5 year summary - Membership - Investment Objectives - Financial Statement

The Scheme provides benefits, related to salary and length of service, by means of a trust which is independent of participating companies’ financial affairs.

The Scheme:

• is open to all UK companies and their employees within the Kingfisher Group, subject to certain employee eligibility conditions;

• is governed by the Definitive Trust Deed and Rules and approved by the Inland Revenue under the Income and Corporation Taxes Act 1988;

• is contracted-out of the State Second Pension (S2P).

This Report should be read in conjunction with the information set out in the Introduction section.

Membership is open to all employees of UK companies within the Kingfisher Group who satisfy the entry qualifications set by their employer, which are broadly similar. There are three categories of membership within the Scheme:

Active members - currently contributing employees who are members of the Scheme.

Deferred pensioners - members who have left service or otherwise ceased active membership and have the right to a future pension under the Scheme.

Pensioners - members who have retired and are in receipt of a pension and dependants who are in receipt of a pension following the death of a member.

* Known since 30 April 2003 as B&Q Properties Limited
** Includes former participating companies Woolworths group, Superdrug, Entertainment UK, MVC and VCI

The Scheme's present investment objectives can be briefly stated as follows.

• To achieve a return on the Scheme’s assets over the longer-term that exceeds the growth of the Scheme’s liabilities (due to increases in salaries and price inflation) consistent with an acceptable degree of risk measured in terms of variability in funding level (defined as ‘assets divided by liabilities’).

• At least match the rate of return of the ‘average’ pension fund over a period of time (in excess of five years) providing this is not incompatible with the above.

The Scheme’s investment objectives are set out in detail in the ‘Statement of Investment Principles’, a copy of which is available by writing to the Group Reward and Benefits Department. The current Statement is being revised to reflect the new asset allocation strategy and investment manager arrangements.

Investment Strategy and Custody of the Scheme's investments
Investment Performance Review
Financial Statement for the period ended 31 March 2003

Investment Strategy
The strategy to achieve the investment objectives involves the Scheme’s assets being spread across a number of asset classes and geographic areas.

The Investment Committee selects the appropriate managers, for each particular asset class, who are given specific objectives to achieve. The type of managers employed include both ‘passive’ (index-tracking) managers as well as active managers (who are expected to produce higher investment performance than the index-tracking managers over the longer-term, but with greater fluctuations in their returns over the shorter-term).

The Scheme does not hold shares directly in Kingfisher plc.

The transition of assets highlighted last year has now been completed, with the allocation to property being phased to ensure the scheme obtains the most favourable terms.

Investment Performance Review
The performance of the Scheme's investments is measured against the scheme specific benchmark and other UK pension schemes of various sizes by an independent external measurement service, the Combined Actuarial Performance Services (CAPS) investment survey. Taking all portfolios together, the return achieved by the Scheme during the year to 31 March 2003 was -16.7%. This was against the survey average return of -22.7%. Whilst a Scheme benchmark was set in February 2003, it is too early to measure the Scheme’s return against this benchmark.

Reviewing performance over the longer periods is more relevant to the Scheme’s long-term objectives. Over three and five year periods, the annual returns were -7.8% and -1.2% compared to the average of -10.9% and -2.8% respectively.

Custody of the Scheme's investments
Although the Trustee Board has delegated day-to-day management of the Scheme's investments to external managers, the custody (safekeeping) of most of these assets is presently carried out independently of the managers by State Street Bank and Trust Company.

For Kingfisher Pension Trustee Limited

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