MONEY MATTERS

As reported last year, the Company and the Trustees agreed to a new Contribution Schedule which would see significantly increased funding over a period of three years.

Since the announcement, the Company has made an initial special contribution of £130m together with regular contributions of £40m per annum. The next special contribution, totalling £60m is to be made this autumn.

Investment of Assets

As reported last year, the Trustees having agreed long-term funding plans with the Company, have been developing an Investment Strategy designed to achieve these.

Following completion of this review, the Trustees have agreed that all future contributions will be invested in less volatile assets such as Government Gilts and Corporate Bonds which better match the pensions provided by the Final Salary Section of the Scheme. This necessitated a full review of the incumbent bond managers, with changes made to the benchmarks. In addition, two new asset managers with specialist expertise in these markets; PIMCO and European Credit Management, have been appointed to run portfolios, with a third, Goldman Sachs expected to start managing the next £60 million of special company funding.

The strategy will, as before, involve the Scheme’s assets being spread across a number of asset classes and geographic areas, with the Investment Committee selecting appropriate managers for each particular asset class, who are then 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).

Taking all portfolios together, the return achieved by the Scheme during the year to 31 March 2006 was 22.18%. Over three and five year periods, the annualised returns were 17.3% and 5.9% respectively.

A copy of the Statement of Investment Principles can be obtained by writing to the Kingfisher Pensions Department at the address shown on here.

Another of the Trustees’ principal responsibilities is to keep accounts for the Pension Scheme. We show opposite a summary of the Annual Accounts of the Pension Scheme which have been audited by KPMG.