LAFARGE UK PENSION PLAN2014+Report+and... · The Trustee Board presents the report and accounts of the Lafarge UK Pension Plan (the Plan) for the year ended ... Lafarge Building Materials

Scheme Registration Number: 1017009961

LAFARGE UK PENSION PLAN

REPORT AND ACCOUNTS

YEAR ENDED 30 JUNE 2014

2

LAFARGE UK PENSION PLAN REPORT AND ACCOUNTS

YEAR ENDED 30 JUNE 2014 CONTENTS TRUSTEE AND ADVISERS 3

REPORT OF THE TRUSTEE

4

STATEMENT OF TRUSTEE’S RESPONSIBILITIES

10

INDEPENDENT AUDITOR’S REPORT

11

FUND ACCOUNT

12

NET ASSETS STATEMENT

13

NOTES TO THE ACCOUNTS

14

SUMMARY FUNDING STATEMENT 22

AUDITOR’S STATEMENT ON CONTRIBUTIONS

24

SCHEDULE OF CONTRIBUTIONS - FINAL PAY SECTION

25

APPENDIX TO SCHEDULE OF CONTRIBUTIONS - FINAL PAY SECTION 27

ACTUARIAL CERTIFICATION OF SCHEDULE OF CONTRIBUTIONS - FINAL PAY SECTION

28

SCHEDULE OF CONTRIBUTIONS - LRPS SECTION

29

APPENDIX TO SCHEDULE OF CONTRIBUTIONS - LRPS SECTION 31

ACTUARIAL CERTIFICATION OF SCHEDULE OF CONTRIBUTIONS - LRPS SECTION

32

ACTUARIAL CERTIFICATION OF TECHNICAL PROVISIONS

33

PAYMENT SCHEDULE – MONEY PURCHASE SECTION 34

SUMMARY OF CONTRIBUTIONS

36

INVESTMENT REPORT COMPLIANCE STATEMENT

37 40

3

Trustee and Advisers Trustee Lafarge UK Pension Trustees Limited Regent House, Station Approach, Dorking,

Surrey, RH4 1TH

Trustee Board Chairman

Norman Braithwaite

Independent Chairman

Employer Directors Bob Andrews Pensioner - formerly Redland PLC Dyfrig James Director

Nick Peall

Jenny Honeysett

Pensioner – formerly Lafarge Tarmac Cement UK Financial Controller Lafarge Tarmac Cement

Member Nominated Directors (MNDs)

Arthur Cunningham Pensioner – Former Lafarge Redland Pension Scheme member

Steve Taylor (up until 04/06/14)

Robert Napier (from 05/06/14) Paul Hunter (re-elected from 05/06/2014) Lynn Clarke (up until 04/06/14) Les Waining (from 05/06/14)

Capital and Development Manager Lafarge Tarmac Aggregates Pensioner – Former Lafarge Redland Pension Scheme member Pensioner – Non-Lafarge Redland Pension Scheme member UK IT Skills Manager Lafarge Tarmac Aggregates Pensioner – Non-Lafarge Redland Pension Scheme member

Secretary John Lovell (up until 31/10/13)

Richard Harris (from 01/11/13)

Lafarge Building Materials Limited Regent House, Station Approach, Dorking, Surrey, RH4 1TH

Actuary (for the purposes of the Pensions Act 1995)

Alison Blay FIA Towers Watson

Watson House, Reigate, Surrey, RH2 9PQ

Auditor KPMG LLP 15 Canada Square (4th floor)

Canary Wharf London E14 5GL

Bankers Barclays Bank PLC Level 28, 1 Churchill Place

London E14 5HP

Investment Advisers Graham Allen Investment Practitioner, member of Investment Committee

Fiduciary Manager Towers Watson (from 01/07/13) Watson House, Reigate, Surrey, RH2 9PQ

Fiduciary Manager Monitor

KPMG (from 01/07/13)

8 Salisbury Square, London EC4Y 8BB

Solicitors Sacker & Partners LLP

20 Gresham Street, London EC2V 7JE

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LAFARGE UK PENSION PLAN REPORT OF THE TRUSTEE

The Trustee Board presents the report and accounts of the Lafarge UK Pension Plan (the Plan) for the year ended 30 June 2014. The financial statements and the Trustee Report have been prepared in accordance with Section 41(1) and (6) of the Pensions Act 1995. THE PLAN The Plan is a self-administered occupational pension scheme. The Plan contains a Defined Benefit arrangement which is closed to future benefit accrual and a contracted-in Defined Contribution arrangement. A separate trust (The Lafarge UK Death Benefit Plan) is established for Death in Service benefits. The Trustee is the trustee of the Lafarge UK Death Benefit Plan. With effect from 7 January 2013 the Administration Agreement between the Trustee and Lafarge (UK) Services Ltd was transferred to Lafarge Building Materials Ltd which had become the new employer of the Pensions Department employees as a consequence of the joint venture between Lafarge SA and Anglo American plc’s UK Cement, Aggregates, Readymix and Paving businesses. TRUSTEE Throughout the year Lafarge UK Pension Trustees Limited acted as the Trustee of the Plan. The names of the Directors who were serving at 30 June 2014 are given on page 3. At the beginning and end of the period every Director in office held a £1 share in the capital of the company. There were no other interests in the capital of the company. The constitution of the Trustee Board is as follows: • The Chairman, who must be independent of the Employers and serves for a term reviewed every three years.

Serving Directors nominate candidates for appointment by the Principal Company. • Four Directors appointed by the Employer (Employer Directors). • Four Directors elected by the elected representatives, Member Nominated Directors (MNDs).

MNDs were elected by the PCC to serve for a three year period. During the year the Trustee has reviewed its approach to the appointment of Member Nominated Directors. Further details of the PCC and the Member nominated representatives during the Plan year and subsequent changes are provided in the Compliance Statement on page 40. PLAN GOVERNANCE Trustee Board and Committees The Trustee Board has procedures in place to govern the Plan effectively and efficiently. The Board retains overall responsibility for all aspects of the Plan and has delegated certain tasks and functions to committees, as it believes this should lead to better governance. Each committee has a written Terms of Reference which is reviewed annually. The Chairman and Secretary maintain an annual Business Schedule setting out the meetings of the Trustee Board and its committees, planning the main content of each meeting to conduct the Board’s business in an orderly manner. In general, the full Board and Investment Committee meet quarterly. The Trustee Board regularly reviews its committee structure and updates the Committees’ Terms of Reference with the emphasis on providing each Committee with a focus on their area of responsibility and appropriate reporting to the Trustee Board at regular intervals. Committee members include Directors selected to give a balance of skills, expertise and interest on the committees and may request attendance of relevant professional advisers as they consider necessary.

5


PLAN GOVERNANCE (continued) The Trustee has in place the following committees: The Investment Committee During the year the Committee comprised four Directors which included the Independent Chairman, plus a representative of Lafarge SA and an independent investment advisor. The Committee meets quarterly to monitor the performance of the Fiduciary Manager and consider new investment opportunities and strategies. The full Committee met four times during the year ended 30 June 2014. The Administration and Discretions Committee This Committee comprises 2 MNDs and 2 management representatives (one of which must be an Employer Director) and met twice during the year ended 30 June 2014 to monitor the administration service provided by Lafarge Building Materials Limited, member communications and consider the payment of discretionary benefits (where discretion has not been delegated to the Secretary) such as Ill Health and Dependant’s pensions. The Defined Contribution Committee This Committee comprises 2 MNDs and 2 representatives from participating employers (one of which must be an Employer Director) and met twice during the year ended 30 June 2014 to monitor the Money Purchase section of the Plan and consider new developments in particular in relation to money purchase investments, member communication, member education and annuity provision. The Audit and Risk Management Committee This Committee comprises the Chairman of the Board plus representatives from each of the three committees above. It meets at least twice a year and its principal role is oversight of the Trustee's Report and Accounts and the Trustee’s risk and controls framework (see below). The Committee met twice during the year ended 30 June 2014.

The Employer Events and Monitoring Committee The Committee comprises 6 Directors including the Chairman and meets at least once a year. During the year ended 30 June 2014 the Committee met ten times. Its primary function is to assess and monitor the financial position of the employers that participate in the Plan. The Committee deals with notifiable events, with any matters the employers decide to seek clearance upon with the Pensions Regulator and is authorised to request independent advice, as relevant, to perform its role. During the year this Committee’s activities have focused on covenant issues relating to the Actuarial Valuation and the proposed Lafarge Holcim merger. Trustee Director Competencies A schedule of Trustee Knowledge and Understanding has been prepared, tailored to the Plan’s circumstances based on the Pensions Regulator’s guidance on relevant expertise for trustees. On appointment, Directors and committee members receive training on relevant pension matters and thereafter are provided with periodic updates. Directors and committee members are regularly asked to assess their levels of knowledge and understanding. The individual assessments are recorded and compiled to identify the strengths collectively, of the Board and its committees, and also of individual Directors. Where a low level of knowledge is indicated, either suitable training is arranged or appropriate information is provided.

6


PLAN GOVERNANCE (continued) When preparing the Business Schedule, training needs are identified so that training may be arranged before the matters are considered. The Directors completed a self-assessment questionnaire during the year. Overall the Directors considered that the Board were performing well. Managing Conflicts of Interest The Board has in place procedures to identify and manage conflicts of interest for members of the Board or the committees. Individual directors may seek external counsel and may initiate the Plan’s procedure to manage their conflict. At the beginning of meetings, the Chairman and Secretary are required to consider the likelihood of conflicts arising, based on the agenda, and to deal with any potential conflicts. Identification and Control of Risk The Trustee Board has established procedures to identify, measure and manage the significant risks inherent in the operation of the Plan by proportionate internal controls. The assessment covers a wide range of external and internal matters including compliance with laws and the Plan Rules, administration and systems, funding, investment and safe custody of assets. The Board has overall responsibility for the programme but has delegated oversight of appropriate risks and controls to the relevant committees described above, each of which maintains a Risk Register for their particular area of responsibility. As part of a programme of continuing review, the Audit and Risk Management Committee reviews the Risk Registers of each of the Committees. The procedures include consideration of the controls to prevent or detect fraud within each area of the Plan’s operation, in particular the investment and administration routines. Appropriate segregation of duties and responsibility, together with supervision and authorisation procedures, are in place and are designed to deter fraud and to lead to timely detection and reporting of any such matters to the Board. Compliance The Plan had procedures in place at 30 June 2014 to satisfactorily demonstrate compliance with the requirements of the Pensions Act 2004 and the Codes of Practice formally issued by the Pensions Regulator. The Plan is compliant with the Codes of Practice. The compliance procedures are administered on a daily basis by the Administrator. Formal reports are made to the Administration and Discretions Committee, at least six monthly, on the service standards, administration costs and compliance with relevant rules and regulations. The Compliance Statement on pages 40 to 43 provides information about the Plan that is required to be disclosed by law and provides general information regarding the Plan. Myners Principles and Responsible Investment The Trustee has considered the principles set out in the Myners Report (the Myners Principles) as subsequently revised in December 2004, that in general reflect good practice for the governance of pension schemes. The Trustee’s principles for the governance of the Plan, and the investment of the Plan’s assets, generally comply with the higher level Myners Principles and where the Trustee considers it is appropriate to do so, with the more detailed principles for defined benefit and contribution schemes. Following the issue of the revised principles, the Trustee has considered them and has taken appropriate action. The Trustee’s approach to responsible investment is set out in the Statement of Investment principles and in broad terms they have delegated responsibility to their investment managers to exercise rights associated with the investment in accordance with the Institutional Shareholders’ Committee’s statement of principles on corporate governance which is reported to the Investment Committee.

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TRUST DEED AND RULES A consolidated Trust Deed and Rules for the Plan was signed and became effective from 6 April 2006. A number of amending Deeds were made between in January, 2007 and March 2012. At their meeting of 12 September 2012 the Directors adopted a new Deed consolidating all of the Amending Deeds with the consolidated Trust Deed and Rules of April 2006. THE LAFARGE SA AGREEMENT This Deed of Agreement between Lafarge SA and the Trustee provides that if Lafarge International Holdings Limited were to fail to meet its obligations to the Plan then Lafarge SA would meet these obligations. PENSION INCREASES There are two main categories of pensions in payment for which different pension increase rules apply. For the former Lafarge Redland Pension Scheme members an increase of 5.0% was applied on 1 July 2014 (3.2% 1 July 2013) and for former Blue Circle Pension Scheme members, a pension increase of 4.8% was applied on 5 April 2014 (3.1% on 6 April 2013).

MEMBERSHIP SUMMARY As at the year end membership of the Plan was as follows: 30 June 2014 30 June 2013 Final Pay Money Purchase Final Pay Money Purchase

Active Members 0 1,090 0 2,054 ………………………………………………………………………………………………………….. Deferred Pensioners 10,908 1,023 10,931 845 ………………………………………………………………………………………………………….. Pensioners and Dependants 19,485 0 19,703 0 …………………………………………………………………………………………………………..

On 31 October 2011 the Final Pay section of the Plan closed to future accrual and the active Final Pay members were transferred to the Money Purchase section of the Plan. These members retained deferred pensions in the Final Pay section but are not included in the above Deferred Pensioners figures. Hope Construction Materials ceased to participate in the Money Purchase section of the plan after 30 June 2013. These 301 members are shown as Active members as at 30 June 2013 but became deferred pensioners as at 1 July 2013 and are included in the deferred member numbers at 30 June 2014. FINANCIAL REVIEW During the year under review, the value of the Plan has changed as follows:

£million Value at 30 June 2013 2,545.5 Change in value over the year 127.3 Value at 30 June 2014 2,672.8

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FINANCIAL REVIEW (continued) A summary of the Plan's income and expenditure in the year is given below. Income (£million) Contributions Money Purchase contributions from Members 0.3 Contributions from Companies including PenXchange Scheme 30.7 Investment income 53.6 Change in market value of investments 187.3 271.9 Outgoings (£million) Pensions 115.4 Tax free payments at retirement 10.7 Death Benefits 0.4 Refunds and payments for leavers 3.8 Administration and Investment Management Expenses 14.3 144.6 Net increase in the Fund 127.3 It is emphasised that the market value of the net assets of the Plan is a snapshot as at 30 June 2014 and that there can be sharp short-term fluctuations in market value. Given the long-term nature of pension schemes, too much emphasis should not be given to short-term rises or falls in the market value of the Plan’s investments. Therefore, it is advised that the Plan’s accounts should be read in conjunction with the Summary Funding Statement on page 22. The day-to-day administration of the Plan is delegated to Lafarge Building Materials Limited. The direct costs of investment management and of the administration of the Plan were agreed by the Trustee to be borne by the Plan and amounted to £12.1 million and £2.2 million respectively for the year to 30 June 2014 (see Notes 9 and 7 to the accounts respectively). INVESTMENTS The Plan's investments are held by the Trustee separately from the finances of Lafarge SA and the participating employing companies and in accordance with the Trust Deed. The Trustee has given instructions to the investment managers to prohibit the use or letting of the Plan's direct property assets by any company in the Lafarge S.A. group and to prohibit investment in shares or bonds or loans of Lafarge S.A. or its subsidiaries or associated companies except in respect of indirect investment in pooled or tracker funds and to restrict any employer related investments to levels permitted by the Act. The Trustee has established an Investment Committee to oversee the Plan’s investments. The Investment Report, setting out details of the Plan’s investment arrangements appears on page 37. ACTUARIAL POSITION The Plan’s triennial actuarial valuation had an effective date of 30 June 2012 and details can be found in the Schedule of Contributions (included with this Report) and the Actuarial report and Statement of Funding principles which are available from the Secretary on request. In summary the valuation revealed a deficit of £660m at the effective dated based on the market value of assets of £2,368m and a value placed on the liabilities of £3,028m. The Trustee conducted an independent review of the Employers' covenant and following consultation and agreement with the company it was agreed that the deficit would be repaid over 15 years through the payment of minimum cash deficit contributions and an expected out performance of the Plans assets of 1.2% per annum over that assumed when valuing the liabilities. From 2016, further additional contributions will be payable subject to Lafarge re-attaining ‘investment grade’ status. If these payments were made the deficit would be recovered more quickly than 15 years.

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LAFARGE UK PENSION PLAN STATEMENT OF TRUSTEES RESPONSIBILITIES

Statement of trustee’s responsibilities for the financial statements The audited financial statements, which are to be prepared in accordance with UK Generally Accepted Accounting Practice (UK GAAP) are the responsibility of the trustee. Pension scheme regulations require the trustee to make available to Plan members, beneficiaries and certain other parties, audited financial statements for each Plan year which:

(i) show a true and fair view of the financial transactions of the Plan during the Plan year and of the amount and disposition at the end of the Plan year of the assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Plan year; and

(ii) contain the information specified in the Schedule to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, including a statement whether the accounts have been prepared in accordance with the Statement of Recommended Practice Financial Reports of Pension Schemes.

The trustee has supervised the preparation of the financial statements and has agreed suitable accounting policies, to be applied consistently, making estimates and judgements on a reasonable and prudent basis. They are also responsible for making available each year, commonly in the form of a trustees’ annual report, information about the Plan prescribed by pensions legislation, which they should ensure is consistent with the financial statements it accompanies.

The trustee also has certain responsibilities in respect of contributions which are set out in the statement of trustee’s responsibilities accompanying the trustee’s summary of contributions.

The trustee has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to them to safeguard the assets of the Plan and to prevent and detect fraud and other irregularities, including the maintenance of appropriate internal controls.

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LAFARGE UK PENSION PLAN FUND ACCOUNT

YEAR ENDED 30 JUNE 2014

DB Sections MP Section Total Total

2014 2014 2014 2013

Notes £’000 £’000 £’000 £’000 Contributions

Contributions 3 23,183 7,897 31,080 28,145 Transfers from other schemes 4 - - - 117 23,183 7,897 31,080 28,262 Benefits and expenses Benefits payable 5 123,961 2,501 126,462 122,578 Payments in respect of leavers 6 3,196 646 3,842 2,675 Administration expenses 7 2,058 159 2,217 3,136 129,215 3,306 132,521 128,389 Net (withdrawal)/addition from dealings with members

(106,032) 4,591

(101,441) (100,127)

Returns on investments Movement in market value of fund investments

10 181,659 5,652 187,311 198,053

Investment income

8 53,553 - 53,553 58,939

Investment management expenses

9 (12,010) (79) (12,089) (7,280)

Net return on investments 223,202 5,573 228,775 249,712 Net increase in the fund

117,170

10,164

127,334

149,585

Net assets of the Plan at the beginning of the year 2,505,577 39,895 2,545,472 2,395,887

Net assets of the Plan at the end of the year

2,622,747 50,059 2,672,806 2,545,472

The notes on pages 14 to 21 form part of these financial statements.

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LAFARGE UK PENSION PLAN NOTES TO THE ACCOUNTS FOR THE YEAR ENDED 30 JUNE 2014

1. Basis of Preparation

The Financial Statements have been prepared in accordance with the Occupational Pensions Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 and with the guidelines set out in the Statement of Recommended Practice (revised May 2007), Financial Reports of Pension Schemes (the Revised SORP).

2. Accounting Policies

(1) Investments Investments are stated at market value at the year end. The market value of quoted securities is based on closing prices. These prices may be the bid price on the relevant Stock Exchange or, where this is not available, on the latest trade price when securities are traded. The value of fixed interest stocks has been quoted excluding the value of interest accruing from the previous interest payment date. Holdings in managed funds have been valued at the bid value of the unit prices declared by the relevant Fund Manager at that date. Direct property investment is valued annually at external independent open market valuations. The property investments were valued by Collier CRE, an external independent valuer, at 31 December 2013. A further review has been made at 30 June 2014 to consider the change in property values as indicated by the IPD All Properties index during the period 1 January to 30 June 2014. No adjustment was made to the December 2013 valuation.

(2) Investment income Income from fixed interest investments and bank interest is accounted for on an accruals basis. Income from dividends is accounted for on an ex dividend basis. Realised and unrealised capital gains and losses on investments are dealt with in the Fund Account in the period in which they arise. Property income is accounted for on the basis of rent receivable, net of expenses, in respect of each financial period. Investment income is stated inclusive of recoverable taxes.

(3) Foreign currencies Assets and liabilities in foreign currencies are expressed in Sterling at the rate of exchange ruling at the period end. Gains and losses arising on conversion or translation of investments are dealt with as part of realised and unrealised investment gains and losses. (4) Contributions and benefits Employee normal and additional voluntary contributions are accounted for when deducted from pay. Employer normal and additional contributions are accounted for in the period to which the corresponding pay relates. Employer augmentation contributions are accounted for in accordance with the agreement under which they are being paid. Benefits are accounted for in the period in which the member notifies the Trustee of their decision on the type or amount of benefit to be taken or, if there is no member choice, on the date of retirement or leaving.

(5) Transfers to other schemes Transfer values have been included in the accounts when paid. Provision is made for group transfers in accordance with the terms of the transfer agreement.

(6) Administration costs and management expenses All costs associated with investment management, actuarial advice, accounting and administration borne by the Plan are accounted for in the period to which they relate.

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3 CONTRIBUTIONS RECEIVABLE DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 From members Additional voluntary contributions - 366 366 954 - 366 366 954 From employers Normal contributions - 6,840 6,840 11,358 Deficit fund contributions

Scheme Apportionment Arrangement contribution 20,000 - 20,000 13,275

Additional contributions for individual augmentations 3,183 691 3,874 2,558 23,183 7,531 30,714 27,191 Total contributions 23,183 7,897 31,080 28,145

Contributions amounting to £20.0 million (2013: £12.0 million) were received by the final pay section in respect of additional employer contributions agreed as part of the actuarial valuation effective in June 2009 for deficit recovery. In the previous year a further deficit contribution of £1.275 million was received reflecting the 2012 financial performance of the UK companies. This reflects the £21.275m due as set out in the Schedules of Contributions on pages 25 to 31. Under the terms of the Recovery Plan the employers will make a further deficit contribution of £25 million by 31 December 2014. Additional contributions amounting to £3,874,000 were received in respect of individual augmentations (2013: £2,558,000). Employer normal contributions include £2 million (2013: £3.6 million) in respect of member salary sacrifice under the PenXchange Scheme.

4 TRANSFERS FROM OTHER SCHEMES DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 Individual transfers in - - - 117

5 BENEFITS PAYABLE DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 Pensions 115,382 - 115,382 112,768 Purchase of annuities - 63 63 8 Death benefits 370 - 370 395 Pension commutation lump sums 8,209 2,438 10,647 9,407 123,961 2,501 126,462 122,578

6 PAYMENTS IN RESPECT OF LEAVERS DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 Refunds to leavers - 4 4 25 Transfers to other schemes 3,196 642 3,838 2,650 3,196 646 3,842 2,675

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7 ADMINISTRATION EXPENSES DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 Pensions Administration fees and expenses 1,034 139 1,173 1,500 Trustee Chairman & other directors fees &

expenses

138

-

138

141 Actuary’s fees - valuations 124 124 215 - other 83 8 91 56 Auditor’s fees and expenses 56 12 68 58 Legal advisers fees 256 - 256 108 Other professional fees for employer covenant

advice and overseas tax claims and returns

136

-

136

122 Trustee Insurance 50 - 50 49 Pension Protection Fund and similar levies 181 - 181 887 2,058 159 2,217 3,136 Pension administration fees represent the direct costs charged to the Plan in respect of Lafarge Building

Materials Limited.

8 INVESTMENT INCOME DB Sections

MP Section

2014 2013

£’000 £’000 £’000 £’000 Income from fixed interest securities 11,803 - 11,803 15,423 Dividends from equities 8,463 - 8,463 23,685 Income from index-linked securities 10,120 - 10,120 5,683 Income from managed and unitised funds 9,267 - 9,267 6,220 Cash distributions from Private Equity investments 6,551 - 6,551 476 Rental income from properties 5,083 - 5,083 7,137 Interest on cash deposits 375 - 375 10 Annuity Income 315 - 315 277 Other 1,576 - 1,576 28

53,553 - 53,553 58,939

9 INVESTMENT EXPENSES DB Sections

MP Section

2014 2013

£’000 £’000 £’000 £’000 Investment managers fees 10,788 79 10,867 6,648 Property management fees 700 - 700 77 Investment professional fees – investment advice 419 - 419 379 Custody, valuation and performance measurement

fees 103 - 103 176

12,010 79 12,089 7,280

Investment management fees for 2014 and 2013 include £2,513,411 and £1,658,000 respectively in respect of Lafarge Investment Management Limited. Included in the investment manager fees stated are management fees for certain managed funds and for the Private Equity portfolio estimated at £6,001,000 (2013: £3,443,000) which are deducted from the market values.

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10 MOVEMENT IN MARKET VALUE OF INVESTMENTS – DB SECTIONS

Value at

30 June 2013

Purchases at Cost

Sales Proceeds

Change in Market value

Value at 30 June

2014 £’000 £’000 £’000 £’000 £’000 Equities 704,463 295,896 (932,905) 53,097 120,551 Derivatives - 4,055 (5,412) 25,284 23,927 Fixed Interest Securities 385,712 697,443 (713,974) 12,058 381,239 Index Linked Securities 464,909 556,393 (469,885) 10,161 561,578 Managed & Unitised Funds 694,638 1,233,688 (711,866) 36,130 1,252,590 Properties 103,185 - (2,166) 8,945 109,964 Private Equity 124,699 11,214 (16,325) 6,933 126,521 Cash & Other Investment Assets 22,099 - (6,340) 29,051 44,810 Other Investment Liabilities (363) - - - (363) Total

2,499,342 2,798,689 (2,858,873) 181,659 2,620,817

An adjustment amounting to £6,001,000 (2013: £3,443,000) has been made to the change in market value in respect of estimated management fees for certain managed funds and Private Equity which are deducted from market values. These estimated fees have been included in the total investment fees in Note 9 on Page 16.

MOVEMENT IN MARKET VALUE OF INVESTMENTS – MONEY PURCHASE SECTION

Value at 30 June

2013

Purchases at Cost

Sales Proceeds

Change in Market value

Value at 30 June

2014 £’000 £’000 £’000 £’000 £’000 Pooled Investment Vehicles for: Money Purchase Investments 36,767 6,978 (2,442) 5,465 46,768 AVC investments 1,551 - (138) 187 1,600 Total 38,318

6,978 (2,580) 5,652 48,368

11 INVESTMENTS DB Sections

MP Section

2014 2013

£’000 £’000 £’000 £’000 Quoted Equities and Convertibles UK 25,818 - 25,818 426,913 Overseas 94,733 - 94,733 277,550 120,551 - 120,551 704,463 Derivative contracts Assets: Interest rate swaps 25,221 - 25,221 - Inflation swaps 85 - 85 - Forward currency contracts 6,532 6,532 31,838 - 31,838 - Liabilities: Interest rate swaps (818) - (818) - Inflation swaps (7,058) - (7,058) - Forward currency contracts (35) (35) (7,911) - (7,911) -

Total derivative contracts, net 23,927 - 23,927 -

18


11 INVESTMENTS (continued) DB

Sections MP

Section 2014 2013

£’000 £’000 £’000 £’000 Fixed Interest UK public sector quoted 380,391 380,391 223,642 UK quoted - - 162,070 Overseas 848 - 848 - 381,239 - 381,239 385,712 Index Linked UK government 561,578 - 561,578 464,909

Managed Funds and Pooled Investments Equities - UK - - 65,109 - overseas equity 320,588 - 320,588 405,593 Emerging Markets Fund 183,799 - 183,799 19,487 UK Companies Financing Fund 11,793 - 11,793 14,382 UK enhanced bonds - - - 115,344 Global Screened Bonds 154,681 - 154,681 29,367 Iron Catastrophe Fund 67,510 - 67,510 45,356 Systematic Trading 65,457 - 65,457 - Energy Cap 457 - 457 - Global Equity 78,508 - 78,508 - Multi-strategy alternative credit 52,235 - 52,235 - Volatility Premium 55,189 - 55,189 - Multi-Asset 29,522 - 29,522 - Global Sovereign Credit 116,732 - 116,732 - Securitised Credit 59,549 - 59,549 - Commodities 50,822 - 50,822 - Direct Lending 5,748 - 5,748 - Money Purchase and AVC investments - 48,368 48,368 38,318 1,252,590 48,368 1,300,958 732,956 Property UK shops, offices and industrial 92,187 - 92,187 88,434 Indirect property investments 17,777 - 17,777 14,751 109,964 - 109,964 103,185 Private Equity US and European partnerships 126,521 - 126,521 124,699 Cash Deposits and other investment assets Sterling cash 38,571 - 38,571 10,888 Overseas currency 984 - 984 2,163 Balances receivable on unsettled trades 363 - 363 771 Accrued investment income 4,892 - 4,892 8,277 44,810 - 44,810 22,099 Other investment liabilities Balances payable on unsettled trades (363) - (363) (363) TOTAL INVESTMENTS 2,620,817 48,368 2,669,185 2,537,660

No individual investments make up more than 5% of the Plan’s assets.

Transaction costs are included in the cost of purchases and sales proceeds. Transaction costs include costs charged directly to the Plan such as fees, commissions, stamp duty and other fees. Transaction costs incurred during the year amounted to £2,028,043 (2013: £358,041). In addition to the transaction costs disclosed, indirect costs are incurred through the bid-offer spread on investments within pooled investment vehicles. The amount of indirect costs is not separately provided to the Plan.

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11 INVESTMENTS (continued) Type of contract

Expiration

Notional principal

£000

Asset £000

Liability

£000

Inflation swaps 1-53 years 652,575 85 (7,058) Interest rate swaps 1-53 years 1,129,640 25,221 (818) 25,306 (7,876) A summary of forward currency contracts held at 30 June 2014 is as follows: Settlement dates

Currency bought

Currency sold

Asset £000

Liability

£000 31/07/2014 31/07/2014 29/08/2014 30/09/2014 31/07/2014 31/07/2014 29/08/2014 30/09/2014 31/07/2014 31/07/2014 29/08/2014 30/09/2014 30/09/2014 31/07/2014 29/08/2014 30/09/2014 31/07/2014 31/07/2014 29/08/2014 29/08/2014 30/09/2014

- €172,777 - - - - - - - - - - - - - - - - - - -

€13,703,773 - €14,667,804 €13,940,693 ¥401,512,521 ¥96,034,515 ¥363,417,677 ¥379,425,510 $57,656,136 $18,742,234 $67,632,341 $42,882,369 $22,100,000 $57,656,136 $57,656,136 $57,656,136 $57,656,136 $25,500,000 $57,656,136 $25,500,000 $57,656,136

361

- 248

- 23

- 31

- 887 91

768 204 70

886 658 278 886 72

653 72

272

- - -

(35) - - - - - - - - - - - - - - - - -

30/09/2014 - $25,500,000 72 - 6,532 (35) Net asset 6,497 Collateral for swap contracts Collateral arrangements are in place for derivative contracts in order to manage the potential risk of counterparty default. Such arrangements require collateral in the form of fixed interest securities or cash equivalents to be passed between the parties dependent upon whether there exists a net asset or a net liability on the contract as at the end of the period. As at 30 June 2014, the collateral received/pledged for the swap portfolio with SSGA was as follows: 2014

£’000 2013 £’000

Collateral received: Fixed interest securities 6,831 - Inflation linked securities 1,698 - Cash equivalents 15,180 - Net collateral received 23,709 - Collateral balances are held separately to other asset holdings of the portfolio and are not re-invested.

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12 CURRENT ASSETS DB Sections MP Section 2014 2013 £’000 £’000 £’000 £’000 Pensions prepayment 3,275 - 3,275 3,084 Contributions receivable from employees - 136 136 Contributions receivable from employer 14 259 273 301 Bank current account and Money Market

deposits

3,095

1,399

4,494

9,268 Other debtors - - - 58 6,384 1,794 8,178 12,711

Bank account deposits shown for the Money Purchase Section as at 30 June 2014 are allocated as follows

2014 £’000 Contributions received and subsequently invested 17 Balance of 1% employer contribution in respect of MP Section expenses 1,124 Payments due in respect of leavers 258

1,399

13 CURRENT LIABILITIES DB Sections MP Section 2014 2013 £’000 £’000 £’000 £’000 Benefits outstanding in respect of leavers 233 64 297 582 Taxes payable 933 - 933 1,152 Investment management creditors 2,131 21 2,152 1,377 Sundry administration creditors and accruals 1,157 18 1,175 1,788 4,454 103 4,557 4,899 14 INSURANCE POLICIES FOR MONEY PURCHASE SECTION – DESIGNATED TO

MEMBERS For the year ended 30 June 2014 Money Purchase Section members’ and employers’ contributions

were invested in funds passively managed by Legal & General. (See Investment Report on page 37 for details). Insurance policies in respect of liabilities that accrued prior to 1 July 1991 for benefits of certain pensioners and deferred pensioners have been assigned to the Trustee. The aggregate value of those policies has not been ascertained but it is unlikely to be significant in relation to the amount of the Plan’s net assets. During the year £315,000 (2013: £277,000) was received in annuity income from Insurance Companies and is included in investment income.

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15 AVC SCHEMES

AVCs invested in the Plan At the end of the year accumulated AVC funds amounting to £4.8 million (30 June 2013: £3.9 million) were invested within the Plan for active and deferred members to secure additional benefits on a money purchase basis. Movements and balances on these funds are included in the Fund Account and Net Assets Statement on page 12 and 13 of the accounts, but are not separately identified. Interest is added to members’ AVC funds half yearly on 5 October and 5 April. Interest was credited to these accounts on 5 October 2013 at 3.7% and 5 April 2014 at 2.5%. Some former Redland members make AVCs to secure additional benefits with the Plan.

AVCs invested externally – Assets designated to members Contributions and other movements in AVCs invested externally for active and deferred members in respect of members with Zurich Life are reflected in the amounts disclosed for the relevant section in the financial statements. These funds secure additional benefits on a money purchase basis. Contributions to Zurich Life ceased on 31 October 2012. With effect from 1 November 2012, all contributions for AVCs invested externally are invested with Legal & General.

16. EMPLOYER RELATED INVESTMENTS AND RELATED PARTY TRANSACTIONS

Lafarge Investment Management Limited is a wholly owned subsidiary of Lafarge Building Materials Limited. Lafarge Building Materials Limited is a subsidiary of Financiere Lafarge. Both are ultimate subsidiaries of Lafarge S.A. Fees paid to certain Trustee Directors are detailed in note 7 to the accounts. Pensioner Trustee Directors receive a pension from the Lafarge UK Pension Plan. There are no material employer-related investments in the Fund.

17. COMMITMENTS AND CONTINGENT LIABILITIES

At the end of the year, £40 million of the total commitment of £161 million remained outstanding to Pantheon, the Plan’s private equity fund-of-funds manager.

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LAFARGE UK PENSION PLAN Valuation Talk – incorporating the Summary Funding Statement

for the period ending 30 June 2013 The assets of the Lafarge UK Pension Plan (‘the Plan’) are held separately from Lafarge. Every three years the Plan is required to undergo a valuation. The latest valuation was performed as at 30 June 2012 and was completed in March 2014. Introduction The valuation provides a snapshot view of the Plan’s funding position. It compares the value of the Plan’s liabilities with the value of the Plan’s assets, assessed at the same date, and identifies any funding shortfall or surplus. Although there are a number of different ways to measure a pension scheme’s funding position, this report gives the results of two methods used by the Plan actuary:

• the ongoing basis (which shows what might happen if the Plan continues with business as normal) • the solvency basis (which shows what might happen if the Plan was to be wound up or discontinued).

The Trustee discusses and agrees with the Company how to value the Plan’s liabilities and, if there is a shortfall, agrees how the Company will meet this over time – this is known as a Recovery Plan. The valuation results in brief The main results of the valuation on the Plan’s ongoing basis at 30 June 2012 are summarised below:

The funding level has improved slightly from the position in 2009. This is principally due to an improvement in the Plan’s investments, which was offset by changes in financial market conditions and increases in life expectancies, both of which increase the value placed on the Plan’s liabilities. Meeting the shortfall The size of the shortfall at 30 June 2012 was £660 million. The Trustee has to balance the desire for the shortfall to be met as quickly as possible with what the Company can reasonably afford to pay. The Trustee took specialist advice to help it assess what was affordable. Discussions with the Company have resulted in an agreement for the Company to make a series of deficit contribution payments to the Plan over 15 years to achieve full funding of the Plan on an ongoing basis.

In summary the Recovery Plan is made up of:

• Minimum guaranteed annual payments starting at £25 million in 2014, £30 million in 2015 and £32.5 million from 2016 onwards.

• Additional annual payments may be payable subject to Lafarge re-attaining ‘investment grade’ status. This will reduce the cost of Lafarge’s borrowings, thus making it more affordable to pay a higher level of contributions to the Plan of £36 million a year from 2016 onwards.

The valuation relates chiefly to deferred and pensioner members with Final Salary benefits. For PensionBuilderplus members, liabilities are equal to the accumulated balances held in each individual’s investment account.

For this valuation the Pensions Regulator has been proactive in monitoring the process, which led to an approved extension to the timetable prior to completion. Valuation on a solvency basis Although neither the Trustee nor Lafarge has given any notice, or has any intention, of winding up the Plan, the Trustee is required by legislation to advise members what their position would be if the Plan had to be wound up. At 30 June 2012 the estimated amount identified by the Plan actuary, which might be sufficient to secure all members’ benefits with an insurance company if the Plan had wound up, was approximately £3,868 million. This would leave a shortfall of £1,500 million.

The solvency basis is the measure which estimates how much an insurance company would require in order to take over responsibility for the payment of all the Plan’s benefits. Due to a number of factors, this is a very high amount and so there is a large shortfall on this measure. The shortfall is, in fact, the amount the employers would be required to pay into the Plan if the Plan was to be wound up.

Value of past service liabilities £3,028 million Assets at market value £2,368 million Shortfall £660 million Funding level 78.2%

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LAFARGE UK PENSION PLAN Valuation Talk – incorporating the Summary Funding Statement

for the period ending 30 June 2013 (continued) Pensions Regulator The Pensions Regulator has closely monitored the progress of the valuation discussions and has been informed of the final agreed Recovery Plan. At the date of issue of ValuationTalk, the Pensions Regulator has made no directions or imposed any schedule of contributions against the Plan. Pension Protection Fund A few years ago the Government set up the Pension Protection Fund (PPF) to pay benefits to members of Final Salary pension schemes in circumstances where the scheme is wound up and the scheme and the participating employers do not have enough money to cover the cost of buying all members’ benefits with an insurance company.

In these circumstances, the pension benefits you would receive from the PPF may be less than the full benefit you have earned in the Plan, depending on your age and when your benefits were earned. Payments to Lafarge There has not been any payment to Lafarge or any participating employer out of Plan assets in the year to 30 June 2012 or the year to 30 June 2013. The importance of Lafarge’s support The Trustee’s objective is to have enough money in the Plan to provide full pensions now and in the future. However, the success of the Plan relies on Lafarge continuing to support the Plan because:

• The funding level can fluctuate as a result of changes in investment conditions and, where there is a funding shortfall at a valuation, Lafarge will need to put in more money; and

• The target funding level may turn out to be too low when the next valuation is conducted – for instance as a result of improved life expectancy – so that more money would need to be put in if more money would need to be put in if benefits are to be provided in full.

A bit of detail: the Sectionalisation of the Plan When the former Blue Circle and Lafarge Redland schemes merged in October 2003 there was a continuing requirement to identify the assets and the liabilities of both groups of members in the sections separately. In effect, the Trustee had to carry out two valuations, one for each section. Until the 2009 valuation, there were only slight variations between the two sections. At the 2009 valuation, as the two sections matured at different rates, the variations were more marked and some of the outcomes were therefore different. For the 2012 valuation, the funding levels of the two sections have come closer together again. The Lafarge Redland section has a funding level calculated on the ongoing basis of 78.8% (a shortfall of 21.2%) while the other section, formed mainly of former Blue Circle members, has a funding level of 77.8% (i.e. a shortfall of 22.2%). The payments due under the Recovery Plan will be apportioned between the two sections, with the aim that the Plan will achieve full funding in both sections at the same time, in approximately 15 years. Update Since the valuation date in 2012, financial market conditions have improved, the investments for the Plan have grown and the value of the liabilities has remained around the same. The Plan actuary has completed the annual update of the funding position as at 30 June 2013. The Plan’s funding level has improved from 78.2% to 81.5% and the deficit/shortfall has reduced from £660 million to £567 million. Indicators are that the funding level had improved further by the end of 2013. Where can I find out more? You can request details of the deficit contributions from the Pensions team in Dorking. The following documents will also be made available on the Plan website (www.lafargeukpensions.com) in due course: • The Statement of Funding Principles • The Recovery Plan • The Schedule of Contributions

http://www.lafargeukpensions.com/

25

26

27

28

29

30

31

32

33

34

35

37

LAFARGE UK PENSION PLAN INVESTMENT REPORT FOR THE YEAR ENDED 30 JUNE 2014

INVESTMENTS ATTRIBUTABLE TO THE FINAL PAY SECTION Investment Arrangements To recognise the increasing maturity of the Plan’s liabilities, the Trustee has aimed to decrease the allocation to return seeking assets such as equities, and increase the allocation to liability matching assets, such as bonds. The long term strategy is to be fully funded on a ‘self sufficient’ basis such that the Plan’s assets match or closely match its liabilities. To help facilitate this strategy with effect from 1 July 2013 the Trustee appointed Towers Watson Limited under a Discretionary Fiduciary Management and Investment Advisory Services Agreement to be responsible for investing the assets of the Final Pay Section. Towers Watson’s appointment is twofold; to advise the Trustee on an appropriate investment strategy and once agreed by the Trustee to implement the strategy under its fiduciary mandate. The Trustee initially tasked Towers Watson to manage the Plan's investments with the objective to outperform a composite benchmark whilst reducing levels of investment risk. From 1 April 2014 the Trustee has tasked Towers Watson with managing the assets relative to the Plan’s liabilities, focusing on improving the Plan’s funding position rather than simply outperforming a composite benchmark. This objective is consistent with a maturing pension scheme seeking to de-risk its portfolio as it moves towards being fully funded on a “self-sufficient” basis i.e. such that the Plan’s assets match or closely match its liabilities without need for recourse to the sponsoring employers for funding. The change in objective resulted in a major restructure of the Plan’s assets during 2013. As part of this process BlackRock was employed as a transition manager to assist in the restructure of the Plan’s legacy assets and to release cash to fund new investments. During the last 12 months, the Plan’s assets were restructured with two key aims in mind: 1. To adopt a long-term approach to ensure all future benefit payments to members can be met 2. To diversify the portfolio away from an over-reliance on individual asset types such as equities. The final structure of the Plan’s assets comprises five main sections as set out below. Within each section Towers Watson selected a range of investment managers chosen for their skill and experience in their particular sector to maximise the investment efficiency (risk enhancing or risk mitigating) of the Plan’s investments. Beta: This section represents exposure to equity and property markets around the world. Investment managers are picked for their ability to outperform underlying markets. Diversification (Alternatives): To reduce the overall risk of the portfolio, this section invests in non-traditional asset classes such as commodities and insurance, which are not subject to the same volatility as equity markets. Private markets (Private Equity and Infrastructure): The Plan can afford to tie an amount of money up for a number of years and be compensated for such a commitment to illiquid assets such as private equity and infrastructure. Credit: Providing capital to Governments and all types of companies allows the Plan to gain a premium for lending and assuming the risk of potential default. Such a risk is managed by constructing a diversified portfolio and employing skilful managers with significant analytical expertise to avoid defaulters. Bonds/Liability Driven Investment: This section is made up of a portfolio of high-quality government bonds and financial derivatives which move in line with the Plan’s liabilities as they change in value due to changes in inflation and interest rates. Towers Watson is overseen by both the Investment Committee and the Trustee. Its fiduciary mandate is governed by a series of Investment Guidelines set out in the Agreement. KPMG assists the Investment Committee by monitoring Towers Watson against a number of Key Performance Indicators and reports on a quarterly basis. As required by the Pensions Act, the Trustee has prepared and maintained a Statement of Investment Principles. This is modified from time to time to reflect the changes required by legislation and changes in investment policy.

38


Employer related investments The SIP ensures there are strict limitations to the extent that the Fund may be invested in Lafarge SA, the principal employer. At 31 March 2014 the Plan’s investments in Lafarge SA amounted to £18,685.65 (0.000723% of the Fund). How the Plan’s Assets are Invested Throughout the year the Plan maintained a wide spread of investments. Note 11 provides an analysis of the Plan’s investments and other assets at 30 June 2014. As at 30 June 2014, the Plan’s investment strategy was structured as follows: Beta 20% Private Markets 7% Credit 25% Diversification 13% Bonds/Liability Driven Investment 35% The Plan had also hedged approximately 55% of the Plan’s fixed and inflation linked liabilities. Investment Manager fees As Fiduciary manager, Towers Watson has invested the Plan’s assets in a number of pooled investment funds and segregated portfolios. The management fees for these investment vehicles are calculated on sliding scales based on the market value of assets invested. For vehicles which include derivatives (Liability Driven Investments and currency hedging instruments), the management fee is calculated based on the notional value of exposure traded. These managers operate a 'clean fee' basis (i.e. direct fee only) and they do not derive additional income from commissions on dealing and indirect charges. BNP Paribas Real Estate are remunerated by fixed fees for property management and transaction based fees for purchases, sales and rent reviews. The fees for property management and for rent reviews are deducted from rental income and are shown in note 9 of the accounts. The transaction based fees for purchases and sales are reflected in the change of market values. For the year ended 30 June 2014 BNP Paribas Real Estate transaction based fees for sales and purchases amounted to £18,500 (2013: £68,500). Towers Watson is remunerated by a fixed fee of £2,795,000 to 30 June 2014. The total Plan investment management fees were £12.1m for the year (2013: £7.3m). See note 9 on page 16 for further detail. Investment Performance At the start of 2014, BNY Mellon was appointed as an independent performance measurer replacing the WM Company. The performance measurer is responsible for calculating the performance of each underlying portfolio and fund held by the Plan as well as performance at the total asset level. During the last 12 months the Plan has been in transition and with the changes to the Plan’s investment strategy, it was agreed that performance at a total asset level should be compared against a return based on the Plan’s liabilities (‘Liability Proxy Return’) as the legacy benchmark was not reflective of the Plan’s current assets, or the future strategy of the Plan.

39


The return on the Plan’s assets, both income received and capital growth, is measured and compared with the Liability Proxy Return on a Plan year basis, and since inception of Towers Watson’s Fiduciary mandate. The annualised Plan returns for one, three and five years ended 30 June 2014 have been as follows:-

The Plan Liability Proxy

% %

1 year 8.2 4.6

3 years 8.6 -

5 years 11.3 -

The Liability Proxy is not shown for the 3 and 5 year periods as the new investment arrangements have been in place, and are available, over only one year. Safe keeping of assets BNY Mellon is employed as the Plan’s global custodian. Towers Watson is responsible for monitoring BNY Mellon against a range of Key Performance Indicators and reporting to the Trustee on a quarterly basis. Custody is separated from investment management, with portfolio valuations reconciled on a monthly basis. The Plan’s auditor, where applicable, verifies the valuation of the Plan’s investments and bank balances reported by the investment managers with the custodians. INVESTMENTS ATTRIBUTABLE TO THE MONEY PURCHASE SECTION Investment strategy The Trustee’s investment objective for the Money Purchase Section and AVC assets is to provide suitable long-term returns consistent with members’ reasonable expectations. The Trustee chooses investment arrangements taking into account, in particular, the need for diversification and the suitability of assets, past performance, charging structure, flexibility and where applicable, the quality of administration. Investment Performance Returns for the year ended 30 June 2014 for each investment fund in the Money Purchase Plan compared with the total return of the relevant benchmark index are shown below.

The Plan %

Benchmark %

Global Equity Index (30:70) 16.1 16.3 UK Equity Index World (ex UK) Equity Index Over 15 year Gilts Index Bonds – Over 15 year Index Over 5 year Index Linked Gilts Pre-Retirement

13.1 21.1 5.3 8.4 4.3 6.2

13.1 21.4 5.3

8.5 4.3 6.3

Cash Fund 0.3 0.3

Members have access to the Legal & General web-site to obtain updates on investment performance data and will be sent updates of the funds’ performance annually.

40

LAFARGE UK PENSION PLAN COMPLIANCE STATEMENT FOR THE YEAR ENDED 30 JUNE 2014

This report discloses additional information about the Plan that is required to be disclosed by law or provides general information regarding the Plan. TRUST DEED AND RULES The consolidated Trust Deed and Rules for the Lafarge UK Pension Plan dated 29 October 2012 are available for reference from the Plan Secretary at the address on page 3. CONTRACTING OUT CERTIFICATE AND TAX STATUS The Plan has been granted a contracting out certificate in respect of the Final Pay Section. The Plan is a registered pension scheme under the Finance Act 2004. The contracting out certificate ceased with effect from 31 October 2011. TRANSFERS All transfer values paid to other pension schemes were made in accordance with the methods and assumptions approved by the Actuary, as prescribed by statutory regulations. Allowance has been made for discretionary benefits and discretionary increases to pensions in payment. ACCOUNTS PREPARATION The accounts have been prepared in accordance with regulations made under Section 41(1) and (6) of the Pensions Act 1995 and Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 and audited by properly qualified independent auditors. PLAN INVESTMENTS A copy of the Trustee’s Statement of Investment Principles is available to members on request from the Secretary at the address on page 3. The Statement of Investment Principles sets out the Trustee’s policy on investment. Of particular relevance are the policies concerning: • the nature of investments which are suitable to hold having regard to the Plan’s pension liabilities, socially

responsible investment, investment risk and the need for diversification of investments as appropriate, • the selection of investments, suitable investment managers and instructions restricting certain types of

investment activity, including self-investment, • procedures for regular review of the investment strategy, having regard to the need for realisation of

investments, • objectives for investment performance of the Plan and review of investment manager performance, • procedures to ensure safe custody of the assets and for monitoring compliance with the Plan’s policies by

investment managers, custodians and administrators.

41


PLAN INVESTMENTS (continued) The Trustee reviewed and approved revisions to the Statement of Investment Principles in June 2013. The Statement will continue to be reviewed, at least annually, to ensure the principles are appropriate to the Plan. The Plan’s investments comply with any restrictions prescribed by regulations made under Section 40 of the Pensions Act 1995 and have been invested in accordance with the requirements of The Occupational Pension Schemes (Investment) Regulations 1996. The Plan did not hold any employer related investments at the period-end other than those shown in Note 10 to the accounts. REGISTER OF RISK AND CONTROLS The Trustee maintains a Register of Risks and Controls which is monitored on an ongoing basis and periodically reviewed by the Trustee Board. See page 6 for further details. SCHEDULE OF CONTRIBUTIONS As required by the Pensions Act 1995 the Trustee has prepared a Payment Schedule (Schedule of Contributions). The Schedule specifies the rates and due dates of employer and employee contributions to the Plan. It is subject to review from time to time as required by legislation and by the Plan’s Deeds and Rules following actuarial valuations and interim reviews. Copies of the Schedules and of the Actuary’s certifications of the Schedules of Contributions are reproduced on pages 25 to 32. COMMUNICATIONS The Trustee considers communication with all members of the Plan to be important. The framework for communication between the Trustee and members is noted below. Active Members Pension Department and local Human Resource staff at all major UK sites and business units provide the essential pensions communication link between the Plan members, their employing company and the Trustee. PensionsTALK magazine is sent to all employees, keeping members informed about various aspects of the pension arrangements. Eligible new employees are given an introductory pensions booklet with his or her employment offer. Within two months after deciding to join the Plan, new members receive a Plan booklet, including an Additional Voluntary Contributions (AVCs) leaflet, outlining the benefits provided. Plan booklets, including AVCs leaflet, are obtainable on request from the Pensions Department or on the website www.lafargeukpensions.com. Benefit Statements Personal Benefit Statements illustrating the main benefits that would be received from the Plan under circumstances of normal retirement or death in service are sent to all active members each year. Those paying additional voluntary contributions (AVCs) also receive statements of their AVC accounts at least annually. Pensioners A Pensioner Contact-Link Scheme keeps the Trustee in touch with approximately half of the Plan’s pensioners. All pensioners have been offered a copy of the Plan’s periodic InTouch magazine and receive PensionsTALK annually. Deferred Pensioners Deferred pensioners receive a copy of PensionsTALK annually. All members are also able to telephone the Pensions Helpline on 01306 872100, should they have queries regarding their pension benefits.

42


MEMBER NOMINATED DIRECTORS (MNDs) Following the creation of the joint venture company, Lafarge Tarmac, the number of contributing members to the Plan is expected to reduce over the coming years. Lafarge Tarmac management decided the PCC will not be the representative body for consultation purposes and consequently withdrew employer representation and limited employee representation on the PCC. Following on from this, the Trustee Board felt that the combination of the change in role of the PCC and the reducing number of active employees in the Plan warranted a review of the nomination and election process of MNDs to the Trustee Board. The new MND nomination and election process The Trustee’s review has established a new process to select MNDs, which meets the Pension Regulator’s criteria of fairness, proportionality and transparency. All Plan members (active, pensioner or deferred) are eligible to be nominated for appointment, provided they are UK resident and have at least two years’ pensionable service in the Plan. The requirement for two years’ pensionable service means that widows and widowers who are receiving a spouse’s pension from the Plan are excluded from standing for election but have the right to vote. Nominations must be supported by two other Plan members (who also satisfy the same eligibility requirements). Members who seek to be nominated will first be assessed by a Selection Panel to ensure candidates are suitable for subsequent election. The Selection Panel will be chosen by the Plan’s Trustee Board and will include existing MNDs. There are two constituencies; former Lafarge Redland Pension Scheme (LRPS) members and non Lafarge Redland Pension Scheme (non LRPS) members. There will be two MNDs from each constituency. Provided there is more than one suitable candidate in each constituency, an election will be held. Normally the term of office will be for four years with an election every two years but to start the process off it was necessary to vary the terms of office for the first three vacancies in 2014 as follows:

• Vacancy 1 in the non LRPS Constituency has a five-year term of office to June 2019 – Paul Hunter was re-elected to fill this vacancy and this longer term was granted to him as the Candidate having the most votes in this Constituency.

• Vacancy 2 in the non LRPS Constituency has a three-year term of office to June 2017 – Les Waining was elected to fill this vacancy.

• Vacancy 3 in the former LRPS Constituency will have a three-year term of office to June 2017 – Robert Napier was elected to fill this vacancy.

A further vacancy will arise in the former LRPS Constituency in 2015 when Arthur Cunningham’s office is due to end. More information will be given in the next PensionsTalk. If a vacancy arises as a result of a mid-term resignation or loss of eligibility, then the candidate with the next highest vote in the constituency may be asked to fill the vacancy for the duration of the term of office.

43


MEMBERS’ INFORMATION AND ADVICE Members can obtain information about their own pension benefits or further information about the Plan from the Secretary, or any member of staff in the Pensions Team, Regent House, Station Approach, Dorking, Surrey, RH4 1TH. Copies of the Plan’s documentation are available for reference at the same address. Any concern connected with the Plan should be referred to the Secretary, who will try to resolve the problem as quickly as possible. Internal Dispute Procedure Complaints or disputes about any aspect of the Plan are normally resolved quickly and informally. However, if, unusually, this is not the case, the Trustee has put in place a formal internal procedure for the resolution of disputes between Plan beneficiaries and the Trustee. For full details of the formal procedure, please contact the Secretary. TPAS (The Pensions Advisory Service) Members and beneficiaries of occupational pension schemes who have problems concerning their scheme and are not satisfied by the information or explanation given by the Administrator or the Trustee can consult with TPAS. A local TPAS adviser can usually be contacted through a Citizens’ Advice Bureau. Alternatively, TPAS can be contacted at: 11 Belgrave Road London, SW1V 1RB Telephone: 0845 601 2923 Pensions Ombudsman Where a complaint or dispute cannot be resolved either through the internal dispute procedure or by TPAS, an application can be made to the Pensions Ombudsman who has the power to investigate and determine complaints or disputes of fact or law involving occupational pension schemes. The address is the same as for TPAS. The telephone number is 020 7834 9144. The Pensions Regulator The Pensions Regulator has a wide range of powers to help protect members’ pension benefits. In certain circumstances, The Pensions Regulator can intervene in the running of pension schemes where trustees, employers or professional advisers have failed in their duties. The contact details online are: www.thepensionsregulator.gov.uk and the postal address is: The Pensions Regulator, Napier House, Trafalgar Place, Brighton, Sussex, BN1 4DW. Pension Tracing Service The Pension Tracing Service, which is a division of The Pension Service, provides members (and their dependants) with details of how to contact any previous employer’s pension scheme. To trace a benefit entitlement under a former employer’s scheme, enquiries should be addressed to: Pension Tracing Service The Pension Service Tyneview Park Whitley Road, Newcastle Upon Tyne NE98 1BA Telephone: 0845 6002537 The Plan’s Scheme Registration Number: 1017009961 The Lafarge UK Pension Plan has been registered with the Tracing Service. The information held includes details of the address at which the Trustee of the Plan may be contacted.

http://www.thepensionsregulator.gov.uk/

Documents

LAFARGE UK PENSION PLAN2014+Report+and... · The Trustee Board presents the report and accounts of the Lafarge UK Pension Plan (the Plan) for the year ended ... Lafarge Building Materials