2017 CONSOLIDATED FINANCIAL STATEMENTS Notes to the consolidated financial statements

5.3.1. Post-employment benefits Post-employment benefits arise mainly from the Group’s obligations towards its employees to provide retirement benefits in France (31.2% of the Group’s total obligations) and defined-benefit pension plans in the United Kingdom (56.2% of the Group’s total obligations), Germany (11.8%) and other European countries (chiefly Belgium and Norway for the remainder). At 31 December 2017 they totalled €358.9 million, versus €446.3 million at 31 December 2016. In the United Kingdom , the Group has five defined-benefit pension plans. The obligations under each plan are asset-funded. Three of these plans are closed to all new employees and the vesting of future benefits has ceased. For each plan, the benefits payable are primarily based on the plan member’s final salary and, in certain cases, the member’s average salary and any incidental benefits. Each plan holds its assets in a trust fund for employees and is supervised by the regulating body defined in UK pensions legislation. The plan trustees are corporate trustees whose directors include representatives of the plan members and independent members. External consultants are hired by the trustees to manage the plans on a day-to-day basis and deal with legal, investment policy and actuarial matters. Under UK law, the plans must be assessed every three years. This assessment is used as a basis to determine the contributions payable by the employer to the funds. The risks associated with these plans are as follows: p asset management; p inflation, to which pension benefits are indexed, although this risk is limited by the use of inflation-indexed financial instruments; p interest rates insofar as the future cash outflows are discounted, although this risk is limited by the use of interest rate hedging instruments; p changes in demographic assumptions and mortality tables. These plans distinguish between active members who still vest benefits, members who are still working but whose benefits have been frozen, and retired members. These three member categories represent 3.4%, 61.5% and 35.1% of the total obligations, respectively. Projected benefit outflows by the funds, which had a total of €1,685.7 million in assets at 31 December 2017, are as follows, in millions of pounds sterling, over the next ten years:

These outflows correspond to benefits provided and estimates for transfers of obligations (and the related assets), at the request of recipients, to external asset managers. Assets covering obligations came to €1,484.1million at 31 December 2017. These plans include the payment of contributions to compensate for the deficit existing in the funds (contributions less mandatory expenses and deductions) and to fund the current service cost for the period. In 2017, over 12 months, this paid contribution totalled €25.8 million, including €19.9 million to fund the deficit (€20.8 million including other related disbursements). The contribution to be paid in 2018 is expected to amount to £23.1 million, including £18.5 million to fund the deficit. In France , the Group’s defined-benefit obligations cover the payment of retirement benefits (indemnités de départ en retraite) . The Group recognises provisions for its commitments to employees, principally in accordance with the terms of voluntary and compulsory retirement under the Syntec collective bargaining agreement. The resulting liability fluctuates according to demographic assumptions such as mortality tables (public statistics) and the discount rate (Bloomberg eurozone index). This plan is exposed to interest rate risk, inflation risk and the risk of changes in demographic assumptions. In Germany , there are four plans, two of which are material (€36.2 million). Since these plans are not funded, they are covered by a provision. The purpose of the main plan is to pay a minimum pension equal to 14.1% of the salary paid up to the social security ceiling and 35.2% beyond that ceiling. This plan only involves employees who entered into service prior to 1 January 1986, and pension entitlements have been frozen since 30 September 1996. This plan is exposed to interest rate risk, inflation risk and the risk of changes in demographic assumptions. There are also plans in Poland, Cameroon, Norway and Belgium. The plans in the latter two countries are funded and serve to pay an annuity to plan members on retirement. The plans in Poland and Cameroon cover benefits payable on retirement. These plans are grouped together under “Other” and the Belgian plan is the main contributor to this item.

p less than two years: £160.1 million; p two to five years: £273.8 million; p five to ten years: £513.1 million.



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