We use our Pensions Dashboard with current and prospective clients as the primary diagnostic tool for understanding the Employer - Scheme dynamic

1. Status
Advisers
The Scheme Is [ ] to future accrual
2013
Existing Recovery Plan Payments [ ] p.a. over [ ] years
Investment - Actuary - , Legal -
Scheme Auditors - Company Auditors - Admin -
[ ] invest return
[ ] FRS17 discount rate
Sufficiency
62% 56%
Rate
63%
Value
100%Funding Ratio
The Scheme is [ ] to new members
£'m
Last Scheme valuation was as at [ ]
Next valuation due as at [ ] (due by [ ])
Scheme Specific Funding Recovery Plan
2014
Scheme assets
Accounting liabilities
Accounting surplus / (deficit)
Accounting funding ratio
Transfer
PPF
FRS17 Scheme Swap Self-
Buy-outFunding
77%63%
/ IAS 19
83%
10
9
8
7
6
5
4
3
2
1
0
Technical Provisions deficit
EmployerCovenantVector
Strong
Employer
Covenant
Weak
Employer
Covenant
Trustee
Pull
BEST
ESTIMATE
SCHEME FUNDING
Employer
Pull
BUYOUTSELF
SUFFICIENCY
Very Strong
Strong
Tending to
Strong
Upper
Moderate
Moderate
Lower
Moderate
Tending to
Weak
Weak
Very Weak
Assets
-
100
200
300
400
500
600
700
800
900
1,000
15%
37%
48%
60%
30%
10%
PENSION DISCLOSURES
Pensioners
Deferreds
Equities
EMPLOYER COVENANT VECTOR
Value£m
2. IDENTIFY THE SCHEME DYNAMICS 4. CALIBRATE TO THE EMPLOYER COVENANT
5. THE PENSION CONTROL CHEVRON©
ASSET PROFILE
THE SEVEN DWARFS©
SCHEME FUNDING TENSION
1. POSITION
3.POWER2.PROSPECTS
? ?
?
Overall
?
IP IN CONTROL
BUSINESS
AS USUAL
ECONOMIC
RECOVERY
PLAN
INSOLVENCY
INSOLVENT
COMPROMISE
1 2 5
SOLVENT
COMPROMISE
3 4
SECURITY FUNDING SEPARATION COMPROMISE
SCHEME IN CONTROLEMPLOYER IN CONTROL
EXIT
CREDITOR PARTNER tPRPPFOWNER
EMPLOYER IN CONTROL… …SCHEME CAUSES CONCERN… …IN CRISIS… ...CATASTROPHE… …EMPLOYER LIQUIDATED
SCHEME JUST
ANOTHER OBLIGATION
SCHEME FUNDING
OBLIGATION BALLOONS
EMPLOYER JUST
ANOTHER INVESTMENT
CRYSTALISE COVENANT IN
ADVANCE OF INSOLVENCY
SCHEME ENTERS PPF
ASSESSMENT PROCESS
The Employer is in controlof
financing its Scheme obligations as
part of its overall capital
management
“It’s not the longevity of the
members but the longevity of the
Employer that threatens the
Scheme”
Treat covenant as another
investment ofthe Scheme, stabilise
investments in preparation for buy-
out of PPF+ benefits
Maximise value prior to insolvency
by agreeing cash and share offer to
fund a PPF compromise in
accordance with the PPF’s 8 tests
Insolvency Practitioner seeks to
maximise value for all creditors,
Scheme enters PPF but may achieve
PPF+ buy-out, tPR considers Moral
Hazard powers
Cash and other
?
Bonds
MEMBER PROFILE
3. IDENTIFY THE SCHEME VOLATILITY
PROJECTED SURPLUS/DEFICIT Probability of
being below
50%
25%
5%
1%
75%
95%
99%
Funding level Value at Risk (VaR)
Example output only
1. Which deficit? What is your
funding target?
2. Can the Company support the
projected deficits?
3. Will the Company's value be
able to underwrite the
projected deficits?
4. Can tPR conclude on a Viable
Recovery Plan?
5. Will the PPF Drift be covered?
6. Do you have a flight plan?
Do the Trustees care about 1 in 20 risk?
What is the Trustees' prudent path of funding?
Median path expected to reach
full funding in around 5 years
1 in 20 chance there will still be a
significant deficit in 10 years time
0
Fundinglevel
Time
Upper funding
range
Lower funding
range
Actives
PPF drift
11:46 17/11/2014G:office97PENSIONSDNA documentsFlyers HandoutsXYZ Dashboard flyer.xlsx[DASHBOARD]

2. 2013
1
2
3
Corporate Structure
Top Co
Owners
(Legal Entity, individuals)
Other UK
Trade Co
Banks
UK Trade Co
DB Pension
Schemes
1. IDENTIFY THE COMPANY PROFILE
2
1
Key Issues
Significant ShareholdersTop Business Risks
Contingent Liabilities
Unsecured debt
PENSIONS ADVISORY
WE ARE UNIQUELY PLACED TO PROVIDE STRATEGIC, TACTICAL AND OPERATIONAL ADVICE ON PENSIONS RELATED
ISSUES WITHIN YOUR BUSINESS FRAMEWORK
6. THE PENSIONS RISK QUADRANTS
"We are encouraging trustees to take an integrated approach to addressing
COVENANT, INVESTMENT, and FUNDING RISKS and to be in a position to
evidence how this has been done" - tPR 2014
COMPANY AGENDA TRUSTEE AGENDA
3. Other stakeholderes1. Shareholder agenda 2. Strategic direction
5. Capital structure
Date:
CONFIDENTIAL
Copyright © 2014 BDO LLP. All rights reserved
PENSION DASHBOARD
Meeting with
(Moodys) (Experian)
Net Assets
Market cap (Group):
Capital Structure
6
5
4
3
2
1
Secured Debt
2014
Credit Rating
Key Financials (£m)
Foreign Trade
Co
XYZ Plc
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific
professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in
this publication or for any decision based on it. BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list
of members’ names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO Member Firms.
BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms.
Copyright © 2014. BDO LLP. All rights reserved. www.bdo.co.uk/pensionsadvisory
6. TKU
9. Fiduciary duties8. Value for money
5. Member issues4. Accountability
7. Data quality
"We had been battling with our pension scheme deficit for some time. BDO not only helped us step back and see the bigger picture but were
also capable of advising on the detailed and complex surgery required to get to a healthy solution."
Martin Beer, Finance Director, Uniq plc
9. Tax
4. Risk Policy
7. HR Policy 6. Financial accounting
6. Deadlines
OUR DIVERSE
TEAM
We have assembled
our team of
Pensions Business
Advisory experts
from diverse, multi-
disciplinary
backgrounds. The
result is a team of
business people
that understand
pensions from
many view points;
as a Chairman,
CEO, CFO,
treasurer, HR
director, non-
executive director,
trustee, member,
employee, union
representative,
insurer, capital
market
counterparty,
regulator, actuary
and, overall, as a
restructuring
business advisor.
Our team helped to
shape the UK
pension regulatory
framework at its
inception, advising
the Pension
Protection Fund on
its initial risk-
based levy and the
Pensions Regulator
on its original
Clearance
Guidance and
Scheme Funding
rules.
Net asset add Debt & pension = EV EV : EBITDA ratio
2. Attitude to risk 3. Legal
BDO ARE UNIQUELY PLACED TO PROVIDE STRATEGIC, TACTICAL AND OPERATIONAL ADVICE ON
PENSIONS RELATED ISSUES WITHIN YOUR BUSINESS FRAMEWORK
1. Funding
Average Salary
Employees
Dividend
EBITDA
Revenue
EBIT
2014
Intercompany creditors/debtors
3
FSDs
TYPEAEVENTS
MULTI-EMPLOYER
PPF
SCHEME
FUNDINGFind
Value
Demand
Value
Preserve
Value
Insure
Value
Apportion
Value
THE
FAMOUS
FIVE©
FSDs
TYPEAEVENTS
MULTI-EMPLOYER
PPF
SCHEME
FUNDINGFind
Value
Demand
Value
Preserve
Value
Insure
Value
Apportion
Value
THE
FAMOUS
FIVE©
XYZ Plc in the news
-
-
Where is the value?
Participating
Employers?
Principal
Employer?
11:46 17/11/2014G:office97PENSIONSDNA documentsFlyers HandoutsXYZ Dashboard flyer.xlsx[DASHBOARD]