VIGILANCIA FITOSANITARIA

Only the New Ordinary Shares have voting rights attached. In a general meeting of the Company, subject to the provisions of the current Articles and to any special rights or restrictions as to voting attached to any other class of shares in the Company from time to time:

• on a show of hands, every member who is present (in person or by proxy) shall have one vote; and

• on a poll, every member who is present (in person or by proxy) shall have one vote for every share of which he is the holder. If any call or other sum payable by a holder of New Ordinary Shares remains unpaid, they shall not be entitled to vote at a general meeting or class meeting in respect of any shares held by them. Currently, all New Ordinary Shares are fully paid. Articles of association

The Company’s Articles were amended pursuant to a special resolution approved at the general meeting of the Company held on 7 February 2014, in order to reflect the rights and restrictions attaching to the B Shares, the C Shares and the C Deferred Shares and certain other changes required in relation to the Share Capital Consolidation. The rights and restrictions attaching to the New Ordinary Shares following the Share Capital

Consolidation remained exactly the same as those attaching to the Existing Ordinary Shares immediately prior to the Share Capital Consolidation.

Substantial shareholdings

As at 31 December 2013 and 4 March 2014, the Company has been advised of the following substantial interests in the New Ordinary Share capital of Melrose Industries PLC:

Shareholder 31 December 2013Holding as at % Holding as at4 March 2014 % BlackRock Inc. 164,027,614 12.95 137,308,187 12.81 Schroders plc 104,406,194 8.24 87,730,453 8.19 Threadneedle Asset

Management Ltd 74,255,412 5.86 62,152,083 5.80 Legal & General

Investment Management Ltd 59,863,410 4.73 50,519,233 4.71 Aviva Investors 57,576,569 4.55 48,543,369 4.53 Scottish Widows Investment Partnership 52,321,407 4.13 48,755,878 4.55 Shareholder dividend

The Directors are pleased to recommend the payment of a final dividend of 5.0p per share (2012: 5.0p) on 15 May 2014 to Ordinary shareholders on the register of members of the

Company at the close of business on 22 April 2014. This dividend recommendation will be put to shareholders at the forthcoming AGM of the Company, to be held on 13 May 2014. Subject to shareholder approval being obtained at the AGM for the final dividend, this will mean a full year 2013 dividend of 7.75p per share (2012: 7.6p).

In the second half of the year ended 31 December 2013, the Company completed the disposals of five of its “FKI” businesses, namely Crosby, Acco, Marelli, Truth and Harris, for a total consideration of approximately £950 million (see note 9 to the financial statements for further details). In accordance with its strategy, the Board decided to use part of the net proceeds of the disposals to return approximately £600 million in cash to shareholders, by way of the Return of Capital proposals described earlier in this Directors’ report. The Return of Capital was approved by shareholders at the general meeting of the Company held on 7 February 2014. This return to shareholders is not included in the full year dividend figure stated above.

It is the intention of the Board to continue to pursue a progressive dividend policy, where appropriate.

The Company offers a Dividend Reinvestment Plan (“DRIP”) which gives shareholders the opportunity to use their dividend payments to purchase further Ordinary Shares in Melrose Industries PLC. Further details about the DRIP and its terms and conditions can be found within the Investors section on the Company’s website at www.melroseplc.net. To the extent that shareholders chose the Income Option in respect of all or some of their entitlement to the Return of Capital, the DRIP could not be used in relation to the single C Share dividend paid to such shareholders in respect of their holdings of such C Shares.

Financial instruments

The disclosures required in relation to the use of financial instruments by the Company, including the financial risk management objectives and policies of the Company and the exposure of the Company to liquidity risk, exchange rate risk, contract and warranty risk and commodity cost risk, can be found in the Finance Director’s review on pages 40 to 47, which is incorporated by reference into this Directors’ report and in note 24 to the financial statements.

Research and development activities

Melrose Group businesses are encouraged to focus on research and development and to ensure that new and innovative product lines continue to be developed. During 2013, investment

continued and several new product launches were either realised during 2013, or planned for 2014. This Group strategy helps to ensure that each business can remain at the forefront of

technological advances within defined market sectors and be able to meet specific customer demands. Some examples of the types of new products being launched within the various markets are discussed within the Chief Executive’s business reviews on pages 22 to 31 of the Strategic Report.

Employees

Further details in relation to employment policies, employee involvement, consultation and development, together with details of some of the human resource improvement initiatives implemented during 2013 are shown on pages 48 and 49 of the Corporate Social Responsibility section of the Strategic Report, which is incorporated by reference into this Directors’ report. Environmental

The Directors of the Company fully understand the importance of the Group’s environmental responsibilities. Each of the Company’s businesses is committed to ensuring that their operations have a minimum adverse effect on the environment and that ongoing reductions in both energy usage and CO2

emissions are achieved, wherever practicable.

Further details in relation to the various environmental initiatives that are ongoing within some of the Group’s businesses and statistics showing greenhouse gas emissions data are shown on pages 52 and 53 of the Corporate Social Responsibility section of the Strategic Report, which is incorporated by reference into this Directors’ report.

Political donations

The Company’s policy is not to make any political donations and there were no political donations made during the year ended 31 December 2013 (2012: nil).

Significant agreements and change of control

With the exception of the Group’s banking facilities, the 2012 Incentive Plan (including the options over 2012 Incentive Shares) and the divisional management long-term incentive plans, there are no other agreements that would have a significant effect upon a change of control of Melrose Industries PLC as at 5 March 2014. In June 2012, as part of the process to acquire Elster, the Group agreed a £1.5 billion five year multi-currency, committed bank facility, which states that in the event of a change of control of the Company following a takeover bid, the Company and lenders under this facility are obliged to enter into negotiations to determine whether and, if so, how to continue with the facility. There is no obligation for the lenders to continue to make the facility available for more than 30 days beyond any change of control. Failure to reach agreement with parties on revised terms could require an acquirer to put in place replacement facilities. In the event of a takeover of the Company, options over the 2012 Incentive Shares would be exercised and any 2012 Incentive Shares resulting from such exercise, or that have previously been issued, would convert into Ordinary Shares of 13/110 pence or an entitlement to a dividend paid in cash, the rate of conversion being based upon the offer price of the Company’s Ordinary Shares as calculated on the date of the change of control of the Company. If part or the entire offer price is not in cash, the Remuneration Committee will determine the value of the non- cash element, having been advised by an investment bank of repute that such valuation is fair and reasonable.

Auditor

So far as each Director is aware, there is no relevant audit information of which the Company’s auditor is unaware and the Directors have taken all the steps which they ought to have taken as Directors to make themselves aware of any relevant audit information and to establish that the Company’s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.

On behalf of the Board, the Audit Committee has reviewed the effectiveness, performance, independence and objectivity of the existing external auditor, Deloitte LLP, for the year ended 31 December 2013 and concluded that the external auditor was in all respects effective. Deloitte LLP has expressed its willingness to continue in office as auditor. Accordingly, resolutions will be proposed at the AGM of the Company to reappoint Deloitte LLP as auditor of the Company and to authorise the Directors to determine their remuneration. Approved by the Board of Directors and signed on its behalf by:

Adam Westley Company Secretary 5 March 2014 S tr at eg ic R ep or t G ove rn an ce Fina nc ia ls S ha re ho lde r i nfo rm ati on

Corporate

Governance report