6-K
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):
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):
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.
Enclosure: Scheme Document
relating to the recommended cash offer for The BOC Group by Linde AG
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 |
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.
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.
1
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
SECs 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. BOCs SEC reporting obligations will be suspended
shortly after the Effective Date upon the filing of the required
forms with the SEC, and BOCs 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, Lindes
ability to successfully integrate the operations and employees
of BOC, as well as additional
2
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 Panels 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 Panels 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.
3
TABLE OF CONTENTS
4
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.
5
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.
6
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.
7
PART ONE: LETTER FROM THE CHAIRMAN OF BOC
|
|
|
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
BOCs 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
8
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 BOCs
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
Exchanges 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
BOCs 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,
9
PART ONE: LETTER FROM THE CHAIRMAN OF BOC
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 Lindes 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 BOCs 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
Lindes 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 BOCs obligations in relation to the funding of such
schemes following completion of the Offer and the agreement has
been cleared by the Pensions Regulator.
Lindes 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 BOCs 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
BOCs 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.
10
PART ONE: LETTER FROM THE CHAIRMAN OF BOC
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
Sir Rob Margetts
Chairman
The BOC Group plc
11
PART TWO: EXPLANATORY STATEMENT
(in compliance with section 426 of the Companies Act)
|
|
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 Boards 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
Lindes 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
12
PART TWO: EXPLANATORY STATEMENT
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 BOCs 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.
13
PART TWO: EXPLANATORY STATEMENT
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 persons 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; |
14
PART TWO: EXPLANATORY STATEMENT
|
|
(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
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.
15
PART TWO: EXPLANATORY STATEMENT
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 BOCs 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 BOCs 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
16
PART TWO: EXPLANATORY STATEMENT
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 BOCs Articles of Association |
It is proposed that BOCs 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 BOCs 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 BOCs 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 BOCs 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
17
PART TWO: EXPLANATORY STATEMENT
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 Boards 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 Lindes 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 Lindes 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 |
18
PART TWO: EXPLANATORY STATEMENT
|
|
|
equipment. In the financial year to 31 December 2005,
Material Handling had sales of
3,628 million,
accounting for 38 per cent. of Lindes total
sales. |
Lindes 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 companys
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, Lindes 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
Germanys 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).
Lindes 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 Commissions approval of the Offer requires
the disposal of Lindes gas business in the UK, BOCs
gas activities in Poland and contracts with Lindes
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 BOCs interest or
acquiring Air Liquides interest in a number of joint
ventures in the region.
The US Federal Trade Commissions 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 worlds
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 BOCs 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 |
19
PART TWO: EXPLANATORY STATEMENT
|
|
|
30 September 2005, Industrial and Special Products had
Total Revenue of £1,722 million, accounting for
37 per cent. of BOCs 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 BOCs 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.
BOCs 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 BOCs 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
BOCs 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 Lindes 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
20
PART TWO: EXPLANATORY STATEMENT
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 Lindes
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 Lindes 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.
21
PART TWO: EXPLANATORY STATEMENT
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 Fergusons 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 BOCs 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
Lindes 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. Lindes 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 BOCs and Lindes
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 BOCs and/or Lindes business
operations and/or some rationalisation of BOCs and/or
Lindes workforces. The Linde Directors believe that the
complementary geographic nature of BOCs and Lindes
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
groups requirements for corporate and operational
headquarters, which will also consider the location of
Lindes headquarters in Germany and BOCs 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
22
PART TWO: EXPLANATORY STATEMENT
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 BOCs
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
23
PART TWO: EXPLANATORY STATEMENT
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
Exchanges 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 Exchanges 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. BOCs SEC
reporting obligations will be suspended shortly after the
Effective Date upon the filing of the required forms with the
SEC, and BOCs 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
24
PART TWO: EXPLANATORY STATEMENT
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.
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.
25
PART TWO: EXPLANATORY STATEMENT
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 |
26
PART TWO: EXPLANATORY STATEMENT
|
|
|
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.
27
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 |
28
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
Commissions 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
BOCs 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 |
29
PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
|
|
|
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
BOCs 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 |
30
PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
|
|
|
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
BOCs 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
BOCs 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, |
31
PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
|
|
|
|
|
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
Groups 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 employees 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 partys 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 Groups 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
Groups 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; |
32
PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
|
|
|
|
(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 Groups 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
BOCs 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 |
33
PART THREE: CONDITIONS TO THE IMPLEMENTATION
OF THE SCHEME AND THE OFFER
|
|
|
|
(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
BOCs 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
BOCs 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.
34
PART THREE: CONDITIONS TO THE IMPLEMENTATION
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.
35
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, BOCs
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 BOCs 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
BOCs unaudited restatement from UK GAAP to IFRS of
BOCs 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 BOCs 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.
36
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.
37
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
38
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
BOCs 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 BOCs 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.
39
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. |
40
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 |
|
|
|
|
|
|
|
|
|
|
|
41
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
42
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups 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.
43
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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
44
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups share of the results of the
investment is included in the profit and loss account, and the
Groups 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.
45
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups 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 Groups 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. |
46
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 BOCs controlling
interest. |
47
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 BOCs controlling
interest. |
48
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 BOCs controlling
interest. |
49
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups 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 BOCs controlling
interest. |
50
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 Groups 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 Groups 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 BOCs controlling
interest. |
51
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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. |
52
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 BOCs
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
BOCs 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, BOCs
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.
53
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 BOCs
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).
54
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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
Groups 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).
55
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups 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). |
56
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups 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.
57
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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
companys 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 companys 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. |
59
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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 Groups
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.
60
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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).
61
PART FOUR: FINANCIAL INFORMATION ON THE BOC GROUP
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
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 |