Financial Statements - Chemring Group PLC

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C H E M R I N G G R O U P P L CDirectors’ Reportfor the year ended 31 October 2003Your directors present the financialstatements of the Group for the yearended 31 October 2003.Principal ActivitiesThe principal activities of the Group arethe design, manufacture and sale ofcountermeasures, military pyrotechnics,and marine safety and security products.Review of the Yearand ResultsA review of the year can be found inthe Chairman’s Statement, theChief Executive’s Review and theFinance Director’s Review on pages 3 to 10.DividendsThe directors recommend a final dividendof 4.85p per ordinary share, whichtogether with the interim dividend of2.55p per ordinary share paid inSeptember 2003, gives a total for the yearof 7.40p (2002: 6.70p).Directors and their InterestsThe present directors are shown onpage 11.Mr K C Scobie andGeneral Sir John Stibbon will be retiringby rotation at the forthcoming AnnualGeneral Meeting and will be offeringthemselves for re-election. The detailsof their service contracts with theCompany are set out in theDirectors’ Remuneration Reporton pages 14 to 18.None of the directors had a beneficialinterest in any contract of significance towhich the Group was a party during theyear to 31 October 2003.Information required as to directors’shareholdings is set out in theDirectors’ Remuneration Report.Substantial ShareholdersAt 2 February 2004 the followinginterests in the ordinary share capital ofthe Company exceeding 3% had beennotified to the Company under theprovisions of section 198 of theCompanies Act 1985:NameDeutsche Bank AGStandard Life GroupPrudential Corporation PLCLegal & General InvestmentManagementEmployeesThe Group pursues a policy of employeecommunication through meetings(including team briefings and workscouncils) and in-house magazines bywhich employees are made aware of theprogress of the Group and the companiesin which they work.The Group employs disabled personswherever circumstances permit, and fulland fair consideration is given toapplications for employment by disabledpersons having regard to their particularaptitudes and disabilities. Disabledpersons in employment receive equaltreatment to that afforded to otheremployees.Environment%Interest13.811.65.84.3The Group recognises that environmentalissues are of fundamental importance to asuccessful and responsible businessstrategy, and it is committed, through aprocess of continual improvement, tominimising the environmental impact ofits operations. In line with thiscommitment, the Group’s businessesare striving towards:■ designing and developing productswhich have the minimal environmentalimpact during their manufacture, useand subsequent disposal■ minimising energy usage and wastewherever practicable■ reusing or recycling materialswherever practicable■ purchasing goods and services fromenvironmentally responsible suppliers■ monitoring progress on environmentalmatters using external and internalauditing.Charitable and PoliticalDonationsCharitable donations amounting to£3,650 (2002: £2,440) were madeduring the year. No political donationswere made during the year (2002: £nil).Policy on Payment ofSuppliersIt is the policy of the Group that each ofthe Group companies should agreeappropriate terms and conditions for itstransactions with suppliers. These willrange from standard written terms toindividually negotiated contracts.Creditor days as at 31 October 2003amounted to 78 days (2002: 61 days).The Chemring 1998Executive Share OptionSchemeOn 5 February 2003, options weregranted over 100,000 ordinary shares tosenior employees of the Group.Additional information is set out inNote 23.P 12
2 0 0 3 F I N A N C I A L S T A T E M E N T SThe Chemring Group PLCShare Based IncentiveScheme (“The ESOP”)No options were granted in the year to31 October 2003. During the yearoptions on 8,616 shares were exercised.Additional information is set out inNote 23.Share CapitalYour Board has decided to seekshareholders’ approval to an increase inthe Company’s authorised share capital bythe creation of 3,000,000 new ordinaryshares of 5p each. The purpose of thisproposal is to ensure that the Board willhave sufficient authorised share capitalavailable to issue shares on the exercise ofoptions under the share option scheme,and if the need should arise, to issueshares as part of the consideration for anyfuture acquisitions.Under the provisions of section 80 of theCompanies Act 1985 (‘the Act’) theBoard is prevented from exercising itspowers under the Articles of Association(‘the Articles’) to allot shares without anauthority in terms of the Act containedeither in the Articles or in a resolution ofthe shareholders in general meeting.Theauthority, when given, can last for amaximum period of five years, but yourBoard proposes that renewal should besought at each annual general meeting.Such proposal is set out as resolution 8 inthe notice of meeting.made without the necessity of convening ageneral meeting, your Board proposes thatadvantage be taken of the provisions ofsection 95 of the Act to disapply the Act’spre-emptive requirements. Accordingly, aspecial resolution (set out as resolution 9 inthe notice of meeting) will be proposedwhich, if passed, will have the effect ofgranting the directors the power to allotnot more than 5% of the present issuedordinary share capital free of therequirements of section 89 of the Act.No issue of these shares will be madewhich would effectively alter the controlof the Company without prior approval ofthe shareholders in general meeting.Statement of Directors’ResponsibilitiesThe directors are required by theCompanies Act 1985 to prepare financialstatements for each financial year whichgive a true and fair view of the state ofaffairs of the Company and the Group asat the end of the financial year and of theGroup’s profit or loss for that period. It isalso the directors’ responsibility tomaintain adequate accounting recordswhich disclose with reasonable accuracythe financial position of the Company andthe Group, to ensure that the financialstatements comply with theCompanies Act 1985, safeguard theassets of the Company and the Group,and prevent and detect fraud and otherirregularities, and prepare the financialstatements on a going concern basis.Close Company ProvisionsAs far as the directors are aware, the closecompany provisions of the Taxes Acts donot apply to the Group nor has there beenany change in that respect since31 October 2003.AuditorsOn 1 August 2003, Deloitte & Touchetransferred their business toDeloitte & Touche LLP, a limited liabilitypartnership incorporated under the LimitedLiability Partnerships Act 2000. TheGroup’s consent has been given to treat theappointment ofDeloitte & Touche as extendingto Deloitte & Touche LLP with effectfrom 1 August 2003 under the provisionsof section 26(5) of the Companies Act 1989.Accordingly a resolution to re-appointDeloitte & Touche LLP will be proposed atthe forthcoming Annual General Meeting.Approved by the Board of Directors on2 February 2004.Signed on behalf of the BoardS L Ellard - SecretarySection 89 of the Act requires that anallotment of shares for cash may not bemade unless the shares are first offered toexisting shareholders on a pre-emptivebasis in accordance with the terms of theAct. In accordance with general practice,to ensure that small issues of shares can beThe directors confirm that suitableaccounting policies, consistently appliedand supported by reasonable and prudentjudgments and estimates, have been usedin the preparation of the financialstatements, and that applicable accountingstandards have been followed.P 13
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Financial Statements - Chemring Group PLC

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