BOC PENSION SCHEME REPORTS AND FINANCIAL … pension scheme . reports and financial statements . for...

Scheme Registration No. 10124787

BOC PENSION SCHEME

REPORTS AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2009

(THE REPORT)

BOC PENSION SCHEME

REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

Contents

Trustee’s ReportPages 1 to 9 Introduction

- Content and Objective of the Report - Format of the Report - Enquiries and Complaints

Management of the Scheme

- Trustee: Details, Appointment and Operational Procedures

- Committees - Advisers and Administrators: Details - Scheme Governance - Pensions Act 1995 and Pensions Act 2004 - Actuarial Valuation - Linde Contribution Obligation - Statement of Funding Principles - Membership Details

Investment ReportPages 10 to 13

Investment Management

- Introduction - Administrator’s Report - Investment Principles - Investment Advisers - Joint Investment Committee - Investment Policy and Objectives - Investment Managers - Custody - The Myners Review - Investment Performance

Investment Performance

BOC PENSION SCHEME

REPORTS AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

Contents

Pages 14 to 24 Financial Statements

- Statement of Trustee’s Responsibilities - Auditor’s Report - Fund Account - Net Assets Statement - Notes to the Financial Statements

Pages 25 to 27 Actuarial Statements

- Certification of the calculation of the technical provisions

- Certification of Contributions Pages 28 to 30 Contributions

- Auditor’s Report - Summary of Contributions Payable

Pages 31 to 33 Compliance Statement

- Scheme Rules - Policy on Transfers-in - Transfer Payments - Agreements with Scheme Advisers - Data Protection - Trustee’s Responsibilities - Increases to Pensions - Participating Companies - Scheme Tax and Social Security Status

Appendix A

Administrator’s Report for BOC Pension Investment Fund

BOC PENSION SCHEME

TRUSTEE’S REPORT FOR THE YEAR ENDED 31 MARCH 2009

Introduction

1

The Scheme provides a lump sum benefit in the event of death-in-service and earnings-related pension benefits for and in respect of Scheme members. It was closed to new entrants with effect from 1 July 2003. Content and Objective of the Report This Report contains the information which the Trustee is required to provide under Regulation 6 of the Occupational Pension Schemes (Disclosure of Information) Regulations 1996 and historical information. The financial statements included on pages 17 to 24 have been prepared and audited in accordance with regulations made under Section 41 of Pensions Act 1995. In addition the Trustee has issued a “Myners compliance report” (see page 13), the latest version of which is available from BOC Pension Services. In the Report, “Company” means The BOC Group Limited which remains as Principal Company for the Scheme notwithstanding its acquisition by Linde AG in September 2006. In order to provide fuller information about the Scheme’s investments, the audited financial statements and investment report for the BOC Pension Investment Fund are bound into the back of this Report. The objective of this Report is to provide a formal and historical record. Less formal publications are used to keep members informed about the progress of the Scheme. Information can also be obtained from the BOC Pension Services internet website, www.bocpensions.co.uk. Format of the Report The Report and Financial Statements have been prepared in accordance with the Pensions Research Accountants Group’s Statement of Recommended Practice (SORP), Financial Reports of Pension Schemes, revised May 2007.

BOC PENSION SCHEME


Introduction

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Enquiries and complaints Enquiries about the Scheme or regarding entitlement of an individual to benefits, complaints regarding Scheme administration and requests for further information should be addressed to: UK Pensions Manager BOC Pension Services The Priestley Centre 10 Priestley Road The Surrey Research Park Guildford GU2 7XY Email: [email protected]

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Trustee The Company has the formal power under the Scheme Rules to appoint and remove the trustee body. The Trustee of the Scheme is BOC Pension Scheme Trustees Limited. The Trustee Directors, their dates of appointment and departure where appropriate, and the committees each sat on during the year were: J Hylands (Chair) from 1/11/2007 Independent Trustee ∅ ∂ Capital Cranfield Pension Trustees Ltd **

from 17/12/2007 Professional Trustee ∅ ∂

D A Beech from 8/12/1998 Gases, Guildford ∆ L A Franks* from 16/6/1997 Pensioners ∆ ∅ L Johns from 18/4/2007 Gases, Guildford ◊∂ C D Morton* from 1/7/2006 Pensioners ∆ ∅∂ I M Rennie from 11/4/2007 Gist, Basingstoke ∂ D Riggall* from 17/4/2007 Gases, Scunthorpe ∂ C Schlegel from 12/1/2009 Treasury, Germany ∅ P A J Struthers* from 29/1/2008 Gist, Basingstoke ∅ M Sweeney To 14/11/2008 Gist, Basingstoke ◊ ∂ L J Tunbridge from 11/1/2008 Gases, Guildford ◊ = Audit Committee, ∆ = Governance Committee, ∅ = Joint Investment Committee and ∂ = Funding Committee ** represented by I Woods to December 2008 and by J Matthews from February 2009 Scheme Secretary S K Kelly from 19/11/2007 Corporate Centre, Guildford Six of the Trustee Directors and the Professional Trustee are appointed by the Company and four (indicated*) are elected from and by the Pensions Advisory Council (PAC) which is a body whose primary role is to provide a sounding board on pensions policy.

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The PAC comprises:

• contributing members of the Scheme elected by members from the various businesses;

• two pensioner representatives elected by retired members of the Scheme ; • a Chairman and Vice-Chairman appointed by the Company; • the UK Pensions Manager (ex-officio).

The term of office of individual Trustee Directors is normally five years. The Independent Trustee Director’s term of office is three years and the Professional Trustee appointment is on an on-going basis subject to an agreed notice period on either side. A Trustee Director will generally cease to hold office on resignation, leaving BOC service or ceasing UK residency. However, a Member-Nominated Director who retires from service can remain as a Trustee Director for the remainder of his term of office and can then stand for re-election. The PAC can instigate removal of elected Trustee Directors; the Company can remove appointed Trustee Directors and the Professional Trustee. Committees Committees are set up for practical reasons where a number of additional meetings are required and to facilitate additional, targeted, technical training. The members of each Committee who represent the Trustee are shown in the table on page 3. Audit Committee The Audit Committee is a joint committee consisting of a representative of the Trustees of each of BOC Pension Scheme, BOC Senior Executive Pension Scheme and BOC Retirement Savings Plan, and from the Administrator of BOC Pensions Investment Fund (BOC Pensions Limited). The main objectives of the Committee are to review the strategic plan for the annual audit, review the audit results and discuss them with the Scheme Auditor, consider the letter of representation to the Auditor and report to the Trustee Boards on these matters. The audit committee formally recommends to the Trustee that the annual report and accounts should be approved.

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Funding Committee A Funding Committee exists to agree with the Company a Statement of Funding Principles to cover the actuarial valuation of the Scheme as at 31 March 2008 and to oversee the valuation process. Governance Committee The Governance Committee is a joint committee with the Trustee of the BOC Senior Executive Pension Scheme and BOC Retirement Savings Plan. The Committee’s principal current areas of focus are managing conflicts of interest, risk management, Trustee Knowledge & Understanding and the Trustee’s Business Plan.

Joint Investment Committee The Joint Investment Committee (JIC) is a corporate entity, BOC Pensions Limited, which is owned jointly by the Trustee and the Trustee of BOC Senior Executive Pension Scheme. Its Board is appointed from Directors of each Scheme. The Trustee has delegated investment powers under the Trust Deed and Rules to the JIC which then acts as a decision-making body. The Directors of the JIC receive specific investment training. Some tasks such as preparing and maintaining the Scheme’s Statement of Investment Principles remain the responsibility of the Trustee. The Trustee can ask questions and challenge investment decisions made by the JIC. Advisers and Administrators The following were retained by, or acted for, the Trustee during the year: Actuaries Hymans Robertson LLP Scheme Actuary: R S Bowie FFA Auditors Ernst & Young LLP Corporate Finance Advisers Penfida LLP Legal Advisers Mayer, Brown International LLP Investment Advisers Hymans Robertson LLP Investment Services BOC Pensions Investment Department Medical Advisers Capita Health Solutions Bankers HSBC Bank plc Benefits Administrators BOC Pension Services

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Scheme Governance The Trustee requires an annual report from the Actuaries, the Auditors, the Legal Advisers, the Benefits Administrators, the Pensions Investment Department, the Investment Managers, the Investment Advisers and the Custodian. Each report provides specified information in relation to the activities performed directly or indirectly on behalf of the Trustee in the previous Scheme year. A representative from each body except the Investment Managers are required to attend a Governance Meeting each year at which all the consolidated reports are discussed. The objectives of the Governance Meeting are to increase both the transparency of the administration of the Scheme and BOC Pension Investment Fund and the accountability of the respective delegates and advisers. The fifteenth Governance Meeting took place in September 2008, at which the Trustee was able to satisfy itself that the Scheme continued to be managed in accordance with statutory requirements, industry best practices and its own and the Company’s governance guidelines. Pensions Act 1995 and Pensions Act 2004 The Trustee has a range of procedures to ensure ongoing compliance with the requirements of Pensions Act 1995 and Pensions Act 2004. The Pensions Regulator (TPR) is the regulatory body for work-based pension schemes in the UK. TPR has a defined set of statutory objectives and wide powers to investigate schemes and take any action it thinks necessary. As an aid to achieving its objectives, TPR requires the completion and submission of an annual scheme return by the scheme administrator. It also requires reports of ‘notifiable events’ and ‘significant breaches’ of pension scheme legislation. Notifiable events are specific events relating to a scheme or a participating employer that TPR considers could potentially have a major impact on the security of members’ benefits. The Company and the Trustee are under an obligation to advise TPR without delay of any notifiable events. During the year, the Trustee identified no notifiable events. Breaches of pension scheme legislation have to be reported to TPR when they are considered to be breaches likely to be of material significance (known as red

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breaches). Those with a duty to report include the Trustee, the Company and the Scheme’s advisers. Red breaches are caused by: dishonesty, poor scheme governance, inadequate controls resulting in deficient administration or slow or inappropriate decision-making practices, incomplete or inaccurate advice, acting (or failing to act) in deliberate contravention of the law. An example of a red breach would be persistent failure to pay scheme contributions on time. During the year there were no red breaches. There was one preventable minor breach of the statutory requirements for providing information to members leaving the Scheme. Action has been taken to ensure that similar breaches will not recur. The Trustee believes that in all other respects the Scheme’s administration has been in compliance with the requirements of both Acts throughout the year. In particular, the Trustee can confirm that contributions were of the amounts required, and were received within the agreed timescale except as explained on page 30. During the year, one new application was received under the Scheme’s formal Internal Dispute Resolution Procedure. This has reached the second stage of the procedure. There was one case from the prior year that is also currently at the second stage. Actuarial Valuation In accordance with the Trust Deed and Rules, the Scheme Actuary carried out an actuarial valuation of the Scheme as at 31 March 2008. In his report, the Scheme Actuary concluded that the Scheme’s assets fell short of its liabilities by £217.7 million and the funding level was 89.5%.

In line with advice received from the Scheme Actuary, and following agreement with the Trustee, with effect from 1 January 2009 the Company increased its deficit funding contributions which it was paying to restore the Scheme funding level to 100%. Any Scheme member can obtain a copy of the actuarial valuation report by contacting BOC Pension Services at the address shown on page 2.

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Linde Contribution Obligation As a consequence of the acquisition of The BOC Group plc by Linde AG in 2006, a Contribution Obligation, agreed with the Trustee and The Pensions Regulator, committed Linde to making a series of payments to the Scheme which is intended to restore the funding level to 100% by 31 December 2011. At the same time, the supplementary contributions, which the Company had been paying, ceased. The first payment under the Linde Contribution Obligation, of £131,250,000, was paid on 19 September 2006. The second payment of £109,375,000 was paid on 19 December 2007. Monthly contributions began in January 2008 to complete the remainder of the Contribution Obligation, the annual amounts of which are as follows:

• in 2008: £55,125,000 • in 2009: £56,875,000 • in 2010: £58,625,000 • in 2011: £60,375,000

Further information on contributions can be found in the ‘Summary of Contributions Payable’ on page 30. Statement of Funding Principles The last actuarial valuation took place as at 31 March 2008. Under new requirements introduced by Pensions Act 2004, the valuation consists of a statement of funding principles (SoFP), actuarial valuation, schedule of contributions and, if the scheme’s assets do not cover the technical provisions (the amount required to pay for the Scheme’s built up pension benefits), a recovery plan. Under the SoFP, the Trustee, with advice from the Scheme Actuary and the agreement of the Company, selects the key assumptions to use in the valuation. The trustees have agreed the valuation results and put in place a SoFP and a new Schedule of Contributions. As recommended by the actuary the contribution obligation is now due to finish in October 2011. The results of the valuation will be published to Scheme members.

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Membership Details The Scheme was closed to new entrants on 30 June 2003. The membership movement details are shown below (for details of levels 1 and 2 see page 30):

Current Active Members Level 1 Level 2 Total

At 1 April 2008 329 4,007 4,336 Late notifications (2) (2) Net inter-level movements (7) 7 - Deaths (1) (10) (11) Retirements (9) (124) (133) Leavers (49) (297) (346) At 31 March 2009 263 3,581 3,844

Deferred Pensioners

At 1 April 2008 9,384 Late notifications (9) New deferreds 346 Deaths (19) Transfers (38) Retirements (334) Full commutations (11) At 31 March 2009 9,319

Pensions in paymentFormer

Members DependantsChildren's

allowances Total

At 1 April 2008 8,659 3,100 89 11,848 Late notifications 5 (5) 1 1 New pensions 467 203 19 689 Pensions ceased (322) (163) (15) (500) At 31 March 2009 8,809 3,135 94 12,038

This Report was approved by the Trustee on 25 June 2009 and signed on its behalf by: John Hylands Phil Struthers Trustee Director Trustee Director

BOC PENSION SCHEME

INVESTMENT REPORT FOR THE YEAR ENDED 31 MARCH 2009

Investment Management

Introduction This report covers the year to 31 March 2009. The Scheme participates in the BOC Pension Investment Fund (BOCPIF), a common investment fund. The major advantage to the Scheme of investing in BOCPIF is that it benefits from the economies of scale enjoyed by the larger fund, in the form of lower transaction and administration costs. The Trustee is satisfied that the investment objectives of BOCPIF are consistent with those of the Scheme. The operation of BOCPIF is regulated by a deed. The original deed, dated 31 March 1992, was updated by deeds of variation dated 29 October 2004 and 4 March 2008. BOCPIF comprises both commingled assets and assets which are directly attributable to the Participating Schemes. The commingled assets are apportioned between the Participating Schemes, in accordance with the terms of the deed, using a standard formula which is used by similar pooled funds. The formula ensures that there is no cross-subsidy between the schemes. It is applied each month to the change in market value of the assets. The change in value is apportioned in the ratio of the interest of each participating scheme in each of the asset classes of BOCPIF at the start of the month, adjusted to take account of any money invested or withdrawn by the schemes during the month. The apportionment of the change in value of BOCPIF in the year to 31 March 2009 is shown in Note 9 to the BOCPIF financial statements attached as Appendix A to this Report. Administrator’s Report The Administrator of BOCPIF has issued an Investment Report. As a consequence the amount of information in this Report by the Trustee is reduced to avoid duplication. The Administrator’s Report is attached as Appendix A to this Report. Investment Principles The Trustee has adopted a statement of investment principles, as required by section 35 of Pensions Act 1995. The statement is reviewed at least annually and more frequently, if required. A copy of the current statement is available on request to the address on page 2.

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The statement requires the Administrator to obtain confirmation annually from its Investment Managers that BOCPIF’s investments are diversified and suitable, and that the Managers have exercised their delegated powers of investment in a manner designed to give effect to the principles set out in the statement. These confirmations have been obtained for the year ended 31 December 2008. The latest revised statement of investment principles is to be adopted by the Trustee on 25 June 2009. Investment Advisers During the year, the Trustee retained the services of the investment consultancy division of Hymans Robertson LLP for advice on investment matters. Subsequent to the year end the trustees decided to replace Hymans Robertson and agreed to appoint Mercer Limited. Joint Investment Committee The JIC is a corporate entity, agreed as BOC Pensions Limited, which was transferred to the joint ownership of the Trustee and BOC SEPS Trustees Limited on 6 August 2007. Members of the JIC are required to be trustee directors of the Trustee or of BOC SEPS Trustees Limited. The JIC was formally constituted on 11 December 2007. The JIC also serves as the Administrator of BOCPIF. The members of the JIC who served during the year were: Date of appointment L A Franks 11/12/2007, resigned 13/04 2009 J F Hylands 11/12/2007 N A Lewis 11/12/ 2007 C D Morton 11/12/2007 C Schlegel 18/02/ 2009 P Struthers 2/04/2008 Capital Cranfield Pension Trustees Limited 11/12/ 2007 Investment Policy and Objectives At the beginning of the year the strategic asset allocation of the Scheme was:

Equities 27.7% Bonds 59.1% Property 9.4% Cash/Alternatives 3.8%

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The Trustee decided in August 2006 that most of the funds allocated to bonds should be invested in a portfolio of government bonds designed to match the profile of the Scheme’s liabilities in terms of exposure to inflation and interest rate risk. A separate portfolio (the Liability Driven Investment portfolio, or “LDI”) was created within BOCPIF. This portfolio is fully allocated to the BOC Pension Scheme. The investment strategy is to invest 60% of Scheme assets into asset classes appropriate to closely match the Scheme’s liabilities (LDI assets) and 40% into asset classes appropriate to deliver the long-term excess return over gilts required by the investment objective. The investment objective, as advised by the actuary, is to achieve an estimated investment return of gilt yields plus 1.6% per annum. A new LDI manager was appointed in May 2008 and the Trustee has set a target of 60% for matching projected liability cashflows to be implemented by June 2010. During the year, in order to capture higher credit yields, the Trustee decided to implement a credit overlay representing 20% of the Scheme’s assets – this was implemented by the new LDI manager in September 2008 based on agreed trigger levels. It was also decided that the Trustee invest in a physical corporate bond portfolio representing 10% of the Scheme’s assets and simultaneously reduce the credit overlay to 10% of assets. Within the return seeking assets, the Trustees decided to reduce strategic exposure to equities and improve diversification through a strategic allocation to alternatives. The allocation to alternatives remains unfunded and is proposed to be through investment in fund of hedge funds. From the 1 March 2009 and as at 31 March 2009 the strategic asset allocation of the Scheme was:

Equities 20.0% Bonds 60.0% Property 10.0% Cash/Alternatives 10.0%

Investment Managers The Scheme Rules require that all the investment management firms that are appointed should be independent of The BOC Group Limited. The appointment and removal of Investment Managers for BOCPIF is the responsibility of its Administrator. Custody The responsibility for deciding the custody arrangements for the assets of BOCPIF rests with the Administrator.

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The Myners Review The Myners Review of Institutional Investment in the UK included a set of ten principles applicable to investment decision-making by pension fund trustee bodies. The proposals currently form a voluntary code. A fund may choose not to comply with some or all of the principles, provided that it then explains the non-compliance both publicly and to its members. Some of the principles apply mainly to the Trustee; others are more applicable to the Administrator of BOCPIF. The compliance reports are consolidated into one document, the BOC Pension Scheme Myners Compliance Report, which is available from BOC Pension Services.

Investment Performance The performance of BOCPIF and its Investment Managers is measured by an independent performance measurement service. Since 1 July 2005 this service has been provided by Mellon Analytical Solutions. Prior to that date, it was provided by The Northern Trust Company. This service calculates investment returns for individual asset classes in BOCPIF, including income and changes in market value. Since 1 April 2003 the investment performance of the Scheme has been measured against its customised benchmark. The return for the year ended 31 March 2009 was -15.85% compared to the benchmark return of -9.50%. The annualised return since 1 April 2003 was 8.1% compared to the benchmark return of 9.7%. This Investment Report was approved by the Trustee on 25 June 2009 and signed on its behalf by: John Hylands Phil Struthers Trustee Director Trustee Director

BOC PENSION SCHEME

FINANCIAL STATEMENTS STATEMENT OF TRUSTEE’S RESPONSIBILITIES

The Trustee is responsible for obtaining audited financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and for making available certain other information about the Scheme in the form of an Annual Report. The financial statements are the responsibility of the Trustee. Pension scheme regulations require the Trustee to make available to Scheme members, beneficiaries and certain other parties, audited financial statements for each Scheme year which:

• show a true and fair view of the financial transactions of the Scheme during the

Scheme year, and of the amount and disposition at the end of the Scheme year of the assets and liabilities, other than liabilities to pay pensions and benefits after the end of the Scheme 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, including a statement whether the financial statements have been prepared in accordance with the Statement of Recommended Practice, ‘Financial Reports of Pension Schemes’ (revised May 2007).

The Trustee has supervised the preparation of the financial statements and has agreed suitable accounting policies, to be applied consistently, making estimates and judgements on a reasonable and prudent basis. The Trustee is 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 to the Scheme by or on behalf of the employer and the active members of the Scheme and the dates on or before which such contributions are to be paid. The Trustee is also responsible under pensions legislation for keeping records of contributions received in respect of any active member of the Scheme and for monitoring whether contributions are made to the Scheme by the employer in accordance with the Schedule of Contributions. Where breaches of the schedule occur, the Trustee is required by Pensions Act 1995 and 2004 to consider making reports to the Pensions Regulator and to the members. The Trustee also has general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the Scheme and to prevent and detect fraud and other irregularities, including the maintenance of an appropriate system of internal control.

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INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE AND MEMBERS

We have audited the financial statements of BOC Pension Scheme for the year ended 31 March 2009 which comprise the fund account, the net assets statement and the related notes 1 to 15. These financial statements have been prepared on the basis of the accounting policies set out therein. This report is made solely to the Trustee, as a body, in accordance with regulation 3 (c) of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, made under the Pensions Act 1995. Our audit work has been undertaken so that we might state to the Trustee those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trustee as a body, for our audit work, for this report, or the opinions we have formed. Respective responsibilities of trustee and auditor As described in the Statement of Trustee’s Responsibilities, the Scheme’s Trustee is responsible for obtaining an annual report, including audited financial statements prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements show a true and fair view and contain the information specified in the schedule to the Occupational Pension Schemes (Requirements to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996 made under the Pensions Act 1995. We also report to you if, in our opinion, we have not received all the information and explanations that we require for our audit, or the information specified by law is not disclosed. We read the other information contained in the Annual Report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies within the financial statements. The other information comprises Trustee’s Report, Investment Report, Actuarial Statements, Compliance Statement and the Administrator’s Report for BOC Pension Investment Fund.

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INDEPENDENT AUDITOR’S REPORT TO THE TRUSTEE AND MEMBERS

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Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes 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 or on behalf of the Trustee in the preparation of the financial statements and of whether the accounting policies are appropriate to the Scheme’s circumstances, consistently applied and adequately disclosed. 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. 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, in accordance with United Kingdom Generally Accepted Accounting Practice, of the financial transactions of the Scheme during the year ended 31 March 2009, 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 year; and

• the financial statements contain the information specified in Regulation 3 of

and the Schedule to The Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.

Ernst & Young LLP Registered Auditor Reading June 2009 Notes : 1. The maintenance and integrity of the BOC Pension Services web site is the responsibility of the Trustees; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions

BOC PENSION SCHEME

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

The notes on pages 19 to 24 form part of these financial statements

2009 2008Notes £'000 £'000

Fund Account

Contributions and benefitsContributions receivable 3 89,202 162,027 Other income - 4 Transfers in from other schemes 4 1,048 2,241

90,250 164,272

Benefits payable 5 73,589 75,645 Payments to and on account of leavers 6 3,707 2,271 Pension Protection Fund levy 392 275 Administration expenses 7 2,539 2,578

80,227 80,769

Net additionsfrom dealings with members 10,023 83,503

Return on InvestmentsInterest received 93 102 Investment management costs 8 (974) (1,230) Share of return in BOCPIF 9 (291,687) 2,591

Net return on investments (292,568) 1,463

Net

(decrease)/increase in the Schemeduring the year (282,545) 84,966

Net assets of the SchemeAt 1 A

pril 2008 1,859,822 1,774,856 At 31 March 2009 1,577,277 1,859,822

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FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

The notes on pages 19 to 24 form part of these financial statements

2009 2008Notes £'000 £'000

Net Assets Statement

Investment assets 9 1,569,944 1,854,521 Current assets 10 9,306 7,180 Current liabilities 11 (1,973) (1,879)

Net assets of the SchemeAt 31 March 2008 1,577,277 1,859,822

The financial statements summarise the transactions and the net assets of the Scheme and deal with the net assets at the disposal of the Trustee. They do not take account of obligations to pay pensions and other benefits which fall due after the end of the Scheme year. The actuarial position of the Scheme, which does take account of such liabilities, is dealt with in the Summary Funding Statement and the actuarial certificates on pages 25 to 27 of the Annual Report, and these financial statements should be read in conjunction with it. These financial statements were approved by the Trustee on 25 June 2009 and signed on its behalf by: John Hylands Phil Struthers Trustee Director Trustee Director

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NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2009

1 PREPARATION OF FINANCIAL STATEMENTS The financial statements have been prepared in accordance with the Occupational Pension Schemes (Requirement 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 (revised May 2007). This is the first year the Revised SORP has been applied to the Scheme’s financial statements. 2 ACCOUNTING POLICIES (a) Investments The accounting policies for investments are dealt with in the financial statements of the BOC Pension Investment Fund (BOCPIF). (b) Contributions

(i) Members’ normal contributions are accounted for when deducted from pay. Employers’ normal contributions are accounted for in the period in which the corresponding members’ contributions are deducted from pay.

(ii) Employers’ augmentation and deficit contributions are accounted for in

the period they fall due. (c) Payments to members

(i) Benefits are generally accounted for in the period in which the member notifies the Trustee of his decision on the type of benefit to be taken or, if there is no member choice, on the date of retirement or leaving. For members with whom we have lost contact, benefits are accounted for on the date that we establish a contact with the member or beneficiary or, if later, the date that the relevant benefit has been identified.

(ii) Individual transfers are accounted for when received or paid which is

normally when the liability is accepted/discharged. (d) Expenses

(i) Expenses are accounted for on an accruals basis.

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3 CONTRIBUTIONS RECEIVABLE 2009 2008£'000 £'000

Employers Normal 25,831 28,868

Augmentations 407 1,891 Deficit funding 55,563 123,156 Other 392 275

MembersNormal 7,009 7,837

89,202 162,027

Further information on contributions is provided in the Summary of Contributions Payable on page 30. 4 TRANSFERS IN FROM OTHER SCHEMES

2009 2008£'000 £'000

Amounts received from BOC Group Schemes 1,048 2,241

Amounts received relate to AVC transfers. See Note 12. 5 BENEFITS PAYABLE

2009 2008£'000 £'000

PensionsRetired members 48,173 45,110 Dependants 10,283 9,797 Children's allowances 135 130

Lump sums on retirement 13,122 19,428 Death benefits 1,876 1,180

73,589 75,645

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6 PAYMENTS TO AND ON ACCOUNT OF LEAVERS

2009 2008£'000 £'000

Transfers out to other schemes Individual transfers out 3,576 2,195

Pension shared on divorce 131 76

3,707 2,271

7 ADMINISTRATION EXPENSES

2009 2008£'000 £'000

Professional fees 472 288 Computer charges 394 395 Pensions Department charges 1,495 1,702 Occupational Pensions Defence Union premium 65 65 Communications 101 117 Bank charges 12 11

2,539 2,578

Costs charged to the Scheme relate solely to the administration of this Scheme. 8 INVESTMENT MANAGEMENT COSTS

2009 2008£'000 £'000

Investment managers' administration feesand custodian charges 974 1,230

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9 INVESTMENTS

2009 2008£'000 £'000

Share of BOCPIF at 1 April 1,854,521 1,770,801 Net Contributions 7,110 81,129 Share of growth in BOCPIF (291,687) 2,591

Share of BOCPIF at end of year 1,569,944 1,854,521

Net contributions consist of the net of surplus amounts invested in/funds disinvested from BOCPIF. Amounts fluctuate depending on contributions received and cash requirements each month. 10 CURRENT ASSETS

2009 2008£'000 £'000

Contributions due from Employers 6,324 1,354 Contributions due from Employees 342 367 Bank balances 1,926 4,682 Other debtors 43 71 Inter-scheme balances 112 141 Due from BOC Pensions Limited 559 565

9,306 7,180

All contributions due to the Scheme relate to March 2009. The deficit funding contributions of £4.7m due by 31 March 2009 were paid on 1 April 2009. All other contributions due to the Scheme were paid in full within the timescale required by the Schedule of Contributions.

22

BOC PENSION SCHEME


11 CURRENT LIABILITIES

2009 2008£'000 £'000

Benefits payable 987 615 Administration fees payable 427 698 HM Revenue & Customs 559 566

1,973 1,879

12 ADDITIONAL VOLUNTARY CONTRIBUTIONS Members of the Scheme may make additional voluntary contributions to a range of investment facilities, which are administered by the Trustee of BOC Retirement Savings Plan (RS Plan). When a member retires, or dies, the funds accumulated within RS Plan (AVC section) in respect of that member are transferred to the Trustee of the Scheme to provide additional benefits for, or in respect of, that member. They may also be transferred when a member leaves service for transfer to another approved pension scheme. The financial statements of RS Plan are not included in the financial statements of the Scheme, but are published separately. A copy of these statements can be obtained by contacting BOC Pension Services at the address shown on page 2. 13 CONTINGENT LIABILITIES OR COMMITMENTS The Scheme had no contingent liabilities at 31 March 2009. 14 RELATED-PARTY TRANSACTIONS (a) The Scheme has received member contributions in respect of directors of the

Trustee who are also Scheme members. These transactions are in accordance with the Scheme Rules.

(b) In accordance with the arrangement agreed in September 1987 between the Company and the Scheme, the costs incurred by the Company in providing Scheme administration services are rechargeable to the Scheme. These costs for the year are disclosed in Note 7 of the financial statements.

(c) Certain employees of BOC Pension Services are members of the Scheme. Contributions in respect of these members are paid in accordance with the Trust Deed and Rules.

23

BOC PENSION SCHEME


24

(d) Trustee Directors who are pensioners of the scheme receive an honorarium on a quarterly basis. The total paid in the year ended 31 March 2009 was £1,750. (2008: £1,250). The company meets the fees of the professional and independent trustees.

(e) Amounts due from BOC Pensions Limited relate to amounts due from the pensions payroll bank account that are subsequently due to be paid to HMRC.

Any other material related-party transactions have been disclosed in the financial statements. 15 EMPLOYER-RELATED INVESTMENT Direct employer-related investment is not permitted under the Scheme Rules.

BOC PENSION SCHEME ACTUARIAL STATEMENTS

BOC PENSION SCHEME

INDEPENDENT AUDITORS’ STATEMENT ABOUT CONTRIBUTIONS, UNDER REGULATION 4 OF THE OCCUPATIONAL PENSION SCHEMES (REQUIREMENT TO OBTAIN AUDITED ACCOUNTS AND A STATEMENT FROM THE AUDITOR) REGULATIONS 1996, TO THE TRUSTEE AND MEMBERS We have examined the summary of contributions to the BOC Pension Scheme in respect of the Scheme year ended 31 March 2009 to which this statement is attached. This statement is made solely to the Trustee, as a body, in accordance with regulation 4 of the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996, made under the Pensions Act 1995. Our work has been undertaken so that we might state to the Trustee those matters we are required to state to them in an auditors’ statement and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Trustee as a body, for our work, for this statement, or the opinion we have formed. Respective responsibilities of trustees and auditor As described in the Statement of Trustees Responsibilities, the Scheme’s Trustee is responsible for ensuring that there is prepared, maintained and from time to time revised a Schedule of Contributions showing the rates and due dates of certain contributions payable towards the Scheme by or on behalf of the employer and the active members of the Scheme. The Scheme’s Trustee is also responsible for keeping records in respect of contributions received in respect of any active member of the scheme and for monitoring whether contributions are made to the Scheme by the employer in accordance with the Schedule of Contributions. Our responsibility is to provide a statement about contributions paid under the Schedule of Contributions and to report our opinion to you. Basis of statement about contributions We planned and performed our work so as to obtain all the information and explanations, which we considered necessary in order to give reasonable assurance that contributions reported in the attached summary of contributions, have in all material respects been paid at least in accordance with the relevant requirements. For this purpose the work that we carried out included examination, on a test basis, of evidence relevant to the amounts of contributions payable to the Scheme and the timing of those payments under the Schedule of Contributions. Our statement about contributions is required to refer to those breaches of the Schedule of Contributions, which come to our attention in the course of our work.

BOC PENSION SCHEME

INDEPENDENT AUDITORS’ STATEMENT ABOUT CONTRIBUTIONS, UNDER REGULATION 4 OF THE OCCUPATIONAL PENSION SCHEMES (REQUIREMENT TO OBTAIN AUDITED ACCOUNTS AND A STATEMENT FROM THE AUDITOR) REGULATIONS 1996, TO THE TRUSTEE AND MEMBERS

Statement about contributions In our opinion, contributions for the Scheme year ended 31 March 2009, as reported in the attached summary of contributions, have, in all material respects, been paid at least in accordance with the Schedule of Contributions certified by the Scheme Actuary on 12 September 2006. Ernst & Young LLP Registered Auditor Reading 29 June 2009

BOC PENSION SCHEME

SUMMARY OF CONTRIBUTIONS FOR THE YEAR ENDED 31 MARCH 2009

During the year ended 31 March 2009, the contributions payable to the Scheme under the Schedule of Contributions were as follows:

2009£'000

Employers Normal 25,831

Deficit funding 55,563 Other 392

MembersNormal 7,009

Contributions payable under the Schedule of contributions 88,795

Employer Augmentations 407

Total contributions per note 3 of the financial statements 89,202

Members contributed either 3% (Level 1) or 5% (Level 2) of Earnings, depending on the level of membership chosen by them. In accordance with the recommendations of the Scheme Actuary, normal contributions by participating companies are as follows:

Level 1 9.8%Level 2 18.5%

Under the terms of the Linde Contribution Obligation regular deficit contributions of £4.59 million per month commenced in January 2008. This increased to £4.74m from January 2009. All contributions were received by their due date on the Schedule of Contributions with the exception of the March Contribution Obligation. This was due on 31 March 2009 and was paid one day late on 1 April 2009. Deficit contributions are due to be paid until December 2011. Augmentations are amounts paid to provide additional benefits for individual members as part of their redundancy arrangements or under bonus sacrifice arrangements. Other contributions are amounts reimbursed to the Scheme in respect of Pension Protection Fund levy payments. This Summary of Contributions was approved by the Trustee on 25 June 2009 and signed on its behalf by: John Hylands Phil Struthers Trustee Director Trustee Director

BOC PENSION SCHEME


Scheme Rules The Scheme is governed by Rules introduced by a Deed dated 6 April 2006, as amended by (1) a supplementary Deed dated 19 December 2006, which made some minor changes to ensure that the Scheme is compliant with the Age Discrimination Regulations introduced on 1 December 2006 and (2) a supplementary Deed dated 4 January 2008, relating to the apportionment of any statutory debt on the employer which may arise in the future. Any Scheme member can obtain a copy of the Scheme Rules by contacting BOC Pension Services or from the website. Contact addresses are shown on page 2. Policy on Transfers-in In 1997, acting on the advice of the Scheme Actuary, the Trustee suspended the acceptance of individual transfer payments from members’ former pension schemes, subject to annual review. At its meeting in March 2005, following further advice from the Scheme Actuary, the Trustee decided to suspend transfers-in permanently. The Trustee will only review this decision again if the Scheme Actuary so advises. Transfer Payments Payments made in respect of deferred pensioners who exercised their option to have a cash equivalent or transfer value paid to another pension arrangement were calculated in accordance with the provisions introduced under Section 97 of Chapter IV of Pension Schemes Act 1993 using tables supplied by the Scheme’s Actuaries. Payments made during the year fully reflected the value of the accrued benefit rights in each case. Statutory changes to transfer value calculations were implemented in October 2008. The calculation of transfer payments includes allowance for the Trustee’s discretion to permit early payment of a deferred pension, without reduction, in circumstances of ill-health. No other discretionary benefits which could be available are included in transfer calculations. Agreements with Scheme Advisers The Trustee has written agreements in place with the Actuaries, the appointed Scheme Actuary, the Auditors, the Legal Advisers, the Medical Advisers, the Investment Advisers, the Corporate Finance Advisers and, in the form of delegation documents, the Joint Investment Committee, Pensions Investment Department and the Benefits Administrators.

BOC PENSION SCHEME


Data Protection The Scheme is registered under Data Protection Act 1998 to process on computer and otherwise, personal information that the Trustee or its delegates may need for Scheme management. Trustee’s Responsibilities Each Trustee Director has been provided with a copy of the Pensions Regulator’s “Guidance for Trustees”. Increases to Pensions The effective date for pension increases is 1 April each year. The increases during the year to pensions in payment were therefore those effected on 1 April 2008. Pensions in Payment Increases were provided in accordance with the Scheme Rules, and statutory GMP requirements, as set out below:

Over State Pension Age at

1/4/2008

GMP portion accrued pre 6/4/1988

GMP portion accrued post

6/4/1988

Service

Terminated Remaining pension φ

Before April 1997 Yes Nil 4.0 4.0 Before April 1997 No Fixed rate* 4.0 4.0 From April 1997 Yes 4.0 4.0 4.0**From April 1997 No 4.0 4.0 4.0** * Either 8.5%, 7.5% or 7% per year depending on leaving date. ** For those pensioners who had been retired for less than 12 months but more than 1 month, a proportionate rate applied.

φ Any part of the pension that had been secured with the member’s AVC Plan fund was increased on the basis notified to the member when the pension was purchased. Increases to dependants’ pensions followed a similar pattern to the above, subject to the modifications resulting from the statutory GMP increase requirements for widows and widowers. The Company did not award a discretionary increase. Deferred Pensions

BOC PENSION SCHEME


The GMP portion of qualifying deferred pensions was increased at 1 April 2008 by the Appropriate Fixed Rate of revaluation applicable to the leaving service date, as specified under the contracting-out regulations. The non-GMP portion of deferred pensions is increased when the pension comes into payment. This increase is broadly the lower of 5% per annum compound and the movement in the General Index of Retail Prices for the period of complete years to payment date, either from 1 June 1990 or from the later date on which the member left the Scheme. The deferred pension as at 1 June 1990 had already been increased at 3% per annum compound at each 1 April since leaving date. For leavers from April 2009 deferred benefits will increase by 2.5% in respect of post 5 April 2009 service. Participating Companies Principal Company The BOC Group Limited Other companies participating BOC Limited Gist Limited All companies participated throughout the year. Scheme Tax and Social Security Status The Scheme is a registered scheme with HM Revenue & Customs under Chapter 2 of Part 4 of Finance Act 2004. Contributory members of the Scheme were in contracted-out employment under Section 9 (2) of Pensions Act 1993 during the year for the purposes of state earnings-related pension provision, under certificate numbers E3800264Y and S0224094Y.

BOC PENSION SCHEME


BOC PENSION INVESTMENT FUND

ADMINISTRATOR’S REPORT

FOR THE YEAR ENDED 31 MARCH 2009


ADMINISTRATOR’S REPORT FOR THE YEAR ENDED 31 MARCH 2009

Contents Pages1 to 12 Investment Report Investment Management

- Introduction - Investment Principles - Advisers - Investment Policy - Relationship with Investment Managers - Investment Management Structure - Implementation of Asset Allocation Changes - Custody - Exercise of Voting Rights - Employer-related Investment - Stock-lending - Liability Driven Investment - Derivatives - The Myners Review Investment Performance - Market Review - Fund Performance

Pages 13 to 26 Financial Statements

- Auditor’s Report - Fund Account and Net Assets Statement - Notes to the Financial Statements



Investment Report

1

Introduction This report covers the management of BOC Pension Investment Fund (“BOCPIF”) for the year to 31 March 2009. BOCPIF is a common investment fund in which the Participating Schemes are BOC Pension Scheme and BOC Senior Executive Pension Scheme. Throughout the year under review, BOC Pensions Limited was the Administrator of BOCPIF. On 8 May 2007, the Trustees of the Participating Schemes agreed to delegate most of their investment responsibilities to a Joint Investment Committee (“the JIC”). The JIC is a corporate entity, agreed as BOC Pensions Limited, which was transferred to the joint ownership of the Trustees of the Participating Schemes on 6 August 2007. Members of the JIC are required to be trustee directors of the Participating Schemes. The JIC was formally constituted on 11 December 2007. The JIC also serves as the administrator of BOCPIF. The Directors of BOC Pensions Limited during the year were:

L A Franks Resigned 13 April 2009 J F Hylands N A Lewis C D Morton P Struthers From 2 April 2008 C Schlegel From 18 February 2009 Capital Cranfield Pension Trustees Limited Secretary: S K Kelly

The operation of BOCPIF is regulated by a deed. The original deed dated 31 March 1992, was updated by deeds of variation dated 29 October 2004 and 4 March 2008. BOCPIF comprises both commingled assets and assets which are directly attributable to the Participating Schemes. The commingled assets are apportioned between the Participating Schemes, in accordance with the terms of the deed, using a standard formula that is used by similar pooled funds. The formula ensures that there is no cross-subsidy between the Participating Schemes. It is applied each month to the change in market value of the assets. The change in value is apportioned in the ratio of the interest of each Participating Scheme in each of the asset classes of BOCPIF at the start of the month, adjusted to take account of any money invested or withdrawn by the Participating Schemes during the month. The apportionment of the change in value of BOCPIF in the year to 31 March 2009 is shown in Note 10 of the financial statements.



Investment Report

2

The deed currently states that assets will be valued at mid price. However, this is not in accordance with current accounting requirements. Assets have been valued as explained in note 3 of the accounts, and the Trust Deed is to be updated to reflect this. Investment Principles Each Participating Scheme has its own statement of investment principles. The statements of the Participating Schemes require the Administrator to obtain confirmation annually from the Investment Managers that BOCPIF’s investments are diversified and suitable, and that the Managers have exercised their delegated powers of investment in a manner designed to give effect to the principles set out in the statement. These confirmations have been obtained for the year ended 31 December 2008. Advisers During the year, the Administrator retained the services of the investment consultancy division of Hymans Robertson LLP for advice on investment matters. Subsequent to the year-end the Administrator decided to replace Hymans Robertson and agreed to appoint Mercer Limited. A list of the investment managers is shown on page 3. Custody is provided by BNY Mellon Asset Servicing BV (see page 5). The auditor of BOCPIF is Ernst & Young LLP. Investment Policy Throughout the year under review, investment policy was set by the trustee bodies of the Participating Schemes. The Administrator was responsible for ensuring that the investment management structure and the objectives set for each Investment Manager were consistent with the investment policy set by the trustee bodies. Relationship with Investment Managers Investment Managers are appointed by the Administrator. As required by the Participating Schemes’ Rules, all the investment management firms are independent of The BOC Group Limited. The Administrator enters into investment management agreements with each Manager, setting out in detail the terms on which each portfolio is managed. Each agreement includes a detailed set of guidelines to be followed by the Investment Manager.



Investment Report

3

The Administrator believes that the Investment Managers should have reasonable discretion in managing the assets of BOCPIF and restrictions are therefore kept to a minimum. Investment Management Structure The following investment managers served during the year, managing portfolios in accordance with the mandates shown (all mandates are actively managed unless otherwise stated). Investment Manager Mandate

Liability Driven Investment “LDI” (Note 7) Barclays Global Investors (“BGI”) BOC Pension Scheme LDI

BOC Senior Executive Pension Scheme LDI Insight Investment Management (Global) BOC Pension Scheme LDI

BOC Senior Executive Pension Scheme LDI Bonds

Barclays Global Investors Index-linked Gilts Note 6 Goldman Sachs Asset Management International Bonds Note 9 Henderson Global Investors Bonds Note 9 Western Asset Management Bonds Note 9

Property ING Real Estate Investment Management Fund of Funds Equities AllianceBernstein Global Note 1 Baillie Gifford Global Note 11 Capital International Global Note 2 GMO UK UK/Global Note 3 Record Currency Management UK Passive SEI Investments (Europe) Global Fund of Funds Note 4 Currency Bridgewater Associates Active Currency Note 5 Record Currency Management Passive Currency Record Currency Management Active Currency Note 8 Alternatives Goldman Sachs Mortgage Credit Note 10 Opportunities Fund



Investment Report

4

Note 1 The AllianceBernstein Global Equity Mandate was terminated in March 2009. Note 2 The Capital Global Equity Mandate was terminated in January 2009. Note 3 The UK mandate with GMO was transferred to a global mandate in January 2009. Note 4 The SEI Equity Mandate was terminated in January 2009. Note 5 The Bridgewater active currency mandate was terminated in December 2008. Note 6 The bond mandate with BGI was terminated in May 2008. Note 7 Insight Investment Management (Global) Limited was appointed in May 2008.

The mandates with BGI were terminated. Note 8 The Record active currency mandate was suspended in October 2008. Note 9 In July 2008 the bond portfolio’s were changed from a relative return target to

an absolute return target managed by Goldman Sachs Asset Management International, Henderson Global Investors and Western Asset Management.

Note 10 On behalf of BOCPS, BOCPIF invested in the GSAM Mortgage Credit Opportunity

Fund on 1st March 2008. There is a single USD share class and investors are subject to a 2 year hard lock-up, with the option of 3 one-year extensions.

Note 11 Baillie Gifford was appointed in January 2009 with a global mandate. The mandates given to each Manager are more fully described in the latest Statement of Investment Principles of the Participating Schemes. Implementation of Asset Allocation Changes

The two Participating Schemes have different investment policies and objectives that are more fully described in their respective 2009 report and accounts. From 1 March 2009 the BOC Pension Scheme changed its strategic bond allocation from 59.1% to 60%, decreased its equity allocation from 27.7% to 20.0%, increased property from 9.4% to 10.0% and introduced a new 10% strategic allocation to cash/alternatives.



Investment Report

5

Similarly, from 1 March 2009 the BOC Senior Executive Pension Scheme maintained its strategic 70% allocation to bonds, reduced its equity allocation from 17.3% to 15.0%, reduced its property allocation to 7.5% and introduced a new 7.5% allocation to cash/alternatives. With the exception of BOC Pension Schemes existing investment in the Goldman Sachs Mortgage Credit Opportunity Fund, for both Participating Schemes the allocation to alternatives remains unfunded and is proposed to be through investment in fund of hedge funds. Custody The custodian is appointed by the Administrator. The Administrator believes it is essential that the assets of BOCPIF should be held by a custodian with secure, accurate and timely administration systems which ensure that those assets are clearly identifiable and which minimise the risk of any loss. The Administrator has to be satisfied that the custodian has in place systems and procedures that should safeguard BOCPIF's assets. The Administrator keeps separate investment records with which those kept by the custodian and by the Investment Managers are reconciled, and the Committee reviews the annual reports on controls issued by the custodian, and by the Investment Managers. The London branch of BNY Mellon Asset Servicing BV served as custodian throughout the year. Exercise of Voting Rights The trustee bodies of the Participating Schemes require that voting rights in respect of UK stocks should be exercised on all occasions, including purely formal matters. In respect of overseas equities, votes should be cast in respect of material issues where it is practical to do so. In deciding which way votes should be cast, the principal objective is to preserve and enhance long-term shareholder value. The trustees of the Participating Schemes have adopted the corporate governance policy of the National Association of Pension Funds (“NAPF”), which incorporates the Institutional Shareholders Committee statement of principles on the responsibilities of institutional shareholders. Responsibility for ensuring that the trustee bodies’ requirements on voting are met has been delegated to the Administrator. The Administrator reviews the corporate governance policy statement of each Investment Manager to ensure consistency with NAPF policy and to enable the Administrator to satisfy



Investment Report

6

itself that the statements are consistent with its own views on corporate governance. It then permits Investment Managers to exercise voting rights, in accordance with house policy, on its behalf. In practice, it is the custodian who votes on behalf of the Administrator, acting in accordance with the voting instructions of the investment managers. All voting actions are reported on a quarterly basis by the investment managers and by the custodian, and are reviewed and discussed with the investment managers as appropriate. Employer-related Investment Legislation prohibits the trustees of most occupational pension schemes, including the Participating Schemes, from making employer-related investments in excess of 5% of scheme assets. The rules of the Participating Schemes impose a stricter limitation by not allowing any direct investment in, or loans to, The Linde Group AG (or, previously, The BOC Group plc) or any Group company. Investment in property owned by, or occupied by, The Linde Group AG (or, previously, The BOC Group plc) or any Group company is also prohibited. The same restrictions are also imposed on BOCPIF. The Administrator does permit Investment Managers to invest in pooled equity funds designed to track the performance of the relevant index, and also to deal in financial futures. Since the pooled funds may invest in Group companies, investment in such funds may result in an indirect exposure to The Linde Group AG. Also, where Group companies form part of a particular index, investment in financial futures will result in an indirect exposure to Linde. Having taken legal advice, the trustee bodies of the Participating Schemes have satisfied themselves that such indirect investment is permitted by their rules, and that the exposure to Group companies’ shares which could result would not be material to the Participating Schemes. Stock-lending The Administrator allows the custodian to stock-lend segregated BOCPIF assets. The activity is regulated by a stock-lending agreement between the Administrator and the custodian. During the year BOCPIF participated in SEI’s pooled equity funds, which also stock-lend their underlying securities. The Administrator is satisfied that the measures SEI put in place to minimise the risk of loss were sufficient to allow BOCPIF to participate in the pooled funds. The stock-lending programme holds both cash and securities as collateral against the lent positions. The cash is invested in a cash collateral fund managed by the custodian which itself invests in bonds to achieve a return above the FedFunds rate. The collapse of Sigma Finance plc in October 2008, whose bonds were held in the cash collateral fund, resulted in



Investment Report

7

an apportioned loss of £547k for BOCPIF during the year. The JIC has put in place a cap of £12m on the cash collateral programme and agreed a managed exit which is expected to take up to 2 years. At 31 March 2009, BOCPIFs exposure to the BNYM USD cash collateral fund was equivalent to GBP 6.90m. Approximately 26% of the USD cash collateral fund is invested in liquid (overnight) instruments; the remaining investments include less liquid asset-backed securities and floating rate notes with maturities extending to 2014. Liability Driven Investment The two participating schemes have separate scheme specific liability driven investment (LDI) portfolios within BOCPIF. The LDI manager has been set a target for matching a proportion of the latest projected liability cashflows, as provided by the Actuary for each scheme, by June 2010 - for BOCPS this is 60%, for SEPS it is 72%. The purpose of this approach is to hedge a proportion of the risks associated with the schemes' exposure to movements in interest rates and inflation. The LDI manager employs a number of investment instruments to achieve the hedging strategy which includes corporate inflation linked bonds, index-linked gilts, interest rate swaps, inflation swaps, credit default swaps, corporate bonds and cash. These investments are held in each scheme's qualifying investment fund and are registered in the name of the fund. Derivatives The Directors have authorised the use of derivatives by their investment managers as part of their investment strategy for the Fund. The main objectives for the use of key classes of derivatives and the policies followed during the year are as follows: Futures A number of the investment managers are permitted to trade futures contracts as part of their portfolio of assets. In addition, futures contracts were taken out as part of the equity transition during the year. The underlying economic exposure of any futures is broadly equivalent to cash offsetting. Swaps Swaps were held by Goldman’s as part of the active management of their bond portfolio. As part of their Liability Driven Investment strategy the Directors have also authorised the use of Swaps by Insight to allow better matching to the long-term liabilities of the Pension Schemes. Forward foreign exchange In order to maintain appropriate diversification of investments within the portfolio and take advantage of overseas investment returns a proportion of the underlying investment



Investment Report

8

portfolio is invested overseas. To reduce the risk of investing in foreign currencies whilst having an obligation to settle benefits in sterling, a currency hedging programme is in place over a proportion of the equity holdings and over the investment in alternatives. In addition, an active managed forward foreign exchange programme was in place until December 2008 which sought to generate a return for the fund. The Myners Review The Myners Review of Institutional Investment in the UK included a set of ten principles applicable to investment decision-making by pension fund trustee bodies. The proposals currently form a voluntary code. A fund may choose not to comply with some or all of the principles, provided that it then explains the non-compliance both publicly and to its members. Some of the principles apply principally to the Administrator of BOCPIF; others are more applicable to the trustee bodies of the Participating Schemes. Each Participating Scheme has its own Myners Compliance Report - there is no separate report for BOCPIF.




9

Market Review Equities Equity markets fell sharply in the period under review as problems in the financial sector moved into the wider economy and contributed to an unprecedented collapse in world trade and industrial production. The UK equity market was down 29.3% over the period. Returns from overseas equity markets were also poor although the weakness of sterling helped UK based investors somewhat: in sterling terms European equities declined 31.1%, Emerging Markets lost 26.3% and Developed Asia suffered a 22.1% fall. The impact of currency was particularly pronounced for UK based investors in the US and Japan where falls of almost 30% in local currency translated into declines of 14.0% and 10.7% respectively in sterling. Problems in the financial sector dominated the earlier part of the period and reached a new height in September with the bankruptcy of Lehman Brothers in the US, which worsened the crisis as credit markets froze in its wake. LIBOR, the rate at which banks are willing to lend to each other, soared and commercial paper markets ceased functioning. Governments around the world responded to the crisis by cutting interest rates to record lows, taking stakes in major banks whose financial positions looked increasingly uncertain and, latterly, some have started buying bonds from banks in order to encourage them to lend more – a process known as quantitative easing. There is still uncertainty about whether the government bailout plans will work, as most of the measures taken have not had time to take effect. Countries have also tended to stimulate in different ways with Germany, for example, concentrating on industry, while the scale of the crisis in the UK is such that the authorities have had little alternative but to recapitalise the banks directly. The stimulus is, however, similar in most major economies and considerable at about 3-4% of GDP. Although it will take some time for economies to recover, the positive news is that the necessary changes are happening, with savings rates rising and trade deficits falling sharply. The collapse in trade, although alarming, is also unlikely to continue in the absence of a similar decline in consumption. At some point, inventories will fall to levels that mean production has to rise. Developments in China are also encouraging with steps taken to stimulate the economy already having some effect. Capital projects, which were interrupted in 2007 when the government was trying to slow the economy owing to concerns about overheating, have restarted and bank lending has soared. The Chinese government appears better placed than many others to stimulate its economy as the political and financial impediments are much smaller. Economic recovery in China may therefore take place more quickly than elsewhere. Although a very slow recovery is in prospect for other parts of the world economy, various measures now suggest that markets are trading close to or below their long run valuation levels so there is evidence that this is providing some support for long term investors.




10

UK Property

Annual returns continued to plunge over the first few months of 2009, with IPD All Property recording -25.5% p.a. in March - an overall drop of 41% in capital values since mid-2007. Nevertheless, the pace of monthly decline has lessened compared with the significant falls witnessed towards the end of 2008. Although the increase in yields continues to be the main driver of the drop in values, falls in rental levels are also starting to have a significant negative impact on capital growth.

The onset of the recession has hit the occupier market, with rental levels starting to decline across all sectors. IPD All Property recorded a -4.9% p.a. decline in March 2009, largely driven by Central London offices, where rents are falling by approximately -18% p.a. The decline across other sectors is less significant, ranging from -1% p.a. to -4% p.a. The office sector is expected to see the worst rental decline, with rents in Central London forecast to fall by about 40-45% in total. The retail and industrial sectors will see relatively similar falls of -20% and -15% respectively from peak to trough.

According to IPD, All Property initial yields have reached 7.7% (March 2009), from their low of 4.6% in mid-2007 and are now above the long-term average. Nevertheless, it is expected that yields will continue to move out over the course of 2009 and possibly into 2010 as the risks attached to the weakening occupier market continue to make investors wary of the asset class.

Subsequent to the year end the administrator was informed that due to expected losses the remaining value of one of the underlying funds was effectively nil. This therefore necessitated a write-down of £250k. The year end accounts reflect this permanent diminution in value.

Bonds

During the period economic data from every corner of the globe suggested that growth was in freefall – without exception, consumption, investment, income and profits had fallen rapidly and, in many cases, were at historically low levels. In the US the economy contracted far more at the end of 2008 than initially anticipated with employment also deteriorating significantly. Over the year the crisis led the Federal Reserve to cut the FedFunds rate from 2.25% to a range of 0-0.25%. Similarly in the UK the Bank of England cut domestic rates from 5.25% to 0.5% in March 2009 whilst the European Central Bank reduced rates from 4% to 1.5%. Meanwhile, inflationary pressures diminished significantly, with lower energy prices paving the way for a retrenchment in headline inflation.




11

In the UK, as well as rate cuts, the Bank of England began purchasing government and corporate bonds in an aim to increase the money supply to the non-financial economy to offset the shortfall in bank lending – a problem which continues to hamper the economy. The UK Treasury has also engaged in a programme to cleanse banks of their most problematic assets to make them more willing to lend. Taken together, the Bank of England and the UK Treasury actions represent significant policy stimulus that should help break the negative feedback loop of credit retention and falling demand at play in the UK economy.

The continued ‘flight to quality’ evidenced by a 10.3% annual return from Gilts (FTA All Stocks) contrasted sharply with a -2.8% return from Index-linked Gilts (FTA ILG Over 5 years) and -6.2% from Corporate Bonds (iBoxx £ Non Gilt). Emerging Market Debt was also hit hard with a -9.7% return for the year to 31 March 2009.

Currency

The year to March 2009 saw one of the highest periods of currency volatility in the last 40 years. All major currencies were relatively stable and traded normally until the summer of 2008, when major currency dislocations began. This was primarily due to the near collapse of the banking system following the demise of Lehman Brothers and the loss of confidence in central banks (and governments) to shore up bank balance sheets. This happened, of course, alongside a period of declining economic growth, falling asset values and rapid financial deleveraging. Previously high yielding currencies such as Sterling and other peripheral commodity-driven currencies such as the Australian Dollar and New Zealand Dollar fell sharply, mainly against the US Dollar, Yen and Swiss Franc. In terms of the largest changes in spot rates, Sterling and Yen were the most significant. Sterling fell by about 25% against the Euro and 35% against the Dollar in the space of six months. Similar moves were seen in the Yen, which appreciated by 20% against the Dollar, 30% against the Euro and just under 50% against Sterling. While some return to normality (in terms of volatility) has been observed in February and March 2009 some currencies remain at extended levels relative to a simple, fair value measure such as Purchasing Power Parity. On this measure, Sterling still remains undervalued while the Euro and Yen are probably overvalued. The Dollar and other minor currencies are relatively close to fair value.

Fund Performance

The performance of BOCPIF and its Investment Managers is measured by an independent performance measurement service. Since July 2005 this service has been provided by Mellon Analytical Solutions. Prior to that date, it was provided by The Northern Trust Company. This service calculates investment returns for individual asset classes in BOCPIF, including income and changes in market value.




12

Investment performance has been measured by asset class since 1 April 2004, and for periods ending 31 March 2009 was as follows:

Year to 31 March 2009

Three Years to 31 March 2009 pa

Five Years to 31 March 2009 pa

Actual Benchmark Actual Benchmark Actual Benchmark Global Equities* -32.7% -29.2% -12.2% -9.5% 0.0% 1.9% Bonds** -9.5% 2.1% -2.7% 2.1% 1.4% 4.2% Property -34.8% -25.5% -12.1% -8.4% -0.2% 1.9% * Reported post hedging from July 2005. ** The bond return is calculated on the bond portfolio excluding the LDI portfolios

established by the participating schemes. The performance of the LDI portfolios is included within the overall performance shown in the investment reports of the respective participating schemes.

It is important to look at the investment performance over the long-term; too much emphasis should not be placed on the absolute rate of return achieved in any one year. Short-term market fluctuations can cause the absolute rate of return to vary considerably from year to year.

This Investment Report was approved by the Administrator on 16 June 2009 and signed on its behalf by:

John Hylands Clive Morton Director Director


AUDITOR’S REPORT FOR THE YEAR ENDED 31 MARCH 2009

We have audited the financial statements of the BOC Pension Investment Fund for the year ended 31 March 2009 which comprise the fund account, the net assets statement and the related notes 1 to 10. These financial statements have been prepared under the basis of the accounting policies set out therein. This report has been prepared for the Fund’s Administrator solely in connection with the Administrator’s wish to have audited financial statements, and the terms of our engagement. It has been released to the Administrator on the basis that this report shall not be copied, referred to or disclosed, in whole (save for the Administrator’s own internal purposes) or in part, without our prior written consent. We consent to its disclosure in full to the trustees and members of the participating schemes of the Fund (being BOC Pension Scheme and BOC Senior Executive Pension Scheme) to enable them to verify that a report from the auditors has been issued in connection with the financial statements of the Fund. Our audit work has been undertaken so that we might state to the Administrator those matters we are required to state to them in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Administrator as a body, for our audit work, for this report, or the opinions we have formed. Respective responsibilities of Administrator and auditor The Administrator is responsible for obtaining financial statements for each Fund year which show a true and fair view of the financial transactions of the Fund during the Fund year prepared in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). The Administrator has supervised the preparation of the financial statements and has agreed suitable accounting policies to be applied consistently, making estimates and judgements on a reasonable and prudent basis. The Administrator also has a general responsibility for ensuring that adequate accounting records are kept and for taking such steps as are reasonably open to it to safeguard the assets of the Fund and to prevent and detect fraud and other irregularities. Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland). We report to you our opinion as to whether the financial statements show a true and fair view 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 Pensions Act 1995. We also report to you if, in our opinion, we have not received all the information and explanations that we require for our audit, or the information specified by law is not disclosed. We read the other information contained in the Administrator’s Report and consider the implications for our report if we become aware of any apparent misstatements or material

13


AUDITOR’S REPORT FOR THE YEAR ENDED 31 MARCH 2009

14

inconsistencies within the financial statements. The other information comprises of the Investment Report. Basis of audit opinion We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes 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 or on behalf of the Administrator in the preparation of the financial statements and of whether the accounting policies are appropriate to the Fund’s circumstances, consistently applied and adequately disclosed. 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. 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, in accordance with United Kingdom

Generally Accepted Accounting Practice, of the financial transactions of the Fund during the year ended 31 March 2009 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 year; and

- the financial statements contain the information specified in Regulation 3 of and the

Schedule to The Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 1996.

Ernst & Young LLP Registered Auditor Reading 23 June 2009 Notes : 1. The maintenance and integrity of the BOC Pension Services web site is the responsibility of the Trustees; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the web site. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions


FUND ACCOUNT AND NET ASSETS STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

2009 2008Notes £'000 £'000

Fund Account

Net ContributionsBOC Pension Scheme 7,110 81,129 BOC SEPS 250 9,275

7,360 90,404 Return on InvestmentsChange in market value of investments 4 (325,745) (28,423) Foreign exchange (loss)/gain (9,614) 967Investment income 5 29,072 37,620 Underwritin

g commission 5 2 Securities lending income 242 225 Investment management costs 6 (3,652) (5,463) Net Return on Investments (309,692) 4,928

Net (decrease)/ increase in the Fund during the year

(302,332) 95,332

Net Assets of the FundAt 1 A

pril 2008 2,023,939 1,928,607 At 31 March 2009 1,721,607 2,023,939

Net Assets Statement

InvestmentsFinancial Assets 7 1,727,645 3,209,874 Financial Liabilities 7 (5,776) (1,184,963)

1,721,869 2,024,911 Current assets 8 24 98 Current liabilities 9 (286) (1,070)

Net assets of the FundAt 31 March 2009 1,721,607 2,023,939

The notes on pages 16 to 26 form part of these financial statements. These financial statements were approved by the Administrator on 16 June 2009 and signed on its behalf by: John Hylands Clive Morton Director Director

15



16 PREPARATION OF FINANCIAL STATEMENTS These financial statements have been prepared by the Administrator as a matter of best practice and summarise the transactions and net assets of the BOC Pension Investment Fund. These financial statements have been prepared in accordance with Schedule 3 of the Audited Accounts Regulations and with the guidelines set out in the Statement of Recommended Practice (SORP), Financial Reports of Pension Schemes (Revised May 2007) – “The Revised SORP” as it applies to investments (except as identified by note 3g). This is the first year that the Revised SORP has been applied to the Funds financial statements. As a result amendments to disclosures and presentation have been made to comply with the Revised SORP. 17 Prior year comparative amounts The Directors have adopted the Revised SORP. Investments previously disclosed at mid prices are now valued at bid or offer prices for assets and liabilities respectively where there is a bid/offer spread. This is a change in accounting policy but the difference in valuation is considered immaterial to the financial statements and therefore comparatives have not been restated.

As a result the comparative figures for investments are reported on a mid price basis and the adjustment in valuation from mid to bid/offer prices is included in the current year Change in Market Value. 18 ACCOUNTING POLICIES

a. Income and expenditure, with the exception of directed commission and securities lending income, are dealt with in the transactions of the Fund on an accruals basis. Directed commission and securities lending income are accounted for on receipt.

b. Dividends from quoted securities are accounted for when the security is declared ex-

div.

c. Income from overseas investments is translated into sterling at rates of exchange ruling on the date of receipt. Income is stated net of attributable tax credits but gross of recoverable withholding taxes which are accrued with the associated investment income.

d. Interest on swaps is included within investment income.

e. Assets and liabilities in foreign currencies are translated into sterling at the rates of

exchange ruling at the year end.

16



f. Where income is not distributed on unit trusts/managed funds, the income arising on underlying assets is accounted for within change in market value of investments.

g. The majority of listed investments are valued on the basis of last traded price or bid

price at the year end depending on the conventions of the stock exchange on which they are listed. Investments in pooled investment vehicles (unit trusts/managed funds) are valued at bid price or at the single quoted price. Unquoted securities are included in the financial statements at the value supplied by the Trust manager. The underlying assets are valued using the guidelines of the British Venture Capital Association. Fixed interest securities are stated at the price excluding accrued interest (the “clean” price). Accrued income is accounted for within investment income.

h. Property unit trusts/managed funds are valued at net asset value at the year end.

The Administrator believes that this accounting policy is appropriate for illiquid funds as it results in investments being valued at their estimated fair value and therefore complies with the SORP.

i. Derivatives are accounted for at market value. Forward foreign exchange contracts

are valued by determining the gain or loss that would arise from closing out the contract at the reporting date and entering into an equal and opposite contract at that date. Forward Foreign Exchange contact trades are settled gross, but disclosed net in note 7. Open positions on fixed interest and equity financial futures contracts are included in the financial statements at market value at the year end. Purchased options with negative market values are valued at nil. Swaps are valued at fair value at the price notified by the Investment Manager. All gains and losses arising on derivative contracts are reported within the Change in Market Value

j. Investment costs, such as brokers’ commission and stamp duty, are added to the

purchase costs of investments. The costs incurred in the sales of investments are deducted from the sale proceeds.

k. Alternatives are valued at the net asset value as at the year end. The Administrator

believes that this accounting policy equates to fair value.

17



18

19 RECONCILIATION OF INVESTMENTS HELD AT BEGINNING AND END OF YEAR

Market value at 31 March

2008Purchases at

CostSales

ProceedsChange in

market value

Market value at 31 March

2009£'000 £'000 £'000 £'000 £'000

Fixed interest securitiesUK conventional gilts 65,170 19,439 (83,225) (1,384) - UK

gilt unit trusts 50,711 85,843 (135,747) (807) -

UK index-linked

gilts 18,464 79,276 (98,387) 647 - UK index-linked managed funds 646,916 - (655,554) 8,638 - UK corporate bonds 124,617 3,207 (110,553) (6,693) 10,5UK corporate index-linked bonds 4,349 536,416

78 (540,426) 79 418

UK unit trusts 5,867 - (6,184) 317 - Overseas government bonds 9,357 5,839 (14,747) (449) - Overseas corporate bonds 31,402 75,333

(93,558) (1,778) 11,3

Overseas index-lined 1,227 - 99

(1,210) (17) - Overseas mana

ged funds 1,269 1,208,450 (1,435) (52,766) 1,155,518

959,349 2,013,803

(1,741,026) (54,213) 1,177,913

Alternatives 33,285 - -

(12,142) 21,1

EquitiesUK Listed 81,949 134,375

43

(166,116) (20,264) 29,9UK Unit trusts

44 /managed funds 57 - - 4 61

Overseas Listed 251,845 933,194 (811,333) (88,829) 284,8Overseas Unquoted unit trusts 181,032 29,851

77 (154,773) (37,601) 18,5

514,883 1,097,420 09

(1,132,222) (146,690) 333,3

Property units/managed funds 187,212 14,531

91

(16,417) (78,259) 107,0

Cash unit trusts 320,582 685,119

67

(956,248) 1,517 50,970

Total securities 2,015,311 3,810,873 (3,845,913) (289,787) 1,690,484

Net derivativesFutures 569 7,281

(7,782) 68 Swaps

(573) 16,172 (17,000) 1,413 12

TBAs 2,598 13,342 (15,449) (491) - Forward currency

(15,159) 6,249,610 (6,205,624) (29,098) (271) (12,565) 6,279,124 (6,230,792) (35,958) (191)

Total Investments 2,002,746 10,089,997 (10,076,705) (325,745) 1,690,293

Cash deposits 16,987 10,016 Accrued investment income 7,419 2,740 Investments sold 6,265 19,272 Investments purchased

(8,506) (452)

2,024,911 1,721,869



4 RECONCILIATION OF INVESTMENTS HELD AT BEGINNING AND END OF YEAR continued) Included within the above purchases and sales figures are transactions costs of £1.1m (2008 £0.7m). Costs are also borne by the scheme in relation to transactions in pooled investment vehicles. However, such costs are taken into account in calculating the price of these investments and are therefore not separately identifiable, The total market value of the Fund’s investment in unit trusts/managed funds where the company operating the fund is registered outside the UK is £1,136.3m at 31 March 2009 (2008: £103.8m). These funds are variously registered in Luxembourg, The Cayman Islands, Ireland, Guernsey, Jersey and the United States of America. The transition from BGI to Insight (Ireland funds) for LDI investments is the main reason for the increase on the prior year. The change in market value of investments during the year comprises all increases and decreases in the market value of investments held at any time during the year, including profits and losses realised on sales of investments during the year. The scheme has outstanding commitments on the ING Property Fund of £1.4m (2008: £3.4m). The drawdown date for these commitments is not finalised. Included in the market value of the Fund are securities loaned as at 31 March 2009 of £5.9m (2007: £127.5m). Securities on loan are covered by collateral of 143 % of the value of the securities loaned. Investments in alternatives consist of units in the Goldman Sachs Mortgage Credit Opportunities Fund.

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20

5 INVESTMENT INCOME

2009 2008£'000 £'000

Fixed interestUK conventional gilts 1,075 3,001 UK index-linked gilts (747) 239UK cor

porate bonds 3,467 8,018

UK index-linked corporate bonds (1) 86Overseas conventional

gilts 1 363

Overseas index-linked gilts - 26 Overseas corporate bonds 2,565 1,880 Overseas managed funds 3,908 109 Interest on swaps (2,055) (1,248) 8,213 12,474

UK equitiesListed 4,107 5,655 Unit trusts/managed funds - (5)

4,107 5,650

Overseas equitiesListed 7,085 6,369 Unit trusts/managed funds - 1,367

7,085 7,736

Indirect property 4,786 7,588

Interest on cash deposits 4,881 4,172

29,072 37,620

6 INVESTMENT MANAGEMENT COSTS

2009 2008£'000 £'000

Investment management and custody 3,668 5,481 Directed commission (16) (18)

3,652 5,463



7 INVESTMENTS a) Market value of investments (excluding cash) by Investment Manager

Pool £'000 % £'000 %AllianceBernsteinActive Global Equity fund Equity 354 0.0 72,040 3.6Active UK Equity fund Equity 2 0.0 66 0.0

Barclays Global InvestorsPassive Index-linked Gilt fund Bond 0 0.0 30,477 1.5BOCPS LDI Scheme LDI 0 0.0 818,711 40.9SEPS LDI SEPS LDI 0 0.0 80,005 4.0

Baille Gifford Equity 169,623 10.0 0

BOC Cash Fund Other 40,904 2.4 70,863 3.5

Bridgewater Associates, IncActive Currency Management Active Currency 0 0.0 1,059 0.1

Capital InternationalActive Global Equity fund Equity 171 0.0 232,763 11.6

GMO UK LimitedActive UK Equity fund Equity 70 0.0 48,521 2.4Global Equity fund Equity 163,553 9.7 0

Goldman SachsActive Bond fund Bond 13,370 0.8 130,728 6.5Pooled Bond fund Bond 111,950 6.6 0Mortgage Opportunity Fund Alternatives 21,143 1.3 33,285 1.7

Henderson Bond 135,516 8.0

ING Real EstateActive Property fund Property 122,021 7.2 206,439 10.3

InsightBOCPS LDI Scheme LDI 725,238 42.9SEPS LDI SEPS LDI 77,261 4.6

Merrill Lynch Investment ManagersPrivate Equity fund Other 61 0.0 56 0.0

Record Currency ManagementActive Currency Management Active Currency -116 0.0 -2,386 -0.1Passive Currency Management Equity 7 0.0 -12,029 -0.6Passive Currency Management Alternatives -41 0.0 0UK Equitisation fund Equity 68 0.0 1 0.0

SEI Investments (Europe)Active Overseas Equity fund of funds Equity 0 163,592 8.2

Western Asset ManagementActive Bond fund Bond 3,585 0.2 128,555 6.4Pooled Bond fund Bond 105,553 6.3 0

1,690,293 100.0 2,002,746 100.0

2009 2008

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7 INVESTMENTS (continued) b) Financial Assets and Liabilities

31 March 2009

31 March 2008

£'000 £'000Financial AssetsUK conventional gilts - 65,170 UK gilt unit trusts - 50,711 UK index-linked gilts - 18,464 UK index-linked managed funds - 646,916 UK corporate bonds 10,578 124,617 UK corporate index-linked bonds 418 4,349 UK unit trusts - 5,867 Overseas government bonds 7,763 9,357 Overseas corporate bonds 3,636 31,402 Overseas index-lined - 1,227 Overseas managed funds 1,155,518 1,269 Alternatives 21,143 33,285 UK Listed 29,944 81,949 UK Unit trusts/managed funds 61 57 Overseas Listed 284,877 251,845 Overseas Unquoted unit trusts 18,509 181,032 Property 107,067 187,212 Cash unit trusts 50,970 320,582 Futures (note 7c) 68 154,473 Swaps 12 TBAs - 2,598 Forward Foreign Exchange (note 7c) 5,053 1,006,821 Cash deposits 10,016 16,987 Investments sold 19,272 6,265 Accrued investment income 2,740 7,419

Total financial Assets 1,727,645 3,209,874

Financial LiabilitiesForward Foreign Exchange (note 7c) (5,324) (1,021,980) Futures - (154,477) Investments purchased (452) (8,506)

Total financial liabilities (5,776) (1,184,963)

Net Assets 1,721,869 2,024,911

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7 INVESTMENTS (continued) c) Derivative contracts outstanding at the year end Futures

Contract Expiration Economic Exposure

Asset Liability

£000 £000 £000

Future Jun-09 3,359.70 68.4 0 The economic exposure represents the notional value of the stock purchased under the futures contract and is therefore subject to market movements Forward Foreign Exchange The scheme had net open FX contracts at the year end as follows: Contract Settlement

DateCurrency purchased Currency sold Asset Liability

£ £ Forward 01-Apr-09 Yen 882,200 £6,203.94 27.52Forward 01-Apr-09 £29,095.14 YEN4,000,000.00 840.96Forward 01-Apr-09 $300,000.00 £211,476.10 2,176.21Forward 02-Apr-09 AUD283,046.46 £136,995.53 208.00Forward 02-Apr-09 CAD1504.67 £836.30 1.93Forward 02-Apr-09 CAD218,661.97 £121,532.89 280.98Forward 02-Apr-09 DKK847.98 £105.59 0.13Forward 02-Apr-09 € 1,748,930.93 £1,622,902.97 2,883.02Forward 02-Apr-09 HKD2,194,355.80 £197,891.17 352.06Forward 02-Apr-09 YEN71,638,123.00 £504,280.75 1,738.36Forward 02-Apr-09 YEN84,771,553.00 £596,730.63 2,057.05Forward 02-Apr-09 MXN4,217.58 £209.06 0.42Forward 02-Apr-09 TRY340.92 £142.42 0.26Forward 02-Apr-09 NOK574,801.57 £59,755.03 363.18Forward 02-Apr-09 NOK1350560.69 £140,401.14 853.34Forward 02-Apr-09 ZAR383242.46 £28,135.73 20.55Forward 02-Apr-09 SGD45.97 £21.14 0.04Forward 02-Apr-09 SEK623,584.10 £52,731.71 108.29Forward 02-Apr-09 SEK1,827,950.66 £154,575.72 317.43Forward 02-Apr-09 CHF522,275.84 £320,847.67 391.88Forward 02-Apr-09 CHF252,607.38 £155,183.30 189.54Forward 02-Apr-09 $3,421,513.26 £2,391,328.81 4,254.29Forward 02-Apr-09 $8,674,442.39 £6,062,651.94 10,785.76

c/f 22,979.31 4,871.89

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7 INVESTMENTS (continued) Forward Foreign Exchange (continued)

Contract Settlement

DateCurrency purchased Currency sold Asset Liability

£ £ Forward 15-Apr-09 £91,040.44 € 107,993.22 8,984.33Forward 15-Apr-09 £3,676,913.46 YEN641,000,000.00 851,566.93Forward 15-Apr-09 € 4,740,633.37 YEN641,000,000.00 137,642.20Forward 15-Apr-09 € 4,677,101.37 CHF7,200,000.00 87,066.46Forward 15-Apr-09 YEN641,000,000.00 £3,651,381.37 877,099.02Forward 15-Apr-09 YEN641,000,000.00 € 4,650,150.53 221,448.45Forward 15-Apr-09 CHF7,200,000.00 € 4,659,590.99 103,284.81Forward 17-Apr-09 £157,141.52 € 171,477 1,681.83Forward 17-Apr-09 € 997,598.03 £923,755.82 227.33Forward 24-Apr-09 £40,018.76 $57,345.28 13.16Forward 24-Apr-09 $3686059.06 £2,541,224.65 30,268.70Forward 24-Apr-09 £768,933.00 $1,087,571.15 10,214.29Forward 24-Apr-09 € 7,475,609 $9,589,636.47 233,835.28Forward 24-Apr-09 SGD1,637,706.00 $1,090,274.71 9,645.23Forward 24-Apr-09 $ 1,283,060.60 € 1,014,919 44,908.79Forward 24-Apr-09 $4,727,352.39 SEK39,111,750.00 1,804.29Forward 24-Apr-09 $8,606,426.15 CHF9,966,930.00 114,294.25Forward 11-Jun-09 AUD2,570,000.00 £1,182,479.07 57,273.20Forward 11-Jun-09 £1,276,999.08 €1,361,00.00 16,538.61Forward 11-Jun-09 £8,473,023.78 € 9,386,000 219,615.47Forward 11-Jun-09 £1,905,712.80 € 2,140,000 76,201.54Forward 11-Jun-09 £481,981.31 YEN65,000,000.00 22,436.38Forward 11-Jun-09 £6,693,743.65 YEN857,000,000.00 634,820.50Forward 11-Jun-09 £647,120.60 $912,000.00 11,028.20Forward 11-Jun-09 € 22,405,000 £19,420,654.00 1,329,248.23Forward 11-Jun-09 YEN2,218,000,000.00 £16,320,824.14 639,737.14Forward 11-Jun-09 SEK72,665,00.00 £5,794,657.10 338,373.17Forward 11-Jun-09 SEK21,841,000.00 £13,676,268.00 256,660.83Forward 11-Jun-09 $37,434,000.00 £25,355,346.71 753,735.24Forward 11-Jun-09 $37,270,000.00 £25,928,760.26 65,936.65Forward 11-Jun-09 € 9,518,000 £8,720,391.60 93,233.61Forward 11-Jun-09 YEN1,296,000,000.00 £9,552,238.81 377,414.17Forward 11-Jun-09 $73,792,000.00 53,194,925.03 1,760,073.05Forward 11-Jun-09 £5,057,534.62 $7,340,000.00 61,893.21Forward 11-Jun-09 $713,000.00 £507,390.25 10,094.33Forward 11-Jun-09 $23,455,000.00 £15,875,325.73 520,641.83Forward 11-Jun-09 $16,828,000.00 £12,100,381.10 370,848.24

5,030,132.29 5,319,656.66b/f 22,979.31 4,871.89

5,053,111.60 5,324,528.55 -271,416.95

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8 CURRENT ASSETS

2009 2008£'000 £'000

VAT receivable 24 98

24 98

9 CURRENT LIABILITIES

2009 2008£'000 £'000

Investment management costs 286 1,070

286 1,070

BOC PENSION SCHEME

COMPLIANCE STATEMENT FOR THE YEAR ENDED 31 MARCH 2009

10 APPORTIONMENT OF THE FUND

Total FundBOC Pension

Scheme BOC SEPS£'000 £'000 £'000

Apportioned Fund at 1 April 2008 2,023,939 1,854,521 169,418

Net Contributions by Schemes 7,360 7,110 250

Share in growth in value of Fund (309,692) (291,687) (18,005)

Apportioned Fund at 31 March 2009 1,721,607 1,569,944 151,663

Apportionment by Pool

Total FundBOC Pension

Scheme BOC SEPS£'000 £'000 £'000

Equity Pool 364,061 341,869 22,192

Bond Pool 370,178 330,580 39,598

Property Pool 122,926 113,074 9,852

Other Pool 40,955 38,186 2,769

Active Currency Pool (115) (106) (9)

BOCPS LDI 725,238 725,238 -

Alternatives 21,103 21,103 -

BOC SEPS LDI 77,261 - 77,261

Apportioned Fund at 31 March 2009 1,721,607 1,569,944 151,663

Each Pool includes the cash under management within the Pool and the associated current assets and liabilities.

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