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Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2015 www.henryboot.co.uk Stock Code: BHY Financial Statements Notes to the Financial Statements continued for the year ended 31 December 2015 27. Retirement benefit obligations continued Inflation risk The present value of the liabilities is calculated by reference to a best estimate of future inflation. If inflation turns out to be higher than this estimate then the deficit will increase. Longevity risk The present value of the liabilities is calculated using a best estimate of the life expectancy of scheme members. An increase in life expectancies will increase the scheme’s liabilities. A formal actuarial valuation was carried out as at 31 December 2012. The results of that valuation have been projected to 31 December 2015 by a qualified independent actuary. The figures in the following disclosure were measured using the projected unit method. The main financial assumptions used in the valuation of the liabilities of the scheme under IAS 19 are: Retail Prices Index ‘Jevons’ (RPIJ) 2.30 2.30 Consumer Prices Index (CPI) 2.00 2.00 Pensionable salary increases 1.00 1.00 Rate in increase to pensions in payment liable for Limited Price Indexation (LPI) 2.30 2.30 Revaluation of deferred pensions 2.00 2.00 Liabilities discount rate 3.80 3.60 Mortality assumptions 2015 % 2015 Years Retiring today (aged 65) Male 21.9 22.1 Female 24.2 24.4 Retiring in 20 years (currently aged 45) Male 23.2 23.3 Female 25.8 26.0 The mortality assumptions adopted are the Self Administered Pension Schemes (SAPS) tables with allowance for future improvements in line with Continuous Mortality Investigation (CMI) 2014 with an annual improvement of 1% per annum. The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below: Impact on scheme liabilities Change in assumption Increase in assumption 2014 % 2014 Years Decrease in assumption Rate of inflation 0.25% Increase by 3.6% Decrease by 3.5% Rate of general increases in salaries 0.25% Nil* Nil* Liabilities discount rate 0.25% Decrease by 3.7% Increase by 4.0% Rate of mortality 1 year Increase by 3.3% Decrease by 3.3% * Increases in salaries above the 1% assumed would not affect the scheme liabilities as future increases in pensionable salaries are to be capped at a maximum of 1% per annum. 124
Henry Boot PLC Annual Report and Financial Statements for the year ended 31 December 2015 www.henryboot.co.uk Stock Code: BHY 27. Retirement benefit obligations continued Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows: Service cost: Current service cost 1,308 1,129 Ongoing scheme expenses 328 425 Settlement (8) — Net interest expense 951 832 Pension Protection Fund 118 47 Pension expenses recognised in profit or loss 2,697 2,433 Remeasurement on the net defined benefit liability: Return on plan assets (excluding amounts included in net interest expense) 723 (8,029) Actuarial gains arising from changes in demographic assumptions (1,338) (2,862) Actuarial (gains)/losses arising from changes in financial assumptions (5,387) 21,349 Actuarial (gains)/losses recognised in other comprehensive income (6,002) 10,458 Total (3,305) 12,891 2015 £’000 The amount included in the Statement of Financial Position arising from the Group’s obligations in respect of the scheme is as follows: Present value of scheme obligations 170,214 176,641 Fair value of scheme assets (150,637) (148,483) 19,577 28,158 This amount is presented in the Statement of Financial Position as follows: Non-current liabilities 19,577 28,158 Movements in the present value of scheme obligations in the year were as follows: At 1 January 176,641 156,254 Current service cost 1,308 1,129 Interest on obligation 6,253 6,920 Contributions from scheme members 5 5 Actuarial (gain)/loss (6,725) 18,487 Liabilities extinguished on settlements (562) — Benefits paid (6,706) (6,154) At 31 December 170,214 176,641 2015 £’000 2015 £’000 2015 £’000 2014 £’000 2014 £’000 2014 £’000 2014 £’000 Shareholder Information Financial Statements Governance Strategic Report Overview 125
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