Strategic Review
72 Finsbury Food Group Annual Report & Accounts 2019
Notes to the Consolidated Financial Statements
Corporate Governance
Financial Statements
14. Pension Schemes (continued)
Sensitivity Analysis The calculation of the defined benefit obligation is sensitive to the assumptions set out on the previous page. The following table summarises changes in these assumptions and their approximate (decrease)/increase in liabilities.
2019
Discount rate plus 0.5% Discount rate minus 0.5% Inflation plus 0.5% Inflation minus 0.5%
Life expectancy plus 1.0 years Life expectancy minus 1.0 years
(£2.6 million) £2.9 million £2.6 million (£2.6 million) £1.1 million (£1.2 million)
The above sensitivities are approximate and only show the likely effect of an assumption being adjusted whilst all other assumptions remain the same. The weighted average duration of the defined benefit obligation is around 19 years.
Risk Mitigation Strategies During the year, the Trustees changed the investment advisory role to a fiduciary investment management role, this brought about a change with the introduction of hedging strategies to its investment portfolio. River and Mercantile was appointed as fiduciary investment manager in December 2018 and a new Statement of Investment Principles (SIP) was agreed in January 2019. All of the Scheme’s investments meet the criteria detailed in the SIP relevant for the Scheme year to 31 December 2018. A change of investments has taken place during 2019 aligning to the new SIP.
Effect of the Scheme on the Company’s Future Cash Flows The Company is required to agree a Schedule of Contributions with the Trustees of the Scheme following a valuation which must be carried out at least once every three years. The next valuation of the Scheme will be prepared as at 31 December 2018. In the event that the valuation reveals a larger deficit than expected the Company may be required to increase contributions above those set out in the existing Schedule of Contributions. Conversely, if the position is better than expected contributions may be reduced. The total cash cost to the Company for the current financial year is £402,000 (2018: £454,000) this includes deficit recovery contributions, pension protection fund levy fees and cost of advisers. The Company expects to pay deficit recovery contributions of £200,000 in the year to 29 June 2020. The projected net interest charge to the Consolidated Statement of Comprehensive Income for the year to 27 June 2020 is £260,000. This projection assumes cash flows to and from the Scheme are broadly unchanged from the current year figures and that there will be no events that would give rise to a settlement/curtailment/past service cost.
Consolidated Statement of Financial Position
2019 £000
Fair value of plan assets
Present value of the defined benefit obligation Deficit
Experience adjustments on plan assets as a percentage of plan assets
Experience adjustments on plan liabilities as a percentage of plan liabilities Total remeasurement (losses)/gains as a percentage of plan liabilities
19,238
(30,550) (11,312)
384
2.0% 1,614 5.3% (332) 1.1%
2018 £000
18,834
(29,370) (10,536)
(779)
(4.1%) -
0.0% (172) 0.6%
2017 £000
19,985
(30,483) (10,498)
712
3.6% -
0.0%
(4,031) 13.2%
2016 £000
19,287
(25,750) (6,463)
(1,451) (7.5%) 236
0.9%
(2,595) 10.1%
2015 £000
20,587
(24,424) (3,837)
656
3.2% -
0.0% (153) 0.6%
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