Chemring Group PLC |Annual Report and Accounts 2012

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94 Financial statements Notes to the group financial statements 34. Pensions continued The total scheme assets updated to 31 October along with the expected rates of return on assets were as follows: Long term rate of return expected 2012 2011 2010 £m Long term rate of return expected £m Long term rate of return expected Equities 6.8% 31.2 6.8% 27.7 7.65% 27.7 Bonds 3.2% 13.4 3.4% 12.3 4.2% 11.2 Total fair value of assets 44.6 40.0 38.9 £m The analysis of pension assets at 31 October 2012 is as follows: 2012 % 2011 % 2010 % Equities 70.0 69.3 71.2 Bonds 30.0 30.7 28.8 100.0 100.0 100.0 The expected rates of return are determined by reference to relevant published indices. The overall expected rate of return is calculated by weighting the individual rates in accordance with the anticipated balance in the scheme’s investment portfolio. History of experience gains and losses: 2012 £m Present value of funded and unfunded obligations (71.6) (65.2) (61.9) (63.0) (42.0) Fair value of scheme assets 44.6 40.0 38.9 34.9 28.4 Deficit in the schemes (27.0) (25.2) (23.0) (28.1) (13.6) Experience gains on scheme liabilities - - 3.8 - - Percentage of scheme liabilities - - 6.1% - - Experience gains/(losses) on scheme assets 1.4 (1.3) 1.4 4.2 (9.9) Percentage of scheme assets 3.1% (3.3)% 3.6% 12.0% (34.9)% 2011 £m 2010 £m 2009 £m 2008 £m Analysis of movement in the deficit in the schemes during the year: 2012 £m 2011 £m Opening deficit in schemes (25.2) (23.0) Current service cost (1.0) (1.2) Curtailment gain 1.4 - Contributions 1.3 1.5 Other finance costs (0.8) (0.7) Actuarial loss (2.7) (1.8) Closing deficit in the schemes (27.0) (25.2) Chemring Group PLC Report and Accounts 2012
95 The principal assumptions used in the actuarial valuation of the Chemring Group Staff Pension Scheme were as follows: 2012 2011 Discount rate 4.4% 5.0% Rate of increase in salaries n/a 4.1% Rate of increase in deferred pensions 2.8% 3.0% Rate of increase in pensions in payment (where applicable) 2.8% 3.0% Inflation assumption – RPI 2.9% 3.1% – CPI 2.2% 2.4% Expected return on scheme assets 5.8% 5.7% In determining the pension liabilities, the Group uses mortality assumptions which are based on published mortality tables. For the Chemring Group Staff Pension Scheme, the actuarial table currently used is SAPS Year of Birth Tables with a medium cohort and 1% underpin. Life expectancy at 65: 2012 2011 Future pensioners – male 88.2 88.2 – female 91.0 91.0 Current pensioners – male 86.3 86.3 – female 89.1 89.1 The assumption considered to be the most significant is the discount rate adopted. If the discount rate in the scheme were to change by 0.1% then it is predicted that the deficit in the scheme would change by approximately £1.4 million. A change in the rate of inflation by 0.1% is predicted to change the deficit by approximately £1.1 million and a one year change to the longevity assumption would change the deficit by approximately £1.9 million. The Group anticipates contributions to the defined benefit schemes for the year ending 31 October 2013 will be £0.8 million (2012: £2.2 million). 35. Contingent liabilities The Group enters into contracts which sometimes have offset commitments. These requirements are valued at the time of the contract being awarded. The cost of the offsets are reviewed throughout the contract life and provided for within the contract costings to the extent of the potential liability. At 31 October 2012, the Group had contingent liabilities in respect of bank and contractual performance guarantees and other matters arising in the ordinary course of business. Where it is expected that a material liability will arise in respect of these matters, appropriate provision is made within the group financial statements. As the conditions of these guarantees are currently being met, no obligating event is foreseeable and therefore no provision has been made at the year end. The Group is, from time to time, party to legal proceedings and claims which arise in the ordinary course of business. The directors do not anticipate that the outcome of these proceedings, actions and claims, either individually or in aggregate, will have a material adverse effect upon the Group’s financial position. A provision of £1.4 million was created during the year to cover potential legal costs for the Group with regards to several pending and probable legal actions. This provision is detailed in note 25. Since 1 November 2010, the Group has taken a £2.5 million deductible for its material damage and business interruption cover, subject to a maximum liability of £3.5 million in any one year. Business review Corporate governance Financial statements Other information Chemring Group PLC Report and Accounts 2012
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Chemring Group PLC | Annual Report
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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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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
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37 Element Non-executive directors
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39 Planned application of the polic
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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 and 90: 87 26. Deferred tax The following a
Page 91 and 92: 89 The following awards were outsta
Page 93 and 94: 91 33. Discontinued operations The
Page 95: 93 Amounts recognised in the income
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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