WILLIAM M MERCER

Seventh-day Adventist Retirement Plan

Annual Report for the year ended 5 April 2000

Contents:

Trustees and their advisers

Trustees' report

Investment report

Actuarial statements

Auditors' report

Financial statements

Notes to the financial statements

Principal Employer

British Union Conference of Seventh-day Adventists

Trustees

L A Aguilar

C S Bramble

M R Dove

E J Hole

Pastor M B Musgrave

A V Officer

V Pilmoor

Plan Administrator and Consultants

William M Mercer Limited

Plan Actuary

W G C Sharp FFA

Investment Manager

Legal & General Assurance (Pensions Management) Limited

Auditors

Colledge Redfern

Legal Advisers

Sacker & Partners

Life Assurance Company

Swiss Life (UK) plc

Plan Registration No:

10235279

TRUSTEES' REPORT OF THE YEAR ENDED 5 APRIL 2000

Introduction

The Trustees of the Seventh Day Adventist Retirement Plan are pleased to present their report together with the financial statements for the year ended 5 April 2000.

The Plan is a defined benefit scheme. It was established on 6 April 1998, and is currently governed by the definitive trust deed and rules dated 30 March 2000. The Plan is approved as an "exempt approved scheme" under the terms of the Income and Corporation Taxes Act 1988. No members of the Plan are contracted-out of the State Earnings-Related Scheme through the Plan, although some members may have chosen to contract-out via individual personal pensions.

In accordance with The Occupational Pension Schemes (Member-nominated Trustees and Directors) Regulations 1996, members have the option to nominate and vote for member elected trustees. However, British Union Conference of Seventh-day Adventists has exercised its right to propose to opt out of the Member-nominated Trustee requirements to retain the right to appoint all Trustees for the Plan. This proposal was put to the active members and pensioner membership in an announcement dated March 1998 and accepted.

Further information about the Plan is given in the explanatory booklet, dated June 1998, which is issued to all members.

Trustees' responsibilities

The financial statements are the responsibility of the Trustees. Pension scheme regulations require the Trustees to make available to the Plan members, beneficiaries and certain other parties, audited financial statements for each Plan year which:

· show a true and fair view of the financial transactions of the Plan during the Plan year and of the amount and disposition, at the end of that year of the assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Plan year, and

· contain the information specified in the Schedule to The Occupational Pension Schemes (Requirement to obtain Audited Accounts and Statement from the Auditor) Regulations 1996, including a statement as to whether the financial statements have been prepared in accordance with the Statement of Recommended Practice, "Financial Reports of Pension Schemes".

The Trustees have supervised the preparation of the financial statements and have agreed suitable accounting policies, to be applied consistently; making any estimates and judgements on a prudent and reasonable basis.

The Trustees are responsible under pensions legislation for ensuring that there is prepared, maintained and, from time to time, revised, a schedule of contributions showing the rates of contributions payable towards the Plan by, or on behalf of, the employer and the active members of the Plan and the dates on or before which such contributions are to be paid. The Trustees are also responsible for keeping records in respect of contributions received in respect of any active member of the Plan and for ensuring that contributions are made to the Plan in accordance with the schedule of contributions.

The Trustees also have a general responsibility for ensuring adequate accounting records are kept and for taking such steps as are reasonably open to them to safeguard the assets of the Plan and to prevent and detect fraud and other irregularities.

Pension increases

In April 2000 all pensions in payment were increased by 1.1% as promised under the terms of the Plan. Preserved pensions were increased in accordance with statutory requirements.

Transfer values

Transfer values paid are calculated and verified in the manner required by the regulations made under section 97 of the Pension Schemes Act 1993.

Financial development and actuarial position

The financial statements on pages 11 to 16 have been prepared and audited in accordance with the regulations made under sections 41 (1) and (6) of the Pensions Act 1995. They show that the value of the fund decreased from £7,896,432 at 5 April 1999 to £7,457.150 at 5 April 2000.

Contributions from participating employers during the year were in accordance with the schedule of contributions.

An actuarial valuation of the Plan was carried out as at 6 April 1998. The liabilities of the Plan consist of the then current pensions in payment and the corresponding contingent benefits. The next full valuation is due to be made as at 6 April 2001. The latest statements from the Actuary are on pages 7 to 9.

Employer related investments

Contributions are normally received by the Trustees in the month to which they relate, however, during the previous year the employer had been paying contributions at a provisional rate of 8% of Pensionable Salaries. Subsequently, the Actuary recommended and it was agreed that contributions should have been paid at the rate of 10.5% of Pensionable Salaries from 6 April 1998. Under the accruals basis of accounting, the difference in contributions between 8% and 10.5% of Pensionable Salaries were therefore shown at 5 April 1999 as outstanding and, accordingly, became employer-related investments as defined in the Pensions Act 1995. At the year end there were no contributions receivable ( 1999 - £85,046 which represented 1.08% of the total net assets of the Plan)

Membership

Details of the current membership of the Plan are given below:

Active members

Pensioners

Members with preserved and deferred benefits

Pensioners include individuals receiving a pension upon the death of their spouse. There are a number of ex-employees with deferred benefits which have arisen as a result of their membership of the previous arrangement. These liabilities have not been assumed by the Trustees of this Plan.

Investments

The day to day management of the Plan's investments has been delegated by the Trustees to the investment manager, Legal & General Assurance (Pensions Management) Limited, and the Trustees have produced an Investment Report, based on that prepared by the manager, and this appears on page 6.

The Trustees have produced a statement of investment principles as required by section 35 of the Pensions Act 1995 and a copy is available on request to the address shown below.

The investment manager is remunerated on a fee basis which is reviewed on a periodic basis by the Trustees.

Further information

Members, and trades unions recognised for the purposes of collective bargaining in relation to members, are entitled to inspect copies of documents giving information about the Plan. In some circumstances, copies of the documents can be provided but a charge may be made for copies of the trust documents (deed and rules) and of the Actuary's report.

Any complaints or enquiries about the Plan, including requests from individuals for information about their benefits, should be addressed to:

Executive Secretary

British Union Conference of Seventh-day Adventists

Stanborough Park

Watford

Hertfordshire

WD2 6JP

Signed for and on behalf of the Trustees

M B Musgrave Date: 18 October 2000

INVESTMENT REPORT FOR THE YEAR ENDED 5 APRIL 2000

The assets supporting the Plan are managed by Legal & General Assurance (Pensions Management) Limited, part of the Legal & General Group, one of the largest financial institutions in the United Kingdom.

The Plan invests in Legal & General's Over 15 Year Gilts Index Fund which is designed for company pension schemes in a way which takes full advantage of the tax exemptions available. The fund invests in quoted Stock Exchange securities and works in much the same way that unit trusts operate for individual investors. All units are redeemable weekly at bid prices calculated from quoted Stock Exchange prices.

The portfolios of securities and cash underlying the units issued by Legal & General are held by independent corporate custodians and are regularly audited by external auditors.

-

The aim of the Over 15 Year Gilts Index Fund is to track the total return of the FTSE-A Government (Over 15 Year) index with the objective of being within ± 0.25%pa of the return of the index for two years in three.

The deployment of assets over the year is shown in the table below:

Performance

The time-weighted investment return on the Plan's assets for the year was 3.1%.

ACTUARIAL STATEMENT FOR THE PURPOSE OF THE DISCLOSURE REGULATIONS

Actuarial statement made for the purposes of Regulation 30 of the Occupational Pension Schemes Regulations 1996

Name of scheme: - Seventh-day Adventist Retirement Plan

Effective date of valuation: - 6 April 1998

Signature: W G C Sharp Date: 29/3/99

Name: W G C Sharp

Qualification: Fellow of the Faculty of Actuaries

Address: William M Mercer

P O Box 64

5 Bedford Park

Croydon CR9 2ZT

Actuarial Certification of Schedule of Contributions

FORM OF ACTUARY'S CERTIFICATE

Actuarial Certificate given for the purposes of Section 58 of the Pensions Act 1995

(Certificate of Schedule of Contributions)

Name of Scheme: Seventh-day Adventist Retirement Plan

Adequacy of rates of contributions

1. I hereby certify that, in my opinion, the rates of the contributions payable in accordance with this schedule of contributions are adequate for the purpose of securing that throughout the period it covers the scheme will meet the minimum funding requirement imposed by section 56(1) of the Pensions Act 1995.

2. In forming this opinion I have complied with the requirements imposed by sections 56(3) and 58 of the Pensions Act 1995, the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 1996 and the mandatory guidelines on minimum funding requirement (GN27), prepared and published by the Institute of Actuaries and the Faculty of Actuaries, and have made the assumptions prescribed by them.

Signature: W G C Sharp Date: 21/3/99

Name: W G C Sharp Qualifications: Fellow of the Institute of Actuaries

Address: Shire House Name of Employer: William M Mercer Limited

Bridle Path

Watford

Herts WD2 4AA

Note

The certification of the adequacy of rates of contributions for the purpose of securing the meeting of the minimum funding requirement is not a certification of their adequacy for the purpose of securing the scheme's liabilities by the purchase of annuities, if the scheme were wound up.

Auditors' report to the Trustees

We have audited the financial statements on pages 11 to 16 which have been prepared under the accounting policies set out on page 13.

Respective responsibilities of Trustees and Auditors

As described on page 2 the Trustees are responsible for obtaining the financial statements and for procuring that contributions are made to the Plan in accordance with the schedule of contributions. It is our responsibility to form an independent opinion, based on our audit, on those financial statements and about contributions to the Plan and to report our opinion to you.

Basis of opinion

We conducted our audit in accordance with Auditing Standards issued by the Auditing Practices Board. An audit includes the examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the Trustees in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Plan's circumstances, consistently applied and adequately disclosed. The work that we carried out also included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Plan and the timing of those payments.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error, and that contributions have been paid in accordance with the schedule of contributions. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion the financial statements show a true and fair view of the financial transactions of the Plan for the year ended 5 April 2000, and of the amount and disposition at that date of its assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Plan year, and contain the information specified in the Schedule to the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 made under the Pension Act 1995.

In our opinion the contributions payable to the Plan during the year ended 5 April 2000 have been paid in accordance with the schedule of contributions.

Colledge Redfern

Colledge Redfern

Chartered Accountants

and Registered Auditors New Colledge House

2 Nascot Street

Watford WD1 3RB

Date : 18 th October 2000

Financial Statements for the year ended 5 April 2000

The financial statements were approved by the Trustees on

The notes on pages 13 to 16 form part of these financial statements.

Notes to the Financial Statements for the year ended 5 April 2000

1. Basis of preparation

The financial statements have been prepared in accordance with the Occupational Pension Schemes (Requirements to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, and with the guidelines set out in the Statement of Recommended Practice, "Financial Reports of Pension Schemes".

The financial statements summarise the transactions of the Plan and deal with the net assets at the disposal of the Trustees. They do not take account of obligations to pay pensions and benefits which fall due after the end of the Plan year.

The actuarial position of the Plan, which does take account of such obligations, is dealt with in the statements by the Actuary on pages 7 – 9 and these financial statements should be read in conjunction therewith.

2. Accounting Policies

The principal accounting policies are set out below.

2.1 Investments are stated at market value.

The market value of managed fund units is taken as the average of the bid and offer prices at the accounting date, as advised by the Investment Manager.

The additional voluntary contributions investments include policies of assurance underwritten by The Equitable Life Assurance Society. The market value of these investments has been taken as the surrender values of the policies at the year end, as advised by the underwriter.

The changes in investment market values are accounted for in the year in which they arise and include profits and losses on investments sold as well as unrealised gains and losses in the value of investments held at the year end.

2.2 Contributions and benefits are accounted for in the period in which they fall due.

2.3 Individual transfer values from and to other pension arrangements are accounted for when received or paid.

2.4 Interest on bank deposits is accounted for as it accrues.

3. Contributions receivable

4. Benefits payable

5. Group life assurance

Lump sum death in service benefits are secured by a policy of assurance underwritten by Swiss Life (UK) plc.

6. Administrative fees and expenses

Except as noted above, costs of the administration of the Plan are borne by the employing companies.

7. Investment at market value

Legal & General Assurance (Pensions Management) Ltd

The movements in total investments during the year were as follows:

The Legal & General Assurance (Pensions Management) Limited managed fund units, are held under a managed fund policy in the name of the Plan. Income generated by these units is not distributed, but retained within the managed fund and reflected in the market value of the units.

In addition to those fees detailed in note 6, Legal & General Assurance (Pensions Management) Limited levies a management charge which is taken from the managed fund assets and reflected in the market value of the managed fund units.

The company managing the managed fund investments is registered in the United Kingdom.

8. AVC investments

The Trustees hold assets which are separately invested from the main fund, in the form of individual insurance policies. These secure additional benefits, on a money purchase basis, for those members who have elected to pay additional voluntary contributions. Members participating in this arrangement receive an annual statement made up to 5 April each year, confirming the amounts held in their account and the movements during the year. The total amount of AVC investments at the year end is shown below.

The movements in AVC assets during the year were as follows:

9. Current assets and liabilities

The contributions receivable, as shown above, constitute an employer-related investment as defined in the Pensions Act 1995 and, at the year end, represent NIL% (1999 – 1.08%) of the total net assets of the Plan.