussion on the responses to the questionnaire the committee 
was satisfied with pwc’s performance and the external audit 
process and that they had employed an appropriate level of 
professional challenge in fulfilling their role the committee has 
determined on the basis of the satisfactory outcome of the 
evaluation that the external audit will not be subject to tender  
in 2014 it has recommended that the board submit the  
reappointment of pwc to shareholders for approval at the  
agm in 2014 
the committee keeps under review the ongoing legislative 
proposals on audit tendering and rotation from the eu and the 
competition commission and will implement them when they 
become final these proposals have effectively superseded the 
complyorexplain provision in the code which would have applied 
to the company for the first time this year the frc plans to 
withdraw this tendering provision during 2014 subject to the 
changing regulatory regime and the committee continuing to be 
satisfied with the effectiveness of the auditors which they will 
consider annually the group does not expect to put the external 
audit services out for tender before the end of the current audit 
partner rotation period in 2018 ie after the audit for the financial 
year ending 31 december 2017 
the committee met with pwc without executive management 
present and there were no concerns raised at that meeting it  
was confirmed that the external auditors had been able to offer 
rigorous and constructive challenge to executive management 
during the year
nonaudit services
the group places great importance on the independence of its 
external auditors and is careful to ensure their objectivity is not 
compromised the committee agrees the fees paid to external 
auditors for their services as auditors and is required to approve 
in advance any fees to the external auditors for nonaudit 
services in excess of £01 million details of the fees paid for 
audit services auditrelated services and nonaudit services can 
be found in note 8 to the financial statements the fees paid for 
nonaudit services in 2013 were £01 million 6 of the total audit  46 nominations committee report
meggitt plc report and accounts 2013
terms of reference
the committee operates within agreed terms of reference last 
updated in 2012 and scheduled for review in 2014 which are on 
our website
responsibilities
the committee reviews the structure size and composition 
including the skills knowledge experience and diversity  
of the board and in consultation with the directors makes 
recommendations to the board on any proposed changes 
decisions on board changes are taken by the board as a whole 
in performing its duties the committee has access to the 
services of the company secretary and may seek external 
professional advice at the group’s expense
board diversity
the board confirms a strong commitment to diversity including 
but not limited to gender diversity at all levels of the group the 
board’s policy on diversity commits meggitt to
•  ensuring the selection and appointment process for 
employees and directors includes a diverse range of 
candidates
•  aspiring to achieve 25 of board positions to be filled by 
women by 2015 and monitoring progress in achieving this 
•  disclosing statistics on gender diversity in every annual 
report see below and page 34 and
•  reviewing this policy from time to time and continuing to 
disclose this policy in the annual report
the board remains committed to ensuring that the directors 
bring a wide range of skills knowledge experience backgrounds 
and perspectives our nonexecutive directors are from the  
uk us and france and have a range of different skills and 
experience from energy to aerospace financial technology and 
city backgrounds to an electrical engineer and a serving chief 
executive at 31 december 2013 10 of the board were female 
the board will review our board diversity target in 2014 in light  
of succession planning objectives and will publish any proposed 
changes in our 2014 annual report
external search consultancies
during 2013 the committee used russell reynolds associates  
to assist in the search for the chief financial officer and  
another senior financial appointment below board level  
russell reynolds associates do not have any other connection 
with the group 
on behalf of the nominations committee
sir colin terry
chairman of the nominations committee
3 march 2014
chairman’s introduction
the nominations committee plays a leading role in assessing 
the balance of skills and experience on the board and the 
group’s principal committees the committee identifies the 
roles and capabilities required to meet the demands of the 
business and with due regard to diversity ensures that a 
succession plan is in place candidates continue to be considered 
on merit against specific criteria determined by the committee
during 2013 a successor was appointed for mr young as group 
finance director after the announcement on 9 january 2013 of 
his appointment as chief executive effective from 1 may 2013 
following a rigorous search process using executive search firm 
russell reynolds associates involving both external and internal 
candidates mr doug webb was appointed as chief financial 
officer on 6 june 2013 mr webb is a chartered accountant and 
was most recently chief financial officer at london stock 
exchange group plc and prior to that chief financial officer at 
qinetiq group plc mr webb’s extensive experience in senior 
international financial positions across a range of industries 
including defence aerospace engineering technology and 
financial services make him an outstanding appointment for the 
role of chief financial officer
as well as considering matters relating to succession and 
composition the committee confirmed it was satisfied with its 
own effectiveness as a result of its 2013 evaluation 
we announced on 27 february 2014 that david robins will  
retire from the board at the end of the 2014 agm throughout  
his time on the board david has always offered good advice and 
independent challenge and we have certainly benefitted from his 
significant financial markets experience on behalf of the board 
i would like to thank david for his appreciable contribution to the 
board and the group over the last 12 years 
in 2014 the committee will continue to review the composition of 
the board and succession plans for executive and nonexecutive 
directors
committee membership and attendance during 2013
   meetings  
   eligible meetings 
name   to attend attended
sir colin terry chairman  7 7
mr t twigger to 1 may 2013  3 3
mr s g young from 1 may 2013  4 4
mr g s berruyer   7 7
mr p g cox   7 6
mr p heiden   7 5
ms b l reichelderfer   7 7
mr d m williams   7 7
  mr cox sent his apologies for a committee meeting held on 9 january 
2013 as he had on that day a board meeting of another company of 
which he is a nonexecutive director which had been arranged before 
his appointment to the meggitt board mr heiden sent his apologies for 
the meetings held on 9 january 2013 and 1 may 2013 in advance of 
committee meetings the chairman discussed the matters to be 
covered at the meeting with directors who had sent their apologies  47 directors’ remuneration report
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
chairman’s introduction and annual statement
it is my pleasure to present the directors’ remuneration report for the year ended  
31 december 2013 the remuneration committee committee hope that you find the 
new layout of the report incorporating this annual statement the policy report and an 
annual report on remuneration to be clear and transparent the policy report and 
annual report on remuneration will be submitted separately to shareholders for 
approval at our agm on 7 may 2014 shareholders will separately be asked to approve  
a new long term incentive plan ltip which if approved will replace the equity 
participation plan epp and executive share option scheme esos from 2014 
onwards
pay philosophy
executive remuneration packages at meggitt are designed to attract motivate and 
retain directors of a high calibre to recognise the international nature of the group’s 
business and to reward the directors for delivering value to shareholders the package 
targets fixed pay at market competitive levels to companies of a similar size and with 
similar operating characteristics supplemented by performance related annual 
bonuses and an equitybased long term incentive plan designed to reward and 
incentivise growth and provide a strong link to group and individual performance 
2013 activity
the key activity of the committee in 2013 was to review the remuneration package and 
policy for senior executives taking into account shareholders’ interests and views on pay 
structure simplicity and other areas of good practice whilst keeping the package and 
policy aligned with our stated pay philosophy the major changes we consulted on were
i simplifying the long term incentive structure into a single ltip and introducing 
performance measures which reflect meggitt’s strategic goals see page 50
ii introducing annual bonus deferral into shares see page 49
iii introducing clawback provisions see pages 49 to 50 and
iv increasing directors’ share ownership guidelines see page 51
the intended remuneration arrangements for 2014 outlined in this report are based  
on this revised remuneration package and policy
2013 performance
ongoing demand growth in civil original equipment and energy was tempered by 
softness in the civil aftermarket and military and operational challenges in the year 
caused a further drag on growth revenue grew 2 and underlying profit before tax 
grew 3 driving a 3 increase in underlying eps to 375p with a strong order book  
and an improving trend in civil aftermarket there is good momentum going into 2014 
esos awards made in 2011 vested at 760 based on threeyear cumulative underlying 
eps performance to 31 december 2013 see page 59 performance of the epp awards 
made in august 2011 where vesting has not yet been confirmed is shown on page 58 
the committee has used its discretion to reduce the vesting outcome under the short 
term incentive plan stip for 2013 performance and esos and epp for the eps 
element of awards vesting in 2014 in relation to the supply from a vendor of non
conforming raw material in 2012 which was discovered in 2013 and impacted our 
customers this issue was caused by a process failure at a properly qualified supplier 
and was recovered by the group with all necessary diligence however the committee 
feels the financial impact felt by shareholders should be recognised and has therefore 
used its discretion to reduce the stip and ltip see annual report on remuneration 
this directors’ remuneration report has been prepared in accordance with the 
provisions of the companies act 2006 and schedule 8 of the large and medium sized 
companies and groups accounts and reports amendment regulations 2013  
the report meets the requirements of the uk listing authority’s listing rules and  
the disclosure and transparency rules in this report we describe how the principles 
relating to directors’ remuneration as set out in the code are applied in practice the 
committee confirms that throughout the financial year the company has complied with 
the code we have identified which sections of the report are audited
paul heiden
chairman of the remuneration committee 48 directors’ remuneration report continued
meggitt plc report and accounts 2013
the policy report
this section of the report sets out the remuneration policy for the directors which shareholders will be asked to approve at the 2014 
agm the committee intends that the policy will come into effect from our agm on 7 may 2014 
executive director remuneration policy table
base salary
function to attract and retain talent by ensuring base salaries are competitive in the relevant talent market
operation salary will be reviewed by the committee annually in february with changes effective from 1 april of that year 
salaries for the year under review are disclosed in the annual report on remuneration
in deciding salary levels the committee considers personal performance including how the individual has helped 
to support the strategic objectives of the group the committee will also consider employment conditions and 
salary levels across the group and prevailing market conditions
salaries are paid to existing directors in gbp however the committee reserves the right to pay future and 
existing directors in any other currency converted at the prevailing market rate when a change is agreed 
opportunity it is not anticipated that percentage salary increases for executive directors will exceed those of the wider 
workforce over the period this policy will apply where increases are awarded in excess of the wider employee 
population for example if there is a material change in the responsibility size or complexity of the role the 
committee will provide the rationale in the relevant year’s annual report on remuneration
performance 
metrics
none explicitly but salaries are independently benchmarked periodically against ftse companies in similar 
industries and those with similar market capitalisation personal performance is also taken into account when 
considering salary increases
 
pension
function to provide postretirement benefits for executive directors in a costefficient manner
operation the pension plans operated by the group which executive directors are or could be members of are 
– meggitt pension plan defined benefit pension plan closed to new members 
– meggitt workplace savings plan defined contribution personal pension scheme open to new members 
salary is the only element of remuneration that is pensionable there are no unfunded pension promises or 
similar arrangements for directors
opportunity from 2013 it has been our policy that new executive director external appointments including mr webb are eligible 
for a pension allowance of 25 of salary payable either as pension contribution up to any limit set in current 
regulations or above such limits in cash where agreements have been made prior to the approval of this policy 
which entitle an executive to receive a pension allowance higher than 25 of salary pension allowances up to a 
maximum of 50 of salary will be paid mr young and mr green had agreements prior to the approval of this policy 
which entitles them to receive a pension allowance of 50 of salary and this arrangement will continue for these 
directors 
performance 
metrics
none 49
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
benefits
function to provide noncash benefits which are competitive in the market in which the executive director is employed 
operation the group may provide benefits including but not limited to a company car or car allowance private medical 
insurance permanent health insurance life assurance a fuel allowance a mobile phone relocation costs and 
any other future benefits made available either to all employees globally or all employees in the region in which 
the executive director is employed 
opportunity benefits vary by role and individual circumstances eligibility and cost is reviewed periodically benefits in respect 
of the year under review are disclosed in the annual report on remuneration it is not anticipated that the costs of 
benefits provided will increase significantly in the financial years over which this policy will apply although the 
committee retains discretion to approve a higher cost in exceptional circumstances eg to facilitate recruitment 
relocation expatriation etc or in circumstances where factors outside the group’s control have changed 
materially eg market increases in insurance costs
performance 
metrics
none
annual bonus  stip
function to incentivise executive directors on delivering annual financial and personal targets
operation performance measures targets and weightings are set at the start of the year
the performance period of the stip is a financial year after the end of the financial year to the extent that the 
performance criteria have been met 75 of the stip award is paid in cash to the director the remaining 25 of 
the award will be deferred into shares and released with no further performance conditions attached and no 
matching shares provided after a further period of two years
the committee will have the discretion to apply clawback to reduce the size of deferred stip awards in the event 
of a material misstatement of results or personal misconduct and such awards will lapse in certain leaver 
circumstances see page 54 for details
opportunity the stip provides for a maximum award opportunity of up to 150 of salary in normal circumstances with an 
ontarget opportunity of 100 of salary and an opportunity of 50 of salary at threshold for any single measure 
the committee has discretion to make a stip award of up to 200 of salary in exceptional circumstances eg  
a substantial contract win which has a significant positive financial impact in the long term but which has no or 
negative short term financial impact dividends accrue on unvested deferred stip awards over the vesting 
period and are released on the vesting date
performance 
metrics
stip awards are based on the achievement of financial and personal performance targets for the executive 
directors two thirds of the stip will be weighted to financial performance with the remainder subject to personal 
performance the relative weightings of the financial and personal elements for any stip period and the 
measures used to assess financial and nonfinancial performance will be set by the committee in its absolute 
discretion to align with the group’s operating and strategic priorities for that year
the award for performance under each element of the stip will be calculated independently the committee will 
have discretion to review the consistency of the payout of the financial and personal elements and adjust the 
total up or down within the levels specified above if it does not consider this to be a fair reflection of the 
underlying performance of the group or the individual 
the personal performance element will typically be based on three to five objectives relevant to the executive’s 
role
details of the measures weightings and targets applicable to the stip for each year including a description of 
how they were chosen and whether they were met will be disclosed retrospectively in the annual report on 
remuneration for the following year subject to commercial sensitivity 50 directors’ remuneration report continued
meggitt plc report and accounts 2013
long term incentive plan ltip—subject to shareholder approval
function to align the interests of executive directors with shareholders in growing the value of the group over the long 
term
operation the ltip the introduction of which is subject to shareholder approval at the 2014 agm would replace the epp and 
esos under the ltip executive directors will be eligible to receive annual awards over meggitt shares vesting 
after three years subject to the achievement of stretching performance targets 
whilst it is the current intention that ltip awards will be in the form of nil cost options the ltip provides at the 
absolute discretion of the committee for awards over conditional shares market value share options and 
phantom awards
the committee will have the discretion to apply clawback to reduce the size of unvested ltip awards in the event 
of a material misstatement of results or personal misconduct
opportunity executive directors will normally be eligible for annual ltip awards of 220 of salary awards up to a maximum 
of 300 of salary may be granted in exceptional circumstances eg to support the recruitment of a key executive 
or to recognise exceptional individual performance the award opportunity under the ltip has been calibrated to 
be equivalent in fair value terms to that granted in aggregate under the previous eppesos structure
30 of an award will vest if performance against each performance condition is at threshold and 100 if it is at 
maximum with straight line vesting in between
dividends accrue on unvested ltip awards over the vesting period and are released to the extent the ltip award 
vests on the vestingexercise date
performance 
metrics
vesting of ltip awards is subject to continued employment and performance against three measures which are 
intended to be as follows
• earnings per share eps
• return on trading assets rota which is underlying operating profit after tax divided by net trading assets 
measured at constant currency net trading assets are adjusted to exclude goodwill and other intangibles 
arising on the acquisition of a business derivative financial instruments retirement benefit obligations 
deferred tax and net debt and
• strategic goals typically to be based on three strategic priorities around execution growth and innovation
the way these measures link to our kpis can be seen on pages 18 to 21 it is the current intention that the 
weighting of the measures will be equal ie one third each but that the committee will consider and adjust if 
deemed appropriate the weighting at the start of each ltip cycle any commerciallysensitive information on 
measures targets and performance will be disclosed retrospectively
awards made under the ltip will have a performance period of three financial years starting from 1 january of 
the year in which the award is made and ending on 31 december of the third year if no entitlement has been 
earned at the end of the relevant performance period awards will lapse 
vesting of the strategic element will also be subject to a discretionary assessment by the committee of the extent 
to which achievement of the strategic objectives is consistent with the underlying financial performance over the 
threeyear period
the measures and targets in operation for grants made under the esos and epp in the current year and which 
are not deemed commercially sensitive are disclosed in the annual report on remuneration 
sharesave scheme and share incentive plan
function to align the interests of employees and shareholders by encouraging all employees to own meggitt shares
operation sharesave—all employee scheme under which all uk employees including executive directors may save up to 
the maximum monthly savings limit as determined by legislation over a period of three or five years options 
under the sharesave scheme are granted at a discount of up to 20 to the market value of shares at the date of 
grant
share incentive plan—all employee scheme under which i all uk employees including executive directors may 
contribute up to the monthly maximum as determined by legislation to purchase shares monthly from pretax 
pay and ii all uk employees including executive directors may receive free shares up to the annual maximum 
value as determined by legislation
opportunity savings contributions and free shares are capped at the prevailing legislative limit at the time uk employees are 
invited to participate
performance 
metrics
none 51
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
notes to the policy table
the committee is satisfied that the above policy is in the best interests of shareholders and does not promote excessive risktaking 
the committee retains discretion to make minor nonsignificant changes to the policy without reverting to shareholders
payments from outstanding awards
outstanding awards are currently held by the directors under the epp and the esos the group’s long term incentives operated prior 
to the introduction of the proposed ltip in 2014 these awards will continue to vest subject to performance conditions being met 
and be capable of exercise during the period over which this policy applies the tables on pages 66 to 67 highlight outstanding and 
vested awards
approach to target setting and performance measure selection
targets applying to the stip and ltip are reviewed annually based on a number of internal and external reference points including 
the group’s strategic plan analyst forecasts for meggitt and its sector comparators historical growth achieved by meggitt and its 
sector comparators and external expectations for growth in meggitt’s markets 
stip
the performance measures used under the stip reflect financial targets for the year and nonfinancial performance objectives the 
policy provides the committee with flexibility to select appropriate measures on an annual basis
stip performance targets are set to be stretching but achievable with regard to the particular personal performance objectives and 
the economic environment in a given year for financial measures ‘target’ is based around the annual budget approved by the board 
prior to the start of the financial year the committee sets an appropriate performance range around target which it considers 
provides an appropriate degree of ‘stretch’ challenge and an incentive to outperform
ltip
it is proposed that the vesting of future ltip awards is linked to eps rota and the achievement of longterm strategic goals
eps is considered by the board to be the most important measure of meggitt’s financial performance it is highly visible internally  
is regularly monitored and reported and is strongly motivational for participants eps targets will continue to be set on a nominal 
cumulative pence basis to incentivise consistent performance and reflect the fact that meggitt’s profits are generated to a large 
degree outside the uk and not significantly influenced by uk retail price inflation
rota helps to balance the achievement of growth and returns the committee believes rota is a good internal proxy for total 
shareholder return tsr which focuses executives on managing the balance sheet and meggitt’s operational performance whilst 
also being less remote for participants below board level the definition of net trading assets for rota excludes goodwill and other 
intangible assets arising when a business is acquired to reflect that acquisitions are not within the control of the majority of 
participants in order to safeguard against poor acquisitions the committee has overall discretion to reduce the outcome under the 
rota element if in its opinion the outcome does not reflect the underlying financial performance of the group the performance of 
acquisitions against board approved targets is also monitored separately 
the committee believes that the strategic goals component will help reinforce the realisation of group strategy and the achievement 
of key nonfinancial and strategic goals over long product cycles which drive longterm value at meggitt the element will typically 
comprise a scorecard of threeyear targets across a maximum of three core strategic areas for the group the committee believes 
that this approach will enable it to reflect the group’s longterm nature and shifting strategic priorities in the ltip to ensure 
executives’ interests remain closely aligned with those of our shareholders over time specific measures and targets for each area 
will be developed and clearly defined at the start of each threeyear cycle to balance leading and lagging indicators of performance 
vesting of this element is subject to a discretionary assessment by the committee of the extent to which achievement of the strategic 
objectives is consistent with meggitt’s underlying financial performance over the performance period
remuneration policy for other employees
the remuneration policy for other employees is based on broadly consistent principles as that for executive directors annual salary 
reviews take into account group performance local pay and market conditions and salary levels for similar roles in comparable 
companies some employees below executive level are eligible to participate in annual bonus schemes opportunities and 
performance measures vary by organisational level geographical region and an individual’s role senior executives are eligible for 
ltip on similar terms as the executive directors although award opportunities are lower and vary by organisational level all uk 
employees are eligible to participate in the sharesave scheme and share incentive plan on identical terms
share ownership guidelines
during the year the committee increased the minimum shareholding guidelines for executive directors from 100 to 300 of base 
salary for the chief executive and from 100 to 200 of base salary for each of the other executive directors there is no set time 
frame within which directors have to meet the guideline however until they meet the guideline they are not permitted to sell more 
than 50 of the aftertax value of a vested share award the shareholding requirement ceases when a director leaves the group 
further information on the shareholding requirement is in the annual remuneration report see page 65 52 directors’ remuneration report continued
meggitt plc report and accounts 2013
payforperformance scenario analysis
the charts below provide an estimate of the potential future reward opportunities for the executive directors and the potential split 
between the different elements of remuneration under three different performance scenarios ‘maximum’ ‘ontarget’ and ‘minimum’ 
maximum
s g young £’000
£3474
ontarget £2119
minimum £1017
100
salary and beneﬁts
stip
pension
ltip
48 31 21
29 29 42
  
maximum
d r webb £’000
£2192
ontarget £1294
minimum £564
100
44 34 22
26 30 44
 
maximum
p e green £’000
£1803
ontarget £1101
minimum £530
100
48 31 21
29 29 42
potential reward opportunities are based on policy applied to 2014 base salaries and 2014 incentive opportunities note that the ltip 
awards granted in a year will not normally vest until the third anniversary of the date of grant and the projected value excludes the 
impact of share price movement or dividend accrual
the ‘maximum’ scenario reflects fixed remuneration salary and benefits and pension plus maximum payout under all incentives 
150 of salary under the stip and full vesting of ltip awards
the ‘ontarget’ scenario reflects fixed remuneration as above plus target stip based on twothirds of maximum opportunity and 
ltip threshold vesting 30 vesting 
the ‘minimum’ scenario reflects fixed remuneration only being the only elements of the executive directors’ remuneration package 
not linked to performance
nonexecutive directors’ remuneration policy table
nonexecutive directors are submitted for reelection annually do not have a contract of service and are not eligible to join the 
group’s pension or share schemes details of the policy on fees paid to our nonexecutive directors are set out in the table below
fees
function to attract and retain nonexecutive directors of the highest calibre with broad commercial and other experience 
relevant to the group
operation fee levels are reviewed annually with any adjustments effective 1 april each year the fees paid to the chairman 
of the board are determined by the committee while the fees for all other nonexecutive directors are reviewed 
by a committee of the board formed of executive directors fees for the year under review and for the current 
year are disclosed in the annual report on remuneration
additional fees are paid to the chairmen of the remuneration and audit committee and to the senior independent 
director to reflect the additional time commitment of these roles
in deciding fee increases the committees consider employment conditions and salary increases across the 
group and prevailing market conditions
currently all fees are paid in gbp however the committees reserve the right to pay future and existing non
executive directors in any other currency converted at the prevailing market rate when a change is agreed 
opportunity fee increases will be applied taking into account the outcome of the annual review the maximum aggregate 
annual fee for all nonexecutive directors including the chairman as provided in the company’s articles of 
association is £1000000
performance 
metrics
none 53
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
recruitment
external appointments
in cases of hiring or appointing a new executive director from outside the group the committee may make use of all existing 
components of remuneration as follows
component approach
maximum annual 
grant value
base salary the base salaries of new appointees will be determined based on the experience and skills 
of the individual internal comparisons employment conditions and salary levels across 
the group and prevailing market conditions initial salaries may be set below market and 
consideration given to phasing any increases over two or three years subject to 
development in the role
na
pension in line with the policy new appointees will be entitled to become members of the meggitt 
workplace savings plan defined contribution plan or receive a cash pension allowance of 
25 of salary in lieu
na
benefits
sharesavesip
new appointees will be eligible to receive benefits in line with the policy and will be 
eligible to participate in allemployee share schemes 
na
na
stip the structure described in the policy table will apply to new appointees with the relevant 
maximum being prorated to reflect the proportion of employment over the year targets 
for the personal element will be tailored to the appointee
150 of salary  
200 in exceptional 
circumstances
ltip new executive director appointees will be granted awards under the ltip on similar terms 
as other executives as described in the policy table
220 of salary 
300 in exceptional 
circumstances
in determining the appropriate remuneration structure and levels the committee will take into consideration all relevant factors to 
ensure that arrangements are in the best interests of meggitt and its shareholders the committee may make an award in respect of 
a new appointment to ‘buy out’ incentive arrangements forfeited on leaving a previous employer ie over and above the approach 
outlined in the table above any such compensatory awards will be made under existing share schemes where appropriate and will 
be subject to the normal performance conditions of those schemes 
the committee may also consider it appropriate to structure ‘buyout’ awards differently to the structure described in the policy 
table exercising the discretion available under ukla listing rule 942 r where necessary to make a oneoff award to an executive 
director in the context of recruitment in doing so the committee will consider relevant factors including any performance conditions 
attached to these awards the likelihood of those conditions being met and the proportion of the vesting period remaining the value 
of any such buyout will be fully disclosed
internal promotion
in cases of appointing a new executive director by way of internal promotion the policy will be consistent with that for external 
appointees as detailed above any commitments made prior to an individual’s promotion will continue to be honoured even if they 
would not otherwise be consistent with the policy prevailing when the commitment is fulfilled although the group may where 
appropriate seek to revise an individual’s existing service contract on promotion to ensure it aligns with other executive directors 
and prevailing market best practice in 2013 the committee reviewed mr young’s service contract which was subsequently updated 
on 1 may on his promotion to chief executive
disclosure on the remuneration structure of any new executive director including details of any exceptional payments will be 
disclosed in the ris notification made at the time of appointment and in the annual report on remuneration for the year in which the 
recruitment occurred
nonexecutive directors
in recruiting a new nonexecutive director the committee will use the policy as set out in the table on page 52 54 directors’ remuneration report continued
meggitt plc report and accounts 2013
service contracts and exit payment policy
executive director service contracts including arrangements for early termination are carefully considered by the committee and 
are designed to recruit retain and motivate directors of the quality required to manage the group
the committee’s policy is that executive director service contracts should be terminable on no more than 12 months’ notice the 
committee’s approach to payments in the event of termination of employment of a director is to take account of the particular 
circumstances including the reasons for termination individual performance contractual obligations and the rules of the group’s 
applicable incentive plans which apply to share awards held by the executive directors
•  compensation for loss of office in service contracts 
except as set out in the table below under the terms of their service contracts the executive directors may be required to work during 
their notice period or may if the company decides be paid in lieu of notice if not required to work the full notice period payment in 
lieu of notice will be equal to base salary plus the cost to the group of providing the contractual benefits pensions allowance health 
insurance and company car or car allowance that would otherwise have been paid or provided during the notice period payments will 
be in equal monthly instalments and will be subject to mitigation such that payments will either reduce or stop completely if the 
executive director obtains alternative employment 
  an executive director’s employment can be terminated by the group without notice or payment in lieu of notice in specific 
circumstances including summary dismissal bankruptcy or resignation 
•  treatment of stip 
executive directors have no automatic entitlement to any bonus on termination of employment under the stip but the committee 
may use its discretion to award a bonus normally prorated 
  where any bonus is deferred into shares the award will normally lapse if an executive director’s employment terminates unless 
the executive director leaves for specified ‘good leaver’ reasons the ‘good leaver’ reasons are death redundancy retirement 
injury disability the business or company which employs the executive director ceasing to be part of the group any other 
circumstances in which the committee exercises discretion to treat the executive director as a ‘good leaver’ or on a change of 
control if the executive director is a ‘good leaver’ their award will vest on the normal vesting date or earlier on a change of control 
and would not be subject to prorating
•  treatment of long term incentive plan awards 
the treatment of awards under the esos and the epp is governed by the rules of plans which have been approved by shareholders 
and is described below similar treatment will apply under the new ltip which shareholders are being asked to approve at the  
2014 agm
  awards under the plans will normally lapse if an executive director’s employment terminates unless the executive director leaves 
for specified ‘good leaver’ reasons the ‘good leaver’ reasons are the same as described above if the executive director is a ‘good 
leaver’ awards will vest to the extent that the attached performance conditions are met but on a time prorated basis with 
committee discretion to allow early vesting under the epp and esos awards vest as soon as practicable after an employee has 
left under the ltip awards will vest on the normal vesting date 55
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
a summary of the key terms of the executive directors’ service contracts on termination of employment or change of control is set out 
below
name position
notice period 
from employer 
notice period 
from employee compensation payable on termination of employment or change of control
mr s g young 
service contract 
dated 1 may 2013 
updated on 
promotion to  
chief executive
chief executive 12 months 6 months as set out in the policy above but service contract includes an 
obligation for the committee to allow mr young to exercise 
options and awards under the group’s share plans that have 
already vested at the point of termination 
no change of control provisions 
mr d r webb  
service contract  
dated 6 june 2013
chief financial  
officer
12 months 6 months as set out in the policy above 
no change of control provisions 
mr p e green  
service contract  
dated 26 february 
2001
group corporate 
affairs director
12 months 6 months mr green’s service contract was entered into before 27 june 
2012 and has not been modified or renewed after that date as 
such remuneration or payments for loss of office that are 
required to be made under mr green’s service contract are 
not required to be consistent with the policy set out above 
payments to mr green under his service contract differ from 
the policy set out above in the following respects 
on termination of employment mr green is entitled to a 
liquidated damages payment equal to his salary and the value 
of his contractual benefits bonus pension allowance 
insurance and company car or car allowance at the date of 
termination prorated to the remaining notice period less an 
amount equal to 5 of the aggregate sum and the committee 
shall exercise its discretion under the group’s share plans to 
treat mr green as a ‘good leaver’ 
on change of control mr green may give notice to terminate 
his employment within 6 months of the event and upon such 
termination he shall become entitled to the liquidated 
damages payment summarised above 
external appointments held by executive directors
the board believes that the group can benefit from experience gained when executive directors hold external nonexecutive 
directorships executive directors are allowed to hold external appointments and to receive payment provided such appointments are 
agreed by the board or committee in advance there are no conflicts of interests and the appointment does not lead to deterioration 
in the individual’s performance details of external appointments and the associated fees received are included in the annual report 
on remuneration on page 64
consideration of conditions elsewhere in the company 
the committee does not consult with employees specifically on executive remuneration policy and framework but does seek to 
promote and maintain good relations with employee representative bodies—including trade unions and works councils—as part of its 
broader employee engagement strategy and consults on matters affecting employees and business performance as required in each 
case by law and regulation in the jurisdictions in which the group operates salary increases made elsewhere in the group are 
amongst the data that the committee considers in determining salaries for executive directors 
consideration of shareholder views 
the committee considers shareholder views received during the year and at the agm each year as well as guidance from 
shareholder representative bodies more broadly the majority of shareholders continue to express support of remuneration 
arrangements at meggitt  56 directors’ remuneration report continued
meggitt plc report and accounts 2013
annual report on remuneration
the following report provides details of how our policy was implemented during the year ended 31 december 2013
remuneration committee—2013 membership and attendance
   meetings  
   eligible  meetings 
name   to attend attended
mr p heiden committee chairman  6 6
mr g s berruyer   6 6
mr p g cox   6 6
ms b l reichelderfer   6 6
mr d m williams   6 6
there was one meeting between the end of the financial year and the date of signing of this report at which all members attended 
activities for the year are described in the chairman’s introduction the committee operates within agreed terms of reference 
available on our website the committee is responsible for determining the remuneration policy and packages for all executive 
directors and executive board members covering five of the next most senior executives across the group and for agreeing the fees 
for the chairman the chairman chief executive and organisational development director attend meetings of the committee by 
invitation they are absent when their own remuneration is under consideration
none of the nonexecutive directors has or has had any personal financial interests or conflicts of interest arising from cross
directorships or daytoday involvement in running the business 
advisers to the committee
during the year the committee’s independent remuneration advisor was kepler associates ‘kepler’ kepler appointed in 2010 was 
selected by the committee as a result of a competitive tender process the committee evaluates the support provided by kepler 
annually and is comfortable that they provide independent remuneration advice to the committee kepler provide guidance on 
remuneration matters at board level and below kepler do not have any other connection with the group kepler is a member of the 
remuneration consultants group and adheres to its code of conduct wwwremunerationconsultantsgroupcom their total fees in 
2013 were £87000
shareholder consultation and 2013 agm voting 
a consultation letter was issued in october 2013 to our top 20 shareholders covering over 65 of our shareholder base on a revised 
remuneration package and policy principally covering the proposed introduction of bonus deferral arrangements and a new ltip 
with clawback provisions attached to both on which we received positive feedback from most of these investors we issued a 
second letter in december 2013 with clarifications particularly related to ltip performance measures the majority of responses 
were supportive and therefore the committee agreed to propose the policy unchanged for shareholder approval at the agm
following feedback received from investor advisory bodies in advance of the 2013 agm the committee also reviewed the level of 
pension contribution for mr young and mr green 50 of salary these arrangements reflect contractual provisions to participate in 
the meggitt pension plan mpp a defined benefit scheme on reaching the government’s lifetime allowance which mr young and mr 
green both reached in april 2012 executives may cease accruing further benefit under the mpp and receive the 50 allowance on 
their full salary as part of the wider review of executive remuneration the committee considered ways to address this concern the 
committee decided that rather than rebalance the package eg through significant salary increases or higher incentive 
opportunities it was simpler and more equitable to make no changes to these legacy pension arrangements as stated in the policy 
report however pension contributions for new executive directors as provided to mr webb will be limited to 25 of salary
the following table shows the results of the advisory vote on the 2012 directors’ remuneration report at the 2013 agm
resolution text votes for
1
 of votes  
cast for votes against
 of votes 
 cast against total votes cast
votes withheld 
abstentions
approval of directors remuneration report 614771357 993 4225279 07 618996636 45795274
1
  a withheld vote is not a vote in law and is not counted in the calculation of the proportion of votes cast for and against a resolution 57
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
single total figure of remuneration for executive directors audited
the table below sets out a single figure for the total remuneration received by each executive director for the year ended  
 31 december 2013 and the prior year
mr s g young mr d r webb mr p e green mr t twigger
1
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
base salary 554 382 240 – 325 309 220 639
taxable benefits
2
21 20 8 – 14 17 10 30
pension 277 178 57 – 163 142 110 320
stip
3
250 459 93 – 126 372 78 767
epp basic
4
153 414  – 119 316 456 690
epp matching
4
108 307  – 84 235 312 512
esos
5
280 512  – 218 391 659 854
total 1643 2272 398 – 1049 1782 1845 3812
1
 mr twigger was a director of the company from 1 january 2013 until 1 may 2013 but continued as an employee until 30 june 2013 remuneration 
received as a result of his role as ceo is disclosed in this table details of remuneration for the period 1 may to 30 june 2013 is disclosed under 
payments to past directors on page 62
2
 taxable benefits consist primarily of company car or car allowance fuel allowance and private health care insurance 
3
 stip paid for performance over the relevant financial year further details of the 2013 stip including performance measures actual performance and 
bonus payouts can be found on page 58
4
 epp is calculated as the number of shares vesting based on performance measures substantially completed during the year valued at the market 
value of the shares for 2013 the figure represents the vesting outcome of the eps element of the 2011 epp award the performance period ended on 
31 december 2013 and an estimate of the outcome under the tsr element of the 2011 epp award the performance period of which will end in august 
2014 based on performance to 31 december 2013 the market value of vested shares is based on the average share price over the last quarter of 2013 
of 52638p for 2012 the figure represents the actual vesting outcome of 2010 epp award valued at the share price on the date of vesting 53300p on 
16 august 2013 the valuation of the 2011 epp award will be updated for the actual vesting outcome of the tsr element in august 2014 and the share 
price on date of vesting 17 august 2014 in next year’s annual report on remuneration further details on performance criteria achievement and 
resulting vesting levels can be found on pages 58 to 59 
5
 esos is calculated as the number of shares vesting based on performance measures substantially completed during the year valued at the difference 
between the market value of the shares and the exercise price of the award for 2013 the figure represents the vesting outcome of the 2011 award the 
market value of vested shares is based on the average share price over the last quarter of 2013 of 52638p and an exercise price of 35170p for 2012 
the 2010 award vested at 100 and the market value and exercise price were 48970p and 28610p respectively the valuation of the 2011 esos award 
will be amended for the share price on date of vesting 2 march 2014 in next year’s annual report on remuneration further details on performance 
criteria achievement and resulting vesting levels can be found on page 59
single total figure of remuneration for nonexecutive directors audited
the table below sets out a single figure for the total remuneration received by each nonexecutive director for the year ended  
31 december 2013 and the prior year
2013
£’000
2012
£’000
sir colin terry 170 165
mr d m williams 72 70
mr g s berruyer
1
52 12
mr p g cox
2
52 13
mr p heiden 62 57
ms b l reichelderfer 52 50
mr d a robins 52 53
1
 appointed 2 october 2012
2
  appointed 27 september 2012 58 directors’ remuneration report continued
meggitt plc report and accounts 2013
incentive outcomes for the year ended 31 december 2013
stip in respect of 2013 performance 
the board set stretching financial and strategic targets for the stip at the start of the 2013 financial year these targets and our 
performance against these are summarised in the table below
performance targets
actual 
performance measure threshold target stretch
underlying profit before tax £365m £385m £405m between 
threshold 
and target
free cash flow
1
£258m £283m £308m below 
threshold
strategic objectives – qd improvement 28 site targets at target
strategic objectives – sap implementation 6 sites at target
personal performance
mr s g young at target
mr d r webb at target
mr p e green at target
mr t twigger at target
1
  adjusted to exclude capital expenditure
the stip pool generated by the above results is equivalent to approximately 45 of target however considering the operational 
performance of the group particularly the supply from a vendor of nonconforming raw material the committee has used its 
discretion to reduce the stip pool by 20 the following awards were made to directors in respect of 2013 performance
 salary £’000
mr s g young 39 250
mr d r webb
1
22 93
mr p e green 39 126
mr t twigger
1
12 78
1
  amounts shown in respect of mr d r webb and mr t twigger have been prorated based on service as a director during the year
2011 epp 
the epp award made in august 2011 vests 50 on cumulative underlying eps performance 25 on cash conversion over three 
financial years and 25 on the group’s relative tsr performance over a threeyear period commencing on the date of grant as follows
measure weighting  period ending vesting schedule outcome vesting 
eps 50 31dec2013 0 vesting below 97p
30 vesting for 97p per share
100 vesting for 111p or more
straight line vesting between these points
1062p
1
760
1
cash conversion 25 31dec2013 0 vesting below 87
30 vesting at 87
100 vesting at 95 and above
straight line vesting between these points
below 
threshold
0
tsr 25 17aug2014 0 vesting below median tsr
30 vesting for median tsr
100 vesting for upper quartile tsr
straight line vesting between these points
na
2
na
2
1  represents growth in eps of 105 over the performance period the vesting outcome of the eps portion of the award has been reduced to reflect the 
cash impact of the issue relating to the supply from a vendor of nonconforming raw material 
2  the vesting outcome of the portion of the award subject to the tsr performance condition will be confirmed at the end of the threeyear performance 
period ending in august 2014 for the purposes of the single figure of remuneration table the estimated vesting of this element of the 2011 award is 
0 based on meggitt’s relative tsr performance to 31 december 2013 which is below median  59
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
2011 esos
the esos award made in april 2011 vested at 760
1
 based on threeyear cumulative underlying eps performance to 31 december 2013 
measure weighting period ending vesting schedule outcome vesting 
eps 100 31dec2013 0 vesting below 97p 
30 vesting for 97p per share 
100 vesting for 111p or more 
straight line vesting between these points
1062p
1
760
1
1
  represents growth in eps of 105 over the performance period the vesting outcome has been reduced to reflect the cash impact of the issue relating 
to the supply from a vendor of nonconforming raw material
executive
interests  
held vesting  interests vesting date vesting
estimated market 
price at vesting
1
exercise price
value  
£’000
mr s g young 210975 760 160341 2mar14 52638p 35170p £280
mr p e green 164345 760 124902 2mar14 52638p 35170p £218
1
  based on the average share price of the company over the three months to 31 december 2013
2010 epp 
as disclosed in the 2012 remuneration report the committee determined that 50 of the 2010 epp award subject to the threeyear 
cumulative underlying eps performance condition vested in full based on performance to 31 december 2012 the remaining 50 of the 
award was dependent on the group’s tsr performance compared to a group of 17 international aerospace and defence companies over 
the threeyear period to 16 august 2013 tsr for all comparator companies is measured on a common currency basis 
measure weighting period ending vesting schedule outcome vesting 
tsr 50 16aug2013 0 vesting below median tsr 
30 vesting for median tsr 
100 vesting for upper quartile tsr 
straight line vesting between these points
664th centile 759
following confirmation of the vesting outcome of this tsr element the overall vesting outcome for the 2010 epp award taking into 
consideration the outcomes of both the eps and tsr elements is 879 of maximum
to allow for comparability going forward the committee has elected to capture the vesting of the entire 2010 epp award in the 
financial year ending 31 december 2012 for the purposes of the single figure as follows
executive
interests 
held vesting  interests vested date vested
market price at 
vesting
value 
£’000
mr s g young
basic award 88379 879 77729 16aug2013 53300p £414
matching award 65526 57630 £307
mr p e green
basic award 67512 879 59376 16aug2013 53300p £316
matching award 50054 44022 £235 60 directors’ remuneration report continued
meggitt plc report and accounts 2013
scheme interests awarded in the year ended 31 december 2013 audited
2013 epp 
executive
1
form of award date of grant
shares over which 
awards granted award price
face value
date of vesting
2
£’000  of salary
3
mr s g young
basic award nil cost option 180313 114556 41901p £480 75 180316
matching award nil cost option 66946 47800p £320 50
mr d r webb
basic award nil cost option 050913 60281 52877p £319 75 050916
matching award nil cost option 39868 53300p £212 50
mr p e green
basic award nil cost option 180313 58173 41901p £244 75 180316
matching award nil cost option 33996 47800p £163 50
1
 mr twigger did not receive any awards under the esos or epp in 2013 
2
 the award price for the basic award is a 90day average price up to the award date the award price for the matching award is based on the market 
price on the date of the award the face value has been calculated using the award price for each award 
3
 based on 2013 salary
consistent with awards made in 2012 vesting of epp awards granted in 2013 is dependent on the achievement of threeyear targets 
relating to cumulative underlying eps cash conversion and relative tsr outperformance the threeyear period over which 
performance will be measured will be the three financial years ending 31 december 2015 this includes the performance period for the 
tsr element which the committee considered it appropriate to align with the other performance measures the performance 
measures are as follows
measure weighting vesting schedule additional information
eps 50 0 vesting below 121p 
30 vesting for 121p per share 
100 vesting for 133p or more 
straight line vesting between these points
cash conversion 25 0 vesting below 87 
30 vesting for 87 
100 vesting for 95 
straight line vesting between these points
defined as cash flow as a  of underlying profit 
after taxation cash flow is measured before 
dividends merger and acquisition costs and 
capital expenditure
tsr outperformance  
of median pa
25 0 vesting below median tsr 
30 vesting for 0 pa outperformance 
100 vesting for ≥ 8 pa outperformance 
straight line vesting between these points
measured relative to a group of 17 international 
aerospace and defence companies
1
 tsr for all 
comparators is measured on a common 
currency basis
1
 bae systems bba aviation boeing cobham curtiss wright eads esterline technologies finmeccanica honeywell moog rockwell collins 
rollsroyce group safran senior ultra electronic holdings woodward governor and zodiac aerospace
2013 esos 
executive
1
date of grant
shares over which 
awards granted exercise price
face value
2
£’000  of salary
3
mr s g young 050913 243114 52650p 1280 200
mr p e green 050913 123456 52650p 650 200
mr d r webb 050913 161443 52650p 850 200
1
 mr twigger did not receive any awards under the esos or epp in 2013
2
 the exercise price is based on the close price the date before the award is granted the face value has been calculated using the award price
3
 based on 2013 salary 61
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
consistent with awards made in 2012 vesting of esos awards granted in 2013 is dependent on the achievement of threeyear 
cumulative underlying eps targets the threeyear period over which performance will be measured will be the three financial years 
ending 31 december 2015 the eps targets are as follows
measure weighting vesting schedule
eps 100 0 vesting below 121p 
30 vesting for 121p per share 
100 vesting for 133p or more 
straight line vesting between these points
total pension entitlements audited
the table below sets out details of the pension entitlements under the meggitt pension plan mpp for mr young mr green and mr 
twigger until his retirement from the board on 1 may 2013 
under the mpp mr young mr green and mr twigger accrued defined benefits at 3 of salary per annum up to the scheme cap and 
were entitled to a cash supplement equivalent to 50 of salary above the scheme cap since reaching the government’s lifetime 
allowance mr young mr green and mr twigger ceased accruing further benefit under the mpp and received a 50 pension allowance 
on their full salary 
mr young and mr green both reached the lifetime allowance in april 2012 and ceased to accrue further benefit under the mpp and 
instead received a 50 allowance on their full salary mr twigger also received a 50 of pension allowance on his full salary until he 
retired from his employment with the company on 30 june 2013 
mr young and mr green’s dependants remain eligible for dependants’ pensions and the payment of a lump sum on death in service
mr webb receives a pension allowance of 25 of base salarythe pension allowance payments made in 2013 are included in the single 
total figure of remuneration table on page 57
mr s g young
1
mr d r webb
2
mr p e green
3
mr t twigger
4 
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
2013
£’000
2012
£’000
accrued benefit 27 26 na na 73 71 46 44
date benefit receivable 05042012 05042012 na na 26102018 26102018 06042011 06042011
total value of additional 
benefit if director retires 
early
left mpp
and taken
benefits
left mpp 
and taken
benefits
na na nil early 
retirement 
factors cost 
neutral
 
 
 
nil early 
retirement 
factors cost 
neutral
 
 
 
retired retired
transfer value 894 942 – – 1741 1607 1587 1664
1
 mr young opted to leave the mpp and take his pension benefits with effect from 5 april 2012
2
 mr webb is not a member of any defined benefit or defined contribution pension scheme operated by the group on appointment 6 june 2013 mr 
webb received a pension allowance of 20 of base salary this was adjusted to 25 on 1 august 2013 when the committee agreed the policy on 
pension allowances for executive directors
3
 mr green opted to leave the mpp with effect from 31 march 2012 he has not drawn his pension
4
 mr twigger opted to leave the mpp and take his pension benefits with effect from 6 april 2011 he retired from his employment with the company on  
30 june 2013
percentage change in ceo cash remuneration  
the table below shows the percentage change in ceo remuneration from the prior year compared to the average percentage change 
in remuneration for all executive employees we have selected our executive population around 250 people for this comparison 
because it is considered to be the most relevant due to the structure of total remuneration most of our senior executives receive 
benefits under the same stip and ltip structure as our ceo
2013 
£’000
2012 
£’000
ceo 
 change  
20122013
executive 
employees 
change  
20122013
base salary 647 639 13 38
taxable benefits 24 30 200 34
stip 244 767 682 628
total 915 1436 363 135
the ceo’s remuneration includes base salary taxable benefits and stip for 2013 the figures comprise elements paid to  
mr t twigger before his retirement from the board in may 2013 and payments made to mr s g young from his appointment as ceo in 
may 2013 the pay for executive employees is calculated using the increase in the earnings of fulltime executive employees the 
analysis is based on a consistent set of employees  62 directors’ remuneration report continued
meggitt plc report and accounts 2013
relative importance of spend on pay
the table below shows shareholder distributions ie dividends and share buybacks and total employee expenditure for 2013 and the 
prior year along with the percentage change in both 
2013  
£’m
2012 
£’m
 change  
20122013
shareholder distributions – dividends
1
1014 925 96
total employee expenditure
2
4751 4538 47
1
  represents dividends paid or proposed in respect of the year see note 16 of the group consolidated financial statements
2 
 comprises wages and salaries and retirement benefit costs see note 9 of the group consolidated financial statements
exit payments made in the year
no exit payments have been made in 2013 
payments to past directors audited
mr twigger ceased to be a director on 1 may 2013 and retired on 30 june 2013 details of mr twigger’s remuneration for the period  
1 january to 1 may 2013 including the full value of longterm incentive awards that vested on his retirement from the group are 
disclosed in the single total figure of remuneration table on page 57 for the period 1 may to 30 june 2013 mr twigger continued to 
receive base pay and contractual benefits and was eligible to receive a prorated stip award for this additional period worked in 
total this amounted to £209000
review of past performance
the remuneration package is structured to help ensure alignment with shareholders there is no direct correlation between share 
price movement and the change in the value of the pay package in any one year as the remuneration package comprises several 
components some fixed and others based on nonfinancial measures the charts below show how the ceo’s pay has been sensitive 
to the share price over the last five years 
this graph illustrates the company’s performance compared to the ftse100 index which is considered the most appropriate broad 
equity market index against which the group’s performance should be measured performance as required by legislation is 
measured by tsr over the five year period from 1 january 2009 to 31 december 2013
100
200
350
300
450
50
150
250
400
31 dec
2008
31 dec
2009
31 dec
2010
year
£
31 dec
2011
31 dec
2012
31 dec
2013
value of £100 invested on 31 december 2008
meggitt
ftse 100
 
the table below details the ceo’s single total figure of remuneration over the same period
2009 2010 2011 2012 2013
mr s g young 
single total figure of remuneration £’000 – – – – 1643
stip outcome  of maximum – – – – 39
epp vesting  of maximum – – – – 38
esos vesting  of maximum – – – – 76
mr t twigger
single total figure of remuneration £’000 1758 2947 4252 3812 1845
stip outcome  of maximum 86 86 100 80 35
epp vesting  of maximum – 50 69 88 56
esos vesting  of maximum 100 100 100 100 98
figures are provided for mr t twigger for the period up to 1 may 2013 and mr s g young for the period from his appointment as ceo on  
1 may 2013 63
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
implementation of remuneration policy for 2014
base salary
base salaries are reviewed taking into account personal performance employment conditions and salary levels across the group 
and prevailing market conditions base salaries were reviewed in early 2014 and effective 1 april 2014 will be as follows for the 
executive directors
 change
2014
 
£’000
mr s g young 375 664
mr d r webb 353 440
mr p e green 585 344
this year salary adjustments have been harmonised at 1 april across the group where possible where this has delayed an 
adjustment from january to april the award has been prorated by 1512ths ie for a 3 adjustment in january this is commuted to a 
375 adjustment in april this has been applied to the salary awards for mr young and mr webb mr green’s salary continues to be 
below competitive levels and it was agreed to increase his salary by 585 
for context salary adjustments across the group vary from region to region according to local salary inflation in the uk and the us 
this is 3 which will be prorated to 375 when applied to the 15 month period described above
pension and benefits
there were no changes in pension contribution rates or benefit provision
2014 stip measures
stip measures for 2014 are based two thirds on group performance—50 pbt and 50 cash—and one third on personal objectives
the stip targets for 2014 together with details of whether they have been met will be disclosed subject to commercial sensitivity in 
the 2014 directors’ remuneration report the opportunity is in line with the policy disclosed on page 49
2014 ltip measures
subject to approval of the ltip by shareholders at the 2014 agm the executive directors will be granted awards under the ltip in 
early 2014 vesting of which will be subject to the following measures and targets
weight measure threshold midpoint stretch
333 underlying eps pence 3 year aggregate equivalent to cagr range of 5 to 10  1240 1305 1370
333 rota average over three years 330 345 360
333
strategic measures
1
 
average over 3 years 
execution
quality  sites on target  
year 1 targets
570 710 860
delivery  sites on target  
year 1 targets
36 57 79
meggitt production 
system
average status  
per schedule
20 30 40
growth
organic revenue 
growth
 organic revenue 
growth cagr over 3 
years
50 65 80
programme 
management
average status  
per reviews
20 30 40
innovation schedule average status  
per schedule
20 30 40
1
performance against each strategic measure will be assessed at the end of the 3year period against a scale of
•  10 —threshold objective not met
•  2  0 — t h r e s h o l d m e t
•  3  0 — o n t a r g e t
•  40—stretch objective met
•  50—stretch objective exceeded  64 directors’ remuneration report continued
meggitt plc report and accounts 2013
chairman and nonexecutive director fees
the following nonexecutive director fee structure was in place for the year ended 31 december 2013 and has been agreed for 2014
2013  
£’000
2014  
£’000
chairman fee 170 176
nonexecutive director base fee 52 54
additional fee for chairing audit or remuneration committee 10 10
additional fee for senior independent director 10 10
this year salary adjustments have been harmonised on 1 april across the group where possible where this has delayed an adjustment 
from january to april the award has been prorated by 1512ths ie for a 3 adjustment in january this is commuted to a 375 
adjustment in april this has been applied to the fee awards for the nonexecutive directors and chairman
directors’ beneficial interests audited
the beneficial interests of the directors and their connected persons in the ordinary shares of the company at 31 december 2013 as 
notified under the disclosure and transparency rules of the financial conduct authority dtr including shares held beneficially in 
the share incentive plan by executive directors were as follows
  shareholding
  ordinary shares of 5p each
  2013 2012
sir colin terry  12041 11846
mr t twigger
1  
1104866 1104756
mr s g young  413351 407154
mr g s berruyer
2
  3000 –
mr p g cox
3
  6824 –
mr p e green   557978 553260
mr p heiden  5841 5701
ms b l reichelderfer  6000 6000
mr d a robins  73008 71261
mr d r webb 
4
  25648 –
mr d m williams  5000 5000
1
 2013 shareholding declared as at 1 may 2013 the date mr twigger ceased to be a director
2
 appointed on 2 october 2012
3
 appointed on 27 september 2012 
4
 appointed on 6 june 2013
between 1 january 2014 and 17 february 2014 the only changes to the beneficial interests of the directors in the ordinary shares  
of the company are that mr young and mr green each acquired 47 shares through the meggitt plc share incentive plan
external appointments held by executive directors
executive director company role
fees retained
£’000
mr s g young derwent london plc nonexecutive director 40
chairman of audit committee 9
member of remuneration committee 4
member of nomination committee stepped down 01082013 2
total 55
mr d r webb segro plc nonexecutive director 53
chairman of audit committee 10
total 63 65
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
directors’ shareholding requirements audited
shares which are included within the shareholding requirement are
source of shares description
esos epp and ltip share awards exercised and retained
deferred bonus shares released and retained after the twoyear deferral period
ordinary shares shares purchased directly in the market
share dividend plan shares acquired through the share dividend plan
share incentive plan shares acquired via the monthly sip partnership share purchase scheme  
free shares retained for more than 5 years under the sip
employee schemes sip saye share awards exercised and retained
the table below shows the shareholding of each executive director against their respective shareholding requirement as at  
31 december 2013
 name
shareholding 
guideline  
 2013  
salary
shares owned 
outright
1
current 
shareholding 
 2013 
salary
2
guideline 
met
mr s g young 300 413351 341 met
mr d r webb
3
200 25648 32 building
mr p e green 200 557978 906 met
1
  includes shares invested to be eligible for epp matching awards
2
  assessment of shareholding is based on shares owned outright salaries as at 31 december 2013 and a share price of 52750 pence the value of a 
meggitt share on 31 december 2013
3
  appointed on 6 june 2013
on 1 may 2013 mr twigger held 1104866 shares equivalent to 791 of his 2013 salary valued at 47250 pence the value of a meggitt 
share on 1 may 2013 against the shareholding requirement which on that date was 100 of salary the shareholding requirement 
has been increased from 100 to 300 subsequent to mr twigger’s departure from the board  66 directors’ remuneration report continued
meggitt plc report and accounts 2013
directors’ interests in share schemes audited
all of the esos and epp awards have performance conditions attached as detailed in the directors remuneration report in the year
of grant and in this report for those awards made in 2013
• the awards made up to and including 2010 have already vested to the extent detailed in this and previous reports and the figures 
shown in the table below for those years are the vested share award amounts 
• the awards made in 2011 2012 and 2013 were unvested as at 31 december 2013
sharesave awards are not subject to performance conditions
date of award
number of shares under award
 exercise 
 price
 mark et pric e 
 at date of 
 exercise
 date 
 exercisable 
 from
 expiry 
 date 
 at 1 jan  
 2013 
 awarded 
 exercised
 at 1 may 
 2013
mr t twigger
esos 2005 part a options 300409 17699 – 17699 16950p – 300412 290419
2005 part b stock sars 101005 322987 – 322987 27865p – 101008 091015
270906 365613 – 365613 26367p – 270909 260916
290307 334448 – 334448 29900p – 290310 280317
250308 475248 – 475248 25250p – 250311 240318
300409 477876 341957 135919 16950p – 300412 290419
120310 419434 – 419434 28610p – 120313 110320
020311 352573 – 352573 35170p – 020314 010321
100412 321752 – 321752 39720p – 100415 090422
epp – basic 050809 192363 – 192363 – – 210812 040819
nil cost options 210411 147299 – 147299 – – 210813 200421
170811 128117 – 128117 – – 170814 160821
220812 122507 – 122507 – – 220815 210822
epp – match 120809 107265 – 107265 – – 210812 040819
nil cost options 210411 109210 – 109210 – – 210813 200421
170811 89855 – 89855 – – 170814 160821
220812 79536 – 79536 – – 220815 210822
sharesave options 140912 2752 – 2752 32694p – 011115 010516
total 4066534 341957 3724577    
date of award
number of shares under award
 award 
 price
 mark et pric e 
 at date of 
 exercise
 date 
 exercisable 
 from
 expiry 
 date 
 at 1 jan  
 2013 
 awarded 
 exercised
 at 31 dec 
 2013
mr s g young
1996 esos no1 options 010404 17200 – 17200 17440p – 010407 310314
esos 2005 part b stock sars 101005 186615 – 186615 27865p – 101008 091015
270906 210871 – 210871 26367p – 270909 260916
290307 192642 – 192642 29900p – 290310 280317
250308 285149 – 285149 25250p – 250311 240318
300409 297345 – 297345 16950p – 300412 290419
120310 251660 – 251660 28610p – 120313 110320
020311 210975 – 210975 35170p – 020314 010321
100412 288520 – 288520 39720p – 100415 090422
050913 – 243114 243114 52650p – 050916 040923
epp – basic 050809 115418  115418 – – 210812 040819
nil cost options 210411 88379 10650 77729 – – 210813 200421
170811 76663 – 76663 – – 170814 160821
220812 73236 – 73236 – – 220815 210822
180313 – 114556 114556 – – 180316 170323
epp– match 120809 64359 – 64359  – 210812 040819
nil cost options 210411 65526 7896 57630 – – 210813 200421
170811 53768 – 53768 – – 170814 160821
220812 47547 – 47547 – – 220815 210822
180313 – 66946 66946 – – 180316 170323
sharesave options 060910 4047 4047 – 22235p 50900p 011113 010514
total  2529920 402023 2931943     67
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
 
date of award
number of shares under award
 exercise 
 price
 mark et pric e 
 at date of 
 exercise
 date 
 exercisable 
 from
 expiry 
 date 
 at 1 jan  
 2013 
 awarded 
 exercised 
 lapsed
 at 31 dec 
 2013
mr p e green
esos 2005 part a options 290307 2759 – 2759 29900p – 290310 280317
300409 12832 – 12832 16950p – 300412 290419
esos 2005 part b stock sars 101005 143549 122887 20662 27865p 52650p 101008 091015
270906 162326 138961 23365 26367p 52650p 270909 260916
290307 145402 145402 – 29900p 52650p 290310 280317
250308 217822 – 217822 25250p – 250311 240318
300409 214306 – 214306 16950p – 300412 290419
120310 192240 – 192240 28610p – 120313 110320
020311 164345 – 164345 35170p – 020314 010321
100412 233384 – 233384 39720p – 100415 090422
050913 – 123456 123456 52650p – 050916 040923
epp – basic 050809 88167 – 88167 – – 210812 040819
nil cost options 210411 67512 8135 59377 – – 210813 200421
170811 59719 – 59719 – – 170814 160821
220812 59240 – 59240 – – 220815 210822
180313 – 58173 58172 – – 180316 170323
epp – match 120809 49163 – 49163 – 210812 040819
nil cost options 210411 50054 6032 44022 – – 210813 200421
170811 41884 – 41884 – – 170814 160821
220812 38461 – 38461 – – 220815 210822
180313 33996 33996 – – 180316 170323
sharesave options 040908 3798 3798 – 17140p 50900p 011113 010514
060910 1389 – 1389 22235p – 011115 010516
140912 1835 – 1835 32694p – 011117 010518
total  1950187 209591 1740596    
date of award
number of shares under award
 exercise 
 price
 mark et pric e 
 at date of 
 exercise
 date 
 exercisable 
 from
 expiry 
 date 
 at 1 jan  
 2013 
 awarded 
 exercised 
 lapsed
 at 31 dec 
 2013
mr d r webb
esos 2005 part a options 050913 – 5698 5698 52650p – 050916 040923
esos 2005 part b stock sars 050913 – 155745 155745 52650p – 050916 040923
epp – basic 050913 – 60281 60281 52650p – 050916 040923
nil cost options
epp – match 050913 – 39868 39868 52650p – 050916 040923
nil cost options
sharesave options 130913 – 3517 3517 42640p – 011118 010519
total  – 265109 265109    
by order of the board
paul heiden
chairman remuneration committee
3 march 2014 68 directors’ report
meggitt plc report and accounts 2013
directors
the directors of the company who were in office during the year 
and up to the date of signing the financial statements were  
sir colin terry chairman mr t twigger retired from the board 
on 1 may 2013 mr s g young chief executive mr g s berruyer 
mr p g cox mr p e green mr p heiden ms b l reichelderfer mr 
d a robins mr d r webb appointed 6 june 2013 and mr d m 
williams senior independent director there have been no 
changes in directors since the end of the year up to the date of 
this directors’ report 
all directors will be submitted for election or reelection at the 
annual general meeting agm except mr d a robins who is due 
to retire at the agm details of any unexpired terms of the 
directors’ service contracts are in the directors’ remuneration 
report membership of committees and biographical information 
is disclosed on page 37 and in the notice of agm
the directors have the benefit of qualifying thirdparty indemnity 
provisions for the purposes of section 236 of the companies act 
2006 pursuant to the articles which were in effect throughout the 
financial year and up to the date of this directors’ report the 
company also purchased and maintained throughout the year 
directors’ and officers’ liability insurance no indemnity is 
provided for the company’s auditors 
conflicts of interest
the company has a procedure for the disclosure review 
authorisation and management of directors’ conflicts of interest 
and potential conflicts of interest in accordance with the 
provisions of the companies act 2006 in deciding whether to 
authorise a conflict or potential conflict the directors must have 
regard to their general duties under the companies act 2006 
the authorisation of any conflict matter and the terms of 
authorisation are regularly reviewed by the board
political donations
no political donations were made during the year 2012 none
share capital and control 
the issued share capital of the company at 31 december 2013 
and details of shares issued during the financial year are shown 
in note 34 of the group’s consolidated financial statements on 31 
december 2013 there were 797045208 ordinary shares in issue 
a further 379202 ordinary shares were issued between 1 
january 2014 and 25 february 2014 all of which were issued as a 
result of the exercise of share awards the ordinary shares are 
listed on the london stock exchange
the rights and obligations attaching to the company’s ordinary 
shares are set out in the articles a copy of the articles is 
available for inspection at the registered office the holders of 
ordinary shares are entitled to receive the company’s report  
and accounts to attend and speak at general meetings of the 
company to appoint proxies to exercise full voting rights and  
to participate in any distribution of income or capital
the directors present their report together with the audited 
consolidated financial statements of the group prepared in 
accordance with international financial reporting standards as 
adopted by the european union ‘ifrss as adopted by the eu’ 
and the companies act 2006 and company audited financial 
statements prepared in accordance with uk generally accepted 
accounting practice ‘uk gaap’ and the companies act 2006 
for the year ended 31 december 2013 
incorporation by reference
certain laws and regulations require that specific information 
should be included in the directors’ report the following 
information is incorporated into this directors’ report by 
reference
•   likely future developments in the group’s business page 1 to 
34
•  the corporate governance report page 35 to 46
•  research and development activities page 28
•  policies on financial risk management including the extent to 
which financial instruments are utilised to mitigate any 
significant risks to which the group is exposed are set out  
in note 3 of the group’s consolidated financial statements page 
84
• greenhouse gas emissions page 32
• employee information page 34
   —employee involvement and
  —employment of disabled persons
•  independent auditors—disclosure of relevant audit   
 information page 70
there are no significant events affecting the group since the end 
of the year requiring disclosure
dividends
the directors recommend the payment of a final dividend of 
880p net per ordinary 5p share 2012 820p to be paid on 9 may 
2014 to those members on the register at close of business on  
14 march 2014 an interim dividend of 395p 2012 360p was 
paid on 4 october 2013 if the final dividend as recommended  
is approved the total ordinary dividend for the year will amount  
to 1275p net per ordinary 5p share 2012 1180p
dividends are paid to shareholders net of a nonrefundable tax 
credit of 10 shareholders liable to higher rates of income tax 
will have additional tax to pay 
shareholders will be offered a scrip dividend alternative  
under the share dividend plan in respect of the proposed final 
dividend during 2013 the company made the meggitt plc  
share dividend plan available for the dividends paid in may 2013 
the final dividend for 2012 and in october 2013 the interim 
dividend for 2013 the cash dividend necessary to give an 
entitlement to one new ordinary share was fixed at 48202p  
and 53480p respectively 69
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
agreements providing compensation in the event of a takeover bid
director contractual entitlement
mr s g young none except that provisions in the company’s 
share plans may cause options andor awards 
granted to employees under such plans to vest  
on a takeover
mr d r webb none except that provisions in the company’s 
share plans may cause options andor awards 
granted to employees under such plans to vest  
on a takeover
mr p e green mr green may terminate his employment within 
six months and would be entitled to 
compensation from the company for loss of 
office the compensation would be annual 
remuneration plus the value of benefits for the 
unexpired notice period less 5 in addition 
provisions in the company’s share plans may 
cause options andor awards granted to 
employees under such plans to vest on  
a takeover
nonexecutive 
directors
none
all other 
employees
there are no agreements that would provide 
compensation for loss of employment resulting 
from a takeover except that provisions in the 
company’s share plans may cause options and
or awards granted to employees under such 
plans to vest on a takeover
substantial shareholdings
at 25 february 2014 the company had been notified under the 
disclosure and transparency rules dtr of the following 
substantial interests in the issued ordinary shares of the 
company requiring disclosure
 percentage of 
  total voting 
  rights attaching 
   to the issued 
  indirect ordinary share 
 direct voting voting capital of the 
 rights m rights m company
the capital group   
   companies inc  – 1195 1502
fmr llc  – 406 509
standard life investments ltd  222 38 325
legal  general group plc 237  – 297
 one voting right per ordinary share
these holdings are published on a regulatory information service 
and on the company’s website
there are no restrictions on transfer or limitations on holding 
ordinary shares and no requirements for prior approval of any 
transfers there are no known arrangements under which 
financial rights are held by persons other than holders of the 
shares and no known agreements or restrictions on share 
transfers or on voting rights shares acquired through company 
share plans rank pari passu on an equal footing with the shares 
in issue and have no special rights 
rules about the appointment and replacement of company 
directors are contained in the articles which provide that a 
director may be appointed by ordinary resolution of the 
shareholders or by the existing directors either to fill a vacancy  
or as an additional director changes to the articles must be 
submitted to the shareholders for approval by way of special 
resolution the directors may exercise all the powers of the 
company subject to the provisions of relevant legislation the 
articles and any directions given by the company in general 
meeting 
the powers of the directors include those in relation to the issue 
and buyback of shares at each agm the shareholders are 
requested to renew the directors’ powers to allot securities in the 
company up to the value specified in the notice of meeting and to 
renew the directors’ powers to allot securities without the 
application of preemption rights up to the value specified in the 
notice of meeting in accordance with the articles the company 
can seek authority from the shareholders at the agm to purchase 
its own shares
the group has significant financing agreements which include 
change of control provisions which should there be a change of 
ownership of the company could result in renegotiation 
withdrawal or early repayment of these financing agreements 
these are a usd 400 million revolving credit agreement dated 
july 2012 a usd 700 million revolving credit agreement dated 
april 2011 a usd 600 million note purchase agreement dated 
june 2010 and a usd 250 million note purchase agreement dated 
june 2003 
there are a number of other longterm commercial agreements 
that may alter or terminate upon a change of control of the 
company following a successful takeover bid these 
arrangements are commercially confidential and their disclosure 
could be seriously prejudicial to the company  70
meggitt plc report and accounts 2013
directors’ report continued
each of the directors whose names and functions are listed in 
the board of directors on page 37 confirm that to the best of 
their knowledge 
•  the group financial statements which have been prepared in 
accordance with ifrss as adopted by the eu give a true and 
fair view of the assets liabilities financial position and profit  
of the group and
•  the strategic report and this directors’ report include a fair 
review of the development and performance of the business 
and the position of the group together with a description of the 
principal risks and uncertainties that it faces
each of the persons who is a director as at the date of this report 
confirms that
•  so far as the director is aware there is no relevant audit 
information of which the company’s auditors are unaware and
•  the director has taken all the necessary steps in order to make 
himself or herself aware of any relevant audit information and 
to establish that the company’s auditors are 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
fair balanced and understandable
the directors as at the date of this report consider that the 
annual report and accounts taken as a whole is fair balanced 
and understandable and provides the information necessary for 
shareholders to assess the group’s performance business 
model and strategy the board has made this assessment on the 
basis of a review of the accounts process a discussion on the 
content of the annual report assessing its fairness balance and 
understandability together with the confirmation from executive 
management that the report is fair balanced and 
understandable
by order of the board
 
m l thomas
company secretary
3 march 2014
 
statement of directors’ responsibilities
the directors are responsible for preparing the annual report 
the directors’ remuneration 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 have elected to 
prepare the group financial statements in accordance with ifrss 
as adopted by the eu and the company financial statements in 
accordance with uk gaap under company law the directors 
must not approve the financial statements unless they are 
satisfied that they give a true and fair view of the state of affairs 
of the group and the company and of the profit or loss of the 
group for that period 
in preparing these financial statements the directors are 
required to
•  select suitable accounting policies and apply them 
consistently
•  make judgements and accounting estimates that are 
reasonable and prudent and
•  state whether ifrss as adopted by the eu and the uk have 
been followed subject to any material departures disclosed 
and explained in the group and company financial statements 
respectively
the directors are responsible for keeping adequate accounting 
records that are sufficient to i show and explain the group’s 
and the company’s transactions ii disclose with reasonable 
accuracy at any time the financial position of the group and the 
company and iii enable them to ensure that the financial 
statements and the directors’ remuneration report comply with 
the companies act 2006 and as regards the group financial 
statements article 4 of the international accounting standards 
regulation they are also responsible for safeguarding the 
assets of the group and the company and hence for taking 
reasonable steps for the prevention and detection of fraud and 
other irregularities  71
meggitt plc report and accounts 2013
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overview of our audit approach
materiality
we set certain thresholds for materiality these helped us to determine 
the nature timing and extent of our audit procedures and to evaluate 
the effect of any misstatements both individually and on the financial 
statements as a whole
based on our professional judgement we determined materiality for 
the group financial statements as a whole to be £14 million which 
represents approximately 5 of profit before tax 
we agreed with the audit committee that we would report to them any 
misstatements identified during our audit above £500000 as well as 
misstatements below that amount that in our view warranted 
reporting for qualitative reasons
overview of the scope of our audit
the group financial statements are a consolidation of a significant 
number of reporting units comprising the group’s operating 
businesses and centralised functions in establishing our approach  
to the group audit we determined the type of work that needed to be 
performed at the reporting units by us as the group engagement team 
or other audit teams within pwc uk and from other pwc network firms 
operating under our instruction where the work was performed by 
other audit teams we determined the level of involvement we needed 
to have in the audit work at those reporting units to be able to conclude 
whether sufficient appropriate audit evidence had been obtained as a 
basis for our opinion on the group financial statements as a whole 
based on our assessment of significance and risk a full scope audit 
was performed over the complete financial information of 11 reporting 
units and targeted audit procedures over specific balances or 
transactions were performed at a further 21 reporting units together 
these 32 reporting units accounted for 91 of group profit before tax 
this together with additional procedures performed at the group level 
including testing the consolidation process gave us sufficient 
appropriate audit evidence for our opinion on the group financial 
statements as a whole 
areas of particular audit focus
in preparing the financial statements the directors made a number  
of subjective judgements for example over significant accounting 
estimates that involved making assumptions and considering future 
events that are inherently uncertain we primarily focused our work in 
these areas by assessing the directors’ judgements against available 
evidence forming our own judgements and evaluating the disclosures 
in the financial statements
in our audit we tested and examined information using sampling and 
other auditing techniques to the extent we considered necessary to 
provide a reasonable basis for us to draw conclusions we obtained 
audit evidence through testing the effectiveness of controls 
substantive procedures or a combination of both 
we considered the following areas to be those that required particular 
focus in the current year this is not a complete list of all risks or areas 
of focus identified by our audit we discussed these areas of focus with 
the audit committee their report on those matters that they 
considered to be significant issues in relation to the financial 
statements is set out on page 44 
report on the group financial statements
our opinion 
in our opinion the group financial statements defined below
•  give a true and fair view of the state of the group’s affairs as at  
31 december 2013 and of the group’s profit and cash flows for the 
year then ended
•  have been properly prepared in accordance with international 
financial reporting standards 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
this opinion is to be read in the context of what we say in the remainder 
of this report
what we have audited
the group financial statements which are prepared by meggitt plc 
comprise
• the consolidated balance sheet as at 31 december 2013
•  the consolidated income statement and consolidated statement of 
comprehensive income for the year then ended
•  the consolidated statement of changes in equity and consolidated 
cash flow statement for the year then ended and
•  the notes to the group financial statements which include a 
summary of significant accounting policies and other explanatory 
information
the financial reporting framework that has been applied in their 
preparation comprises applicable law and ifrss as adopted by the 
european union
certain disclosures required by the financial reporting framework have 
been presented elsewhere in the annual report rather than in the 
notes to the financial statements these are crossreferenced from the 
financial statements and are identified as audited
what an audit of financial statements involves 
we conducted our audit in accordance with international standards  
on auditing uk and ireland ‘isas uk  ireland’ 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 
we read all the financial and nonfinancial information in the ‘annual 
report and accounts’ the ‘annual report’ to identify material 
inconsistencies with the audited group financial statements and to 
identify any information that is apparently materially incorrect based  
on or materially inconsistent with the knowledge acquired by us in the 
course of performing the audit if we become aware of any apparent 
material misstatements or inconsistencies we consider the implications 
for our report
independent auditors’ report to the  
members of meggitt plc 72
meggitt plc report and accounts 2013
area of focus how the scope of our audit addressed the area of focus
valuation of goodwill and other intangible assets
goodwill and intangible assets represent the largest assets 
within the group’s balance sheet
the directors’ assessment of the carrying value of goodwill 
and intangible assets and the annual impairment review the 
directors are required to perform is described in notes 18 to 20 
of the financial statements
this assessment of the carrying value of these assets is 
inherently subjective due to the judgement involved in estimating 
future cash flows and in calculating the discount rate to apply to 
these cash flows
our work included testing management’s impairment models including the cash 
flows and evaluating and corroborating key inputs used in these models
we performed sensitivity analysis over the significant assumptions used in 
the models to ascertain the point at which an impairment would be triggered 
and considered the likelihood of such a change in the key assumptions either 
individually or in aggregate the significant assumptions included forecast sales 
over the next five years the discount rate and the terminal growth rate
we read the disclosures in the financial statements included in note 18 in 
respect of management’s impairment testing and considered whether these 
were consistent with the conclusions of our audit work and met the disclosure 
requirements of the relevant accounting standards
provisions for environmental legal and other matters
the group has a number of material provisions in respect of 
environmental legal and other matters these are set out in 
note 31 to the financial statements these provisions require 
the directors to make estimates of the likely future cash flows 
that will be required to settle the group’s obligations these 
estimates are inherently subjective and therefore give rise to 
greater audit risk
the group has an experienced team who are responsible for managing 
environmental legal and other matters and this expertise is supplemented by 
the use of external third party experts where appropriate our audit procedures 
included an assessment of the experience and expertise of those third parties 
involved in determining the provisions and the scope of their work 
we evaluated the existing obligations of the group corroborating key facts 
surrounding these obligations including obtaining third party expert reports 
from the group’s external specialists where appropriate assessed the extent of 
any insurance coverage and tested the associated provisions – for example we 
recalculated provisions and independently assessed future cost estimates we also 
used our own experience of similar situations to develop an independent view of 
the adequacy of the provisions
risk of fraud in revenue recognition 
isas uk  ireland presume there is a risk of fraud in revenue 
recognition because of the pressure management may feel to 
achieve results
in assessing this risk for the group we concluded that most 
significant areas of risk related to revenues where contract 
accounting principles are followed as this involves judgement 
over future cost estimates and percentage of completion  
and where adjustments to revenues are made as a result of 
manual journals
we tested revenues recognised under contract accounting by checking that an 
appropriate amount of revenue had been recognised which fairly reflected the  
stage of completion of the contract we also evaluated the design of the key 
controls management has in place over contract accounting and tested some  
of these controls
we tested manual journal entries impacting revenue at inscope reporting  
units and at a group level our work specifically focused on understanding the 
reasons for the adjustments and corroborating the adjustments to appropriate 
audit evidence
risk of management override of internal controls
isas uk  ireland require that we consider this we considered whether there was evidence of bias by the directors in the 
significant accounting estimates and judgements relevant to the financial 
statements we also assessed the overall control environment of the group 
including arrangements for staff to “whistleblow” inappropriate actions and 
interviewed senior management and the group’s internal audit function
we analysed manual journals at in scope reporting units to identify higher risk 
journals and we performed detailed testing over the higher risk manual journal 
entries identified we also tested any significant adjustments made to the financial 
statements at a group level
independent auditors’ report to the  
members of meggitt plc continued 73
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
other information in the annual report
under isas uk  ireland we are required to report to you if in our 
opinion information in the annual report is
•  materially inconsistent with the information in the audited group 
financial statements or
•  apparently materially incorrect based on or materially inconsistent 
with our knowledge of the group acquired in the course of 
performing our audit or
• is otherwise misleading
we have no exceptions to report arising from this responsibility
responsibilities for the financial statements and  
the audit
our responsibilities and those of the directors 
as explained more fully in the statement of directors’ responsibilities 
set out on page 70 the directors are responsible for the preparation 
of the group 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 group 
financial statements in accordance with applicable law and isas uk  
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors 
this report including the opinions has been prepared for and only for 
the company’s members as a body in accordance with chapter 3 of 
part 16 of the companies act 2006 and for no other purpose we do not 
in giving these opinions accept or assume responsibility for any other 
purpose or to any other person to whom this report is shown or into 
whose hands it may come save where expressly agreed by our prior 
consent in writing
other matter 
we have reported separately on the company financial statements of 
meggitt plc for the year ended 31 december 2013 and on the 
information in the directors’ remuneration report that is described as 
having been audited 
andrew paynter senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
london
3 march 2014
going concern
under the listing rules we are required to review the directors’ 
statement set out on page 30 in relation to going concern we have 
nothing to report having performed our review
as noted in the chief financial officer’s review the directors have 
concluded that it is appropriate to prepare the group’s financial 
statements using the going concern basis of accounting the going 
concern basis presumes that the group has adequate resources to 
remain in operation and that the directors intend it to do so for at least 
one year from the date the financial statements were signed as part of 
our audit we have concluded that the directors’ use of the going 
concern basis is appropriate
however because not all future events or conditions can be predicted 
these statements are not a guarantee as to the group’s ability to 
continue as a going concern
opinion on matter prescribed by the companies act 2006
in our opinion the information given in the strategic report and the 
directors’ report for the financial year for which the group financial 
statements are prepared is consistent with the group financial 
statements
other matters on which we are required to report  
by exception
adequacy of information and explanations received
under the companies act 2006 we are required to report to you if in 
our opinion we have not received all the information and explanations 
we require for our audit we have no exceptions to report arising from 
this responsibility
directors’ remuneration
under the companies act 2006 we are required to report to you if in 
our opinion certain disclosures of directors’ remuneration specified by 
law have not been made we have no exceptions to report arising from 
these responsibilities
corporate governance statement
under the listing rules we are required to review the part of the 
corporate governance statement relating to the company’s 
compliance with nine provisions of the uk corporate governance code 
‘the code’ we have nothing to report having performed our review
on page 70 of the annual report as required by the code provision 
c11 the directors state that they consider the annual report taken  
as a whole to be fair balanced and understandable and provides the 
information necessary for members to assess the group’s 
performance business model and strategy on page 44 as required by 
c38 of the code the audit committee has set out the significant 
matters that it considered in relation to the financial statements and 
how they were addressed under isas uk  ireland we are required 
to report to you if in our opinion
•  the statement given by the directors is materially inconsistent with 
our knowledge of the group acquired in the course of performing 
our audit or
•  the section of the annual report describing the work of the audit 
committee does not appropriately address matters communicated 
by us to the audit committee
we have no exceptions to report arising from this responsibility 74
meggitt plc report and accounts 2013
consolidated income statement
for the year ended 31 december 2013
 notes
 2013 
 
 £’m
 2012 
 restated 
 £’m
revenue 5 16373 16058
cost of sales 9811 9291
gross profit 6562 6767
net operating costs 3559 3553
operating profit
1
6 3003 3214
finance income 12 03 20
finance costs 13 312 421
net finance costs 309 401
profit before tax
2
44 2694 2813
tax 14 371 458
profit for the year attributable to equity owners of the company 44 2323 2355
earnings per share
basic
3
15 294p 301p
diluted
4
15 289p 297p
1
  underlying operating profit 10 3972 3921
2
  underlying profit before tax 10 3778 3660
3
  underlying basic earnings per share 15 375p 365p
4
  underlying diluted earnings per share 15 369p 360p 75
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
consolidated statement of comprehensive income
for the year ended 31 december 2013
 notes
 2013 
 
 £’m
 2012 
 restated 
 £’m
profit for the year 2323 2355
items that may be reclassified to the income statement in subsequent periods
currency translation differences 372 547
cash flow hedge movements 19 58
tax effect 14 01 06
 352 599
items that will not be reclassified to the income statement in subsequent periods
remeasurement of retirement benefit obligations 33 468 40
tax effect 14 216 23
 252 17
    
other comprehensive expense for the year 100 582
    
total comprehensive income for the year attributable to equity owners of the company 2223 1773 76
meggitt plc report and accounts 2013
as at 31 december 2013
consolidated balance sheet
 notes
 2013 
 £’m
 2012 
 £’m
noncurrent assets
goodwill 18 14571 14942
development costs 19 2705 2215
programme participation costs 19 2106 2036
other intangible assets 20 7073 7789
property plant and equipment 21 2455 2322
trade and other receivables 23 899 988
derivative financial instruments 30 355 498
deferred tax assets 32 91 1002
  30255 31792
current assets
inventories 22 2992 2912
trade and other receivables 23 3289 3042
derivative financial instruments 30 112 50
current tax recoverable 28 02
cash and cash equivalents 24 1161 1049
  7582 7055
total assets 6 37837 38847
current liabilities
trade and other payables 25 3291 3519
derivative financial instruments 30 07 40
current tax liabilities 406 570
obligations under finance leases 27 24 31
bank and other borrowings 28 72 1270
provisions 31 443 448
  4243 5878
net current assets 3339 1177
noncurrent liabilities
trade and other payables 26 52 63
derivative financial instruments 30 01 02
deferred tax liabilities 32 2193 2895
obligations under finance leases 27 51 50
bank and other borrowings 28 6660 6123
provisions 31 1492 1785
retirement benefit obligations 33 2381 2997
  12830 13915
total liabilities 17073 19793
net assets 20764 19054
equity
share capital 34 399 393
share premium 11663 11439
other reserves 141 141
hedging and translation reserves 827 1179
retained earnings 7734 5902
total equity attributable to owners of the company 20764 19054
the financial statements on pages 74 to 121 were approved by the board of directors on 3 march 2014 and signed on its behalf by 
 
s g young d r webb 
director director 77
meggitt plc report and accounts 2013
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for the year ended 31 december 2013
consolidated statement of changes in equity
equity attributable to owners of the company
 notes
  
 share 
 capital  
 
 £’m
 share 
 premium 
 
 £’m
 other  
 reserves 
 
 £’m
 hedging and 
 translation 
 reserves 
 £’m
 retained 
 earnings 
 restated 
 £’m
 total 
 equity  
 restated  
 £’m
at 1 january 2012 389 11301 141 1778 4324 17933
profit for the year – – – – 2355 2355
other comprehensive income for the year
currency translation differences 
 arising in the year – – – 544 – 544
 transferred to income statement – – – 03 – 03
cash flow hedge movements
 movement in fair value – – – 39 – 39
 transferred to income statement – – – 19 – 19
remeasurement of retirement benefit obligations 33 – – – – 40 40
other comprehensive expenseincome before tax – – – 605 40 565
tax effect 14 – – – 06 23 17
other comprehensive expenseincome for the year – – – 599 17 582
total comprehensive expenseincome for the year – – – 599 2372 1773
employee share schemes
 value of services provided – – – – 57 57
 issue of equity share capital 02 08 – – 01 09
dividends 16 02 130 – – 850 718
at 31 december 2012 393 11439 141 1179 5902 19054
profit for the year – – – – 2323 2323
other comprehensive income for the year
currency translation differences 
 arising in the year – – – 319 – 319
 transferred to income statement 43 – – – 53 – 53
cash flow hedge movements
 movement in fair value – – – 16 – 16
 transferred to income statement – – – 03 – 03
remeasurement of retirement benefit obligations 33 – – – – 468 468
other comprehensive expenseincome before tax – – – 353 468 115
tax effect 14 – – – 01 216 215
other comprehensive expenseincome for the year – – – 352 252 100
total comprehensive expenseincome for the year – – – 352 2575 2223
employee share schemes
 value of services provided – – – – 218 218
 issue of equity share capital 34 04 26 – – 05 25
dividends 16 02 198 – – 956 756
at 31 december 2013 399 11663 141 827 7734 20764
  other reserves relate to capital reserves arising on the acquisition of businesses in 1985 and 1986 where merger accounting was applied
  hedging and translation reserves at 31 december 2013 comprise a credit balance on the hedging reserve of £32 million 2012 £16 million and 
a credit balance on the translation reserve of £795 million 2012 £1163 million amounts recycled from the hedging reserve to the income 
statement in respect of cash flow hedge movements have been recorded in net finance costs amounts recycled from the translation reserve 
to the income statement in respect of the disposal of foreign subsidiaries have been recorded in net operating costs 78
meggitt plc report and accounts 2013
for the year ended 31 december 2013
consolidated cash flow statement
 notes
 2013 
 £’m
 2012 
 £’m
cash inflow from operations before exceptional operating items 3619 4088
cash outflow from exceptional operating items 11 162 147
cash inflow from operations 39 3457 3941
interest received 03 02
interest paid 197 281
tax paid 440 346
cash inflow from operating activities 2823 3316
businesses acquired 42 265 84
businesses disposed 43 533 159
capitalised development costs 19 702 522
capitalised programme participation costs 19 357 361
purchase of intangible assets 184 280
purchase of property plant and equipment 524 355
proceeds from disposal of property plant and equipment 39 03
cash outflow from investing activities 1460 1440
dividends paid to company’s shareholders 16 756 718
issue of equity share capital 34 25 09
proceeds from borrowings 1815 1893
debt issue costs – 20
repayments of borrowings 2314 2927
cash outflow from financing activities 1230 1763
net increase in cash and cash equivalents 133 113
cash and cash equivalents at start of the year 1049 946
exchange losses on cash and cash equivalents 21 10
cash and cash equivalents at end of the year 24 1161 1049 79
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 strategic report financial statements supplementary information governance reports
notes to the consolidated financial statements
transactions between and balances with group companies are 
eliminated together with unrealised gains on intergroup transactions 
unrealised losses are eliminated to the extent the asset transferred is 
not impaired the accounting policies of acquired businesses are 
changed where necessary to be consistent with those of the group
the following items in respect of the acquisition and disposal of 
subsidiaries are excluded from the underlying profit measures used by 
the board to monitor and measure the underlying performance of the 
group see note 10
• any amounts by which the fair value of net assets of an acquired  
 subsidiary exceed the cost of acquisition 
• acquisition related expenses 
• any gain or loss arising from the disposal of a subsidiaryand 
• any changes in the fair value of contingent consideration payable in  
 respect of the acquisition of a subsidiary or receivable in respect of  
 the disposal of a subsidiary 
 
foreign currencies
functional and presentational currency
the group’s consolidated financial statements are presented in pounds 
sterling items included in the financial statements of each of the 
group’s subsidiaries are measured using the functional currency of the 
primary economic environment in which the subsidiary operates
transactions and balances
transactions in foreign currencies are recorded at the rates of 
exchange prevailing on the dates of the transactions monetary assets 
and liabilities denominated in foreign currencies are reported at the 
rates of exchange prevailing at the balance sheet date exchange 
differences on retranslating monetary assets and liabilities are 
recognised in the income statement except where they relate to 
qualifying cash flow hedges or net investment hedges in which case 
exchange differences are recognised in other comprehensive income 
foreign subsidiaries
the results of foreign subsidiaries are translated at the average rates 
of exchange for the period assets and liabilities of foreign subsidiaries 
are translated at the rates of exchange prevailing at the balance sheet 
date exchange differences arising from the retranslation of the results 
and opening net assets of foreign subsidiaries are recognised as a 
separate component of equity in hedging and translation reserves 
exchange differences on borrowings designated as net investment 
hedges of foreign subsidiaries are also recognised in hedging and 
translation reserves 
when a foreign subsidiary is sold the cumulative exchange differences 
relating to the retranslation of the net investment in the foreign 
subsidiary are recognised in the income statement as part of the gain 
or loss on disposal this applies only to exchange differences recorded 
in equity after 1 january 2004 exchange differences arising prior to  
1 january 2004 remain in equity on disposal as permitted by ifrs 1 
‘first time adoption of international financial reporting standards’ 
goodwill and fair value adjustments arising from the acquisition of a 
foreign subsidiary are treated as assets and liabilities of the subsidiary 
and are retranslated at the rates of exchange prevailing at the balance 
sheet date
1 basis of preparation
meggitt plc is a public limited company listed on the london stock 
exchange domiciled in the united kingdom and incorporated in 
england and wales with the registered number 432989 its registered 
office is at atlantic house aviation park west bournemouth 
international airport christchurch dorset bh23 6ew
meggitt plc is the parent company of a group whose principal 
activities during the year were the design and manufacture of high 
performance components and subsystems for aerospace defence 
and other specialist markets including energy medical industrial 
test and automotive 
the consolidated financial statements of the group have been prepared 
in accordance with international financial reporting standards 
‘ifrss’ as adopted by the european union and the companies act 
2006 applicable to companies reporting under ifrs the consolidated 
financial statements have been prepared on a going concern basis 
under the historical cost convention as modified by the revaluation of 
certain financial assets and financial liabilities including derivative 
instruments at fair value
2 summary of significant accounting policies
the principal accounting policies adopted by the group in the 
preparation of the consolidated financial statements are set out below 
these policies have been applied consistently to all periods presented 
unless stated otherwise 
 
basis of consolidation
the group financial statements consolidate the financial statements of 
the company and all of its subsidiaries a subsidiary is an entity over 
which the group has the power to govern its financial and operating 
policies the existence and nature of potential voting rights that are 
currently available to the group are considered when determining 
whether the entity is a subsidiary the results of subsidiaries acquired 
are consolidated from the date on which control passes to the group 
the results of subsidiaries disposed are consolidated up to the date on 
which control passes from the group 
the cost of an acquisition is the fair value of consideration provided 
including the fair value of any contingent consideration as measured at 
the acquisition date subsequent changes to the fair value of contingent 
consideration are recorded in the income statement identifiable 
assets and liabilities of an acquired business that meet the conditions 
for recognition under ifrs 3 are recognised at their fair value at the 
date of acquisition to the extent the cost of an acquisition exceeds the 
fair value of net assets acquired the difference is recorded as 
goodwill to the extent the fair value of net assets acquired exceeds the 
cost of an acquisition the difference is recorded immediately in the 
income statement acquisition related expenses are  recognised in the 
income statement as incurred
when a subsidiary is acquired the fair values of its identifiable assets 
and liabilities are finalised within 12 months of the acquisition date all 
fair value adjustments are recorded with effect from the date of 
acquisition and consequently may result in the restatement of 
previously reported financial results
when a subsidiary is disposed the difference between the fair value of 
consideration received or receivable and the value at which net assets 
of the subsidiary were recorded immediately prior to disposal is 
recognised in the income statement any contingent consideration 
receivable is measured at fair value at the date of disposal in 
determining the gain or loss to be recognised contingent 
consideration is measured at fair value at each subsequent balance 
sheet date with any changes in fair value recorded in the income 
statement 80
meggitt plc re port and accounts 2013
notes to the consolidated financial statements continued
exceptional operating items
items which are significant by virtue of their size or nature which are 
considered nonrecurring and which are excluded from the underlying 
profit measures used by the board to monitor and measure the 
underlying performance of the group see note 10 are classified as 
exceptional operating items they include for instance adjustments to 
the fair value of contingent consideration payable in respect of an 
acquired business or receivable in respect of a disposed business 
costs directly attributable to the acquisition or disposal of businesses 
the costs of integrating significant acquisitions significant site 
consolidation and other restructuring costs and gains or losses made 
on the disposal of businesses additionally in 2013 given its 
significance and nonrecurring nature the raw material supply issue 
described in note 11 has been treated as an exceptional operating item 
exceptional operating items are included within the appropriate 
consolidated income statement category but are highlighted separately 
in the notes to the financial statements 
 
intangible assets
goodwill 
goodwill represents the excess of the cost of an acquisition over the fair 
value of the group’s share of identifiable net assets acquired and 
liabilities and contingent liabilities assumed goodwill is tested annually 
for impairment and also whenever events or changes in circumstances 
indicate the carrying value may not be recoverable goodwill is carried 
at cost less amortisation charged prior to 1 january 2004 less 
accumulated impairment losses in the event the subsidiary to which 
goodwill relates is disposed of its attributable goodwill is included in 
the determination of the gain or loss on disposal
research and development
research expenditure is recognised as an expense in the income 
statement as incurred development costs incurred on projects where 
the related expenditure is separately identifiable measurable and 
management are satisfied as to the ultimate technical and commercial 
viability of the project based on all relevant available information are 
recognised as an intangible asset capitalised development costs are 
carried at cost less accumulated amortisation and any impairment 
amortisation is charged over the periods expected to benefit typically 
up to 10 years commencing with the launch of the product 
development costs not meeting the criteria for capitalisation are 
expensed as incurred
programme participation costs
programme participation costs consist of incentives given to original 
equipment manufacturers in connection with their selection of the 
group’s products for installation onto new aircraft where the group 
has obtained principal supplier status these incentives comprise cash 
payments andor the supply of initial manufactured parts on a free of 
charge or deeply discounted basis programme participation costs are 
recognised as an intangible asset and carried at cost less accumulated 
amortisation and any impairment amortisation is charged over the 
periods expected to benefit from receiving the status of principal 
supplier through the sale of replacement parts typically up to 15 
years 
2 summary of significant accounting policies continued
segment reporting
operating segments are those segments for which results are 
reviewed by the group’s chief operating decision maker ‘codm’ to 
assess performance and make decisions about resources to be 
allocated the codm has been identified as the board the group has 
determined that its current segments are meggitt aircraft braking 
meggitt systems meggitt control systems meggitt polymers  
composites meggitt sensing systems and the meggitt equipment 
group 
the principal profit measure reviewed by the codm is ‘underlying 
operating profit’ as defined in note 10 a segmental analysis of 
underlying operating profit is accordingly provided in the notes to the 
financial statements 
segmental information on assets is provided in respect of ‘trading 
assets’ which are defined to exclude from total assets amounts which 
the codm does not review on a segmental level excluded assets 
comprise centrally managed trading assets goodwill other intangible 
assets excluding software assets derivative financial instruments 
deferred tax assets current tax recoverable and cash and cash 
equivalents
no segmental information is provided in respect of liabilities as no 
such measure is reviewed by the codm  
 
revenue recognition
revenue represents the fair value of consideration received or 
receivable in respect of goods and services provided in the normal 
course of business to external customers net of trade discounts 
returns and sales related taxes 
sale of goods
revenue is recognised when the significant risks and rewards of 
ownership have transferred to the customer managerial involvement 
and control of the goods is not retained by the group the revenue and 
costs associated with the sale can be measured reliably and the 
collection of related receivables is probable in the majority of 
instances these conditions are met when delivery to the customer 
takes place in a minority of instances ‘bill and hold’ arrangements 
exist whereby revenue is recorded prior to delivery but only when the 
customer has accepted title to the goods the goods are separately 
identifiable and available for delivery on terms agreed with the 
customer and normal credit terms apply
contract accounting revenue
the group is usually able to reliably estimate the outcome of a contract 
at inception and accordingly recognises revenue and cost of sales by 
reference to the stage of completion of the contract revenue is 
typically measured by applying to the total contract revenue the 
proportion costs incurred in the period for work performed bear to the 
total estimated contract costs where it is not possible to reliably 
estimate the outcome of a contract revenue is recognised equal to the 
costs incurred provided recovery of such costs is probable if total 
contract costs are forecast to exceed total contract revenue then the 
expected loss is recorded immediately in the income statement
revenue from services
revenue is recognised by reference to the stage of completion of the 
contract for ‘costplus fixed fee’ contracts revenue is recognised 
equal to the costs incurred plus an appropriate proportion of the fee 
agreed with the customer for other contracts stage of completion is 
typically measured by reference to contractual milestones achieved 
number of aircraft flying hours or number of aircraft landings
revenue from funded research and development
revenue is recognised according to the stage of completion of the 
contract the stage of completion is typically measured by reference to 
contractual milestones achieved 81
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
taxation
tax payable is based on taxable profit for the period calculated using 
tax rates enacted or substantively enacted at the balance sheet date
deferred tax is provided in full using the liability method on temporary 
differences between the tax bases of assets and liabilities and their 
corresponding book values as recorded in the group’s financial 
statements deferred tax is provided on unremitted earnings of foreign 
subsidiaries except where the group can control the remittance and it 
is probable that the earnings will not be remitted in the foreseeable 
future deferred tax assets are recognised only to the extent it is 
probable that taxable profits will be available against which deductible 
temporary differences can be utilised where deferred tax arises on 
the initial recognition of an asset or liability other than in a business 
combination and the recognition gives rise to no impact on taxable 
profit or loss then deferred tax is not recognised deferred tax is 
calculated using tax rates enacted or substantively enacted at the 
balance sheet date
current tax and deferred tax are recognised in the income statement 
other comprehensive income or directly in equity depending on where 
the item to which they relate has been recognised
impairment of noncurrent nonfinancial assets
assets are reviewed for impairment annually and also whenever events 
or changes in circumstances indicate the carrying value may not be 
recoverable to the extent the carrying value exceeds the recoverable 
amount the difference is recorded as an expense in the income 
statement the recoverable amount used for impairment testing is the 
higher of the value in use and fair value less costs of disposal for the 
purpose of impairment testing assets are grouped at the lowest level 
for which there are separately identifiable cash flows which are largely 
independent of cash flows from other assets or groups of assets at 
each balance sheet date previously recorded impairment losses other 
than any relating to goodwill are reviewed and if no longer required 
reversed with a corresponding credit to the income statement
inventories
inventories are recorded at the lower of cost and net realisable value 
cost represents materials direct labour other direct costs and related 
production overheads based on normal operating capacity and is 
determined using the firstin firstout fifo method net realisable 
value is based on estimated selling price less further costs expected 
to be incurred to completion and disposal 
when a subsidiary is acquired finished goods are valued at fair value 
which is typically estimated selling price less costs of disposal and a 
reasonable profit allowance for the selling effort work in progress is 
also valued at fair value at acquisition which is typically estimated 
selling price less costs to complete costs of disposal and a reasonable 
profit allowance for work not yet completed when this inventory is 
subsequently disposed post acquisition the fair value is charged to the 
income statement the difference between the fair value of the 
inventory disposed and its actual cost of manufacture is excluded from 
the underlying profit measures used by the board to monitor and 
measure the underlying performance of the group see note 10
provision is made for obsolete slow moving or defective items where 
appropriate and for unrealised profits on items of intergroup 
manufacture 
2 summary of significant accounting policies continued
other intangible assets
a intangible assets acquired as part of a business combination
for acquisitions the group recognises intangible assets separately 
from goodwill provided they are separable or arise from contractual or 
other legal rights and their fair value can be measured reliably 
intangible assets are initially recognised at fair value which is 
regarded as their cost intangible assets are subsequently held at cost 
less accumulated amortisation and any provision for impairment 
where the intangible assets recognised have finite lives their cost is 
amortised on a straightline basis over those lives the nature of 
intangible assets recognised and their estimated useful lives are as 
follows
customer relationships  up to 25 years
technology   up to 25 years
trade names and trademarks  up to 25 years
order backlogs  over period of backlog  
                                                                          typically up to 3 years
amortisation of intangible assets acquired as part of a business 
combination is excluded from the underlying profit measures used by 
the board to monitor and measure the underlying performance of the 
group see note 10
b other purchased intangible assets
purchased licences trademarks patents and software are carried at 
cost less accumulated amortisation amortisation is charged on a 
straightline basis over their estimated useful economic life typically 
over periods up to 10 years 
property plant and equipment
property plant and equipment is recorded at cost less accumulated 
depreciation and any impairment except for land which is shown at 
cost less any impairment cost includes expenditure directly 
attributable to the acquisition of the asset depreciation is calculated 
on a straightline basis over the estimated useful lives of the assets as 
follows
freehold buildings  up to 50 years
leasehold property  over period of lease
plant and machinery  3 to 10 years
furnaces  up to 20 years
fixtures and fittings  3 to 10 years
motor vehicles 4 to 5 years
assets’ residual values and useful lives are reviewed annually and 
adjusted if appropriate
when property plant and equipment is disposed the difference 
between sale proceeds net of related costs and the carrying value of 
the asset is recognised in the income statement
borrowing costs
borrowing costs directly attributable to the construction or production 
of qualifying assets are capitalised as part of the cost of those assets 
until such time as the assets are substantially ready for their intended 
use qualifying assets are those that necessarily take a substantial 
period of time to get ready for their intended use which would generally 
be at least twelve months all other borrowing costs are recognised in 
the income statement in the period in which they are incurred 82
meggitt plc re port and accounts 2013
notes to the consolidated financial statements continued
provisions
provision is made for environmental legal and regulatory liabilities 
onerous contracts and product warranty claims when the group has a 
present obligation as a result of past events it is more likely than not 
that an outflow of economic benefits will be required to settle the 
obligation and the amount can be reliably estimated provisions are 
discounted to present value where the impact is significant using a 
pretax rate the discount rate used is based on current market 
assessments of the time value of money adjusted to reflect any risks 
specific to the obligation which have not been reflected in the 
undiscounted provision the impact of the unwinding of discounting is 
recognised in the income statement within net finance costs
retirement benefit schemes
for defined benefit schemes pension costs and the costs of providing 
other postretirement benefits principally healthcare are charged to 
the income statement in accordance with the advice of qualified 
independent actuaries past service costs are recognised immediately 
in the income statement unless the changes are dependent on 
employees remaining in service for a particular period in which case 
costs are recognised on a straightline basis over that period 
retirement benefit obligations represent for each scheme the 
difference between the fair value of the schemes’ assets and the 
present value of the schemes’ defined benefit obligations measured at 
the balance sheet date the defined benefit obligation is calculated 
annually by independent actuaries using the projected unit credit 
method the present value of the defined benefit obligation is 
determined by discounting the defined benefit obligations using 
interest rates of high quality corporate bonds denominated in the 
currency in which the benefits will be paid and with terms to maturity 
comparable with the terms of the related defined benefit obligations 
remeasurement gains and losses are recognised in the period in 
which they arise in other comprehensive income
for defined contribution schemes payments are recognised in the 
income statement when they fall due the group has no further 
obligations once the contributions have been paid
sharebased compensation
the group operates a number of equitysettled and cashsettled 
sharebased compensation schemes
for equitysettled schemes the fair value of an award is measured at 
the date of grant and reflects any marketbased vesting conditions 
non marketbased vesting conditions are excluded from the fair value 
of the award at the date of grant the group estimates the number of 
awards expected to vest as a result of non marketbased vesting 
conditions and the fair value of this estimated number of awards is 
recognised as an expense in the income statement on a straightline 
basis over the period for which services are received at each balance 
sheet date the group revises its estimate of the number of awards 
expected to vest as a result of non marketbased vesting conditions 
and adjusts the amount recognised cumulatively in the income 
statement to reflect the revised estimate when awards are exercised 
and the company issues new shares the proceeds received net of any 
directly attributable transaction costs are credited to share capital 
nominal value and share premium
for cashsettled schemes the total amount recognised is based on the 
fair value of the liability incurred the fair value of the liability is 
remeasured at each balance sheet date with changes in fair value 
recognised in the income statement for the period
2 summary of significant accounting policies continued
trade receivables
trade receivables are stated initially at fair value then measured at 
amortised cost less any provisions for impairment provisions for 
impairment are recognised in the income statement when there is 
objective evidence the group will not be able to collect all amounts due 
according to the original terms of the receivables the impairment 
recorded is the difference between the carrying value of the receivable 
and its estimated future cash flows discounted where appropriate 
cash and cash equivalents
cash and cash equivalents include cash in hand and deposits held at  
call with banks bank overdrafts are disclosed as current liabilities 
within bank and other borrowings except where the group participates 
in offset arrangements with certain banks whereby cash and overdraft 
amounts are offset against each other
trade payables
trade payables are initially recognised at fair value and subsequently 
held at amortised cost trade payables are not interest bearing
leases
leases where the group has substantially all the risks and rewards  
of ownership are classified as finance leases finance leases are 
capitalised at commencement of the lease at the lower of fair value of 
the leased asset and present value of the minimum lease payments 
each lease payment is allocated between the liability and finance 
charges so as to achieve a constant rate on the finance balance 
outstanding the corresponding lease obligations net of finance 
charges are included in liabilities assets acquired under finance 
leases are depreciated over the shorter of the useful life of the asset or 
the lease term
leases in which a significant portion of the risks and rewards of 
ownership are retained by the lessor are classified as operating 
leases payments made under operating leases net of any incentives 
received from the lessor are charged to the income statement on a 
straightline basis over the period of the lease 
dividends
interim dividends are recognised as liabilities when they are approved 
by the board final dividends are recognised as liabilities when they 
are approved by the shareholders
borrowings
borrowings are initially recognised at fair value being proceeds 
received less directly attributable transaction costs incurred 
borrowings are generally subsequently measured at amortised cost 
with any transaction costs amortised to the income statement over the 
period of the borrowings using the effective interest method certain 
borrowings however are designated as fair value through profit and 
loss at inception if the group has interest rate derivatives in place 
which have the economic effect of converting fixed rate borrowings into 
floating rate borrowings such borrowings are measured at fair value 
at each balance sheet date with any movement in fair value recorded in 
the income statement within net operating costs movements in fair 
value are excluded from the underlying profit measures used by the 
board to monitor and measure the underlying performance of the 
group see note 10
any related interest accruals are included within borrowings 
borrowings are classified as current liabilities unless the group has an 
unconditional right to defer settlement of the liability for at least 12 
months after the balance sheet date 83
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
derivatives that do not meet the criteria for hedge accounting
where derivatives do not meet the criteria for hedge accounting 
changes in fair value are recognised immediately in the income 
statement the group utilises a large number of foreign currency 
forward contracts to mitigate against currency fluctuations the group 
has determined the additional costs of meeting the extensive 
documentation requirements in order to apply hedge accounting under 
ias 39 ‘financial instruments recognition and measurement’ are not 
merited gains and losses arising from measuring these contracts at 
fair value are excluded from the underlying profit measures used by 
the board to monitor and measure the underlying performance of the 
group see note 10 
share capital
ordinary shares are classified as equity incremental costs directly 
attributable to the issue of new shares are deducted from the proceeds 
recorded in equity 
own shares represent shares in the company that are held by an 
independently managed employee share ownership plan 
consideration paid for own shares including any incremental directly 
attributable costs is recorded as a deduction from equity when such 
shares are sold any consideration received net of any directly 
attributable costs is recorded within equity
adoption of new and revised accounting standards
during the year the following new accounting standard and revision 
and amendment to existing standards became effective and had a 
significant impact on the group’s consolidated financial statements
• ias 19 revised 2011 ‘employee benefits’ the impact of this  
 revision on the group’s consolidated financial statements including  
 restatement of comparatives is set out in note 44  
• ias 1 amended ‘presentation of financial statements’ the main  
 change for the group arising from this amendment is with regard to  
 the way in which items are presented in the consolidated statement  
 of comprehensive income items are now required to be presented  
 according to whether or not they may be reclassified to the income  
 statement in future accounting periods and 
• ifrs 13 ‘fair value measurement’ this standard has not had any  
 significant impact on amounts recognised in the consolidated  
 financial statements it has however required additional disclosures  
 which are set out in note 29 
recent accounting developments
a number of new standards and amendments and revisions to existing 
standards have been published and are mandatory for the group’s 
future accounting periods they have not been adopted early in these 
consolidated financial statements none of these are expected to have 
a significant impact on the consolidated financial statements when they 
are adopted except as disclosed below
• ifrs 9 ‘financial instruments’ the main change is expected to  
 relate to the way in which movements in the fair value of the group’s  
 fixed rate borrowings attributable to changes in the group’s own  
 credit risk are accounted for the group is yet to assess the full  
 impact of ifrs 9 which becomes effective for accounting periods  
 beginning on or after 1 january 2015 this standard is subject to  
 endorsement by the european union
2 summary of significant accounting policies continued
derivative financial instruments and hedging
the group uses derivative financial instruments to hedge its exposure 
to interest rate risk and foreign currency transactional risk derivative 
financial instruments are recognised at fair value on the date the 
derivative contract is entered into and are subsequently remeasured  
at fair value at each balance sheet date using values determined 
indirectly from quoted prices that are observable for the asset or 
liability 
the method by which any gain or loss arising from remeasurement  
is recognised depends on whether the instrument is designated as  
a hedging instrument and if so the nature of the item hedged the 
group recognises an instrument as a hedging instrument by 
documenting at inception of the instrument the relationship between 
the instrument and the hedged item and the objectives and strategy for 
undertaking the hedging transaction to be designated as a hedging 
instrument an instrument must also be assessed at inception and on 
an ongoing basis to be highly effective in offsetting changes in fair 
values or cash flows of hedged items 
to the extent the maturity of the financial instrument is more than 12 
months from the balance sheet date the fair value is reported as a 
noncurrent asset or noncurrent liability all other derivative financial 
instruments are reported as current assets or current liabilities 
fair value hedges
changes in fair value of derivative financial instruments that are 
designated and qualify as fair value hedges are recognised in the 
income statement within net operating costs together with changes in 
fair value of the hedged item any difference between the movement in 
fair value of the derivatives and the hedged item is excluded from the 
underlying profit measures used by the board to monitor and measure 
the underlying performance of the group see note 10 the group 
currently only applies fair value hedge accounting to the hedging of 
fixed interest rate risk on borrowings
cash flow hedges
changes in fair value of the effective portion of derivative financial 
instruments that are designated and qualify as cash flow hedges are 
initially recognised in other comprehensive income changes in fair 
value of any ineffective portion are recognised immediately in the 
income statement within net operating costs 
to the extent changes in fair value are recognised in other 
comprehensive income they are recycled to the income statement in 
the periods in which the hedged item affects the income statement 
the group currently only applies cash flow hedge accounting to the 
hedging of floating interest rate risk on borrowings
if the forecast transaction to which the cash flow hedge relates is  
no longer expected to occur the cumulative gain or loss previously 
recognised in other comprehensive income is transferred to the income 
statement immediately if the hedging instrument is sold expires or no 
longer meets the criteria for hedge accounting the cumulative gain or 
loss previously recognised in other comprehensive income is 
transferred to the income statement when the forecast transaction is 
recognised in the income statement
net investment hedges
hedges of net investments of foreign subsidiaries are accounted for in 
a similar way to cash flow hedges changes in fair value of the effective 
portion of any hedge are recognised in other comprehensive income 
changes in fair value of any ineffective portion are recognised 
immediately in the income statement within net operating costs 
cumulative gains and losses previously recognised in other 
comprehensive income are transferred to the income statement if the 
foreign subsidiary to which they relate is disposed 84
meggitt plc re port and accounts 2013
notes to the consolidated financial statements continued
3 financial risk management
financial risk factors
the group’s operations expose it to a number of financial risks including market risk principally foreign exchange risk and interest rate risk 
credit risk and liquidity risk these risks are managed by a centralised treasury department in accordance with board approved objectives 
policies and authorities regular reports monitor exposures and assist in managing the associated risks 
market risk
foreign exchange risk
the group operates internationally and is subject to foreign exchange risks on future commercial transactions and the retranslation of the results 
of and net investments in foreign subsidiaries the principal exposures arise with respect to the us dollar against the pound sterling to mitigate 
risks associated with future commercial transactions the group policy is to hedge known and certain forecast transaction exposures based on 
historical experience and projections the group hedges at least 70 of the next 12 months anticipated exposure and can hedge up to five years 
ahead details of hedges in place are provided in note 30 the group does not currently hedge exposures arising from the retranslation of the 
results of foreign subsidiaries the group uses borrowings denominated in the relevant currencies to hedge its net investments in foreign 
subsidiaries 
interest rate risk
the group has borrowings issued at both fixed and floating rates of interest borrowings issued at fixed rates expose the group to fair value 
interest rate risk whereas borrowings issued at floating rates expose the group to cash flow interest rate risk the group’s policy is to maintain at 
least 25 of its net debt at fixed rates the group mitigates interest rate risks through swaps which have the economic effect of converting fixed 
rate borrowings into floating rate borrowings and floating rate borrowings into fixed rate borrowings details of hedges in place are provided in 
note 30
credit risk
the group is not subject to significant concentration of credit risk with exposure spread across a large number of customers across the world in 
addition many of the group’s principal customers are either government departments or large multinationals policies are maintained to ensure 
the group makes sales to customers with an appropriate credit history letters of credit or other appropriate instruments are put in place to 
reduce credit risk where considered necessary the group is also subject to credit risk on the counterparties to its other financial instruments 
which it controls through only dealing with highly rated counterparties and netting transactions on settlement wherever possible
liquidity risk
the group maintains sufficient committed facilities to meet projected borrowing requirements based on cash flow forecasts additional 
headroom is maintained to protect against the variability of cash flows and to accommodate small bolton acquisitions key ratios are monitored 
to ensure continued compliance with covenants contained in the group’s principal credit agreements the following table analyses the group’s 
nonderivative financial liabilities and derivative assets and liabilities at the balance sheet date the amounts disclosed in the table are the 
contractual undiscounted cash flows
 
2013
 less than 
 1 year 
 £’m
 12 years 
 
 £’m
 25 years 
 
 £’m
greater than 
 5 years 
 £’m
 total 
 
 £’m
trade and other payables 3166 12 22 18 3218
bank and other borrowings 41 424 3704 2419 6588
interest payments on borrowings 206 191 482 286 1165
obligations under finance leases see note 27 34 10 28 127 199
derivative financial instruments
inflows 82 85 235 158 560
outflows 07 07 19 – 33
total 3372 559 4020 2692 10643
 
2012
 less than 
 1 year 
 £’m
 12 years 
 
 £’m
 25 years 
 
 £’m
greater than 
 5 years 
 £’m
 total 
 
 £’m
trade and other payables 3399 21 24 18 3462
bank and other borrowings 1237 04 3412 2470 7123
interest payments on borrowings 237 206 559 417 1419
obligations under finance leases see note 27 31 03 08 39 81
derivative financial instruments
inflows 752 83 248 217 1300
outflows 685 07 21 04 717
total 4837 158 3776 2731 11502
  excludes social security and other taxes of £125 million 2012 £120 million see note 25
 assumes no change in interest rates from those prevailing at year end 85
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
3 financial risk management continued
sensitivity analysis
the group’s principal exposures in relation to market risks are to changes in the exchange rate between the us dollar and pound sterling and to 
changes in us interest rates the table below illustrates the sensitivity of the group’s results to changes in these key variables at the balance 
sheet date the analysis covers only financial assets and liabilities held at the balance sheet date and is made on the basis of the hedge 
designations in place on those dates and assuming no hedge ineffectiveness 
 2013 2012
 
 income 
 statement 
 £’m
 equity 
 
 £’m
 income 
 statement 
 £’m
 equity 
 
 £’m
usdgbp exchange rate  10 252 361 184 504
us yield curve  1 46 41 32 50
the impact on equity from movements in the exchange rate comprises £463 million 2012 £576 million in respect of us dollar net debt offset by 
£102 million 2012 £72 million in respect of other financial assets and liabilities however as all us dollar debt is designated as a net investment 
hedge this element of the impact is entirely offset by the retranslation of foreign subsidiaries
capital risk management
the group’s objective when managing its capital structure is to minimise the cost of capital while maintaining adequate capital to protect against 
volatility in earnings and net asset values the strategy is designed to maximise shareholder return over the long term the relative proportion of 
debt to equity will be adjusted over the medium term depending on the cost of debt compared to equity and the level of uncertainty facing the 
industry and the group the group’s current posttax average cost of capital is approximately 8 2012 8 the group’s committed credit 
facilities contain two principal financial covenants the group has complied with these covenant requirements for the year ended 31 december 
2013 further details on the covenant requirements and the group’s performance against these can be found on page 29 of the chief financial 
officer’s review the capital structure of the group at the balance sheet date is as follows 
 
 2013 
 £’m
 2012 
 £’m
net debt see note 40 5646 6425
total equity 20764 19054
debtequity  272 337
4 critical accounting estimates and judgements
in applying the group’s accounting policies set out in note 2 the group is required to make certain estimates and judgements concerning the 
future these estimates and judgements are regularly reviewed and revised as necessary the estimates and judgements that have the most 
significant effect on the amounts included in these financial statements are as follows
goodwill
each year the group carries out impairment tests of goodwill which require estimates to be made of the value in use of its cash generating units 
‘cgus’ these value in use calculations are dependent on estimates of future cash flows longterm growth rates and appropriate discount rates 
to be applied to future cash flows of the cgus further details on these estimates and sensitivities of the carrying value of goodwill to these 
estimates are provided in note 18
fair value of intangible assets acquired in a business combination
on the acquisition of a business it is necessary to attribute fair values to any intangible assets acquired provided they meet the criteria to be 
recognised the fair values of these intangible assets are dependent on estimates of attributable future revenues margins cash flows and 
appropriate discount rates to be applied to future cash flows identified intangibles are subject to impairment testing at least annually or if events 
or changes in circumstances indicate the carrying value may not be recoverable estimates are also required of the useful life of the identified 
intangible assets and these estimates are reviewed at least annually and revised if appropriate the group takes advice from third parties in 
determining the fair values and useful lives of intangibles arising on significant acquisitions see note 20 for further details
development costs and programme participation costs
the group capitalises development costs and programme participation costs provided they meet certain criteria costs are only capitalised 
where the group is satisfied as to the ultimate commercial viability of the project based on available information projects typically involve 
longterm relationships on aircraft platforms and in assessing commercial viability estimates need to be made of aircraft volumes aftermarket 
revenues which are dependent on aircraft utilisation fleet lives and operator service routines costs of manufacture and in the case of 
development costs the costs to complete the development activity capitalised costs are subject to impairment testing at least annually and 
where headroom is limited or if events or changes in circumstances indicate the carrying value may not be recoverable more frequently see note 
19 for further details 86
meggitt plc re port and accounts 2013
4 critical accounting estimates and judgements continued
environmental matters
the group is involved in the investigation and remediation of certain sites for which it has been identified as a potentially responsible party under 
us law advice is received by the group from its environmental consultants and legal advisors to assist in the determination of the timing and 
estimation of the costs the group may incur in respect of such claims and appropriate provisions are made the group has extensive insurance 
arrangements in place to mitigate the impact of historical environmental events on the group to the extent estimates in respect of claims change 
as more information becomes available adjustments are made to the carrying value of these provisions and if the costs are determined to be 
covered by insurance to the amounts recoverable from insurers see note 31 for further details
legal and regulatory
the group is subject to legal proceedings and other claims arising in the ordinary course of business the group is required to assess the 
likelihood of any adverse judgements or outcomes as well as potential ranges of probable losses a determination of the provisions required for 
these matters is based on a careful analysis of each individual issue with the assistance of outside legal counsel however actual losses incurred 
could differ from the original estimates see note 31 for further details
onerous contracts
the group makes provision for any expected losses arising from onerous contracts which require estimates to be made of future contract 
revenues margins potential claims from third parties and cash flows these estimates are dependent on a number of factors including 
anticipated sales volumes future pricing production costs and the outcome of negotiations with third parties to the extent these estimates 
change as more information becomes available adjustments are made to the carrying value of these provisions however actual losses incurred 
could differ from the original estimates see note 31 for further details
retirement benefit obligations
the liability recognised in respect of retirement benefit obligations is dependent on a number of estimates including those relating to mortality 
inflation salary increases and the rate at which liabilities are discounted external actuarial advice is taken with regard to the most appropriate 
assumptions to use during 2013 the determination of the discount rate for the uk scheme was impacted by a reduction in the number of high 
quality uk corporate bonds following the uk sovereign credit rating downgrade advice from the group’s uk actuary was taken as to the extent to 
which adjustments should be made within the reduced population of high quality bonds for individual bonds with significantly different yields how 
to reflect the shortage of bonds at the long end of the yield curve and whether to expand the population based on issue size further details on 
these estimates and sensitivities of the retirement benefit obligations to these estimates are provided in note 33
income taxes
in determining the group’s provisions for income tax and deferred tax it is necessary to consider transactions in a small number of key tax 
jurisdictions for which the ultimate tax determination is uncertain to the extent the final outcome differs from the tax that has been provided 
adjustments will be made to income tax and deferred tax balances held in the period the determination is made if the actual outcome of events 
differed by 10 from the estimates made at 31 december 2013 the impact on the tax charge would be approximately £40 million judgements 
also need to be made as to the extent to which deferred tax assets and liabilities can be offset against one another see note 32 for further details
5 revenue
the group’s revenue is analysed as follows
 
 2013 
 £’m
 2012 
 £’m
sale of goods 14288 14172
contract accounting revenue 1101 1151
revenue from services 739 486
revenue from funded research and development 245 249
total 16373 16058
notes to the consolidated financial statements continued 87
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
6 segmental analysis 
analysis by operating segment 
the group manages its businesses under the key segments of meggitt aircraft braking systems meggitt control systems meggitt polymers  
composites meggitt sensing systems and the meggitt equipment group 
• meggitt aircraft braking systems is a leading supplier of aircraft wheels brakes and brake control systems
• meggitt control systems is a leading supplier of pneumatic fluid control thermal management and electromechanical equipment and 
subsystems 
• meggitt polymers  composites is a leading specialist in fuel containment engineered aircraft sealing solutions and technical polymers 
electrothermal ice protection and complex composite structures and assemblies 
• meggitt sensing systems is a leading provider of highperformance sensing and conditionmonitoring solutions for highvalue rotating 
machinery and other assets
• the meggitt equipment group was created to enable a set of strong technologically distinct businesses to market their offerings to specialist  
customers while benefiting from the group’s investment in shared services and common processes the division supplies aircraft fire 
protection and control systems avionics combat systems livefire and simulation training heat transfer equipment for offshore oil and gas 
power generation linear motion control aircraft safety and security equipment and automotive and industrial control electronics
year ended 31 december 2013
the key performance measure reviewed by the codm is underlying operating profit a detailed reconciliation of operating profit to underlying operating 
profit is provided in note 10
  
 meggitt 
  aircraft 
 braking 
 systems 
 £’m
 meggitt 
  control 
 systems 
 
 £’m
 meggitt 
  polymers  
 composites 
 
 £’m
 meggitt 
  sensing 
 systems 
 
 £’m
 meggitt 
  equipment 
 group 
 
 £’m
 total 
 
 
 
 £’m
gross segment revenue 3304 2065 1829 2420 6814 16432
intersegment revenue – 09 19 16 15 59
revenue from external customers 3304 2056 1810 2404 6799 16373
underlying operating profit see note 10 1224 504 302 343 1599 3972
items not affecting underlying operating profit see note 10      969
operating profit see note 10 3003
finance income see note 12 03
finance costs see note 13      312
net finance costs 309
profit before tax 2694
tax see note 14      371
profit for the year      2323
exceptional operating items see note 11 15 53 – 65 151 284
amortisation of intangible assets see notes 19 and 20 745 91 67 76 285 1264
depreciation see note 21 81 28 32 71 110 322
  central costs are allocated using a variety of bases designed to reflect the beneficial relationship between the costs and the segments  
bases include headcount payroll costs gross assets and revenue
 of the total amortisation in the year £507 million has been charged to underlying operating profit as defined in note 10
 of the total depreciation in the year £314 million has been charged to underlying operating profit as defined in note 10
the group’s largest customer accounts for 66 of revenue £1083 million revenue from this customer arises across all segments
  
 meggitt 
  aircraft 
 braking 
 systems 
 £’m
 meggitt 
  control 
 systems 
 
 £’m
 meggitt 
  polymers  
 composites 
 
 £’m
 meggitt 
  sensing 
 systems 
 
 £’m
 meggitt 
  equipment 
 group 
 
 £’m
 total 
 
 
 
 £’m
additions to noncurrent assets
development costs see note 19 248 116 25 151 162 702
programme participation costs see note 19 315 32 – – 10 357
other purchased intangible assets 04 49 08 16 18 95
property plant and equipment 40 35 27 151 246 499
total 607 232 60 318 436 1653
    relates to those noncurrent assets included within segmental trading assets reviewed by the codm 88
meggitt plc re port and accounts 2013
6 segmental analysis continued
as at 31 december 2013
  
 total 
 £’m
meggitt aircraft braking systems 5022
meggitt control systems 1639
meggitt polymers  composites 878
meggitt sensing systems 2311
meggitt equipment group 3563
total segmental trading assets 13413
centrally managed trading assets 1765
goodwill see note 18 14571
other intangible assets 6341
derivative financial instruments – noncurrent see note 30 355
deferred tax assets see note 32 91
derivative financial instruments – current see note 30 112
current tax recoverable 28
cash and cash equivalents see note 24 1161
total assets  37837
 centrally managed trading assets principally include amounts recoverable from insurers in respect of environmental issues relating to former  
 sites other receivables and property plant and equipment of central companies  
 in 2013 trading assets reviewed by the codm include software assets since software assets were not included in trading assets reviewed by  
 the codm in 2012 the prior year comparatives have not been restated
year ended 31 december 2012 restated  see note 44
the key performance measure reviewed by the codm is underlying operating profit a detailed reconciliation of operating profit to underlying 
operating profit is provided in note 10
 
 meggitt 
  aircraft 
 braking 
 systems 
 £’m
 meggitt 
  control 
 systems 
 
 £’m
 meggitt 
  polymers  
 composites 
 
 £’m
 meggitt 
  sensing 
 systems 
 
 £’m
 meggitt 
  equipment 
 group 
 
 £’m
 total 
 
 
 £’m
gross segment revenue 3112 2158 1895 2414 6527 16106
intersegment revenue – 09 23 12 04 48
revenue from external customers 3112 2149 1872 2402 6523 16058
underlying operating profit see note 10 1171 498 338 362 1552 3921
items not affecting underlying operating profit see note 10     707
operating profit see note 10 3214
finance income see note 12 20
finance costs see note 13     421
net finance costs 401
profit before tax 2813
tax see note 14     458
profit for the year     2355
exceptional operating items see note 11 24 29 02 73 63 133
amortisation of intangible assets see notes 19 and 20 711 51 65 83 318 1228
depreciation see note 21 84 29 32 75 99 319
  central costs are allocated using a variety of bases designed to reflect the beneficial relationship between the costs and the segments bases 
include headcount payroll costs gross assets and revenue
  of the total amortisation in the year £422 million has been charged to underlying operating profit as defined in note 10
the group’s largest customer accounts for 70 of revenue £1123 million revenue from this customer arises across all segments
 
 meggitt 
  aircraft 
 braking 
 systems 
 £’m
 meggitt 
  control 
 systems 
 
 £’m
 meggitt 
  polymers  
 composites 
 
 £’m
 meggitt 
  sensing 
 systems 
 
 £’m
 meggitt 
  equipment 
 group 
 
 £’m
 total 
 
 
 £’m
additions to noncurrent assets
development costs see note 19 167 121 07 92 135 522
programme participation costs see note 19 334 27 – – – 361
property plant and equipment see note 21 47 36 31 76 176 366
total 548 184 38 168 311 1249
   relates to those noncurrent assets included within segmental trading assets reviewed by the codm
notes to the consolidated financial statements continued 89
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
6 segmental analysis continued
as at 31 december 2012
  
 total 
 £’m
meggitt aircraft braking systems 4795
meggitt control systems 1450
meggitt polymers  composites 793
meggitt sensing systems 1902
meggitt equipment group 3142
total segmental trading assets 12082
centrally managed trading assets 1433
goodwill see note 18 14942
other intangible assets see note 20 7789
derivative financial instruments – noncurrent see note 30 498
deferred tax assets see note 32 1002
derivative financial instruments – current see note 30 50
current tax recoverable 02
cash and cash equivalents see note 24 1049
total assets 38847
 centrally managed trading assets principally include amounts recoverable from insurers in respect of environmental issues relating to former  
 sites other receivables and property plant and equipment of central companies 
analysis by geography
 
 2013 
 £’m
 2012 
 £’m
revenue
uk 1658 1624
rest of europe 3651 3437
united states of america 8117 8184
rest of world 2947 2813
total 16373 16058
revenue is based on the location of the customer 
 
 2013 
 £’m
 2012 
 £’m
noncurrent assets
uk 7144 7088
rest of europe 2156 2069
united states of america 19530 20066
rest of world 80 81
total 28910 29304
segmental noncurrent assets are based on the location of the assets they exclude trade and other receivables derivative financial instruments 
and deferred tax 90
meggitt plc re port and accounts 2013
7 operating profit
operating profit is stated after chargingcrediting
 
 2013 
 £’m
 2012 
 £’m
raw materials and consumables used 4506 4697
changes in inventories of finished goods and work in progress 59 228
employee costs see note 9 5661 5427
research and development costs expensed as incurred 402 449
amortisation of capitalised development costs see note 19 169 116
amortisation of programme participation costs see note 19 254 232
amortisation of other purchased intangible assets see note 20 98 74
amortisation of intangible assets acquired in business combinations see note 10 743 806
depreciation see note 21 322 319
gainloss on disposal of property plant and equipment 11 03
exceptional operating items see note 11 284 133
financial instruments see note 10 61 234
net foreign exchange lossgain 21 24
operating lease rentals 143 155
other operating income 46 48
8 auditor remuneration
payable to pricewaterhousecoopers llp and network firms
 
 2013 
 £’m
 2012 
 £’m
fees payable to the company’s auditor and its associates
for the audit of the company and consolidated financial statements in respect of the current year 08 09
for the audit of the company and consolidated financial statements in respect of the prior year 01 –
 for the audit of the company’s subsidiaries pursuant to legislation 06 05
for audit related assurance services 01 01
total 16 15
9 employee information
 
 2013 
 £’m
 2012 
 £’m
employee costs including executive directors
wages and salaries 4410 4222
social security costs 791 766
retirement benefit costs see note 33 341 316
sharebased payment expense see note 35 119 123
total 5661 5427
details of directors’ remuneration is provided in the directors’ remuneration report on pages 47 to 67 which forms part of these financial 
statements
 
 2013 
 number
 2012 
 number
average monthly number of persons employed including executive directors
meggitt aircraft braking systems 1191 1216
meggitt control systems 1136 1161
meggitt polymers  composites  1979 2092
meggitt sensing systems 1623 1600
meggitt equipment group 4525 4242
corporate including shared services and centres of excellence 581 520
total 11035 10831
notes to the consolidated financial statements continued 91
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
10 reconciliations between profit and underlying profit
underlying profit is used by the board to monitor and measure the underlying trading performance of the group it excludes certain items as 
described below 
 note
 2013 
 
 £’m
 2012 
 restated 
 £’m
operating profit 3003 3214
exceptional operating items see note 11 284 133
amortisation of intangible assets acquired in business combinations a 743 806
disposal of inventory revalued in business combinations b 03 02
financial instruments c 61 234
adjustments to operating profit 969 707
underlying operating profit 3972 3921
profit before tax 2694 2813
adjustments to operating profit per above 969 707
net interest expense on retirement benefit obligations see note 33 d 115 140
adjustments to profit before tax 1084 847
underlying profit before tax 3778 3660
profit for the year 2323 2355
adjustments to profit before tax per above 1084 847
tax effect of adjustments to profit before tax 438 347
adjustments to profit for the year 646 500
underlying profit for the year 2969 2855
  of the adjustments to operating profit £288 million 2012 £54 million relating to exceptional operating items and £03 million 2012 £02 
million relating to the disposal of inventory revalued in business combinations has been charged to cost of sales with the balance of £678 
million 2012 £651 million included within net operating costs
a the group excludes from its underlying profit figures the amortisation of intangible assets acquired in business combinations 
 
 2013 
 £’m
 2012 
 £’m
amortisation of other intangible assets see note 20 841 880
less amortisation of other purchased intangible assets see note 20 98 74
amortisation of intangible assets acquired in business combinations 743 806
b  ifrs 3 requires finished goods acquired in a business combination to be valued at fair value which is typically estimated selling price less costs 
of disposal and a reasonable profit allowance for the selling effort work in progress acquired in a business combination is also valued at fair 
value which is typically estimated selling price less costs to complete costs of disposal and a reasonable profit allowance for work still to be 
carried out the fair value of acquired inventory is thus significantly higher than the actual cost of manufacture of the same items built post 
acquisition the value of which includes no profit element the difference between the fair value of the inventory disposed of and its actual cost 
of manufacture is excluded from the group’s underlying profit figures 
c  although the group uses foreign currency forward contracts to hedge against foreign currency exposures it has decided that the costs of 
meeting the extensive documentation requirements to be able to apply hedge accounting under ias 39 ‘financial instruments recognition and 
measurement’ are not merited the group’s underlying profit figures exclude amounts which would not have been recorded if hedge accounting 
had been applied 
  where interest rate derivatives do not qualify to be hedge accounted movements in the fair value of the derivatives are excluded from 
underlying profit where interest rate derivatives do qualify to be hedge accounted any difference between the movement in the fair value of 
derivatives and in the fair value of fixed rate borrowings is excluded from underlying profit 
 
 2013 
 £’m
 2012 
 £’m
movement in the fair value of foreign currency forward contracts 120 201
impact of retranslating net foreign currency assets and liabilities at spot rate 08 05
movement in the fair value of interest rate derivatives 186 64
movement in the fair value of fixed rate borrowings 135 26
financial instruments – gain 61 234
d  as referred to in note 44 in 2013 the group has adopted ias 19 revised 2011 ‘employee benefits’ this revised standard has led to the net 
pension finance cost recorded in the income statement becoming more significant as net pension finance cost is a noncash nontrading item 
the board has decided to exclude it from the underlying profit measures it uses to monitor and measure the underlying trading performance of 
the group prior year underlying profit measures have been restated accordingly 92
meggitt plc re port and accounts 2013
11 exceptional operating items 
income statement cash expenditure
 note
  
 2013 
 £’m
 2012 
 £’m
 2013 
 £’m
 2012 
 £’m
site consolidations a 82 98 64 60
integration of pacific scientific aerospace ‘pacsci’ b 72 48 46 56
gain on disposal of businesses c 90 32 05 09
raw material supply issue d 200 – 31 –
business acquisition expenses 07 13 04 14
other 13 06 12 08
exceptional operating items 284 133 162 147
a  this principally relates to the consolidation of the group’s two north american sensor businesses onto a single new site in california usa 
and the consolidation of the group’s two uk avionics businesses onto a single existing site in hampshire uk these two consolidations were 
substantially completed in 2013
b  the integration of pacsci has now been substantially completed following the consolidation in 2013 of the group’s fire suppression business 
acquired as part of the pacsci acquisition onto the existing site of its fire detection business in california usa
c  on 23 may 2013 the group disposed of the shares of meggitt addison inc and realised a gain of £149 million on 20 december 2013 the 
group disposed of the shares of the sunbank family of companies llc and realised a loss of £59 million see note 43 cash expenditure 
relates to business disposal expenses which have been treated as an exceptional operating item proceeds from the disposal of businesses are 
reported separately as part of cash outflow from investing activities see note 43
d  on 1 november 2013 the group announced it had identified an issue relating to the supply from a vendor of nonconforming raw material in one 
of our businesses a solution is in place including where necessary the replacement of the relevant parts over the next few years the cost of 
this issue is estimated to be £200 million
the tax credit in respect of exceptional operating items was £107 million 2012 £54 million
12 finance income
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
interest on bank deposits 01 02
unwinding of interest on other receivables – 17
other finance income 02 01
finance income 03 20
13 finance costs
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
interest on bank borrowings 35 58
interest on senior notes 154 194
interest on obligations under finance leases 11 11
unwinding of discount on provisions – 17
net interest expense on retirement benefit obligations see note 33 115 140
amortisation of debt issue costs 12 17
less amounts capitalised in the cost of qualifying assets see notes 19 and 20 15 16
finance costs 312 421
notes to the consolidated financial statements continued 93
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
14 tax
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
current tax – current year 380 498
current tax – adjustment in respect of prior years 65 49
deferred tax – origination and reversal of temporary differences 110 52
deferred tax – effect of changes in tax rates 54 43
total taxation 371 458
the finance act 2012 included legislation to reduce the main rate of corporation tax in the uk to 23 with effect from 1 april 2013 the finance 
act 2013 included legislation to further reduce the main rate of corporation tax in the uk to 21 with effect from 1 april 2014 and to 20 with 
effect from 1 april 2015 as these changes were substantively enacted during the year they have been reflected in the consolidated financial 
statements the impact of these changes on net deferred tax liabilities at 31 december 2013 profit for the year underlying and statutory and 
comprehensive income for the year has not been significant
reconciliation of total tax charge
a reconciliation of the notional tax charge based on average standard rates of tax weighted in proportion to accounting profits to the actual tax 
charge is as follows
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
profit on ordinary activities before tax at uk corporation tax rate of 2325 2012 245 as restated 626 689
effects of  
different tax rates of subsidiaries operating in other jurisdictions 141 166
permanent differences 201 196
temporary differences 15 94
changes in statutory tax rates 54 43
tax credits and incentives 44 32
prior year credits 82 32
total taxation 371 458
  the sensitivity of the tax charge to changes in the tax rate is such that a one percentage point increase or reduction in the tax rate would cause 
the total taxation charge for 2013 to increase or reduce respectively by approximately £27 million
tax relating to components of other comprehensive income
2013 2012 
restated
 
 before 
 tax 
 £’m
 tax credit 
 charge 
 £’m
 after 
 tax 
 £’m
 before 
 tax 
 £’m
 tax credit 
 charge 
 £’m
 after 
 tax 
 £’m
current tax – currency translation movements 319 02 317 551 07 558
deferred tax – currency translation movements 53 02 51 04 02 02
deferred tax – remeasurement of retirement benefit obligations 468 216 252 40 23 17
deferred tax – cash flow hedge movements 19 03 16 58 15 43
other comprehensive income 115 215 100 565 17 582
current tax 02 07 
deferred tax 217  10 
total 215  17 
tax relating to items recognised directly in equity
 
 2013 
 £’m
 2012 
 £’m
current tax credit relating to sharebased payment expense 53 
deferred tax creditcharge relating to sharebased payment expense 33 31
total 86 31 94
meggitt plc re port and accounts 2013
15 earnings per ordinary share
earnings per ordinary share ‘eps’ is calculated by dividing the profit attributable to owners of the company by the weighted average number of 
shares in issue during the year the weighted average number of shares used excludes any shares bought by the group and held during the year 
by an independently managed employee share ownership plan trust see note 36 the weighted average number of own shares excluded was nil 
million shares for both this and the prior year the calculation of diluted eps adjusts the weighted average number of shares to reflect the 
assumption that all potentially dilutive ordinary shares convert for the group this means assuming all share awards in issue are exercised 
 
 2013 
 profit 
  
 £’m
 2013 
 shares 
  
 number ‘m
 2013 
 eps 
  
 pence
 2012 
 profit 
 restated 
 £’m
 2012 
 shares 
  
 number ‘m
 2012 
 eps 
 restated 
 pence
basic eps 2323 7911 294 2355 7823 301
potential effect of dilutive ordinary shares – 131 05 – 100 04
diluted eps 2323 8042 289 2355 7923 297
 profit for the year attributable to equity owners of the company
underlying eps is based on underlying profit for the year see note 10 and the same number of shares as is used in the calculation of basic eps it 
is reconciled to basic eps below
 
 2013 
 
 pence
 2012 
 restated 
 pence
basic eps 294 301
adjust for effects of
exceptional operating items 22 10
amortisation of intangible assets acquired in business combinations 56 64
financial instruments 07 23
net interest expense on retirement benefit obligations 10 13
underlying basic eps 375 365
diluted underlying eps is based on underlying profit for the year see note 10 and the same number of shares used in the calculation of diluted 
eps diluted underlying eps for the year was 369 pence 2012 360 pence as restated
16 dividends
 
 2013 
 £’m
 2012 
 £’m
in respect of earlier years – 569
in respect of 2012
 interim of 360p per share – 281
 final of 820p per share 644 –
in respect of 2013
 interim of 395p per share 312 –
dividends paid 956 850
less paid as scrip dividend see note 41 200 132
dividends paid in cash 756 718
a final dividend in respect of 2013 of 880p per share 2012 820p amounting to an estimated total final dividend of £702 million 2012 £644 
million is to be proposed at the annual general meeting on 7 may 2014 this dividend is not reflected in these financial statements as it is has not 
been approved by the shareholders at the balance sheet date
notes to the consolidated financial statements continued 95
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
17 related party transactions
transactions between the company and its subsidiaries have been eliminated on consolidation the remuneration of key management personnel 
of the group which is defined as members of the board and the management board is set out below 
 
 2013 
 £’m
 2012 
 £’m
salaries and other shortterm employee benefits 68 85
retirement benefit expense 04 03
sharebased payment expense 32 46
total 104 134
interests of key management personnel including executive directors in share schemes operated by the group at the balance sheet date are set 
out below
 
 2013 
 average 
 award 
 price 
 pence
 2013 
 number 
 outstanding 
 
  ‘m
 2012 
 average 
 award 
 price 
 pence
 2012 
 number 
 outstanding 
 
 ‘m
share options 34866 01 18249 01
share appreciation rights – equitysettled 35323 57 28574 101
equity participation plan shares na 28 na 36
full details of all elements in the remuneration package of each director together with directors’ share interests and share awards are given in 
the directors’ remuneration report on pages 47 to 67 which forms part of these financial statements
18 goodwill
 
 2013 
 £’m
 2012 
 £’m
cost at 1 january 14942 15440
exchange rate adjustments 196 537
businesses acquired see note 42 90 39
businesses disposed see note 43 265 –
cost at 31 december 14571 14942
goodwill is tested for impairment annually or more frequently if there is any indication of impairment no impairment charge was required in the 
year 2012 £nil and the cumulative impairment charge recognised to date is £nil 2012 £nil the total amount of goodwill and other intangible 
assets acquired as part of a business combination in the year that are expected to be deductible for tax purposes is £248 million 2012 £nil
for the purpose of impairment testing goodwill is allocated to the group’s cash generating units ‘cgus’ which principally comprise its individual 
business operations goodwill is initially allocated in the year a business is acquired to cgus expected to benefit from the acquisition 
subsequent adjustments are made to this allocation to the extent operations to which goodwill relates are transferred between cgus 
an analysis of goodwill by principal cgu is shown below
 
 2013 
 £’m
 2012 
 £’m
meggitt aircraft braking systems ‘mabs’ 6653 6758
meggitt north hollywood inc 1772 1656
meggitt safety systems incpacific scientific htl 1296 1320
meggitt sensing systems ‘mss’ 829 739
meggitt rockmart inc 686 699
meggitt training systems inc 629 641
other 2706 3129
total 14571 14942
  during the year the group determined that the cash flows of certain individual business operations were now so closely related to those of 
other business unit operations within the group they no longer met the definition of a cgu accordingly meggitt safety systems inc and 
pacific scientific htl are now treated as a single cgu and mss sbu is treated also as a single cgu  96
meggitt plc re port and accounts 2013
18 goodwill continued 
for each cgu the group has determined its recoverable amount from value in use calculations the value in use calculations are based on cash 
flow forecasts derived from the most recent budgets and plans for the next five years as approved by management in december 2013 cash flows 
for periods beyond five years are extrapolated using estimated growth rates the resultant cash flows are discounted using a pretax discount 
rate appropriate for the relevant cgu the key assumptions for the value in use calculations are shown below
•  sales volumes selling prices and cost increases over the five years covered by management’s detailed plans sales volumes are based on 
industry forecasts and management estimates for the businesses in which each cgu operates including forecasts for oem deliveries of large 
jets regional aircraft and business jets air traffic growth and military spending by the us dod and other major governments selling prices 
and cost increases are based on past experience and management expectations of future changes in the market overall a cautious approach 
to volume levels selling prices and cost increases has been taken given the continued global economic uncertainty the extent to which these 
assumptions affect each principal cgu with a significant level of goodwill are described below
  mabs meggitt north hollywood inc meggitt safety systems incpacific scientific htl and mss are broadly spread across both civil aerospace 
and military platforms with meggitt north hollywood inc and mss also operating in the energy sector mabs is a leading supplier of wheels 
brakes and brake control systems particularly for regional aircraft business jets and military aircraft meggitt north hollywood inc designs 
and manufactures fluid control devices and systems for most aircraft types and has a higher content on large jets meggitt safety systems inc
pacific scientific htl designs and manufactures fire protection and control systems for large regional business and military aircraft mss is a 
leading provider of highperformance sensing and conditionmonitoring solutions for highvalue rotating machinery and other assets and 
within the aerospace sector has a higher content on large jets all four cgus have significant oem and aftermarket revenue derived from sole 
source positions with the aftermarket where platform lives can be up to thirty years for civil aircraft and longer for military representing the 
greater proportion of revenue except for mss which has a higher oem content meggitt rockmart inc and meggitt training systems inc both 
operate mainly in military markets the principal customer of meggitt rockmart inc is the us dod to whom meggitt rockmart inc are a 
leading supplier of flexible fuel tanks meggitt training systems inc supplies integrated live and virtual training packages for armed forces and 
law enforcement agencies across the world 
  in civil aerospace growth in capacity terms measured in available seat kilometres ask’s is forecast to grow in line with the longterm trend 
rate of 5 which together with the group’s growing fleet and price increases should drive an increase in aftermarket revenue of 8 to 9 per 
annum over the medium term the group’s continuing confidence in air passenger travel growth is supported by the sustained high levels of 
order intake at boeing and airbus large jet deliveries increased by 8 in 2013 and the group expects good delivery growth over the next 5 
years underpinned by continued strong recent order intake and a backlog at boeing and airbus which equates to over 7 years of deliveries at the 
current production rate deliveries of regional aircraft increased by 11 in 2013 with modest growth anticipated over the next few years driven 
principally by demand for 7090 seat aircraft on which the group has a strong shipset content total business jet deliveries decreased by 5 in 
2013 but deliveries of supermidsize and longrange aircraft where the group benefits from particularly strong market positions grew 
strongly further growth is anticipated in this market over the next 5 years driven by increasing internationalisation of the customer base and 
the ongoing improvement in the us economy in military markets defence budgets are likely to remain under pressure over the medium term 
sequestration has been implemented in the us and although the effect in 2014 is unlikely to be as severe as initially anticipated a cautious 
stance on nearterm revenue growth has been assumed however the group has key positions on future growth platforms and in the absence 
of any clarity on where cuts will ultimately fall continues to anticipate average compound organic military growth of around 2 per annum in 
the medium term
•  growth rates used for periods beyond those covered by management’s detailed budgets and plans growth rates are derived from 
management’s estimates which take into account the longterm nature of the industry in which each cgu operates external industry forecasts 
of longterm growth in the aerospace and defence sectors the extent to which a cgu has sole source position on platforms where it is able to  
share in a continuing stream of highly profitable aftermarket revenues the maturity of the platforms supplied by the cgu and the technological  
content of the cgu’s products for the purpose of impairment testing a conservative approach has been used and where the derived rate is  
higher than the longterm gdp growth rates for the countries in which the cgu operates uk 24 2012 23 us 24 2012 24 the  
latter has been used
•  discount rates applied to future cash flows the group’s pretax weighted average cost of capital wacc was used as the foundation for 
determining the discount rates to be applied the wacc was then adjusted to reflect risks specific to the cgu not already reflected in the future 
cash flows for that cgu the discount rates used were as follows mabs 103 2012 108 meggitt north hollywood inc 110 2012 
111 meggitt safety systems incpacific scientific htl 108 2012 96 meggitt rockmart inc 107 2012 112 and meggitt training 
systems inc 109 2012 100 the discount rates used for ‘other’ cgu’s ranged between 93 to 109 2012 84 to 113
a sensitivity analysis was carried out for each cgu to determine the extent to which its assumptions would need to change for the calculated 
recoverable amounts from value in use to fall below the carrying value of goodwill of the cgu management has concluded that no reasonably 
foreseeable change in the key assumptions used in the impairment model would result in a significant impairment charge being recorded in the 
financial statements the principal cgu with the least headroom in percentage terms is mabs ‘other’ goodwill of £2706 million 2012 £3129 
million relates to approximately 10 individual cgus for which sensitivities at the aggregated level are also provided below  
to require an impairment in the group financial statements one of the following would be required
 
 mabs 
 
 other 
 
reduction in estimates of cash flows more than 15 20
reduction of longterm growth rates more than 80 75
increase in the discount rate applied to future cash flows more than 15 15
notes to the consolidated financial statements continued 97
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
19 development costs and programme participation costs
 
 de v el opment 
 costs 
 
 £’m
 programme 
 participation 
 costs 
 £’m
at 1 january 2012
cost 2303 3018
accumulated amortisation 445 1043
net book amount 1858 1975
year ended 31 december 2012
opening net book amount 1858 1975
exchange rate adjustments 62 68
additions 522 361
interest capitalised 13 –
amortisation 116 232
net book amount 2215 2036
at 31 december 2012
cost 2760 3269
accumulated amortisation 545 1233
net book amount 2215 2036
year ended 31 december 2013
opening net book amount 2215 2036
exchange rate adjustments 38 33
additions 702 357
disposals 20 –
interest capitalised 15 –
amortisation 169 254
net book amount 2705 2106
at 31 december 2013
cost 3407 3560
accumulated amortisation 702 1454
net book amount 2705 2106
 charged to net operating costs in respect of development costs and to cost of sales in respect of programme participation costs
interest has been capitalised using the average rate payable on the group’s floating rate borrowings of 16 2012 16 
the net book amount of development costs include £911 million 2012 £725 million in respect of meggitt aircraft braking systems which have 
an estimated weighted average remaining life of 91 years 2012 92 years the net book amount of programme participation costs includes 
£2027 million 2012 £1995 million in respect of meggitt aircraft braking systems which have an estimated weighted average remaining life of 
84 years 2012 91 years 98
meggitt plc re port and accounts 2013
20 other intangible assets
 
 customer 
 r elationships 
 
  
 £’m
 technology 
 
 
  
 £’m
 order 
 backlogs 
 
  
 £’m
 trade 
 names and 
 trademarks 
  
 £’m
 other 
 purchased 
 
  
 £’m
 total 
 
 
 
 £’m
at 1 january 2012
cost 8632 2467 114 309 734 12256
accumulated amortisation 2297 808 82 163 248 3598
net book amount 6335 1659 32 146 486 8658
year ended 31 december 2012
opening net book amount 6335 1659 32 146 486 8658
exchange rate adjustments 228 59 01 06 13 307
business acquired 07 29 01 – – 37
additions – – – – 279 279
disposals – – – – 01 01
interest capitalised – – – – 03 03
amortisation – net operating costs see note 10 591 163 29 23 74 880
net book amount 5523 1466 03 117 680 7789
at 31 december 2012
cost 8321 2405 112 299 984 12121
accumulated amortisation 2798 939 109 182 304 4332
net book amount 5523 1466 03 117 680 7789
year ended 31 december 2013
opening net book amount 5523 1466 03 117 680 7789
exchange rate adjustments 58 14 – – 04 76
business acquired see note 42 100 56 01 – 01 158
businesses disposed see note 43 95 11 – 06 – 112
additions – – – – 155 155
amortisation – net operating costs see note 10 547 170 03 23 98 841
net book amount 4923 1327 01 88 734 7073
at 31 december 2013
cost 8079 2388 109 279 1108 11963
accumulated amortisation 3156 1061 108 191 374 4890
net book amount 4923 1327 01 88 734 7073
  acquired in business combinations amortisation of these items is excluded from the group’s underlying profit figures see note 10 
  principally relates to software costs amortisation of £14 million 2012 £nil has been charged to exceptional operating items and is excluded  
  from the group’s underlying profit figures see note 10
no interest has been capitalised in the year in 2012 interest was capitalised using the average rate payable on the group’s floating rate 
borrowings of 16
the net book amount of customer relationships include £3502 million 2012 £3915 million in respect of meggitt aircraft braking systems which 
have an estimated weighted average remaining life of 100 years 2012 110 years the net book amount of technology includes £702 million 
2012 £784 million in respect of meggitt aircraft braking systems which have an estimated weighted average remaining life of 100 years 2012 
110 years
notes to the consolidated financial statements continued 99
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
21 property plant and equipment
 
 land and 
 buildings 
 
 £’m
 plant 
 equipment 
and vehicles 
 £’m
 total 
 
 
 £’m
at 1 january 2012
cost 1648 3722 5370
accumulated depreciation 504 2567 3071
net book amount 1144 1155 2299
year ended 31 december 2012
opening net book amount 1144 1155 2299
exchange rate adjustments 25 35 60
business acquired 25 16 41
additions 69 297 366
disposals 01 04 05
depreciation 70 249 319
net book amount 1142 1180 2322
at 31 december 2012
cost 1692 3807 5499
accumulated depreciation 550 2627 3177
net book amount 1142 1180 2322
year ended 31 december 2013
opening net book amount 1142 1180 2322
exchange rate adjustments 08 11 19
business acquired see note 42 – 07 07
businesses disposed see note 43 01 40 41
additions 219 296 515
disposals 01 06 07
depreciation 65 257 322
net book amount 1286 1169 2455
at 31 december 2013
cost 1859 3850 5709
accumulated depreciation 573 2681 3254
net book amount 1286 1169 2455
 depreciation of £08 million 2012 £nil has been charged to exceptional operating items and is excluded from the group’s underlying profit   
 figures see note 10
the group’s obligations under finance leases see note 27 are secured by the lessors’ title to the leased assets which have a carrying amount of 
£44 million included within land and buildings 2012 £45 million and £02 million 2012 £14 million included within plant equipment and 
vehicles 
22 inventories
 
 2013 
 £’m
 2012 
 £’m
contract costs incurred 108 88
less progress billings 30 42
net contract costs 78 46
raw materials and boughtin components 1151 1078
manufacturing work in progress 1279 1239
finished goods and goods for resale 484 549
total 2992 2912
the cost of inventories recognised as an expense and included in cost of sales was £9237 million 2012 £8962 million the cost of inventories 
recognised as an expense includes £23 million 2012 £72 million in respect of writedowns of inventory to net realisable value and has been 
reduced by £74 million 2012 £49 million in respect of the reversal of writedowns made in previous years 100
meggitt plc re port and accounts 2013
23 trade and other receivables
 
 2013 
 £’m
 2012 
 £’m
trade receivables 2446 2402
amounts recoverable on contracts 359 146
prepayments and accrued income 122 104
other receivables 1261 1378
total 4188 4030
less noncurrent portion
other receivables 899 988
noncurrent portion 899 988
current portion 3289 3042
other receivables includes £959 million 2012 £1027 million in respect of insurance receivables arising on environmental issues pertaining to 
businesses sold by whittaker corporation prior to its acquisition by the group see note 31 of which £105 million 2012 £107 million is shown as 
current
trade receivables are stated after a provision for impairment of £41 million 2012 £66 million other balances within trade and other receivables 
do not contain impaired assets the provision for impairment against trade receivables is based on a specific risk assessment taking into account 
past default experience and is analysed as follows
 
 2013 
 £’m
 2012 
 £’m
at 1 january 66 72
exchange rate adjustments 01 02
businesses disposed 05 
credit to income statement – net operating costs 21 04
at 31 december 41 66
at 31 december 2013 trade receivables of £618 million 2012 £500 million were past due but not impaired these relate to a number of 
independent customers for whom there is no recent history of default the ageing analysis of these trade receivables is as follows
 
 2013 
 £’m
 2012 
 £’m
up to 3 months overdue 532 427
over 3 months overdue 86 73
total 618 500
the maximum exposure to credit risk at the balance sheet date is the fair value of each class of receivable reported above the group does not 
hold any collateral as security
trade and other receivables are denominated in the following currencies
 
 2013 
 £’m
 2012 
 £’m
sterling 792 693
us dollar 2893 2798
euro 417 421
other 86 118
total 4188 4030
notes to the consolidated financial statements continued 101
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
24 cash and cash equivalents
 
 2013 
 £’m
 2012 
 £’m
cash at bank and on hand 1010 949
shortterm bank deposits 151 100
total 1161 1049
cash and cash equivalents are subject to interest at floating rates the credit quality of cash and cash equivalents is as follows
 
 2013 
 £’m
 2012 
 £’m
spmoody’s rating
aaa 07 10
aa 290 278
a 817 725
bbb 47 36
total 1161 1049
25 trade and other payables – current
 
 2013 
 £’m
 2012 
 £’m
payments received on account 422 426
trade payables 1282 1216
social security and other taxes 125 120
accrued expenses 478 478
deferred consideration relating to acquired businesses – 02
other payables 984 1277
total 3291 3519
26 trade and other payables – noncurrent
 
 2013 
 £’m
 2012 
 £’m
deferred consideration relating to acquired businesses 29 29
other payables 23 34
total 52 63
27 obligations under finance leases
minimum  
lease payments 
present value  
of minimum  
lease payments
 
 2013 
 £’m
 2012 
 £’m
 2013 
 £’m
 2012 
 £’m
amounts payable under finance leases
in one year or less 34 43 24 31
in more than one year but not more than five years 38 37 13 11
in more than five years 127 139 38 39
total 199 219 75 81
less future finance charges 124 138
present value of lease obligations 75 81
less noncurrent portion 51 50 
current portion 24 31
obligations under finance leases are principally us dollar denominated the weighted average period to maturity is 110 years 2012 112 years 
and the weighted average interest rate is 139 2012 160 102
meggitt plc re port and accounts 2013
28 bank and other borrowings
 
 2013 
 £’m
 2012 
 £’m
current
bank loans 39 122
other loans 33 1148
total current 72 1270
noncurrent
bank loans 2458 1701
other loans 4202 4422
total noncurrent 6660 6123
   
total 6732 7393
analysis of bank and other borrowings repayable
in one year or less 72 1270
in more than one year but not more than five years 4137 3433
in more than five years 2523 2690
total 6732 7393
bank and other borrowings are stated after deduction of unamortised debt issue costs of £39 million 2012 £51 million debt issue costs are 
written off over the period of the facility to which they relate the group has no secured borrowings 2012 £01 million secured by specific land 
and buildings of the group 
the group has the following committed facilities
2013 2012
 
 drawn 
 £’m
 undrawn 
 £’m
 total 
 £’m
 drawn 
 £’m
 undrawn 
 £’m
 total 
 £’m
senior notes 2013 usd 700 million 2012 usd 2500 million 423 – 423 1538 – 1538
senior notes usd 6000 million 3623 – 3623 3691 – 3691
syndicated credit facility usd 7000 million 1864 2361 4225 938 3368 4306
syndicated credit facility usd 4000 million 622 1793 2415 801 1660 2461
total 6532 4154 10686 6968 5028 11996
the group issued usd 2500 million of loan notes to private placement investors in 2003 the notes were in two tranches as follows usd 1800 
million carried an interest rate of 536 and were repaid in 2013 and usd 700 million carry an interest rate of 546 and are due for repayment in 
2015
the group issued usd 6000 million of loan notes to private placement investors in 2010 the notes are in four tranches as follows usd 2000 
million carry an interest rate of 462 and are due for repayment in 2017 usd 1250 million carry an interest rate of 502 and are due for 
repayment in 2020 usd 1500 million carry an interest rate of 517 and are due for repayment in 2020 and usd 1250 million carry an interest 
rate of 512 and are due for repayment in 2022 
the group has a usd 7000 million syndicated revolving credit facility which matures in 2016 and a usd 4000 million syndicated revolving credit 
facility which matures in 2017 at 31 december 2013 the amounts drawn under revolving credit facilities were £2486 million 2012 £1739 million 
represented by borrowings denominated in us dollars of £970 million 2012 £801 million in euros of £623 million 2012 £nil in swiss francs 
of £783 million 2012 £938 million and in sterling of £110 million 2012 £nil borrowings under the facilities are subject to interest at floating 
rates 
the committed facilities available at each balance sheet date expire as follows
2013 2012
 
 drawn 
 £’m
 undrawn 
 £’m
 total 
 £’m
 drawn 
 £’m
 undrawn 
 £’m
 total 
 £’m
in one year or less – – – 1107 – 1107
in more than one year but not more than five years 4117 4154 8271 3400 5028 8428
in more than five years 2415 – 2415 2461 – 2461
total 6532 4154 10686 6968 5028 11996
the group also has various uncommitted facilities with its relationship banks
notes to the consolidated financial statements continued 103
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
28 bank and other borrowings continued
the fair value of bank and other borrowings is as follows
 2013 2012
 
 book  
 value 
 £’m
 fair  
 value 
 £’m
 book  
  value 
 £’m
 fair  
  value 
 £’m
current 72 72 1270 1287
noncurrent 6660 6763 6123 6284
total 6732 6835 7393 7571
after taking account of the financial derivatives that alter the interest and currency basis of the financial liabilities entered into by the group the 
interest rate exposure on gross bank and other borrowings is  
as at 31 december 2013 fixed rate borrowings
 
 floating 
 
 £’m
 fixed 
 
 £’m
 nonint er es t 
 bearing 
 £’m
 total 
 
 £’m
 weighted 
 average 
 int er es t r at e 
 
 
 
 weighted 
 average 
 period 
 for which 
 rate is fixed 
 years
us dollar 2627 2596 – 5223 42 43
swiss franc 796 – – 796
euro 623 03 16 642 07 31
sterling 110 – – 110
gross bank and other borrowings 4156 2599 16 6771
less unamortised debt issue costs 32 07 – 39
bank and other borrowings 4124 2592 16 6732
 on 10 june 2013 usd 1800 million of loan notes issued in 2003 were repaid using floating rate borrowings at 31 december 2013 a 5 year  
 floating to fixed interest rate swap has been entered into which has the effect of converting usd 1600 million of the new floating rate  
 borrowings into fixed rate borrowings  
 
as at 31 december 2012
fixed rate borrowings
 
 floating 
 
 £’m
 fixed 
 
 £’m
 noninter est 
 bearing 
 £’m
 total 
 
 £’m
 weighted 
 average 
 interest rate 
 
 
 
 weighted 
 average 
 period 
 for which 
 rate is fixed 
 years
us dollar 2948 2768 – 5716 51 53
swiss franc 938 – – 938
euro 681 01 33 715 59 05
sterling 75 – – 75
gross bank and other borrowings 4642 2769 33 7444
less unamortised debt issue costs 46 05 – 51
bank and other borrowings 4596 2764 33 7393
the weighted average period to maturity for noninterest bearing borrowings is 35 years 2012 38 years 104
meggitt plc re port and accounts 2013
29 financial instruments
as at 31 december 2013
held at fair value held at amortised cost
 
 through 
 profit 
  loss 
 £’m
 derivatives 
 used for 
 hedging 
 £’m
 loans  
 receivables 
 
 £’m
 liabilities 
  
 
 £’m
 total 
 book 
 value 
 £’m
 total 
 fair 
 value 
 £’m
noncurrent
trade and other receivables see note 23 – – 899 – 899 899
derivative financial instruments see note 30 334 21 – – 355 355
current
trade and other receivables – – 3167 – 3167 3167
derivative financial instruments see note 30 112 – – – 112 112
cash and cash equivalents see note 24 – – 1161 – 1161 1161
financial assets 446 21 5227 – 5694 5694
current
trade and other payables – – – 3166 3166 3166
derivative financial instruments see note 30 07 – – – 07 07
obligations under finance leases see note 27 – – – 24 24 24
bank and other borrowings see note 28 – – – 72 72 72
noncurrent
trade and other payables see note 26 – – – 52 52 52
derivative financial instruments see note 30 01 – – – 01 01
obligations under finance leases see note 27 – – – 51 51 51
bank and other borrowings see note 28 2568 – – 4092 6660 6763
financial liabilities 2576 – – 7457 10033 10136
total 2130 21 5227 7457 4339 4442
as at 31 december 2012
held at fair value held at amortised cost
 
 through 
 profit 
  loss 
 £’m
 derivatives 
 used for 
 hedging 
 £’m
 loans  
 receivables 
 
 £’m
 liabilities 
  
 
 £’m
 total 
 book 
 value 
 £’m
 total 
 fair 
 value 
 £’m
noncurrent
trade and other receivables see note 23 – – 988 – 988 988
derivative financial instruments see note 30 498 – – – 498 498
current
trade and other receivables – – 2938 – 2938 2938
derivative financial instruments see note 30 50 – – – 50 50
cash and cash equivalents see note 24 – – 1049 – 1049 1049
financial assets 548 – 4975 – 5523 5523
current
trade and other payables – – – 3399 3399 3399
derivative financial instruments see note 30 27 13 – – 40 40
obligations under finance leases see note 27 – – – 31 31 31
bank and other borrowings see note 28 – – – 1270 1270 1287
noncurrent
trade and other payables see note 26 – – – 63 63 63
derivative financial instruments see note 30 02 – – – 02 02
obligations under finance leases see note 27 – – – 50 50 50
bank and other borrowings see note 28 2749 – – 3374 6123 6284
financial liabilities 2778 13 – 8187 10978 11156
total 2230 13 4975 8187 5455 5633
   excludes prepayments and accrued income of £122 million 2012 £104 million see note 23
 excludes social security and other taxes of £125 million 2012 £120 million see note 25
notes to the consolidated financial statements continued 105
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
29 financial instruments continued
fair value measurement and hierarchy
for trade and other receivables cash and cash equivalents trade and other payables obligations under finance leases and the current element 
of bank and other borrowings fair values approximate to their book values due to the short maturity periods of these financial instruments for 
trade and other receivables allowances are made within the book value for credit risk  
derivative financial instruments measured at fair value is classified as level 2 in the fair value measurement hierarchy as they have been 
determined using significant inputs based on observable market data the fair values of foreign currency forward contracts have been derived 
from forward exchange rates observable at the balance sheet date together with the contractual forward rates the fair values of interest rate 
derivatives have been derived from forward interest rates based on yield curves observable at the balance sheet date together with the  
contractual interest rates
the noncurrent portion of bank and other borrowings measured at fair value is classified as level 3 in the fair value measurement hierarchy as 
it has been determined using significant inputs which are a mixture of those based on observable market data interest rate risk and those not 
based on observable market data credit risk the fair value attributable to interest rate risk has been derived from forward interest rates based 
on yield curves observable at the balance sheet date together with the contractual interest rates and with the credit risk margin kept constant 
the fair value attributable to credit risk has been derived from quotes from lenders for borrowings of similar amounts and maturity periods 
similar methods of valuation have been used to derive the fair value of the noncurrent portion of bank and other borrowings which is held at 
amortised cost but for which a fair value is provided in the table above
there were no transfers of assets or liabilities between levels of the fair value hierarchy during the year
financial liabilities designated as fair value through profit or loss
cumulative changes in the fair value of the noncurrent portion of bank and other borrowings arising from changes in credit risk are as follows 
 
 2013 
 £’m
 2012 
 £’m
fair value at 1 january 100 112
credit to income statement 30 12
fair value at 31 december 70 100
the difference between the fair value and contractual amount at maturity of the noncurrent portion of bank and other borrowings is as follows 
 
 2013  
 £’m
 2012  
 £’m
fair value 2568 2749
difference between fair value and contractual amount at maturity 153 288
contractual amount payable at maturity 2415 2461
 
financial liabilities classified as level 3 in the hierarchy
changes in fair value are as follows 
 
 
 2013 
 £’m
 2012 
 £’m
bank and other borrowings at fair value through profit or loss
at 1 january 2749 2836
exchange rate adjustments 44 125
gainloss recognised in net operating costs 137 38 
at 31 december 2568 2749
the largest movement in credit spread  seen in a six month period since inception of the borrowings is 75 basis points a 75 basis point movement 
in the credit spread used as an input in determining the fair value at 31 december 2013 would impact profit before tax by approximately £100 
million  106
meggitt plc re port and accounts 2013
30 derivative financial instruments
as at 31 december 2013
contract or underlying 
principal amount
fair value 
 
 assets 
 £’m
 liabilities 
 £’m
 assets 
 £’m
 liabilities 
 £’m
interest rate swaps – cash flow hedges 966 – 21 –
interest rate swaps – fair value hedges 2415 – 228 –
foreign currency forward contracts – not hedge accounted 3445 124 218 08
total 6826 124 467 08
less noncurrent portion
interest rate swaps – cash flow hedges 966 – 21 –
interest rate swaps – fair value hedges 2415 – 228 –
foreign currency forward contracts – not hedge accounted 1706 16 106 01
noncurrent portion 5087 16 355 01
current portion 1739 108 112 07
as at 31 december 2012
contract or underlying 
principal amount
fair value 
 
 assets 
 £’m
 liabilities 
 £’m
 assets 
 £’m
 liabilities 
 £’m
interest rate swaps – fair value hedges 2461 – 431 –
interest rate swaps – not hedge accounted – 984 – 02
cross currency swaps – net investment hedges – 681 – 13
foreign currency forward contracts – not hedge accounted 2339 548 117 27
total 4800 2213 548 42
less noncurrent portion
interest rate swaps – fair value hedges 2461 – 431 –
interest rate swaps – not hedge accounted – 984 – 02
foreign currency forward contracts – not hedge accounted 1115 32 67 –
noncurrent portion 3576 1016 498 02
current portion 1224 1197 50 40
interest rate swaps
the total notional principal amount of outstanding interest rate swap contracts at 31 december 2013 is £3381 million 2012 £3445 million of 
which £604 million will expire in 2017 £966 million will expire in 2018 £1056 million will expire in 2020 and £755 million will expire in 2022 the 
contracts are all denominated in usd of the notional principal amount outstanding £966 million 2012 £984 million has the economic effect of 
converting floating rate us dollar borrowings into fixed rate us dollar borrowings and £2415 million 2012 £2461 million has the economic 
effect of converting fixed rate us dollar borrowings into floating rate us dollar borrowings to the extent they meet the criteria for hedge 
accounting the floating rate to fixed rate swap contracts are accounted for as cash flow hedges and the fixed rate to floating rate swap contracts 
as fair value hedges 
cross currency swaps
at 31 december 2012 the group had entered into cross currency swaps which were used to synthetically convert us dollar denominated 
borrowings into euro denominated borrowings to hedge against euro denominated assets of overseas subsidiaries the swaps were accounted 
for as net investment hedges the swaps expired during 2013
foreign currency forward contracts
although the group uses foreign currency forward contracts to hedge against foreign currency exposures it has decided that the costs of 
meeting the extensive documentation requirements to be able to apply hedge accounting under ias 39 ‘financial instruments recognition and 
measurement’ are not merited 
 
 2013 
 assets 
 £’m
 2013 
 liabilities 
 £’m
 2012 
 assets 
 £’m
 2012 
 liabilities 
 £’m
fair value
us dollar forward sales usd£ 174 – 92 25
forward sales denominated in other currencies 44 08 25 02
total 218 08 117 27
notes to the consolidated financial statements continued 107
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
30 derivative financial instruments continued
credit quality of derivative financial assets
the credit quality of derivative financial assets is as follows 
 
 2013 
 £’m
 2012 
 £’m
spmoody’s rating
aa 72 77
a 338 372
bbb 57 99
total 467 548
31 provisions 
 
 environmental  
legal  regulatory 
 a 
 £’m
 onerous 
 contracts 
 b 
 £’m
 warranty 
 costs 
 c 
 £’m
 total 
 
 
 £’m
at 1 january 2013 1637 411 185 2233
exchange rate adjustments 21 04 01 16
business acquired see note 42 03 – 01 04
businesses disposed see note 43 – 01 03 04
additional provision in year – cost of sales – 217 57 274
additional provision in year – net operating costs 105 – – 105
unused amounts reversed – cost of sales 17 166 52 235
unused amounts reversed – net operating costs 159 01 – 160
utilised 141 62 63 266
at 31 december 2013 1407 402 126 1935
 
 2013 
 £’m
 2012 
 £’m
current 443 448
noncurrent 1492 1785
at 31 december 2013 1935 2233
a  provision has been made for known exposures arising from environmental remediation health and safety liabilities product liability 
matters legal proceedings and contractual disputes in a number of businesses the group’s operations and facilities are subject to laws and 
regulations that govern the discharge of pollutants and hazardous substances into the ground air and water as well as the handling storage 
and disposal of such materials and other environmental matters failure to comply with its obligations potentially exposes the group to serious 
consequences including fines other sanctions and limitations on operations the group is involved in the investigation and remediation of 
current and former sites for which it has been identified as a potentially responsible party under us law provision has been made for the 
expected costs arising from these sites based on information currently available a receivable has been established to the extent these costs 
are recoverable under the group’s environmental insurance policies or from other parties see note 23 a number of asbestosrelated claims 
have been made against subsidiary companies of the group to date the amount connected with such claims in any year has not been material 
and many claims are covered fully or partly by existing insurance and indemnities there is a provision for claims which cannot be recovered 
from insurers during the year an administrative settlement was reached with the us government following its investigation of alleged 
violations of us export control laws by certain  subsidiaries  of the group under the terms of the 30month consent agreement meggittusa 
inc was assessed a civil penalty of usd 25 million of which usd 22 million was suspended on condition the government approves certain 
past or future remedial costs incurred or to be incurred by the group’s us subsidiaries in addition the group will be required to implement 
additional future compliance measures no provision is held for the suspended penalty as it is not considered probable that such amounts 
will be payable the provisions are expected to be substantially utilised over the next ten years and are discounted where appropriate using a 
discount rate appropriate to each provision  
b  onerous contracts include lease obligations and trading contracts provision has been made for the estimated rental shortfall in respect of 
properties with onerous lease obligations these will be utilised over the lease terms typically up to five years and are discounted where 
appropriate using a discount rate appropriate to each provision provision has also been made for estimated losses under certain trading 
contracts as described in note 11 during 2013 the group has been made aware of an issue relating to the supply from a vendor of non
conforming raw material in one of our businesses provision has been made for the estimated future costs associated with this matter which 
include the provision of a number of free of charge replacement parts to customers over a period of several years there are a number of 
uncertainties regarding the ultimate amounts that will be payable including the extent to which replacement parts will be required however 
the directors believe based on the information currently available that the ultimate outcome will not be significantly different from that 
recognised during 2013 the group made significant progress in resolving a small number of other contractual matters and accordingly was 
able to reduce or release provisions previously created in respect of these matters onerous trading contract provisions are expected to be 
substantially utilised over the next ten years and are discounted where appropriate using a discount rate appropriate to each provision
c  provision has been made for product warranty claims these provisions are expected to be utilised over the next three years  108
meggitt plc re port and accounts 2013
32 deferred tax 
movements in deferred tax assets and liabilities during the year without taking into consideration the offsetting of balances are as follows 
deferred tax assets
 
 retirement 
 benefit 
 obligations 
 £’m
 other 
 
 
 £’m
 total 
 
 
 £’m
at 1 january 2012 1017 191 1208
exchange rate adjustments 28 03 31
reclassifications – 119 119
charge to income statement restated see note 14 23 78 101
chargecredit to other comprehensive income restated see note 14 23 12 11
charge to equity see note 14 – 31 31
at 31 december 2012 943 210 1153
exchange rate adjustments 01 01 –
business acquired see note 42 – 01 01
businesses disposed see note 43 – 46 46
reclassifications – 06 06
charge to income statement see note 14 45 134 179
charge to other comprehensive income see note 14 216 01 217
credit to equity see note 14 – 33 33
at 31 december 2013 681 160 841
deferred tax liabilities
 
 accelerated 
 tax 
 depr eciation 
 £’m
 intangible 
 assets 
  
 £’m
 total 
 
 
 £’m
at 1 january 2012 188 3063 3251
exchange rate adjustments 06 114 120
business acquired – 08 08
credit to income statement see note 14 17 75 92
credit to other comprehensive income see note 14 – 01 01
at 31 december 2012 165 2881 3046
exchange rate adjustments 03 40 43
businesses disposed see note 43 – 60 60
reclassifications 03 – 03
chargecredit to income statement see note 14 28 151 123
at 31 december 2013 193 2750 2943
 acquired in business combinations
deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets against current tax liabilities 
and when the deferred income taxes relate to the same tax authority during 2013 the group reassessed the extent to which deferred tax assets 
could be offset against deferred tax liabilities and determined that an element of the gross deferred tax asset relating to retirement benefit 
obligations met the criteria for offset accordingly this offset has been reflected in the balance sheet at 31 december 2013 the group has not 
restated the balance sheet at 31 december 2012 as the adjustment would not have had a significant impact on total assets and would have had no 
impact on net assets income for the year or other comprehensive income for the year the balances after allowing for such offsets are as  
follows
 
 2013 
 £’m
 2012 
 £’m
deferred tax assets 91 1002
deferred tax liabilities 2193 2895
net balance at 31 december 2102 1893
deferred tax assets are analysed as follows
 
 2013 
 £’m
 2012 
 £’m
to be recovered within one year 02 15
to be recovered after more than one year 89 987
total 91 1002
deferred tax liabilities are analysed as follows
 
 2013 
 £’m
 2012 
 £’m
falling due within one year 03 01
falling due after more than one year 2190 2894
total 2193 2895
notes to the consolidated financial statements continued 109
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
32 deferred tax continued
the group has unrecognised deferred tax assets of £89 million 2012 £100 million the majority of which relates to capital losses in the uk 
deferred tax assets have not been recognised in respect of these items as it is not regarded as more likely than not that they will be recovered 
deferred tax assets not recognised would be recoverable in the event that they reverse and suitable taxable profits are available there are no 
unremitted earnings in foreign subsidiaries that would give rise to a tax liability in the event of those subsidiaries remitting their earnings
33 retirement benefit obligations
pension schemes
the group operates a number of pension schemes for the benefit of its employees the nature of each scheme which has a significant impact on 
the financial statements is as follows 
•  in the uk the group operates a funded defined benefit scheme which is closed to new members but open to future accrual for existing 
members
•  in the us the group operates five defined benefit schemes all of which are closed to new members with two exceptions these schemes are 
open to future accrual for existing members the schemes are a mixture of funded and unfunded schemes and
•  in switzerland the group operates a funded defined benefit scheme which is open to new members and to future accrual 
the uk and us schemes provide benefits to members in the form of a guaranteed level of pension payable for life the benefits provided depend on a 
member’s length of service for the majority of schemes the benefits are dependent on salary at retirement or average salary over employment in 
the final years leading up to retirement in the us one scheme provides a fixed benefit for each year of service the swiss scheme has many of the 
characteristics of a defined contribution scheme but provides for certain minimum benefits to be guaranteed to members 
for all funded schemes benefit payments are made from funds administered by third parties unrelated to the group the assets of such schemes 
are held in trust funds or their equivalent separate from the group’s finances scheme assets held in trusts or their equivalent are governed by 
local regulations and practice in each country as is the nature of the relationship between the group and the trustees or equivalent and their 
composition for all unfunded schemes benefit payments are made by the group as the obligations fall due 
the group also operates a number of defined contribution schemes under which the group has no further obligations once the contributions have 
been paid
healthcare schemes
the group has two principal other postretirement benefit schemes providing medical and life assurance benefits to certain employees and 
former employees of meggitt aircraft braking systems corporation and meggitt rockmart inc these schemes are unfunded
amounts recognised in the income statement 
 
 2013 
 
 £’m
 2012 
       restated 
 £’m
total charge in respect of defined contribution pension schemes 192 183
defined benefit pension schemes
 service cost 127 123
 past service cost 07 –
 net interest expense on retirement benefit obligations 95 115
total charge in respect of defined benefit pension schemes 229 238
healthcare schemes
 service cost 15 10
 net interest expense on retirement benefit obligations 20 25
total charge in respect of healthcare schemes 35 35
total charge 456 456
 
of the total charge £341 million 2012 £316 million has been charged to operating profit see note 9 of which £189 million 2012 £181 million 
has been included in cost of sales and £152 million 2012 £135 million in net operating costs the remaining £115 million 2012 £140 million as 
restated is included in finance costs see note 13 110
meggitt plc re port and accounts 2013
33 retirement benefit obligations continued 
amounts recognised in the balance sheet
2013
 
 uk 
 pension 
 scheme 
 £’m
 overseas 
 pension 
 schemes 
 £’m
 overseas 
 healthcare 
 schemes 
 £’m
 total 
 
 
 £’m
fair value of scheme assets 4499 2385 – 6884
present value of scheme liabilities 5734 3048 483 9265
retirement benefit obligations 1235 663 483 2381
2012
 
 uk 
 pension 
 scheme 
 £’m
 overseas 
 pension 
 schemes 
 £’m
 overseas 
 healthcare 
 schemes 
 £’m
 total 
 
 
 £’m
fair value of scheme assets 4128 2219 – 6347
present value of scheme liabilities 5464 3295 585 9344
retirement benefit obligations 1336 1076 585 2997
of the total deficit of £2381 million 2012 £2997 million £610 million 2012 £725 million is in respect of unfunded schemes
analysis of pension scheme assets
 2013 2012
 quoted unquoted total quoted unquoted total
 £’m £’m £’m  £’m £’m £’m 
equities 1994 04 1998 444 1241 06 1247 302
government bonds 1327 19 1346 299 1242 70 1312 318
corporate bonds 427 264 691 154 552 384 936 227
cash 223 – 223 50 249 – 249 60
other assets 146 95 241 53 237 147 384 93
uk pension scheme 4117 382 4499 1000 3521 607 4128 1000
equities 1126 – 1126 472 1107 – 1107 499
government bonds 228 – 228 96 338 – 338 152
corporate bonds 659 – 659 276 501 – 501 226
cash 106 – 106 44 45 – 45 20
property 99 115 214 90 94 99 193 87
other assets 52 – 52 22 35 – 35 16
overseas pension schemes 2270 115 2385 1000 2120 99 2219 1000
equities 3120 04 3124 454 2348 06 2354 371
government bonds 1555 19 1574 228 1580 70 1650 260
corporate bonds 1086 264 1350 196 1053 384 1437 227
cash 329 – 329 48 294 – 294 46
property 99 115 214 31 94 99 193 30
other assets 198 95 293 43 272 147 419 66
total pension schemes’ assets 6387 497 6884 1000 5641 706 6347 1000
other assets include hedge funds commodities and derivatives the schemes have no investments in any assets of the group 
notes to the consolidated financial statements continued 111
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
33 retirement benefit obligations continued
changes in the fair value of scheme assets
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
at 1 january 6347 5849
exchange rate adjustments 31 84
interest income 249 247
contributions – group 416 383
contributions – members 36 36
benefits paid 375 351
remeasurement gain return on schemes’ assets excluding amounts included in interest income 255 289
administrative expenses borne directly by the schemes  13 22
at 31 december 6884 6347
 in 2013 certain administrative expenses previously paid by the schemes are now being paid directly by the group all administrative expenses  
 whether paid directly by the group or borne by the schemes are charged to net operating costs
financial assumptions used to calculate scheme liabilities 
 2013 2012
 
 uk 
 pension 
 scheme
 overseas 
 pension 
 schemes
 overseas 
 healthcare 
 schemes
 uk 
 pension 
 scheme
 overseas 
 pension 
 schemes
 overseas 
 healthcare 
 schemes
discount rate 460 455 455 450 380 380
inflation rate 340 na na 300 na na
increases to deferred benefits during deferment 260 na na 250 na na
increases to pensions in payment 330 na na 300 na na
salary increases 440 476 na 400 400 na
 to the extent not overridden by specific scheme rules
in determining the fair value of scheme liabilities the group uses mortality assumptions which are based on published mortality tables adjusted 
to reflect the characteristics of the scheme populations the group’s mortality assumptions in the uk are based on recent mortality 
investigations of self administered pension schemes adjusted to reflect the profile of the membership of the plan which include the results of a 
postcode analysis of members used to support the 2012 triennial uk actuarial valuation allowance has been made for rates of mortality to 
continue to fall at the rate of 125 per annum in the us mortality assumptions are based on the rp2000 irs rpa tables  
 2013  2012
 
 uk 
 scheme 
 years
 overseas 
 schemes 
 years
 uk 
 scheme 
 years
 overseas 
 schemes 
 years
member age 45 life expectancy at age 65 – male 235252 193 234251 192
member age 45 life expectancy at age 65 – female 263279 211 262279 210
member age 65 current life expectancy – male 218236 193 217235 192
member age 65 current life expectancy – female 243260 211 242259 210
details on the sensitivity of scheme liabilities to changes in assumptions are provided below
•  the impact of a 10 basis point reduction in discount rate would cause scheme liabilities at 31 december 2013 to increase by approximately  
£144 million
•  the impact of a 10 basis point increase in inflation and salary inflation rates would cause scheme liabilities at 31 december 2013 to increase by 
approximately £107 million
•  the impact of assuming every scheme member were to live for an additional year would cause scheme liabilities at 31 december 2013 to 
increase by approximately £227 million
the above sensitivity analyses are based on a change in an assumption while keeping all other assumptions constant in practice this is unlikely 
to occur and changes in some of the assumptions may be correlated when calculating the sensitivity of the defined benefit obligation to 
significant actuarial assumptions the same method of calculating the defined benefit obligation has been used as when calculating the 
retirement benefit obligations recognised in the balance sheet the methods and types of assumptions used in preparing the sensitivity analysis 
did not change compared to the previous year  
in the us regulatory bodies are currently consulting on a new set of mortality tables which reflect recently observed longevity experience new 
mortality tables are expected to be finalised in the next two years and will once adopted likely provide for increased longevity and accordingly 
higher retirement benefit scheme liabilities for most us schemes it is not yet possible to quantify the impact any changes may have on our 
schemes’ retirement benefit liabilities 112
meggitt plc re port and accounts 2013
33 retirement benefit obligations continued 
changes in the present value of retirement benefit obligations 
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
at 1 january 2997 3199
exchange rate adjustments 09 74
service cost 142 133
past service cost 07 –
net interest expense on retirement benefit obligations see note 13 115 140
contributions – group 416 383
remeasurement of retirement benefit obligations
 gain from change in demographic assumptions 69 62
 gainloss from change in financial assumptions 144 311
 return on schemes’ assets excluding amounts included in interest income 255 289
total remeasurement gain 468 40
administrative expenses borne directly by the schemes 13 22
at 31 december 2381 2997
risks
the group is exposed to a number of risks arising from operating its defined benefit pension and healthcare schemes the most significant of 
which are detailed below
asset volatility 
in determining the present value of schemes’ defined benefit obligations liabilities are discounted using interest rates of high quality corporate 
bonds to the extent the actual return on schemes’ assets is below this yield the retirement benefit obligations recognised in the consolidated 
financial statements would increase this risk is partly mitigated by funded schemes investing in matching corporate bonds such that changes in 
asset values are offset by similar changes in the value of scheme liabilities however the group also invests in other asset types such as equities 
property commodities derivatives and hedge funds where movements in asset values may be uncorrelated to movements in the yields on high 
quality corporate bonds the group believes that due to the longterm nature of its scheme liabilities it is appropriate to invest in assets which 
are expected to outperform corporate bonds over this timeframe scheme assets are well diversified such that the failure of any single 
investment would not have a material impact on the overall level of assets the group actively monitors how the duration and expected yield of 
scheme assets are matching the expected cash outflows arising from the pension obligations for each funded scheme there is a ‘glidepath’ in 
place which provides to the extent the funding position improves for asset volatility to be reduced by increased investment in longterm fixed 
interest securities with maturities that match the benefit payments as they fall due
interest rate risk
in determining the present value of schemes’ defined benefit obligations liabilities are discounted using interest rates of high quality corporate 
bonds if these yields fall the retirement benefit obligations recognised in the consolidated financial statements would increase this risk is 
partly mitigated through the funded schemes investing in matching assets as described above 
inflation rate risk
in determining the present value of schemes’ defined benefit obligations estimates are made as to levels of salary inflation inflation increases 
that will apply to deferred benefits during deferment and pensions in payment and healthcare cost inflation to the extent actual inflation exceeds 
these estimates the retirement benefit obligations recognised in the consolidated financial statements would increase salary inflation risk is 
partly mitigated in both the uk and us schemes by linking benefits in respect of future service to average salaries over a period of employment 
rather than final salary at retirement benefits in respect of certain periods of past service are still linked to final salary at retirement in the uk 
inflation risk in respect of deferred benefits and pensions in payment is mitigated by caps on the levels of inflation under the scheme rules in the 
us and switzerland the schemes provide for no inflation to be applied to benefits in deferment or retirement exposure to inflation on us 
healthcare costs has been mitigated by freezing group contributions to medical costs at 2011 cost levels  
longevity risk
in determining the present value of schemes’ defined benefit obligations assumptions are made as to the life expectancy of members during 
employment and in retirement to the extent life expectancy exceeds this estimate the retirement benefit obligations recognised in the 
consolidated financial statements would increase this risk is more significant in the uk plan where inflationary increases result in higher 
sensitivity to changes in life expectancy the group currently does not use derivatives such as longevity swaps to mitigate this risk
the group has not changed the processes used to manage defined benefit scheme risks during the year 
other information 
in the uk the last triennial valuation was in 2012 following which the group agreed with the uk trustees to progressively increase deficit 
reduction payments with the aim being to eliminate the deficit by 2024 in the us deficit reduction levels are driven by regulations and provide for 
deficits to be eliminated over periods up to 15 years there is no significant deficit in the swiss scheme the estimated group contributions 
expected to be paid to the schemes during 2014 are £464 million 
notes to the consolidated financial statements continued 113
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
33 retirement benefit obligations continued 
the weighted average duration of the schemes’ defined benefit obligation is 171 years the expected maturity of undiscounted pension and 
healthcare benefits at 31 december 2013 is as follows
 
 less than 
 a year 
 £’m
 between 
 12 years 
 £’m
 between 
 25 years 
 £’m
 over 
 5 years 
 £’m
 total 
 £’m
pension schemes 326 334 1043 16310 18013
healthcare schemes 34 34 107 674 849
total 360 368 1150 16984 18862
34 share capital and share schemes
issued share capital
 
 ordinary 
 shares of 
 5p each 
 number ‘m
 nominal 
  value 
 
 £’m
 net 
 c onsider ation 
 
 £’m
allotted and fully paid
at 1 january 2012 7788 389
issued on exercise of executive share awards 27 02 06
issued on exercise of sharesave awards 02 – 04
scrip dividends 33 02 132
at 31 december 2012 7850 393 
issued on exercise of executive share awards 72 03 05
issued on exercise of sharesave awards 11 01 20
scrip dividends 38 02 200
at 31 december 2013 7971 399 
 
share options
year of grant 
 number of  
 ordinary shares 
 under award
 exercise 
 price 
 per share
exercise period
from to 
meggitt 2008 sharesave scheme 
2008 25066 17140p 011113 300414
2008 74311 17140p 011115 300416
2010 16994 22235p 011113 300414
2010 451831 22235p 011115 300416
2010 50781 22235p 011117 300418
2012 724303 32694p 011115 300416
2012 382279 32694p 011117 300418
2013 511899 42640p 011116 300417
2013 251845 42640p 011118 300419
meggitt 1996 no 1 executive share option scheme
2004 17200 17440p 010407 310314
meggitt executive share option scheme 2005 part a
2005 73289 27865p 101008 091015
2006 9471 26367p 270909 260916
2007 8442 29900p 290310 280317
2008 10220 25250p 250311 240318
2009 30531 16950p 300412 290419
2010 19171 28610p 120313 110320
2011 134405 35170p 020314 010321
2011 8683 34550p 170814 160821
2012 221239 39720p 100415 090422
2013 240108 52650p 050916 040923
2013 5504 54500p 090916 080923
all the above awards which were granted for nil consideration may in certain circumstances be exercised earlier than the dates given the 
weighted average remaining contractual life of outstanding awards is 42 years 2012 36 years  114
meggitt plc re port and accounts 2013
34 share capital and share schemes continued
share appreciation rights – equitysettled
year of grant
 indicative  
 number of shares 
 to be released 
 number of  
 ordinary shares 
 under award
 exercise 
 price 
 per share
exercise period
from to 
meggitt executive share option scheme 2005 part b 
2005 193672 410536 27865p 101008 091015
2006 264387 528614 26367p 270909 260916
2007 233089 538093 29900p 290310 280317
2007 43075 95170 28875p 170810 160817
2008 569335 1092088 25250p 250311 240318
2008 307984 502200 20400p 070811 060818
2009 1164992 1716573 16950p 300412 290419
2010 982420 2146754 28610p 120313 110320
2011 1325677 3977785 35170p 020314 010321
2011 184223 533944 34550p 170814 160821
2012 1196324 4843140 39720p 100415 090422
2013 7344 3873782 52650p 050916 040923
2013 – 11679 54500p 090916 080923
 based on indicative share price of 52750p the share price at 31 december 2013
all the above share appreciation rights which were granted for nil consideration may in certain circumstances be exercised earlier than the 
dates given the weighted average remaining contractual life of outstanding awards is 71 years 2012 69 years  during the year a number of 
cashsettled share appreciation rights were converted into equitysettled share appreciation rights see note 35
35 sharebased payment
the group operates a number of share schemes for the benefit of its employees the total expense recorded in the income statement in respect of 
such schemes was £119 million 2012 £123 million see note 9 the nature of each scheme which has a significant impact on the expense 
recorded in the income statement is set out below 
meggitt 1996 executive share option scheme and meggitt executive share option scheme 2005 
equitysettled
share awards are granted to certain senior executives at an award price equal to the market price of the shares on the day before the grant is 
made the awards are generally exercisable at the earliest three years after the grant is made awards can only be exercised if the group meets 
an earnings per share performance condition the group has no obligation legal or constructive to settle the awards in cash awards under part 
a of the schemes provide for the executive on exercise to be entitled on payment of the award price to the number of shares under award 
awards under part b of the schemes are in the form of equitysettled share appreciation rights sar’s and provide for the executive on exercise 
to be entitled to receive equity equivalent to the gain in value between the award price and the market price on the date of exercise 
during the year 34 million awards 2012 nil previously issued as cashsettled were modified to equitysettled of these awards 06 million had 
not fully vested and were remeasured to fair value at the date they were modified the fair value derived is being expensed to the income 
statement over the remaining vesting period
an expense of £25 million 2012 £31 million was recorded in the year in respect of all equitysettled awards movements in the number of 
outstanding awards and their related weighted average award prices are as follows
 
 2013 
 average 
 award 
 price 
 pence
 2013 
 number of 
 awards 
 outstanding 
  ‘m
 2012 
 average 
 award 
 price 
 pence
 2012 
 number of 
 awards 
 outstanding 
  ‘m
at 1 january 30435 245 27011 215
granted 52658 41 39720 55
lapsed 36526 05 34077 02
modified from cashsettled 26204 34 na 
exercised 26242 104 20350 23
at 31 december 36049 211 30435 245
notes to the consolidated financial statements continued 115
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
35 sharebased payment continued 
at 31 december 2013 of the total number of awards outstanding 72 million are exercisable at an average exercise price of 24550 pence 2012 
99 million at an average exercise price of 23954 pence the fair values of the awards made in the year were determined using the blackscholes 
option pricing model the significant assumptions used in the model and the fair values determined were
 
 2013 
 award in 
 september 
 2013 
 modific ation in 
 april 
 2012 
 award in 
 april
share price at date of grantmodification pence 52650 46860 39720
award price pence 52650 35170 39720
vesting period years 30 10 30
expected volatility 35 27 38
expected life of award years 50 30 50
risk free rate 156 073 107
expected dividend yield 324 265 331
fair value at date of award pence 12137 12054 9825
expected volatility figures are based on volatility over the last five years measured using a statistical analysis of daily share prices awards may 
be exercised at any point between the vesting date and ten years after the date the award was made
cashsettled
under the terms of the meggitt executive share option scheme 2005 the group may grant cashsettled sar’s to certain overseas employees 
the group is required to pay the intrinsic value of the sar’s to the employee at the date of exercise awards can only be exercised if the group 
meets an earnings per share performance condition
as referred to above during the year 34 million awards 2012 nil were modified from cashsettled to equitysettled these awards were 
remeasured to fair value immediately prior to the date of modification and a corresponding expense recorded in the income statement the 
liability of £59 million was then reclassified to equity on the date the awards were modified 
an expense of £31 million 2012 £25 million was recorded in the year in respect of all cashsettled awards the group has recorded a liability at 
the balance sheet date of £07 million 2012 £49 million the total intrinsic value at the balance sheet date was £09 million 2012 £55 million 
movements in the number of outstanding awards and their related weighted average award prices are as follows
 
 2013 
 average 
 award 
 price 
 pence
 2013 
 number of 
 awards 
 outstanding 
  ‘m
 2012 
 average 
 award 
 price 
 pence
 2012 
 number of 
 awards 
 outstanding 
  ‘m
at 1 january 26774 48 25259 68
granted 52650 01 39720 02
lapsed 38507 01 34043 01
modified to equitysettled 26204 34 na 
exercised 24259 08 23200 21
at 31 december 35405 06 26774 48
at 31 december 2013 of the total number of awards outstanding 02 million are exercisable at an average exercise price of 20524 pence 2012 
32 million at an average exercise price of 23526 pence the fair value of the awards made in the year were determined at the grant date using 
the blackscholes option pricing model and reflect the same assumptions used for equitysettled awards as disclosed above as a cashsettled 
award the fair value of outstanding awards is remeasured at each balance sheet date 
meggitt equity participation plan 2005 
under the meggitt equity participation plan 2005 an annual award of shares may be made to certain senior executives for awards made in 2013 
and 2012 the number of shares if any that an executive ultimately receives depends on three performance conditions
•  an earnings per share eps measure 50 of the award 
•  a cash flow measure 25 of the award and
 • total shareholder return tsr achieved by the group as measured against a comparator group selected by the remuneration committee 25 
of the award
each of the conditions is measured over a three year performance period for awards made in 2009 and 2010 50 of the award was based on an 
eps measure and 50 on a tsr condition an expense of £54 million 2012 £59 million was recorded in the year movements in the number of 
outstanding shares that may potentially be released to employees are as follows
 
 2013 
 number of 
 shares 
 under awar d 
 outstanding 
 ‘m
 2012  
 number of 
 shares 
 under award 
 outstanding 
 ‘m
at 1 january 78 83
awarded 21 24
lapsed 06 13
released to employees 16 16
at 31 december 77 78 116
meggitt plc re port and accounts 2013
35 sharebased payment continued
at 31 december 2013 15 million of the shares under award are eligible for release 2012 11 million 
the fair value of the awards made in 2013 subject to the eps and cash flow performance conditions was 47800 pence 2012 39297 pence the 
fair value of the awards made in 2013 which were subject to the tsr performance condition was determined using a monte carlo model the 
significant assumptions used in the model and the fair values determined in respect of the principal awards made in the year were
  
 2013 
 award in 
 march
 2012 
 award in 
 august
share price at date of grant pence 47800 39297
vesting period years 30 30
expected volatility 26 29
expected life of award years 30 30
risk free rate 026 026
fair value at date of award pence 24800 24000
36 own shares
own shares represents shares in the company that are held by an independently managed employee share ownership plan trust ‘the trust’
formed to purchase shares to be used to meet certain of the company’s future obligations in respect of employee share schemes as described in 
the directors’ remuneration report on pages 47 to 67 at 31 december 2013 the trust held no ordinary shares 2012 1708 shares
37 contingent liabilities
the company has given guarantees in respect of credit facilities for certain of its subsidiaries some property leases other leasing arrangements 
and the performance by some current and former subsidiaries of certain contracts also there are similar guarantees given by certain other 
group companies the directors do not believe that the effect of giving these guarantees will have a material adverse effect upon the group’s 
financial position 
the company and various of its subsidiaries are from time to time parties to legal proceedings and claims which arise in the ordinary course of 
business the directors do not anticipate that the outcome of these proceedings actions and claims either individually or in aggregate will have a 
material adverse effect upon the group’s financial position
38 contractual commitments
capital commitments
 
 2013 
 £’m
 2012 
 £’m
contracted for but not incurred 
intangible assets 14 11
property plant and equipment 75 84
total 89 95
operating lease commitments
the group leases various factories warehouses and offices under noncancellable operating leases these leases have various lease periods 
escalation clauses and renewal rights additionally the group leases various items of plant and machinery under both cancellable and non
cancellable operating leases expenditure on operating leases is charged to the income statement as incurred and is disclosed in note 7
the future aggregate minimum lease payments under non–cancellable operating leases are as follows
 
 2013 
 £’m
 2012 
 £’m
in one year or less 130 137
in more than one year but not more than five years 382 436
in more than five years 257 256
total 769 829
other financial commitments
the group enters into longterm arrangements with aircraft and original equipment manufacturers to design develop and supply products to 
them for the life of the aircraft this represents a significant longterm financial commitment for the group and requires the consideration of a 
number of uncertainties including the feasibility of the product and the ultimate commercial viability over a period which can extend over 40 years 
the directors are satisfied that at this time there are no significant contingent liabilities arising from these commitments
notes to the consolidated financial statements continued 117
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
39 cash inflow from operations
 
 2013 
 
 £’m
 2012 
 restated 
 £’m
profit for the year 2323 2355
adjustments for
 finance income see note 12 03 20
 finance costs see note 13 312 421
 tax see note 14 371 458
 depreciation see note 21 322 319
 amortisation see notes 19 and 20 1264 1228
 gainloss on disposal of property plant and equipment 11 03
 gain on disposal of businesses see note 11 90 32
 financial instruments see note 10 61 234
 retirement benefit obligation deficit payments 274 250
 sharebased payment expense see note 35 119 123
changes in working capital
 inventories 164 305
 trade and other receivables 246 147
 trade and other payables 131 67
 provisions 274 339
cash inflow from operations 3457 3941
40 movements in net debt
 
 2013 
 £’m
 2012 
 £’m
at 1 january 6425 7884
free cash inflow 1104 1824
businesses acquired see note 42 265 84
business acquisition expenses see note 11 04 14
businesses disposed see note 43 533 159
business disposal expenses see note 11 05 09
dividends paid to company’s shareholders see note 16 756 718
issue of equity share capital see note 34 25 09
net cash generated – inflow 632 1167
debt acquired with businesses see note 42 03 04
exchange rate adjustments 27 339
other noncash movements 123 43
at 31 december 5646 6425
analysed as
 
 2013 
 £’m
 2012 
 £’m
bank and other borrowings – current see note 28 72 1270
bank and other borrowings – noncurrent see note 28 6660 6123
obligations under finance leases – current see note 27 24 31
obligations under finance leases – noncurrent see note 27 51 50
cash and cash equivalents see note 24 1161 1049
total 5646 6425 118
meggitt plc re port and accounts 2013
41 major noncash transactions
during the year meggitt plc issued 38 million shares worth £200 million in respect of scrip dividends 2012 33 million shares worth £132 
million see notes 16 and 34
42 business combinations 
on 27 august 2013 the group acquired 100 of the voting rights of piezotech llc ‘piezotech’ piezotech’s highend performance piezoceramic 
technology for extreme temperature gas turbine sensors and its position in emerging energy and medical markets strengthen two strands of the 
group’s sensing business the assets and liabilities of piezotech at the date of acquisition including the goodwill arising on consolidation were as 
follows 
   
 fair value 
 £’m
goodwill see note 18 90
other intangible assets see note 20 158
property plant and equipment see note 21 07
inventories 10
trade and other receivables  current 14
trade and other payables  current 06
obligations under finance leases  current 01
provisions  current see note 31 04
obligations under finance leases  noncurrent 02
deferred tax liabilities see note 32  01
net assets    265
consideration satisfied in cash   265
total consideration payable  265
goodwill arising on consolidation is based on preliminary estimates of fair values which will be finalised in 2014 goodwill is attributable to the 
profitability of the acquired business and expected future synergies arising following the acquisition costs related to the acquisition were £05 
million these costs have been treated as an exceptional operating item see note 11 the impact of the acquired business on the results of the 
group for the period since acquisition is not significant and would not have been significant had it been acquired on 1 january 2013 
notes to the consolidated financial statements continued 119
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
43 business disposals
on 23 may 2013 the group disposed of 100 of the ordinary shares of meggitt addison inc ‘addison’ for a total consideration of £260 million 
addison was engaged in vapour cycle air conditioning systems providing cooling heating and ventilation for fixed wing light aircraft on 20 
december 2013 the group disposed of 100 of the ordinary shares of the sunbank family of companies llc ’sunbank’ for a total consideration 
of £283 million sunbank supplied connector accessories backshells and conduit systems for aerospace and industrial markets these 
businesses were no longer considered core to the group’s operations the impact of the disposals on the group’s results and cash flows for the 
year was not significant
the net assets of the businesses at the dates of disposal were as follows
  
  
 addison  
 £’m
   
 sunbank 
 £’m
 total 
 £’m
goodwill see note 18 80 185 265
other intangible assets see note 20 56 56 112
property plant and equipment see note 21 03 38 41
deferred tax assets see note 32  23 23
inventories 20 43 63
trade and other receivables  current 22 31 53
cash and cash equivalents 02 12 14
trade and other payables  current 12 40 52
provisions  current see note 31 01 03 04
deferred tax liabilities see note 32 09  09
net assets 161 345 506
currency translation gain transferred from equity 50 03 53
gainloss on disposal see note 11 149 59 90
total consideration 260 283 543
satisfied by
proceeds received from disposal of businesses 264 283 547
business disposal expenses paid see note 11 03 02 05
trade and other receivables  contingent consideration  08 08
trade and other payables  other 01 06 07
total consideration 260 283 543
net cash inflow arising on disposal 
proceeds received from disposal of businesses 264 283 547
less cash and cash equivalents disposed of  02 12 14
businesses disposed 262 271 533
less business disposal expenses paid 03 02 05
total cash inflow 259 269 528 120
meggitt plc re port and accounts 2013
44 restatement of prior year comparatives
ias 19 revised 2011 ‘employee benefits’ makes changes to the recognition and measurement of certain items of defined benefit pension 
expense scheme administration expenses borne directly by defined benefit schemes are now recorded within net operating costs and not as 
previously accounted for as a reduction in the expected return on scheme assets the expected return on scheme assets is now calculated using 
the same rate used to discount scheme liabilities and no longer includes any allowance for equitylike outperformance or deduction for scheme 
administration expenses the adverse impact on net operating costs and net finance costs of these changes is offset by an equal reduction in 
remeasurement losses as the group has always recognised remeasurement gains and losses immediately there has been no impact on the 
value at which retirement benefit obligations are recorded in the balance sheet as the revised net pension finance cost calculated under ias 19 
revised 2011 ‘employee benefits’ is a noncash nontrading item the board has in 2013 as previously announced excluded it from the 
underlying profit measures as defined in note 10 it uses to monitor and measure the underlying performance of the group the prior year 
comparatives have been restated accordingly
the impact of these changes is set out below 
2013 2012
 
 under 
 prior year 
 policy 
 £’m
 change 
 in policy 
  
 £’m
 as 
 reported 
 
 £’m
 under 
 prior year 
 policy 
 £’m
 change 
 in policy 
  
 £’m
 as 
 restated 
 
 £’m
revenue 16373 – 16373 16058 – 16058
cost of sales 9811 – 9811 9291 – 9291
gross profit 6562 – 6562 6767 – 6767
net operating costs 3542 17 3559 3531 22 3553
operating profit 3020 17 3003 3236 22 3214
finance income 332 329 03 354 334 20
finance costs 561 249 312 669 248 421
net finance costs 229 80 309 315 86 401
profit before tax 2791 97 2694 2921 108 2813
tax 397 26 371 488 30 458
profit for the year attributable to equity owners of the company 2394 71 2323 2433 78 2355
items that will not be reclassified to the income statement in subsequent 
periods
 remeasurement of retirement benefit obligations 371 97 468 68 108 40
 tax effect 190 26 216 07 30 23
other items affecting other comprehensive income 352 – 352 599 – 599
other comprehensive income for the year 171 71 100 660 78 582
total comprehensive income for the year 
attributable to equity owners of the company 2223 – 2223 1773 – 1773
earnings per share pence
 basic 303 09 294 311 10 301
 diluted 298 09 289 307 10 297
underlying operating profit 3989 17 3972 3943 22 3921
underlying profit before tax 3760 18 3778 3628 32 3660
underlying basic earnings per share pence 373 02 375 362 03 365
underlying diluted earnings per share pence 368 01 369 357 03 360
notes to the consolidated financial statements continued 121
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
45 group companies 
the following information is not a complete listing of all subsidiary companies at 31 december 2013 and relates only to those subsidiaries 
principally affecting the profits or assets of the group
united kingdom
meggitt aerospace limited meggitt finance limited ‡
meggitt defence systems limited  meggitt uk limited
continental europe
artus sas – france piher sensors  controls sa – spain 
meggitt sa – switzerland  
north america
linear motion llc meggitt north hollywood inc  
meggitt aircraft braking systems corporation meggitt orange county inc
meggitt aircraft braking systems kentucky corporation meggitt rockmart inc
meggitt defense systems inc nasco aircraft brake inc
meggitt gp inc‡ oeco llc
meggitt oregon inc pacific scientific company
meggitt safety systems inc piezotech llc
meggitt training systems inc securaplane technologies inc
 
rest of world
meggitt aerospace asia pacific pte limited – singapore meggitt brasil soluçeos de engenharia limited – brazil
i  united kingdom companies listed above are incorporated and registered in england and wales north american companies listed above  
are incorporated and registered in the united states of america other companies listed above are incorporated in the country named
ii  the ordinary shares of all subsidiaries were 100 owned by meggitt plc either directly or indirectly at 31 december 2013
iii all companies listed above are included in the consolidation
iv  companies marked ‡ are management companies otherwise all companies are operating companies engaged in the group’s principal 
activities as described in note 1 
a full list of subsidiary companies will be annexed to the next annual return to the registrar of companies 122
meggitt plc re port and accounts 2013
other matters on which we are required to report  
by exception
adequacy of accounting records and information and  
explanations received
under the companies act 2006 we are required to report to you if in 
our opinion
•  we have not received all the information and explanations we require 
for our audit or
•  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
we have no exceptions to report arising from this responsibility
directors’ remuneration
under the companies act 2006 we are required to report to you if in 
our opinion certain disclosures of directors’ remuneration specified by 
law have not been made we have no exceptions to report arising from 
this responsibility
other information in the annual report
under isas uk  ireland we are required to report to you if in our 
opinion information in the annual report is
•  materially inconsistent with the information in the audited company 
financial statements or
•  apparently materially incorrect based on or materially inconsistent 
with our knowledge of the company acquired in the course of 
performing our audit or
• is otherwise misleading
we have no exceptions to report arising from this responsibility
responsibilities for the financial statements and the audit
our responsibilities and those of the directors 
as explained more fully in the statement of directors’ responsibilities 
set out on page 70 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 isas uk  
ireland those standards require us to comply with the auditing 
practices board’s ethical standards for auditors 
this report including the opinions has been prepared only for the 
company’s members as a body in accordance with chapter 3 of part 16 
of the companies act 2006 and for no other purpose we do not in 
giving these opinions accept or assume responsibility for any other 
purpose or to any other person to whom this report is shown or into 
whose hands it may come save where expressly agreed by our prior 
consent in writing
other matter
we have reported separately on the group financial statements of 
meggitt plc for the year ended 31 december 2013
andrew paynter senior statutory auditor
for and on behalf of pricewaterhousecoopers llp
chartered accountants and statutory auditors
london
3 march 2014
report on the company financial statements
our opinion 
in our opinion the company financial statements defined below
•  give a true and fair view of the state of the company’s affairs as at 31 
december 2013
•  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
this opinion is to be read in the context of what we say in the remainder 
of this report
what we have audited
the company financial statements which are prepared by meggitt 
plc comprise
•  the company balance sheet as at 31 december 2013 and
•  the notes to the company financial statements which include a 
summary of significant accounting policies and other explanatory 
information
the financial reporting framework applied in their preparation 
comprises applicable law and united kingdom accounting standards 
united kingdom generally accepted accounting practice
in applying the financial reporting framework the directors have  
made a number of subjective judgements for example on significant 
accounting estimates in making such judgements they have made 
assumptions and considered future events
certain disclosures required by the financial reporting framework have 
been presented elsewhere in the annual report rather than in the 
notes to the financial statements these are crossreferenced from the 
financial statements and are identified as audited
what an audit of financial statements involves 
we conducted our audit in accordance with international standards on 
auditing uk and ireland ‘isas uk  ireland’ an audit obtains 
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 
we read all the financial and nonfinancial information in the ‘annual 
report and accounts’ the ‘annual report’ to identify material 
inconsistencies with the audited company financial statements and to 
identify any information that is apparently materially incorrect based 
on or materially inconsistent with the knowledge acquired by us in the 
course of performing the audit if we become aware of any apparent 
material misstatements or inconsistencies we consider the 
implications for our report
opinions on matters prescribed by the  
companies act 2006
in our opinion
•  the information given in the strategic report and the directors’ 
report for the financial year for which the company financial 
statements are prepared is consistent with the company financial 
statements and
•  the part of the directors’ remuneration report to be audited has 
been properly prepared in accordance with the companies act 2006
independent auditors’ report to the  
members of meggitt plc 123
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
company balance sheet
 notes
 2013 
 £’m
 2012 
 £’m
fixed assets
tangible fixed assets 3 311 246
derivative financial instruments 9 355 504
investments 4 20699 20607
  21365 21357
current assets
debtors 5 9400 9583
derivative financial instruments 9 114 49
cash at bank and in hand 170 135
  9684 9767
creditors – amounts falling due within one year 6 795 1861
derivative financial instruments 9 93 50
net current assets 8796 7856
total assets less current liabilities 30161 29213
creditors – amounts falling due after more than one year 7 6645 6098
provision for liabilities and charges 8 17 20
derivative financial instruments 9 102 02
net assets 23397 23093
capital and reserves
calledup share capital 12 399 393
share premium account 13 11663 11439
other reserves 13 175 175
profit and loss reserve 13 11160 11086
total shareholders’ funds 13 23397 23093
the financial statements on pages 123 to 129 were approved by the board of directors on 3 march 2014 and signed on its behalf by 
 
 
s g young d r webb 
director director
as at 31 december 2013 124
meggitt plc re port and accounts 2013
foreign currencies
transactions in foreign currencies are recorded at the rates of 
exchange prevailing at the dates of the transactions monetary assets 
and liabilities denominated in foreign currencies at the balance sheet 
date are reported at the rates of exchange prevailing at that date 
exchange differences on retranslating monetary assets and liabilities 
are recognised in the profit and loss account except where they relate 
to qualifying cash flow hedges in which case the exchange differences 
are recognised in equity 
pension scheme arrangements
as the company is unable to identify its share of the underlying assets 
and liabilities of the meggitt pension plan on a consistent and 
reasonable basis the company accounts for the scheme as though it 
were a defined contribution scheme accordingly the amount charged 
to the profit and loss account is the contribution payable in the period 
differences between contributions payable in the period and 
contributions paid are shown as accruals or prepayments in the 
balance sheet 
sharebased compensation
the fair value of services received from employees is recognised as  
an expense in the profit and loss account over the period for which 
services are received ‘the vesting period’ 
for equitysettled awards the fair value of an award is measured at 
the date of grant and reflects any marketbased vesting conditions 
non marketbased vesting conditions are excluded from the fair value 
of the award at the date of grant the company estimates the number 
of awards expected to vest as a result of non marketbased vesting 
conditions and the fair value of this estimated number of awards is 
recognised as an expense in the profit and loss account on a straight 
line basis over the vesting period at each balance sheet date the 
company revises its estimate of the number of awards expected to vest 
as a result of non marketbased vesting conditions and adjusts the 
amount recognised cumulatively in the profit and loss account to 
reflect the revised estimate proceeds received net of directly 
attributable transaction costs are credited to share capital nominal 
value and share premium
for cashsettled awards the total amount recognised is based on the 
fair value of the liability incurred the fair value of the liability is 
remeasured at each balance sheet date with changes in fair value 
recognised in the profit and loss account for the period
the grant by the company of options over its equity instruments to 
employees of subsidiary undertakings is treated as a capital 
contribution the fair value of the awards made is recognised over the 
vesting period as an increase in investment in subsidiary 
undertakings with a corresponding credit to the profit and loss 
reserve
shares in the company are held by an independently managed 
employee share ownership trust ‘esop trust’ to meet future 
obligations in respect of the company’s employee share schemes the 
cost of own shares held by the esop trust is deducted from 
shareholders’ funds
1 basis of preparation
these financial statements have been prepared on a going concern 
basis under the historical cost accounting convention as modified by 
the revaluation of financial assets and financial liabilities including 
derivative financial instruments at fair value in accordance with the 
companies act 2006 the company continues to prepare its annual 
financial statements in accordance with uk generally accepted 
accounting practice uk gaap 
2 summary of significant accounting policies
the principal accounting policies adopted by the company in the 
preparation of the financial statements are set out below these 
policies have been applied consistently to all periods presented unless 
stated otherwise
investments
investments in subsidiaries are stated at cost less provision for 
impairment in value except for investments acquired before 1 january 
1988 where section 612 merger relief has been taken and investments 
are stated at the nominal value of the shares issued in consideration
tangible fixed assets
tangible fixed assets are stated at cost net of depreciation and any 
provision for impairment cost includes the original purchase price of 
the asset and costs attributable to bringing the asset into use 
depreciation is not provided on freehold land on other assets it is 
provided in equal annual instalments over the estimated useful lives  
of the assets as follows
land and buildings  over period of lease
plant and equipment  3 to 10 years
motor vehicles 5 years
operating leases
rental costs under operating leases are charged to the profit and loss 
account on a straightline basis over the lease term even if the 
payments are not made on this basis
taxation
the charge for taxation is based on the profit for the period and takes 
into account taxation deferred because of timing differences between 
the treatment of certain items for taxation and accounting purposes
deferred taxation is provided in full without discounting on timing 
differences that result in an obligation at the balance sheet date to pay 
more tax or a right to pay less tax at a future date at rates expected  
to apply when they crystallise based on current tax rates and law 
deferred taxation assets are recognised to the extent it is regarded as 
more likely than not that they will be recovered
deferred taxation is not provided on timing differences arising from  
the sale or revaluation of fixed assets unless at the balance sheet date 
a binding commitment to sell the asset has been entered into and it is 
unlikely that any gain will qualify for rollover relief
provision for liabilities and charges
in accordance with frs 12 provision is made for onerous property 
leases provisions are discounted where appropriate to reflect the time 
value of money
notes to the financial statements of the company 125
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
loans
loans are initially stated at proceeds received less directly attributable 
transaction costs incurred transaction costs are amortised to the 
profit and loss account over the period of the loans loans are held at 
fair value where a hedge relationship is in place any related interest 
accruals are included within the value at which loans are recorded 
loans are classified as current liabilities unless the company has an 
unconditional right to defer settlement of the liability for at least 12 
months after the balance sheet date 
capital instruments 
ordinary shares are classified as equity incremental costs directly 
attributable to the issue of new shares are deducted from the proceeds 
recorded in equity other instruments are classified as liabilities if they 
contain an obligation to transfer economic benefits otherwise they are 
included in shareholders’ funds
dividends
interim dividends are recognised when they are approved by the board 
final dividends are recognised when they are approved by the 
company’s shareholders
profit and recognised gains and losses of the company
the company has taken advantage of the legal dispensation contained 
in section 408 of the companies act 2006 allowing it not to publish a 
separate profit and loss account and related notes the company has 
also taken advantage of the legal dispensation contained in section 408 
of the companies act 2006 allowing it not to publish a separate 
statement of recognised gains and losses
related party transactions
the company has taken advantage of the exemption contained in frs 8 
from the requirement to disclose related party transactions within  
the group
2 summary of significant accounting policies continued
derivative financial instruments and hedging
derivative financial instruments are recognised at fair value on the 
date the derivative contract is entered into and are subsequently 
remeasured at fair value at each balance sheet date to the extent the 
maturity of the financial instrument is more than 12 months from the 
balance sheet date the fair value is reported as a noncurrent asset or 
liability derivative financial instruments with maturities of less than 12 
months from the balance sheet are shown as current assets or 
liabilities the method by which any gain or loss is recognised depends 
on the designation of the derivative financial instrument
fair value hedges
fair value hedges are hedges of the fair value of recognised assets or 
liabilities or a firm commitment interest rate swaps that change fixed 
rate interest to variable rate interest are treated as fair value hedges 
provided they meet the hedge criteria changes in the fair value of 
derivative financial instruments designated as fair value hedges are 
recognised in the profit and loss account together with changes in the 
fair value of the hedged item 
cash flow hedges
cash flow hedges are hedges of highly probable forecast transactions 
interest rate swaps that change variable rate interest to fixed rate 
interest are treated by the company as cash flow hedges provided they 
meet the hedge criteria changes in fair value of the effective portion of 
derivative financial instruments designated as cash flow hedges are 
initially recorded within equity to the extent changes in fair value are 
recorded in equity they are recycled to the profit and loss account in 
the periods in which the hedged item affects the profit and loss 
account however when the transaction to which the hedge relates 
results in the recognition of a nonmonetary asset or a liability then 
gains and losses previously recognised in equity are included in the 
initial measurement of the cost of the nonmonetary asset or liability
if the forecast transaction to which the cash flow hedge relates is no 
longer expected to occur the cumulative gain or loss previously 
recognised in equity is transferred to the profit and loss account 
immediately if the hedging instrument is sold expires or no longer 
meets the criteria for hedge accounting the cumulative gain or loss 
previously recognised in equity is transferred to the profit and loss 
account when the forecast transaction is recognised in the profit and 
loss account
derivatives that do not meet the criteria for hedge accounting 
where derivatives do not meet the criteria for hedge accounting 
changes in fair value are recognised immediately in the profit and loss 
account the company utilises a number of foreign currency forward 
contracts to mitigate against currency fluctuations the company has 
determined that the additional costs of meeting the extensive 
documentation requirements for the company’s large number of 
foreign currency contracts are not merited accordingly gains and 
losses arising from measuring the contracts at fair value are recorded 
immediately in the profit and loss account 126
meggitt plc re port and accounts 2013
3 tangible fixed assets
 
 land and 
 buildings 
 
 £’m
 plant 
 equipment  
 and vehicles 
 £’m
 total 
 
 
 £’m
cost at 1 january 2013 08 302 310
additions – 90 90
disposals 01 02 03
cost at 31 december 2013 07 390 397
accumulated depreciation at 1 january 2013 04 60 64
charge for year – 24 24
disposals – 02 02
accumulated depreciation at 31 december 2013 04 82 86
    
net book amount at 31 december 2013 03 308 311
net book amount at 31 december 2012 04 242 246
 
 2013 
 £’m
 2012 
 £’m
net book amount of land and buildings
freehold – 01
short leasehold 03 03
total 03 04
4 investments
 
 2013 
 £’m
 2012 
 £’m
shares in subsidiaries
at 1 january 20607 20524
capital contributions see note 13 92 83
at 31 december 20699 20607
the directors believe that the carrying value of the investments is supported by their underlying assets a list of principal subsidiaries is included 
in note 45 of the meggitt plc group accounts
5 debtors
 
 2013 
 £’m
 2012 
 £’m
amounts falling due within one year
amounts owed by subsidiary undertakings 9363 9541
other debtors 12 25
prepayments and accrued income 25 17
total 9400 9583
6 creditors – amounts falling due within one year
 
 2013 
 £’m
 2012 
 £’m
bank loans and overdrafts 01 76
other loans 29 1140
trade creditors 28 40
amounts owed to subsidiary undertakings 455 301
uk corporation tax payable 162 167
taxation and social security 56 38
other creditors 19 40
accruals 45 59
total 795 1861
bank loans and overdrafts other loans and amounts owed to subsidiary undertakings are unsecured
notes to the financial statements of the company continued 127
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
7 creditors – amounts falling due after more than one year
 
 2013 
 £’m
 2012 
 £’m
bank loans 2458 1702
other loans 4187 4396
total 6645 6098
bank loans and other loans are unsecured
 
 2013 
 £’m
 2012 
 £’m
analysis of bank loans and overdrafts repayable
in one year or less 01 76
in more than one year but not more than five years 2458 1702
total 2459 1778
 
 2013 
 £’m
 2012 
 £’m
analysis of other loans repayable
in one year or less 29 1140
in more than one year but not more than five years 1668 1715
in more than five years 2519 2681
total 4216 5536
amounts repayable in more than five years mature in 2020 and 2022
8 provision for liabilities and charges
 
 onerous 
 lease costs 
 £’m
 def err ed t ax 
 provision 
 £’m
 total 
 
 £’m
at 1 january 2013 02 18 20
credit to profit and loss account – 02 02
charge to profit and loss reserve – 01 01
utilisation of provision 02 – 02
at 31 december 2013 – 17 17
the deferred tax provision are analysed as follows
 
 2013 
 £’m
 2012 
 £’m
accelerated capital allowances 17 20
other shortterm timing differences – 02
total 17 18
movements in the deferred tax provision are analysed as follows
 
 2013 
 £’m
 2012 
 £’m
at 1 january 18 06
creditcharge to profit and loss account 02 24
chargecredit to profit and loss reserve 01 12
at 31 december 17 18 128
meggitt plc re port and accounts 2013
9 derivative financial instruments
 
 2013 
 assets 
 £’m
 2013 
 liabilities 
 £’m
 2012 
 assets 
 £’m
 2012 
 liabilities 
 £’m
interest rate swaps 249 – 431 02
cross currency swaps – – – 13
foreign currency forward contracts 220 195 122 37
total 469 195 553 52
less noncurrent portion
interest rate swaps 249 – 431 02
foreign currency forward contracts 106 102 73 –
noncurrent portion 355 102 504 02
current portion 114 93 49 50
the company is exempt from the frs 29 disclosures as the consolidated financial statements of meggitt plc give the disclosures required by 
ifrs 7 see meggitt plc group accounts notes 29 and 30 
10 commitments
capital commitments
 
 2013 
 £’m
 2012 
 £’m
contracted for but not incurred
plant equipment and vehicles 01 01
total 01 01
operating lease commitments
the annual commitments under noncancellable operating leases all of which relate to land and buildings expire as follows
 
 2013 
 £’m
 2012 
 £’m
within two to five years – 01
later than five years 01 01
total 01 02
11 pensions
the directors believe that the frs 17 total deficit for the scheme in which the company participates would be consistent with the ias 19 deficit 
reported in note 33 to the meggitt plc group accounts in respect of the uk scheme at 31 december 2013 an amount of £01 million 2012 £01 
million relating to contributions payable in respect of the defined contribution scheme were outstanding
12 calledup share capital
 
 ordinary 
 shares of 
 5p each 
 number ‘m
 nominal 
 value 
 
 £’m
 net 
 c onsider ation 
 
 £’m
allotted and fully paid
at 1 january 2013 7850 393
issued on exercise of executive share awards 72 03 05
issued on exercise of sharesave awards 11 01 20
scrip dividends 38 02 200
at 31 december 2013 7971 399 
notes to the financial statements of the company continued 129
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
13 reconciliation of movements in shareholders’ funds
 
 calledup 
 share 
 capital 
 £’m
 share 
 premium  
 account 
 £’m
 other 
 reserves 
 
 £’m
 profit and 
 loss 
 reserve 
 £’m
 total 
 2013 
 
 £’m
 total 
 2012 
 
 £’m
at 1 january 2013 393 11439 175 11086 23093 21835
profit for the financial year – – – 903 903 1886
dividends – – – 956 956 850
cash flow hedge movements – – – 16 16 43
currency translation differences – – – 02 02 12
employee share option schemes
 value of subsidiary employee services see note 4 – – – 92 92 83
 value of services provided – – – 22 22 29
 shares issued 04 26 – 05 25 09
scrip dividends 02 198 – – 200 132
at 31 december 2013 399 11663 175 11160 23397 23093
details of the group’s employee share schemes are included in note 35 of the meggitt plc group accounts 130
meggitt plc report and accounts 2013
fiveyear record
 
 2013 
 £’m
 2012 
 £’m
 2011 
 £’m
 2010 
 £’m
 2009 
 £’m
revenue and profit
revenue 16373 16058 14553 11620 11505
underlying profit before tax 3778 3660 3253 2637 2442
exceptional operating items 284 133 203 157 208
amortisation of intangible assets acquired in business combinations 743 806 751 647 692
disposal of inventory revalued in business combinations 03 02 113 – –
financial instruments 61 234 97 32 366
net interest expense on retirement benefit obligations 115 140 121 153 133
profit before tax 2694 2813 2162 1648 1775
earnings and dividends
earnings per share – basic 294p 301p 231p 193p 202p
earnings per share – underlying 375p 365p 321p 286p 264p
dividends per ordinary share paid or proposed in respect of the year 1275p 1180p 1050p 920p 845p
gearing ratio
year end net debt as a percentage of capital employed 272 337 440 502 635
 the figures for prior years have been restated see note 44 to the group financial statements 131
meggitt plc report and accounts 2013
 strategic report financial statements supplementary information governance reports
investor information
dividends
the proposed 2013 final dividend of 880p per ordinary share if approved will be paid on 9 may 2014 to 
shareholders on the register on 14 march 2014 the expected payment date for the 2014 interim dividend  
is 3 october 2014
shareholder enquiries
registrar 
computershare investor  
services plc  
the pavilions  
bridgwater road  
bristol bs99 6zz
t 0870 703 6210  
e wwwinvestorcentrecoukcontactus
enquiries about the following administrative matters should be addressed to meggitt plc’s registrar 
• change of address notification
• lost share certificates
• dividend payment enquiries
•  dividend mandate instructions shareholders may have their dividends paid directly into their bank or 
building society accounts by completing a dividend mandate form tax vouchers are sent directly to 
shareholders’ registered addresses
•  amalgamation of shareholdings shareholders who receive more than one copy of the annual report are 
invited to amalgamate their accounts on the share register
shareholders can view and manage their shareholdings online at wwwinvestorcentrecouk including 
updating address records making dividend payment enquiries updating dividend mandates and viewing 
the latest share price shareholders will need their shareholder reference number srn which can be 
found on their share certificate or a recent dividend tax voucher to access this site once signed up to 
investor centre an activation code will be sent to the shareholder’s registered address to enable the 
shareholder to manage their holding
electronic communications  
and electronic proxy voting 
meggitt encourages shareholders to vote at the annual general meeting agm and provides a facility for 
electronic proxy voting shareholders who are not crest members can vote online on resolutions proposed 
at the agm via our website after voting has opened proxy cards contain further details on how and when to 
vote and further information for crest members
we provide annual reports and other documents to shareholders in their elected format under the 
electronic communications provisions which were approved by the shareholders at the agm in 2007 
electronic copies of the annual report and accounts 2013 and the notice of agm will be posted on our 
website where meggitt plc’s announcements to the stock exchange and press releases are also 
published
share dealing services
800am – 430pm 
monday – friday
t 0870 703 0084
we have established share dealing services with the group’s registrar computershare investor services 
plc which provides shareholders with an easy way to buy or sell meggitt plc ordinary shares on the 
london stock exchange 
the internet share dealing service commission is 1 of the value of the transaction subject to a minimum 
charge of £30 stamp duty currently 05 is payable on purchases there is no need to open an account to 
deal realtime dealing is available during market hours there is a facility to place orders outside market 
hours up to 90day limit orders are available for sales to access the service shareholders should have 
their srn and log onto wwwcomputersharecomdealinguk 
the telephone share dealing service commission is 1 of the value of the transaction plus £35 stamp  
duty currently 05 is payable on purchases the service is available from 800am to 430pm monday to 
friday excluding bank holidays on telephone number 0870 703 0084 shareholders should have their  
srn when making the call detailed terms and conditions are available on request by telephoning  
0870 702 0000
this is not a recommendation to buy sell or hold shares in meggitt plc shareholders who are unsure of 
what action to take should obtain independent financial advice share values may go down as well as up 
which may result in shareholders receiving less than they originally invested
insofar as this statement constitutes a financial promotion for the share dealing service provided by 
computershare investor services plc it has been approved by computershare investor services plc for 
the purpose of the financial services act 2012 only computershare investor services plc is authorised 
and regulated by the financial conduct authority where this statement has been received in a country 
where providing such a service would be contrary to local laws or regulations this should be treated as 
information only
sharegift 
17 carlton house terrace 
london sw1y 5ah 
 
t 0207 930 3737
sharegift registered charity number 1052686 the independent share donation charity is especially useful 
for those who may want to dispose of a small number of shares which are uneconomic to sell on their own 
shares which have been donated to sharegift are aggregated and sold when practicable with the proceeds 
passed on to a wide range of uk registered charities further details about sharegift can be obtained from 
wwwsharegiftorg  132
meggitt plc report and accounts 2013
investor information continued
analysis of ordinary shareholders as at 31 december 2013 
  number of   of total
  shareholders  shares 
size of holdings 
1–999  5529  016
1000–9999  2557 100 
10000–99999  549  211
100000–249999  129 244
250000–499999  74  336
500000–999999  69 624
1000000 and over  101 8469
  9008  10000 
  number of   of total
  shareholders  shares 
types of shareholder
individuals  7438  178
banks and nominees  1476 9737 
investment and insurance companies  27  014
other  67 071
 
   9008  10000 
2014 provisional financial calendar 
fullyear results announcement for year  
ended 31 december 2013 4 march 
final dividend exdividend date 12 march 
final dividend record date 14 march 
report and accounts for year  
ended 31 december 2013 despatched 27 march 
deadline for receipt of scrip dividend elections 17 april 
agm and interim management statement 7 may 
final dividend for year ended  
31 december 2013 – payment date 9 may 
interim announcement for period ended 30 june 2014 5 august 
interim dividend exdividend date 13 august 
interim dividend record date 15 august 
deadline for receipt of scrip dividend elections 19 september 
interim dividend for period ended  
30 june 2014 – payment date  3 october 
interim management statement 5 november
key dates 2014 
march
4
fullyear
results
may
7
agm  interim
management 
statement
august
5
interim
 results
november
5
interim
 management
statement
advisors
registrars
computershare investor services plc
principal clearing bankers
hsbc bank plc
barclays bank plc
bank of america merrill lynch
independent auditors
pricewaterhousecoopers llp
solicitors
clifford chance llp
brokers
bank of america merrill lynch
financial advisors
n m rothschild  sons limited
contact us
investor relations
t 01202 597 597
investorsmeggittcom
information on meggitt plc including the latest share 
price wwwmeggittcom designed by hybrid creative 
typeset by orb solutions 
printed by leycol print
the papers used for the production of this report are 
certified by the forestry stewardship council
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elemental chlorine free they are produced at paper 
mills certified to iso 14001 and registered to emas company information 
meggitt plc
atlantic house
aviation park west
bournemouth international airport
christchurch
dorset bh23 6ew
united kingdom
t 44 0 1202 597 597
f 44 0 1202 597 555
wwwmeggittcom
registered in england and wales
company number 432989


Summary:
 financial highlights 2
meggitt’s 2013 results continued to demonstrate the breadth and 
resilience of its portfolio our equipment is installed on over 
60000 aircraft worldwide—a growing fleet—with a stable 
aftermarket revenue stream stretching out for many decades 
our excellent win rate on the many new aircraft programmes 
entering service which drove our investment in research and 
development of £1349m 82 of revenue gives us confidence in 
making further good progress in the years to come 
1
  the definition of ‘underlying’ is provided in notes 
10 and 15 to the consolidated financial 
statements on pages 91 and 94 respectively the 
figures for prior years have been restated as 
explained in note 44 on page 120 to the 
consolidated financial statements
revenue
£ millions 
16373
underlying profit before tax 
£ millions
1
 
 
3778
free cash flow
£ millions
1104
dividends per share
pence  
1275
underlying earnings per share
pence
1
 
375
13 1104
12 1824
11 1930
10 1633
09 1550
13 1275
12 1180
11 1050
10 920
09 845
13 16373
12 16058
11 14553
10 11620
09 11505
13 3778
12 3660
11 3253
10 2637
09 2442
13 375
12 365
11 321
10 286
09 264
›› see page 22 
›› see page 27 
›› see page 24 
›› see page 27 
›› see page 28 
2
meggitt plc report and accounts 2013 meggitt plc report and accounts 2013