Telboy. Definitely sounds like scale insect although at 5mm they're bigguns! Best treatment is to flick them off (I use a bamboo kebab skewer) then treat with a systemic insecticide like Rapide. Removal by cottonbuds dipped in meths or alcohol is recommended by some. You can also blast them off with a plant sprayer concentrated to a narrow jet.(99p B&Q) Add a few drops of wash up liquid to the water and wash off any fluffy/waxy residue at the same time. In almost all cases, you have to take some manual action to physically removed the adults and residues (eggs?)which stick like the proverbial and let the insecticide do for the babies. I seem to get ants associated with them as well. I now spray with insecticide once a month starting late Feb and (fingers crossed) haven't had any major bug probs so far this year. That'll be the kiss of death then :-) Lots of Luck Here is a link that might be useful: All about scale insect

Chinese elm, Jacqueline Hillier variety tends to do that -- other varieties much less. I think they are called adventudinous buds (did I get it right?) -- potential branches, not insects. You can gently rub them off, if you don't like them but be careful not to damage the bark. The tree will continue to produce them. Looks like a healthy tree to me.

My Lacebark (Chinese) elm had the same thing. Nasty. The Ladybugs eventually wear them down, but it took several seasons. The scale also got on my River birch, but it's gone from it now, too.

Huggorm, what part of the photo do you identify as a "fungus fruiting body"? the little orange marks are typical of the bark on a Chinese elm, if that is what you are referring to.