BT 2015 Annual Report Download - page 47

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Overview
The Strategic Report
Purpose and strategy Delivering our strategy
0ur lines of business Group performance Governance Financial statements Additional information
Changes over the last year Risk mitigation
he actuarial valuation of the chee as at 0 une 01 was announced
on 0 anuar 01. his has provided certaint over the level of cash
contributions reuired until the net triennial valuation is concluded.
hen a valuation is calculated the fundin position is aected b the
financial aret conditions at the valuation date. hen deterinin
epected future returns on the chee assets dierent factors are taen
into account includin ields or returns on overnent bonds which
have fallen sinificantl since 0 une 01. f a lower investent return
assuption is adopted at the 0 une 01 valuation the liabilities would
liel increase potentiall leadin to a hiher level of deficit paents.
he  entered into lonevit insurance and reinsurance arraneents
on  ul 01 to help protect the chee aainst costs associated
with potential increases in life epectanc. hese arraneents covered
approiatel  of the chees total eposure to increases in lonevit.
n 1 ul 01 the ourt of ppeal handed down its udent on the
scope and etent of the rown uarantee which was ranted b the
overnent on s privatisation. his udent has provided welcoe
clarit althouh the rown uarantee is not taen into account for the
purposes of the actuarial valuation of the chee and is an entirel
separate atter onl bein relevant in the hihl unliel event that
becaeinsolvent.
he investent perforance and liabilit eperience as well as the
associated riss and an itiation are reularl reviewed and onitored
b both us and the  rustee. he  has a well-diversified investent
strate which reduces the ipact of adverse oveents in the value of
individual asset classes and helps ensure that an ecient balance of ris
andreturn is aintained.
ur financial strenth and cash eneration provide a level of protection
aainst future variations in the fundin position of the . he fundin
liabilities also include soe buer aainst future neative eperience
asleislation reuires that liabilities are calculated on a prudent basis.
he UK econo rew b  in 01 however custoers are cautious with
their spendin. rice and value for one reain the ain decision drivers
for an consuers and sall businesses. t a lobal level continuin
economic uncertainty remains a factor causing corporate customers to delay
or downscale infrastructure uprades and sinificant investent decisions.
opetition in our arets is stron. n the UK new providers of fibre to
the preises are enterin the fibre access aret oerin alternatives to
the irin edia and penreach networs. n the  and content arets
viewin habits are chanin with the increasin use of on-deand
viewin via over-the-top content services providers.
ied-obile converence is a trend visible in an ontinental uropean
countries and increasinl in UK arets.  nuber of providers are
copetin in this space. s proposed acuisition of  a stiulate other
operators to react to fied-obile converence provided the UK aret
develops in this wa.
ur itiation of this ris centres on successfull eecutin our strate.
e believe that deliverin this strate with its focus on broadenin and
deepenin our custoer relationships deliverin superior custoer service
transforin our costs and investin for rowth will toether help us deliver
sustainable profitable revenue rowth. e are investin in our business
in areas such as fibre content voiceobilit UK business arets and
throuh our focus on lobal copanies. ur etensive cost transforation
proraes continue to deliver savins and will support profitabilit trends.
e also believe we can itiate this ris b seein chanes in reulation to
level the plain field so that we can copete eectivel in adacent arets
for the benefit of our custoers.