La optimización de uso del patrimonio histórico: perspectiva desde la oferta.

GAGFAH GROUP offers its employees both defined contribution plans and defined benefit plans. Under the defined contribution plans, GAGFAH GROUP pays contributions to public or private pension insurance schemes on the basis of statutory or contractual requirements. GAGFAH GROUP does not have any other benefit obligations beyond payment of contributions. The current contribution payments are disclosed as an expense in the relevant year under personnel expenses for the various categories of expenses according to the cost of sales method.

Regarding the Group’s expenses for defined contribution plans we refer to section H.4. “Number of Employees and Personnel Expenses”.

In conjunction with the defined benefit plans, there are various types of employer-funded pension plans for company pensions, e.g. old-age pensions, early retirement pensions, invalidity pensions, widow’s / widower’s and orphan’s pensions. The GAGFAH subgroup, for example, grants its employees company pensions under Pension Regulation 2002 (hereinafter referred to as “VO 2002”). Payments to recipients are made if the requirements under the workplace agreement are fulfilled and if payments from the pension insurance are made. The above-mentioned criteria have to be proved by presentation of a notice of a German pension insurance institution and a professional pension fund, respectively. The compliance with the waiting period, which, in this case equals the legal vesting terms, is regarded as a general requirement. Payment of old-age pensions are subject to the ending of employment relationship after the age of 65. The old-age pension is calculated as the sum of the individual benefit modules which accumulate during the pensionable working life. Benefit modules are measured as a fixed percentage of pensionable earnings in September of each year. The future cash flows arising from this pension scheme are covered by means of pension provisions which are calculated using the projected unit credit method.

Current pension benefits and legally vested rights to pension benefits are protected against the effects of an insolvency in accordance with the Act to Improve Occupational Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung). For this purpose, the Company pays contributions to a pension assurance association (Pensions-Sicherungs-Verein Versicherungsverein auf Gegenseitigkeit (PSVaG), Cologne), the institution of statutory insolvency insurance for occupational pensions.

The obligations from company pensions are fully provided for pension provisions which in turn are backed by sound assets and are partially covered by individual contracts for the reinsurance of pension benefits. The pension provisions from defined benefit plans are calculated using the projected unit credit method stipulated under IAS 19.67 with an actuarial valuation performed at each balance sheet date. This method takes into account both the pensions known and expectancies acquired as of the balance sheet date and the increases in salaries and pensions to be expected in the future.

CONSOLIDATED FINANCIAL STATEMENTS NOTES OTHER 133

GAGFAH S.A. CONSOLIDATED ANNUAL REPORT 2014

96 A. General Information

103 B. Consolidated Group and Consolidation Principles

114 C. Accounting Policies

144 D. Group Segment Reporting

148 E. Notes to the Consolidated Statement of Financial Position 209 F. Notes to the Consolidated Statement of Comprehensive Income 227 G. Notes to the Consolidated Statement of Cash Flows 229 H. Other Notes

Actuarial assumptions are the best estimates of the variables that will determine the ultimate cost of providing post-employment benefits. Actuarial assumptions comprise demographic assumptions (e.g. mortality, rates of employee turnover) and financial assumptions (e.g. discount rate or future salary increases). Actuarial gains and losses result from increases or decreases in the present value of the defined benefit obligation include of changes in actuarial assumptions and include adjustments. Actuarial gains and losses do not include changes in the present value of the defined benefit obligation include of introduction, amendment, curtailment or settlement of the defined benefit plan.

Remeasurements arising from defined benefit plans comprise actuarial gains and losses, the return on plan assets (excluding interest). Effects from remeasurements are recognized immediately in other

comprehensive income (OCI). All other expenses related to defined benefit plans (e.g. service cost, net interest on the net defined benefit liability/asset) are recognized in profit or loss.

Past service costs are recognized in profit or loss at the earlier of either the date when the plan amendment or curtailment occurs or the date when the entity recognizes related restructuring costs or termination benefits.

Gains or losses on the settlement of a defined benefit plan are recognized in profit or loss when the settlement occurs.

The net defined benefit liability as shown in the Consolidated Statement of Financial Position is calculated as the balance of the defined benefit obligation and the fair value of plan assets.

Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. All plan assets are not available to the creditors of the Group, nor can they be paid directly to the Group.

The pension plans expose GAGFAH GROUP to actuarial risks, mainly in the form of interest rate risks,

furthermore inflation risks (future salary and pension increases) and longevity risks. A sensitivity analysis containing the impacts of a change in the significant actuarial assumptions on the defined benefit obligation can be found in chapter E.13.1. “Pension Provisions”.

In addition to their own pension schemes, NILEG subgroup and GBH subgroup are members of

supplementary pension funds which qualify as multi-employer defined benefit plans. The NILEG subgroup participates in the pension scheme organized by the pension institution of the Federal Republic of

Germany and the Federal States (“Versorgungsanstalt des Bundes und der Länder”; hereinafter referred to as “VBL”).The GBH subgroup is involved in the pension scheme of the public corporation“Kommunaler Versorgungsverband Baden-Württemberg” (“Zusatzversorgungskasse des Kommunalen

Versorgungsverbandes Baden-Württemberg”; hereinafter referred to as “ZVK-KVBW”). The services of those supplementary pension funds are funded by levies of the employers and contributions of the employees, each based on certain percentage of the employee’s remuneration. In addition, the

supplementary pension funds raise recapitalization payments (“Sanierungsgelder”) from the participating employers in order to cover any additional financing requirements. A joint liability for other participating

134 _{WHERE LIFE HAPPENS SHAREHOLDER INFORMATION DIRECTORS’ REPORT}

companies is not apparent from the statutes of the supplementary pension funds. The proportion of the subgroups NILEG and GBH of the total contributions to the plan is less than 1%.

Due to the fact that the aforementioned supplementary pension funds are public-law institutions, a future wind-up of the plans is considered unlikely. In the unlikely event of a wind-up, first all liabilities of the supplementary pension funds against third-parties (non-insured) must be met. Then the remaining assets shall be used exclusively for the insured beneficiaries.

As the VBL and the ZVK-KVBW do not provide available sufficient information to permit treatment as defined benefit plans, the multi-employer defined benefit plans constituted by them are pursuant to IAS 19.34 (a) accounted for as if they were defined contribution plans. GAGFAH GROUP is not aware of any specific information on any surpluses or deficits in the plan or any future effects that such surpluses or deficits may have. The respective countervalue amounts to € 30.0 million. GAGFAH GROUP will have to pay this amount only in case its membership of VBL and ZVK-KVBW would be terminated. Regarding the Group’s current contributions to the supplementary pension funds we refer to section H.4. “Number of Employees and Personnel Expenses”.