REG - Serco Group PLC - Half Year Results <Origin Href="QuoteRef">SRP.L</Origin> - Part 4
29/10/2014 12:02
- Part 4: For the preceding part double click ID:nRSL8461Oc
93.7 415.5 435.2 855.8
Operating profit 29.4 4.0 11.8 4.9 16.7 29.0 58.9
Net investment revenue/ (finance costs) 0.3 0.2 0.2 (0.4) (0.2) (0.2) (0.4)
Income tax expense (3.0) (1.8) (1.9) (0.8) (2.7) (5.8) (11.4)
Profit from continuing operations 26.7 2.4 10.1 3.7 13.8 23.0 47.1
Other comprehensive income - (1.0) (0.5) 0.4 (0.1) 1.7 2.1
Total comprehensive income 26.7 1.4 9.6 4.1 13.7 24.7 49.2
Dividends received from joint venture 9.0 2.9 11.9 2.8 14.7 24.5 51.5
Non-current assets 457.2 12.4 158.6 20.2 178.8 214.8 177.5
Current assets 193.5 91.8 110.4 39.9 150.3 155.7 136.2
Current liabilities (177.9) (100.0) (109.3) (35.7) (145.0) (146.4) (131.6)
Non-current liabilities (456.9) (10.8) (157.7) (19.3) (177.0) (212.6) (174.0)
Net assets 15.9 (6.6) 2.0 5.1 7.1 11.5 8.1
Proportion of group ownership 33% 50% - - - - -
Interest in joint ventures 5.3 (3.3) 2.0 5.1 7.1 11.5 8.1
1 AWE Management Limited (100% of entity's results)
2 Northern Rail Holdings Limited (100% of entity's results)
3 Representing the Group's percentage portion of the results of the respective joint ventures
Notes to the condensed set of financial statements
6. Exceptional items
Exceptional items are non-recurring items of financial performance that are material to the results of the Group either by
virtue of size or nature. The Group believes these items require separate disclosure on the face of the income statement to
assist in the understanding of the underlying performance of the Group.
Net profit on disposal of subsidiaries and operations
Six months ended30 June 2014(unaudited)£m Six months ended30 June 2013(unaudited)£m Year ended 31 December 2013(audited)£m
Gain on disposal of UK transport maintenance business - - 23.2
Gain on disposal of Braintree Community Hospital 0.5 - -
Loss on disposal of occupational health business - - (3.9)
Loss on disposal of Collectica (3.7) - -
Loss on disposal of Ascot College - - (0.1)
Prior period technical services disposal adjustment 5.4 - -
Net profit on disposal of subsidiaries and operations 2.2 - 19.2
In June 2014 the Group concluded the sale of Collectica Limited, a debt recovery business, to Marston Holdings Limited.
Collectica, whose main contract is with Her Majesty's Court and Tribunal Service, an executive agency of the Ministry of
Justice (MoJ), collects long standing debt using bailiff services. The loss on disposal was £3.7m.
In March 2014, the Group's operations at Braintree Community Hospital were disposed, resulting in a gain of £0.5m.
A further gain of £5.4m was also made in the period, following the release of provisions in relation to the 2012 disposal
of the technical services business which have become time expired.
Other exceptional operating items
During the prior year an investigation was undertaken by the MoJ into the billing practices in respect of the Electronic
Monitoring (EM) contract. Additionally, the Cabinet Office undertook a wider review across other Serco contracts with UK
Central Government. Serco also agreed with the UK Government to undertake a process of corporate renewal, to strengthen
governance and transparency which included the separation of the UK & Europe division into two new divisions - UK Central
Government and UK & Europe Local & Regional Government. The audits, reviews and corporate renewal processes all incurred
one-off costs that were deemed to be exceptional items in 2013 and 2014, which are set out in the table below together with
other items identified for separate presentation.
Six months ended30 June 2014(unaudited)£m Six months ended30 June 2013(unaudited)£m Year ended 31 December 2013(audited)£m
Costs associated with UK Government reviews (5.7) - (11.6)
Settlement amounts relating to UK Government reviews - - (66.3)
UK clinical health contract provisions (3.9) - (17.6)
Restructuring (14.5) - (14.9)
Provision for settlement relating to pension deficit funding (7.5) - -
Asset impairment - - (9.6)
Deferred consideration relating to prior year acquisition - - 10.3
Other exceptional operating items (31.6) - (109.7)
Notes to the condensed set of financial statements
6. Exceptional items (continued)
Settlement amounts relating to UK Government reviews
In December 2013, following a review of the billing arrangements on the EM contract by the MoJ, a settlement of £64.3m was
reached in respect of contractual claims. In addition, a £2.0m settlement was reached on the Prisoner Escort & Custody
Services (PECS) contract which was also subject to Government review to reflect repayment of past profit earned on this
contract. The settlement was full and final in respect of contractual claims with the proviso that additional payments
might be sought in limited circumstances, such as if criminality were to be established; Serco continues to cooperate fully
with the ongoing investigations by the Serious Fraud Office, in relation to the electronic monitoring contract.
Costs associated with UK Government reviews
Since July 2013 there have been external adviser and other directly-related incremental costs that amounted to £11.6m in
the period to 31 December 2013 and £5.7m in the six months to 30 June 2014.
UK clinical health withdrawal and onerous contract provisions
During the period the Group continued to monitor performance on the UK clinical health operations, against which an onerous
contract provision was made in the prior year and where the Group's intention is to withdraw from the UK clinical health
market. Two contracts, Cornwall Out of Hours and Braintree Clinic al Services which was disposed of in the period, are
being exited early and a third loss-making contract, Suffolk Community Health, is being run through to the end of the
contract term in 2015. Following a further review of the costs of delivering improved service levels and meeting
performance obligations through to the end of the contracts and the intended withdrawal from this market, the Group has
revised upwards the estimate of the costs of running the contracts to term, resulting in an additional non-cash exceptional
charge of £3.9m in the period (year ended 31 December 2013: £17.6m).
Restructuring
As a result of an assessment of the Group's operations, a restructuring charge of £14.5m was taken in the six months ended
30 June 2014, which was in addition to a charge of £14.9m incurred in 2013.
Provision for settlement relating to pension deficit funding
The Group is in dispute with the Trustees of the DLR pension scheme over the extent of its liability to fund the deficit on
the pension scheme. At 30 June 2014 the Group has recognised a £7.5m provision in relation to this matter for the estimated
settlement, together with associated costs. This has been disclosed as an exceptional item as it is material and considered
a non-recurring event as the dispute arises from a disagreement over the extent of liability to fund the deficit.
Asset impairment
As a result of a review of under-performing businesses and operations, an impairment charge of £9.6m was taken in 2013 in
relation to the carrying value of fixed assets in Great Southern Railway, a rail tourism business based in Australia,
reflecting challenging market condition.
Adjustment to prior year acquisitions
On assessment against the earn-out criteria, in 2013 an adjustment was made to the deferred consideration arising on the
Intelenet acquisition in 2011 of £10.3m.
Tax impact of above items
The tax impact of these items was a tax credit of £4.2m (31 December 2013: £28.8m).
Notes to the condensed set of financial statements
7. Investment revenue and finance costs
Six months ended30 June 2014 (unaudited)£m Six months ended30 June 2013(unaudited)£m Year ended 31 December 2013(audited)£m
Interest receivable on other loans and deposits 1.3 1.4 2.4
Net interest receivable on retirement benefit obligations 1.5 1.2 2.3
Movement in discount on other debtors - - 0.5
Investment revenue 2.8 2.6 5.2
Interest payable on non-recourse loans (0.4) (0.5) (0.8)
Interest payable on other loans (15.7) (17.1) (31.5)
Facility fees and other charges (1.9) (1.8) (6.1)
Interest payable on obligations under finance leases (1.9) (1.2) (2.5)
Movement in discount on provisions and deferred consideration (0.1) (1.0) (1.5)
Finance costs (20.0) (21.6) (42.4)
8. Tax
The effective tax rate on profit before exceptional items is 14.9% (six months to 30 June 2013: 20.6%). The principal
drivers of this tax rate are the mix of taxable profits across the countries in which the group operates and the equity
accounting for our joint ventures which includes their tax charges in the group profit before tax.
The effective tax rate on exceptional items is 14.3% (six months to 30 June 2013: £nil). This rate is driven by costs for
which no tax relief is available.
During the period the group has recognised a deferred tax credit of £4.6m (six months to 30 June 2013: nil) in respect of
UK losses incurred in the period. At as 30 June 2014 the total deferred tax asset recognised in respect of UK losses is
£29.6m (six months to 30 June 2013: £nil).
9. Dividends
Six months ended30 June 2014(unaudited)£m Six months ended30 June 2013(unaudited)£m Year ended 31 December 2013(audited)£m
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2013 of 7.45p per share on 487.4 million ordinary shares (2013: Final dividend for the year ended 31 December 2012 of 7.45p per share on 488.3 million ordinary shares) 36.4 36.4 36.4
Interim dividend for the year ended 31 December 2013 of 3.10p per share on 486.9 million shares (2012: Interim dividend for the year ended 31 December 2012 of 2.65p per share on 488.2 million shares) - - 15.1
36.4 36.4 51.5
The declared interim dividend is 3.10p per ordinary share on 538.4 million shares, representing a payment of £16.7m (2013:
interim dividend of 3.10p per ordinary share on 486.9 million shares, representing a payment of £15.1m).
The declared interim dividend was approved by the Board on 11 August 2014 and has not been included as a liability as at 30
June 2014.
Notes to the condensed set of financial statements
10. Earnings per share
Basic and diluted earnings per share (EPS) have been calculated in accordance with IAS 33 Earnings per Share.
The calculation of the basic and diluted EPS is based on the following data:
Number of shares Six months ended30 June 2014(unaudited)Millions Six months ended30 June 2013(unaudited)Millions Year ended 31 December 2013(audited)Millions
Weighted average number of ordinary shares for the purpose of basic EPS 503.6 490.1 489.0
Effect of dilutive potential ordinary shares: share options 12.3 13.4 11.6
Weighted average number of ordinary shares for the purpose of diluted EPS 515.9 503.5 500.6
Six months ended30 June 2014 Six months ended30 June 2013 Year ended31 December 2013
Earnings per share Earnings(unaudited)£m Per share amount(unaudited)Pence Earnings(unaudited)£m Per share amount(unaudited)Pence Earnings(audited)£m Per share amount(audited)Pence
Earnings before exceptional items 18.8 3.73 84.2 17.18 157.1 32.13
Exceptional items (25.2) (5.00) - - (61.7) (12.62)
Earnings for the purpose of basic EPS (6.4) (1.27) 84.2 17.18 95.4 19.51
Effect of dilutive potential ordinary shares - - - (0.46) - (0.45)
Diluted EPS (6.4) (1.27) 84.2 16.72 95.4 19.06
19.06
At 30 June 2014 options over 1,073,127 (30 June 2013 and 31 December 2013: nil) shares were excluded from the weighted
average number of shares used for calculating diluted earnings per share because their exercise price was above the average
share price for the year and they were therefore anti-dilutive.
11. Goodwill
£m
At 1 January 2013 1,312.1
Exchange differences 22.6
At 30 June 2013 1,334.7
Disposals (15.7)
Exchange differences (48.2)
At 31 December 2013 1,270.8
Additions 4.4
Disposals (3.4)
Exchange differences (10.8)
At 30 June 2014 1,261.0
Notes to the condensed set of financial statements
11. Goodwill (continued)
The goodwill acquired in business combinations is allocated at acquisition to the cash-generating units (CGUs) that are
expected to benefit from that business combination.
The Group tests goodwill annually for impairment or more frequently if there are indications that goodwill might be
impaired. Following a weakened outlook in certain parts of the business, an impairment review was undertaken. This review
focused on the Global Services and Health CGUs and adopted key assumptions consistent with the prior year end, except for
the discount rate in Global Services which has reduced to 11.4% to more appropriately represent the respective risks
inherent in the associated Indian and UK cash flows. No other CGUs displayed any indicators of impairment after
considering their performance in the period and in light of headroom on historic impairment reviews.
Key assumptions
The key assumptions affecting the CGUs within each operating segment are discussedbelow. The table shows the key
assumptions applied in the impairment review across the CGUs. These assumptions are revised in light of changes to the
current economic environment.
Discount rate 30 June 2014% Discount rate 31 December2013% Terminal growth rates 30 June 2014 % Terminal growth rates 31 December 2013 % Goodwill 30 June 2014£m Goodwill 31 December 2013£m Goodwill 30 June 2013£m
UK Central Government
Home Affairs 9.1 2.2 42.6 46.0 46.0
UK&E Local & Regional Government
Health 9.2 9.1 2.2 2.2 79.5 79.5 81.4
Transport & Local Direct Services 9.1 2.2 116.6 116.9 131.2
Germany 8.6 2.0 17.1 17.6 17.9
Global Services 11.4 12.5 4.0 4.0 517.7 513.3 501.9
Americas 10.5 2.4 373.8 385.9 421.4
AMEAA
ASPAC 10.4 3.0 105.7 103.3 125.9
Middle East 8.6 3.0 8.0 8.3 9.0
At 31 December 1,261.0 1,270.8 1,334.7
Sensitivity analysis
Sensitivity analysis has been performed for each key assumption and, except as noted below, the Directors have not
identified any reasonably possible change in a key assumption that would cause the carrying value of net assets, including
goodwill, to exceed the recoverable amount.
Sensitivity analysis shows that a 1% increase in the discount rate would result in an impairment of the Health CGU of £0.8m
and the Global Services CGU of £45.2m. A 1% increase in the discount rate would not cause the operating assets, including
goodwill, to exceed their recoverable amount on any other CGU.
Sensitivity analysis shows that a 1% decrease in the terminal growth rate would result in an impairment of the Global
Services CGU of £60.2m. A 1% decrease in the terminal growth rate would not cause the operating assets, including goodwill,
to exceed their recoverable amount on any other CGU.
Notes to the condensed set of financial statements
12. Analysis of net debt
Cash and cash equivalents£m Non-recourse loans Other loans Obligations under finance leases Total£m
£m £m £m
At 1 January 2013 (audited) 142.8 (25.1) (699.5) (50.2) (632.0)
Cash flow 50.3 4.9 (124.2) (3.5) (72.5)
Exchange differences 0.8 (0.2) (34.8) (0.1) (34.3)
Non-cash movements - (2.2) - (13.1) (15.3)
At 30 June 2013 (unaudited) 193.9 (22.6) (858.5) (66.9) (754.1)
Cash flow (52.1) - 25.2 8.4 (18.5)
Exchange differences (16.7) 0.1 51.1 0.4 34.9
Non-cash movements - 2.2 - (9.9) (7.7)
At 31 December 2013 (audited) 125.1 (20.3) (782.2) (68.0) (745.4)
Cash flow 97.5 1.4 48.2 9.2 156.3
Acquisitions 0.8 - - - 0.8
Disposals (1.0) - - - (1.0)
Exchange differences (1.6) - 17.2 - 15.6
Non cash movements - (2.6) - (4.5) (7.1)
At 30 June 2014 (unaudited) 220.8 (21.5) (716.8) (63.3) (580.8)
13. Provisions
EmployeeRelated1£m Property2£m Contract3£m Other4£m Total£m
At 1 January 2013 (audited) 13.3 7.9 14.9 20.1 56.2
Charged to income statement 3.2 - 0.3 4.7 8.2
Released to income statement - (0.1) (1.2) (4.5) (5.8)
Utilised during the period (1.7) (1.7) (4.4) (3.8) (11.6)
Unwinding of discount - 0.1 0.2 - 0.3
Exchange differences 0.3 0.4 0.1 0.7 1.5
At 30 June 2013 (unaudited) 15.1 6.6 9.9 17.2 48.8
Derecognised on disposal of subsidiary - (0.3) - - (0.3)
Charged to income statement 2.6 0.2 21.4 3.1 27.3
Released to income statement - - (3.4) (2.9) (6.3)
Utilised during the period (1.0) (0.8) (1.5) (2.2) (5.5)
Unwinding of discount - 0.1 - - 0.1
Exchange differences (1.0) (0.5) (0.5) (1.0) (3.0)
At 31 December 2013 (audited) 15.7 5.3 25.9 14.2 61.1
Acquisitions - 0.1 - - 0.1
Charged to income statement 6.4 2.4 12.0 9.0 29.8
Released to income statement (0.2) (0.4) (3.5) (3.7) (7.8)
Utilised during the period (1.4) (0.8) (10.0) (2.1) (14.3)
Unwinding of discount - 0.1 - - 0.1
Exchange differences (0.3) (0.2) - (0.2) (0.7)
At 30 June 2014 (unaudited) 20.2 6.5 24.4 17.2 68.3
Analysed as:
Current 3.1 2.5 18.3 15.2 39.1
Non-current 17.1 4.0 6.1 2.0 29.2
1. Employee related provisions are liabilities for long-term service awards, terminal gratuities and redundancy
payments which have been recognised based on contractual entitlement, including (where applicable) an estimate of the
probabilities that employees will stay until retirement and receive all relevant amounts.
2. Property provisions relate to leased properties which are either underutilised or vacant and where the unavoidable
costs associated with the lease exceed the economic benefits expected to be required. Management has calculated the
provision based on the discounted cash outflows required to settle the lease obligations as they fall due over the next ten
years.
3. Contract provisions relate to provisions for loss making onerous contracts. Management has used the present value of
the estimated future cash outflows required to settle the contract obligations as they fall due over the respective
contracts in determining the provision.
4. Other provisions are held for legal and other costs that the Group expects to incur over an extended period. These
costs are based on past experience of similar items and other known factors and represent management's best estimate of the
likely outcome.
Notes to the condensed set of financial statements
14. Financial instruments
The classification of the fair value measurement falls into three levels, based on the degree to which the fair value is
observable. The levels are as follows:
Level 1: derived from unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2: derived from other observable market data for the assets or liabilities; and
Level 3: derived from valuation techniques using data that is not based on observable market data.
Based on the above, the derivative financial instruments held by the Group at 30 June 2014, are considered to fall into
Level 2. It is the Group's policy to recognise transfers between levels of the fair value hierarchy at the end of the
reporting period during which the transfer occurred. There have been no transfers between levels in the year.
The Group held the following financial instruments:
Carrying amount (measurement basis) Comparison fair value Carrying amount (measurement basis) Comparison fair value
Amortised cost Fair value - Level 2 Level 2 Amortised cost Fair value - Level 2 Level 2
6 months ended 30 June 2014(unaudited) 6 months ended 30 June 2014(unaudited) 6 months ended 30 June 2014(unaudited) Year ended 31 December 2013(audited) Year ended 31 December 2013(audited) Year ended 31 December 2013(audited)
£m £m £m £m £m £m
Financial assets - current
Cash and bank balances 220.8 - 220.8 125.1 - 125.1
Forward foreign exchange contracts designated as FVTPL - 0.8 - - 8.6 -
Derivative instruments in designated hedge accounting relationships:
Cross currency swaps - 0.6 - - - -
Forward foreign exchange contracts - - - - 0.1 -
Trade receivables 244.3 244.3 210.7 - 210.7
Loan receivables 2.4 - 2.4 2.5 - 2.5
Financial assets - non-current -
Derivative instruments in designated hedge accounting relationships:
Cross currency swaps - 0.7 - - - -
Loan receivables 3.1 - 3.1 3.3 3.3
Financial liabilities - current
Forward foreign exchange contracts designated as FVTPL - (3.9) - - (6.8) -
Derivative instruments in designated hedge accounting relationships:
Cross currency swaps - (0.7) - - (0.3) -
Forward foreign exchange contracts - (12.1) - - (13.1) -
Trade payables (160.9) - (160.9) (169.9) - (169.9)
Loans (34.8) - (36.4) (52.2) - (59.3)
Obligations under finance leases (15.2) - (15.2) (14.9) - (14.9)
Financial liabilities - non-current
Interest rate swaps designated as FVTPL - - - - (0.1) -
Derivative instruments in designated hedge accounting relationships:
Cross currency swaps - (4.0) - - (0.3) -
Forward foreign exchange contracts - (13.2) - - (20.7) -
Loans (709.0) - (715.1) (756.1) - (736.8)
Obligations under finance leases (48.1) - (48.1) (53.1) - (53.1)
Notes to the condensed set of financial statements
14. Financial instruments (continued)
Carrying amount (measurement basis) Comparison fair value
Amortised cost Fair value - Level 2 Level 2
6 months ended 30 June 2013(unaudited) 6 months ended 30 June 2013(unaudited) 6 months ended 30 June 2013(unaudited)
£m £m £m
Financial assets - current
Cash and bank balances 193.9 - 193.9
Forward foreign exchange contracts designated as FVTPL - 6.1 -
Derivative financial instruments in designated hedge accounting relationships:
Cross currency swaps - 0.3 -
Forward foreign exchange contracts - 0.3 -
Trade receivables 574.6 - 574.6
Loan receivables 1.0 - 1.0
Financial assets - non-current
Derivative financial instruments in designated hedge accounting relationships:
Cross currency swaps - 0.7 -
Forward foreign exchange contracts - 0.1 -
Loan receivables 0.5 - 0.5
Financial liabilities - current
Forward foreign exchange contracts designated as FVTPL - (1.2) -
Derivative instruments in designated hedge accounting relationships:
Forward foreign exchange contracts - (11.8) -
Trade payables (183.7) - (183.7)
Loans (49.0) - (45.7)
Obligations under finance leases (14.2) - (14.2)
Financial liabilities - non-current
Interest rate swaps designated as FVTPL - (0.1) -
Derivative instruments in designated hedge accounting relationships:
Forward foreign exchange contracts - (18.6) -
Loans (833.7) - (824.0)
Obligations under finance leases (52.7) - (52.7)
The Directors estimate that the carrying amounts of cash, trade receivables and trade payables approximate to their fair
value due to the short-term maturity of these instruments.
The fair values of loans and finance lease obligations are based on cash flows discounted using a rate based on the
borrowing rate associated with the tenor of the liability.
The fair value of derivatives is calculated using a discounted cash flow approach applying discount factors derived from
observable market data to actual and estimated future cash flows. Credit risk is considered in the calculation of these
fair values.
Notes to the condensed set of financial statements
15. Defined benefit schemes
The service cost included in operating profit in the period is £12.5m (30 June 2013: £9.3m, 31 December 2013: £20.1m).
Included in investment revenue and finance costs is a credit of £1.5m (30 June 2013: £1.2m, 31 December 2013: £2.3m)
relating to the net interest income on our consolidated pension schemes.
Among our non-contract specific schemes, the largest is the Serco Pension and Life Assurance Scheme (SPLAS). The estimated
actuarial deficit of SPLAS as at 30 June 2014 was approximately £2m (31 December 2013: £13m, 30 June 2013: £27m). The most
recent full actuarial valuation of this scheme was undertaken as at 5 April 2012 and resulted in an actuarially assessed
deficit of £24m. Following this review, the Group agreed with the Trustees to a small increase in contributions, bringing
cash contributions up to 33% of members' pensionable salaries until 2021. The level of benefits and contributions under the
scheme is kept under continual review in light of the needs of the business and changes to pension legislation.
Contract specific Non-contract specific Total
At 30 June 2014 (unaudited) £m £m £m
Fair value of scheme assets 239.4 1,201.7 1,441.1
Present value of scheme liabilities (287.3) (1,126.5) (1,413.8)
Net amount recognised (47.9) 75.2 27.3
Members' share of deficit - 3.7 3.7
Franchise adjustment 44.4 - 44.4
Net retirement benefit (obligation)/asset (3.5) 78.9 75.4
Analysed as:
Retirement benefit obligations (3.5) (5.9) (9.4)
Retirement benefit assets - 84.8 84.8
Related assets:
Intangible assets 0.3 - 0.3
Contract specific Non-contract specific Total
At 31 December 2013 (audited) £m £m £m
Fair value of scheme assets 227.2 1,145.9 1,373.1
Present value of scheme liabilities (267.8) (1,091.2) (1,359.0)
Net amount recognised (40.6) 54.7 14.1
Members' share of deficit - 3.7 3.7
Franchise adjustment 35.1 - 35.1
Net retirement benefit (obligation)/asset (5.5) 58.4 52.9
Analysed as:
Retirement benefit obligations (5.5) (5.8) (11.3)
Retirement benefit assets - 64.2 64.2
Related assets:
Intangible assets 1.0 - 1.0
Contract specific Non-contract specific Total
At 30 June 2013 (unaudited) £m £m £m
Fair value of scheme assets 212.9 1,175.2 1,388.1
Present value of scheme liabilities (287.3) (1,152.9) (1,440.2)
Net amount recognised (74.4) 22.3 (52.1)
Members' share of deficit - 4.3 4.3
Franchise adjustment 62.3 - 62.3
Effect of IFRIC 14 - 0.1 0.1
Net retirement benefit (obligation)/asset (12.1) 26.7 14.6
Analysed as:
Retirement benefit obligations (12.1) (7.5) (19.6)
Retirement benefit assets - 34.2 34.2
Related assets:
Intangible assets 2.0 - 2.0
Notes to the condensed set of financial statements
15. Defined benefit schemes (continued)
At 30 June 2014(unaudited)% At 31 December 2013 (audited)% At 30 June 2013(unaudited)%
Main assumptions:
Rate of salary increases 3.00 3.20 3.80
Rate of increase in pensions in payment (CPI) 2.30 2.50 2.60
Rate of increase in pensions in payment (RPI) 3.30 3.30 3.50
Rate of increase in deferred pensions (CPI) 2.40 2.60 2.60
Rate of increase in deferred pensions (RPI) 3.40 3.40 3.40
Inflation assumption (CPI) 2.40 2.60 2.60
Inflation assumption (RPI) 3.30 3.40 3.40
Discount rate 4.30 4.60 4.60
At 30 June 2014(unaudited)Years At 31 December 2013 (audited)Years At 30 June 2013(unaudited)Years
Post-retirement mortality:
Current pensioners at 65 - male 22.5 22.5 22.4
Current pensioners at 65 - female 25.0 24.9 24.9
Future pensioners at 65 - male 24.3 24.2 24.2
Future pensioners at 65 - female 27.0 26.9 26.9
Pension assumption sensitivities
Assumption Change in assumption Change in present value of scheme liabilities
Discount rate 4.3% +0.5% (8%)
(0.5%) +9%
Inflation 3.30% (RPI) and +0.5% +8%
2.40% (CPI) (0.5%) (8%)
Rate of salary increase 3.00% +0.5% +1%
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