1.15 Note 18.4 says UK and US Plan defined benefit costs were nil, while Note 18.8 reports a settlement cost and a settlement credit on the US Plan
UK Company A · a UK-listed medical technology group · Regulator-style question
In brief
Note 18.4 states that [wording masked] for 2024, 2023 and 2022. Note 18.8 states that [amount] [wording masked] 2023 on US Plan lump sums and that a [amount] credit is recorded in 2024 on the US annuity purchase. The 2025 report repeats the $nil statement. We ask what the $nil statement covers.
The evidence, as filed
Screenshot withheld to protect the company’s identity: Annual Report 2024, page 237; Annual Report 2025, page 257; Annual Report 2024, page 240; Annual Report 2024, page 235. Their wording or layout could lead back to the company even with names and figures masked; the evidence list below records what each page shows.
What the report shows, and what the rule requires
| What the annual report shows | What the rule requires |
|---|---|
| What the annual report shows Expenses note: '[wording masked] (2023: $nil, 2022: $nil).' Funding note: [amount] of settlement costs in 2023 and a [amount] credit in 2024, both on the US Plan. | What the rule requires The statement says which costs it covers (for example service cost or employer contributions), or gives the UK and US Plan amounts recognised in the income statement in a way that agrees with Notes 18.2 and 18.8. |
Why it matters
If the statement is meant to cover all defined benefit costs, the audited notes contain two statements that do not agree; if it is meant narrowly, the wording does not say so.
Exposure
Narrative consistency in the notes; no amount in the primary statements is affected.
Our workings
the sentence in Note 18.4 follows directly the definition of defined benefit plan costs [wording masked].
Note 18.8 reports a [amount] settlement cost in 2023 and a [amount] credit in 2024 linked to the US Plan, and Note 18.2 shows settlements in the income statement of 5 for 2024 and (4) for 2023.
Only the company can say which reading is intended.
Management’s best defence, and our reply
The company would say the sentence refers to the cost of benefit accrual: both plans are closed to future accrual, so their service cost and the employer funding contributions are nil, which Note 18.8 also states. Settlement results are one-off and are separately disclosed in Notes 18.2 and 18.8, so nothing is hidden. That reading is tenable, which is why this is put as a question; however, the sentence sits straight after a definition of defined benefit costs that includes interest and administration costs, so a reader would take it to mean all of them.
The fix
- Reword, for example: 'There was no service cost [wording masked], which are closed to future accrual (2023: $nil); settlement amounts are set out in Note 18.8.'
Question for the company
What does the statement in Note 18.4 that [wording masked] cover, and how does it reconcile with the [amount] settlement cost in 2023 and the [amount] credit in 2024 on the US Plan reported in Note 18.8?
Evidence relied on
| # | What it shows | Type | Where |
|---|---|---|---|
| 1 | Note 18.4 states nil cost for both plans in all three years | Document | Annual Report 2024, page 237 |
| 2 | the preceding sentence defines defined benefit plan costs widely | Document | Annual Report 2024, page 237 |
| 3 | Note 18.8 reports a US Plan settlement cost in 2023 and a credit in 2024 | Document | Annual Report 2024, page 240 |
| 4 | settlements recognised in the income statement: 5 in 2024, (4) in 2023 | Document | Annual Report 2024, page 235 |
| 5 | the 2025 report repeats the statement | Document | Annual Report 2025, page 257 |
Prepared by Pramanex from the company’s published annual reports, without the company’s involvement, to show how an annual report review reads. The company is not named, and nothing on this page is a statement about any identifiable company. Observations are not an audit, review or other assurance engagement, and not legal advice. A regulator-style question is a question, not a conclusion.
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