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Notes to the Accounts (23-26)
23 Cash and financing
| |
2004
£m |
2003
£m |
| Reconciliation of net cash flow to movement in net debt |
|
|
| Decrease in cash in the year |
(1.2) |
(1.3) |
| Net repayment/(receipt) of loans |
1.6 |
(3.5) |
| Reduction/(increase) in net debt resulting from cash flows |
0.4 |
(4.8) |
| Loan transfer on disposal of business |
|
5.4 |
| Exchange rate movements |
(1.3) |
0.9 |
| Movement in net debt in the period |
(0.9) |
1.5 |
| Net debt at 1 January |
(10.4) |
(11.9) |
| Net debt at 31 December |
(11.3) |
(10.4) |
| |
1 January
2004
£m |
Cash
flow
£m |
Other
non - cash
movements
£m |
Exchange rate
movements(1)
£m |
31 December
2004
£m |
| Analysis of net debt |
|
|
|
|
|
| Cash at bank and in hand |
15.6 |
(0.2) |
- |
(1.0) |
14.4 |
| Overdrafts |
- |
(1.0) |
- |
- |
(1.0) |
| |
15.6 |
(1.2) |
- |
(1.0) |
13.4 |
| Debt due after one year |
(26.0) |
1.6 |
24.7 |
(0.3) |
- |
| Debt due within one year |
- |
- |
(24.7) |
- |
(24.7) |
| |
(26.0) |
1.6 |
- |
(0.3) |
(24.7) |
| Total |
(10.4) |
0.4 |
- |
(1.3) |
(11.3) |
(1) Exchange rate movements result from the adjustment of opening balances and cash flows in the year to closing exchange rates.
| |
2004
£m |
2003
£m |
| Interest |
|
|
| Interest payable on bank loans and overdrafts |
1.7 |
1.9 |
| Interest receivable |
(0.1) |
(0.2) |
| Net interest payable |
1.6 |
1.7 |
24 Leasing commitments
At 31 December 2004 the Group had the following annual commitments under operating leases
| |
Land and
buildings
£m |
Other
£m |
Total
£m |
2003 (1)
£m |
| Expiring within one year |
1.1 |
- |
1.1 |
0.8 |
| Expiring two to five years |
1.6 |
0.2 |
1.8 |
1.5 |
| Expiring after five years |
0.7 |
- |
0.7 |
0.2 |
| |
3.4 |
0.2 |
3.6 |
2.5 |
(1) Leasing commitments at 31 December 2003 comprised £2.5 million of land and buildings.
25 Pension commitments
During the year, the Group operated two funded defined benefit pension schemes set up under separate trusts. The Group pays
contributions to the funds in order to provide security for existing pensions and the accrued benefits of current and former
employees. At the end of 2003 the Group closed both schemes to new members, and pension provision for new employees is via
a defined contribution plan. The disclosures below relate to the defined benefit schemes only.
SSAP24
The adequacy of the schemes to meet the projected benefits is assessed by independent qualified actuaries at regular intervals.
The most recent actuarial valuations of the schemes, based on the projected unit method, were as at 5 April 2004. The schemes
had assets with a combined market value (excluding the value of insurance policies) of £28.3 million at that date. On the
assumptions adopted, the value of the schemes’ assets was equal to 94% of the value placed on the accrued benefits assessed
on an ongoing basis allowing for expected future increases in salaries. Under SSAP24 the deficits arising are being spread over
14 years by way of variation from regular cost using the straight-line method.
The most significant actuarial assumptions were: investment return of 7.5% per annum in respect of the period pre-retirement,
and 5.0-5.5% per annum in respect of the period post-retirement; price inflation of 3.0% per annum; general salary inflation of
5.0% per annum and pension increases of 3.0-3.25% per annum.
Company contributions to the schemes amounted to £1.0 million (2003: £0.8 million) for the year. The pension charge for 2004
in respect of these defined benefit schemes is £1.5 million (2003: £0.9 million). There is a prepayment of £0.3 million (2003:
£0.8 million) included in the balance sheet being the excess of the accumulated company pension contributions paid to the
schemes over the amount charged to the profit and loss account.
FRS 17
The disclosures required in relation to the transitional arrangements within FRS 17 ‘Retirement Benefits’ have been based on
the most recent formal actuarial valuation as at 5 April 2004 updated to 31 December 2004, but using the following financial
assumptions for the purpose of FRS 17:
| |
2004
% per
annum |
2003
% per
annum |
2002
% per
annum |
| Price inflation |
2.8 |
2.75- |
2.25 |
| General salary and wage inflation |
4.8 |
4.75 |
4.25 |
| Increases to pensions in payment (in excess of GMPs) |
2.8 |
2.75 |
2.25 |
| Increases to deferred pensions |
2.8 |
2.75 |
2.25 |
| Discount rate |
5.3 |
5.4 |
5.5 |
Scheme assets and expected rate of return
| |
Fair value
£m |
2004
Expected rate
of return
%pa |
Fair value
£m |
2003
Expected rate
of return
%pa |
Fair value
£m |
2002
Expected rate
of return
%pa |
| Equities |
21.5 |
7.9 |
19.3 |
8.2 |
16.3 |
8.2 |
| Bonds |
7.4 |
4.8 |
6.5 |
5.0 |
5.6 |
4.8 |
| Property |
1.4 |
6.8 |
1.2 |
7.1 |
1.4 |
6.9 |
| Cash and net current assets |
- |
3.8 |
0.3 |
3.8 |
0.1 |
4.0 |
| Total |
30.3 |
7.1 |
27.3 |
7.3 |
23.4 |
7.3 |
The investment return assumptions used by the actuary are the best estimates chosen from a range of possible assumptions, and
will not necessarily be borne out in practice. The schemes’ assets are not intended to be realised in the short term and their fair
value may be subject to significant change before they are realised.
Profit and loss charge for the year 2004 (based on 31 December 2003 assumptions)
| Analysis of amounts charged to operating profit: |
Vitec Group
Pension
Scheme
£m |
Vitec Group
Executive
Pension
Scheme
£m |
2004
Total
£m |
Vitec Group
Pension
Scheme
£m |
Vitec Group
Executive
Pension
Scheme
£m |
2003
Total
£m |
| Current service cost |
1.4 |
0.3 |
1.7 |
0.8 |
0.4 |
1.2 |
| Past service costs |
- |
- |
- |
- |
- |
- |
| Total charged to operating profit |
1.4 |
0.3 |
1.7 |
0.8 |
0.4 |
1.2 |
| |
|
|
|
|
|
|
| Analysis of the amount charged to other finance income: |
|
|
|
|
|
|
| Interest on pension scheme liabilities |
1.2 |
0.5 |
1.7 |
1.0 |
0.5 |
1.5 |
| Expected return on assets in the pension scheme |
(1.5) |
(0.6) |
(2.1) |
(1.2) |
(0.5) |
(1.7) |
| Net credit to other finance income |
(0.3) |
(0.1) |
(0.4) |
(0.2) |
- |
(0.2) |
| Total profit and loss charge before deduction for tax |
1.1 |
0.2 |
1.3 |
0.6 |
0.4 |
1.0 |
History of experience gains and losses
| |
2004 |
2003 |
2002 |
| a. Gain/(loss) on plan assets |
|
|
|
| amount (£ million) |
0.7 |
2.1 |
(5.6) |
| % of plan assets at end of year |
2.3% |
7.6% |
-23.4% |
| b. Experience gain on plan liabilities |
|
|
|
| amount (£ million) |
1.3 |
- |
0.1 |
| % of plan liabilities at end of year |
3.6% |
0.0% |
0.4% |
c. Total actuarial loss recognised in Statement of
total recognised gains and losses |
|
|
|
| amount (£ million) |
(0.3) |
(0.8) |
(5.7) |
| % of plan liabilities at end of year |
0.8% |
2.4% |
20.4% |
Reconciliation to the balance sheets
| |
Vitec Group
Pension
Scheme
£m |
Vitec Group
Executive
Pension
Scheme
£m |
2004
Total
£m |
Vitec Group
Pension
Scheme
£m |
Group
Executive
Pension
Scheme
£m |
2003
Total
£m |
| Fair value of scheme assets |
21.9 |
9.0 |
30.9 |
19.9 |
7.9 |
27.8 |
| Actuarial value of scheme liabilities |
(25.3) |
(11.2) |
(36.5) |
(23.0) |
(9.8) |
(32.8) |
| Deficit in the scheme |
(3.4) |
(2.2) |
(5.6) |
(3.1) |
(1.9) |
(5.0) |
| Related deferred tax asset |
1.0 |
0.7 |
1.7 |
0.9 |
0.6 |
1.5 |
| Pension liability recognised in balance sheet |
(2.4) |
(1.5) |
(3.9) |
(2.2) |
(1.3) |
(3.5) |
The amount of the net pension liability would have a consequential effect on reserves. The assets and liabilities shown for the
Vitec Group Executive Pension Scheme include an amount of £0.6 million (2003: £0.5 million) in respect of certain insurance
policies which meet part of the benefit entitlement for some pensioners of the Scheme. The value placed on these insurance
policies is in addition to the value of the Scheme’s investments. The present value of the schemes’ liabilities are derived from
cash flow projections over long time periods and thus are inherently uncertain.
| |
2004
£m |
2003
£m |
| Deficit in schemes at beginning of year |
(5.0) |
(4.0) |
| Movement over year: |
|
|
| Current service cost |
(1.7) |
(1.2) |
| Employer contributions |
1.0 |
0.8 |
| Other finance income |
0.4 |
0.2 |
| Actuarial loss recognised in Statement of total recognised gains and losses before adjustment for tax |
(0.3) |
(0.8) |
| Deficit in schemes at end of year |
(5.6) |
(5.0) |
26 Related party transactions
During the year the following related party transactions took place.
Lino Manfrotto, a director of Lino Manfrotto & Co Spa, is president and shareholder of Mancor Spa, a company from which
Gruppo Manfrotto rents properties used in its business under operating leases that expire at the end of 2006. Rents paid to
Mancor in 2004 totalled c210,027, £142,985 (2003: c247,634, £171,000). At 31 December 2004, there were no
outstanding amounts payable to Mancor (2003: Nil).
Abramo Manfrotto is a director of Gruppo Manfrotto Srl. He is also sole administrator of Antide Srl, a company specialising in
world-wide web sites and e-mail services. Group companies paid Antide a total of c60,950, £41,468 during the year (2003:
c100,944, £70,000) for products and services. At 31 December 2004, there was c16,894, £11,494 outstanding and payable
to Antide Srl.
Abramo Manfrotto is also Managing Director of ALU Spa. Sales of Gruppo Manfrotto products and services to ALU in 2004
totalled c3,902,994, £2,655,459. At 31 December 2004, there was c151,111, £102,811 outstanding, payable by ALU Spa.
Sales of ALU products and services to Gruppo Manfrotto companies in 2004 totalled c82,202, £55,927. At 31 December
2004, there was c10,291, £7,002 outstanding, payable to ALU Spa.
Information correct at 13/04/05