47153 AG Barr Annual Report 2025 AW4 SQ WEB - Flipbook - Page 155
Strategic Report
Corporate Governance
Accounts
Employee benefits
Retirement benefit plans
The Group operates two pension schemes, as detailed in Note 26. The schemes are generally funded through payments to trustee-administered funds. The Group has
both defined benefit and defined contribution plans.
Defined contribution pension plans
A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Obligations for contributions are recognised as an expense
in the income statement as they fall due. The Group has no further payment obligations once the contributions have been paid.
Defined benefit pension plans
A defined benefit plan is a pension plan that is not a defined contribution plan. Typically defined benefit plans define an amount of pension benefit that an employee will
receive on retirement, usually dependent on one or more factors such as age, years of service and compensation.
The surplus/deficit recognised in the statement of financial position in respect of defined benefit pension plans is the present value of plan assets less the fair value of the
defined benefit obligation. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The pension rules state
that the trustees shall pay any surplus, after liabilities have been satisfied, to the participating employer.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds
that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in other comprehensive income
in the period in which they arise.
The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. The gain or loss on a settlement is the difference between
the present value of the defined benefit obligation being settled as determined on the date of settlement and the settlement price, including any plan assets transferred
and any payments made directly by the Group in connection with the settlement.
The Group’s defined benefit plan was closed to future accrual on 1 May 2016.
Share-based compensation
The Group grants equity-settled share-based payments to certain employees. These are measured at fair value (excluding the effect of non market-based vesting conditions)
at the grant date. The fair value of the equity-settled share-based payment determined at the grant date is expensed on a straight-line basis over the vesting period,
based on the Group’s estimate of the shares that will eventually vest and adjusted for the effect of non market-based vesting conditions. Fair value is measured using the
Black-Scholes pricing model.
The Group also provides employees with the ability to purchase the Company’s ordinary shares at a discount to the current market value through payroll.
The Group records as an expense the fair value of the discount on the shares purchased by the employee as a charge to the income statement and a credit to the share
options reserve.
At each year end date, the entity revises its estimates of the number of options that are expected to vest based on the non market-based vesting conditions. It recognises
the impact of the revision to original estimates, if any, in the income statement, with a corresponding adjustment to the share options reserve.
Profit-sharing and bonus plans
The Group recognises a liability and an expense for various bonuses based on formulae that take into consideration the profit attributable to the Company’s shareholders
after certain adjustments.
The Group recognises a provision where there is a contractual obligation or where there is a past practice that has created a constructive obligation.
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