Accell Group’s Adjustment of UK Pension Plan Has Positive Effect on Equity
HEERENVEEN, the Netherlands – Accell Group NV announces that it will adjust the valuation of its UK pension plan on its balance sheet. The positive effect on equity is € 5.2 million as at 31 December 2014. The adjustment has a positive effect of € 0.4 million on the net profit in 2014 and has no impact on the company’s operating activities and cash flows.
The adjustment follows a recommendation by the Netherlands Authority for the Financial Markets(AFM) about the application of accounting standards regarding pensions.
Accell Group CFO Hielke Sybesma says, “The valuation rules relating to (defined benefit) pension plans are complex and we have been in talks with the AFM for some time about the valuation of our UK pension plan. The AFM is of the opinion that the valuation surplus of our UK pension plan must be fully capitalised because Accell Group is entitled to it at the conclusion of its obligations under the plan. In calculating the surplus we had applied prudence due to the long-term nature of the plan and inherent uncertainties. We follow the recommendation and will adjust the financial statements for 2015 in this respect. The adjustment has a positive effect on equity of more than € 5 million on a total equity of € 276 million as at 31 December 2014.”
In the financial statements for 2013 and 2014 Accell Group applied a degree of caution in the valuation of the UK pension plan. The net balance of plan assets and liabilities in the UK pension plan is € 19.8 million as at 31 December 2014 and Accell Group is entitled to this benefit in the event the pension plan is terminated. However, in view of the long-term nature and uncertainties when valuing such plans, Accell Group limited the amount of capitalised economic benefit to the total of the annual contributions made by the company to the pension plan. The cumulative contributions amount to € 2.5 million as at 31 December 2014. Therefore an asset ceiling of € 17.3 million was applied as at 31 December 2014. In note 18 to the financial statements for 2014 Accell Group included a detailed disclosure of the UK pension plan, which also highlights the valuation surplus.
Reasons for adjustment
The AFM informed Accell Group that it is of the opinion that the financial statements for 2014 do not comply with accounting standards IFRIC 14.9 and IFRIC 14.13. According to the AFM the maximum economic benefit, as calculated in accordance with IAS 19 and IFRIC 14, must be reflected in the balance sheet and it does not suffice to disclose a valuation surplus in a note to the financial statements.
The AFM believes that the determined asset ceiling in the financial statements for 2014 does not comply with the provisions of IAS 19.8 and IAS 19.64. Through this press release Accell Group announces that it will adjust the valuation of the pension assets relating to the UK pension plan in the financial statements for 2015, including an adjustment of the financial information 2014.