220 348
Consolidated Financial Report |
EXPLANATORY NOTES
2014 Annual Report
Prysmian Group
220
The following table presents a sensitivity analysis of the
effects of an increase/decrease in the most significant
actuarial assumptions used to determine the present value
of benefit obligations, namely the interest rate and inflation
rate:
MEDICAL BENEFIT PLANS
Some Group companies provide medical benefit plans for
retired employees. In particular, the Group finances medical
benefit plans in Brazil, Canada and the United States. The
plans in the United States account for approximately 90%
of the total obligation for medical benefit plans (80% at 31
December 2013).
Apart from interest rate and life expectancy risks, medical
benefit plans are particularly susceptible to increases in the
cost of meeting claims. None of the medical benefit plans
has any assets to fund the associated obligations, with
benefits paid directly by the employer.
As noted earlier, the US medical benefit plans account for
the majority of the benefit obligation. These plans are not
subject to the same level of legal protection as pension
plans. The enactment of important health care legislation
in the United States (the Affordable Care Act, also known
as “ObamaCare”) could result in a reduction of costs and
risks associated with these plans, as plan members move to
individual forms of insurance. Currently the new reform has
had no impact on liabilities and costs.
The obligation in respect of medical benefit plans is analysed
as follows:
2014
2013 (*)
Opening balance
23
28
Business combinations
-
-
Personnel costs
1
1
Interest costs
1
1
Plan settlements
-
-
Actuarial (gains)/losses recognised in equity - Salary increase assumptions
(4)
(2)
Actuarial (gains)/losses recognised in equity - Demographic assumptions
-
1
Actuarial (gains)/losses recognised in equity - Financial assumptions
3
(4)
Reclassifications
-
-
Disbursements
(1)
(1)
Currency translation differences
2
(1)
Total movements
2
(5)
Closing balance
25
23
(*) The previously published prior year consolidated financial statements have been restated following the adoption of IFRS 10 and IFRS 11. Further details can
be found in Section C. Restatement of comparative figures.
31 December 2014
31 December 2013
decrease - 0.50%
increase + 0.50%
decrease - 0.50%
increase + 0.50%
Interest rate
+5.21%
-4.80%
+5.23%
-4.80%
decrease - 0.25%
increase + 0.25%
decrease - 0.25%
increase + 0.25%
Inflation rate
-1.57%
+1.60%
-2.58%
+2.64%
(in millions of Euro)
(in millions of Euro)