Renold PLC Re Pensions (1269I)

TIDMRNO

RNS Number : 1269I

Renold PLC

07 December 2015

Renold plc

("Renold" or "the Company" or "the Group")

Re: Lowering risk and reducing liabilities for pension schemes

Renold, a leading international supplier of industrial chains and related power transmission products, announces further actions to reduce and de-risk pension liabilities in the UK and Germany.

UK: Second medically underwritten insured buy-in

The Renold Pension Scheme (the Group's UK legacy Defined Benefit pension scheme, 'the RPS') has completed a second medically underwritten insured buy-in that fully de-risks another GBP27m (approximately 25%) of the current UK pensioner liabilities (1) and follows a similar transaction in April 2015. Both transactions were in respect of the highest risk pensioner members (2) and the transaction announced today results in approximately 50% of current UK pensioner liabilities being fully de-risked.

Similarly attractive pricing terms were obtained compared to the April transaction and hence the RPS was again able to secure the liabilities at a small discount to their assumed funding valuation. As a result, the transaction has improved the funding level of the RPS in addition to the further reduction in risk. The transaction is broadly neutral from an accounting valuation perspective and was structured as a 'buy-in' and hence the insurance policy remains an asset of the scheme. Consideration for the buy-in will be sourced entirely from a portion of the scheme's holding of high quality corporate bonds. The Group has agreed that a modest acceleration of up to GBP1.0m of contingent cash contributions that would have been payable in the financial year ending March 2018, will be made in the financial year ending March 2017.

The Group is now fully protected against risks arising from volatility in longevity, inflation and interest rates in respect of these members. These factors will be relevant to future triennial revaluations and funding discussions with Trustees.

Closure of unfunded German pension scheme to future accrual

A German court has confirmed that the pension scheme of the Group's subsidiary in Germany was properly closed to future accrual with effect from 30 September 2013. This is expected to result in a reduction in the Group's unfunded pension obligations of approximately 6.0% or GBP1.5m, based on market conditions and exchange rates as at 30 September 2015 and will be fully disclosed in the Group's Annual Report and Accounts for the year ending 31 March 2016. The confirmed closure also reduces annual service costs as well as eliminating the German scheme's exposure to the risk of salary inflation.

Robert Purcell, Chief Executive of Renold, commented:

"These actions significantly reduce and further de-risk our pension liabilities in the UK and Germany. At the same time, they lower future funding costs and thus protect the Group's ability to invest further in the business. They are also important milestones in rebuilding the Group's balance sheet and delivering sustainable gains in shareholder value."

7 December 2015

(1) Liabilities assessed on a scheme funding basis

(2) High liability members from a scheme perspective are those with higher annual pension incomes who represent a significant concentration of longevity risk for the scheme.

ENQUIRIES:

 
 Renold plc               0161 498 4500 
 Robert Purcell, Chief 
  Executive 
 Brian Tenner, Finance 
  Director 
 
 Instinctif               020 7457 2020 
 Mark Garraway 
 Helen Tarbet 
 

NOTES FOR EDITORS

Renold is a global leader in the manufacture of industrial chains and also manufactures a range of torque transmission products which are sold throughout the world to a broad range of original equipment manufacturers and distributors. The Company has a well deserved reputation for quality that is recognised worldwide. Its products are used in a wide variety of industries including manufacturing, transportation, energy, steel and mining.

Further information about Renold can be found on the website at: www.renold.com

This information is provided by RNS

The company news service from the London Stock Exchange

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December 07, 2015 02:00 ET (07:00 GMT)