Peachtree 2015 Annual Report Download - page 136
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The Sage Group plc | Annual Report & Accounts 2015
134
Operating assets and liabilities continued
9 Provisions continued
Legal
£m
Building
£m
Warranty
£m
Total
£m
At 1 October 2014 16.8 2.9 1.6 21.3
– Acquisition / disposal of subsidiaries 0.6 – – 0.6
– New provision in the year 7.3 0.7 – 8.0
– Increase in provision 0.4 – 0.3 0.7
– Provision utilised in the year (3.3) – (0.3) (3.6)
– Unused amounts reversed (5.4) – – (5.4)
– Exchange movement (1.2) (0.1) – (1.3)
At 30 September 2015 15.2 3.5 1.6 20.3
Legal
£m
Building
£m
Warranty
£m
Total
£m
Maturity profile
< 1 year 7.9 0.8 1.2 9.9
1 – 2 years 0.3 – 0.2 0.5
2 – 5 years 7.0 – 0.2 7.2
> 5 years – 2.7 – 2.7
At 30 September 2015 15.2 3.5 1.6 20.3
The Group offers a warranty cover in respect of products sold to third parties. The estimated liability is recorded when products are sold.
These estimates are established using historical information on the average cost of warranty claims and management estimates regarding
future claims. The timing of the cash flows associated with warranty provision is spread over the period of warranty with the majority of the
claims expected in the first year.
Building provisions relate to dilapidation charges and onerous lease commitments. The timing of the cash flows associated with building
provisions is dependent on the timing of lease agreement termination.
Legal provisions have been made in relation to ongoing disputes with third parties and other claims against the Group. The ageing of legal
provisions is assessed regularly, based upon internal and external legal advice, as required.
10 Post-employment benefits
This note explains the accounting policies governing the Group’s pension schemes, analyses the deficit on the defined benefit pension
scheme and shows how it has been calculated.
The majority of the Group’s employees are members of defined contribution pension schemes. Additionally the Group does operate
two small defined benefit schemes in France and Switzerland.
For defined contribution schemes, the Group pays contributions into separate funds on behalf of the employee and has no further
obligations to employees. The risks associated with this type of plan are assumed by the member. Contributions paid by the Group
in respect of the current period are included in the income statement.
The defined benefit scheme is a pension arrangement under which participating members receive a pension benefit at retirement
determined by the scheme rules, salary and length of pensionable service. The income statement charge for the defined benefit
scheme is the current/past service cost and the net interest cost which is the change in the net defined benefit liability that arises
from the passage of time. The Group underwrites both financial and demographic risks associated with this type of plan.