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Net debt 77.5 85.3
Analysis by currency after currency swaps
Years ended 31 March
2010 2009
£m £m
Sterling 48.6 66.2
Euro (11.6) (15.1)
Swiss Franc 11.0 14.9
Other European currencies 4.8 (1.2)
Canadian Dollar 21.4 18.2
US Dollar (0.4) (0.8)
Other currencies 3.7 3.1
77.5 85.3
11 Retirement benefit obligations
Defined benefit pension arrangements
The Group's principal defined benefit pension arrangement is the Hogg Robinson
(1987) Pension Scheme (the UK Scheme). The UK Scheme was available to most UK
employees until it was closed to new members in March 2003. Its benefits are
based on final pensionable salary. The increase in final pensionable salary
since 31 March 2003 is limited to the lower of the increase in the Retail
Prices Index and 5% per annum. The latest actuarial valuation of the scheme was
carried out at 6 April 2008 by an independent qualified actuary.
The Group also operates defined benefit schemes in Norway, Switzerland, Germany
and Italy.
The following amounts have been included in the Consolidated Income Statement
in respect of defined benefit pension arrangements:
Years ended 31 March
2010 2009
£m £m
Current service charge 2.8 3.4
Curtailment gain (0.5) -
Charge to operating profit 2.3 3.4
Interest cost on pension scheme liabilities 16.3 16.1
Expected return on pension scheme assets (13.1) (14.9)
Charge to finance costs 3.2 1.2
Total charge to Consolidated Income Statement 5.5 4.6
The following amounts have been recognised as movements in equity:
Years ended 31 March
2010 2009
£m £m
Actual return on scheme assets 34.2 (31.4)
Less: expected return on scheme assets (13.1) (14.9)
21.1 (46.3)
Experience gains and losses arising on scheme liabilities 1.9 2.5
Changes in assumptions underlying the present value of
scheme liabilities (89.2) 21.9
Exchange rate movement 0.2 (1.5)
Movement in the year (66.0) (23.4)
Cumulative amount recognised in the Consolidated
Statement of Comprehensive Income since
the transition date to IFRS, 1 April 2003 (68.0) (2.0)
The key assumptions used for the UK Scheme were:
Years ended 31 March
2010 2009 2008
Rate of increase in salary 4.80% 4.00% 4.60%
Rate of increase in final pensionable salary 3.50% 2.70% 3.30%
Rate of increase in pensions in payment - accrued before 1999 5.00% 5.00% 5.00%
Rate of increase in pensions in payment - accrued after 1999 3.50% 2.70% 3.30%
Discount rate 5.50% 6.70% 6.30%
Inflation 3.50% 2.70% 3.30%
Expected rate of return on plan assets:
Equity instruments 8.00% 7.20% 8.00%
Debt instruments 4.50% 6.70% 5.30%
Property 8.00% 7.20% 8.00%
Other assets 4.40% 5.00% 5.40%
The assumptions for the schemes in Norway, Switzerland, Germany and Italy do
not produce materially different results from the assumptions used for the UK
Scheme.
The expected rates of return have been set taking into account current market
returns for each category of asset at the balance sheet dates.
The mortality assumptions for the UK Scheme are based on PMA/FA92 tables with
'medium cohort' projections and a 1% underpin in the rate of future
improvements in mortality. Life expectancy at the age of 65 is assumed to be:
Years ended 31 March
2010 2009
Current Pensioners
Male 22.7 22.6
Female 26.0 25.9
Future retirements
Male 24.7 24.1
Female 28.1 27.5
The UK liability is based on the assumption that active and deferred members
will take 25% of the value of their pension as a lump sum on retirement.
The provision included in the Consolidated Balance Sheet arising from
obligations in respect of defined benefit schemes is as follows:
Years ended 31 March
2010 2009
£m £m
Present value of defined benefit obligations
Unfunded scheme 9.6 8.9
Wholly or partly funded schemes 350.7 254.1
360.3 263.0
Fair value of scheme assets (233.9) (197.7)
126.4 65.3
The net present value of defined benefit obligations has moved as follows:
Years ended 31 March
2010 2009
£m £m
At beginning of year 263.0 269.4
Current service cost 2.8 3.4
Curtailment gain (2.3) -
Interest cost 16.3 16.1
Contributions by plan participants 1.4 1.6
Actuarial losses / (gains) 87.3 (24.4)
Foreign currency exchange changes 0.3 6.8
Benefits paid (8.5) (9.9)
At end of year 360.3 263.0
The fair value of scheme assets has moved as follows:
Years ended 31 March
2010 2009
£m £m
At beginning of year 197.7 221.3
Curtailment loss (1.8) -
Expected returns on plan assets 13.1 14.9
Actuarial gains / (losses) 21.1 (46.3)
Foreign currency exchange changes 0.5 5.3
Contributions by the employer 10.4 10.8
Contributions by plan participants 1.4 1.6
Benefits paid (8.5) (9.9)
At end of year 233.9 197.7
The assets held in defined benefit schemes were as follows:
Years ended 31 March
2010 2009
£m £m
Equity instruments 123.7 110.5
Debt instruments 64.1 62.7
Property 33.2 12.5
Other assets 12.9 12.0
233.9 197.7
None of the plan assets are represented by financial instruments of the Group.
None of the plan assets are occupied or used by the Group.
The schedule of contributions for the UK Scheme has been agreed with the
Trustees at 15.2% of pensionable salaries plus £6.6m per annum with effect from
April 2008. This is expected to amount to £8.7m for the year ending 31 March
2011.
The obligations and assets are split as follows:
Years ended 31 March
2010 2010 2010 2009 2009 2009
UK Overseas Total UK Overseas Total
£m £m £m £m £m £m
Defined benefit obligations (319.3) (41.0) (360.3) (223.0) (40.0) (263.0)
Fair value of plan assets 203.4 30.5 233.9 171.7 26.0 197.7
Deficit (115.9) (10.5) (126.4) (51.3) (14.0) (65.3)
Five year experience
Years ended 31 March
2010 2009 2008 2007 2006
£m £m £m £m £m
Defined benefit obligations (360.3) (263.0) (269.4) (274.8) (310.2)
Fair value of plan assets 233.9 197.7 221.3 214.9 185.7
Deficit (126.4) (65.3) (48.1) (59.9) (124.5)
Experience gains/(losses)
on plan liabilities 1.9 2.5 (2.3) (3.6) (1.8)
on plan assets 21.1 (46.3) (18.3) 4.0 22.4
Pension funding in excess of the charge to operating profit is shown in the
Consolidated Cash Flow Statement as follows:
Years ended 31 March
2010 2009
£m £m
Contributions less service cost (note 14) (7.6) (7.2)
12 Reserves
Retained earnings
Years ended 31 March
2010 2009
£m £m
At 1 April (155.2) (132.8)
Retained profit for the financial year 14.3 9.1
Dividends (note 7) (1.2) (12.3)
Minority interest (0.9) (1.7)
Shares purchased by Employee Benefits Trust (1.1) -
Actuarial loss (66.0) (23.4)
Deferred tax movement on pension liability 18.7 5.9
At 31 March (191.4) (155.2)
Other reserves
Share-based Exchange Other
incentives reserve reserves
£m £m £m
Balance at 1 April 2008 0.9 4.4 5.3
Other comprehensive income:
Currency translation differences - 17.6 17.6
Transactions with owners:
Share-based incentives 1.2 - 1.2
Balance at 1 April 2009 2.1 22.0 24.1
Other comprehensive income:
Currency translation differences - (11.8) (11.8)
Transactions with owners:
Share-based incentives 1.1 - 1.1
Balance at 31 March 2010 3.2 10.2 13.4
13 Minority interests
Years ended 31 March
2010 2009
£m £m
At 1 April 3.5 2.5
Exchange differences - 0.1
Dividends paid (1.0) (0.8)
Share of profit after tax 0.9 1.7
At 31 March 3.4 3.5
14 Cash generated from operations
Years ended 31 March
2010 2009
£m £m
Profit before tax from continuing operations 21.2 15.4
Adjustments for:
Depreciation and amortisation (note 8 and 9) 13.2 11.4
Net increase in provisions 4.4 7.2
Share of results of associates and joint ventures (0.2) (0.1)
Net finance costs (note 4) 7.0 10.0
Adjustments to goodwill on recognition of deferred tax assets (note 2) - 0.3
Pension curtailment credit (0.5) -
Other timing differences 1.4 0.9
46.5 45.1
Cash expenditure charged to provisions (8.4) (3.2)
Change in trade and other receivables (10.5) 27.3
Change in trade and other payables 16.2 3.2
Pension funding in excess of charge to operating profit (note 11) (7.6) (7.2)
Cash generated from operations 36.2 65.2
END
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