Annual Report & ACCOUNTS for the year ended 30 June 2014

HYR 2014

The Group sponsors defined benefit arrangements in certain countries, the most material being a defined benefit pension plan in the Netherlands. This is a funded career average pay arrangement, where pensionable salary is subject to a cap. The arrangement is financed through an insurance contract.

The other defined benefit pension arrangements operated by the Company are unfunded: Jubilee awards of £182,000 (2013: £98,000) for employees in the Netherlands are recognised within other payables in the Consolidated Statement of Financial Position as at 30 June 2014.

The pension cost relating to the defined benefit pension arrangement in the Netherlands is assessed in accordance with the advice of an independent qualified actuary using the projected unit method.

The major actuarial assumptions used by the actuary were:

20142013
Discount rate3.40%3.90%
Inflation assumption1.80%1.90%
Salary growth2.30%2.40%
Rate of increase in accrued pensions of active members1.20%1.30%
Rate of increase in pensions in payment0.00%0.00%
Rate of increase in pensions in deferment0.00%0.00%

In valuing the liabilities of the pension scheme at 30 June 2014 and 30 June 2013, mortality assumptions have been made as indicated below.

The mortality assumption follows the AG Prognosetafel 2012-2062 mortality tables with an experience adjustment in line with the ES-P2 tables as published by the Dutch Alliance of Insurers.

The assumptions used by the Group are the best estimates chosen by the Directors from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice.

2014
£000
2013
£000
Present value of funded defined benefit obligations(5,927)(4,722)
Fair value of scheme assets4,8573,726
Net pension scheme deficit(1,070)(996)

Movements in Present Value of Defined Benefit Obligations

2014
£000
2013
£000
Defined benefit obligation at beginning of the period4,7222,801
Service cost590446
Interest cost207124
Employee contributions152107
Remeasurement loss6191,076
Foreign exchange difference on translation(363)168
Defined benefit obligations at end of the period5,9274,722

Movements in Fair Value of Scheme Assets

2014
£000
2013
£000
Fair value of scheme assets at beginning of the period3,7262,438
Interest income159123
Additional charges(99)(289)
Employer contributions731897
Employee contributions152107
Remeasurement gain483304
Foreign exchange difference on translation(295)146
Fair value of scheme assets at end of the period4,8573,726

Analysis of the Amount Charged to the Income Statement

2014
£000
2013
£000
Service cost590446
Net interest cost481
Additional charges99289
Net pension expense737736

Analysis of the Amount Charged to the Other Statement of Consolidated Income

2014
£000
2013
£000
Amounts charged in previous periods772
Actuarial loss on defined benefit pension scheme136772
Net pension expense908772

Scheme Assets

The Group's defined benefit pension scheme in the Netherlands is financed through an insurance contract. Under this contract, a market price for the assets in respect of this insurance contract is not available. In accordance with IAS 19 for such insurance policies, an asset value has been calculated by discounting expected future cash flows. The discount rate used for this calculation reflects the risk associated with the scheme assets and the maturity or expected disposal date of those assets.

The fair value of the scheme's assets is as follows:

2014
£000
2013
£000
Discount rate used to value assets3.40%3.90%
Total fair value of assets4,8573,726
Actual return on scheme assets159123

The long term rate of return on pension plan assets is determined by aggregating the expected return for each asset class over the strategic asset allocation as at the year end. This rate of return is then adjusted for any expected profit sharing based on market related returns on notional loans.

The scheme's assets do not include any of the Group's own financial instruments or any property occupied by or other assets used by the Group.

The employer has a contract with the insurance company Nationale-Nederlanden to cover the committed pension benefits.

The employer contributions expected to be paid into the scheme for the next financial period amount to £694,000 (2013: £571,000).

History of Amounts in the Current Period

2014
£000
2013
£000
2012
£000
Present value of funded defined benefit obligations(5,927)(4,722)(2,801)
Fair value of scheme assets4,8573,7262,438
Deficit in the scheme(1,070)(996)(363)