(AOF) – Thales has reached an agreement to ensure all commitments under its Thales UK Pension Scheme. Under the agreement, Thales will transfer approximately £2.7 billion of its gross pension liabilities and related scheme investments to Rothesay. This operation guarantees the benefits of all members of the plan, which includes defined benefit commitments for 10,512 retirees and beneficiaries, as well as for 5,915 other members whose rights are deferred.
This transaction is part of Thales’ capital allocation strategy. Thus, the group frees its balance sheet from the potential volatility in the valuation of pension plans resulting from market risks such as inflation, interest rates and longevity risks.
As part of the agreement, Thales expects to recognize a one-off charge to profit of approximately £400 million in the fourth quarter of 2023, and a non-recurring cash outlay of approximately £850 million during the same period. These impacts on the income statement and cash flow will not affect either the EBIT for the 2023 financial year or the free operating cash flow for the 2023 financial year of the company.
Once this transaction is completed, Thales will no longer have to pay £75 million a year to reduce the pension fund deficit. Finally, the group expects a neutral impact on its adjusted net income.
The full “buy-out” will be effective by mid-2025 at the latest, after a first technical step of full “buy-in” implemented from December 1, 2023. The terms and conditions of the “buy-out” ” complete have already been contractually agreed with Rothesay. As part of this transaction, Thales will repurchase £165 million of investments with an average maturity of 5 years.
© 2023 Agence Option Finance (AOF) – All reproduction rights reserved by AOF. AOF collects its data from the sources it considers the safest. However, the reader remains solely responsible for their interpretation and use of the information made available to them. The reader must therefore hold AOF and its contributors harmless from any claim resulting from this use. Agence Option Finance (AOF) is a brand of the Option Finance group
Did you like this article ? Share it with your friends using the buttons below.
