Chemring Group PLC |Annual Report and Accounts 2012

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88 Financial statements Notes to the group financial statements 29. Own shares Balance at 1 November 2011 6.6 7.2 Acquired in the year 4.8 1.5 Issued in the year to satisfy employee share awards (1.8) (2.1) Balance at 31 October 2012 9.6 6.6 The own shares reserve represents the cost of shares in Chemring Group PLC purchased in the market and held by the Group to satisfy awards under the Group’s share-based incentive schemes (see note 31). During the year, 1,215,000 (2011: 300,000) ordinary shares were acquired, and 359,331 (2011: 456,855) ordinary shares were distributed following the vesting of awards under the Chemring Group Performance Share Plan. The total number of ordinary shares held in treasury at 31 October 2012 was 2,198,814 (2011: 1,343,145), with an average cost of £4.39 (2011: £4.89) per share. This represents 1.1% of the total issued and fully-paid ordinary share capital. 30. Obligations under non-cancellable operating leases Minimum lease payments under operating leases recognised in the income statement in the year 1.9 2.5 At the balance sheet date the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: Within one year 3.7 4.0 Two to five years 7.0 10.8 2012 £m 2012 £m 2012 £m 2011 £m 2011 £m 2011 £m 10.7 14.8 Operating lease payments represent rentals payable by the Group. Leases are negotiated for an average term of three years and rentals are fixed for the lease period, with an option to extend for a further period at the then prevailing market rate. 31. Share-based payments The Group operates share-based compensation arrangements to provide incentives to the Group’s senior management and other eligible employees. The Group recognised a net charge of £0.1 million (2011: £0.2 million) in respect of share-based payment transactions during the year. Details of the three schemes which operated during the year are as follows: The Chemring Group Performance Share Plan (the “PSP”) Under the PSP, conditional awards of ordinary shares are made at nil cost. Awards ordinarily vest on the third anniversary of the award date. The scheme commenced in March 2006. Number of conditional shares awarded 2012 2011 Outstanding at the beginning of the year 1,792,977 1,741,095 Awarded during the year 1,785,720 711,212 Vested during the year (359,331) (456,855) Lapsed during the year (987,973) (202,475) Outstanding at the end of the year 2,231,393 1,792,977 Subject to vesting at the end of the year - - Chemring Group PLC Report and Accounts 2012
89 The following awards were outstanding at 31 October 2012: Date of award Number of ordinary shares under award Vesting price per share £ Date when awards will vest 20 Jan 2010 318,380 Nil 20 Jan 2013 19 Jan 2011 453,360 Nil 19 Jan 2014 24 Oct 2011 17,492 Nil 24 Oct 2014 27 Jan 2012 1,442,161 Nil 27 Jan 2015 The Group has applied a discount to the share-based payment, to reflect the anticipated achievement of the stipulated targets for each PSP award, based on the predicted figures within the Group’s five year plan as well as the expected number of leavers over the life of the PSP awards. As there is no option element the share price is discounted based on the following assumptions: • dividend growth at 2p per annum (2011: growth at 2p per annum); • weighted average cost of capital 7.8% (2011: 9.4%). The weighted average fair value of awards made during the year was 333p (2011: 607p). The closing share prices on the dates of vesting of awards in the year were 368.5p, 274.4p and 289.3p (2011: 666.6p). The compensation expense recognised in respect of share options is based on their fair value at the grant date. The Chemring Group 2008 UK Sharesave Plan (the “UK Sharesave Plan”) Options were granted during the year on 30 July 2012. Number of share options Weighted average exercise price Pence 2012 2011 Number of share options Weighted average exercise price Pence Business review Corporate governance Financial statements Other information Outstanding at the beginning of the year 505,164 430 449,100 385 Granted during the year 553,724 223 182,629 508 Exercised during the year (14,115) 371 (85,885) 373 Lapsed during the year (262,602) 445 (40,680) 400 Outstanding at the end of the year 782,171 244 505,164 430 Subject to exercise at the end of the year 33,150 344 11,395 374 The following options were outstanding at 31 October 2012: Date of grant Number of ordinary shares under option Exercise price per share £ Dates between which options may be exercised 1 Aug 2008 75,195 3.736 1 Oct 2013 – 1 Apr 2014 31 Jul 2009 33,150 3.444 1 Oct 2012 – 1 Apr 2013 31 Jul 2009 31,970 3.444 1 Oct 2014 – 1 Apr 2015 30 Jul 2010 17,105 4.784 1 Oct 2013 – 1 Apr 2014 30 Jul 2010 20,195 4.784 1 Oct 2015 – 1 Apr 2016 29 Jul 2011 37,950 5.080 1 Oct 2014 – 1 Apr 2015 29 Jul 2011 16,917 5.080 1 Oct 2016 – 1 Apr 2017 30 Jul 2012 412,355 2.230 1 Oct 2015 – 1 Apr 2016 30 Jul 2012 137,334 2.230 1 Oct 2017 – 1 Apr 2018 The weighted average fair value of options granted in the year was 101p (2011: 42p). The weighted average fair value of options exercised in the year was 83p (2011: 85p). The weighted average share price on exercise of the options during the year was 365p (2011: 610p). The fair values of the share options in the UK Sharesave Plan are based on the difference between the exercise price and the share price on the grant date of the option. The Chemring Group 2008 US Stock Purchase Plan (the “US Stock Purchase Plan”) Options were granted during the year on 30 July 2012. This plan provides US employees with the opportunity to share in the future success of the Group and mirrors the UK Sharesave Plan, subject to certain legal and tax differences due to the differing jurisdictions. Chemring Group PLC Report and Accounts 2012
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Chemring Group PLC | Annual Report
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1 Financial performance Revenue - c
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3 Business review Corporate governa
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5 Balance sheet, cash flow and debt
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7 Secondly, we will maintain a stro
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9 evaluation of its RVIS remote vis
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11 for flight-tests on the Typhoon
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13 A400 is a thermite incendiary gr
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15 US Energetic Materials Qualifica
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17 addition, profit at Alloy Surfac
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19 Overall working capital decrease
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21 Principal risks and uncertaintie
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23 Risk description Competitive ris
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25 to 0.80 this year. In absolute t
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27 The Group is involved with a num
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29 The Rt Hon Lord Freeman*~ Non-Ex
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31 All holders of ordinary shares a
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33 Directors’ remuneration report
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35 The Committee aims to align the
Page 39 and 40: 37 Element Non-executive directors
Page 41 and 42: 39 Planned application of the polic
Page 43 and 44: 41 Service contracts and policy on
Page 45 and 46: 43 Implementation section (audited)
Page 47 and 48: 45 Long term incentives Details of
Page 49 and 50: 47 Directors’ shareholdings To re
Page 51 and 52: 49 The appointment and removal of t
Page 53 and 54: 51 Nomination Committee Mr P Hickso
Page 55 and 56: 53 Independent auditors’ report t
Page 57 and 58: 55 Consolidated statement of compre
Page 59 and 60: 57 Consolidated balance sheet as at
Page 61 and 62: 59 Notes to the consolidated cash f
Page 63 and 64: 61 Accounting convention The financ
Page 65 and 66: 63 Deferred tax liabilities are rec
Page 67 and 68: 65 that no impairment has occurred
Page 69 and 70: 67 A segmental analysis of revenue
Page 71 and 72: 69 Operating profit is stated after
Page 73 and 74: 71 The total charge for the year ca
Page 75 and 76: 73 movements on derivatives, net of
Page 77 and 78: 75 14. Other intangible assets Deve
Page 79 and 80: 77 If stated under historical cost
Page 81 and 82: 79 The average credit period taken
Page 83 and 84: 81 22. Obligations under finance le
Page 85 and 86: 83 Liquidity risk The table below d
Page 87 and 88: 85 Analysed as: Included in current
Page 89: 87 26. Deferred tax The following a
Page 93 and 94: 91 33. Discontinued operations The
Page 95 and 96: 93 Amounts recognised in the income
Page 97 and 98: 95 The principal assumptions used i
Page 99 and 100: 97 Independent auditors’ report o
Page 101 and 102: 99 Parent company statement of tota
Page 103 and 104: 101 2. Tangible assets Land and bui
Page 105 and 106: 103 6. Creditors due within one yea
Page 107 and 108: 105 12. Staff costs 2012 Number 201
Page 109 and 110: Notes 107 Business review Corporate
Page 111 and 112: Business review Corporate governanc
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Chemring Group PLC |Annual Report and Accounts 2012

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