LucyGroup-ARA2024_spreads web ready_FINAL

FINANCIAL REVIEW CONTINUED

BUSINESS OVERVIEW STRATEGIC REPORT CORPORATE GOVERNANCE FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Return on net assets The Group recorded a return on net assets of 21.6% (2023: 18.3%) during the year. Post-employment benefits The Group accounts for post employment benefits in accordance with IAS 19 Employee Benefits. The balance sheet reflects the net surplus of the W Lucy Defined Benefit Pension Scheme in the UK as at 31st December 2024, based on the market value of assets at that date and the valuation of liabilities using AA corporate bond yields adjusted to reflect the duration of the Scheme’s liabilities. This Scheme was closed in 2002 to new entrants to reduce the risk of volatility of the Group’s liabilities. The last triennial valuation of the Scheme was performed as at 6th April 2023. This valuation revealed a Scheme surplus of £11.2m and a funding level of 121%, compared with a deficit of £4.4m in the previous valuation following a significant increase in bond yields. As part of the actuarial valuation, the Company agreed from 1 January 2024 to pay contributions of £0.2m for expenses plus 21.5% of pensionable salary in respect of the Scheme’s active members, compared with 28.8% in the previous valuation. The separate IAS 19 valuation performed as at 31st December 2024 showed a Scheme surplus of £18.2m (2023: £16.4m). This represents an increase in the funding level from 133% to 140% during the year. The increase in bond yields during the year has resulted in a higher discount rate than last year, which has decreased the value of the scheme’s liabilities. This has been partially offset by increases

International Financial Reporting Standard The consolidated financial statements of the Group have been prepared under UK adopted International Financial Reporting Standards (IFRS) to represent the international nature of the Group’s business activities. The parent company has elected to prepare its financial statements in accordance with FRS 101.

in the expectations for inflation, but overall these have led to an actuarial gain of £3.2m from changes in the financial assumptions. The interest on the Scheme’s surplus at the previous review date has increased the surplus by £0.8m. Changes to the mortality projection assumption has altered the expected life expectancies for members of the scheme. The impact of this change has been to reduce the value of the Scheme’s liabilities by £0.1m, which further increased the surplus. The scheme’s assets underperformed by £1.5m compared to the expected rate of interest over the year, which has served to decrease the surplus. The costs of further accrual of benefits by members and the Scheme’s expenses have exceeded contributions paid by the Company during the year, reducing the surplus by £0.4m. The discretionary pension increases awarded by the Company to a defined group of members decreased the surplus by £0.2m. Allowing for actual pension increases and revaluation in deferment during the year results in an experience loss of £0.1m, further decreasing the surplus. The related deferred tax liability of £4.5m resulted in a net pension asset of £13.6m (2023: £12.3m) at the end of the year. The amount of the surplus is sensitive to changes in the main financial assumptions, particularly the rate used to discount the liabilities (the discount rate). A change in the discount rate of 0.1% would increase/ decrease the surplus by £0.5m (2023: £0.6m). The value of non-UK defined post employment benefits was £7.4m (2023: £6.5m) at the end of the year.

Gary Ashton Group Finance Director

20 March 2025

48

|

Lucy Group Ltd Annual Report & Accounts 2024

LUCYGROUP.COM

|

49