BT 2014 Annual Report Download - page 158

155
Financial statements
Financial statements
19. Retirement beneƬt plans continued
BTPS assets
Asset allocation
The target allocation of assets between dierent classes of investment is reviewed regularly and is a key factor in the Trustee’s investment policy.
Thetargets set reect the Trustee’s views on the appropriate balance to be struck between seeking returns and incurring risk, and on the extent to
which the assets should be distributed to match liabilities. Current market conditions and trends are regularly assessed and short-term tactical shifts
in asset allocation may be made around the long-term target. The BTPS also uses nancial instruments to balance the asset allocation and to manage
ination risk, liquidity risk and foreign currency risk.
Under IAS19 (Revised 2011) plan assets must be valued at the bid market value at the balance sheet date. For the main asset categories
– securities listed on recognised stock exchanges are valued at closing bid prices
– properties are valued on the basis of open market value
– unlisted equities are valued in accordance with International Private Equity and Venture Capital (IPEVC) guidelines
– unlisted xed interest and index-linked instruments are valued using the latest market price or using discounted cash ow models that consider
credit risk.
The fair value of the assets of the BTPS analysed by asset category are shown below. These are subdivided by assets that have a quoted market price
in an active market and those that do not (such as investment funds).
Asset fair valuea2014
Target Asset fair valuea
2013
Target
At 31 March
Total assets
£bn
of which
quoted
b
£bn
Total
%%
Total assets
£bn
of which
quoted
b
£bn
Total
%%
Equities 11.2c
5.8 28 26 11.1 6.0 27 26
Fixed-interest securities 7.1
5.7 18 17 7.9 6.0 19 17
Index-linked securities 9.9
8.5 24 26 9.5 8.3 23 26
Property 4.3
– 11 11 4.3 – 10 11
Alternative assetsd7.1
1.0 18 20 8.1 0.9 20 20
Cash and other 0.3 – 1 – 0.4 – 1 –
Total 39.9 21.0 100 100 41.3 21.2 100 100
a At 31 March 2014 and 31 March 2013, the schemeos assets did not include any directly held ordinary shares of the company. The scheme held £9m (201213: £9m) of index-linked bonds issued by the
group.
b Assets with a Tuoted price in an active market.
c At 31 March 2014, the BTPS held £2.6bn of 8. eTuities (201213: £2.7bn).
d Alternative asset classes include commodities, private eTuity and credit opportunities.
The Trustee reports on investment performance against a target benchmark which is based on the target asset mix and the market returns for each
asset class. BTPS performance against the benchmark for the periods to 30 June 2013 was as follows.
Period ending 30 June 2013
Tar get
benchmark
%
Actual
BTPS
%
Over
(under)
performance
%
6 monthsa3.4 3.7 0.3
3 years 7.1 7.4 0.3
10 years 6.9 7.9 1.0
a The Trustee historically reported investment performance for periods ending 31 December. From 2013, the Trustee changed this to periods ending 30{June.