Chemring Interim 2006 - Chemring Group PLC
Chemring Interim 2006 - Chemring Group PLC Chemring Interim 2006 - Chemring Group PLC
C H E M R I N G G R O U P P L CIndependent Review ReportTo Chemring Group PLCIntroductionWe have been instructed by the Company to review the financial information for the six months ended 30 April 2006 whichcomprises the consolidated income statement, the consolidated statement of recognised income and expense, the consolidatedbalance sheet, the consolidated cash flow statement and associated notes, and the related notes 1 to 10. We have read the otherinformation contained in the interim report and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information.This report is made solely to the Company in accordance with Bulletin 1999/4 issued by the Auditing Practices Board.Our work has been undertaken so that we might state to the Company those matters we are required to state to them in anindependent review report and for no other purpose.To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.Directors’ responsibilitiesThe interim report, including the financial information contained therein, is the responsibility of, and has been approved by,the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules of theFinancial Services Authority which require that the accounting policies and presentation applied to the interim figures areconsistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them,are disclosed.International Financial Reporting StandardsAs disclosed in note 1, the next annual financial statements of the Group will be prepared in accordance with InternationalFinancial Reporting Standards (IFRS) as adopted for use in the EU. Accordingly, the interim report has been prepared inaccordance with the recognition and measurement criteria of IFRS and the disclosure requirements of the Listing Rules.The accounting policies are consistent with those that the directors intend to use in the annual financial statements.Review work performedWe conducted our review in accordance with the guidance contained in Bulletin 1999/4 issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial data and based thereon, assessing whether theaccounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than anaudit performed in accordance with International Standards on Auditing (UK and Ireland) and therefore provides a lower levelof assurance than an audit. Accordingly, we do not express an audit opinion on the financial information.Review conclusionOn the basis of our review we are not aware of any material modifications that should be made to the financial information aspresented for the six months ended 30 April 2006.Emphasis of matter - insurance claimIn arriving at our review conclusion, we have considered the adequacy of the disclosure made in note 3 concerning theamounts recognised under a claim against the Group’s former insurance brokers concerning the insurance for Kilgore FlaresCompany LLC and their subsequent handling of an insurance claim.The future settlement of the claim against the brokerscould result in a shortfall, or a surplus, when compared with the recorded debtor at 30 April 2006. It is not possible toquantify the effect, if any, of this uncertainty. Details of the circumstances relating to this uncertainty and the amount of therelated debtor recorded at 30 April 2006 are disclosed in note 3.DELOITTE & TOUCHE LLPChartered AccountantsSouthampton27 June 2006P 10
I N T E R I M R E P O R T 2 0 0 6Notes to the Interim Statement1. ACCOUNTING POLICIESBasis of preparationPrior to 2006 the Group prepared its annual financial statements in accordance with UK Generally Accepted AccountingPractices (UK GAAP). For the interim accounts to 30 April 2006 and continuing, the Group is required to prepare itsconsolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Accordingly thesefinancial statements have been prepared in accordance with IFRS adopted for use in the European Union. These will be thoseIAS, IFRS and related Interpretations (Standing Interpretations Committee (SIC)/International Financial ReportingInterpretations Committee (IFRIC) interpretations), subsequent amendments to those standards and related interpretations,future standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB) thathave been endorsed by the European Commission (collectively referred to as IFRS). These are subject to ongoing review andendorsement by the European Commission or possible amendment by interpretive guidance from the IASB and the IFRICand are therefore still subject to change.The restated information in this report will be updated for any changes which arisebefore 31 October 2006.Moreover, under IFRS, only a complete set of financial statements comprising a balance sheet, income statement, statement ofchanges in equity, cash flow statement, together with comparative financial information and explanatory notes can provide afair presentation of the Group’s financial position, results of operations and cash flow. Accordingly, the financial information inthis report cannot be described as compliant with IFRS but has been prepared in accordance with the policies expected to bein place at 31 October 2006.Comparative data for 2005 has been restated to conform to the new accounting policies and where appropriate these newpolicies reflect the exemptions from restating certain financial information as permitted under IFRS1 First Time Adoption ofInternational Financial Reporting Standards. Note 8 “Explanation of Transition to IFRS” details the exemptions taken bythe Group.The unaudited consolidated income statement for each of the six month periods and the unaudited consolidated balancesheet as at 30 April 2006 do not amount to full accounts within the meaning of section 240 of the Companies Act 1985and have not been delivered to the Registrar of Companies. The interim report was approved by the Board of Directorson 27 June 2006.The unaudited comparative figures for the twelve months to 31 October 2005 have been prepared under IFRS. They do notconstitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The unqualified auditedaccounts for the twelve months ended 31 October 2005, under previous UK GAAP, have been filed with the Registrar ofCompanies and did not contain statements under section 237(2) or (3) of the Companies Act 1985.Basis of accountingThe interim statement has been prepared in accordance with IFRS for the first time. The disclosures required by IFRS1concerning the transition from previously reported UK GAAP to IFRS are given in notes 8 and 9.Accounting conventionThe financial statements are prepared under the historical cost convention, except for the revaluation of certain properties andfinancial instruments.Basis of consolidationThe Group financial statements consolidate those of the Company and all of its subsidiaries. A subsidiary is an entity overwhich the Group has the power to govern the financial and operating policies of an entity so as to obtain benefits from itsactivities. The results of subsidiaries acquired are consolidated from the date on which control passes to the Group and theresults of disposed subsidiaries are consolidated up to the date on which control passes from the Group.All companies within the Group make up their financial statements to the same date. All intra group transactions, balances,income and expenses are eliminated on consolidation.Operating profitOperating profit is stated before the share of results of the associate and before investment income and finance expense.Operating profit excludes the results of discontinued operations.P 11
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I N T E R I M R E P O R T 2 0 0 6Notes to the <strong>Interim</strong> Statement1. ACCOUNTING POLICIESBasis of preparationPrior to <strong>2006</strong> the <strong>Group</strong> prepared its annual financial statements in accordance with UK Generally Accepted AccountingPractices (UK GAAP). For the interim accounts to 30 April <strong>2006</strong> and continuing, the <strong>Group</strong> is required to prepare itsconsolidated financial statements in accordance with International Financial Reporting Standards (IFRS). Accordingly thesefinancial statements have been prepared in accordance with IFRS adopted for use in the European Union. These will be thoseIAS, IFRS and related Interpretations (Standing Interpretations Committee (SIC)/International Financial ReportingInterpretations Committee (IFRIC) interpretations), subsequent amendments to those standards and related interpretations,future standards and related interpretations issued or adopted by the International Accounting Standards Board (IASB) thathave been endorsed by the European Commission (collectively referred to as IFRS). These are subject to ongoing review andendorsement by the European Commission or possible amendment by interpretive guidance from the IASB and the IFRICand are therefore still subject to change.The restated information in this report will be updated for any changes which arisebefore 31 October <strong>2006</strong>.Moreover, under IFRS, only a complete set of financial statements comprising a balance sheet, income statement, statement ofchanges in equity, cash flow statement, together with comparative financial information and explanatory notes can provide afair presentation of the <strong>Group</strong>’s financial position, results of operations and cash flow. Accordingly, the financial information inthis report cannot be described as compliant with IFRS but has been prepared in accordance with the policies expected to bein place at 31 October <strong>2006</strong>.Comparative data for 2005 has been restated to conform to the new accounting policies and where appropriate these newpolicies reflect the exemptions from restating certain financial information as permitted under IFRS1 First Time Adoption ofInternational Financial Reporting Standards. Note 8 “Explanation of Transition to IFRS” details the exemptions taken bythe <strong>Group</strong>.The unaudited consolidated income statement for each of the six month periods and the unaudited consolidated balancesheet as at 30 April <strong>2006</strong> do not amount to full accounts within the meaning of section 240 of the Companies Act 1985and have not been delivered to the Registrar of Companies. The interim report was approved by the Board of Directorson 27 June <strong>2006</strong>.The unaudited comparative figures for the twelve months to 31 October 2005 have been prepared under IFRS. They do notconstitute statutory accounts within the meaning of section 240 of the Companies Act 1985. The unqualified auditedaccounts for the twelve months ended 31 October 2005, under previous UK GAAP, have been filed with the Registrar ofCompanies and did not contain statements under section 237(2) or (3) of the Companies Act 1985.Basis of accountingThe interim statement has been prepared in accordance with IFRS for the first time. The disclosures required by IFRS1concerning the transition from previously reported UK GAAP to IFRS are given in notes 8 and 9.Accounting conventionThe financial statements are prepared under the historical cost convention, except for the revaluation of certain properties andfinancial instruments.Basis of consolidationThe <strong>Group</strong> financial statements consolidate those of the Company and all of its subsidiaries. A subsidiary is an entity overwhich the <strong>Group</strong> has the power to govern the financial and operating policies of an entity so as to obtain benefits from itsactivities. The results of subsidiaries acquired are consolidated from the date on which control passes to the <strong>Group</strong> and theresults of disposed subsidiaries are consolidated up to the date on which control passes from the <strong>Group</strong>.All companies within the <strong>Group</strong> make up their financial statements to the same date. All intra group transactions, balances,income and expenses are eliminated on consolidation.Operating profitOperating profit is stated before the share of results of the associate and before investment income and finance expense.Operating profit excludes the results of discontinued operations.P 11
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