1st Feb 2006 07:01
FOR IMMEDIATE RELEASE 1 FEBRUARY 2006 CHEMRING GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2005 Results Profit before tax and impairment of goodwill ‚£17.3 million (2004: ‚£13.3million), up 30%Basic earnings per ordinary share before impairment of goodwill 42.22p (2004:33.32p), up 27%Profit before tax ‚£14.3 million (2004: ‚£13.3 million), up 8%Basic earnings per ordinary share 31.90p (2004: 33.32p), down 4%Dividend per ordinary share 10.50p (2004: 9.00p), up 17% Highlights Over 80% turnover growth at Alloy Surfaces, creating the world's largestexpendable decoy business, and further significant expansion announced postyear endAcquisition of Nobel Energetics within the newly-formed Energetics divisionMarine division classified as non-core and divestment announcedStrong operational cash flowOrder book up 32% to ‚£123 million at the year endCurrent order book at record high of ‚£160 millionFour acquisitions in the Energetics division since the year end Commenting on the results, Ken Scobie, Chemring Group Chairman, said: "TheGroup's profitability has been substantially influenced by another record yearfor sales and earnings at Alloy Surfaces in the US. The rest of theCountermeasures division delivered excellent results in the second half andthis, together with a good performance from the Energetics division, provided avery respectable increase in earnings per ordinary share before impairment ofgoodwill to 42.22p (2004: 33.32p). The strength of the Group's underlying performance is masked in part by theMarine division which made losses of ‚£2.5 million in the year, equating toapproximately 6p of post-tax earnings. Without these losses, the Group wouldhave been reporting even higher growth in earnings. The Board has nowdetermined that the Marine division is non-core and accordingly will bedivested. The Board has reviewed the direction of the Group, taking into account ourunique position in the defence industry worldwide. It has determined that itwill remain totally focussed on the defence industry, with its commercialactivities limited to exploiting any technology arising from its defenceproducts. The Group will obviously continue with its core Countermeasures business, whereit is experiencing excellent growth and is by some distance the world leader,with more than half of the world decoys market and supplying in excess of 60%of the US military's decoy requirements. Our second core business is that of Energetics, where the Group already hassignificant experience and where we believe the worldwide market is highlyfragmented and capable of consolidation. The Board believes that good organicgrowth can be generated in this division, and combined with acquisitions, thiscould provide excellent returns. The acquisitions of Technical Ordnance,Leafield Engineering and Leafield Marine announced today will significantlystrengthen the division, and the UK Government's recently published DefenceIndustrial Strategy would appear to support our focus in this area. The Group's order book is at a record level, demand for our decoys promisessolid growth in Countermeasures, and our concentration on Energetics willproduce a strong second division. I look forward to reporting further dynamicprogress of the Group, including its newly acquired businesses, at the halfyear." For further information: Ken Scobie Chairman 0207 930 0777 Dr David Price Chief Executive 0207 930 0777 Paul Rayner Finance Director 0207 930 0777 Rupert Pittman Cardew Group 0207 930 0777 CHEMRING GROUP PLC PRELIMINARY RESULTS FOR THE YEAR ENDED 31 OCTOBER 2005 Results Turnover from continuing operations was ‚£130.2 million (2004: ‚£125.6 million),an increase of 4%. Net operating margin from continuing operations beforeimpairment of goodwill was 14.8% (2004: 13.5%). Net operating profit fromcontinuing operations before impairment of goodwill was ‚£19.3 million (2004: ‚£16.9 million), an increase of 14%. The acquired business turnover of ‚£2.3 million and operating profit of ‚£0.8million represents two months' contribution from Nobel Energetics, which wasacquired on 1 September 2005. Following the Board's annual impairment test on the Group's total goodwill, itwas decided to take a goodwill impairment charge of ‚£3 million againstoperating profit in relation to the non-core Marine division. Total operating profit was ‚£17.1 million (2004: ‚£16.9 million). An analysis of the core and non-core business turnover and operating profit isshown below: 2005 2004 ‚£m ‚£m Turnover Operating Turnover Operating profit/(loss) profit/(loss) Core 118.7 21.8 110.1 17.4 Non-core 11.5 (2.5) 15.5 (0.5) 130.2 19.3 125.6 16.9 Core - acquired 2.3 0.8 - - 132.5 20.1 125.6 16.9 Impairment of goodwill - (3.0) - - 132.5 17.1 125.6 16.9 The non-core Marine losses of ‚£2.5 million include restructuring costs of ‚£1.0million in relation to accelerated amortisation of development costs,additional stock provisions and redundancy costs. Profit before tax and impairment of goodwill was ‚£17.3 million (2004: ‚£13.3million), an increase of 30%. Profit before tax was ‚£14.3 million (2004: ‚£13.3 million) an increase of 8%. The dividend per ordinary share of 10.50p (2004: 9.00p) is covered 3.0 times(2004: 3.5 times). Turnover by Business Area 2005 2004 ‚£m ‚£m Core businesses Countermeasures 90.8 78.7 Energetics 30.2 31.4 121.0 110.1 Non-core business Marine 11.5 15.5 132.5 125.6 Total Core Businesses Countermeasures The global expendable countermeasures market continued to grow in 2005, and isnow estimated to stand at about ‚£180 million per annum. The demand for decoys,particularly our special material products, has grown very strongly, driven bythe MANPADS threat to the numerous peacekeeping operations currently beingundertaken in the Middle East, Eastern Europe, Southern Asia and Africa. TheGroup is the world leader in decoy technology, and we have three of the fourlargest suppliers. Alloy Surfaces' strong growth has continued and it is nowthe largest supplier of expendable decoys in the world. Alloy Surfaces had an excellent year, generating in excess of $75 million ofsales. A second production facility was commissioned and completed on scheduleduring the first half of the year, and production has ramped-up steadily tofull capacity. This was primarily to meet increased demand for decoys from theUS Air Force. The build-up of BOL-IR decoys to production rates in excess of50,000 per month to support the UK Ministry of Defence (MoD) operations inAfghanistan and Iraq was also successfully completed. Overall, Alloy Surfacesmanufactured in excess of one million decoys during the year. Export sales of special material decoys also started to increase, with sizablevolumes ($15 million) delivered to the UK, Japan and Australia. The USGovernment has indicated its willingness to allow exports to other NATOcountries, offering the potential for growth in our export sales. We recently announced the signing of a Memorandum of Understanding with the DoDfor the expansion of Alloy Surfaces' production capacity in Philadelphia toincrease the manufacture of one of its special material decoys for US Armyhelicopters. To meet the growth from 20,000 to 80,000 units per month, weshall be expanding one of the two existing plants and building a thirdmanufacturing facility. We expect to have the extension to the second plantoperational by May 2006, and to have commissioned the third plant by September2006. Maximum manufacturing rates will be achieved in January 2007 and willcontinue until at least the end of 2008. If the ramp-up in production isachieved to the US Army's schedule, then, at full capacity, the new requirementshould generate more than $50 million per annum of additional revenues. Early in the year, the award of a multi-year contract to Kilgore for theproduction of M206 and MJU-7A/B decoys for the US Air Force was delayed bythree months because of an appeal from one of our competitors, which was dulyrejected. Production was then successfully ramped-up and consistentmanufacture of over one million decoys was achieved in the remaining ninemonths of the year. The second half performance of the business was ahead ofthe same period last year. Our UK business, Chemring Countermeasures, also had a successful year, makingconsiderable progress on the development of new products for the air, sea andland environments. Good progress was made on the development of new dual-spectral flares forfixed-wing and helicopter applications, and recent flight tests havedemonstrated that these meet the stringent MoD requirements. We have alsocompleted flight testing of a new kinematic decoy that will cope withrate-biased seekers. Orders for these new products have already been secured inthe first months of the current financial year. We have secured our first export development and production contract for keysub-systems in the underwater countermeasure system, LOKI. This will open up anew export market, which is just starting to grow. Finally, a five year framework agreement, worth ‚£11.9 million, was signed withthe MoD for the supply of decoys, and work is now underway to convert this intoa full partnering agreement. Energetics There was a reduction in sales volumes in the year at PW Defence, Pains WessexAustralia and Kilgore, although Pains Wessex Marine increased its turnover by6%. PW Defence was affected by strong competitive pressures in the UK market fromother European companies. Following a restructuring of the cost base andinvestment in various new products, a recovery is expected in 2006. We alsosigned a partnership agreement with Martin Electronics Inc. in the US. Thisshould secure better access to the lucrative US military market for ourpyrotechnic products, and provides us with a family of 40mm products for theEuropean market. The ordnance activities at Kilgore also had a disappointing year, down 17%,with delays in new orders for both ordnance primers and marine locationmarkers. In September 2005, we completed the acquisition of Nobel Energetics, located onthe Ardeer peninsula on the west coast of Scotland. The company has a turnoverof approximately ‚£13 million and employs 130 people. Nobel Energetics has a wide range of products that significantly enhance ourproduct range, including initiators, actuators, gas generators, munitionrelease cartridges, demolition stores, propellants and rocket motors. Thecompany provides twenty devices for Martin Baker ejector seats. It is in theprocess of completing the development of the rocket motors for the Saab NLAWmissile that has been ordered by the MoD as its short-range anti-tank weapon. Atotal of 14,000 units have been ordered. Shortly after the year end, we completed the acquisition of Comet, located inBremerhaven, Germany. The company has a turnover of about ‚£14 million andemploys 110 people. Comet extends our product portfolio significantly intraining/simulation products, and mine breaching systems. It also enhances ouraccess to German and Eastern European markets. It has a strong marinepyrotechnics brand, which combined with Pains Wessex Marine, makes us the worldleader in this market. Finally, we have separately announced today the acquisitions of three othercompanies that will further enhance the growth of our Energetics division. We have reached agreement on the acquisition of Technical Ordnance in SouthDakota, USA. It manufactures initiators, impulse cartridges, safety and armingcomponents, and cutting charges, and has a complementary range to NobelEnergetics. Technical Ordnance supplies all of the US armed forces, althoughits largest customer is the US Air Force. It has a turnover of approximately ‚£18 million and employs 120 staff. We have also acquired Leafield Engineering and Leafield Marine, both located inthe UK. Leafield Engineering provides a comprehensive range of pyro-mechanical devices,safety and arming mechanisms, and weapon break-up systems, as well asprotractors, cutters and explosive release bolts. It greatly extends ourpresence in the missile and weapon segment of the defence market. It has aturnover of over ‚£5.8 million and employs just over 70 staff. Leafield Marine manufactures valves and inflation systems for the marine anddefence markets, utilising technology similar to that which exists at NobelEnergetics. It has sales of ‚£1.4 million and employs 20 people. The acquisitions of Technical Ordnance, Leafield Engineering and LeafieldMarine will bring additional sales of approximately ‚£25 million to ourEnergetics division. This division, including Nobel Energetics and Comet, willnow have sales in excess of ‚£75 million per annum. Non-core Business Marine It was a disappointing year for the Marine division. In the lights business,reduced demand from the MoD led to a 22% fall in sales volumes, whilst beaconssales, particularly in the US, continued to be affected by doubts regarding theperformance of GPS beacons. An upgrade programme took place over the firstseven months of the year and sales only started to recover towards the very endof the year, after a second independent trial had verified the improvedperformance. Sales of automatic identification system (AIS) transponders were also down to40% of last year's levels, as the expected legislation for the US and Russianwork boats failed to materialise; this now looks to be delayed until 2006 or2007. A major restructuring of the business to reduce costs was undertaken during theyear. A number of new products, including a lower cost beacon, are nearingcompletion, and we expect McMurdo to return to profitability during 2006. The Board of Directors During the year Peter Molony indicated his wish to retire from the Board, onwhich he had served for eight years, initially for eighteen months as ChiefExecutive, and subsequently as a non-executive director and Chairman of theAudit Committee. The Board will miss his counsel and contribution, whichcommenced at a low point in the Group's fortunes. We wish him well in hisretirement. The Group is currently searching for a replacement, during whichtime Mr Scobie has temporarily assumed the Chairmanship of the Audit Committee. Insurance ClaimIn previous reports we have dealt with the issues surrounding our claimsagainst Royal & Sun Alliance, which has now been settled, and against ourformer insurance brokers, Willis, in connection with the insurance recovery atKilgore. In good faith the Board responded to proposals from Willis that weshould go to mediation, recognising that should this fail it would delay thecommencement of Court proceedings. The mediation proved to be an unsatisfactoryexercise and there is now no alternative but to go to Court. The Groupcontinues to carry forward in its balance sheet a reasonable estimate forrecovery of the claim against Willis at the same level as in 2004. Research and Development Research and development expenditure totalled ‚£6.3 million (2004: ‚£6.0million), an analysis of which is set out below: 2005 2004 ‚£m ‚£m Customer funded research and development 2.6 2.4 Internally funded research and development 2.6 2.2 Capitalised development costs 1.1 1.4 Total research and development expenditure 6.3 6.0 The Group's policy is to write-off capitalised development costs over a threeyear period. Amortisation of development costs was ‚£1.6 million (2004: ‚£1.6million) Interest The interest charge for the year was ‚£3.0 million (2004: 3.1 million). Interest was covered 6.8 times (2004: 5.5 times) by operating profits beforeimpairment of goodwill. Taxation The tax charge of ‚£5.0 million (2004: ‚£3.8 million) represents a rate of 29%(2004: 29%) on profits before impairment of goodwill. The goodwill impairmentcharge does not attract tax relief. Pensions The calculated deficit under FRS17 on the Group's two defined benefit pensionschemes after tax was ‚£13.6 million (2004: ‚£12.3 million). The increaseddeficit arose principally as a result of the reduction in the discount rate onfuture liabilities. Cash Flow and Net Debt Operating cash flow was ‚£21.1 million (2004: ‚£14.5 million), with ‚£23.6 millionof operating cash flow generated in the second half of the year, compared to anoutflow in the first half of ‚£2.5 million. Working capital balances reduced inthe second half. Fixed asset expenditure in the year was ‚£8.0 million (2004: ‚£5.6 million). Theincrease in expenditure was in support of Alloy Surfaces' second facility.Following the year end, Alloy Surfaces signed a lease on a third plant toprovide additional capacity to satisfy increased demand for its decoys. Thecosts associated with the fit-out of the new plant and an extension to theexisting facilities will be in the region of $8 million, and will be incurredin 2006. The Group generated positive cash before the acquisition of Nobel Energetics.However, as this acquisition was funded with a medium term loan, the Group'soverall net debt increased to ‚£52.8 million (2004: ‚£30.0 million). Gearing is75% (2004: 47%). Dividends The Board is recommending a final ordinary dividend of 7.30p per ordinaryshare, an 18% increase on the final dividend for 2004. This, together with theinterim dividend of 3.20p paid in September 2005, gives a total dividend forthe year of 10.50p, a 17% increase over 2004. The dividend is 3.0 timescovered. The shares will be marked "ex dividend" on 22 February 2006 and thedividend is payable on 5 May 2006. Post Balance Sheet Events On 30 November 2005, the entire issued share capital of Comet GmbH was acquiredfor a cash consideration of ¢â€š¬9.6million (approximately ‚£6.6 million beforecosts). The consideration, which is subject to a working capital adjustment,has been funded by a Euro medium term loan. The acquisitions of Technical Ordnance, Inc., Leafield Engineering Limited andLeafield Marine Limited have been announced today. A summary of thetransactions is set out below: Agreement has been reached on the acquisition of the entire capital stock ofTechnical Ordnance for $70 million (approximately ‚£40 million), subject to aworking capital adjustment. The acquisition is dependent upon regulatoryapprovals and is anticipated to complete in March 2006. The acquisition ofTechnical Ordnance has been funded via a vendor placing of the Company's shareswhich is expected to raise approximately ‚£27.7 million (before costs), with thebalance funded from a new medium term loan. The entire issued share capital of Leafield Engineering and Leafield Marine hasbeen acquired for a cash consideration of ‚£4.4 million, subject to a workingcapital adjustment, and the assumption of ‚£0.6 million of bank overdrafts. TheLeafield acquisitions have been financed utilising an existing term loanfacility. International Financial Reporting Standards International Financial Reporting Standards (IFRS) came into effect on 1January 2005. The Group's first set of audited financial statements reportedunder IFRS will be for the year ending 31 October 2006. A preliminaryassessment of the impact on the Group has been made, and the potential impactof certain items is set out below: Goodwill Amortisation No change, as the Group already carries out an annual impairment test and does not charge any amortisation. Development Costs Development costs are capitalised under SSAP13, and no change to reported numbers is envisaged. Deferred Tax The Group does discount deferred tax liabilities. Without the discounting, the tax charge is likely to rise by approximately 1% per annum. Pensions The deficit arising from actuarial valuations will be recorded on the balance sheet. Prospects The market outlook for our Countermeasures business continues to be verypositive. In 2005, the global market increased by 12%, driven by the increasedrequirements of the US. Over the next three years, the global market isexpected to grow, with significant growth in demand from both the US Army andthe US Air Force, particularly for our special material decoys.The five new acquisitions in the Energetics division have also created anenormous opportunity for growth, bringing together key expertise and technologyfrom both the US and Europe. The Group now has a very broad range of productsand we expect to achieve strong export growth when these are coupled with ourglobal market access. The Group's order book is at a record level, demand for our decoys promisessolid growth in Countermeasures, and our concentration on Energetics willproduce a strong second division. We look forward to reporting further dynamicprogress of the Group, including its newly acquired businesses, at the halfyear. SUMMARY FINANCIAL INFORMATION 2005 2004 2003 ‚£000 ‚£000 ‚£000 Turnover Core business Countermeasures 90,768 78,724 64,264 27,923 31,360 31,560 Energetics -continued 2,272 - - -acquiring 30,195 31,360 31,560 -total 120,963 110,084 95,824 Total core business Non-core business - Marine 11,495 15,496 14,346 Discontinued operations - - 8,240 Total turnover 132,458 125,580 118,410 Operating profit/(loss) before impairment of goodwill: -Continuing 19,324 16,927 14,026 -Discontinued - - (216) -Acquisitions 742 - - Total operating profit before impairment of goodwill 20,066 16,927 13,810 Impairment of goodwill (3,000) - - Total operating profit 17,066 16,927 13,810 Profit before taxation and impairment of goodwill 17,303 13,315 11,844 Profit before taxation 14,303 13,315 11,844 Dividend per ordinary share 10.50p 9.00p 7.40p Basic earnings per ordinary share - before impairment of goodwill1 42.22p 33.32p 30.48p Basic earnings per ordinary share 31.90p 33.32p 30.48p Diluted earnings per ordinary share 31.76p 33.14p 30.05p Net debt 52,774 30,008 38,681 Shareholders' funds 70,204 63,357 52,423 1See note 3CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 October 2005 2005 2004 Before impairment of goodwill Impairment Total Total of goodwill operations operations ‚£000 ‚£000 ‚£000 ‚£000 Turnover 130,186 - 130,186 125,580-continuing 2,272 - 2,272 -acquired - 132,458 - 132,458 125,580 Operating profit -continuing 19,324 (3,000) 16,324 16,927 742 - 742 -acquiring - 20,066 (3,000) 17,066 16,927 Associated undertaking 197 - 197 151 Loss on disposal of subsidiary undertaking - - (690) - Profit /(loss) on ordinary activities before interest 20,263 (3,000) 17,263 16,388 Interest payable (2,960) - (2,960) (3,073) Profit/(loss) on ordinary activities before taxation 17,303 (3,000) 14,303 13,315 Tax on profit/(loss) on (5,011) - (5,011) (3,822)ordinary activities Profit/(loss) on ordinary activities after taxation 12,292 (3,000) 9,292 9,493 Equity minority interest (13) 15 Profit for the year 9,279 9,508 Dividends (3,073) (2,690) Retained profit for the year 6,206 6,818 Basic earnings per ordinary 42.22p (10.32p) 31.90p 33.32pshare Diluted earnings per ordinary 31.76p 33.14pshare Dividend per ordinary share 10.50p 9.00p ADDITIONAL FINANCIAL PERFORMANCE STATEMENTSFor the year ended 31 October 2005 2005 2004 ‚£000 ‚£000 Statement of total recognised gains and losses Profit for the year 9,279 9,508 Currency translation differences on foreign currency net investments 67 (1,945) Total recognised gains and losses since last annual report and financial statements 9,346 7,563 Reconciliation of movements in shareholders' funds Profit on ordinary activities after taxation 9,292 9,493 Equity minority interest (13) 15 Dividends (3,073) (2,690) Retained profit for the year 6,206 6,818 Other recognised gains/(losses) 67 (1,945) Ordinary shares issued 10 77 Share premium arising 564 5,984 Net addition to shareholders' funds 6,847 10,934 Opening shareholders' funds as restated 63,357 52,423 Closing shareholders' funds 70,204 63,357 CONSOLIDATED BALANCE SHEETAs at 31 October 2005 2005 2004 ‚£000 ‚£000 ‚£000 ‚£000 Fixed assets Intangible assets: Development costs 2,297 2,841 Goodwill 39,948 27,984 42,245 30,825 Tangible assets 51,747 41,810 Investments 1,068 1,073 95,060 73,708 Current assets Stock 32,274 25,090 Debtors 29,948 27,036 Cash at bank and in hand 7,774 9,933 69,996 62,059 Creditors due within one year (43,026) (49,915) Net current assets 26,970 12,144 Total assets less current liabilities 122,030 85,852 Creditors due after more than one year (46,922) (18,174) Provisions for liabilities and charges (4,627) (4,057) Equity minority interest (277) (264) 70,204 63,357 Capital and reserves Called-up share capital 1,521 1,511 Reserves Share premium account 27,274 26,710 Special capital reserve 12,939 12,939 Revaluation reserve 2,374 2,410 Revenue reserves 26,096 19,787 68,683 61,846 Shareholders' funds 70,204 63,357 Attributable to equity shareholders 70,142 63,295 Attributable to non-equity shareholders 62 62 70,204 63,357 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 October 2005 2005 2004 ‚£000 ‚£000 ‚£000 ‚£000 Net cash inflow from operating 21,141 14,462activities Returns on investments and (3,131) (3,045)servicing of finance Taxation (7,612) (2,291) Capital expenditure (7,953) (5,580) Acquisitions and disposals (21,767) 482 Equity dividends paid (2,736) (2,219) (22,058) 1,809 Net cash (outflow)/inflow before financing Financing - issue of shares 574 6,061 - increase/ 25,967 (4,478) (decrease) in debt 26,541 1,583 Increase in cash 4,483 3,392 Reconciliation of net cash flow to movement in net debt Increase in cash 4,483 3,392 Cash (inflow)/outflow from the (increase)/decrease in debt (25,967) 4,478 Change in net debt resulting (21,484) 7,870from cash flows New finance leases (103) (354) Translation difference (1,109) 1,157 Amortisation of debt finance (70) -costs Movement in net debt (22,766) 8,673 Opening net debt (30,008) (38,681) Closing net debt (52,774) (30,008) 2005 2004 Continuing Acquired Total Total operations operations operations operations ‚£000 ‚£000 ‚£000 ‚£000 Reconciliation of operating profit to net cash flow from operating activities Operating profit 16,324 742 17,066 16,927 Impairment of goodwill 3,000 - 3,000 - Amortisation charge 1,607 - 1,607 1,555 Depreciation charge 4,087 16 4,103 3,229 Loss on sale of tangible fixed 8 - 8 128assets Increase in stock (5,549) (147) (5,696) (1,169) (Increase)/decrease in debtors (854) (251) (1,105) 1,116 Increase/(decrease) in 1,901 257 2,158 (7,324)creditors 20,524 617 21,141 14,462 Notes Accounts and Auditors ReportThe financial information set out above does not constitute the Company'sstatutory accounts for the year ended 31 October 2005 or 31 October 2004 but isderived from those accounts. Statutory accounts for 2004 have been deliveredto the Registrar of Companies, and those for 2005 will be delivered followingthe Company's Annual General Meeting. The auditors have reported on thoseaccounts; their reports were unqualified and did not contain statements unders237(2) or s237(3) of the Companies Act 1985. The financial information has been prepared in accordance with the accountingpolicies adopted for the 2004 accounts. Insurance ClaimFollowing the manufacturing incident at Kilgore Flares Company LLC on 18 April2001, resulting in material damage and suspension of operations, the Grouplodged a claim with its insurers for property damage and businessinterruption. As previously reported, at 31 October 2004, payments totalling ‚£10,756,000 had been received from the Group's insurers. The Group is now pursuing a claim against its former insurance brokers,concerning the insurance cover for Kilgore Flares Company LLC and the brokers'subsequent handling of the claim. During the year the Group incurred costs of‚£147,000 in relation to the claim, which were written off. The balance of the claim that had not been recovered from the Group's insurancebrokers at the year end was ‚£2,796,000 (2004: ‚£2,689,000), which has beenincluded within other debtors. Foreign exchange movements of ‚£107,000 havebeen recognised through the statement of total recognised gains and losses inthese financial statements, due to the claim being denominated in US dollars. Earnings per Ordinary ShareThe earnings and shares used in the calculations are as follows: 2005 2004 Ordinary Ordinary shares shares Earnings Number EPS Earnings Number EPS As restated ‚£000 000s Pence ‚£000 000s Pence Basic 9,275 29,075 31.90 9,504 28,521 33.32 Additional shares issuable other than at fair value in respect of options outstanding - 125 (0.14) - 160 (0.18) Diluted 9,275 29,200 31.76 9,504 28,681 33.14 Earnings comprise profit for the financial year after deducting preferencedividends of ‚£4,000 (2004: ‚£4,000). Ordinary shares are calculated byreference to the average number of shares in issue in the year. Reconciliation from basic earnings per share to basic earnings per share -before impairment of goodwill: 2005 2004 Ordinary Ordinary shares shares Earnings Number EPS Earnings Number EPS ‚£000 000s Pence ‚£000 000s Pence Basic 9,275 29,075 31.90 9,504 28,521 33.32 Impairment of goodwill 3,000 - 10.32 - - - Basic - before impairment 12,275 29,075 42.22 9,504 28,521 33.32of goodwill DividendSubject to shareholder approval, the final dividend of 7.30p per ordinary sharewill be paid on 5 May 2006 to all shareholders registered at the close ofbusiness on 24 February 2006. The ex-dividend date will be 22 February 2006.The total dividend for the year will be 10.50p (2004: 9.00p). 2005 Financial Statements The financial statements for the year ended 31 October 2005 will be posted toshareholders on 20 February 2006 and will also be available from that date atthe registered office, 1650 Parkway, Whiteley, Fareham, Hampshire PO15 7AH. ENDCHEMRING GROUP PLCRelated Shares:
Chemring