NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2024 25 EMPLOYEE BENEFITS (CONT’D) The expenses are recognised in the following line items in profit or loss: Group Note 2024 2023 $’000 $’000 Cost of sales 170 195 Administrative expenses 118 339 Other operating expenses 49 52 Defined benefit obligation expenses 32 337 586 The weighted average duration of the defined benefit obligations as at 31 December 2024 was 11 years (2023: 12 years). The Group has paid $10,000 (£6,000) (2023: $13,000 (£8,000)) in contributions to the benefits in 2024. The $8.9 million (£5.2 million) cash contributed in 2022 was ring fenced by the Group and held in an escrow bank account to ensure liquidity for the pension plan. However, following the triennial schedule of contributions signed on 5 April 2023, the ring-fenced funds were released in 2024, as the pensions plan was in surplus as at 31 December 2024. No further contributions are expected to be made in the next financial year. The Group operates various funded pension schemes which are established in accordance with local conditions and practices within the countries concerned. The most significant funds are described below: United Kingdom (UK) The Group makes contributions to a pension scheme for its UK employees, which was set up in 1993. The plan operates a funded defined benefit arrangement together with a defined contribution plan, both with different categories of membership. The defined benefit section of the plan was closed to new entrants in 2001 and at the same time, rights to a guaranteed minimum pension (GMP) under the defined contribution scheme also ceased. The plan entitles a retired employee to receive an annual pension payment. The contributions required are determined by a qualified actuary on the basis of triennial valuations using the projected unit credit method. The last full actuarial valuation of this scheme was carried out by a qualified independent actuary as at 5 April 2023 and this has been updated on an approximate basis to 31 December 2024. The contributions of the Group during the year were about 28.90% (2023: 36.30%) of pensionable salary. As the defined benefit section is closed to new entrants, the current service cost, as a percentage of pensionable payroll is likely to increase as the membership ages, although it will be applied to a decreasing pensionable payroll. The assumptions which have the most significant effect on the results of the valuation are those relating to the discount rate and the rates of increase in salaries and pensions. Taiwan The Group makes contributions to a defined benefit pension plan for its employees in Taiwan. The contributions required are determined by an external qualified actuary using the projected unit credit method. The most recent valuation was carried out on 31 December 2024. The contributions of the Group were no less than 6% (2023: 6%) of the employees’ earnings. The assumptions which have the most significant effect on the results of the valuations are those relating to the discount rate and the rate of increase in salaries. The defined benefit plans are administered by pension funds that are legally separated from the Group. The boards of the pension funds are required by law to act in the best interests of the plan participants. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, currency risk, interest rate risk and market investment risk. The above plans are substantially funded by the Group’s subsidiaries. The funding requirements are based on pension funds’ actuarial measurement framework set out in the funding policies of the plans. FINANCIALS CITY DEVELOPMENTS LIMITED 150
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