6-K
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
 

FORM 6-K

 

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934

 

Report on Form 6-K dated 24 July 2006

 

Commission File Number 000-10906

 

The BOC Group plc


 

Chertsey Road, Windlesham
Surrey, GU20 6HJ England


(Name and address of registrant's principal executive office)
 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

     
Form 20-F:  þ   Form 40-F:  o
 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

     
Yes:  o   No:  þ
 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

     
Yes:  o   No:  þ
 

Indicate by check mark whether the registrant by furnishing the information contained in this form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

     
Yes:  o   No:  þ

Enclosure: Scheme Document relating to the recommended cash offer for The BOC Group by Linde AG

 


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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, The BOC Group plc, has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

         
   


 
Date: July 24, 2006  By:   /s/ Alan Ferguson  
  Name:  Alan Ferguson 
  Title:  Group Finance Director 

 


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LOGO


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TO VOTE ON THE PROPOSALS
Whether or not you plan to attend the Meetings:
1.  Complete and return the BLUE Form of Proxy in respect of the Court Meeting, to be received by no later than 2:00 p.m. on Monday 14 August 2006 or, alternatively, it may be handed to the Chairman of the Court Meeting or the Registrars before the start of the Court Meeting.
 
2.  Complete and return the WHITE Form of Proxy in respect of the EGM, to be received by no later than 2:15 p.m. on Monday 14 August 2006.
 
3.  Alternatively, certain shareholders may submit their proxies electronically by following the instructions set out on page 6 of this document.
If you require assistance, please telephone
Lloyds TSB Registrars
on 0845 600 0301 (from within the UK)
or +44 1903 276 342 (from outside the UK)
between 8:30 a.m. and 5:30 p.m. Monday to Friday (except UK public holidays)
The completion and return of Forms of Proxy will not prevent you from attending and voting at the Court Meeting or the EGM, or any adjournment thereof, in person should you wish to do so and are so entitled.
IT IS IMPORTANT THAT, FOR THE COURT MEETING IN PARTICULAR, AS MANY VOTES AS POSSIBLE ARE CAST SO THAT THE COURT MAY BE SATISFIED THAT THERE IS A FAIR AND REASONABLE REPRESENTATION OF BOC SHAREHOLDER OPINION. YOU ARE THEREFORE STRONGLY ENCOURAGED TO SIGN AND RETURN YOUR FORMS OF PROXY AS SOON AS POSSIBLE.
This page should be read in conjunction with ACTION TO BE TAKEN on page 6 of this document and the rest of this document.


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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

PART TWO OF THIS DOCUMENT COMPRISES AN EXPLANATORY STATEMENT IN COMPLIANCE WITH SECTION 426 OF THE COMPANIES ACT 1985. If you are in any doubt as to the action you should take, you are recommended to seek your own financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser who, if you are taking advice in the United Kingdom, is authorised under the Financial Services and Markets Act 2000, or from another appropriately authorised independent financial adviser if you are taking advice in a territory outside the United Kingdom.
If you have sold or otherwise transferred all of your BOC Shares, please send this document together with the accompanying documents as soon as possible to the purchaser or transferee, or to the stockbroker, bank or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee. However, such documents should not be forwarded or transmitted in or into any jurisdiction in which such act would constitute a violation of the relevant laws in such jurisdiction. If you have sold or transferred part of your holding of BOC Shares, please consult the stockbroker, bank or other agent through whom the sale or transfer was effected before forwarding anything to the purchaser or transferee.
The distribution of this document in jurisdictions other than the United Kingdom may be restricted by the laws of those jurisdictions and therefore persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Failure to comply with any such restrictions may constitute a violation of the securities laws of any such jurisdiction.
 
Recommended Cash Offer by
Linde AG
for
The BOC Group plc
to be implemented
by means of a Scheme of Arrangement
under section 425 of the Companies Act 1985
 
Your attention is drawn to the letter from the Chairman of BOC in Part One of this document, which contains the unanimous recommendation of the BOC Directors that you vote in favour of the Scheme at the Court Meeting and the special resolution to be proposed at the Extraordinary General Meeting. A letter from JPMorgan Cazenove and Merrill Lynch explaining the Scheme appears in Part Two of this document.
Notices of a Court Meeting and an Extraordinary General Meeting of BOC, each of which will be held at the New Connaught Rooms (the Grand Hall), 61-65 Great Queen Street, Covent Garden, London WC2B 5DA, England on Wednesday 16 August 2006, are set out in Parts Twelve and Thirteen of this document. The Court Meeting will start at 2:00 p.m. on that date and the EGM at 2:15 p.m. (or as soon thereafter as the Court Meeting is concluded or adjourned).
The action to be taken by BOC Shareholders in respect of the Meetings is set out on page 6 of this document. BOC Shareholders will find enclosed with this document a blue Form of Proxy for use in connection with the Court Meeting and a white Form of Proxy for use in connection with the EGM. Whether or not you intend to attend the Meetings in person, please complete and sign both of the enclosed Forms of Proxy in accordance with the instructions printed on them and return them to the Registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6ZN, as soon as possible and, in any event, so as to be received at least 48 hours before the Court Meeting and/or the EGM (as the case may be). You may also appoint a proxy electronically by following the instructions set out in notes 6 and 7 of the EGM notice contained in Part Thirteen of this document. Forms of Proxy returned by fax will not be accepted.
If the blue Form of Proxy for the Court Meeting is not returned by the above time, it may be handed to the Chairman of the Court Meeting or the Registrars before the start of that Meeting. However, in the case of the EGM, unless the white Form of Proxy is returned by the time noted above, it will be invalid. The completion and return of a Form of Proxy will not prevent you from attending and voting in person at either the Court Meeting or the EGM, if you so wish and are so entitled.
BOC Shareholders (other than Restricted Overseas Persons) will also find a green Loan Note Form of Election enclosed with this document to be used if you wish to elect to receive Loan Notes instead of cash in respect of all or part of your holding of Scheme Shares.
If you have any questions about this document, the Court Meeting, the EGM or the Offer, or are in any doubt as to how to complete the Forms of Proxy or the Loan Note Form of Election, please call the BOC Shareholder helpline between 8:30 a.m. and 5:30 p.m. Monday to Friday (except UK public holidays) on 0845 600 0301 (from within the UK) or +44 1903 276 342 (from outside the UK). Calls will be charged at LoCall or international rates as the case may be. Please note that calls may be monitored or recorded and the helpline cannot provide financial advice or advice on the merits of the Offer.
Deutsche Bank, which is authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) and by the FSA and is regulated by the FSA for the conduct of UK business, is acting exclusively for Linde and no one else in connection with the Offer and will not be responsible to anyone other than Linde for providing the protections afforded to clients of Deutsche Bank nor for providing advice in connection with the Offer.
Morgan Stanley is acting as financial adviser to Linde in connection with the Offer and no one else and will not be responsible to anyone other than Linde for providing the protections afforded to clients of Morgan Stanley or for providing advice in relation to the Offer or any other matters referred to in this document.
JPMorgan Cazenove, which is regulated in the UK by the FSA, is acting exclusively for BOC and no one else in connection with the Offer and will not be responsible to anyone other than BOC for providing the protections afforded to clients of JPMorgan Cazenove nor for providing advice in relation to the Offer or any other matters referred to in this document.
Merrill Lynch is acting exclusively for BOC in connection with the Offer and no one else and will not be responsible to anyone other than BOC for providing the protections afforded to clients of Merrill Lynch or for providing advice in relation to the Offer or any other matters referred to in this document.

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IMPORTANT NOTICE
The Loan Notes to be issued in connection with the Offer have not been, nor will they be, registered under the US Securities Act or under the applicable securities laws of any state, district or other jurisdiction of the United States or of Canada, Australia, Japan, Malaysia or New Zealand and no regulatory clearances in respect of the Loan Notes have been, or will be, applied for in any jurisdiction. Accordingly, Loan Notes are not being, and unless permitted by applicable law and regulation, may not be, offered, sold, resold, delivered or transferred, directly or indirectly, in or into the United States, Canada, Australia, Japan, Malaysia or New Zealand or to, or for the account or benefit of, any Restricted Overseas Person.
Notice to US investors in BOC: The Offer relates to the shares of an English company and is being made by means of a scheme of arrangement provided for under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Offer is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement which differ from the disclosure requirements of the US tender offer rules. Financial information included in the documentation has been prepared in accordance with accounting standards applicable in the UK and Germany that may not be comparable to the financial statements of US companies. If Linde exercises its right in the future to implement the Offer by way of a takeover offer, the Offer will be made in compliance with the applicable US laws and regulations.
BOC is currently subject to the informational requirements of the US Exchange Act and, in accordance therewith, files reports and other information with the SEC. Reports and other information filed by BOC with the SEC may be inspected and copies taken at the public reference facilities maintained by the SEC at Room 1580, 100 F Street, N.E., Washington, D.C. 20549, United States. Copies of such material may also be obtained by mail from the Branch of Public Reference of the SEC at 100 F Street, N.E., Washington, D.C. 20549, United States at prescribed rates and, with respect to certain reports and information, free of charge on the SEC’s website at www.sec.gov. In addition, such material may be obtained from the website of the New York Stock Exchange at www.nyse.com. Following the Effective Date, the BOC ADSs will be delisted from the New York Stock Exchange and the BOC ADSs and the underlying BOC Shares will be deregistered with the SEC. BOC’s SEC reporting obligations will be suspended shortly after the Effective Date upon the filing of the required forms with the SEC, and BOC’s SEC reporting and other obligations will terminate upon the deregistration becoming effective 90 days thereafter.
This document does not constitute an offer or an invitation to purchase or subscribe for any securities or a solicitation of an offer to buy any securities pursuant to this document or otherwise in any jurisdiction in which such offer or solicitation is unlawful. This document and the accompanying documents have been prepared for the purposes of complying with English law, the City Code and the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside of England and Wales.
The statements contained in this document are made as at the date of this document, unless some other time is specified in relation to them, and service of this document shall not give rise to any implication that there has been no change in the facts set out in this document since such date. Nothing contained in this document shall be deemed to be a forecast, projection or estimate of the future financial performance of BOC or the BOC Group, or of Linde or the Linde Group, except where otherwise stated.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements under United States securities laws. These statements are based on the current expectations of the management of BOC and Linde (as applicable) and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein include statements about the expected effects on Linde of the Offer, anticipated earnings enhancements, estimated cost savings and other synergies, costs to be incurred in achieving synergies, potential disposals and other strategic options and all other statements in this document other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as “intends”, “expects”, “anticipates”, “targets”, “estimates” and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Offer, Linde’s ability to successfully integrate the operations and employees of BOC, as well as additional

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factors, such as changes in economic conditions, success of business and operating initiatives and restructuring objectives, customers’ strategies and stability, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Neither BOC nor Linde undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
DEALING DISCLOSURE REQUIREMENTS
Under the provisions of Rule 8.3 of the City Code, if any person is, or becomes, “interested” (directly or indirectly) in one per cent. or more of any class of “relevant securities” of BOC, all “dealings” in any “relevant securities” of BOC (including by means of an option in respect of, or a derivative referenced to, any such “relevant securities”) must be publicly disclosed by no later than 3:30 p.m. (London time) on the Business Day following the date of the relevant transaction. This requirement will continue until the Effective Date or until the date on which the Scheme lapses or is otherwise withdrawn or on which the “offer period” otherwise ends (or, if Linde elects to effect the Offer by way of a takeover offer, until the date on which such offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the “offer period” otherwise ends). If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an “interest” in “relevant securities” of BOC, they will be deemed to be a single person for the purposes of Rule 8.3.
Under the provisions of Rule 8.1 of the City Code, all “dealings” in “relevant securities” of BOC by Linde or BOC, or by any of their respective “associates”, must be disclosed by no later than 12:00 noon (London time) on the Business Day following the date of the relevant transaction. The Panel has granted relief from the requirements of Rule 8.1 in respect of certain directors of BOC Group companies not involved in the Offer discussions so as to allow BOC to issue an aggregated disclosure in relation to all such directors on each Friday (other than a bank holiday) to the extent any dealings have been carried out by them during the week preceding such disclosure.
A disclosure table, giving details of the companies in whose “relevant securities” “dealings” should be disclosed, and the number of such securities in issue, can be found on the Panel’s website at www.thetakeoverpanel.org.uk.
“Interests in securities” arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an “interest” by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the City Code, which can also be found on the Panel’s website. If you are in any doubt as to whether or not you are required to disclose a “dealing” under Rule 8, you should consult the Panel.

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TABLE OF CONTENTS
             
        Page
         
 PART ONE: LETTER FROM THE CHAIRMAN OF BOC     8  
 PART TWO: EXPLANATORY STATEMENT     12  
 PART THREE: CONDITIONS TO THE IMPLEMENTATION OF THE SCHEME AND THE OFFER     29  
 PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP     36  
 PART FIVE: INFORMATION FOR BOC ADS HOLDERS     166  
 PART SIX: SUMMARY OF THE TERMS OF THE LOAN NOTES     168  
 PART SEVEN: NOTES ON ELECTING FOR THE LOAN NOTE ALTERNATIVE     172  
 PART EIGHT: UNITED KINGDOM, GERMAN AND US TAXATION     177  
 PART NINE: ADDITIONAL INFORMATION     184  
 PART TEN: THE SCHEME OF ARRANGEMENT     204  
 PART ELEVEN: DEFINITIONS     212  
 PART TWELVE: NOTICE OF COURT MEETING     218  
 PART THIRTEEN: NOTICE OF EXTRAORDINARY GENERAL MEETING     220  

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS
       
Event   Time and/or date
     
Latest time for lodging Forms of Proxy for:
   
 
Court Meeting (blue form)
  2:00 p.m. on Monday 14 August 2006(1)(2)
 
EGM (white form)
  2:15 p.m. on Monday 14 August 2006(1)
Voting Record Time
  6:00 p.m. on Monday 14 August 2006
Court Meeting
  2:00 p.m. on Wednesday 16 August 2006
EGM
  2:15 p.m. on Wednesday 16 August 2006(3)
The following dates are indicative only and are subject to change.    
Latest time for lodging Loan Note Forms of Election (green form)   3:00 p.m. on Sunday 3 September 2006(1)
Scheme Record Time
  6:00 p.m. on Monday 4 September 2006
Hearing and Order Date
  Monday 4 September 2006
Last day of dealings in, and for registration of transfers of, BOC Shares   Monday 4 September 2006
Dealings in BOC Shares suspended
  5:00 p.m. on Monday 4 September 2006
Filing of the Order sanctioning the Scheme
  Tuesday 5 September 2006
Effective Date of the Scheme
  Tuesday 5 September 2006
Cancellation of listing of BOC Shares
  8:00 a.m. on Tuesday 5 September 2006
Latest date for dispatch of cheques or settlement through CREST in respect of cash consideration due under the Scheme and the dispatch of Loan Note certificates in respect of valid elections for the Loan Note Alternative   within 14 days after the Effective Date
Notes:
(1) Please see “Action to be taken” on page 6.
 
(2) Alternatively, blue Forms of Proxy (but NOT white Forms of Proxy) may be handed to the Chairman of the Court Meeting or the Registrars before the start of the Court Meeting on Wednesday 16 August 2006 and will still be valid.
 
(3) To commence at 2:15 p.m. or, if later, immediately after the conclusion or adjournment of the Court Meeting.
Unless otherwise stated, all references in this document to times are to London time.
The Court Meeting and the EGM will both be held at the New Connaught Rooms (the Grand Hall), 61-65 Great Queen Street, Covent Garden, London WC2B 5DA, England on Wednesday 16 August 2006.
Holders of BOC ADSs should see “Key Dates for BOC ADS Holders” on page 166 of this document.

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ACTION TO BE TAKEN
Detailed instructions on the action to be taken are set out in paragraph 18 of Part Two of this document and are summarised below.
Voting at the Court Meeting and the Extraordinary General Meeting
The Scheme will require approval at a meeting of Scheme Shareholders convened by order of the Court to be held at the New Connaught Rooms (the Grand Hall), 61-65 Great Queen Street, Covent Garden, London WC2B 5DA, England at 2:00 p.m. on Wednesday 16 August 2006. Implementation of the Scheme will also require the approval of BOC Shareholders at the EGM to be held at the same place at 2:15 p.m. on Wednesday 16 August 2006 (or as soon thereafter as the Court Meeting is concluded or adjourned).
It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of BOC Shareholder opinion. Whether or not you plan to attend the Meetings in person, you are strongly encouraged to sign and return your Forms of Proxy, or to appoint a proxy electronically, as referred to below, as soon as possible and in any event so as to be received by the Registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6ZN, by the following times and dates:
     
blue Forms of Proxy for the Court Meeting
  2:00 p.m. on Monday 14 August 2006
white Forms of Proxy for the EGM
  2:15 p.m. on Monday 14 August 2006
(or, in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).
Both Forms of Proxy are pre-printed with a reply paid address on the reverse (for postage from within the UK). Alternatively, proxy appointments and instructions may be registered electronically by logging on to the Registrars’ website, www.sharevote.co.uk, where full details of the procedure are given. The personal reference number, card ID and account number printed on the Forms of Proxy will be required in order to use this electronic system. Alternatively, shareholders who have already registered with the Registrars’ on-line portfolio service, Shareview, can appoint their proxy electronically by logging on to their portfolio at www.shareview.co.uk and clicking on ‘Company Meetings’. A proxy appointment made electronically will not be valid if sent to any address other than those provided or if received after the deadlines referred to above. Please note that any electronic communication found to contain a computer virus will not be accepted. If you hold your BOC Shares in uncertificated form (i.e. in CREST), you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes for the notice of the EGM set out at the end of Part Thirteen of this document). Proxies submitted via CREST (under CREST participant ID 7RA01) must be received by the Registrars not later than 2:00 p.m. on Monday 14 August 2006 in the case of the Court Meeting and by 2:15 p.m. on Monday 14 August 2006 in the case of the EGM (or, in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).
The completion and return of a Form of Proxy will not prevent you from attending and voting at the Court Meeting or the EGM, or any adjournment thereof, in person should you wish to do so.
Note:
Alternatively, blue Forms of Proxy for the Court Meeting (but NOT white Forms of Proxy for the EGM) may be handed to the Chairman of the Court Meeting or the Registrars before the start of the Court Meeting on Wednesday 16 August 2006 and will still be valid.
Elections for the Loan Note Alternative
A green Loan Note Form of Election is enclosed with this document. If you wish to elect to receive Loan Notes instead of cash in respect of all or part of your holding of Scheme Shares under the Scheme, and provided you are not a Restricted Overseas Person, you should complete the green Loan Note Form of Election and return it to the Registrars by 3:00 p.m. on Sunday 3 September 2006 or such other time and date as may be notified to BOC Shareholders via a Regulatory Information Service or as may otherwise be required by the Panel. A pre-paid envelope for use within the UK is provided for this purpose.
If your Scheme Shares are in certificated form and you wish to receive Loan Notes, you should send in your share certificate(s) and/or other documents of title with your completed Loan Note Form of Election.

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If your Scheme Shares are in uncertificated form and you wish to receive Loan Notes, in addition to completing the Loan Note Form of Election, you should take (or procure to be taken) the action set out in paragraph 2 of Part Seven of this document to transfer the Scheme Shares in respect of which you wish to elect for the Loan Note Alternative to an escrow balance, using a TTE instruction specifying Lloyds TSB Registrars (in its capacity as a CREST participant) as the escrow agent, as soon as possible and in any event so that the TTE instruction settles no later than the Loan Note Deadline.
Notes on completing the green Loan Note Form of Election and on submitting a TTE instruction are set out in Part Seven of this document.
The Loan Note Alternative is not available to Restricted Overseas Persons.
Scheme Shareholders who do not wish to elect to receive any Loan Notes are not required to return the Loan Note Form of Election or their share certificate(s) or other documents of title or to submit a TTE instruction.
Apart from completing, signing and returning the Forms of Proxy, Scheme Shareholders not electing to receive Loan Notes need take no further action at this stage.
If you have any questions about this document, the Court Meeting, the EGM or the Offer, or are in any doubt as to how to complete the Forms of Proxy or the Loan Note Form of Election, please call the BOC Shareholder helpline between 8:30 a.m. and 5:30 p.m. Monday to Friday (except UK public holidays) on 0845 600 0301 (from within the UK) or +44 1903 276 342 (from outside the UK). Calls will be charged at LoCall or international rates as the case may be. Please note that calls may be monitored or recorded and the helpline cannot provide financial advice or advice on the merits of the Offer.
BOC ADS Holders
Holders of BOC ADSs should, in particular, read Part Five of this document, which contains important information which is relevant to them, and Part Eight, which contains a description of certain US federal income tax consequences of the Scheme.

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PART ONE: LETTER FROM THE CHAIRMAN OF BOC
(THE BOC GROUP LOGO)

     
Registered office:
   
Chertsey Road
   
Windlesham
   
Surrey GU20 6HJ
   
(Registered in England and Wales
   
with Number 22096)
  22 July 2006
To the holders of BOC Shares, the holders of BOC ADSs and, for information only, to holders of BOC 121/4 per cent. Unsecured Loan Stock 2012/2017 and holders of options or awards under the BOC Share Schemes
Dear Shareholder
RECOMMENDED CASH OFFER BY LINDE FOR BOC
1.  Introduction
On 6 March 2006, the boards of BOC and Linde announced that they had reached agreement on the terms of a recommended cash offer by Linde for the entire issued and to be issued share capital of BOC. The Offer is to be implemented by means of a Court-approved scheme of arrangement under section 425 of the Act.
I am writing to you today, on behalf of your Board, to set out the full terms of, and the background to, the Offer, to explain the reasons for our unanimous recommendation of the Offer and to seek your support and approval for the resolutions required to implement it.
In order to approve the terms of the Offer, BOC Shareholders need to vote in favour of the resolutions to be proposed at the Court Meeting and the EGM, to be held on Wednesday 16 August 2006. Details of the actions you should take and the recommendation of the BOC Directors are set out respectively in paragraphs 8 and 11 of this letter.
2.  Summary of the terms of the Offer and the Scheme
The Offer is being implemented by way of the Scheme, full details of which are set out in the Explanatory Statement in Part Two of this document.
Under the terms of the Offer, Scheme Shareholders on the register of members of BOC at the Scheme Record Time will receive 1,600 pence in cash for each Scheme Share (which results in 3,200 pence in cash for each BOC ADS, with each BOC ADS representing two BOC Shares). The Offer values BOC’s existing issued share capital at approximately £8.2 billion.
The consideration for the Offer represents a premium of approximately:
40 per cent. to the average closing price of 1,143 pence per BOC Share during the three months up to and including 23 January 2006, being the last Business Day before the announcement by BOC that it had received an approach from Linde; and
 
39 per cent. to the closing price of 1,151 pence per BOC Share on 23 January 2006.
As the Pre-Conditions to the making of the Offer had not been satisfied on or before 7 June 2006, BOC Shareholders who are on the share register at the Scheme Record Time will receive a Second Interim Dividend in addition to the consideration for their Scheme Shares under the Scheme. It is expected that this will be paid at the same time as the consideration under the Scheme is sent to Scheme Shareholders.
The amount of the Second Interim Dividend is 20.25 pence per BOC Share. This has been calculated on the basis previously announced, namely 3.375 pence per BOC Share for each consecutive full period of

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PART ONE: LETTER FROM THE CHAIRMAN OF BOC
seven days during the period commencing on 1 June 2006 and ending on 18 July 2006, being the date on which Linde announced that the Pre-Conditions had been satisfied. As noted when your Board wrote to you in connection with BOC’s interim results on 11 May 2006, the Dividend Reinvestment Plan will not be available in respect of the Second Interim Dividend.
3.  The Loan Note Alternative
As an alternative to some or all of the cash consideration which would otherwise be receivable under the Scheme, Scheme Shareholders (other than Restricted Overseas Persons) may elect to receive Loan Notes to be issued by Linde.
If you elect to receive the Loan Note Alternative in respect of some or all of your Scheme Shares, you will receive, for every £1 of cash consideration otherwise receivable under the Scheme, £1 nominal value of Loan Notes. You should consider the tax implications when deciding whether to elect to receive Loan Notes.
Further information in relation to the Loan Note Alternative is set out in paragraph 3 of Part Two of this document while the detailed terms of the Loan Notes are summarised in Part Six of this document. General non-exhaustive guidance as to the UK taxation consequences for a Scheme Shareholder who elects to receive Loan Notes is set out in Part Eight of this document. If you want to elect to receive Loan Notes, you must complete the green Loan Note Form of Election and, if your BOC Shares are in certificated form, you must return your share certificate(s) and/or other documents of title or, if your BOC Shares are held in CREST, you must submit a TTE instruction. Notes on electing for the Loan Note Alternative are set out in Part Seven of this document.
4.  Scheme becoming effective
If the Scheme becomes effective, it will be binding on all Scheme Shareholders irrespective of whether or not they attended or voted at the Court Meeting or the EGM. Applications will be made to the UK Listing Authority for the listing of BOC Shares to be cancelled and to the London Stock Exchange for the BOC Shares to cease to be admitted to trading on the London Stock Exchange’s market for listed securities. It is expected that such cancellation will take place on the Effective Date.
Cheques in respect of the cash consideration (or the cash consideration settled through CREST, as the case may be) and certificates in respect of the Loan Notes issued pursuant to the Loan Note Alternative will be dispatched by Lloyds TSB Registrars on behalf of Linde to Scheme Shareholders within 14 days after the Effective Date.
5.  BOC ADSs
Holders of BOC ADSs will be given the opportunity to instruct the Depositary how to vote the BOC Shares underlying their BOC ADSs. Part Five of this document contains important information which is relevant to holders of BOC ADSs and Part Eight contains a description of certain US federal income tax consequences of the Scheme.
6.  Background to and reasons for recommending the Offer
BOC’s strong financial performance over recent years has produced consistent improvements in its return on capital employed and, with its excellent team of employees driving the business, has delivered significant value to BOC Shareholders.
Against this background, Linde approached BOC concerning a possible offer for BOC in January 2006. On 24 January 2006, it was announced that the BOC Board had unanimously rejected the initial proposal from Linde which was based on an all cash offer of 1,500 pence per share. The BOC Board rejected this initial proposal because it failed to value fully the growth prospects of BOC and there was a lack of certainty that a transaction would complete. Linde subsequently improved its proposal by making the Offer on the terms announced on 6 March 2006 and now set out in this document. On 2 May 2006, it was announced that Linde had closed the successful syndication of the loan transaction supporting the Offer. On 6 June 2006,

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Linde announced that the Pre-Condition to the Offer which related to clearance by the European Commission had been satisfied and on 18 July 2006 announced that the remaining Pre-Condition to the Offer, relating to the necessary antitrust clearances in the US, had been satisfied. The Offer is materially more attractive than Linde’s initial proposal and represents a significant premium to the BOC Share price prior to the approach from Linde. In the view of the BOC Board, it is a full and fair price, taking into account the prospects for the BOC business and the strategic options available to the BOC Group.

7.  Management, employees and pensions
Linde has confirmed that it attaches great importance to the skills and experience of the existing management and employees of BOC. Linde and BOC’s businesses are very complementary on a geographic basis and Linde has stated that it expects that BOC managers and employees will play an important role in the enlarged group as well as benefiting from greater opportunities within it. Accordingly, the BOC Board understands that it is Linde’s intention to employ the best talents in the combined group. Further, Linde has given assurances to the BOC Board that, on the Scheme becoming effective, the existing employment rights, including pension rights, of all management and employees of BOC will be fully safeguarded.
Linde, BOC and the trustees of the BOC UK Defined Benefit Pension Schemes (having regard to the interests of active, deferred and retired members) have reached agreement in respect of BOC’s obligations in relation to the funding of such schemes following completion of the Offer and the agreement has been cleared by the Pensions Regulator.
Linde’s intentions and expectations regarding the employees and management of BOC, as stated to the BOC Board, are set out in paragraph 12 of the Explanatory Statement in Part Two of this document. The BOC Board has had regard to those matters in reaching its decision to recommend the Offer and it believes that they are a reasonable reflection at the date of this document of the likely effects of the implementation of the Offer. The Board has taken steps to ensure that key employees are incentivised to remain with the BOC Group and these are described in paragraphs 12 and 13 of the Explanatory Statement in Part Two and in paragraph 6.3 of Part Nine of this document.
Participants in the BOC Share Schemes will be contacted regarding the effect of the Scheme on their rights and appropriate proposals will be made to participants (including a cashless exercise facility). Information relating to the effect of the Scheme on participants is set out in paragraph 13 of the Explanatory Statement in Part Two of this document.
8.  Action to be taken
The Scheme and the Offer are subject to the satisfaction or waiver of the Conditions set out in Part Three of this document.
Your attention is drawn to paragraph 18 of Part Two of this document which explains in detail the action you should take in relation to the Offer, a summary of which is set out on page 6.
If you have any questions about this document, the Court Meeting, the EGM or the Offer, or are in any doubt as to how to complete the Forms of Proxy or the Loan Note Form of Election, please call the BOC Shareholder helpline between 8:30 a.m. and 5:30 p.m. Monday to Friday (except UK public holidays) on 0845 600 0301 (from within the UK) or +44 1903 276 342 (from outside the UK). Calls will be charged at LoCall or international rates as the case may be. Please note that calls may be monitored or recorded and the helpline cannot provide financial advice or advice on the merits of the Offer.
9.  Interim Results
It is expected that BOC’s interim results for the nine months to 30 June 2006 will be published on 2 August 2006. These results will be available online at www.boc.com from that date and hard copies will also be available on request from BOC’s registered office.
10. Further information
Your attention is drawn to the letter from JPMorgan Cazenove and Merrill Lynch set out in Part Two of this document.

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11. Recommendation

The BOC Directors, who have been so advised by JPMorgan Cazenove and Merrill Lynch, consider the terms of the Offer to be fair and reasonable. In providing their advice to the BOC Directors, JPMorgan Cazenove and Merrill Lynch have taken into account the commercial assessments of the BOC Directors. Accordingly, the BOC Directors unanimously recommend that BOC Shareholders approve the Scheme and vote in favour of the resolutions to be proposed at the Court Meeting and the EGM, as they have undertaken to do in respect of all of their own beneficial holdings of 101,677 BOC Shares (representing, in aggregate, approximately 0.02 per cent. of the existing issued share capital of BOC).
Yours sincerely
-s- Rob Margetts
Sir Rob Margetts
Chairman
The BOC Group plc

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PART TWO: EXPLANATORY STATEMENT
(in compliance with section 426 of the Companies Act)
 
LOGO LOGO
JPMorgan Cazenove Merrill Lynch Financial Centre
20 Moorgate 2 King Edward Street
London EC2R 6DA London EC1A 1HQ
22 July 2006
To the holders of BOC Shares, the holders of BOC ADSs and, for information only, to holders of BOC 121/4 per cent. Unsecured Loan Stock 2012/2017 and holders of options or awards under the BOC Share Schemes
Dear Sir/Madam
RECOMMENDED CASH OFFER BY LINDE FOR BOC
1.  Introduction
On 6 March 2006, the boards of BOC and Linde announced that they had reached agreement on the terms of a recommended cash offer by Linde for the entire issued and to be issued share capital of BOC. The Offer is to be implemented by means of a scheme of arrangement under section 425 of the Act which requires the approval of BOC Shareholders and the sanction of the Court.
Your attention is drawn to the letter from Sir Rob Margetts, the Chairman of BOC, set out in Part One of this document, which forms part of this Explanatory Statement. That letter contains, amongst other things, the background to and reasons for the BOC Board’s recommendation of the Offer. The letter also states that the BOC Directors, who have been so advised by JPMorgan Cazenove and Merrill Lynch, consider the terms of the Offer to be fair and reasonable. In providing their advice to the BOC Directors, JPMorgan Cazenove and Merrill Lynch have taken into account the BOC Directors’ commercial assessment.
The BOC Directors are unanimously recommending BOC Shareholders to approve the Scheme and to vote in favour of the resolutions to be proposed at the Court Meeting and the EGM, as the BOC Directors have irrevocably undertaken to do in respect of all of their own beneficial holdings of 101,677 BOC Shares, representing, in aggregate, approximately 0.02 per cent. of the existing issued share capital of BOC.
The BOC Directors have been advised jointly by JPMorgan Cazenove and Merrill Lynch in connection with the Offer and the Scheme. JPMorgan Cazenove and Merrill Lynch have been authorised by the BOC Directors to write to you, on behalf of the Board, to explain the terms of the Offer and the Scheme and to provide you with other relevant information.
Statements made or referred to in this letter which refer to Linde’s reasons for the Offer, to information concerning the business of the Linde Group and to the intentions and expectations regarding the Linde Group, reflect the views of the Linde Directors. Statements made or referred to in this letter which refer to the recommendation of the BOC Directors, to information concerning the business of the BOC Group and to the intentions and expectations regarding the BOC Group, reflect the views of the BOC Directors.
The Scheme is set out in full in Part Ten of this document. Your attention is also drawn to the information in the other Parts of this document, which all form part of this Explanatory Statement.
2.  Summary of the terms of the Offer and the Scheme
The Offer is to be implemented by way of a scheme of arrangement between BOC and its shareholders under section 425 of the Act. The Scheme is subject to the satisfaction (or waiver) of the Conditions as described in paragraph 4 below. If the Scheme becomes effective, the entire issued share

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capital of BOC, other than up to 4,258,686 BOC Shares held by the trustee of the BOC Employee Share Trust, will be held by Linde.
In accordance with the terms of the Scheme, Scheme Shareholders on the register of members of BOC at the Scheme Record Time will receive 1,600 pence in cash for each Scheme Share (which results in 3,200 pence in cash for each BOC ADS, with each BOC ADS representing two BOC Shares).
The terms of the Offer value BOC’s existing issued share capital at approximately £8.2 billion.
The consideration for the Offer represents a premium of approximately:
40 per cent. to the average closing price of 1,143 pence per BOC Share during the three months up to and including 23 January 2006, being the last Business Day before the announcement by BOC that it had received an approach from Linde; and
 
39 per cent. to the closing price of 1,151 pence per BOC Share on 23 January 2006.
As the Pre-Conditions to the making of the Offer had not been satisfied on or before 7 June 2006, BOC Shareholders who are on the share register at the Scheme Record Time will receive a Second Interim Dividend in addition to the consideration for their Scheme Shares under the Scheme.
The amount of the Second Interim Dividend is 20.25 pence per BOC Share. This has been calculated on the basis of 3.375 pence per BOC Share for each consecutive full period of seven days during the period commencing on 1 June 2006 and ending on 18 July 2006, being the date on which Linde announced that the Pre-Conditions had been satisfied. As noted when BOC wrote to BOC Shareholders in connection with its interim results on 11 May 2006, the Dividend Reinvestment Plan will not be available in respect of the Second Interim Dividend.
3.  Loan Note Alternative
Scheme Shareholders (other than Restricted Overseas Persons) may elect to receive Loan Notes, to be issued by Linde, instead of all or part of the cash consideration to which they would otherwise be entitled under the Scheme on the following basis:
     
for each £1 of cash consideration otherwise
receivable under the Scheme
  £1 nominal value of Loan Notes
The Loan Note Alternative is conditional upon the Scheme becoming effective. Upon the Scheme becoming effective, and if any Loan Notes are to be issued, the Loan Note Elected Shares will be acquired by Linde fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto, including the right to receive and retain all dividends and other distributions announced, declared or paid on or after 6 March 2006, other than the Second Interim Dividend (to the extent set out in paragraph 2 above).
A summary of the principal terms and conditions of the Loan Notes is set out in Part Six of this document while certain further details regarding the election for Loan Notes are also set out in clause 3 of the Scheme set out in Part Ten of this document. Notes on completing the Loan Note Form of Election are set out in Part Seven of this document. Scheme Shareholders may elect for the Loan Note Alternative until the Loan Note Deadline.
The Loan Notes, which will be governed by English law, will bear interest from the date of issue. The first interest payment will be made on 30 June 2007 and interest will then be payable every six months thereafter in arrear to the relevant holder of the Loan Notes. The interest will be paid on 30 June and 31 December each year (or, if such date is not a Business Day, on the first Business Day thereafter), at a rate per annum calculated to be 0.75 per cent. below LIBOR as determined on the first Business Day of each such interest period. As at 18 July 2006 (being the last practicable date before this document was posted), LIBOR was 4.81 per cent. Until such time as the Loan Notes have been repaid in full, there will at all times be deposited in a bank account charged in favour of the security trustee for the holders of the Loan Notes an amount equal to the then outstanding amount of the Loan Notes (including accrued but unpaid interest).
The Loan Notes will be issued, credited as fully paid, in integral multiples of £1 nominal value. Linde reserves the right not to issue the Loan Notes where valid elections are received for an aggregate of less than £20 million in nominal value of Loan Notes by the Loan Note Deadline. If insufficient elections are received and Linde exercises this right, Scheme Shareholders who elected to receive Loan Notes will instead receive cash consideration in accordance with the terms of the Scheme.

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The Loan Notes will be redeemable at par (together with accrued interest) at the option of the individual holders, in whole or in part, on each interest payment date falling on or after 30 June 2007. Any Loan Notes outstanding on the final redemption date (which is expected to be 31 December 2013) will be redeemed at par (together with any accrued interest) on that date (or, if such date is not a Business Day, on the first Business Day thereafter). Linde may elect to redeem any Loan Notes on any earlier interest payment date if the aggregate nominal value of the Loan Notes then outstanding is less than £5 million. Assuming the Scheme becomes effective, the Loan Notes will be transferable but no application will be made for them to be listed or dealt in on any stock exchange. If Linde elects to implement the Offer by making a takeover offer, the Loan Notes will not be transferable.
Deutsche Bank and Morgan Stanley have advised that, in their opinion, based on market conditions on 18 July 2006 (the last practicable date prior to the publication of this document), their estimate of the value of the Loan Notes (had they been in issue on that day) would have been not less than 98 pence per £1 in nominal value of the Loan Notes.
There are two types of Loan Notes available under the Loan Note Alternative, allowing a validly accepting Scheme Shareholder to elect for either QCB Loan Notes or Non QCB Loan Notes. General non-exhaustive guidance as to the difference in the UK taxation consequences for a validly accepting Scheme Shareholder who elects for either a QCB Loan Note or a Non QCB Loan Note is set out in Part Eight of this document. However, each Scheme Shareholder will need to take advice as to whether it is desirable, having regard to the personal circumstances of the Scheme Shareholder in question, to elect to receive QCB Loan Notes or Non QCB Loan Notes.
In contrast to the QCB Loan Notes, the Non QCB Loan Notes will contain a provision giving Linde the option on the final redemption date to repay amounts owing under the Non QCB Loan Notes to each holder of Non QCB Loan Notes in US dollars. The type of Loan Note a Scheme Shareholder chooses may have an impact on that person’s tax treatment. Please refer to paragraph 13 of Part Six of this document for further details about the difference between QCB Loan Notes and Non QCB Loan Notes.
All payments under the Loan Notes will be made after deduction or withholding for or on account of tax. Scheme Shareholders who elect to receive Loan Notes will be asked to provide a declaration that they are the beneficial owners of the Loan Notes, that they are not resident in Germany for tax purposes and that they do not have a taxable presence in Germany. If this declaration is given, Linde will not deduct tax from payments made under the Loan Notes unless there is a change of German law, Linde is specifically directed to make payments after deduction of German tax by a German tax authority or unless the declaration is not, or ceases to be, correct. If the declaration is not given Linde reserves the right to make payments under the Loan Notes after deduction of German withholding tax. The current withholding tax rate is 31.65 per cent. A more detailed summary of certain UK and German tax consequences for certain UK tax resident Scheme Shareholders who validly accept the Loan Note Alternative is contained in paragraphs 1 and 2 of Part Eight of this document.
The Loan Notes have not been, nor will they be, registered under the US Securities Act or under the applicable securities laws of any state, district or other jurisdiction of the United States or of Canada, Australia, Japan, Malaysia or New Zealand and no regulatory clearances in respect of the Loan Notes have been, or will be, applied for in any jurisdiction. Accordingly, Loan Notes are not being, and, unless permitted by applicable law and regulation, may not be, offered, sold, resold, delivered or transferred, directly or indirectly, in or into the United States, Canada, Australia, Japan, Malaysia or New Zealand or to, or for the account or benefit of, any Restricted Overseas Person.
4.  Conditions of the Offer
The Offer is conditional upon all Conditions to the Scheme having been satisfied (or, where applicable, waived) and the Scheme becoming effective, subject to the City Code, by not later than 28 February 2007, or such later date (if any) as BOC, Linde and (if required) the Court may agree. The Conditions to the Offer and the Scheme are set out in full in Part Three of this document. In particular, the Scheme is conditional upon:
(a) approval of the Scheme by Scheme Shareholders at the Court Meeting or at any adjournment thereof as described in paragraph 5(B) below;

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(b) the special resolution necessary to implement the Scheme as set out in the notice of the EGM being duly passed by the requisite majority of BOC Shareholders at the EGM as described in paragraph 5(B) below or at any adjournment thereof; and
 
(c) the sanction (without modification or, as agreed by BOC and Linde, with modification) of the Scheme and the confirmation of the reduction of capital involved therein by the Court as described in paragraph 5(D) below.
The Scheme can only become effective if all Conditions to the Scheme, including shareholder approvals and the sanction of the Court, have been satisfied (or, other than certain Conditions, waived). The Scheme will become effective upon the delivery to the Registrar of Companies in England and Wales of an office copy of the Order and the registration by him of that office copy. This is expected to occur on Tuesday 5 September 2006. Unless the Scheme becomes effective on or before 28 February 2007, or such later date as Linde and BOC may agree and (if required) the Court may allow, the Scheme will not become effective and the Offer will not proceed.
5.  The Scheme
(A) Scheme mechanism
The Offer is being implemented by means of a scheme of arrangement between BOC and the Scheme Shareholders under section 425 of the Act. The Scheme Shareholders are holders of BOC Shares other than Excluded Shares and any BOC Shares which are beneficially held by a member of the Linde Group. The Excluded Shares are all of the BOC Shares which are held by the trustee of the BOC Employee Share Trust. The provisions of the Scheme are set out in full in Part Ten of this document. The purpose of the Scheme is to provide for Linde to become the owner of the whole of the issued share capital of BOC. This is to be achieved under the Scheme as follows:
(i) the cancellation of the Cancellation Shares held by Cancellation Shareholders and the application of the reserve arising from such cancellation in paying up in full a number of New BOC Shares (equal to the number of Cancellation Shares) and issuing them to Linde, in consideration for which Cancellation Shareholders, and those holding BOC ADSs, will receive cash on the basis set out in paragraph 2 above; and
 
(ii) the transfer by Loan Note Elected Shareholders to Linde of the Loan Note Elected Shares in accordance with the Scheme in consideration for which such Loan Note Elected Shareholders will be issued Loan Notes, on the basis set out in paragraph 3 above, instead of the cash to which they would otherwise have been entitled.
Upon the Scheme becoming effective, and if any Loan Notes are to be issued, the Loan Note Elected Shares will be acquired by Linde fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto including the right to receive and retain all dividends and other distributions announced, declared or paid on or after 6 March 2006, other than the Second Interim Dividend (to the extent set out in paragraph 2 above).
The Excluded Shares will be acquired by Linde outside the terms of the Scheme. Further information on these arrangements concerning the 2006 Options and 2006 Awards is provided in paragraph 5(C) below.
Linde has acquired 1 BOC Share so that it is a member of BOC prior to the Effective Date. The acquisition of that BOC Share by Linde, combined with the provisions of the Scheme and the agreement with the trustee of the BOC Employee Share Trust referred to below, was carried out for technical reasons in order to avoid the necessity of a valuation under section 103 of the Companies Act of the New BOC Shares being issued to Linde.
Because the Excluded Shares will be acquired by Linde outside the terms of the Scheme, the trustee of the BOC Employee Share Trust, BOC and Linde have entered into an agreement whereby the trustee has agreed to be bound by the Scheme and has waived any rights attaching to the shares held by the BOC Employee Share Trust to receive shares when the reserve arising from the cancellation of the Cancellation Shares is applied to pay up in full New BOC Shares issued to Linde.

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(B) The Meetings
The Scheme requires the approval of Scheme Shareholders by the passing of a resolution at the Court Meeting and the approval of BOC Shareholders at the separate EGM, both of which will be held on Wednesday 16 August 2006. The Court Meeting is being held at the direction of the Court to seek the approval of Scheme Shareholders for the Scheme. The EGM is being convened to enable the BOC Directors to implement the Scheme and to amend the articles of association of BOC as described in paragraph 5(C) below.
Notices of the Court Meeting and the EGM are set out in Parts Twelve and Thirteen, respectively, of this document. Entitlement to attend and vote at these meetings and the number of votes which may be cast will be determined by reference to the register of members of BOC at the Voting Record Time.
Any BOC Shares which Linde may acquire prior to the Court Meeting or EGM (and any BOC Shares which any member of the Linde Group beneficially holds at the date of the Court Meeting or EGM) are not Scheme Shares and therefore no member of the Linde Group is entitled to vote at the Court Meeting in respect of the BOC Shares held or acquired by it and it will not exercise the voting rights attaching to these BOC Shares at the EGM. As at 18 July 2006, being the last practicable date prior to the posting of this document, Linde owned 1 BOC Share.
Holders of BOC ADSs will be given the opportunity to instruct the Depositary how to vote the BOC Shares underlying their BOC ADSs. Holders of BOC ADSs should read, in particular, Part Five of this document, which contains important information which is relevant to them, and Part Eight, which contains a description of certain US federal income tax consequences of the Scheme.
Court Meeting
The Court Meeting has been convened for 2:00 p.m. on Wednesday 16 August 2006 to enable the Scheme Shareholders to consider and, if thought fit, approve the Scheme. At the Court Meeting, voting will be by poll and each member present in person or by proxy will be entitled to one vote for each BOC Share held. The approval required at the Court Meeting is a majority in number of those BOC Shareholders present and voting, either in person or by proxy, representing 75 per cent. or more in value of the BOC Shares for which votes are cast.
Extraordinary General Meeting
In addition to the Court Meeting, the EGM has been convened for 2:15 p.m. on the same date (or as soon thereafter as the Court Meeting is concluded or adjourned) and at the same place to consider and, if thought fit, pass a special resolution (which requires votes in favour of not less than 75 per cent. of the votes cast) to approve:
(i) a reduction of BOC’s share capital equal to the nominal value of the Cancellation Shares by the cancellation and extinguishing of the Cancellation Shares in accordance with the Scheme;
 
(ii) the issue of New BOC Shares to Linde in accordance with the Scheme;
 
(iii) the giving of authority to the BOC Directors pursuant to section 80 of the Companies Act to allot securities in BOC; and
 
(iv) certain amendments to BOC’s articles of association as described in paragraph 5(C) below.
Forms of Proxy for the Court Meeting and the EGM should be returned to the Registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6ZN, as soon as possible and, in any event, so as to be received 48 hours before the time appointed for the relevant meeting. If the blue Form of Proxy for use at the Court Meeting is not returned by the above time, it may be handed to the Chairman of the Court Meeting or the Registrars before the start of that meeting. However, in the case of the EGM, unless the white Form of Proxy is returned by the time mentioned in the instructions printed on it, it will be invalid. Proxy appointments and instructions may also be registered electronically by logging on to the Registrars’ website, www.sharevote.co.uk, where full details of the procedure are given. BOC Shareholders who hold BOC Shares in CREST may also appoint a proxy using CREST by following the instructions set out in note 7 of the EGM notice contained in Part Thirteen of this document. The completion and

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return of a Form of Proxy will not prevent you from attending and voting in person at either the Court Meeting or the EGM, or at any adjournment thereof, if you so wish and are so entitled.
(C) Amendments to BOC’s Articles of Association
It is proposed that BOC’s articles of association be amended to ensure that any BOC Shares which are issued after the EGM but on or before 6:00 p.m. on the day before the Order Date will be subject to and bound by the Scheme. Also, any BOC Shares issued on the exercise of options or vesting of awards under the BOC Share Schemes after 6:00 p.m. on the day before the Order Date will not be subject to the Scheme. Accordingly, it is proposed that BOC’s articles of association be amended so that any BOC Shares issued or transferred to any person (other than Linde) after 6:00 p.m. on the day before the Order Date will automatically be acquired by Linde in consideration for the payment by Linde to such person of such amount of consideration as would have been payable pursuant to the Scheme for each such BOC Share as if it were a Scheme Share. These provisions will avoid any person being left with BOC Shares after dealings in such shares have ceased on the London Stock Exchange. It is also proposed that BOC’s articles of association be amended so that any Excluded Shares which are still in issue after the expiry of six months from the Effective Date be automatically acquired by Linde in consideration for the payment by Linde to the holders of Excluded Shares of such amount of consideration as would have been payable pursuant to the Scheme if the Excluded Shares had been subject to the Scheme. Holders of options and/or awards and their spouses or civil partners (other than Restricted Overseas Persons) may elect for the Loan Note Alternative in respect of the BOC Shares they acquire after 6:00 p.m. on the day before the Order Date provided they do so when they exercise their options and/or their awards vest (or in the case of a spouse or civil partner, when they receive BOC Shares from the optionholder) on or before the date falling six months after the Effective Date. Holders of options and/or awards who are Restricted Overseas Persons and their spouses or civil partners will receive cash.
It is also proposed that BOC’s articles of association be amended to remove the requirement that any BOC Director hold 500 BOC Shares in his or her own name. The proposed amendments are set out in the EGM notice in Part Thirteen of this document.
(D) Sanction of the Scheme by the Court
Following the Meetings, and the satisfaction (or, other than in respect of certain Conditions, waiver) of the other Conditions to the Scheme, the Scheme and the related Capital Reduction must be sanctioned by the Court and will become effective only upon delivery to the Registrar of Companies in England and Wales of an office copy of the Order and the registration by him of that office copy.
The Hearing by the Court to sanction the Scheme and to confirm the Capital Reduction comprised in the Scheme is expected to be held on Monday 4 September 2006. Linde has confirmed that it will be represented by counsel at such Hearing so as to consent to the Scheme and to undertake to the Court to be bound thereby. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the EGM.
On the Effective Date, share certificates in respect of Cancellation Shares will cease to be valid and should be destroyed upon receipt of the cash consideration. In addition, on the Effective Date, entitlements to Cancellation Shares held within CREST will be cancelled. Share certificates in respect of Loan Note Elected Shares should have been returned to the Registrars along with completed Loan Note Forms of Election. Entitlements to Loan Note Elected Shares held within CREST should have been transferred to the Registrar as the escrow agent.
(E)  Modifications to the Scheme
The Scheme contains a provision for BOC and Linde jointly to consent, on behalf of all persons affected, to any modification of, or addition to, the Scheme or to any condition approved or imposed by the Court. The Court would be unlikely to approve any modification of, or addition to, or impose a condition to the Scheme which might be material to the interests of Scheme Shareholders unless Scheme Shareholders were informed of any such modification, addition or condition. It would be a matter for the Court to decide, in its discretion, whether or not a further meeting of Scheme Shareholders should be held in these circumstances. Similarly, if a modification, addition or condition is put forward which in the opinion of the BOC Directors is of such a nature or importance that it requires the consent of Scheme Shareholders, the BOC

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Directors will not take the necessary steps to enable the Scheme to become effective unless and until such consent is obtained.
(F)  Alternative means of implementing the Offer
Linde reserves the right, with the consent of the Panel, to elect to implement the Offer by making a takeover offer for the entire issued and to be issued share capital of BOC. Provided that no bona fide competing offer has been made public and there has been no change in the BOC Board’s recommendation of the Offer, Linde will only elect to implement the Offer by making a takeover offer with the consent of BOC (such consent not to be unreasonably withheld or delayed). If Linde elects to implement the Offer by making a takeover offer, that offer will be implemented on the same terms (subject to appropriate amendments, including the inclusion of an acceptance condition set at 90 per cent. of the shares to which the Offer relates and 90 per cent. of the voting rights attaching to those shares), so far as applicable, as those which would apply to the Scheme. Further, if sufficient acceptances of such offer are received and/or sufficient BOC Shares are otherwise acquired, it is the intention of Linde to apply the provisions of Schedule 2 to The Takeovers Directive (Interim Implementation) Regulation 2006 to acquire compulsorily any outstanding BOC Shares to which such offer relates.
6.  Break Fee Agreement
Linde and BOC entered into a break fee agreement on 6 March 2006 which sets out various matters in relation to the Offer including the payment of a break fee in certain situations.
Linde may be required to pay to BOC an amount of £75 million (subject to any adjustments for VAT) if a Linde Event has occurred and:
the Offer fails in response to such event; or
 
the Offer has not become unconditional by 28 February 2007.
BOC may be required to pay to Linde an amount of £75 million (subject to any adjustments for VAT) in circumstances where:
an independent competing offer for BOC is announced before Linde has indicated to BOC that it does not wish to proceed with the Offer or the Offer lapses or is withdrawn or is not made and the competing offer (or any other independent competing offer which is announced before (A) Linde has indicated to BOC that it does not wish to proceed with the Offer or (B) any such earlier independent competing offer lapses, is withdrawn or is not made) subsequently becomes unconditional in all respects or otherwise completes; or
 
the BOC Board withdraws or adversely modifies its recommendation or agrees to recommend an independent competing offer, except in response to a Linde Event.
A “Linde Event” is defined in the Break Fee Agreement as any event or circumstance attributable to any act or omission of Linde, its Supervisory or Executive Board or its advisers (acting in their capacity as such) or its financing banks or other debt holders or shareholders (acting in their capacity as such) which would materially delay or prevent completion of the acquisition other than the exercise by Linde or the financing banks of any rights under, or relating to, the conditions to the Offer.
A summary of certain provisions of the Break Fee Agreement, including details relating to the conditions of these payments, is set out in paragraph 10 of Part Nine of this document.
7.  Information relating to Linde
Linde, headquartered in Wiesbaden, Germany, is a leading industrial gases and engineering company. Linde is organised into the following business segments:
Gas and Engineering comprises Linde’s activities both in industrial and medical gases and in plant construction. In the financial year to 31 December 2005, the Gas and Engineering segment had sales of 5,831 million, accounting for 61 per cent. of Linde’s total sales; and
 
Material Handling is one of the largest manufacturers of industrial trucks in the world and offers a comprehensive range of products: engine-powered forklift trucks, electric trucks and warehouse

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equipment. In the financial year to 31 December 2005, Material Handling had sales of 3,628 million, accounting for 38 per cent. of Linde’s total sales.
Linde’s sales in the financial year to 31 December 2005 were 20 per cent. in Germany, 51 per cent. in the rest of Europe, 14 per cent. in North America, 4 per cent. in South America, 8 per cent. in Asia and 3 per cent. in Australia and Africa.
For the financial year ended 31 December 2005, Linde reported net income after minority interests of 501 million (2004: 380 million) and sales of 9,501 million (2004: 8,856 million). As at 31 December 2005, Linde had shareholders’ capital and reserves excluding minority interests of 4,364 million (2004: 3,908 million).
On 23 June 2006, Linde decided to increase the company’s share capital by 94,893,465.60 from 306,851,957.76 to 401,745,423.36 by the issuance of 37,067,760 new no par value bearer shares each representing 2.56 of the share capital (the “New Linde Shares”). On 26 June 2006, the then existing holders of shares in Linde and holders of the 550,000,000 1.25 per cent. Convertible Notes Due 2009 issued by Linde Finance B.V. were offered the opportunity to acquire the New Linde Shares (the “Linde Rights Offering”) pursuant to a German prospectus.
All of the New Linde Shares available in the Linde Rights Offering were taken in full. Payment and delivery was successfully completed by 11 July 2006, for those New Linde Shares subscribed for by exercising the rights offered. Payment for and delivery of the remainder (32,322 New Linde Shares) was successfully completed by 13 July 2006.
As a result, Linde’s current market capitalisation is approximately 9.6 billion (based on the closing price of 61.37 for Linde shares on 18 July 2006). Linde is a member of Germany’s DAX 30 Index (which includes the 30 largest publicly-traded Prime Standard companies in Germany, based on order book turnover and market capitalisation).
Current trading and outlook of Linde
On 26 April 2006, the board of Linde announced its trading statement for the quarter ended 31 March 2006. Linde reported net income after minority interests for the first quarter of 134 million (2005: 89 million) and sales of 2,415 million (2005: 2,118 million).
Linde’s current trading performance and outlook reflect the recent and projected modest growth in the markets in which it operates and, in the view of the board of Linde, are in line with expectations.
The European Commission’s approval of the Offer requires the disposal of Linde’s gas business in the UK, BOC’s gas activities in Poland and contracts with Linde’s ethylene oxide customers in the UK and Ireland, which together generated sales of approximately 160 million for the financial year ended 31 December 2005. In addition, Linde has committed to transfer certain contracts with helium suppliers and to sever structural links between BOC and Air Liquide in the Asia/Pacific region to an extent agreed with the European Commission by either selling BOC’s interest or acquiring Air Liquide’s interest in a number of joint ventures in the region.
The US Federal Trade Commission’s clearance of the Offer requires the disposal of eight air separation units in the United States. Linde has also agreed to divest three liquid helium purchase agreements with suppliers in the United States, Russia and Poland as well as associated assets. These divestitures corresponded to a sales volume of approximately 180 million for the financial year ended 31 December 2005.
8.  Information relating to BOC
BOC, headquartered in Windlesham, UK, is one of the world’s leading industrial gases companies. The BOC Group has an international portfolio of companies grouped into three main lines of business:
Process Gas Solutions encompasses large on-site supply schemes, especially in the metals, chemicals and petroleum sectors, as well as small on-site schemes and liquid supplies for customers in sectors such as food and beverages, glass and minerals. In the financial year to 30 September 2005, Process Gas Solutions had Total Revenue of £1,466 million, accounting for 32 per cent. of BOC’s Total Revenue;
 
Industrial and Special Products covers a range of products including compressed gases, special and medical gases and LPG, as well as smaller sales of bulk liquefied gases. In the financial year to

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30 September 2005, Industrial and Special Products had Total Revenue of £1,722 million, accounting for 37 per cent. of BOC’s Total Revenue; and
 
BOC Edwards supplies a wide range of materials, process-enabling equipment and services to the semi-conductor industry and its vacuum technology business supplies vacuum pumps for a variety of industrial and scientific applications. In the financial year to 30 September 2005, BOC Edwards had Total Revenue of £826 million, accounting for 18 per cent. of BOC’s Total Revenue.
BOC also has a specialist logistics business, Gist, and the BOC Group has an effective 20 per cent. interest in a hospitals business based in South Africa.
BOC’s sales from Process Gas Solutions and Industrial and Special Products businesses in the financial year to 30 September 2005 were 30 per cent. in the Americas, 25 per cent. in Europe, 35 per cent. in Asia-Pacific and 10 per cent. in Africa.
For the financial year ended 30 September 2005, BOC reported earnings before exceptional items attributable to equity shareholders of £334.2 million (restated as £335.7 million in accordance with IFRS) and Total Revenue of £4,605.0 million. In its interim results for the six months ended 31 March 2006 (which were prepared in accordance with IFRS) BOC reported earnings before exceptional and certain re-measurement items attributable to equity shareholders of £183.5 million on Total Revenue of £2,465.2 million. As at 31 March 2006, the BOC Group had total capital and reserves of £2,367.0 million.
BOC has a current market capitalisation of approximately £8.2 billion (based on the closing price of 1,600 pence for each BOC Share on 18 July 2006). BOC Shares are traded on the London Stock Exchange and BOC ADSs are traded on the New York Stock Exchange.
It is expected that BOC’s interim results for the nine months to 30 June 2006 will be published on 2 August 2006. These results will be available online at www.boc.com from that date and hard copies will also be available on request from BOC’s registered office.
9.  Background to and reasons for the Offer
The Offer provides the opportunity for Linde and BOC to create a leading worldwide focused industrial gases business with combined gas and engineering sales of around 11.9 billion. The combination of Linde and BOC would result in a much larger, global gas player with complementary products and geographic positions. Specifically, such a combination would:
create a leading global industrial gases company:
  complementary worldwide footprint with a presence in approximately 70 countries;
 
  a leading market position in core product segments (cylinders, bulk and onsite); and
 
  covering the key market segments in industrial gases in a leading position (refining, manufacturing, metallurgy, food and chemicals, etc.);
enable the combined group to improve its ability to serve its customers worldwide:
  strong international presence with local management, production, sales and engineering;
 
  comprehensive product and service offering in industrial gases;
 
  joint application innovation with know-how exchange; and
 
  providing industrial gases and engineering from a single source; and
enhance Linde’s position in high-growth areas for industrial gases:
  strong position in fast growing regions (Eastern Europe, Asia/Pacific and South America);
 
  complementary development opportunities in high-growth gas segments such as healthcare and electronics; and
 
  enhanced expertise in key future growth sectors such as specialty gases and hydrogen.
In addition to the improved growth prospects of the enlarged group, Linde believes the combination creates an opportunity to deliver synergies throughout the combined group, prior to any one-off expenses, of approximately 250 million per annum, to be fully realised during 2009. The one-off expenses involved in obtaining such synergies are anticipated to be approximately 200 million, all of which are expected to be incurred before the end of 2008. These synergies are expected to be predominantly based on joint supply management optimisation and combined procurement volumes and a reduction in selling, general and administrative expenses. In addition, Linde expects to achieve revenue synergies through increased sales

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volume from integrating operations and businesses in many geographical regions, cross selling and an enhanced global customer product and service offering.
Through a rapid but smooth integration and transformation, as well as the mutual exchange of best practices in all functions, regions and market segments, the combined group will strive to unlock value opportunities for shareholders, customers and employees. Linde believes that the Offer will further enhance its proven capability to execute a profitable growth strategy and is expected to be accretive in terms of earnings per share during 2008 (excluding the effect of fair value adjustments and based on the standalone Linde Gas and Engineering business (excluding Material Handling) versus the combined group (excluding Material Handling)).
These statements of estimated cost savings and one-off costs for achieving them relate to future actions and circumstances which, by their nature, involve risks, uncertainties and other factors. Because of this, the cost savings referred to may not be achieved, or those achieved could be materially different from those estimated.
This statement regarding earnings enhancement is not a profit forecast and should not be interpreted to mean that Linde’s future earnings per share will necessarily match or exceed the historical published earnings per share of Linde or BOC.
10. Offer financing
Linde has announced that it has obtained committed funds to finance the Offer by means of a credit agreement originally entered into on 3 March 2006 with, amongst others, Commerzbank AG, Deutsche Bank AG, Dresdner Kleinwort Wasserstein — The Investment Banking Division of Dresdner Bank AG, Morgan Stanley Bank International Limited and The Royal Bank of Scotland plc as mandated lead arrangers and Deutsche Bank Luxembourg S.A. as facility agent as the same may be amended, varied and restated from time to time.
Linde closed the successful syndication of the loan transaction supporting the acquisition of BOC on 3 May 2006. The syndication process, managed by mandated lead arrangers Commerzbank AG, Deutsche Bank AG, Dresdner Kleinwort Wasserstein — The Investment Banking Division of Dresdner Bank AG, and Morgan Stanley Bank International Limited (jointly acting as bookrunners), and mandated lead arranger The Royal Bank of Scotland plc, concluded with an oversubscription of 60 per cent.
The Credit Agreement provides for committed funds of approximately 15 billion which will be used, among other things, to finance the Offer, refinance certain existing indebtedness and pay transaction expenses, as well as to provide ongoing working capital for the enlarged Linde Group.
Linde has stated its intention to maintain an investment-grade rating for the combined group.
Since the announcement on 6 March 2006 by Linde and BOC that they had reached agreement on the terms of the Offer, Linde has successfully completed the Linde Rights Offering, raising 1,835,280,738 billion as a result of a capital increase. Linde has also raised 691,249,996 and £247,642,500 as a result of the issuance of new hybrid bonds. The proceeds of these equity and hybrid capital fundraisings have been placed on deposit to be used by Linde to finance the Offer. As a result, Linde has reduced the committed funds available under the Credit Agreement by £2.0 billion to approximately 12.1 billion.
Linde has also stated its intention to refinance the funds obtained pursuant to the Credit Agreement through a combination of proceeds from disposals of selected businesses and cash flows generated in the course of business.
Deutsche Bank and Morgan Stanley, joint financial advisers to Linde, are satisfied that sufficient resources are available to satisfy in full the cash consideration payable to Scheme Shareholders under the terms of the Offer.
Further details of Linde’s financing are set out in paragraph 9 of Part Nine of this document.
11. The BOC Directors and the effect of the Scheme on their interests
The names of the BOC Directors and details of their interests in the share capital of BOC, and options and awards over this share capital, are set out in Part Nine of this document. BOC Shares held by BOC Directors will be subject to the Scheme.

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In common with the other participants in the BOC Share Schemes, the BOC Directors will be able to exercise any options they hold over BOC Shares as described in Part Nine of this document. It has been agreed that Alan Ferguson’s restricted award over 32,051 BOC Shares which was to vest in March 2006 will instead vest on the date on which the Scheme becomes effective, together with the award of 16,026 shares which was to vest in March 2007.
Particulars of the service contracts and letters of appointment of the BOC Directors are set out in paragraph 6 of Part Nine of this document.
The BOC Directors have given undertakings to Linde to vote in favour of the Scheme in respect of all of their own beneficial holdings of 101,677 BOC Shares (representing, in aggregate, approximately 0.02 per cent. of the existing issued share capital of BOC).
The non-executive directors of BOC intend to retire from the Board of BOC shortly after the Scheme becomes effective. They will receive compensation in the form of payment in lieu of notice. The present expectation of the non-executive directors of BOC is that they will have no continuing business involvement with BOC, except for Matthew Miau who would remain a director of the joint venture BOC Lienhwa Industrial Gases Company Limited or any other company within that joint venture group of companies.
As at 18 July 2006, being the last practicable date prior to the publication of this document, no arrangements had been finalised in respect of the roles of the BOC executive directors in the enlarged group.
Save as set out above, the effect of the Scheme on the interests of BOC Directors does not differ from its effect on the like interests of any other person.

12. Management, employees and pensions
Linde has confirmed that it attaches great importance to the skills and experience of the existing management and employees of BOC. Linde and BOC’s businesses are very complementary on a geographic basis and Linde has stated that it expects that BOC managers and employees will play an important role in the enlarged group as well as benefiting from greater opportunities within it. Accordingly, the Board understands that it is Linde’s intention to employ the best talents in the combined group. Linde will discuss with the executive directors of BOC and senior management their roles in the enlarged group.
Further, Linde has given assurances to the BOC Directors that, on the Scheme becoming effective, the existing employment rights, including pension rights, of all management and employees of BOC will be fully safeguarded. Linde’s plans for BOC do not involve any material change in the conditions of employment of BOC employees.
In addition, Linde can confirm that there are no plans to make any material change to the conditions of employment of Linde employees.
It is expected that integration of BOC’s and Linde’s businesses will result in some headcount reduction in the short term following the Scheme becoming effective, including as a result of the integration of administrative and business support functions and the standardisation of the organisation structures within the enlarged group, which will be subject to consultation obligations under relevant laws. In certain jurisdictions, Linde will be required to dispose of subsidiaries and/or assets of BOC and/or Linde, in order to comply with the requirements of relevant anti-trust authorities in relation to the Offer. Such disposals may involve headcount reductions and/or transfers to new employers, which will impact a number of employees of BOC and Linde. In the mid and longer terms, evaluation of the business needs and operational efficiencies of the enlarged Linde Group in each relevant country may (subject to consultation obligations under relevant laws) result in relocation of some of BOC’s and/or Linde’s business operations and/or some rationalisation of BOC’s and/or Linde’s workforces. The Linde Directors believe that the complementary geographic nature of BOC’s and Linde’s businesses will mean that the need to effect such rationalisation as a result of the Offer will be limited.
The Board of Linde is currently reviewing the enlarged group’s requirements for corporate and operational headquarters, which will also consider the location of Linde’s headquarters in Germany and BOC’s headquarters in the UK. Presently, each of BOC and Linde has a group headquarters and an operational centre in its country of incorporation. Following completion of the Offer, Linde expects to streamline group headquarters and operational centres in order to eliminate duplication of functions and ensure the enlarged

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group is run as efficiently as possible. Based on information currently available to Linde, it is likely that some presence in both Germany and the UK will be retained.
Following the announcement of the Offer, the Board was concerned that there was a risk of losing key staff during the offer period. With the approval of the Panel and Linde, BOC put in place a plan for retention arrangements for certain key employees of BOC. None of the BOC Directors are eligible to receive cash payments under these general cash retention arrangements. The individuals who will benefit from the cash retention arrangements and the final allocation of payments under the cash retention arrangements were approved by the Remuneration Committee.
Additional retention arrangements have been put in place in relation to certain businesses which may be disposed of. Insofar as these relate to BOC Edwards, Dr Rajagopal, the Chief Executive of BOC Edwards and a director of BOC, will be eligible to participate. Further details are given in paragraph 6.3 of Part Nine of this document.
Certain arrangements have also been made in relation to the BOC Share Schemes and these are summarised in paragraph 13 below. Full details of the BOC Directors’ interests in options over BOC Shares under the terms of the BOC Share Schemes are set out in paragraph 3.2 of Part Nine of this document.
Linde, BOC and the trustees of the BOC UK Defined Benefit Pension Schemes (having regard to the active, deferred and retired members) have reached agreement in respect of BOC’s obligations in relation to the funding of such schemes following completion of the Offer and the agreement has been cleared by the Pensions Regulator. The BOC Board has had regard to the above in reaching its decision to recommend the Offer.
13. BOC Share Schemes
The Scheme will extend to BOC Shares issued pursuant to the BOC Share Schemes before 6:00 p.m. on the day before the Order Date. However, no BOC Shares will be issued (pursuant to the BOC Share Schemes or otherwise) during the period beginning on the Loan Note Deadline and ending on the Scheme Record Time.
Options and awards granted under the BOC Share Schemes which are not already exercisable or which have not already vested will become exercisable or will vest as a result of the Scheme becoming effective, subject where applicable to the extent performance tests are satisfied, and participants will be able to exercise their options or awards conditional upon the Scheme becoming effective. The BOC Remuneration Committee and Linde have agreed, pursuant to the discretions given to the Remuneration Committee in the rules of the relevant BOC Share Scheme, that in respect of options and awards granted under the BOC Executive Share Option Scheme 2003, the BOC Long Term Incentive Plan and the BOC Share Matching Plan, the performance conditions will be applied but any pro rating in respect of time will be waived except where participants in these arrangements (other than the Long Term Incentive Plan) have resigned. Options and awards granted to BOC Directors will be treated the same under these arrangements as the options and awards granted to all other participants in the BOC Share Schemes.
To the extent that, following application of the performance conditions, an option or award does not become exercisable or vest as a result of the Scheme becoming effective or becomes exercisable but is not exercised, it will lapse six months after the Effective Date except for options granted under the Executive Share Option Scheme 1995 and the Executive Share Option Scheme 1995 Jersey which are already exercisable (to the extent that the relevant performance targets were satisfied) and will remain exercisable to the same extent, and options granted under the BOC Sharesave Schemes which have become exercisable by reason of death and will be exercisable for 12 months from the date of death.
Outstanding options and awards under the BOC Share Schemes will be satisfied by the issue of BOC Shares or, to the extent available, by the transfer of BOC Shares held in the BOC Employee Share Trust.
The Scheme will not extend to BOC Shares acquired by participants in the BOC Share Schemes after 6:00 p.m. on the day before the Order Date. Therefore, an amendment is proposed to the articles of association of BOC to the effect that any BOC Shares issued or transferred to participants (or their spouses or civil partners) following the exercise of options or the vesting of awards after 6:00 p.m. on the day before the Order Date will automatically be acquired by Linde in consideration for the payment by Linde to such persons of such amount of consideration as would have been payable pursuant to the Scheme for each

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such BOC Share as if it were a Scheme Share. The holders of options or awards and their spouses or civil partners (other than Restricted Overseas Persons) may elect for the Loan Note Alternative in respect of the BOC Shares they acquire after 6:00 p.m. on the day before the Order Date provided they do so when they exercise their options and/or their awards vest (or, in the case of a spouse or civil partner, when they receive BOC Shares from the optionholder) on or before the date falling six months after the Effective Date. Holders of options and/or awards and their spouses or civil partners who are Restricted Overseas Persons will receive cash.
Linde has agreed with BOC, as a term of its proposal to optionholders under the BOC Executive Share Option Scheme 1995, the BOC Executive Share Option Scheme 1995 Jersey and the BOC Executive Share Option Scheme 2003 to make available to such optionholders a cashless exercise facility such that the exercise price of options exercised in connection with the proposals is funded out of the consideration payable by Linde for the BOC Shares acquired on the exercise of such options. The cashless exercise facility will remain available for at least six months after the Effective Date in respect of options granted under the executive share option schemes.
Options granted under the BOC Sharesave Schemes will only be exercisable to the extent of savings made under the related savings contract at the time of exercise together with any accrued interest due.
Holders of options and awards under the BOC Share Schemes will be sent a separate letter explaining the effect of the Scheme on their options and awards and the action they may take.
14. Delisting
The last day of dealings in, and for registration of transfers of, BOC Shares will be the Order Date which is expected to be Monday 4 September 2006, following which BOC Shares will be suspended from the Official List and from the London Stock Exchange’s market for listed securities. No transfers of BOC Shares will be registered after this date until the Scheme becomes effective, other than the registration of BOC Shares released, transferred or issued under the terms of the BOC Share Schemes after the Order Date and prior to the Scheme becoming effective.
Prior to the Scheme becoming effective, applications will be made to the UK Listing Authority for the listing of the BOC Shares to be cancelled and to the London Stock Exchange for the BOC Shares to cease to be admitted to trading on the London Stock Exchange’s market for listed securities. It is expected that such cancellation and cessation will take place on the Effective Date. Accordingly, if the Court makes the Order on Monday 4 September 2006, the delisting will become effective on Tuesday 5 September 2006.
Following the Effective Date, the BOC ADSs will be delisted from the New York Stock Exchange and the BOC ADSs and the underlying BOC Shares will be deregistered with the SEC. BOC’s SEC reporting obligations will be suspended shortly after the Effective Date upon the filing of the required forms with the SEC, and BOC’s SEC reporting and other obligations will terminate upon the deregistration becoming effective 90 days thereafter.

15. Settlement
Settlement of the cash consideration and issue of the certificates in respect of the Loan Notes to which any holder of Loan Note Elected Shares is entitled under the Scheme will be effected within 14 days of the Effective Date in the manner set out below.
Except with the consent of the Panel, settlement of cash consideration to which any Scheme Shareholder is entitled under the Scheme will be implemented in full in accordance with the terms of the Scheme free of any lien, right of set-off, counterclaim or other analogous right to which Linde may otherwise be, or claim to be, entitled against such Scheme Shareholder.
All documents and remittances sent through the post will be sent at the risk of the person(s) entitled thereto.
(A) Cash consideration where Scheme Shares are held in uncertificated form (that is, in CREST)
On the Effective Date, Cancellation Shares held within CREST will be cancelled. Scheme Shareholders who hold Cancellation Shares in uncertificated form will receive any cash consideration to which they are entitled through CREST by Linde procuring the creation of a CREST payment obligation in favour of the

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appropriate CREST account through which the relevant Scheme Shareholder holds such uncertificated shares in respect of the cash consideration due to him or her. The CREST payment obligations will be created within 14 days after the Effective Date.
As from the Effective Date, each holding of BOC Shares credited to any stock account in CREST will be disabled and all BOC Shares will be removed from CREST in due course thereafter.
Linde reserves the right to pay all or any part of the cash consideration referred to above to all or any Scheme Shareholder(s) who hold Cancellation Shares in uncertificated form at the Scheme Record Time in the manner referred to in paragraph 15(B) below if, for any reason, it wishes to do so.
(B) Cash consideration where Scheme Shares are held in certificated form
On the Effective Date, Cancellation Shares held in certificated form will be cancelled and share certificates for such Cancellation Shares will cease to be valid and should be destroyed.
Settlement of cash consideration due under the Scheme in respect of Cancellation Shares held in certificated form shall be dispatched:
by first class post, by cheque drawn on a branch of a UK clearing bank; or
 
by such other method as may be approved by the Panel.
All such cash payments (whether in respect of BOC Shares in uncertificated or certificated form) shall be made in sterling. Payments made by cheque shall be payable to the Scheme Shareholder concerned or, in the case of joint holders, to the holder whose name stands first in the register of members of BOC in respect of the joint holding concerned. Cheques shall be dispatched within 14 days after the Effective Date.
All deliveries of cheques required to be made pursuant to the Scheme shall be effected by posting the same by first class post in pre-paid envelopes addressed to the persons entitled thereto at their respective addresses as appearing in the register of members of BOC at the Scheme Record Time (or, in the case of joint holders, at the address of that one of the joint holders whose name stands first in the said register in respect of such joint holding at such time) or in accordance with any special instructions regarding communications, and neither BOC nor Linde shall be responsible for any loss or delay in the transmission of cheques sent in this way and such cheques shall be sent at the risk of the person entitled thereto.
(C) Loan Notes
Where a Scheme Shareholder (other than a Restricted Overseas Person) validly elects for and becomes entitled to receive Loan Notes under the Loan Note Alternative, any relevant Loan Note Elected Shares will, after the cancellation of the Cancellation Shares and the issue of New BOC Shares to Linde, be transferred to Linde as soon as reasonably practicable.
Whether Loan Note Elected Shares are held in certificated or uncertificated form, where a Scheme Shareholder validly elects to transfer some or all of his or her Scheme Shares in exchange for Loan Notes (subject to the terms and conditions of the Loan Note Alternative set out in Part Six of this document and any such election being made on the Loan Note Form of Election by the Loan Note Deadline), the amount of Loan Notes in respect of which the election is made will be issued and credited as fully paid to the Loan Note Elected Shareholder not more than 14 days after the Effective Date.
Definitive certificates for the Loan Notes will be dispatched by first class post (or by such other method as may be approved by the Panel) within 14 days of the Effective Date. Fractional entitlements to Loan Notes will be disregarded and will not be issued.
The Loan Note Alternative is not available to any Restricted Overseas Person.

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16. United Kingdom, German and US taxation
Your attention is drawn to Part Eight of this document.
The summary is intended as a guide only and BOC Shareholders who are in any doubt about their taxation position, or who are resident for tax purposes outside the United Kingdom or the US, are strongly advised to contact an appropriate professional independent financial adviser immediately.
17. Overseas Shareholders
The implications of the Scheme and the Offer (including the right to make an election under the Loan Note Alternative) for Overseas Persons may be affected by the laws of the relevant jurisdictions. Overseas Persons should inform themselves about, and observe, any applicable legal requirements. It is the responsibility of each Overseas Person to satisfy himself or herself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required, or the compliance with other necessary formalities which are required to be observed and the payment of any issue, transfer or other taxes due in such jurisdiction.
Notice to US investors in BOC: The Offer relates to the shares of an English company and is being made by means of a scheme of arrangement provided for under English company law. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules under the US Exchange Act. Accordingly, the Offer is subject to the disclosure requirements and practices applicable in the UK to schemes of arrangement which differ from the disclosure requirements of the US tender offer rules. Financial information included in the documentation has been prepared in accordance with accounting standards applicable in the UK and Germany that may not be comparable with the financial statements of US companies. If Linde exercises its right in the future to implement the Offer by way of a takeover offer, the Offer will be made in compliance with the applicable US laws and regulations.
This document does not constitute an offer or an invitation to purchase or subscribe for any securities or a solicitation of an offer to buy any securities pursuant to this document or otherwise in any jurisdiction in which such offer or solicitation is unlawful. This document and the accompanying documents have been prepared for the purposes of complying with English law, the City Code and the Listing Rules and the information disclosed may not be the same as that which would have been disclosed if this document had been prepared in accordance with the laws of jurisdictions outside of England.
Overseas Persons should consult their own legal and tax advisers with respect to the legal and tax consequences of the Scheme.
18. Action to be taken
The Scheme and the Offer are subject to the satisfaction or waiver of the Conditions set out in Part Three of this document.
In order to become effective, the Scheme must be approved by a majority in number of Scheme Shareholders, present and voting either in person or by proxy at the Court Meeting, representing 75 per cent. or more in value of all BOC Shares held by such Scheme Shareholders and, in addition, a special resolution implementing the Scheme must be passed at the EGM (requiring the approval of BOC Shareholders representing 75 per cent. or more of the votes cast at the EGM). Under the Act, the Scheme is also subject to the approval of the Court at the Hearing, which is expected to be held on Monday 4 September 2006. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, including those who did not vote to approve the Scheme.
Notices convening the Court Meeting and the EGM are set out in Parts Twelve and Thirteen of this document, respectively.
BOC Shareholders will find enclosed with this document:
a blue Form of Proxy for use at the Court Meeting;
 
a white Form of Proxy for use at the EGM;
 
a green Loan Note Form of Election; and

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a reply-paid envelope for use within the United Kingdom for the return of the Loan Note Form of Election and, in the case of Loan Note Elected Shareholders holding Scheme Shares in certificated form, the relevant share certificates and/or other documents of title.
Restricted Overseas Persons will not receive a Loan Note Form of Election.
It is important that, for the Court Meeting in particular, as many votes as possible are cast so that the Court may be satisfied that there is a fair and reasonable representation of BOC Shareholder opinion. Whether or not you plan to attend the Meetings in person, you are strongly encouraged to sign and return your Forms of Proxy or to appoint a proxy electronically as referred to below, as soon as possible and in any event so as to be received by the Registrars, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6ZN, by the following times and dates:
     
blue Forms of Proxy for the Court Meeting
  2:00 p.m. on Monday 14 August 2006
white Forms of Proxy for the EGM
  2:15 p.m. on Monday 14 August 2006
(or, in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).
Both Forms of Proxy are pre-printed with a reply paid address on the reverse (for postage from within the UK). Alternatively, proxy appointments and instructions may be registered electronically by logging on to the Registrars’ website, www.sharevote.co.uk, where full details of the procedure are given. The personal reference number, card ID and account number printed on the Forms of Proxy will be required in order to use this electronic system. Alternatively, shareholders who have already registered with the Registrars’ on-line portfolio service, Shareview, can appoint their proxy electronically be logging on to their portfolio at www.shareview.co.uk. and clicking on ‘Company Meetings’. A proxy appointment made electronically will not be valid if sent to any address other than those provided or if received after the deadlines referred to above. Please note that any electronic communication found to contain a computer virus will not be accepted. If you hold your BOC Shares in uncertificated form (that is, held in CREST), you may vote using the CREST Proxy Voting Service in accordance with the procedures set out in the CREST Manual (please also refer to the accompanying notes for the notice of the EGM set out at the end of Part Thirteen of this document). Proxies submitted via CREST (under CREST participant ID 7RA01) must be received by the Registrars not later than 2:00 p.m. on Monday 14 August 2006 in the case of the Court Meeting and by 2:15 p.m. on Monday 14 August 2006 in the case of the EGM (or, in the case of an adjourned meeting, not less than 48 hours prior to the time and date set for the adjourned meeting).
If the blue Form of Proxy relating to the Court Meeting is not lodged by 2:00 p.m. on Monday 14 August 2006, it may be handed to the Chairman of the Court Meeting or the Registrars before the start of the Court Meeting on Wednesday 16 August 2006 and will still be valid. However, in the case of the EGM, unless the white Form of Proxy is returned by 2:15 p.m. on Monday 14 August 2006 and in accordance with the instructions printed on it, it will be invalid. The completion and return of a Form of Proxy, or the making of such appointment electronically in accordance with the foregoing procedures, will not preclude you from attending and voting in person at either the Court Meeting or the EGM, or any adjournment thereof, if you so wish and are so entitled.
If you wish to elect to receive Loan Notes instead of cash in respect of all or part of your holding of Scheme Shares under the Scheme, you should also complete the green Loan Note Form of Election and return it to Lloyds TSB Registrars by the Loan Note Deadline.
If your Scheme Shares are in uncertificated form (that is, held in CREST) and you wish to receive Loan Notes, in addition to completing and returning a Loan Note Form of Election, you should also take (or procure to be taken) the action set out in paragraph 2 of Part Seven of this document to transfer the Scheme Shares in respect of which you wish to elect for the Loan Note Alternative to an escrow balance, using a TTE instruction specifying Lloyds TSB Registrars (in its capacity as a CREST participant) as the escrow agent, as soon as possible and in any event so that the TTE instruction settles no later than the Loan Note Deadline.
Notes on completing the green Loan Note Form of Election and on submitting a TTE instruction are set out in Part Seven of this document.
The Loan Note Alternative is not available to Restricted Overseas Persons.

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PART TWO: EXPLANATORY STATEMENT
Scheme Shareholders who do not wish to elect to receive any Loan Notes are not required to return the Loan Note Form of Election or return share certificates or other documents of title or submit a TTE instruction.
Apart from completing, signing and returning the Forms of Proxy, Scheme Shareholders not electing to receive Loan Notes need take no further action at this stage.
If you have any questions about this document, the Court Meeting, the EGM or the Offer, or are in any doubt as to how to complete the Forms of Proxy or the Loan Note Form of Election, BOC Shareholders should call the BOC Shareholder helpline between 8:30 a.m. and 5:30 p.m. Monday to Friday (except UK public holidays) on 0845 600 0301 (from within the UK) or +44 1903 276 342 (from outside the UK). Calls will be charged at LoCall or international rates as the case may be. Please note that calls may be monitored or recorded and the helpline cannot provide financial advice or advice on the merits of the Offer.
19. Further information
The terms of the Scheme are set out in full in Part Ten of this document. Your attention is also drawn to the further information contained in this document which forms part of this explanatory statement.
     
Yours faithfully   Yours faithfully
for and on behalf of   for and on behalf of
JPMorgan Cazenove   Merrill Lynch
Mark Breuer   Kevin J Smith
Managing Director   Managing Director

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PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
1.  Pre-Conditions of the Offer
The following Pre-Conditions to the Offer and the posting of this document have been satisfied:
(a) insofar as the proposed acquisition of BOC by Linde constitutes a concentration with a Community dimension within the scope of Council Regulation (EC) 139/2004 (as amended) (the “Merger Regulation”):
  (i) the European Commission shall have made a decision declaring the concentration compatible with the common market under Articles 6(1)(b), 8(1) or 8(2) of the Merger Regulation, any conditions and obligations attached to the European Commission’s decision being in form and substance reasonably satisfactory to Linde; or
 
  (ii) the European Commission shall not have taken a decision in accordance with Articles 6(1)(b), 6(1)(c), 8(1), 8(2) or 8(3) of the Merger Regulation within the time limits set in Articles 10(1) and 10(3) and is thereby deemed to have declared the concentration compatible with the common market pursuant to the presumption in Article 10(6) of the Merger Regulation; or
 
  (iii) in the event that the European Commission makes a referral to a competent authority under Articles 4(4) or 9(1) of the Merger Regulation in connection with the proposed acquisition of BOC by Linde, such competent authority shall have issued a decision, finding or declaration, in terms reasonably satisfactory to Linde, approving the proposed acquisition and permitting its closing without any breach of applicable law; and
(b) all filings having been made and all or any applicable waiting periods (including any extensions thereof) under the United States Hart-Scott Rodino Antitrust Improvements Act of 1976 and the regulations thereunder having expired, lapsed or been terminated as appropriate in each case in respect of the proposed acquisition of BOC by Linde and neither of the parties being subject to any order or injunction of a court of competent jurisdiction in the United States that prohibits consummation of the Offer as a result of action brought by the US Federal Trade Commission or US Department of Justice.
2.  Conditions of the Offer
The Offer is conditional upon the Scheme becoming unconditional and becoming effective, subject to the City Code, by not later than 28 February 2007, or such later date (if any) as BOC, Linde and (if required) the Court may agree. The Scheme is conditional upon:
(a) approval of the Scheme by a majority in number, representing 75 per cent. or more in value, of the Scheme Shareholders present and voting, either in person or by proxy, at the Court Meeting or at any adjournment thereof;
 
(b) the resolution necessary to implement the Scheme as set out in the notice of the EGM being duly passed by the requisite majority of BOC Shareholders at the EGM or at any adjournment thereof; and
 
(c) the sanction (without modification or with modification as agreed by BOC and Linde) of the Scheme and the confirmation of any reduction of capital involved therein by the Court, an office copy of the Order and the minute of such reduction attached thereto being delivered for registration to the Registrar of Companies and, in relation to the reduction of capital, being registered by him.
3.  Conditions of the Scheme
In addition, the Scheme is conditional upon the following matters and, accordingly, the necessary action to make the Scheme effective will not be taken unless such conditions (as amended if appropriate) have been satisfied or waived:
(a) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, no Third Party having intervened (as defined below) and there not continuing to be outstanding any statute, regulation or order of any Third Party in each case which is material in the context of the Offer and

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which, in each case to an extent which is material in the context of the Wider Linde Group or Wider BOC Group taken as a whole, would reasonably be expected to:
  (i) make the Offer, its implementation or the acquisition or proposed acquisition by Linde or any member of the Wider Linde Group of any shares or other securities in, or control or management of, BOC or any member of the Wider BOC Group void, illegal or unenforceable in any jurisdiction, or otherwise directly or indirectly materially restrain, prevent, prohibit, restrict or delay the same or impose material additional conditions or obligations with respect to the Offer, or otherwise materially impede, challenge or interfere with the Offer or such acquisition, or require material amendment to the terms of the Offer or the acquisition or proposed acquisition of any BOC Shares on the acquisition of control or management of BOC or the Wider BOC Group by Linde or any member of the Wider Linde Group;
 
  (ii) limit or delay, or impose any limitations on, the ability of any member of the Linde Group or any member of the BOC Group to acquire or to hold or to exercise effectively, directly or indirectly, all or any rights of ownership in respect of shares or other securities in, or to exercise voting or management control over, any member of the Wider BOC Group or any member of the Linde Group;
 
  (iii) prevent or delay or alter the terms envisaged for any proposed divestiture or require any additional divestiture by any member of the Wider Linde Group of any shares or other securities in BOC;
 
  (iv) prevent or delay or alter the terms envisaged for any proposed divestiture or require any additional divestiture by any member of the Wider Linde Group or by any member of the Wider BOC Group of all or any portion of their respective businesses, assets or properties or limit the ability of any of them to conduct any of their respective businesses or to own or control any of their respective businesses, assets or properties or any part thereof;
 
  (v) except pursuant to Part XIIIA of the Act, require any member of the Wider Linde Group or of the Wider BOC Group to acquire, or to offer to acquire, any shares or other securities (or the equivalent) in any member of the Wider BOC Group owned by any third party;
 
  (vi) limit the ability of any member of the Wider Linde Group or of the Wider BOC Group to conduct or integrate or co-ordinate its business, or any part of it, with the businesses or any part of the businesses of any other member of the Wider Linde Group or of the Wider BOC Group;
 
  (vii) result in any member of the Wider BOC Group ceasing to be able to carry on business under any name under which it presently does so; or
 
  (viii) otherwise adversely affect any or all of the business, assets, profits, financial or trading position or prospects of any member of the Wider BOC Group,
  and all applicable waiting and other time periods (including any extensions of such waiting and other time periods) during which any Third Party could intervene under any applicable legislation or regulation of any relevant jurisdiction having expired, lapsed or been terminated (as appropriate), in each case which is material in the context of the Wider Linde Group or the Wider BOC Group taken as a whole;
(b) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, all Authorisations which are necessary or are reasonably considered necessary or appropriate by Linde in any relevant jurisdiction for or in respect of the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, BOC or any other member of the Wider BOC Group by any member of the Wider Linde Group or the carrying on by any member of the Wider BOC Group of its business having been obtained, in terms and in a form reasonably satisfactory to Linde, from all appropriate Third Parties or from any persons or bodies with whom any member of the Wider BOC Group has entered into contractual arrangements and all such Authorisations remaining in full force and effect and there being no notice or intimation of any intention to revoke, suspend, restrict, modify

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or not to renew any of the same (in any case to an extent which is or would be material in the context of the Wider BOC Group taken as a whole);
(c) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, there being no provision of any material arrangement, agreement, licence, permit, franchise or other instrument to which any member of the Wider BOC Group is a party, or by or to which any such member or any of its assets is or are or may be bound, entitled or subject or any material circumstance, which, in each case as a consequence of the Offer or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, BOC or any other member of the Wider BOC Group by any member of the Wider Linde Group or otherwise, could or might reasonably be expected to result in (in any case to an extent which is or would be material in the context of the Wider BOC Group taken as a whole):
  (i) any monies borrowed by, or any other indebtedness or liabilities (actual or contingent) of, or any grant available to, any member of the Wider BOC Group being or becoming repayable or capable of being declared repayable immediately or prior to its stated repayment date;
 
  (ii) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property, assets or interests of any member of the Wider BOC Group or any such mortgage, charge or other security interest (wherever created, arising or having arisen) becoming enforceable;
 
  (iii) any such arrangement, agreement, licence, permit, franchise or other instrument, or the rights, liabilities, obligations or interests of any member of the Wider BOC Group thereunder, or the interests or business of any such member in or with any other person, firm, company or body (or any arrangement or arrangements relating to any such interests or business) being, or becoming capable of being, terminated or adversely modified or affected or any adverse action being taken or any obligation or liability arising thereunder;
 
  (iv) any material asset or interest of any member of the Wider BOC Group being or falling to be disposed of or ceasing to be available to any member of the Wider BOC Group or any right arising under which any such asset or interest could be required to be disposed of or could cease to be available to any member of the Wider BOC Group;
 
  (v) any member of the Wider BOC Group ceasing to be able to carry on business under any name under which it presently does so;
 
  (vi) the creation of material liabilities (actual or contingent) by any member of the Wider BOC Group;
 
  (vii) the financial or trading position or the value of any member of the Wider BOC Group being prejudiced or adversely affected,
  and, except as aforesaid, no event having occurred which, under any provision of any such arrangement, agreement, licence, permit, franchise or other instrument, would result in or would be reasonably likely to result in any of the events or circumstances which are referred to in paragraphs (i) to (vii) of this Condition (c) in any case to an extent which is or would be material in the context of the Wider BOC Group taken as a whole;
(d) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, no member of the Wider BOC Group having (in each case, save for paragraph (ii) below, to an extent which is material in the context of the Wider BOC Group taken as a whole):
  (i) issued or agreed to issue, or authorised the issue of, additional shares of any class, or securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or acquire,

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  any such shares or convertible securities or transferred or sold any shares out of treasury, other than:
  (A) to other members of the Wider BOC Group or to third parties, provided that such issue, transfer or sale preserves the BOC Group’s existing interest in such member of the Wider BOC Group as at 6 March 2006; or
 
  (B) shares issued pursuant to the exercise of options or the vesting of awards in each case granted under the BOC Share Schemes or under an employee’s terms of employment;
  (ii) purchased or redeemed or repaid any of its own shares or other securities or reduced or, save in respect of the matters mentioned in paragraph (i) above, made any other change to any part of its share capital to an extent which (other than in the case of BOC) is material in the context of the Wider BOC Group taken as a whole;
 
  (iii) recommended, declared, paid or made any dividend or other distribution whether payable in cash or otherwise or made any bonus issue (other than to a member of the BOC Group or a third party, provided that such dividend or other distribution is pro rata to that party’s existing interest in such member of the Wider BOC Group as at 6 March 2006) save, to the extent applicable, in relation to the Second Interim Dividend;
 
  (iv) except as a result of the issue of notes under the Euro Medium Term Note Programme or commercial paper under any BOC commercial paper programme or the refinancing of any existing indebtedness, or as between members of the BOC Group, made or authorised any change in its loan capital;
 
  (v) merged with, demerged or acquired any body corporate, partnership or business or acquired or disposed of or transferred, mortgaged, charged or created any security interest over any assets of a material value or any right, title or interest in any assets of a material value (including shares in any undertaking and trade investments) or authorised the same (in each case other than in the ordinary course of business), other than a transaction between:
  (A) members of the BOC Group; or
 
  (B) a member of the BOC Group and a third party, provided that such transaction preserves the BOC Group’s existing interest in such member of the Wider BOC Group as at 6 March 2006;
  (vi) except as a result of the issue of notes under the Euro Medium Term Note Programme or commercial paper under any BOC commercial paper programme or the refinancing of any existing indebtedness, issued, agreed to issue or authorised the issue of, or made any change in or to, any debentures or incurred or increased any indebtedness or liability (actual or contingent), in each case other than as between:
  (A) members of the BOC Group; or
 
  (B) a member of the BOC Group and a third party, provided that such issue, change, incurrence or increase preserves the BOC Group’s existing interest in such member of the Wider BOC Group as at 6 March 2006;
  (vii) entered into, varied, or authorised any contract, agreement, commitment, transaction or arrangement other than in the ordinary course of business (whether in respect of capital expenditure or otherwise) which:
  (A) is of a long term, onerous or unusual nature or magnitude or which could reasonably be expected to involve an obligation of such nature or magnitude; or
 
  (B) could restrict the business of any member of the Wider BOC Group;

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  (viii) entered into, implemented, effected or authorised any reconstruction, amalgamation or scheme in respect of itself or another member of the Wider BOC Group, other than as between:
  (A) members of the BOC Group; or
 
  (B) a member of the BOC Group and a third party, provided that such transaction preserves the BOC Group’s existing interest in such member of the Wider BOC Group as at 6 March 2006;
  (ix) entered into, or varied the terms of, any contract, agreement, commitment, transaction or arrangement with any director of BOC;
 
  (x) other than by way of a solvent winding-up in respect of a member which is dormant at the relevant time, taken any corporate action or had any legal proceedings instituted or threatened against it or petition presented or order made for its winding-up (voluntarily or otherwise), dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any material part of its assets and revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction;
 
  (xi) been unable, or admitted in writing that it is unable, to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;
 
  (xii) waived or compromised any claim;
 
  (xiii) made any alteration to its memorandum or articles of association;
 
  (xiv) made or agreed or consented to:
  (A) any material change to:
  the terms of the trust deeds constituting the pension scheme(s) established by any member of the BOC Group for its directors, employees or their dependants; or
 
  the benefits which accrue or to the pensions which are payable thereunder; or
 
  the basis on which qualification for, or accrual or entitlement to, such benefits or pensions are calculated or determined; or
 
  the basis upon which the liabilities (including pensions) or such pension schemes are funded or made,
  (B) any change to the trustees including the appointment of a trust corporation;
  (xv) proposed, agreed to provide or modified the terms of any share option scheme, incentive scheme or, other than increases in emoluments in the ordinary course of business, other benefit relating to the employment or termination of employment of any person employed by the BOC Group; or
 
  (xvi) entered into any contract, agreement, commitment, transaction or arrangement or passed any resolution or made any offer (which remains open for acceptance) or proposed or announced any intention in each case with respect to any of the transactions, matters or events referred to in this Condition (d);
(e) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations:
  (i) there having been no adverse change or deterioration in the business assets, financial or trading position or profit or prospects of any member of the Wider BOC Group which in any case is material in the context of the Wider BOC Group taken as a whole;
 
  (ii) no contingent or other liability of any member of the Wider BOC Group having arisen or become apparent or increased which in any case is material in the context of the Wider BOC Group taken as a whole; and

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  (iii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member of the Wider BOC Group is or may become a party (whether as plaintiff, defendant or otherwise) having been threatened, announced, implemented or instituted by or against or remaining outstanding against or in respect of any member of the Wider BOC Group which in any case is material in the context of the Wider BOC Group taken as a whole;
(f) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, Linde not having discovered:
  (i) that any financial or business or other information concerning the Wider BOC Group publicly disclosed at any time by or on behalf of any member of the Wider BOC Group, or otherwise disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, is misleading or contains any misrepresentation of fact or omits to state a fact necessary to make any information contained therein not misleading and which was not subsequently corrected before 6 March 2006 by disclosure either publicly or otherwise to Linde and which in any case is material in the context of the Wider BOC Group taken as a whole; or
 
  (ii) any information which affects the import of any information disclosed at any time by or on behalf of any member of the Wider BOC Group to an extent which in any case is material in the context of the Wider BOC Group taken as a whole; and
(g) since 30 September 2005 and except as disclosed in BOC’s annual report and accounts for the year then ended or as otherwise publicly announced by BOC prior to 6 March 2006 (by the delivery of an announcement to a Regulatory Information Service) or as otherwise fairly disclosed prior to 6 March 2006 in writing to Linde or its advisers by or on behalf of BOC in the course of negotiations, Linde not having discovered:
  (i) that any past or present member of the Wider BOC Group has not complied with any applicable legislation or regulations of any jurisdiction with regard to the use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or harm human health, or otherwise relating to environmental matters or the health and safety of any person, or that there has otherwise been any such use, treatment, handling, storage, transport, release, disposal, discharge, spillage, leak or emission (whether or not this constituted a non-compliance by any person with any legislation or regulations and wherever the same may have taken place) which, in any case, would be likely to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider BOC Group which in any case is material in the context of the Wider BOC Group taken as a whole;
 
  (ii) that there is, or is likely to be, any liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of by any past or present member of the Wider BOC Group or any other property or any controlled waters under any environmental legislation, regulation, notice, circular, order or other lawful requirement of any relevant authority or Third Party or otherwise which in any case is material in the context of the Wider BOC Group taken as a whole; or
 
  (iii) that circumstances exist whereby a person or class of persons would be likely to have a claim in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider BOC Group which in any case is or would be material in the context of the Wider BOC Group taken as a whole.
The Scheme can only become effective if all Conditions to the Scheme, including shareholder approvals and the sanction of the Court, have been satisfied (or, other than certain Conditions, waived). Unless the Scheme becomes effective by not later than 28 February 2007, or such later date as BOC and Linde may agree and (if required) the Court may allow, the Scheme will not become effective and the Offer will not proceed.

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OF THE SCHEME AND THE OFFER
For the purpose of these conditions:
“Authorisations” means authorisations, orders, grants, recognitions, determinations, certificates, confirmations, consents, licences, clearances, provisions and approvals;
“Third Party” means any central bank, government, government department or governmental, quasi-governmental, supranational, statutory, regulatory or investigative body, authority, court, trade agency, association, institution or professional or environmental body or any other similar person or body whatsoever in any relevant jurisdiction, but excluding any anti-trust or merger control authority;
a Third Party shall be regarded as having “intervened” if it has decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference or made, proposed or enacted any statute, regulation, decision or order or taken any measures or other steps or required any action to be taken or information to be provided or otherwise having done anything and “intervene” shall be construed accordingly;
the “Wider BOC Group” means BOC and its subsidiary undertakings and associated undertakings and any other undertaking in which BOC and/or such undertakings (aggregating their interests) have a substantial interest;
the “Wider Linde Group” means Linde and its subsidiary undertakings and associated undertakings and any other undertaking in which Linde and/or such undertakings (aggregating their interests) have a substantial interest;
for these purposes “subsidiary undertaking”, “associated undertaking” and “undertaking” have the meanings given by the Act, other than paragraph 20(1)(b) of Schedule 4A to the Act which shall be excluded for this purpose, and “substantial interest” means a direct or indirect interest in 20 per cent. or more of the voting equity capital of an undertaking.
Subject to the requirements of the Panel, Linde reserves the right to waive all or any of the above Conditions, in whole or in part, except the Conditions in paragraph 2 above.
If the Panel requires Linde to make an offer for BOC Shares under the provisions of Rule 9 of the City Code, Linde may make such alterations to the Conditions as are necessary to comply with the provisions of that Rule.
4.  Certain further terms of the Offer

The Loan Note Elected Shares will be acquired by Linde fully paid and free from all liens, equitable interests, charges, encumbrances and other third party rights of any nature whatsoever and together with all rights now or hereafter attaching thereto including the right to receive and retain all dividends and other distributions announced, declared or paid on or after 6 March 2006, other than the Second Interim Dividend (details of which are set out in paragraph 2 of Part Two of this document).
The Offer and, where relevant, the Loan Note Alternative are on and subject to the terms set out in this document and, in relation to the Loan Note Alternative, in the Loan Note Form of Election and such further terms as may be required to comply with the Listing Rules and the provisions of the City Code.
The availability of the Offer to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about and observe any applicable requirements.
Linde reserves the right, with the consent of the Panel and, in certain circumstances, of BOC, to elect to implement the Offer by way of a takeover offer. In such event, such offer will be implemented on the same terms (subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent. of the shares to which such offer relates), so far as applicable, as those which would apply to the Scheme.
This document and any rights or liabilities arising hereunder, together with the Offer and the Scheme, are governed by English law and are subject to the jurisdiction of the English courts. The rules and regulations of the FSA, the rules of the London Stock Exchange and the rules contained in the City Code, so far as they are appropriate, apply to the Offer.

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PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
The financial information contained in this Part Four does not constitute statutory accounts within the meaning of Section 240 of the Act. The statutory accounts for BOC in respect of the financial years ended 30 September 2005 and 30 September 2004 have been delivered to the Registrar of Companies. In respect of each of those accounts, BOC’s auditors, PricewaterhouseCoopers LLP, gave reports which were unqualified and did not contain a statement under Section 237(2) or (3) of the Act.
The financial information set out in Section A of this Part Four for the year ended 30 September 2005 has been extracted, without material adjustment, from BOC’s audited consolidated financial statements for the year ended 30 September 2005 (the “2005 financial statements”). The financial information for the years ended 30 September 2004 and 30 September 2003 has also been extracted, without material adjustment, from the 2005 financial statements. Section A begins at page 37 of this document.
The financial information set out in Section B of this Part Four has been extracted, without material adjustment, from BOC’s unaudited restatement from UK GAAP to IFRS of BOC’s financial information for the year ended 30 September 2005. Section B begins at page 112 of this document.
The financial information set out in Section C of this Part Four has been extracted, without material adjustment, from BOC’s unaudited interim results for the half-year ended 31 March 2006. Section C begins at page 144 of this document.
Throughout this Part Four BOC and its subsidiaries are referred to as the “Group”. The audited financial information in Section A of this Part Four has been prepared in accordance with UK GAAP. The unaudited restatement of the financial information for the year ended 30 September 2005 in Section B of this Part Four and the unaudited interim financial information in Section C of this Part Four have been prepared in accordance with IFRS as adopted for use in the European Union.

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Table of Contents

PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
SECTION A:      GROUP FINANCIAL INFORMATION
FOR THE YEAR ENDED 30 SEPTEMBER
GROUP PROFIT AND LOSS ACCOUNT
                                                                                   
        Years Ended 30 September
         
        2005   2004   2003
                 
        Before       After   Before       After   Before       After
        Exceptional   Exceptional   Exceptional   Exceptional   Exceptional   Exceptional   Exceptional   Exceptional   Exceptional
        Items   Items   Items   Items   Items   Items   Items   Items   Items
    Notes   £ million   £ million   £ million   £ million   £ million   £ million   £ million   £ million   £ million
                                         
Turnover, including share of joint ventures and associates
    1       4,605.0             4,605.0       4,599.3             4,599.3       4,323.2             4,323.2  
Less: Share of turnover of joint ventures
            727.8             727.8       647.0             647.0       544.3             544.3  
Share of turnover of associates
            122.5             122.5       66.9             66.9       60.6             60.6  
                                                             
Turnover of subsidiary undertakings
            3,754.7             3,754.7       3,885.4             3,885.4       3,718.3             3,718.3  
Cost of sales
    2(a)       (2,161.6 )           (2,161.6 )     (2,181.7 )           (2,181.7 )     (2,136.2 )     (1.7 )     (2,137.9 )
                                                             
Gross profit
            1,593.1             1,593.1       1,703.7             1,703.7       1,582.1       (1.7 )     1,580.4  
Net operating expenses
    2(a)       (1,156.5 )     (20.7 )     (1,177.2 )     (1,239.3 )     (14.8 )     (1,254.1 )     (1,174.7 )     (58.5 )     (1,233.2 )
                                                             
Operating profit of subsidiary undertakings
            436.6       (20.7 )     415.9       464.4       (14.8 )     449.6       407.4       (60.2 )     347.2  
Share of operating profit of joint ventures
            107.1             107.1       99.4       (2.6 )     96.8       86.8       (6.8 )     80.0  
Share of operating profit of associates
            20.5             20.5       13.1             13.1       11.4             11.4  
                                                             
Total operating profit including share of joint ventures and associates
    1       564.2       (20.7 )     543.5       576.9       (17.4 )     559.5       505.6       (67.0 )     438.6  
Profit/(loss) on termination/disposal of businesses — continuing operations
    2(b)             98.1       98.1             (79.5 )     (79.5 )                  
Profit on disposal of fixed assets — continuing operations
    2(b)             10.5       10.5             4.9       4.9                    
                                                             
Profit on ordinary activities before interest
            564.2       87.9       652.1       576.9       (92.0 )     484.9       505.6       (67.0 )     438.6  
Interest on net debt
    3       (76.7 )           (76.7 )     (88.4 )           (88.4 )     (96.1 )           (96.1 )
           
Interest on pension scheme liabilities
    8(a)       (128.9 )           (128.9 )     (117.4 )           (117.4 )     (110.2 )           (110.2 )  
Expected return on pension scheme assets
    8(a)       147.1             147.1       133.2             133.2       119.6             119.6    
           
Other net financing income
            18.2             18.2       15.8             15.8       9.4             9.4  
                                                             
Profit on ordinary activities before tax
            505.7       87.9       593.6       504.3       (92.0 )     412.3       418.9       (67.0 )     351.9  
Tax on profit on ordinary activities
    4(a)       (131.5 )     (28.4 )     (159.9 )     (146.2 )     44.5       (101.7 )     (121.4 )     25.0       (96.4 )
                                                             
Profit on ordinary activities after tax
            374.2       59.5       433.7       358.1       (47.5 )     310.6       297.5       (42.0 )     255.5  
Minority interests — equity
            (40.0 )     (26.7 )     (66.7 )     (46.6 )           (46.6 )     (36.8 )     0.4       (36.4 )
                                                             
Profit for the financial year
            334.2       32.8       367.0       311.5       (47.5 )     264.0       260.7       (41.6 )     219.1  
Dividends
    9       (204.1 )           (204.1 )     (197.3 )           (197.3 )     (192.1 )           (192.1 )
                                                             
Retained profit for the financial year
            130.1       32.8       162.9       114.2       (47.5 )     66.7       68.6       (41.6 )     27.0  
                                                             
Earnings per 25p ordinary share
    10                                                                          
— basic
            67.5p       6.6p       74.1p       63.2p       (9.7 )p     53.5p       52.9p       (8.4 )p     44.5p  
— diluted
            67.3p       6.6p       73.9p       63.1p       (9.6 )p     53.5p       52.9p       (8.4 )p     44.5p  
                                                             
All turnover and operating profit arose from continuing operations.
Acquisitions in 2005 were not material.

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Table of Contents

PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
GROUP BALANCE SHEET
                         
    At 30 September
     
        2005   2004
    Notes   £ million   £ million
             
Fixed assets
                       
Intangible assets
    11       142.6       174.9  
Tangible assets
    12       2,639.9       2,618.4  
Investment in joint ventures
                       
— share of gross assets
            1,102.2       996.1  
— share of gross liabilities
            (810.7 )     (737.4 )
              291.5       258.7  
— loans to joint ventures
            225.0       199.3  
Investment in associates
                       
— share of net assets
            80.7       52.4  
— loans to associates
            2.1       3.3  
Other investments
            14.6       34.5  
                   
Investments
    13       613.9       548.2  
                   
              3,396.4       3,341.5  
                   
Current assets
                       
Stocks
    14       306.3       284.4  
Debtors falling due within one year
    15(a)       710.4       705.6  
Debtors falling due after more than one year
    15(b)       17.0       16.3  
Investments
    16       16.4       20.8  
Cash at bank and in hand
    17       191.0       228.2  
                   
              1,241.1       1,255.3  
                   
Creditors: amounts falling due within one year
                       
Borrowings and finance leases
    18(a)       (259.2 )     (262.1 )
Other creditors
    18(b)       (898.3 )     (872.6 )
                   
              (1,157.5 )     (1,134.7 )
                   
Net current assets
            83.6       120.6  
                   
Total assets less current liabilities
            3,480.0       3,462.1  
                   
Creditors: amounts falling due after more than one year
                       
Borrowings and finance leases
    19(a)       (771.5 )     (928.5 )
Other creditors
    19(b)       (30.8 )     (34.7 )
                   
              (802.3 )     (963.2 )
                   
Provisions for liabilities and charges
                       
Deferred tax
    22       (241.9 )     (253.0 )
Other
    22       (118.9 )     (92.2 )
                   
Total provisions for liabilities and charges
            (360.8 )     (345.2 )
                   
Total net assets excluding pension assets and liabilities
            2,316.9       2,153.7  
                   
Pension assets
    8(a)       88.7       68.9  
Pension liabilities
    8(a)       (352.5 )     (344.5 )
                   
Total net assets including pension assets and liabilities
            2,053.1       1,878.1  
                   
Capital and reserves
                       
Equity called up share capital
    23       125.6       124.7  
Share premium account
    24(a)       406.6       374.9  
Revaluation reserves
    24(a)       26.3       30.1  
Profit and loss account
    24(a)       1,369.5       1,181.5  
Pensions reserves
    24(a)       (221.7 )     (253.6 )
Joint ventures’ reserves
    24(a)       253.9       238.0  
Associates’ reserves
    24(a)       32.3       26.0  
Own shares
    24(a)       (50.5 )     (46.3 )
                   
Equity shareholders’ funds
            1,942.0       1,675.3  
Minority shareholders’ equity interests
            111.1       202.8  
                   
Total capital and reserves
            2,053.1       1,878.1  
                   
The financial statements were approved by the board of directors on 28 November 2005 and are signed on its behalf by:
A E Isaac Director A M Ferguson Director

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PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
GROUP CASH FLOW STATEMENT
                                 
        Years Ended 30 September
         
        2005   2004   2003
    Notes   £ million   £ million   £ million
                 
Net cash inflow from operating activities
    27(a )     665.5       758.5       700.1  
                         
Dividends from joint ventures and associates
                               
Dividends from joint ventures
            47.8       69.0       31.7  
Dividends from associates
            3.3       10.1       3.3  
                         
Dividends from joint ventures and associates
            51.1       79.1       35.0  
                         
Returns on investments and servicing of finance
Interest paid
            (83.5 )     (83.3 )     (94.4 )
Interest received
            18.6       13.9       16.6  
Dividends paid to minorities in subsidiaries
            (66.4 )     (19.3 )     (12.4 )
Interest element of finance lease rental payments
            (0.3 )     (2.5 )     (4.2 )
                         
Returns on investments and servicing of finance
            (131.6 )     (91.2 )     (94.4 )
                         
Tax paid
            (118.4 )     (98.2 )     (90.7 )
                         
Capital expenditure and financial investment
                               
Purchases of tangible fixed assets
            (353.0 )     (244.6 )     (281.4 )
Sales of tangible fixed assets
            22.6       39.7       37.0  
Purchases of intangible fixed assets
            (0.6 )     (0.2 )     (1.2 )
Net sales/(purchases) of current asset investments
            4.7       (0.9 )     16.6  
Purchases of trade and other investments
            (3.4 )     (3.8 )     (3.3 )
Sales of trade and other investments
            30.0       5.6       5.3  
                         
Capital expenditure and financial investment
            (299.7 )     (204.2 )     (227.0 )
                         
Acquisitions and disposals
                               
Acquisitions of businesses
    28(a )     (57.1 )     (50.9 )     (135.5 )
Net cash acquired with subsidiaries
            2.3       2.8        
Disposals of businesses
    28(a )     224.1       98.3       3.9  
Net cash disposed of with subsidiaries
            (23.3 )           (0.1 )
Receipts from capital restructuring of joint ventures(1)
            17.0       53.0        
Investments in joint ventures
            (8.4 )     (12.9 )      
Divestments/repayments from joint ventures
                        12.4  
Investments in associates
            (37.1 )     (3.9 )     (8.4 )
Divestments/repayments from associates
            11.3       6.1       9.4  
                         
Acquisitions and disposals
            128.8       92.5       (118.3 )
                         
Equity dividends paid
            (204.1 )     (197.3 )     (192.1 )
                         
Net cash inflow before use of liquid resources and financing
            91.6       339.2       12.6  
                         
Management of liquid resources
                               
Net sales/(purchases) of short-term investments
            14.3       (20.8 )     16.2  
                         
Financing
                               
Issue of shares(2)
            9.6       12.4       (2.6 )
Decrease in debt
    27(d )     (165.7 )     (180.7 )     (128.7 )
                         
Net cash outflow from financing
            (156.1 )     (168.3 )     (131.3 )
                         
(Decrease)/increase in cash
            (50.2 )     150.1       (102.5 )
                         
 
(1) Receipts from capital restructuring of joint ventures relates to amounts received from Japan Air Gases Ltd. This has no impact on BOC’s effective shareholding.
 
(2) Issue of shares in 2005 is net of an outflow of £18.8 million for the 10 per cent buy back of shares in African Oxygen Limited relating to minority shareholders. This has no impact on BOC’s effective shareholding.
A reconciliation of the movement in cash to the movement in net debt in the year is given in note 27(b).
Liquid resources are defined as short-term deposits.

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Table of Contents

PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
TOTAL RECOGNISED GAINS AND LOSSES
                                 
        Years Ended 30 September
         
        2005   2004   2003
    Notes   £ million   £ million   £ million
                 
Parent(1)
    24(b)       298.4       11.4       218.6  
Subsidiary undertakings
            57.4       269.8       (0.4 )
Joint ventures
            6.8       (13.1 )     (0.2 )
Associates
            4.4       (4.1 )     1.1  
                         
Profit for the financial year
            367.0       264.0       219.1  
Actuarial loss recognised on the pension schemes
            (12.4 )     (2.2 )     (17.5 )
Movement on deferred tax relating to actuarial loss on pensions
            (6.7 )     (8.1 )     2.0  
Movement on current tax relating to actuarial loss on pensions
            8.4       3.2        
Unrealised profit on disposal of a subsidiary
                        8.2  
Exchange translation effect on:
                               
— results for the year of subsidiaries
            7.6       0.2       8.0  
— results for the year of joint ventures
            1.4       (0.7 )     0.2  
— results for the year of associates
            0.4       (0.1 )     (0.2 )
— foreign currency net investments in subsidiaries
            64.7       (76.1 )     15.3  
— foreign currency net investments in joint ventures
            6.0       (21.5 )     9.6  
— foreign currency net investments in associates
            0.7       (2.8 )     (1.4 )
                         
Total recognised gains and losses for the financial year
    24(a)       437.1       155.9       243.3  
                         
 
(1) In accordance with the concession granted under the Companies Act 1985, the profit and loss account of The BOC Group plc has not been presented separately in these financial statements.
 
(2) There were no material differences between reported profits and losses and historical cost profits and losses on ordinary activities before tax for 2005, 2004 and 2003.
 
(3) Profit attributable to the parent company includes dividends received from subsidiaries, joint ventures and associates, often through intermediate holding companies. These dividends may include the distribution of earnings of previous periods. As a result, the relationship of profit between parent, subsidiaries, joint ventures and associates may show fluctuations from year to year.
 
(4) Excluding the amounts recognised above, a current tax charge of £(5.8) million (2004: £6.7 million credit, 2003: £9.7 million credit) has been recognised directly in the Group reserves.

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PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
MOVEMENT IN SHAREHOLDERS’ FUNDS
                         
    Years Ended 30 September
     
    2005   2004   2003
    £ million   £ million   £ million
             
Profit for the financial year
    367.0       264.0       219.1  
Dividends
    (204.1 )     (197.3 )     (192.1 )
                   
      162.9       66.7       27.0  
Other recognised gains and losses
    70.1       (108.1 )     24.2  
Reversal of goodwill in total recognised gains and losses on disposal of subsidiaries
    1.0       15.3       (4.2 )
Shares issued
    32.6       8.7       3.7  
Consideration paid for the purchase of own shares held in an ESOP trust
    (8.2 )           (7.5 )
Consideration received for the sale of own shares held in an ESOP trust
    4.0       2.5       1.2  
Credit in respect of employee share schemes
    4.3       3.5       0.7  
                   
Net increase/(decrease) in shareholders’ funds for the financial year
    266.7       (11.4 )     45.1  
Shareholders’ funds at 1 October
    1,675.3       1,686.7       1,641.6  
                   
Shareholders’ funds at 30 September
    1,942.0       1,675.3       1,686.7  
                   

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PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
BALANCE SHEET OF THE BOC GROUP plc
                         
    At 30 September
     
        2005   2004
    Notes   £ million   £ million
             
Fixed assets
                       
Tangible assets
    12(e)       14.9       11.3  
Investments
    13(d)       3,165.8       2,982.6  
                   
              3,180.7       2,993.9  
                   
Current assets
                       
Debtors falling due within one year
    15(a)       153.0       320.4  
Cash at bank and in hand
    17       44.3       80.8  
                   
              197.3       401.2  
                   
Creditors: amounts falling due within one year
                       
Borrowings and finance leases
    18(a)       (107.2 )     (252.1 )
Other creditors
    18(b)       (1,005.4 )     (1,004.1 )
                   
              (1,112.6 )     (1,256.2 )
                   
Net current liabilities
            (915.3 )     (855.0 )
                   
Total assets less current liabilities
            2,265.4       2,138.9  
                   
Creditors: amounts falling due after more than one year
                       
Borrowings and finance leases
    19(a)       (677.0 )     (674.5 )
Other creditors
    19(b)       (0.2 )     (3.2 )
                   
              (677.2 )     (677.7 )
                   
Total net assets
            1,588.2       1,461.2  
                   
Capital and reserves
                       
Equity called up share capital
    23       125.6       124.7  
Share premium account
    24(b)       406.6       374.9  
Other reserves
    24(b)       336.4       336.4  
Profit and loss account
    24(b)       769.6       671.0  
Own shares
    24(b)       (50.0 )     (45.8 )
                   
Total capital and reserves
            1,588.2       1,461.2  
                   
The financial statements were approved by the board of directors on 28 November 2005 and are signed on its behalf by:
A E Isaac Director A M Ferguson Director

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ACCOUNTING POLICIES
General
Basis of preparation These financial statements are based on the historical cost accounting convention in accordance with the Companies Act 1985 and comply with all applicable UK accounting standards.
  UK accounting standards differ in certain respects from those generally accepted in the US and the major effects of these differences in the determination of net income and shareholders’ funds are shown in note 30 to the financial statements. Disclosure requirements of both the UK and US are incorporated throughout the notes to these financial statements.
Basis of consolidation The Group accounts include the accounts of the parent undertaking and of all subsidiaries, joint ventures and associates.
  The results of businesses acquired during the year are included from the effective date of acquisition. The results of businesses disposed of during the year are included up to the date of relinquishing control. Material, separately identifiable business segments disposed of are analysed as discontinued operations and prior years’ analyses are restated to reflect those businesses as discontinued.
Accounting policies These accounts have been prepared on an accounting basis consistent with that applied in the financial year ended 30 September 2004.
 
Exchange Profit and loss and other period statements of the Group’s overseas operations are translated at average rates of exchange for the financial year. Assets and liabilities denominated in foreign currencies are translated at the rates of exchange ruling at the financial year end. Assets or liabilities swapped into other currencies are accounted for in those currencies. Exchange differences are dealt with as a movement in reserves where they arise from:
  i) the translation of the opening net assets of overseas operations;
 
  ii) the retranslation of retained earnings of overseas operations from average to closing rates of exchange; and
  iii) the translation or conversion of foreign currency borrowings taken to hedge overseas assets.
  All other exchange differences are taken to the profit and loss account. The principal exchange rates affecting the Group are shown in the financial review on page 63 of the annual report and accounts.
Revenue Recognition
Turnover is based on the invoiced value of the sale of goods and services, and includes the sales value of long-term contracts appropriate to the state of completion. It excludes sales between Group undertakings, VAT and similar sales-based taxes. Turnover for goods and services is recognised when the significant risks and rewards of ownership are transferred to the customer. This is determined to be when delivery has occurred, title of the goods has passed to the purchaser, and where the price is fixed or determinable and reflects the commercial substance of the transaction. Sales returns are not a significant business issue in the industries in which the Group operates.
Revenue on long-term supply contracts with customers generally contains two elements:
i) a fixed charge for the use of production or storage facilities. This is recognised on a straight line basis over the period of the contract. Where the charge is in respect of production facilities, it will also typically include the supply of a specified volume of product;
 
ii) a variable charge for the supply of product, or the supply of product in excess of a specified contract volume. This is recognised when the risks and rewards of ownership are transferred to the customer.
Profit on long-term contracts is recognised on a percentage of completion basis. Provision is made for all losses incurred together with any foreseeable or anticipated future losses.

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Retirement Benefits
Retirement benefits are accounted for under FRS 17.
For defined benefit schemes the regular service cost of providing retirement benefits to employees during the year is charged to operating profit in the year. The full cost of providing amendments to benefits in respect of past service is also charged to operating profit in the year.
A credit representing the expected return on the assets of the retirement benefit schemes during the year is included within other net financing income. This is based on the market value of the assets of the schemes at the start of the financial year.
A charge representing the expected increase in the liabilities of the retirement benefit schemes during the year is included within other net financing income. This arises from the liabilities of the schemes being one year closer to payment.
Differences between actual and expected returns on assets during the year are recognised in the statement of total recognised gains and losses in the year, together with differences arising from changes in assumptions.
For defined contribution schemes the cost of providing benefits is charged to operating profit as incurred.
Research and Development
Revenue expenditure on research and development is written off when incurred.
Operating Leases
The cost of operating leases is written off on the straight line basis over the period of the lease.
Intangible Fixed Assets
Goodwill Goodwill arising on the acquisition of a business, being the excess of the fair value of the purchase price over the fair value of the net assets acquired, is capitalised and amortised on a straight line basis over its useful economic life, generally up to a maximum period of 20 years. An impairment review is carried out at the end of the first full financial year following acquisition. Any impairment in the value of goodwill, calculated by discounting estimated future cash flows, is dealt with in the profit and loss account in the period in which it arises. Negative goodwill, being the excess of the fair value of the net assets acquired over the fair value of the purchase price, is capitalised and amortised on a straight line basis, generally over a period equivalent to the realisation of the non-monetary assets acquired.
  Goodwill, both positive and negative, arising on acquisitions before 30 September 1998 was taken to reserves and has not been reinstated on the balance sheet. This is in line with the relevant accounting standard on goodwill, FRS10. This goodwill will remain in reserves until such time as it becomes impaired or the business or businesses to which it relates are disposed of, at which time it will be taken to the profit and loss account or statement of total recognised gains and losses where appropriate.
Intangibles Other material intangible assets acquired, such as patents and trademarks, are capitalised and written off on the straight line basis over their effective economic lives.
Tangible Fixed Assets
Tangible fixed assets are stated at cost less accumulated depreciation. No depreciation is charged on freehold land or construction in progress. Depreciation is charged on all other fixed assets on the straight

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line basis to write them down to their residual values over the effective lives. Straight line depreciation rates vary according to the class of asset, but are typically:
         
    Per Annum
     
Freehold property
     2% - 4%   
Leasehold property (or at higher rates based on the life of the lease)
     2% - 4%   
Plant and machinery
     3% - 10%  
Cylinders
     4% - 10%  
Motor vehicles
     7% - 20%  
Computer hardware and major software
    15% - 25%  
       
Until 30 September 1999, land and buildings were revalued periodically. Following the adoption of FRS 15, land and buildings are no longer revalued. At 1 October 1999, the net book value of assets previously revalued is regarded as the historical cost.
 
Interest costs on major fixed asset additions are capitalised during the construction period and written off as part of the total cost.
 
Where finance leases have been entered into, the capital element of the obligations to the lessor are shown as part of borrowings and the rights in the corresponding assets are treated in the same way as owned fixed assets.
 
Any impairment in the value of fixed assets, calculated by comparing the carrying value against the higher of the net realisable value or value in use, is dealt with in the profit and loss account in the period in which it arises.
Investments
Investments which are held for the long term and in which the Group has a participating interest and exercises joint control with one or more other parties are treated as joint ventures and accounted for on the gross equity method. Investments which are held for the long term and in which the Group has a participating interest and exercises significant influence are treated as associates and accounted for on the equity method. In both cases, the Group’s share of the results of the investment is included in the profit and loss account, and the Group’s share of the net assets is included in investments in the balance sheet. Other investments are shown on the balance sheet at cost less any provision for impairment.
Stocks
Stocks and work in progress are valued at the lower of cost and net realisable value. Cost where appropriate includes a proportion of overhead expenses. Work in progress is stated at cost less progress payments received or receivable. Cost is arrived at principally on the average and ‘first-in, first-out’ (FIFO) basis. The amount of long-term contracts, net of amounts transferred to cost of sales and after deducting foreseeable losses and payments on account, is included in stocks as long-term contract amounts.
Deferred Tax
The Group provides for deferred tax assets and liabilities arising from timing differences between the recognition of gains and losses in the financial statements and their recognition for tax purposes. Deferred tax assets are only recognised where it is more likely than not that they will be recovered. Deferred tax assets and liabilities are not discounted.
Provisions
Provisions are made when an obligation exists for a future liability in respect of a past event and where the amount of the obligation can be reliably estimated. Restructuring provisions are made for direct expenditures of a business reorganisation where the plans are sufficiently detailed and well advanced, and where appropriate communication to those affected has been undertaken at the balance sheet date. Provisions for warranties are based on contractual arrangements with customers and experience of product performance.

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Financial Instruments
The Group uses financial instruments, including interest rate and currency swaps, to raise finance for its operations and to manage the risks arising from those operations. All transactions are undertaken only to manage interest and currency risk associated with the Group’s underlying business activities and the financing of those activities. The Group does not undertake any trading activity in financial instruments.
Foreign exchange transaction exposures The Group generally hedges actual and forecast foreign exchange exposures up to two years ahead. Forward contracts are used to hedge the forecast exposure and any gains or losses resulting from changes in exchange rates on contracts designated as hedges of forecast foreign exchange are deferred until the financial period in which they are realised. If the contract ceases to be a hedge, any gains and losses are recognised through the profit and loss account.
 
Balance sheet translation exposures A large proportion of the Group’s net assets are denominated in currencies other than sterling. Where practicable and cost effective the Group hedges these balance sheet translation exposures by borrowing in relevant currencies and markets and by the use of currency swaps. Currency swaps are used only as balance sheet hedging instruments, and the Group does not hedge the currency translation of its profit and loss account. Exchange gains and losses arising on the notional principal of these currency swaps during their life and at termination or maturity are dealt with as a movement in reserves. If the swap ceases to be a hedge of the underlying transaction, any gains or losses are recognised in the profit and loss account.
 
Interest rate risk exposures The Group hedges its exposure to movements in interest rates associated with its borrowings primarily by means of interest rate swaps and forward rate agreements. Interest payments and receipts on these agreements are included with net interest payable. They are not revalued to fair value and are not shown on the Group balance sheet at the balance sheet date.

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NOTES TO THE FINANCIAL STATEMENTS
1.     Segmental information
a)     Turnover (including share of joint ventures and associates)
                                                         
    Continuing Operations    
         
        Industrial       Total
    Process Gas   and Special   BOC   Afrox       Total Group   Group by
    Solutions   Products   Edwards   Hospitals   Gist   by Origin   Destination
    £ million   £ million   £ million   £ million   £ million   £ million   £ million
                             
2005
                                                       
Europe
    332.3       467.0       185.6             315.9       1,300.8       1,252.1  
Americas
    631.5       322.3       268.3                   1,222.1       1,188.8  
Africa
    38.6       272.3             275.1             586.0       583.4  
Asia/Pacific
    463.9       660.1       372.1                   1,496.1       1,580.7  
                                           
Turnover
    1,466.3       1,721.7       826.0       275.1       315.9       4,605.0       4,605.0  
                                           
2004
                                                       
Europe
    292.8       449.1       189.5             293.2       1,224.6       1,162.7  
Americas
    523.4       422.6       272.3                   1,218.3       1,171.6  
Africa
    36.1       230.8             432.1             699.0       699.4  
Asia/Pacific
    422.9       679.8       354.7                   1,457.4       1,565.6  
                                           
Turnover
    1,275.2       1,782.3       816.5       432.1       293.2       4,599.3       4,599.3  
                                           
2003
                                                       
Europe
    278.3       430.0       154.3             291.8       1,154.4       1,137.4  
Americas
    517.5       461.7       259.6                   1,238.8       1,191.5  
Africa
    30.8       201.3             353.4             585.5       588.0  
Asia/Pacific
    416.1       658.2       270.2                   1,344.5       1,406.3  
                                           
Turnover
    1,242.7       1,751.2       684.1       353.4       291.8       4,323.2       4,323.2  
                                           
 
(1)  Inter segment turnover is not material.
 
(2)  The Afrox hospitals business was accounted for as a subsidiary company until March 2005 and thereafter as an associated company, following the disposal of BOC’s controlling interest.

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b)     Business analysis
                                                         
    Continuing Operations
     
        Industrial    
    Process Gas   and Special   BOC   Afrox    
    Solutions   Products   Edwards   Hospitals   Gist   Corporate   Total Group
    £ million   £ million   £ million   £ million   £ million   £ million   £ million
                             
2005
                                                       
Total operating profit before exceptional items (1)
    207.2       289.4       38.1       37.2       24.5       (32.2 )     564.2  
Operating exceptional items(1)
                (20.7 )                       (20.7 )
                                           
Operating profit
    207.2       289.4       17.4       37.2       24.5       (32.2 )     543.5  
Profit on disposal of businesses
          13.2             84.9                   98.1  
Profit on disposal of fixed assets
          10.5                               10.5  
Capital employed(2)
    1,795.6       948.9       549.2       25.0       46.9       (81.2 )     3,284.4  
Capital expenditure(3)
    203.8       124.5       33.2       12.4       18.5       4.9       397.3  
Depreciation and amortisation(3)
    147.3       95.5       38.9       6.7       12.4       1.1       301.9  
                                           
2004
                                                       
Total operating profit before exceptional items (1)
    190.3       269.5       47.8       59.8       25.1       (15.6 )     576.9  
Operating exceptional items(1)
    (0.8 )     (15.6 )     (1.0 )                       (17.4 )
                                           
Operating profit
    189.5       253.9       46.8       59.8       25.1       (15.6 )     559.5  
Loss on disposal of business
          (79.5 )                             (79.5 )
Profit on disposal of fixed assets
    4.9                                     4.9  
Capital employed(2)
    1,625.2       943.9       548.1       162.5       6.9       (66.2 )     3,220.4  
Capital expenditure(3)
    100.1       99.4       30.1       17.5       9.0             256.1  
Depreciation and amortisation(3)
    156.0       101.5       40.1       12.3       12.9       1.2       324.0  
                                           
2003
                                                       
Total operating profit before exceptional items (1)
    184.0       242.7       18.5       46.1       29.2       (14.9 )     505.6  
Operating exceptional items(1)
    (6.9 )     (4.5 )     (10.6 )                 (45.0 )     (67.0 )
                                           
Operating profit
    177.1       238.2       7.9       46.1       29.2       (59.9 )     438.6  
Capital employed(2)
    1,822.9       1,158.1       596.1       167.2       0.8       (88.0 )     3,657.1  
Capital expenditure(3)
    93.1       105.2       37.6       17.8       22.3       5.2       281.2  
Depreciation and amortisation(3)
    165.8       101.2       39.1       9.8       15.8       1.7       333.4  
                                           
 
(1)  Including share of joint ventures and associates.
 
(2)  Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all current borrowings net of cash and deposits.
 
(3)  Subsidiary undertakings only.
 
(4)  Net interest and net borrowings are managed centrally and are not directly attributable to individual business segments or regions.
 
(5)  The Afrox hospitals business was accounted for as a subsidiary company until March 2005 and thereafter as an associated company, following the disposal of BOC’s controlling interest.

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c)     Regional analysis
                                         
                    Total
    Europe   Americas   Africa   Asia/Pacific   Group
    £ million   £ million   £ million   £ million   £ million
                     
2005
                                       
Total operating profit before exceptional items(1)
    143.7       100.0       91.3       229.2       564.2  
Operating exceptional items(1)
    (5.1 )     (15.6 )                 (20.7 )
                               
Operating profit
    138.6       84.4       91.3       229.2       543.5  
Profit on disposal of businesses
          13.2       84.9             98.1  
Profit on disposal of fixed assets
          10.5                   10.5  
Capital employed(2)
    774.2       1,143.2       203.4       1,163.6       3,284.4  
Capital expenditure(3)
    105.1       133.0       45.8       113.4       397.3  
                               
2004
                                       
Total operating profit before exceptional items(1)
    155.4       77.4       108.9       235.2       576.9  
Operating exceptional items(1)
          (14.8 )           (2.6 )     (17.4 )
                               
Operating profit
    155.4       62.6       108.9       232.6       559.5  
Loss on disposal of business
          (79.5 )                 (79.5 )
Profit on disposal of fixed assets
    4.9                         4.9  
Capital employed(2)
    796.6       992.9       335.4       1,095.5       3,220.4  
Capital expenditure(3)
    72.3       71.8       44.2       67.8       256.1  
                               
2003
                                       
Total operating profit before exceptional items(1)
    144.3       91.8       85.0       184.5       505.6  
Operating exceptional items(1)
    (7.3 )     (49.1 )           (10.6 )     (67.0 )
                               
Operating profit
    137.0       42.7       85.0       173.9       438.6  
Capital employed(2)
    866.2       1,225.0       321.5       1,244.4       3,657.1  
Capital expenditure(3)
    102.7       79.1       36.7       62.7       281.2  
                               
 
(1)  Including share of joint ventures and associates.
 
(2)  Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all current borrowings net of cash and deposits.
 
(3)  Subsidiary undertakings only.
 
(4)  Net interest and net borrowings are managed centrally and are not directly attributable to individual business segments or regions.
 
(5)  The Afrox hospitals business was accounted for as a subsidiary company until March 2005 and thereafter as an associated company, following the disposal of BOC’s controlling interest.

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d)     Joint ventures and associates — business analysis
                                                         
    Joint Ventures   Associates
         
        Industrial           Industrial    
    Process Gas   and Special   BOC   Process Gas   and Special   BOC   Afrox
    Solutions   Products   Edwards   Solutions   Products   Edwards   Hospitals
    £ million   £ million   £ million   £ million   £ million   £ million   £ million
                             
2005
                                                       
Turnover(1)
    287.9       244.9       195.0       51.7       7.6       5.5       57.7  
Operating profit before exceptional items(1)
    44.6       31.6       30.9       8.9       0.5       1.2       9.9  
Operating exceptional items(1)
                                         
                                           
Operating profit
    44.6       31.6       30.9       8.9       0.5       1.2       9.9  
Capital employed(2)
    116.7       67.0       107.8       42.7       5.0       2.2       30.8  
Capital expenditure
    192.2       17.8       54.3       2.2       1.6             17.8  
     
Group share
    106.3       8.2       26.4       0.6       0.5             2.0  
Other partners
    85.9       9.6       27.9       1.6       1.1             15.8  
     
Depreciation and amortisation (1)
    32.7       10.3       11.2       2.8       0.6       0.1       0.8  
                                           
2004
                                                       
Turnover(1)
    230.0       238.9       178.1       36.3       7.7       5.5       17.4  
Operating profit before exceptional items(1)
    40.8       30.4       28.2       6.3       0.7       1.4       4.7  
Operating exceptional items(1)
    (0.8 )     (0.8 )     (1.0 )                        
                                           
Operating profit
    40.0       29.6       27.2       6.3       0.7       1.4       4.7  
Capital employed(2)
    89.5       69.3       99.9       35.3       4.9       2.5       9.7  
Capital expenditure
    58.5       15.5       30.1       2.1       2.7       0.1        
     
Group share
    25.7       7.4       14.8       0.6       0.7              
Other partners
    32.8       8.1       15.3       1.5       2.0       0.1        
     
Depreciation and amortisation (1)
    27.0       10.2       10.1       2.7       0.5       0.1       1.0  
                                           
 
(1)  Group share.
 
(2)  Capital employed comprises the Group’s share of the net assets of joint ventures or associates.
 
(3)  The decrease in capital employed of joint ventures in 2004 is principally due to the acquisition of an additional 30 per cent ownership interest in the Cantarell joint venture (see note 28a)).
 
(4)  The Afrox hospitals business was accounted for as a subsidiary company until March 2005 and thereafter as an associated company, following the disposal of BOC’s controlling interest.

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PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
                                                         
    Joint Ventures   Associates
         
        Industrial           Industrial    
    Process Gas   and Special   BOC   Process Gas   and Special   BOC   Afrox
    Solutions   Products   Edwards   Solutions   Products   Edwards   Hospitals
    £ million   £ million   £ million   £ million   £ million   £ million   £ million
                             
2003
                                                       
Turnover(1)
    191.9       221.6       130.8       30.9       8.6       5.7       15.4  
Operating profit before exceptional items(1)
    39.0       25.6       22.2       5.8       0.7       1.4       3.5  
Operating exceptional items (1)
    (2.5 )     (1.8 )     (2.5 )                        
                                           
Operating profit
    36.5       23.8       19.7       5.8       0.7       1.4       3.5  
Capital employed(2)
    183.8       108.2       118.0       40.8       7.2       3.3       8.3  
Capital expenditure
    40.7       10.5       20.7       8.0       1.1       0.4        
     
Group share
    17.7       5.1       10.3       2.5       0.3       0.2        
Other partners
    23.0       5.4       10.4       5.5       0.8       0.2        
     
Depreciation and amortisation (1)
    28.0       10.1       9.6       5.4       1.2       0.6       0.7  
                                           
 
(1)  Group share.
 
(2)  Capital employed comprises the Group’s share of the net assets of joint ventures or associates.
e)     Joint ventures and associates — regional analysis
                                         
    Joint Ventures   Associates
         
    Americas   Asia/Pacific   Americas   Africa   Asia/Pacific
    £ million   £ million   £ million   £ million   £ million
                     
2005
                                       
Turnover(1)
    140.2       587.6       41.5       57.7       23.3  
Operating profit before exceptional items(1)
    24.1       83.0       3.7       10.2       6.6  
Operating exceptional items(1)
                             
                               
Operating profit
    24.1       83.0       3.7       10.2       6.6  
Capital employed(2)
    (10.8 )     302.3       16.0       31.6       33.1  
Capital expenditure
    103.2       161.1       0.1       17.8       3.7  
     
Group share
    64.0       76.9             2.0       1.1  
Other partners
    39.2       84.2       0.1       15.8       2.6  
     
2004
                                       
Turnover(1)
    87.6       559.4       26.5       17.4       23.0  
Operating profit before exceptional items(1)
    17.2       82.2       1.1       4.7       7.3  
Operating exceptional items(1)
          (2.6 )                  
                               
Operating profit
    17.2       79.6       1.1       4.7       7.3  
Capital employed(2)
    (30.0 )     288.7       12.5       9.7       30.2  
Capital expenditure
    6.0       98.1       0.1             4.8  
     
Group share
    2.4       45.5                   1.3  
Other partners
    3.6       52.6       0.1             3.5  
     
2003
                                       
Turnover(1)
    68.0       476.3       19.1       15.4       26.1  
Operating profit before exceptional items(1)
    19.1       67.7       (0.7 )     3.5       8.6  
Operating exceptional items(1)
          (6.8 )                  
                               
Operating profit
    19.1       60.9       (0.7 )     3.5       8.6  
Capital employed(2)
    26.5       383.5       13.1       8.3       38.2  
Capital expenditure
    13.8       58.1       6.0             3.5  
     
Group share
    5.4       27.7       1.8             1.2  
Other partners
    8.4       30.4       4.2             2.3  
     
 
(1)  Group share.
 
(2)  Capital employed comprises the Group’s share of the net assets of joint ventures or associates.
 
(3)  The decrease in capital employed of joint ventures in 2004 is principally due to the acquisition of an additional 30 per cent ownership interest in the Cantarell joint venture (see note 28a)).
 
(4)  The Afrox hospitals business was accounted for as a subsidiary company until March 2005 and thereafter as an associated company, following the disposal of BOC’s controlling interest.

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f)     Significant country analysis
                                                 
    UK   US
         
    2005   2004   2003   2005   2004   2003
    £ million   £ million   £ million   £ million   £ million   £ million
                         
Turnover(1)
    993.2       973.9       914.3       887.1       959.7       1,013.5  
Total operating profit before exceptional items(1)
    85.5       112.9       110.4       41.7       21.5       31.3  
Operating exceptional items(1)
    (5.1 )           (5.0 )     (15.6 )     (14.8 )     (48.9 )
                                     
Operating profit
    80.4       112.9       105.4       26.1       6.7       (17.6 )
Profit/(loss) on disposal of business
                      13.2       (79.5 )      
Profit on disposal of fixed assets
          4.9             10.5              —  
Capital employed(2)
    530.2       575.8       629.5       932.1       820.7       1,039.5  
Capital expenditure(3)
    93.1       60.7       92.4       115.5       56.2       71.0  
                                     
 
(1)  Including share of joint ventures and associates.
(2)  Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all current borrowings net of cash and deposits.
(3)  Subsidiary undertakings only.
2.     Profit and loss
a)     Analysis of costs
                         
    2005   2004   2003
    £ million   £  million   £ million
             
i)  Expense category
                       
Cost of sales
    (2,161.6 )     (2,181.7 )     (2,137.9 )
                   
Distribution costs
    (316.3 )     (317.7 )     (321.7 )
Administrative expenses(1)
    (861.0 )     (936.6 )     (913.2 )
Income from other fixed asset investments
    0.1       0.2       1.7  
                   
Net operating expenses
    (1,177.2 )     (1,254.1 )     (1,233.2 )
                   
                         
    Continuing        
    Operations        
    Before        
    Exceptional   Exceptional    
    Items   Items(2)   Total
    £ million   £ million   £ million
             
ii)  2005 analysis
                       
Cost of sales
    (2,161.6 )           (2,161.6 )
                   
Distribution costs
    (316.3 )           (316.3 )
Administrative expenses(1)
    (840.3 )     (20.7 )     (861.0 )
Income from other fixed asset investments
    0.1             0.1  
                   
Net operating expenses
    (1,156.5 )     (20.7 )     (1,177.2 )
                   
iii)  2004 analysis
                       
Cost of sales
    (2,181.7 )           (2,181.7 )
                   
Distribution costs
    (317.7 )           (317.7 )
Administrative expenses(1)
    (921.8 )     (14.8 )     (936.6 )
Income from other fixed asset investments
    0.2             0.2  
                   
Net operating expenses
    (1,239.3 )     (14.8 )     (1,254.1 )
                   
iv)  2003 analysis
                       
Cost of sales
    (2,136.2 )     (1.7 )     (2,137.9 )
                   
Distribution costs
    (318.6 )     (3.1 )     (321.7 )
Administrative expenses(1)
    (857.8 )     (55.4 )     (913.2 )
Income from other fixed asset investments
    1.7             1.7  
                   
Net operating expenses
    (1,174.7 )     (58.5 )     (1,233.2 )
                   
 
(1)  Included in total administrative expenses is research and development expenditure of £43.2 million (2004: £41.6 million, 2003: £39.9 million).
(2)  All exceptional items arose in continuing operations.

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b)     Exceptional items analysis
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Charged in arriving at operating profit
                       
Restructuring costs
    (6.8 )     (17.4 )     (23.8 )
Impairment of goodwill
    (13.9 )            
Litigation settlement
                (43.2 )
                   
Total operating exceptional items
    (20.7 )     (17.4 )     (67.0 )
                   
i)     Restructuring costs and impairment of goodwill
£20.7 million has been charged in 2005 for restructuring in BOC Edwards. This comprises goodwill impairment of £13.9 million and severance costs. Savings of approximately £5 million are targeted from this restructuring during 2006.
In 2004 following the sale of the packaged gas business in the US, costs of £14.8 million were incurred to restructure the footprint of the remaining business in the US. This covered the severance costs and other costs of restructuring those functions which are shared by BOC’s businesses in the US. Restructuring costs in 2004 also included a charge of £2.6 million (2003: £8.3 million) relating to the integration of BOC’s gases business and part of the Air Liquide business in Japan to form Japan Air Gases.
The restructuring costs in 2003 related to various programmes including programmes under the business initiative announced in August 2001. The major programmes covered investments in information management systems, the restructuring of BOC Edwards’ manufacturing capacity and restructuring to deliver operational efficiencies in Process Gas Solutions and Industrial and Special Products. These programmes were completed in 2004.
Cash flow from operating activities includes an outflow of £16.9 million (2004: £11.9 million, 2003: £28.3 million) in respect of the various restructuring programmes.
ii)     Litigation settlement
An action was filed in the US against The BOC Group Cash Balance Retirement Plan (the Plan). It was alleged that the Plan improperly calculated lump sum distributions from the Plan in violation of the Employee Retirement Income Security Act. In November 2003, the parties reached an agreement to settle at US$69 million (£43.2 million).The settlement was approved by the court in March 2004. The full amount was provided in 2003 as an exceptional item. The settlement is being paid out of Plan assets.
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Credited/(charged) after operating profit
                       
Profit on disposal of businesses — continuing operations
    98.1              
Loss on disposal of business — continuing operations
          (79.5 )      
Profit on disposal of fixed assets — continuing operations
    10.5       4.9        
                   
Total non-operating exceptional items
    108.6       (74.6 )      
                   
iii)     Disposal of businesses
The sale of Afrox Healthcare Limited in South Africa was completed on 22 March 2005. African Oxygen Limited, BOC’s subsidiary in South Africa, retains a significant interest in the hospitals business through a 20 per cent holding in the new company. The gain on disposal was £84.9 million.
The sale of the packaged gas business in the US was completed on 30 July 2004. The loss on disposal of £79.5 million in 2004 included the write-off of the assets associated with the business, severance and other disposal costs. It also included a goodwill write-off of £19.9 million, of which £15.3 million had been written off to reserves in the years up to, and including, 1998 in accordance with prevailing UK GAAP at that time. Part of the consideration was payable subject to certain conditions and accordingly was not recognised in 2004. This remaining consideration was received in November 2005 and has been recognised in 2005 as an exceptional item.

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iv)     Profit on disposal of fixed assets
The sale of an investment in the US in 2005 resulted in a profit of £10.5 million, which has been accounted for as an exceptional item. The sale of property in the UK in 2004 resulted in a profit of £4.9 million, which was accounted for as an exceptional item.
c)     Fees to auditors
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Audit fees (Parent £0.3 million, 2004: £0.4 million, 2003: £0.4 million)
    2.2       2.5       2.0  
                   
Non-audit fees
                       
Tax services — advisory
    1.0       0.7       0.8  
 — compliance
    0.2       0.4       0.8  
Audit related services(1)
    1.9       0.9       0.5  
Other services (expatriate administration services)(2)
    1.1       1.1       1.4  
                   
Total non-audit fees
    4.2       3.1       3.5  
                   
Total fees paid to auditors
    6.4       5.6       5.5  
                   
 
(1)  Audit related services include advice associated with the implementation of Section 404 of the US Sarbanes-Oxley Act 2002 and International Financial Reporting Standards. These services are treated as non-audit services in 2005.
 
(2)  The expatriate administration contract was signed in June 2001 for a five year period following a competitive tender process.
 
(3)  The audit fees for the Afrox hospitals business are £0.4 million for 2005. These fees are not included in the above figures for 2005 following the disposal by BOC’s South African subsidiary of its majority shareholding in Afrox Healthcare Limited in March 2005.
BOC operates a number of policies designed to ensure auditor independence and objectivity. The audit committee is responsible for overseeing implementation of these policies including the review of all expenditure related to non-audit services. The audit committee, by delegation to the chairman of the audit committee, approves in advance any non-audit services and has approved a policy that prevents the use of the auditor for any services that could threaten the independence or objectivity of the audit.
3.     Interest on net debt
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Interest payable on borrowings totally repayable within five years
    52.5       55.9       48.0  
Interest payable on all other borrowings
    30.5       35.9       46.5  
                   
Interest payable and similar charges
    83.0       91.8       94.5  
Interest capitalised
    (1.1 )     (0.1 )     (0.8 )
                   
Interest payable (net of interest capitalised)
    81.9       91.7       93.7  
Interest receivable and similar income
    (34.3 )     (21.2 )     (17.9 )
                   
Interest (net)
    47.6       70.5       75.8  
Share of interest of joint ventures (net)
    25.1       17.0       19.3  
Share of interest of associates (net)
    4.0       0.9       1.0  
                   
Total interest on net debt
    76.7       88.4       96.1  
                   
Interest payable on finance leases
    0.7       1.7       3.5  
Interest payable on borrowings repayable by instalments
    7.0       10.0       14.1  
                   
Share of interest of joint ventures and associates is after deducting interest capitalised of £1.8 million (2004: £0.5 million, 2003: £0.1 million).

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4.     Tax
a)     Tax on profit on ordinary activities
                           
    2005   2004   2003
    £ million   £ million   £ million
             
Current tax:
                       
Payable in the UK
                       
Corporation tax at 30% (2004: 30%, 2003: 30%)
    116.6       79.8       85.7  
Double tax relief
    (84.1 )     (52.9 )     (57.5 )
                   
      32.5       26.9       28.2  
                   
Payable overseas
                       
 
US — Federal tax at 35% (2004: 35%, 2003: 35%)
    (3.2 )     0.1       0.2  
 
 — State and local taxes
          0.1       (0.3 )
Australia at 30% (2004: 30%, 2003: 30%)
    20.7       23.2       16.4  
South Africa at 29% (2004: 30%, 2003: 30%)
    58.3       35.5       26.0  
Japan at 42% (2004: 42%, 2003: 42%)
    16.8       14.1       11.3  
Other countries
    40.9       14.3       35.6  
                   
      133.5       87.3       89.2  
                   
Total current tax
    166.0       114.2       117.4  
                   
Deferred tax:
                       
Origination and reversal of timing differences
    (6.1 )     (12.4 )     (20.9 )
Effect of change in tax rate on opening liability
          (0.1 )     (0.1 )
                   
Total deferred tax(1)
    (6.1 )     (12.5 )     (21.0 )
                   
Tax on profit on ordinary activities
    159.9       101.7       96.4  
                   
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Analysis of charge in the year by entity type
                       
Subsidiary undertakings
    130.2       75.9       77.9  
Share of joint ventures
    26.1       23.5       16.0  
Share of associates
    3.6       2.3       2.5  
                   
Tax on profit on ordinary activities
    159.9       101.7       96.4  
                   
 
(1)  The deferred tax includes a credit of £4.7 million (2004: £13.5 million, 2003: £18.5 million) relating to subsidiary undertakings. The balance relates to the Group’s share of joint ventures and associates.
The tax charge includes a credit of £7.7 million for operating exceptional items (2004: £18.9 million, 2003: £25.0 million) and a charge of £36.1 million for non-operating exceptional items (2004: £25.6 million credit, 2003: £nil).The effective rate of tax on adjusted profit was 26.0 per cent (2004: 29.0 per cent, 2003: 29.0 per cent). The total rate of tax was 26.9 per cent (2004: 24.7 per cent, 2003: 27.4 per cent).

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b)     Deferred tax
i)     Deferred tax  — UK GAAP
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Analysis
                       
Arising from accelerated depreciation allowances
    271.6       312.2       346.5  
Other timing differences
    (27.7 )     (34.2 )     (43.7 )
Tax losses and other credits available
    (8.3 )     (30.8 )     (30.2 )
                   
      235.6       247.2       272.6  
                   
Movement during the year(1)
                       
At 1 October 2004
    247.2       272.6       283.9  
Exchange adjustment
    6.6       (3.8 )     5.7  
Arising during the year
    (4.7 )     (13.5 )     (18.5 )
Transfers to current tax
    (14.4 )     (0.2 )     (1.0 )
Acquisitions/(disposals) of businesses
                (18.7 )
Other movements
    0.9       (7.9 )     21.2  
                   
At 30 September 2005
    235.6       247.2       272.6  
                   
 
(1)  Subsidiary undertakings only.
                         
The balance at 30 September 2005 is shown in:
                       
Provisions for liabilities and charges (note 22)
    241.9       253.0       279.2  
Less: Debtors falling due after more than one year (note 15 b))
    6.3       5.8       6.6  
                   
      235.6       247.2       272.6  
                   
ii)     Deferred tax — US GAAP
For US GAAP reporting, the Group follows SFAS 109, Accounting for Income Taxes, in respect of deferred taxation. SFAS 109 requires deferred tax to be fully provided on all temporary differences.
The table below provides a reconciliation of deferred taxes from a UK GAAP basis to a US GAAP basis at 30 September 2005.
                         
        Adjustments    
    UK GAAP   to US GAAP   US GAAP
    £ million   £ million   £ million
             
Accelerated capital allowances
    271.6             271.6  
Other temporary differences
    (27.7 )     (6.3 )     (34.0 )
Tax losses and other credits available
    (8.3 )           (8.3 )
                   
      235.6       (6.3 )     229.3  
                   
 
(1)  The UK deferred tax balance of £235.6 million does not include the deferred tax asset of £98.4 million relating to the Group’s net pension liabilities. As required by the applicable UK GAAP accounting standard, FRS 17, this asset is set against the relevant retirement benefit liability to show the net position (see note 8 a)). If it was included above, it would be wholly reversed in the adjustments to US GAAP.
         
    US GAAP
    £ million
     
Movement during the year
       
At 1 October 2004
    237.0  
Exchange adjustment
    8.0  
Arising during the year(2)
    22.2  
Transfers to current tax
    (14.4 )
Acquisitions/(disposals) of businesses
     
Other movements(3)
    (23.5 )
       
At 30 September 2005
    229.3  
       
 
(2)  The amount arising during the year includes a charge of £28.5 million in respect of the undistributed earnings of foreign subsidiaries and joint ventures.
 
(3)  This mainly relates to the deferred tax on an additional minimum pension liability under US GAAP. See note 8 c) and 30 f).

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The components of deferred tax assets/(liabilities) at 30 September 2005 were:
                 
    2005   2004
    £ million   £ million
         
Long-term
               
Asset
    156.9       153.6  
Liability
    (370.8 )     (383.9 )
             
Net liability
    (213.9 )     (230.3 )
             
Short-term
               
Asset
    26.8       19.1  
Liability
    (42.2 )     (25.8 )
             
Net (liability)/asset
    (15.4 )     (6.7 )
             
Total deferred tax assets
    183.7       172.7  
Total deferred tax liabilities
    (413.0 )     (409.7 )
             
      (229.3 )     (237.0 )
             
c)     Factors affecting the current and total tax charge for the period
The table set out below provides a reconciliation between the UK corporation tax rate and the Group’s total tax rate, and between the UK corporation tax rate and the effective tax rate on adjusted profit, computed by taking the various elements of the tax reconciliation as a percentage of the profit before tax and the adjusted profit before tax.
                                                 
        Reconciliation of
    Reconciliation of   Effective Tax Rate
    Total Tax Rate   on Adjusted Profit
         
    2005   2004   2003   2005   2004   2003
    %   %   %   %   %   %
                         
UK corporation tax rate
    30.0       30.0       30.0       30.0       30.0       30.0  
Difference in tax rates of overseas subsidiaries, joint ventures and associates
    0.1       1.1       0.5       0.1       0.9       0.4  
Excess of tax depreciation over book depreciation
    (0.6 )     (2.5 )     (3.3 )     (0.7 )     (2.1 )     (2.8 )
Other timing differences
          (0.9 )     2.1       0.1       (0.7 )     1.8  
State and local taxes
    0.4       0.2       0.3       0.4       0.2       0.3  
Net (utilisation)/creation of losses
    (2.0 )           0.9       (2.4 )           0.7  
Investment tax credits
    (0.3 )           (0.1 )     (0.3 )           (0.1 )
Prior year tax
    (1.2 )     (3.0 )     (0.1 )     (1.4 )     (2.4 )      
Tax effect of exceptional items
    (0.3 )     3.6       4.4                    
Permanent items and other items with less than a 5% net effect
    1.9       (0.8 )     (1.3 )     2.2       (0.7 )     (1.1 )
                                     
Current total tax rate/effective tax rate
    28.0       27.7       33.4       28.0       25.2       29.2  
Deferred tax timing differences
    (1.1 )     (3.0 )     (6.0 )     (2.0 )     3.8       (0.2 )
                                     
Total tax rate/effective tax rate
    26.9       24.7       27.4       26.0       29.0       29.0  
                                     
Profit on ordinary activities before tax, as shown in the consolidated profit and loss account, is analysed over its component parts as follows:
                         
    2005   2004   2003
    £ million   £ million   £ million
             
UK
    59.2       83.7       67.0  
Overseas
    534.4       328.6       284.9  
                   
      593.6       412.3       351.9  
                   
d)     Factors that may affect future tax charges
The total charge in future periods will be affected by any changes to the corporation tax rates in force in the countries in which the Group operates. The current tax charge will also be affected by changes in the excess of tax depreciation over book depreciation and the use of tax credits.

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e)     Unused tax credits
On a consolidated basis, the Group has net operating loss carryforwards of £1.3 million. If not offset against taxable income, these losses will expire as follows:
         
    Net
    Operating
    Loss
Year   £ million
     
2006
     
2007
     
2008
     
2009
     
2010
     
Thereafter, or no expiry date
    1.3  
For US Federal tax purposes, the Group has investment tax credits and general business tax credits to carry forward of approximately £7.8 million, which are available to reduce income taxes otherwise payable. These do not expire until 2006 or thereafter.
In addition, the Group has alternative minimum tax credits for US Federal income tax purposes of approximately £27.3 million which can be carried forward to reduce regular tax liabilities of future years. There is no expiration date on these credits.
Investment tax credits are accounted for by the flow-through method whereby they reduce income taxes currently payable and the provision for income taxes in the period in which the assets giving rise to such credits are placed in service. Deferred tax assets, subject to the need for a valuation allowance, are recognised to the extent that the investment tax credits are not currently utilised.
5.     Directors
Directors’ remuneration and interests are given in the report on remuneration on pages 72 to 83 of the annual report and accounts.
6.     Employee numbers
a)     Subsidiaries
                                 
    2005   2004
         
    Year End   Average   Year End   Average
                 
i)  Employees by business
                               
Process Gas Solutions
    6,821       6,430       5,836       5,631  
Industrial and Special Products
    13,004       12,991       13,874       14,895  
BOC Edwards
    4,680       4,780       4,911       4,823  
Afrox hospitals
          6,628       13,392       13,654  
Gist
    5,638       5,135       4,961       4,852  
Corporate
    429       416       409       405  
                         
      30,572       36,380       43,383       44,260  
                         
ii)  Employees by region
                               
Europe
    13,408       12,912       12,712       12,504  
Americas
    6,216       6,223       6,283       7,140  
Africa
    3,541       10,049       16,790       17,073  
Asia/ Pacific
    7,407       7,196       7,598       7,543  
                         
      30,572       36,380       43,383       44,260  
                         
 
 
b)  Joint ventures and associates
                               
 
Joint ventures
    6,111       6,152       6,094       5,993  
Associates
    14,124       7,516       906       885  
                         
      20,235       13,668       7,000       6,878  
                         

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c)     Employment costs(1)
                         
    2005   2004   2003
    £ million   £ million   £ million
             
Wages and salaries
    790.5       855.2       844.7  
Social security costs
    74.8       79.6       77.7  
Other pension costs(2)
    86.6       80.8       115.4  
                   
      951.9       1,015.6       1,037.8  
                   
 
(1)  Subsidiary undertakings only.
 
(2)  Other pension costs includes an exceptional credit of £nil (2004: £4.4 million, 2003 £43.2 million charge). See also notes 2 b) and 8 a).
7.     Options and incentive schemes
a)     Policy
Executive options that are granted at the market price of the company’s shares at the time of the grant do not attract a compensation expense under UK GAAP. For those executive options, including the Long-Term Incentive Plan, that are granted at a discount to the market price of the company’s shares at the time of the grant, the compensation expense is charged to the profit and loss account over the life of the option. The Group takes advantage of the exemption granted under UITF 17 (revised 2003), Employee Share Schemes, whereby no compensation expense need be recorded for employee schemes that are granted at a discount.
b)     Summary of movements
BOC operates share option schemes for both executives and employees. The features of these are given in the report on remuneration on pages 73 to 75 of the annual report and accounts and in the employees report on page 25 of the annual report and accounts.
                                                         
                            Long-
                            Term
            Incentive
    Employee Options   Executive Options   Plan(1)
             
    Number of       Weighted   Number of       Weighted   Number
    Shares   Range of   Average   Shares   Range of   Average   of Shares
    Million   Option Prices   Option Price   Million   Option Prices   Option Price   Million
                             
Outstanding at 1 October 2002
    5.4       650p-914p       855p       23.5       677p-1119p       943p        
Granted
    2.3       698p       698p       4.9       776p-873p       837p       1.2  
Exercised
    (0.3 )     650p-914p       826p       (0.4 )     677p-851p       751p        
Lapsed
    (1.1 )     650p-914p       868p       (1.6 )     677p-1016p       937p        
                                           
Outstanding at 30 September 2003
    6.3       698p-914p       801p       26.4       677p-1119p       926p       1.2  
Granted
    1.2       795p       795p       2.9       820p-896p       820p       1.4  
Exercised
    (0.7 )     698p-914p       811p       (0.7 )     677p-919p       749p        
Lapsed
    (1.2 )     698p-914p       821p       (2.0 )     677p-1119p       940p       (0.1 )
                                           
Outstanding at 30 September 2004
    5.6       698p-914p       794p       26.6       722p-1079p       919p       2.5  
Granted
    1.1       787p       787p       1.7       905p-1074p       905p       1.5  
Exercised
    (0.8 )     698p-914p       857p       (3.5 )     722p-1016p       887p        
Lapsed
    (0.6 )     698p-914p       824p       (1.7 )     776p-1034p       921p       (0.6 )
                                           
Outstanding at 30 September 2005
    5.3       698p-914p       780p       23.1       776p-1079p       922p       3.4  
                                           
Number of participants at 30 September 2005
    5,361                       1,284                       129  
                                           
Options exercisable:
                                                       
At 30 September 2005
    0.1       823p-914p       873p       14.8       848p-1079p       965p       0.5  
At 30 September 2004
    0.2       766p-894p       875p       6.3       722p-980p       892p        
                                           
Fair value of options granted during:
                                                       
Year ended 30 September 2005
    254p                       175p                       737p  
Year ended 30 September 2004
    205p                       175p                       705p  
                                           
 
(1)  The long-term incentive plan was granted at an option price of £nil.

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The weighted average fair value of options granted during the year was calculated using the Black-Scholes option pricing model. Details of the assumptions used are given in note 30 h).
c)     Analysis of options outstanding
                                                                 
            Long-Term Incentive
    Employee Options   Executive Options   Plan(1)
             
    Number of   Weighted   Normal   Number of   Weighted   Normal   Number   Normal
    Options   Average   Exercisable   Options   Average   Exercisable   of Awards   Exercisable
    Thousand   Option Price   Date   Thousand   Option Price   Date   Thousand   Date
                                 
Outstanding at 30 September 2005
                                                               
Date of grant
                                                               
1996
                      410       916p       1999-2006              
1997
                      669       980p       2000-2007              
1998
    20       823p       2005-2006       1,060       916p       2001-2008              
1999
    231       766p       2004-2007       1,281       859p       2002-2009              
2000
    257       870p       2005-2008       3,997       937p       2003-2010              
2001
    461       894p       2004-2009       3,184       994p       2004-2011              
2002
    446       914p       2005-2010       4,189       1016p       2005-2012              
2003
    1,872       698p       2006-2011       4,076       839p       2006-2013       982       2006-2013  
2004
    1,009       795p       2007-2012       2,564       820p       2007-2014       1,159       2007-2014  
2005
    1,024       787p       2008-2013       1,669       905p       2008-2015       1,273       2008-2015  
                                                 
      5,320                       23,099                       3,414          
                                                 
 
(1)  The long-term incentive plan was granted at an option price of £nil.
8.     Pensions and other retirement benefits
a)     UK GAAP Group
The Group operates a number of pension schemes throughout the world. The larger schemes are self-administered and the schemes’ assets are held independently of the Group’s finances. Pension costs are assessed in accordance with the advice of independent, professionally qualified actuaries.
Contributions to funded defined benefit schemes are based on advice from independent actuaries using actuarial methods, the objective of which is to provide adequate funds to meet pension obligations as they fall due. For the two largest schemes, in the UK and US, the dates of the latest actuarial reviews are 31 March 2002 and 1 January 2004 respectively.
In South Africa, under the Pension Funds Second Amendment Act 2001, surpluses in pension funds have to be used in a manner specified in Regulations to the Act to improve current and former members’ benefits before the employer can obtain any benefit from the surpluses. Consequently, it is considered unlikely that the company will obtain any benefit from the surpluses in the South African schemes. Therefore, in accordance with FRS 17, the surpluses at 30 September 2005 have been written off in the statement of total recognised gains and losses.
In Europe, company contributions to the main scheme in respect of current service are currently payable at a rate of 13.8 per cent of payroll. In the year ended 30 September 2005 the company made additional contributions of £36 million to this scheme in order to reduce the funding valuation deficit. The level of additional contributions for the year to 30 September 2006 is expected to be up to 20 per cent higher than in 2005.
In the Americas, company contributions to the main pension plan remain suspended as the plan continues to be in surplus.
In Africa, company contributions were payable at rates ranging from 11 per cent to 21 per cent of payroll and are expected to remain at that level for the year to 30 September 2006.
In Asia/ Pacific, company contributions to the main scheme were payable at rates ranging from 9 per cent to 20 per cent of payroll and are expected to remain at that level for the year to 30 September 2006.
Some of the defined benefit schemes, including the UK scheme, are closed to new members. It is therefore expected that under the projected unit method prescribed by FRS 17 the contribution rate in respect of current service will increase as the members of the schemes approach retirement.

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The most recent actuarial funding valuations have been updated by independent qualified actuaries, in order to assess the liabilities of the schemes at 30 September 2005 for the purposes of FRS 17. Scheme assets are stated at their market value at 30 September 2005.
                                 
Main Assumptions for FRS 17 Purposes   Europe   Americas   Africa   Asia/Pacific
                 
2005
                               
Rate of increase in salaries
    4.4%       3.8%       5.5%       3.5%  
Rate of increase in pensions in payment
    2.9%             4.5%       2.4%  
Discount rate
    5.0%       5.4%       8.5%       5.4%  
Inflation
    2.9%       2.6%       4.5%       2.5%  
                         
2004
                               
Rate of increase in salaries
    4.4%       3.8%       7.5%       3.6%  
Rate of increase in pensions in payment
    2.9%             5.3%       2.4%  
Discount rate
    5.5%       5.7%       10.0%       6.1%  
Inflation
    2.9%       2.5%       5.5%       2.5%  
                         
2003
                               
Rate of increase in salaries
    4.1%       3.75%       7.5%       3.5%  
Rate of increase in pensions in payment
    2.6%             4.8%       2.5%  
Discount rate
    5.3%       5.9%       10.0%       6.2%  
Inflation
    2.6%       2.5%       5.0%       2.5%  
Date of latest actuarial funding valuation
    31 Mar 02       01 Jan 04       30 Jun 04       31 Dec 03  
The assumptions used for the US health care benefits for FRS 17 purposes are a discount rate of 5.4 per cent (2004: 5.7 per cent, 2003: 5.9 per cent) and an ultimate health care cost trend rate of 4.5 per cent (2004: 4.5 per cent, 2003: 4.5 per cent).
Contributions to non defined benefit schemes in the year were £15.9 million (2004: £15.6 million, 2003: £12.0 million) and are included in note 6 c).

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The assets in the schemes and the expected rates of return were:
                                 
    Equities   Bonds   Other   Total
                 
Long-term rate of return expected at 30 September 2005
                               
Europe
    7.7%       4.6%       7.2%        
Americas
    7.7%       3.9%       3.9%        
Africa
    10.9%       6.4%       5.7%        
Asia/Pacific
    7.7%       4.3%       4.9%        
                         
Value at 30 September 2005 (£ million)
                               
Europe
    1,016.0       279.7       218.1       1,513.8  
Americas
    310.3       76.2       0.3       386.8  
Africa
    111.9       15.6       14.7       142.2  
Asia/Pacific
    154.8       8.8       51.7       215.3  
                         
Total
    1,593.0       380.3       284.8       2,258.1  
                         
Long-term rate of return expected at 30 September 2004
                               
Europe
    8.5%       5.1%       7.5%        
Americas
    9.5%       3.2%       3.5%        
Africa
    13.5%       10.0%       9.0%        
Asia/Pacific
    8.1%       4.6%       5.0%        
                         
Value at 30 September 2004 (£ million)
                               
Europe
    870.3       260.5       106.9       1,237.7  
Americas
    292.7       76.1       0.3       369.1  
Africa
    93.8       17.5       6.9       118.2  
Asia/Pacific
    116.7       15.6       37.1       169.4  
                         
Total
    1,373.5       369.7       151.2       1,894.4  
                         
Long-term rate of return expected at 30 September 2003
                               
Europe
    8.5%       5.0%       6.4%        
Americas
    9.5%       4.1%              
Africa
    13.0%       10.0%       8.1%        
Asia/Pacific
    8.5%       4.8%       5.2%        
                         
Value at 30 September 2003 (£ million)
                               
Europe
    793.9       216.1       62.3       1,072.3  
Americas
    307.0       66.2             373.2  
Africa
    73.6       16.8       7.9       98.3  
Asia/Pacific
    105.6       15.1       25.2       145.9  
                         
Total
    1,280.1       314.2       95.4       1,689.7  
                         

62


Table of Contents

PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
The following amounts at 30 September 2005 were measured in accordance with the requirements of FRS 17:
                                                 
            Americas            
        Americas   Health            
    Europe   Pensions   Care   Africa   Asia/Pacific   Total
    £ million   £ million   £ million   £ million   £ million   £ million
                         
2005
                                               
Total market value of asse