Annual Report 2014

Etex Annual Report 2014
Financial report
Consolidated financial statements
The expense recognised in the income statement is detailed as follows:
IN THOUSANDS OF EUR 2013 2014
Total service cost -3,495 -6,477
Interest cost -50,174 -54,104
Interest Income 39,757 46,216
Administration cost (excluding management of assets) -1,437 -1,573
Total employee benefit expense -15,349 -15,938
The employee benefit expense is included in the following line items of the income statement :
Operating income -4,932 -8,046
Financial result -10,417 -7,892
The main weighted assumptions used in measuring the employee benefit liabilities are the following:
2013 2014
Discount rate 4.45% 3.53%
Future salary increases 2.21% 2.08%
Pension increase 3.16% 2.96%
Medical cost trend 5.50% 5.50%
The distribution of the plan assets is the following:
2013 2014
Equity instruments 62% 35%
Debt instruments 20% 50%
Real estate 8% 7%
Cash and fixed deposits 6% 4%
Insurance 4% 4%
Total 100% 100%
The expected employer contributions to be paid in 2015 to defined benefit plans amount to € 10,862 thousand.
Sensitivity analysis
UK
The measurement of the defined benefit obligation for the Plans in UK is particularly sensitive to changes in key assumptions,
as described below:
The discount rate has been selected following actuarial advice and taking into account the duration of the liabilities. A decrease in the
discount rate of 1.0% would result in a £ 165 million increase in the present value of the defined benefit obligations of the Plans (which is
likely to be mitigated in part by an increase in asset values). The inflation assumption adopted is consistent with the discount rate used.
It is used to set the assumptions for pension increases and deferred revaluations used for preserved members benefits. An increase in the
inflation rate of 1.0% would result in a £ 101 million increase in the present value of the defined benefit obligation of the Plans (which is likely
to be mitigated in part by an increase in asset values). The increase in the present value of the defined benefit obligation due to a member
living one year longer would be approximately £ 25 million. There is also a risk of asset volatility leading to lower funding levels in the Plans.
Ireland
The measurement of the defined benefit obligation for the Plans in Ireland is particularly sensitive to changes in key assumptions,
as described below:
The discount rate has been selected following actuarial advice and taking into account the duration of the liabilities. A decrease in the
discount rate of 1.0% would result in a € 20 million increase in the present value of the defined benefit obligations of the Plans (which is
likely to be mitigated in part by an increase in asset values). The inflation assumption adopted is consistent with the discount rate used. It
is used to set the assumptions for pension increases and deferred revaluations used for preserved members’ benefits. An increase in the
inflation rate of 1.0% would result in a € 20 million increase in the present value of the defined benefit obligation of the Plans (which is likely
to be mitigated in part by an increase in asset values). The increase in the present value of the defined benefit obligation due to a member
living one year longer would be approximately € 3 million.
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