Chemring Group PLC |Annual Report and Accounts 2012

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Corporate governance
Directors’ report
for the year ended 31 October 2012
The directors present their annual report, together with the audited
financial statements of the Group and the Company for the year
ended 31 October 2012.
Principal activities
The principal activities of the Group are the design, manufacture
and sale of counter-IED equipment, countermeasures, pyrotechnics
and munitions.
Business review
The Chairman’s statement and the business review on pages 4
to 27 provide an overview of the Group’s business development,
performance and position during and at the end of the financial
year; its strategy and likely future development; key performance
indicators; and a description of the principal risks and uncertainties
facing the business. Further information regarding financial risk
management policies and financial instruments is given in note 24
of the financial statements. There have been no significant events
since the balance sheet date.
Results and dividends
The profit attributable to the Group’s shareholders for the year was
£15.3 million (2011: £73.9 million). The directors recommend a final
dividend of 4.2p per ordinary share which, together with the interim
dividend of 5.3p per ordinary share paid in August 2012, gives a
total for the year of 9.5p (2011: 14.8p). The final dividend is subject
to approval by shareholders at the Annual General Meeting on
20 March 2013, and accordingly has not been included as a liability
in these financial statements.
Directors and their interests
The present directors are shown on pages 28 and 29.
Mr D Evans resigned as a director on 21 March 2012, Mr P Rayner
resigned as a director on 31 July 2012, and Dr D Price resigned as a
director on 23 October 2012.
Mr M Papworth was appointed as a director on 5 November 2012,
and Mr S Bowers was appointed as a director on 7 January 2013.
Both of these directors will be seeking re-appointment under
Article 87.1 of the Company’s Articles of Association at the
forthcoming Annual General Meeting.
In accordance with the Company’s Articles of Association, all
directors are required to submit themselves for re-election every
three years. However, in order to ensure compliance with the UK
Corporate Governance Code, all directors now voluntarily submit
themselves for re-election at every Annual General Meeting.
Sir Peter Norriss has indicated his intention to retire as a
non-executive director at this year’s Annual General Meeting,
and will not therefore be seeking re-election.
Nigel Young, who was Interim Chief Financial Officer between
August 2012 and January 2013, will join the Board as a
non-executive director at the end of April 2013. He will become
Chairman of the Audit Committee, succeeding Lord Freeman
who plans to retire from the Board at the end of the year.
Details of the service contracts between the Company and the
executive directors are set out in the directors’ remuneration
report on page 41. The non-executive directors do not have service
contracts with the Company.
The Company has made qualifying third party indemnity provisions
for the benefit of its directors, which were in effect throughout the
year and remain in force at the date of this report.
None of the directors had a beneficial interest in any contract of
significance to which the Group was a party during the year ended
31 October 2012.
Information required as to directors’ shareholdings is set out in the
directors’ remuneration report.
Substantial shareholdings
At 23 January 2013, the following substantial holdings in the
ordinary share capital of the Company had been notified to the
Company in accordance with Chapter 5 of the Disclosure and
Transparency Rules of the Financial Services Authority:
Name
% Interest
Invesco Limited 27.5
UBS Global Asset Management 5.5
Old Mutual Asset Managers 5.1
Ameriprise Financial, Inc. 5.1
JP Morgan Chase & Co. 4.9
AXA S.A. and its group of companies 4.8
Standard Life Investments Ltd 4.6
BT Pension Scheme Trustees Ltd as Trustees
of the BT Pension Scheme 3.8
Cantillon Capital Management LLC 3.6
Tameside MBC re Greater Manchester Pension Fund 3.4
Hermes Equity Ownership Services Ltd 2.9
Employees and employee consultation
Details of the Group’s employment policies and employee
consultation practices are set out in the corporate responsibility
review on page 25.
Charitable and political donations
Charitable donations amounting to £64,000 (2011: £129,000) were
made during the year. No political donations were made during the
year (2011: £nil).
Contractual arrangements
The Group contracts with a wide range of customers, comprising
governments, armed forces, prime contractors and OEMs across the
globe. The US Department of Defense is the largest single customer,
and procures the Group’s products under a significant number of
separate contracts placed with individual Group businesses.
The Group’s businesses utilise many suppliers across the world, and
arrangements are in place to ensure that businesses are not totally
reliant on single suppliers for key raw materials or components.
Policy on payment of suppliers
It is the policy of the Group that each of the Group companies
should agree appropriate terms and conditions for its transactions
with suppliers. These will range from standard written terms to
individually negotiated contracts. Creditor days of the Group as at
31 October 2012 amounted to 25 days (2011: 29 days).
Share capital and shareholder rights
General
The Company’s share capital consists of ordinary shares of 1p
each and preference shares of £1 each, which are fully paid-up
and quoted on the main market of the London Stock Exchange.
Full details of the movements in the issued share capital of the
Company during the financial year are provided in note 27 of the
financial statements.
Chemring Group PLC Report and Accounts 2012