EXHIBIT 14.2
The Company’s responses to the requirements of Form 20-F have been incorporated into this annual report by reference to the Company’s Report on Form 6-K dated December 10, 2003 which contains the Company’s Report and accounts 2003. Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, the information incorporated into this annual report by reference to such Form 6-K is attached as an exhibit hereto.
Report of the directors | ||
02 | Financial highlights | |
04 | Chairman’s statement | |
06 | Chief executive’s review | |
08 | Board of directors | |
10 | Executive management board | |
12 | Group five year record | |
14 | Group profile | |
23 | Employees | |
25 | Safety, health and the environment | |
28 | Research, development and information technology | |
29 | Risk factors | |
31 | Operating review | |
46 | Financial review | |
53 | Corporate governance | |
60 | Report on remuneration |
Financial statements | ||
70 | Responsibility of the directors | |
71 | Report by the independent auditors | |
72 | Group profit and loss account | |
73 | Group balance sheet | |
74 | Group cash flow statement | |
75 | Total recognised gains and losses | |
75 | Movement in shareholders’ funds | |
76 | Balance sheet of The BOC Group plc | |
77 | Accounting policies | |
79 | Notes to the financial statements | |
122 | Group undertakings |
Shareholder information | ||
124 | Dividends | |
124 | Nature of trading market | |
125 | Analysis of shareholdings | |
126 | Taxation | |
128 | Financial calendar | |
128 | Key contacts information | |
130 | Cross reference to Form 20-F | |
131 | Glossary of terms | |
132 | Index |
Cautionary statement
Financial year
01 The BOC Group plcAnnual report and accounts 2003
Board of directors
Rob Margetts CBEno (01)
Tony Isaacno4Δ (02)
Fabiola ArredondolOn (03)
Julie BaddeleylOno (04)
John Bevan4Δ (05)
Andrew BonfieldlOn (06)
08 The BOC Group plcAnnual report and accounts 2003
René Médorio4Δ (07)
Roberto G Mendozal Ono (08)
Matthew MiaulOn (09)
Sir Christopher O’DonnelllOn (10)
Dr ‘Raj’ Rajagopal4Δ (11)
John Walsh4Δ (12)
Board committees | ||
l | Audit committee | |
O | Remuneration committee | |
n | Nomination committee | |
o | Pensions committee | |
4 | Executive management board | |
Δ | Investment committee |
09 The BOC Group plcAnnual report and accounts 2003
Executive management board
John Bevan (01)
Nick Deeming (02)
Stephen Dempsey (03)
Peter Dew (04)
Tony Isaac (05)
Rob Lourey (06)
10 The BOC Group plcAnnual report and accounts 2003
Kent Masters (07)
René Médori (08)
Dr ‘Raj’ Rajagopal (09)
Greg Sedgwick (10)
John Walsh (11)
11 The BOC Group plcAnnual report and accounts 2003
Group five year record
1999 | 2000 | 2001 | 2002 | 2003 | ||||||||||||||||
Profit and loss | £ million | £ million | £ million | £ million | £ million | |||||||||||||||
Turnover1 | 3,052.7 | 3,579.7 | 3,772.9 | 3,657.7 | 3,718.3 | |||||||||||||||
Total operating profit before exceptional items2 | 479.9 | 496.4 | 530.6 | 500.1 | 505.6 | |||||||||||||||
Exceptional items | (69.4 | ) | (4.4 | ) | (108.3 | ) | (74.5 | ) | (67.0 | ) | ||||||||||
Total operating profit2 | 410.5 | 492.0 | 422.3 | 425.6 | 438.6 | |||||||||||||||
Profit/(loss) on termination/disposal of businesses | 32.5 | 12.5 | – | (20.2 | ) | – | ||||||||||||||
Profit on disposal of fixed assets | – | – | 3.6 | – | – | |||||||||||||||
Profit before interest | 443.0 | 504.5 | 425.9 | 405.4 | 438.6 | |||||||||||||||
Interest on net debt | (80.2 | ) | (111.5 | ) | (123.4 | ) | (103.1 | ) | (96.1 | ) | ||||||||||
Interest on pension scheme liabilities | – | (100.7 | ) | (107.2 | ) | (106.1 | ) | (110.2 | ) | |||||||||||
Expected return on pension scheme assets | – | 149.5 | 166.9 | 139.1 | 119.6 | |||||||||||||||
Other net financing income | – | 48.8 | 59.7 | 33.0 | 9.4 | |||||||||||||||
Profit before tax | 362.8 | 441.8 | 362.2 | 335.3 | 351.9 | |||||||||||||||
Tax on profit on ordinary activities | (85.3 | ) | (135.2 | ) | (104.6 | ) | (106.2 | ) | (96.4 | ) | ||||||||||
Profit after tax | 277.5 | 306.6 | 257.6 | 229.1 | 255.5 | |||||||||||||||
Minority interests | (27.4 | ) | (28.0 | ) | (33.5 | ) | (26.2 | ) | (36.4 | ) | ||||||||||
Profit for the financial year | 250.1 | 278.6 | 224.1 | 202.9 | 219.1 | |||||||||||||||
Earnings per 25p Ordinary share | ||||||||||||||||||||
Basic: | ||||||||||||||||||||
— on profit for the financial year | 51.4 | p | 57.2 | p | 46.0 | p | 41.4 | p | 44.5 | p | ||||||||||
— before exceptional items | 56.6 | p | 53.5 | p | 57.5 | p | 55.9 | p | 52.9 | p | ||||||||||
Diluted: | ||||||||||||||||||||
— on profit for the financial year | 51.2 | p | 56.9 | p | 45.9 | p | 41.2 | p | 44.5 | p | ||||||||||
— before exceptional items | 56.4 | p | 53.3 | p | 57.3 | p | 55.7 | p | 52.9 | p | ||||||||||
Ordinary dividends per share3 | ||||||||||||||||||||
Actual | 32.7 | p | 35.0 | p | 37.0 | p | 38.0 | p | 39.0 | p | ||||||||||
Number of fully paid Ordinary shares in issue at the year end (million) | 491.0 | 492.2 | 494.4 | 497.3 | 497.7 | |||||||||||||||
1. | Subsidiary undertakings only. | |
2. | Including share of operating profit of joint ventures and associates. | |
3. | Dividends paid in the calendar year. | |
4. | Excludes exceptional items. A fuller explanation of the term ‘adjusted’, and the reasons for presenting such a measure, is given in the operating review on page 31. A reconciliation of adjusted profit before tax to profit before tax is given in the profit and loss account on page 72. A reconciliation of adjusted return on capital employed to return on capital employed is given in the operating review on page 32. |
12 The BOC Group plcAnnual report and accounts 2003
1999 | 2000 | 2001 | 2002 | 2003 | |||||||||||||||||
Balance sheet | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Fixed assets | |||||||||||||||||||||
– | intangible assets | 36.5 | 49.2 | 48.1 | 150.7 | 206.1 | |||||||||||||||
– | tangible assets | 3,043.9 | 3,294.0 | 3,168.6 | 3,027.4 | 2,913.4 | |||||||||||||||
– | joint ventures, associates and other investments | 365.9 | 456.3 | 449.8 | 468.6 | 656.7 | |||||||||||||||
Working capital (excluding bank balances and short-term loans) | 275.5 | 282.8 | 257.0 | 203.1 | 220.1 | ||||||||||||||||
Deferred tax provisions | (36.4 | ) | (295.8 | ) | (294.3 | ) | (291.8 | ) | (279.2 | ) | |||||||||||
Other non current liabilities and provisions | (262.9 | ) | (181.4 | ) | (184.3 | ) | (173.7 | ) | (145.8 | ) | |||||||||||
Net borrowings and finance leases | (1,138.5 | ) | (1,308.4 | ) | (1,272.1 | ) | (1,325.6 | ) | (1,368.1 | ) | |||||||||||
Net assets excluding pension assets and liabilities | 2,284.0 | 2,296.7 | 2,172.8 | 2,058.7 | 2,203.2 | ||||||||||||||||
Pension assets5 | – | 402.0 | 107.0 | 54.3 | 50.7 | ||||||||||||||||
Pension liabilities5 | – | (31.1 | ) | (56.0 | ) | (311.0 | ) | (341.8 | ) | ||||||||||||
Net assets including pension assets and liabilities | 2,284.0 | 2,667.6 | 2,223.8 | 1,802.0 | 1,912.1 | ||||||||||||||||
Shareholders’ capital and reserves | 2,013.1 | 2,394.0 | 2,086.2 | 1,684.1 | 1,734.8 | ||||||||||||||||
Minority shareholders’ interests | 270.9 | 273.6 | 137.6 | 117.9 | 177.3 | ||||||||||||||||
Total capital and reserves | 2,284.0 | 2,667.6 | 2,223.8 | 1,802.0 | 1,912.1 | ||||||||||||||||
Other selected financial information Capital employed6 | |||||||||||||||||||||
Total capital and reserves | 2,284.0 | 2,667.6 | 2,223.8 | 1,802.0 | 1,912.1 | ||||||||||||||||
Non current liabilities and provisions | 299.3 | 477.2 | 478.6 | 465.5 | 425.0 | ||||||||||||||||
Net borrowings and finance leases7 | 1,138.5 | 1,308.4 | 1,272.1 | 1,325.6 | 1,368.1 | ||||||||||||||||
3,721.8 | 4,453.2 | 3,974.5 | 3,593.1 | 3,705.2 | |||||||||||||||||
Total assets | 4,814.0 | 5,618.3 | 5,060.0 | 4,947.4 | 4,931.8 | ||||||||||||||||
Long-term liabilities and provisions | 1,278.7 | 1,399.0 | 1,554.5 | 1,897.5 | 1,851.5 | ||||||||||||||||
Capital expenditure1 | 505.4 | 413.7 | 352.6 | 354.3 | 281.2 | ||||||||||||||||
Depreciation and amortisation1 | 270.8 | 313.3 | 329.5 | 330.9 | 333.4 | ||||||||||||||||
Employees | |||||||||||||||||||||
UK | 10,067 | 9,929 | 10,597 | 11,266 | 10,414 | ||||||||||||||||
Overseas | 32,057 | 32,780 | 32,574 | 35,014 | 34,093 | ||||||||||||||||
Continuing operations | 42,124 | 42,709 | 43,171 | 46,280 | 44,507 | ||||||||||||||||
Ratios | |||||||||||||||||||||
Return on capital employed8 | 11.2% | 12.4% | 10.3% | 10.5% | 10.8% | ||||||||||||||||
Adjusted return on capital employed4, 9 | 13.1% | 12.5% | 12.9% | 12.3% | 12.5% | ||||||||||||||||
Net debt/capital employed | 30.6% | 29.4% | 32.0% | 36.9% | 36.9% | ||||||||||||||||
Net debt/equity | 49.8% | 49.0% | 57.2% | 73.6% | 71.5% | ||||||||||||||||
5. | Pension assets represents the excess of pension assets over pension liabilities in countries where pension assets exceed pension liabilities. Pension liabilities represents the excess of pension liabilities over pension assets in countries where pension liabilities exceed pension assets. | |
6. | As defined in note 1 b) to the financial statements. | |
7. | Analysed for 2003 and 2002 in note 20 to the financial statements. | |
8. | Operating profit as a percentage of the average capital employed excluding net pension liabilities. The average is calculated on a monthly basis. | |
9. | Operating profit before exceptional items as a percentage of the average capital employed excluding net pension liabilities. The average is calculated on a monthly basis. |
13 The BOC Group plcAnnual report and accounts 2003
Group profile
Introduction
Analysis of results by business
Turnover | Operating profit | Adjusted operating profit | ||||||||||||||||||||||
£ million | % | £ million | % | £ million | % | |||||||||||||||||||
Process Gas Solutions | 1,242.7 | 29 | 177.1 | 40 | 184.0 | 36 | ||||||||||||||||||
Industrial and Special Products | 1,751.2 | 40 | 238.2 | 54 | 242.7 | 48 | ||||||||||||||||||
BOC Edwards | 684.1 | 16 | 7.9 | 2 | 18.5 | 4 | ||||||||||||||||||
Afrox hospitals | 353.4 | 8 | 46.1 | 11 | 46.1 | 9 | ||||||||||||||||||
Gist | 291.8 | 7 | 29.2 | 7 | 29.2 | 6 | ||||||||||||||||||
Corporate | – | – | (59.9 | ) | (14 | ) | (14.9 | ) | (3 | ) | ||||||||||||||
4,323.2 | 100 | 438.6 | 100 | 505.6 | 100 | |||||||||||||||||||
14 The BOC Group plcAnnual report and accounts 2003
Analysis of results by region (including share of joint ventures and associates) | ||||||||||||||||||||||||
Turnover | Operating profit | Adjusted operating profit | ||||||||||||||||||||||
£ million | % | £ million | % | £ million | % | |||||||||||||||||||
Europe | 1,154.4 | 27 | 137.0 | 31 | 144.3 | 29 | ||||||||||||||||||
Americas | 1,238.8 | 29 | 42.7 | 10 | 91.8 | 18 | ||||||||||||||||||
Africa | 585.5 | 13 | 85.0 | 19 | 85.0 | 17 | ||||||||||||||||||
Asia/Pacific | 1,344.5 | 31 | 173.9 | 40 | 184.5 | 36 | ||||||||||||||||||
4,323.2 | 100 | 438.6 | 100 | 505.6 | 100 | |||||||||||||||||||
Management organisation
15 The BOC Group plcAnnual report and accounts 2003
Group profile continued
Corporate development
16 The BOC Group plcAnnual report and accounts 2003
Industrial gases
17 The BOC Group plcAnnual report and accounts 2003
Group profile continued
Business segments
Process Gas Solutions (PGS)
18 The BOC Group plcAnnual report and accounts 2003
Industrial and Special Products (ISP)
19 The BOC Group plcAnnual report and accounts 2003
Group profile continued
20 The BOC Group plcAnnual report and accounts 2003
BOC Edwards
21 The BOC Group plcAnnual report and accounts 2003
Group profile continued
Afrox hospitals
Gist (formerly BOC Distribution Services)
22 The BOC Group plcAnnual report and accounts 2003
Employees
Europe | 12,353 | |||
Americas | 7,451 | |||
Africa | 17,138 | |||
Asia/Pacific | 7,565 | |||
Employee satisfaction and commitment
Employment policies and Code of Conduct
Communication and involvement
Resourcing, training and development
23 The BOC Group plcAnnual report and accounts 2003
Employees continued
Reward and recognition
Retirement benefit plans
Diversity
Employee share schemes
24 The BOC Group plcAnnual report and accounts 2003
Safety, health and the environment
Overall safety performance
2002 | 20031 | |||||||
Lost workday case rate | 0.37 | 0.45 | ||||||
Total recordable case rate | 0.76 | 1.18 | ||||||
Passenger car avoidable accident rate | 1.72 | 1.99 | ||||||
Truck avoidable accident rate | 2.13 | 2.75 | ||||||
Safety
• | Lost workday case rate (LWCR) per 200,000 hours. This includes all accidents resulting in the loss of one complete day of work, according to best international practice. Many companies only report cases resulting in three or more lost workdays as deemed reportable under RIDDOR regulations. |
• | Total recordable case rate (TRCR) per 200,000 hours. This includes all LWCRs and medical treatment cases. |
• | Passenger car avoidable accident rate (PCAAR) per million miles. |
• | Truck avoidable accident rate (TAAR) per million miles. |
25 The BOC Group plcAnnual report and accounts 2003
Safety, health and the environment continued
Occupational health and hygiene
The environment
26 The BOC Group plcAnnual report and accounts 2003
The BOC Foundation for the Environment
27 The BOC Group plcAnnual report and accounts 2003
Research, development and information technology
Research and development
Information technology
28 The BOC Group plcAnnual report and accounts 2003
Risk factors
BOC is affected by the semiconductor business cycle
Acquisitions may not be successful in achieving intended benefits and synergies
• | delays or difficulties in completing the integration of acquired companies or assets; |
• | higher than expected costs or a need to allocate resources to manage unexpected operating difficulties; |
• | diversion of the attention and resources of BOC’s management; |
• | inability to retain key employees in acquired companies; |
• | inability to retain key customers; and |
• | assumption of liabilities unrecognised in due diligence. |
The growth of BOC’s gases business will depend on the ability to win and execute large projects profitably
• | failure to complete the project on time owing to unforeseen construction problems (which may require BOC to pay penalties under the terms of the customer contract); |
• | failure of the plant to deliver the contracted volumes and quantities of product required by the customer because of design errors or errors in manufacturing or construction (which may require BOC to pay penalties under the terms of the customer contract); and |
• | inability to operate the plant at costs assumed in BOC’s financial evaluation of the project. |
The safety of BOC’s operations is critical to success
• | exclusion from certain market sectors deemed important for future development of the business (such as medical gases); |
• | damage to reputation; |
• | fines and penalties for breaches of safety laws; and |
• | liability payments and costs to employees or third parties arising from injury or damage. |
BOC operates in over 50 different countries and is therefore exposed to economic, political and business risks associated with international operations
BOC relies on development of, or access to, technology to support business growth
29 The BOC Group plcAnnual report and accounts 2003
Risk factors continued
BOC operates in a highly competitive environment
Recognising and anticipating changes in the manufacturing economy is key to BOC’s success
BOC’s success depends to a significant extent on its key personnel and employees
Litigation may have an adverse impact on financial results
Increased energy costs could reduce profitability
Ineffective implementation of computer software systems
30 The BOC Group plcAnnual report and accounts 2003
Operating review
Introduction
Impact of currency movements
Impact of | 2001 results | Impact of | 2002 results | |||||||||||||||||||||
2001 results | movements | (at 2002 rates | 2002 results | movements | (at 2003 rates | |||||||||||||||||||
(as reported) | in currency | of exchange) | (as reported) | in currency | of exchange) | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Turnover (including share of joint ventures and associates) | ||||||||||||||||||||||||
Process Gas Solutions | 1,193.0 | (35.4 | ) | 1,157.6 | 1,200.6 | (50.5 | ) | 1,150.1 | ||||||||||||||||
Industrial and Special Products | 1,573.9 | (75.4 | ) | 1,498.5 | 1,605.3 | (5.0 | ) | 1,600.3 | ||||||||||||||||
BOC Edwards | 873.1 | (26.7 | ) | 846.4 | 688.2 | (30.3 | ) | 657.9 | ||||||||||||||||
Afrox hospitals | 287.8 | (76.8 | ) | 211.0 | 259.0 | 46.9 | 305.9 | |||||||||||||||||
Gist | 231.4 | 0.2 | 231.6 | 264.8 | (0.1 | ) | 264.7 | |||||||||||||||||
Total | 4,159.2 | (214.1 | ) | 3,945.1 | 4,017.9 | (39.0 | ) | 3,978.9 | ||||||||||||||||
Operating profit | ||||||||||||||||||||||||
Process Gas Solutions | 103.7 | (3.3 | ) | 100.4 | 161.2 | (6.6 | ) | 154.6 | ||||||||||||||||
Industrial and Special Products | 227.0 | (11.6 | ) | 215.4 | 229.3 | 2.1 | 231.4 | |||||||||||||||||
BOC Edwards | 62.7 | (1.7 | ) | 61.0 | (1.4 | ) | (0.8 | ) | (2.2 | ) | ||||||||||||||
Afrox hospitals | 32.3 | (8.6 | ) | 23.7 | 29.7 | 5.4 | 35.1 | |||||||||||||||||
Gist | 20.6 | – | 20.6 | 25.5 | 0.3 | 25.8 | ||||||||||||||||||
Corporate | (24.0 | ) | 0.1 | (23.9 | ) | (18.7 | ) | 0.4 | (18.3 | ) | ||||||||||||||
Total | 422.3 | (25.1 | ) | 397.2 | 425.6 | 0.8 | 426.4 | |||||||||||||||||
Adjusted operating profit | ||||||||||||||||||||||||
Process Gas Solutions | 156.5 | (4.4 | ) | 152.1 | 185.2 | (7.1 | ) | 178.1 | ||||||||||||||||
Industrial and Special Products | 248.8 | (12.5 | ) | 236.3 | 248.0 | 2.0 | 250.0 | |||||||||||||||||
BOC Edwards | 78.8 | (2.2 | ) | 76.6 | 26.1 | (1.0 | ) | 25.1 | ||||||||||||||||
Afrox hospitals | 32.3 | (8.6 | ) | 23.7 | 29.7 | 5.4 | 35.1 | |||||||||||||||||
Gist | 21.3 | – | 21.3 | 25.5 | 0.3 | 25.8 | ||||||||||||||||||
Corporate | (7.1 | ) | 0.1 | (7.0 | ) | (14.4 | ) | 0.4 | (14.0 | ) | ||||||||||||||
Total | 530.6 | (27.6 | ) | 503.0 | 500.1 | – | 500.1 | |||||||||||||||||
Exceptional or non-recurring items
31 The BOC Group plcAnnual report and accounts 2003
Operating review continued
2003 | 2002 | 2001 | ||||||||||||||||||||||||||||||||||
Adjusted | Operating | Adjusted | Operating | Adjusted | Operating | |||||||||||||||||||||||||||||||
operating | exceptional | Operating | operating | exceptional | Operating | operating | exceptional | Operating | ||||||||||||||||||||||||||||
profit | items | profit | profit | items | profit | profit | items | profit | ||||||||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||||||||
Process Gas Solutions | 184.0 | (6.9 | ) | 177.1 | 185.2 | (24.0 | ) | 161.2 | 156.5 | (52.8 | ) | 103.7 | ||||||||||||||||||||||||
Industrial and Special Products | 242.7 | (4.5 | ) | 238.2 | 248.0 | (18.7 | ) | 229.3 | 248.8 | (21.8 | ) | 227.0 | ||||||||||||||||||||||||
BOC Edwards | 18.5 | (10.6 | ) | 7.9 | 26.1 | (27.5 | ) | (1.4 | ) | 78.8 | (16.1 | ) | 62.7 | |||||||||||||||||||||||
Afrox hospitals | 46.1 | – | 46.1 | 29.7 | – | 29.7 | 32.3 | – | 32.3 | |||||||||||||||||||||||||||
Gist | 29.2 | – | 29.2 | 25.5 | – | 25.5 | 21.3 | (0.7 | ) | 20.6 | ||||||||||||||||||||||||||
Corporate | (14.9 | ) | (45.0 | ) | (59.9 | ) | (14.4 | ) | (4.3 | ) | (18.7 | ) | (7.1 | ) | (16.9 | ) | (24.0 | ) | ||||||||||||||||||
Total Group | 505.6 | (67.0 | ) | 438.6 | 500.1 | (74.5 | ) | 425.6 | 530.6 | (108.3 | ) | 422.3 | ||||||||||||||||||||||||
Other non GAAP measures
2003 | 2002 | 2001 | ||||||||||||||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||||||||||||||
Operating | capital | Operating | capital | Operating | capital | |||||||||||||||||||||||||||||||
profit | employed | ROCE | profit | employed | ROCE | profit | employed | ROCE | ||||||||||||||||||||||||||||
£ million | £ million | % | £ million | £ million | % | £ million | £ million | % | ||||||||||||||||||||||||||||
Adjusted ROCE | 505.6 | 4,053.4 | 12.5 | 500.1 | 4,053.8 | 12.3 | 530.6 | 4,108.2 | 12.9 | |||||||||||||||||||||||||||
Operating exceptional items | (67.0 | ) | – | (74.5 | ) | – | (108.3 | ) | – | |||||||||||||||||||||||||||
ROCE | 438.6 | 4,053.4 | 10.8 | 425.6 | 4,053.8 | 10.5 | 422.3 | 4,108.2 | 10.3 | |||||||||||||||||||||||||||
1. | ROCE is operating profit as a percentage of the average capital employed excluding net pension liabilities. |
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Free cash flow | 141.8 | 166.5 | 192.3 | |||||||||
Exceptional cash items | (28.3 | ) | (67.3 | ) | (51.8 | ) | ||||||
Acquisitions and disposals | (118.3 | ) | (215.5 | ) | (133.6 | ) | ||||||
Other items within capital expenditure and financial investment: | ||||||||||||
Purchases of intangible fixed assets | (1.2 | ) | (0.1 | ) | (0.3 | ) | ||||||
Net sales/(purchases) of current asset investments | 16.6 | 4.3 | (6.5 | ) | ||||||||
Purchases of trade and other investments | (10.8 | ) | (19.7 | ) | (10.2 | ) | ||||||
Sales of trade and other investments | 6.5 | 11.5 | 7.8 | |||||||||
Net cash inflow/(outflow) before use of liquid resources and financing | 6.3 | (120.3 | ) | (2.3 | ) | |||||||
32 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2003 with 2002)
Group
2002 (at 2003 | ||||||||||||
2003 | 2002 | exchange rates)1 | ||||||||||
Turnover including share of joint ventures and associates (£ million) | 4,323.2 | 4,017.9 | 3,978.9 | |||||||||
Operating profit (£ million) | 438.6 | 425.6 | 426.4 | |||||||||
Adjusted operating profit (£ million)2 | 505.6 | 500.1 | 500.1 | |||||||||
Profit before tax (£ million) | 351.9 | 335.3 | 342.8 | |||||||||
Adjusted profit before tax (£ million)2 | 418.9 | 430.0 | 435.3 | |||||||||
Earnings per share | 44.5p | 41.4p | 41.9p | |||||||||
Adjusted earnings per share2 | 52.9p | 55.9p | 56.2p | |||||||||
1. | A reconciliation of turnover, operating profit and adjusted operating profit for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted results with UK GAAP results is shown on page 32 and in the profit and loss account on page 72. |
Process Gas Solutions (PGS) | ||||||||||||
Change | ||||||||||||
on 20021 | ||||||||||||
2003 | Change | (constant | ||||||||||
£ million | on 2002 | currency) | ||||||||||
Turnover | 1,242.7 | +4% | +8% | |||||||||
Operating profit | 177.1 | +10% | +15% | |||||||||
Adjusted operating profit2 | 184.0 | -1% | +3% | |||||||||
1. | A reconciliation of results for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
33 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2003 with 2002) continued
34 The BOC Group plcAnnual report and accounts 2003
35 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2003 with 2002) continued
Industrial and Special Products (ISP) | ||||||||||||
Change | ||||||||||||
on 20021 | ||||||||||||
2003 | Change | (constant | ||||||||||
£ million | on 2002 | currency) | ||||||||||
Turnover | 1,751.2 | +9% | +9% | |||||||||
Operating profit | 238.2 | +4% | +3% | |||||||||
Adjusted operating profit2 | 242.7 | -2% | -3% | |||||||||
1. | A reconciliation of results for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
36 The BOC Group plcAnnual report and accounts 2003
BOC Edwards | ||||||||||||
Change | ||||||||||||
on 20021 | ||||||||||||
2003 | Change | (constant | ||||||||||
£ million | on 2002 | currency) | ||||||||||
Turnover | 684.1 | -1 | % | +4 | % | |||||||
Operating profit | 7.9 | note 4a | note 4b | |||||||||
Adjusted operating profit2 | 18.5 | -29 | % | -26 | % | |||||||
1. | A reconciliation of results for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
4a. | Compares with a loss of £1.4 million in 2002 |
4b. | Compares with a loss of £2.2 million in 2002 |
37 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2003 with 2002) continued
Afrox hospitals | ||||||||||||
Change | ||||||||||||
on 20021 | ||||||||||||
2003 | Change | (constant | ||||||||||
£ million | on 2002 | currency) | ||||||||||
Turnover | 353.4 | +36% | +16% | |||||||||
Operating profit | 46.1 | +55% | +31% | |||||||||
Adjusted operating profit2 | 46.1 | +55% | +31% | |||||||||
1. | A reconciliation of results for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
Gist | ||||||||||||
Change | ||||||||||||
on 20021 | ||||||||||||
2003 | Change | (constant | ||||||||||
£ million | on 2002 | currency) | ||||||||||
Turnover | 291.8 | +10% | +10% | |||||||||
Operating profit | 29.2 | +15% | +13% | |||||||||
Adjusted operating profit2 | 29.2 | +15% | +13% | |||||||||
1. | A reconciliation of results for 2002 at 2002 and at 2003 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
38 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2002 with 2001)
Group
2001 (at 2002 | ||||||||||||
2002 | 2001 | exchange rates)1 | ||||||||||
Turnover including share of joint ventures and associates (£ million) | 4,017.9 | 4,159.2 | 3,945.1 | |||||||||
Operating profit (£ million) | 425.6 | 422.3 | 397.2 | |||||||||
Adjusted operating profit (£ million)2 | 500.1 | 530.6 | 503.0 | |||||||||
Profit before tax (£ million) | 335.3 | 362.2 | 340.7 | |||||||||
Adjusted profit before tax (£ million)2 | 430.0 | 466.9 | 444.2 | |||||||||
Earnings per share | 41.4 | p | 46.0 | p | 44.4 | p | ||||||
Adjusted earnings per share2 | 55.9 | p | 57.5 | p | 55.8 | p | ||||||
1. | A reconciliation of turnover, operating profit and adjusted operating profit for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted results with UK GAAP results is shown on page 32 and in the profit and loss account on page 72. |
Process Gas Solutions (PGS) | ||||||||||||
Change | ||||||||||||
on 20011 | ||||||||||||
2002 | Change | (constant | ||||||||||
£ million | on 2001 | currency) | ||||||||||
Turnover | 1,200.6 | +1% | +4% | |||||||||
Operating profit | 161.2 | +55% | +61% | |||||||||
Adjusted operating profit2 | 185.2 | +18% | +22% | |||||||||
1. | A reconciliation of results for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
39 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2002 with 2001) continued
40 The BOC Group plcAnnual report and accounts 2003
41 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2002 with 2001) continued
Industrial and Special Products (ISP) | ||||||||||||
Change | ||||||||||||
on 20011 | ||||||||||||
2002 | Change | (constant | ||||||||||
£ million | on 2001 | currency) | ||||||||||
Turnover | 1,605.3 | +2% | +7% | |||||||||
Operating profit | 229.3 | +1% | +6% | |||||||||
Adjusted operating profit2 | 248.0 | Nil | +5% | |||||||||
1. | A reconciliation of results for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
42 The BOC Group plcAnnual report and accounts 2003
BOC Edwards | ||||||||||||
Change | ||||||||||||
on 20011 | ||||||||||||
2002 | Change | (constant | ||||||||||
£ million | on 2001 | currency) | ||||||||||
Turnover | 688.2 | -21% | -19% | |||||||||
Operating profit | (1.4 | ) | -102% | -102% | ||||||||
Adjusted operating profit2 | 26.1 | -67% | -66% | |||||||||
1. | A reconciliation of results for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
43 The BOC Group plcAnnual report and accounts 2003
Operating review (comparing 2002 with 2001) continued
44 The BOC Group plcAnnual report and accounts 2003
Afrox hospitals | ||||||||||||
Change | ||||||||||||
on 20011 | ||||||||||||
2002 | Change | (constant | ||||||||||
£ million | on 2001 | currency) | ||||||||||
Turnover | 259.0 | -10% | +23% | |||||||||
Operating profit | 29.7 | -8% | +25% | |||||||||
Adjusted operating profit2 | 29.7 | -8% | +25% | |||||||||
1. | A reconciliation of results for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
Gist | ||||||||
2002 | Change | |||||||
£ million | on 20011 | |||||||
Turnover | 264.8 | +14% | ||||||
Operating profit | 25.5 | +24% | ||||||
Adjusted operating profit2 | 25.5 | +20% | ||||||
1. | A reconciliation of results for 2001 at 2001 and at 2002 rates of exchange is shown on page 31. |
2. | A reconciliation of adjusted operating profit with operating profit is shown on page 32. |
3. | All comments below are on a constant currency basis. |
45 The BOC Group plcAnnual report and accounts 2003
Financial review
Post balance sheet events
Corporate transactions
Restructuring
Financial indicators
2003 | 2002 | 2001 | ||||||||||
Interest cover (times)1 | 4.6 | 4.1 | 3.4 | |||||||||
Adjusted interest cover (times)2 | 5.3 | 4.9 | 4.3 | |||||||||
Net debt/equity (%) | 71.5 | 73.6 | 57.2 | |||||||||
Net debt/capital employed (%) | 36.9 | 36.9 | 32.0 | |||||||||
Average cost of net borrowings (%) | 5.6 | 6.2 | 7.2 | |||||||||
Group tax rate (%) | 27.4 | 31.7 | 28.9 | |||||||||
Adjusted Group tax rate (%)3 | 29.0 | 30.0 | 32.5 | |||||||||
1. | Interest on net debt covered by operating profit. |
2. | Interest on net debt covered by adjusted operating profit. |
3. | The adjusted tax charge expressed as a percentage of adjusted profit before tax. |
The ratios are commented on below in the appropriate section.
Financing
Management of financial risks
Currency risk The Group faces currency risk principally on its net assets, most of which are in currencies other than sterling. Currency movements can therefore have a significant effect on the Group’s balance sheet when translating these foreign currency assets into sterling. In order to reduce this effect the Group manages its borrowings, where practicable and cost effective, to hedge its foreign currency assets.
Financial review continued
Foreign exchange risk At 30 September 2003, the Group had outstanding forward exchange contracts totalling £173.8 million (2002: £133.9 million) in respect of its actual and forecast transaction exposures. The fair value of these contracts at 30 September 2003 amounted to a gain of £5.8 million (2002: a gain of £4.9 million). A ten per cent appreciation of sterling would increase the fair value of these contracts by £13.7 million (2002: £7.4 million).
Counterparty risk Cash deposits and other financial instruments give rise to credit risk on the amounts due from counterparties. Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty depending upon its credit rating and by regular reviews of these ratings. The possibility of material loss arising in the event of non-performance by a counterparty is considered unlikely by management.
Interest on net debt
Net interest on pension financing items
Debt maturity profile | ||||||||||||||||
The maturity profile of the Group’s gross borrowings is as follows: | ||||||||||||||||
2003 | 2002 | |||||||||||||||
£ million | % | £ million | % | |||||||||||||
More than five years | 521.8 | 36.1 | 549.5 | 36.4 | ||||||||||||
Two to five years | 416.4 | 28.8 | 390.6 | 25.8 | ||||||||||||
One to two years | 146.5 | 10.1 | 180.9 | 12.0 | ||||||||||||
Within one year | 360.9 | 25.0 | 390.1 | 25.8 | ||||||||||||
Total | 1,445.6 | 100.0 | 1,511.1 | 100.0 | ||||||||||||
Other contractual obligations
Total | ||||||||||||
Unconditional | contractual | |||||||||||
Operating | purchase | cash | ||||||||||
leases | obligations | obligations | ||||||||||
£ million | £ million | £ million | ||||||||||
Due after more than five years | 120.7 | 575.7 | 696.4 | |||||||||
Due within two to five years | 93.3 | 247.4 | 340.7 | |||||||||
Due within one to two years | 46.6 | 69.3 | 115.9 | |||||||||
Due within one year | 55.4 | 70.1 | 125.5 | |||||||||
Total | 316.0 | 962.5 | 1,278.5 | |||||||||
Off-balance sheet arrangements
Inflation
Taxation
Contingencies
Legal proceedings
Welding fumes litigationBOC has been named in numerous lawsuits in the US alleging injury from exposure to welding fumes. Many of these cases were filed during 2003. Certain of these cases have been either filed in, or transferred for pre-trial purposes to, the federal district court in the Northern District of Ohio, where a multi-district litigation (MDL) proceeding has been commenced. The MDL proceeding is still at an early stage. The MDL proceeding is a vehicle for coordinating pre-trial proceedings in cases pending in different federal district courts in the US. In addition to the cases in federal court, BOC is a defendant in a number of similar cases pending in state courts. These cases are in different stages of procedural development, and certain cases are scheduled for trial from time to time.
Financial review continued
ERISA litigationAn action was filed in the US District Court for the Southern District of Illinois against The BOC Group Cash Balance Retirement Plan (the Plan). The plaintiffs brought this action on behalf of themselves and all others similarly affected, alleging that the Plan improperly calculated lump sum distributions from the Plan in violation of the Employee Retirement Income Security Act. The maximum potential liability could have reached US$116 million and any award would be paid out of Plan assets.
Insurance
Critical accounting policies
Tangible fixed assetsA significant part of the capital employed of the Group, particularly in the Process Gas Solutions and Industrial and Special Products lines of business, is invested in tangible fixed assets. The nature of the business demands significant capital investment to renew or increase production capacity or to enable the business to achieve greater productivity and efficiency.
Intangible fixed assetsIn a similar manner to tangible fixed assets, management uses its judgement to determine the extent to which goodwill arising from the acquisition of a business has a value that will benefit the performance of the Group over future periods. It is the Group’s policy to amortise goodwill on a straight line basis over its useful economic life. This takes into account, among other things, the maturity of the business acquired and its product and customer base. Any change in these assumptions would have an impact on the earnings of the Group.
Environmental provisionsIn certain parts of the business, mainly in the US, the Group has obligations to carry out environmental clean-ups at former and current production sites. Many of these obligations will not arise for a number of years, and the costs are difficult to predict accurately. Management uses its judgement and experience to provide an appropriate amount for the likely cost of such clean-ups, and the amounts, if material, are discounted to present values. Both the amount of anticipated costs, and the interest rates used to discount such costs, are subjective. The use of different assumptions would impact the earnings of the Group.
Current asset provisionsIn the course of normal trading activities, management uses its judgement in establishing the net realisable value of various elements of working capital – principally stocks, work-in-progress and accounts receivable. Provisions are established for obsolete or slow moving stocks, bad or doubtful debts and product warranties. Actual costs in future periods may be different from the provisions established and any such differences would affect future earnings of the Group.
The critical accounting policies under UK GAAP do not materially differ from those under US GAAP. Further details of the differences between UK and US GAAP are given in note 30 to the financial statements.
Accounting
US GAAP
Financial review continued
Exchange rates
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
US dollar | ||||||||||||||||||||
At 30 September | 1.66 | 1.57 | 1.47 | 1.48 | 1.65 | |||||||||||||||
Average for the year | 1.60 | 1.47 | 1.44 | 1.56 | 1.63 | |||||||||||||||
Highest rate during year | 1.69 | 1.58 | 1.50 | 1.67 | 1.72 | |||||||||||||||
Lowest rate during year | 1.54 | 1.41 | 1.37 | 1.40 | 1.55 | |||||||||||||||
Australian dollar | ||||||||||||||||||||
At 30 September | 2.45 | 2.89 | 2.98 | 2.73 | 2.52 | |||||||||||||||
Average for the year | 2.62 | 2.77 | 2.76 | 2.56 | 2.55 | |||||||||||||||
Highest rate during year | 2.89 | 3.00 | 3.03 | 2.85 | 2.87 | |||||||||||||||
Lowest rate during year | 2.40 | 2.54 | 2.62 | 2.45 | 2.33 | |||||||||||||||
Japanese yen | ||||||||||||||||||||
At 30 September | 185.60 | 191.45 | 175.09 | 159.77 | 175.34 | |||||||||||||||
Average for the year | 191.01 | 184.34 | 170.04 | 166.03 | 191.43 | |||||||||||||||
Highest rate during year | 199.49 | 193.05 | 181.26 | 178.67 | 230.73 | |||||||||||||||
Lowest rate during year | 182.17 | 173.82 | 153.13 | 149.77 | 168.23 | |||||||||||||||
South African rand | ||||||||||||||||||||
At 30 September | 11.57 | 16.58 | 13.24 | 10.68 | 9.88 | |||||||||||||||
Average for the year | 13.24 | 15.64 | 11.47 | 10.24 | 9.82 | |||||||||||||||
Highest rate during year | 16.41 | 19.49 | 13.26 | 11.18 | 10.43 | |||||||||||||||
Lowest rate during year | 11.40 | 13.00 | 10.54 | 9.92 | 9.12 | |||||||||||||||
May | June | July | August | September | October | |||||||||||||||||||
High | 1.65 | 1.69 | 1.67 | 1.62 | 1.66 | 1.70 | ||||||||||||||||||
Low | 1.59 | 1.63 | 1.58 | 1.57 | 1.57 | 1.66 | ||||||||||||||||||
Principal operating companies
• | The BOC Group Inc, a wholly-owned Delaware corporation and a subsidiary of The BOC Group Inc, a wholly-owned Nevada corporation. |
• | BOC Limited, a wholly-owned English company. |
• | BOC Limited, a wholly-owned Australian company. |
• | Gist Limited, a wholly-owned English company. |
• | Japan Air Gases Limited, a Japanese company, in which the Group’s Japanese 98 per cent owned subsidiary holds 45 per cent. |
• | African Oxygen Limited, a South African company, in which the Group’s shareholding is 56 per cent. |
Supplier payment policy
Going concern
Substantial holdings
Corporate governance
The board
Audit | Nomination | Remuneration | ||||||||||||||
Board | committee | committee | committee | |||||||||||||
(six meetings) | (four meetings) | (six meetings) | (six meetings) | |||||||||||||
R J Margetts | 6 | – | 6 | – | ||||||||||||
A E Isaac | 6 | – | 6 | – | ||||||||||||
F R Arredondo | 5 | 4 | 5 | 4 | ||||||||||||
J M Baddeley | 6 | 4 | 6 | 6 | ||||||||||||
J A Bevan1 | 4 | – | – | – | ||||||||||||
A R J Bonfield2 | 1 | 1 | 1 | 1 | ||||||||||||
R S Grant3 | 2 | – | – | – | ||||||||||||
G U U Lundberg4 | 2 | 1 | 2 | 3 | ||||||||||||
R Médori | 6 | – | – | – | ||||||||||||
R G Mendoza5 | 5 | 4 | 4 | 4 | ||||||||||||
M F C Miau | 6 | – | 5 | 4 | ||||||||||||
Sir Christopher O’Donnell | 5 | 4 | 5 | 4 | ||||||||||||
Dr K Rajagopal | 6 | – | – | – | ||||||||||||
J L Walsh | 6 | – | – | – | ||||||||||||
1. | appointed on 5 December 2002. |
2. | appointed on 29 July 2003. |
3. | resigned on 31 December 2002. |
4. | resigned on 4 March 2003. |
5. | appointed on 9 October 2002. |
The chairman meets twice a year with the non-executive directors without the executive management present and at each meeting there is a session without the chairman present, chaired by Sir Christopher O’Donnell as the senior independent director, during which they review the chairman’s performance.
Corporate governance continued
Directors and officers
Non-executive directors
Board committees
Audit committee
Nomination committee
Remuneration committee
Pensions committee
Executive management board
Investment committee
Accountability and audit
Audit committee report
i) | interim financial results. |
ii) | interim report from the internal audit function of progress against the 2003 audit plan. |
iii) | corporate governance issues arising in the US under the Sarbanes-Oxley Act and in the UK in the revised Combined Code. The audit committee reviewed the Group’s actions and disclosure items in response to these matters designed to enhance the Group’s corporate governance practices. |
iv) | the external 2003 audit plan for the Group’s auditors, PricewaterhouseCoopers LLP (PwC). This review included the audit objectives, auditor independence and objectivity policies managed by PwC, partner rotation, audit scope, team, timetable, deliverables and fee proposal. |
v) | the Group’s risk management process, including progress on the management of key risks identified by the Group, and within the Group’s lines of business. |
vi) | the 2003 full year results. |
vii) | the annual report disclosure items relevant to the audit committee. |
viii) | full year report on internal audit and effectiveness of internal control. |
ix) | the external auditors’ year end report. |
x) | the independence and objectivity of the external auditors, including a review of non-audit fees. |
Corporate governance continued
i) | policies and procedures adopted by the auditor. |
ii) | policies implemented by the Group to manage non-audit services, employment of former auditor employees, audit partner rotation and influence on the conduct or objectivity of the audit. |
The audit committee concludes that, based on the foregoing, it has discharged its responsibilities as set out in the terms of reference and is satisfied that auditor independence and objectivity have been maintained.
Risk management and internal controls
Risk management in BOCThe BOC risk management programme assists management throughout the Group to identify, assess and manage business risk.
Internal controls in BOCThe directors have delegated to executive management the establishment and implementation of a system of internal controls appropriate to the various business environments in which it operates. The Group operates under a system of controls that has been developed and refined over time to meet its current and future needs and the risks and opportunities to which it is exposed. These controls, which are communicated through various operating and procedural manuals and processes, include but are not limited to:
• | the definition of the organisational structure and the appropriate delegation of authorities to operational management. |
• | procedures for the review and authorisation of capital investments through the investment committee including post-acquisition reviews and appraisals. |
• | strategic planning and the related annual planning process including the ongoing review by the board of the Group’s strategies. |
• | the establishment of individual business unit annual performance targets and the quarterly business review of actual performance. |
• | the monthly financial reporting and review of financial results and other operating statistics such as the health and safety reports as well as the Group’s published quarterly financial statements, which are based on a standardised reporting process. |
• | accounting and financial reporting policies to ensure the consistency, integrity and accuracy of the Group’s accounting records. |
• | specific treasury policies and objectives and the ongoing reporting and review of all significant transactions and financing operations. |
The internal control system is monitored and supported by an internal audit function that operates on a global basis and reports its results to management and the audit committee on the Group’s operations. The work of the internal auditors is focused on the areas of greatest risk to the Group determined on the basis of a risk management approach to audit.
Disclosure controls and procedures
Going concern
Communications with shareholders
Compliance
US corporate governance compliance
Corporate social investment
i) | to continue to focus on projects to improve environmental stewardship; |
ii) | to strengthen BOC’s educational support in selected areas; |
iii) | to continue to devolve the choices of charitable donations to employees through matched giving and volunteering schemes; and |
iv) | to broaden the organisation’s involvement in social programmes around the world. |
Corporate governance continued
Supporting the environment
Charitable programmes
Community involvement
Investing in education
Annual General Meeting
Resolutions will seek approval to the following:
a) | receipt of the report and accounts; |
b) | approval of the directors’ remuneration report; |
c) | reappointment of Andrew Bonfield, Sir Christopher O’Donnell, Julie Baddeley and John Walsh as directors; |
d) | reappointment of PricewaterhouseCoopers LLP as auditors and granting authority to the directors to fix their remuneration. Following the change in legal status of the auditors PricewaterhouseCoopers to a Limited Liability Partnership (LLP) from 1 January 2003, PricewaterhouseCoopers resigned on 13 February 2003 and the directors appointed PricewaterhouseCoopers LLP to fill the casual vacancy until the next Annual General Meeting. Special notice of this resolution has been received; |
e) | the dividend policy; |
f) | political donations and expenditure pursuant to the Political Parties, Elections and Referendums Act 2000; |
g) | renewal of the authority of the directors to allot shares; |
h) | renewal of the authority for the directors to allot shares for cash other than to existing shareholders in proportion to their holdings; |
i) | granting of general authority for the company to purchase its own shares up to a maximum of ten per cent of issued share capital. No purchases were made following last year’s authority; and |
j) | amendments to the Articles of Association. |
The report of the directors has been approved by the board and signed on its behalf by:
Nick DeemingSecretary
21 November 2003
Report on remuneration
The remuneration committee
Remuneration policy
Remuneration components
60 The BOC Group plcAnnual report and accounts 2003
Current long-term incentive arrangements
Long-Term Incentive Plan (LTIP)Executive directors, members of the executive management board and a number of other key executives selected from the company’s global operations participate in the LTIP. The remuneration committee has the discretion to grant awards up to a maximum of two times salary. The award made in February 2003 to the chief executive was based on 1.5 times salary and for other board directors one times salary. There are three performance conditions: total shareholder return (TSR), adjusted earning per share (EPS) and adjusted return on capital employed (ROCE). Up to one third of the award could vest in respect of each performance condition | ||||||
The TSR performance condition compares BOC’s TSR performance with two separate comparator groups, a UK comparator group comprising 31 industrial and manufacturing companies and a global industrial gases group of six leading companies as follows: | ||||||
UK group | ||||||
Aggregate Industries | BPB | Invensys | Scottish & Southern Energy | |||
AMEC | Centrica | Johnson Matthey | Scottish Power | |||
Anglo American | Corus Group | Kelda Group | Severn Trent | |||
AWG | FKI | National Grid Transco | Shell Transport & Trading | |||
BAE Systems | Hanson | Pilkington | Smiths Group | |||
BG Group | IMI | Rio Tinto | Tomkins | |||
BHP Billiton | ICI | RMC Group | United Utilities | |||
BP | International Power | Rolls-Royce | ||||
When determining BOC’s performance relative to the global gases group, the TSR for BOC and the comparator companies will be amended (amended TSR) so that it reflects the excess (or shortfall) in returns relative to the local stockmarket index where each company has its primary listing. The nationality and the local stockmarket index that will be used to calculate the amended TSR for each company is shown in parentheses below | ||||||
Global gases group | ||||||
Airgas | (US – S&P 500 Index) | |||||
Air Liquide | (France – CAC 40 Index) | |||||
Air Products & Chemicals | (US – S&P 500 Index) | |||||
Linde | (Germany – DAX 30 Index) | |||||
Nippon Sanso | (Japan – NIKKEI 225 Index) | |||||
Praxair | (US – S&P 500 Index) | |||||
The BOC Group | (UK – FTSE 100 Index) | |||||
61 The BOC Group plcAnnual report and accounts 2003
Report on remuneration continued
Former long-term incentive arrangements
Retirement benefits
Shareholding guidelines
Non-executive directors
62 The BOC Group plcAnnual report and accounts 2003
Service contracts
63 The BOC Group plcAnnual report and accounts 2003
Report on remuneration continued
Directors' emoluments and compensation | ||||||||
2003 | 2002 | |||||||
Charged against profit in the year | £’000 | £’000 | ||||||
Salaries and benefits | 2,665 | 2,586 | ||||||
Annual bonuses payable for the year | 1,123 | 1,631 | ||||||
Termination payments6 | 1,507 | – | ||||||
Other emoluments | – | 500 | ||||||
Fees to non-executive directors | 443 | 352 | ||||||
5,738 | 5,069 | |||||||
Company pension contributions to money purchase plans | 279 | 184 | ||||||
Company pension contributions to lump sum benefit plans | 196 | 927 | ||||||
Provision for share incentive schemes1 | 387 | 194 | ||||||
Payments to former directors and their dependants2 | 461 | 52 | ||||||
7,061 | 6,426 | |||||||
Year ended 30 September 2003 | 2002 | |||||||||||||||||||||||
Allowances | Total | |||||||||||||||||||||||
Basic | and | Termination | Bonus | remunera- | Total | |||||||||||||||||||
salary/fees | benefits3 | payments | payable | tion | remuneration | |||||||||||||||||||
Individual remuneration | £’000 | £’000 | £’000 | £’000 | £’000 | £’000 | ||||||||||||||||||
Chairman | ||||||||||||||||||||||||
R J Margetts | 225 | – | – | – | 225 | 180 | ||||||||||||||||||
Executive directors | ||||||||||||||||||||||||
J A Bevan5 | 243 | 136 | – | 117 | 496 | – | ||||||||||||||||||
A E Isaac4 | 654 | 122 | – | 367 | 1,143 | 1,806 | ||||||||||||||||||
R Médori | 342 | 276 | – | 192 | 810 | 862 | ||||||||||||||||||
Dr K Rajagopal | 327 | 15 | – | 184 | 526 | 590 | ||||||||||||||||||
J L Walsh | 319 | 144 | – | 178 | 641 | 657 | ||||||||||||||||||
Non-executive directors | ||||||||||||||||||||||||
F R Arredondo | 35 | – | – | – | 35 | 27 | ||||||||||||||||||
J M Baddeley | 43 | – | – | – | 43 | 34 | ||||||||||||||||||
A R J Bonfield5 | 7 | – | – | – | 7 | – | ||||||||||||||||||
R G Mendoza5 | 35 | – | – | – | 35 | – | ||||||||||||||||||
M F C Miau | 35 | – | – | – | 35 | 21 | ||||||||||||||||||
Sir Christopher O’Donnell7 | 43 | – | – | – | 43 | 34 | ||||||||||||||||||
Directors retiring in the year | ||||||||||||||||||||||||
R S Grant6 | 83 | 4 | 1,507 | 85 | 1,679 | 726 | ||||||||||||||||||
G U U Lundberg6 | 20 | – | – | – | 20 | 34 | ||||||||||||||||||
Directors retiring in 2002 | ||||||||||||||||||||||||
Sir David John | – | – | – | – | – | 76 | ||||||||||||||||||
H C Groome | – | – | – | – | – | 11 | ||||||||||||||||||
J H Macdonald | – | – | – | – | – | 11 | ||||||||||||||||||
Total | 2,411 | 697 | 1, 507 | 1,123 | 5,738 | 5,069 | ||||||||||||||||||
1. | This represents the amount charged to operating profit during the year for those elements of the various share incentive schemes relating to directors. | |
2. | This represents payments to former directors and/or their dependants which were not provided for in previous years, as well as salary, benefits and pension costs, amounting to £410, 000, relating to Mr Grant from the date of his resignation from the board to 30 June 2003. | |
3. | Includes overseas and relocation expenses. | |
4. | Mr Isaac was the highest paid director in 2003. | |
5. | Mr Mendoza was appointed to the board on 9 October 2002, Mr Bevan was appointed to the board on 5 December 2002 and Mr Bonfield was appointed to the board on 29 July 2003. The remuneration above is the total remuneration earned since their appointment. | |
6. | Mr Grant resigned from the board on 31 December 2002, and Mr Lundberg resigned from the board on 4 March 2003. The remuneration above, excluding termination payments, is the total remuneration earned to their date of resignation. Details of Mr Grant’s termination payment are given on page 69. | |
7. | Fees in respect of Sir Christopher O’Donnell are paid to Smith & Nephew plc. | |
8. | The aggregate remuneration charged against profits for directors and members of the executive management board in the year was £9. 5 million. Remuneration of members of the executive management board other than directors is given on page 65. |
64 The BOC Group plcAnnual report and accounts 2003
Executive officers The aggregate remuneration of members of the executive management board, other than directors, for services in all capacities during 2003 was as follows: | ||||
2003 | ||||
Charged against profit in the year | £’000 | |||
Salaries and benefits | 1,593 | |||
Annual bonuses payable for the year | 638 | |||
Provision for share incentive schemes1 | 212 | |||
Company pension contributions | 39 | |||
2,482 | ||||
1. | This represents the amount charged to operating profit for those elements of the various share incentive schemes relating to executive officers. |
Directors' share interests at 30 September 2003 The directors of the company and their families had the following beneficial interests in the company's securities and rights under the share incentive schemes: | ||||||||||||||||||||||||||||||||
At 30 September 2003 | At 1 October 2002 (or at date of appointment if later) | |||||||||||||||||||||||||||||||
Long-term | Share | Long-term | Share | |||||||||||||||||||||||||||||
Ordinary | Share | incentive | incentive | Ordinary | Share | incentive | incentive | |||||||||||||||||||||||||
shares | options | plan awards | units | shares | options | plan awards | units | |||||||||||||||||||||||||
F R Arredondo | 991 | – | – | – | 500 | – | – | – | ||||||||||||||||||||||||
J M Baddeley | 1,254 | – | – | – | 500 | – | – | – | ||||||||||||||||||||||||
J A Bevan | 16,070 | 269,993 | 38,659 | – | 16,070 | 202,339 | – | – | ||||||||||||||||||||||||
A R J Bonfield | 500 | – | – | – | – | – | – | – | ||||||||||||||||||||||||
A E Isaac | 5,700 | 1,096,535 | 127,867 | – | 5,700 | 947,357 | – | 45,000 | ||||||||||||||||||||||||
R J Margetts | 17,000 | – | – | – | 6,000 | – | – | – | ||||||||||||||||||||||||
R Médori | 16,772 | 435,253 | 44,652 | – | 16,772 | 367,112 | – | – | ||||||||||||||||||||||||
R G Mendoza | 10,763 | – | – | – | – | – | – | – | ||||||||||||||||||||||||
M F C Miau | 2,772 | – | – | – | 2,281 | – | – | – | ||||||||||||||||||||||||
Sir Christopher O’Donnell | 2,179 | – | – | – | 2,081 | – | – | – | ||||||||||||||||||||||||
Dr K Rajagopal | 14,416 | 526,589 | 42,622 | – | 14,416 | 460,009 | – | – | ||||||||||||||||||||||||
J L Walsh | 13,175 | 452,089 | 42,622 | – | 8,175 | 387,500 | – | – | ||||||||||||||||||||||||
Directors retiring in the year | ||||||||||||||||||||||||||||||||
R S Grant | 62,803 | 542,697 | – | – | 62,803 | 542,697 | – | – | ||||||||||||||||||||||||
G U U Lundberg | 5,000 | – | – | – | 5,000 | – | – | – | ||||||||||||||||||||||||
65 The BOC Group plcAnnual report and accounts 2003
Report on remuneration continued
Directors’ share interests – movements during the year | ||||||||||||||||||||||||||||||||||||||||
Share options | ||||||||||||||||||||||||||||||||||||||||
At | ||||||||||||||||||||||||||||||||||||||||
1 October | Market | |||||||||||||||||||||||||||||||||||||||
2002 | price | |||||||||||||||||||||||||||||||||||||||
(or at date of | At | Exercise | at date | Earliest | Latest | |||||||||||||||||||||||||||||||||||
appointment | 30 September | price | of exercise | exercise | exercise | |||||||||||||||||||||||||||||||||||
if later) | Granted | Exercised | Lapsed | 2003 | pence | pence | date | date | Notes | |||||||||||||||||||||||||||||||
J A Bevan | ||||||||||||||||||||||||||||||||||||||||
6,000 | – | – | – | 6,000 | 722 | 10/02/98 | 10/02/05 | c. | ||||||||||||||||||||||||||||||||
10,000 | – | – | – | 10,000 | 919 | 14/02/99 | 14/02/06 | c. | ||||||||||||||||||||||||||||||||
10,000 | – | – | – | 10,000 | 980 | 21/02/00 | 21/02/07 | c. | ||||||||||||||||||||||||||||||||
10,000 | – | – | – | 10,000 | 914 | 11/02/01 | 11/02/08 | c. | ||||||||||||||||||||||||||||||||
30,000 | – | – | – | 30,000 | 894 | 18/11/01 | 18/11/08 | c. | ||||||||||||||||||||||||||||||||
45,000 | – | – | – | 45,000 | 937 | 26/05/03 | 26/05/10 | |||||||||||||||||||||||||||||||||
301 | – | – | – | 301 | 870 | 01/07/03 | 31/12/03 | a. b. | ||||||||||||||||||||||||||||||||
35,000 | – | – | – | 35,000 | 993 | 07/02/04 | 07/02/11 | |||||||||||||||||||||||||||||||||
619 | – | – | – | 619 | 766 | 01/04/04 | 30/09/04 | a. b. | ||||||||||||||||||||||||||||||||
419 | – | – | – | 419 | 894 | 01/04/04 | 30/09/04 | a. b. | ||||||||||||||||||||||||||||||||
55,000 | – | – | – | 55,000 | 1016 | 06/02/05 | 06/02/12 | |||||||||||||||||||||||||||||||||
– | 67,654 | – | – | 67,654 | 776 | 06/02/06 | 06/02/13 | |||||||||||||||||||||||||||||||||
202,339 | 67,654 | – | – | 269,993 | ||||||||||||||||||||||||||||||||||||
A E Isaac | ||||||||||||||||||||||||||||||||||||||||
45,000 | – | – | – | 45,000 | 716 | 16/11/98 | 16/11/04 | b. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 722 | 10/02/98 | 10/02/05 | c. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 919 | 14/02/99 | 14/02/06 | c. | ||||||||||||||||||||||||||||||||
2,357 | – | – | – | 2,357 | 827 | 01/05/03 | 31/10/03 | a. b. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 980 | 21/02/00 | 21/02/07 | c. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 914 | 11/02/01 | 11/02/08 | c. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 851 | 10/02/02 | 10/02/09 | c. | ||||||||||||||||||||||||||||||||
250,000 | – | – | – | 250,000 | 937 | 26/05/03 | 26/05/10 | |||||||||||||||||||||||||||||||||
200,000 | – | – | – | 200,000 | 993 | 07/02/04 | 07/02/11 | |||||||||||||||||||||||||||||||||
200,000 | – | – | – | 200,000 | 1016 | 06/02/05 | 06/02/12 | |||||||||||||||||||||||||||||||||
– | 149,178 | – | – | 149,178 | 776 | 06/02/06 | 06/02/13 | |||||||||||||||||||||||||||||||||
947,357 | 149,178 | – | – | 1,096,535 | ||||||||||||||||||||||||||||||||||||
R Médori | ||||||||||||||||||||||||||||||||||||||||
10,000 | – | 10,000 | – | – | 742 | 750 | ||||||||||||||||||||||||||||||||||
20,000 | – | – | – | 20,000 | 677 | 11/02/98 | 11/02/04 | b. | ||||||||||||||||||||||||||||||||
15,000 | – | – | – | 15,000 | 722 | 10/02/98 | 10/02/05 | c. | ||||||||||||||||||||||||||||||||
15,000 | – | – | – | 15,000 | 919 | 14/02/99 | 14/02/06 | c. | ||||||||||||||||||||||||||||||||
15,000 | – | – | – | 15,000 | 980 | 21/02/00 | 21/02/07 | c. | ||||||||||||||||||||||||||||||||
30,000 | – | – | – | 30,000 | 914 | 11/02/01 | 11/02/08 | c. | ||||||||||||||||||||||||||||||||
30,000 | – | – | – | 30,000 | 851 | 10/02/02 | 10/02/09 | c. | ||||||||||||||||||||||||||||||||
100,000 | – | – | – | 100,000 | 937 | 26/05/03 | 26/05/10 | |||||||||||||||||||||||||||||||||
2,112 | – | – | – | 2,112 | 870 | 01/08/07 | 31/01/08 | a. b. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 993 | 07/02/04 | 07/02/11 | |||||||||||||||||||||||||||||||||
80,000 | – | – | – | 80,000 | 1016 | 06/02/05 | 06/02/12 | |||||||||||||||||||||||||||||||||
– | 78,141 | – | – | 78,141 | 776 | 06/02/06 | 06/02/13 | |||||||||||||||||||||||||||||||||
367,112 | 78,141 | 10,000 | – | 435,253 | ||||||||||||||||||||||||||||||||||||
Dr K Rajagopal | ||||||||||||||||||||||||||||||||||||||||
10,000 | – | – | 10,000 | – | ||||||||||||||||||||||||||||||||||||
15,000 | – | – | – | 15,000 | 677 | 11/02/98 | 11/02/04 | b. | ||||||||||||||||||||||||||||||||
25,000 | – | – | – | 25,000 | 722 | 10/02/98 | 10/02/05 | c. | ||||||||||||||||||||||||||||||||
35,000 | – | – | – | 35,000 | 919 | 14/02/99 | 14/02/06 | c. | ||||||||||||||||||||||||||||||||
471 | – | – | – | 471 | 827 | 01/05/03 | 31/10/03 | a. b. | ||||||||||||||||||||||||||||||||
20,000 | – | – | – | 20,000 | 848 | 14/08/99 | 14/08/06 | c. | ||||||||||||||||||||||||||||||||
35,000 | – | – | – | 35,000 | 980 | 21/02/00 | 21/02/07 | c. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 914 | 11/02/01 | 11/02/08 | c. | ||||||||||||||||||||||||||||||||
1,676 | – | – | – | 1,676 | 823 | 01/05/02 | 31/10/03 | a. b. | ||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 851 | 10/02/02 | 10/02/09 | c. | ||||||||||||||||||||||||||||||||
87,500 | – | – | – | 87,500 | 937 | 26/05/03 | 26/05/10 | |||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 993 | 07/02/04 | 07/02/11 | |||||||||||||||||||||||||||||||||
80,000 | – | – | – | 80,000 | 1016 | 06/02/05 | 06/02/12 | |||||||||||||||||||||||||||||||||
362 | – | – | 362 | – | ||||||||||||||||||||||||||||||||||||
– | 74,589 | – | – | 74,589 | 776 | 06/02/06 | 06/02/13 | |||||||||||||||||||||||||||||||||
– | 2,353 | – | – | 2,353 | 698 | 01/05/08 | 31/10/08 | a. b. | ||||||||||||||||||||||||||||||||
460,009 | 76,942 | – | 10,362 | 526,589 | ||||||||||||||||||||||||||||||||||||
66 The BOC Group plcAnnual report and accounts 2003
At | ||||||||||||||||||||||||||||||||||||||||
1 October | Market | |||||||||||||||||||||||||||||||||||||||
2002 | price | |||||||||||||||||||||||||||||||||||||||
(or at date of | At | Exercise | at date | Earliest | Latest | |||||||||||||||||||||||||||||||||||
appointment | 30 September | price | of exercise | exercise | exercise | |||||||||||||||||||||||||||||||||||
if later) | Granted | Exercised | Lapsed | 2003 | pence | pence | date | date | Notes | |||||||||||||||||||||||||||||||
J L Walsh | ||||||||||||||||||||||||||||||||||||||||
10,000 | – | 10,000 | – | – | 742 | 749 | ||||||||||||||||||||||||||||||||||
15,000 | – | – | – | 15,000 | 677 | 11/02/98 | 11/02/04 | b. | ||||||||||||||||||||||||||||||||
10,000 | – | – | – | 10,000 | 722 | 10/02/98 | 10/02/05 | c. | ||||||||||||||||||||||||||||||||
10,000 | – | – | – | 10,000 | 919 | 14/02/99 | 14/02/06 | c. | ||||||||||||||||||||||||||||||||
12,500 | – | – | – | 12,500 | 980 | 21/02/00 | 21/02/07 | c. | ||||||||||||||||||||||||||||||||
30,000 | – | – | – | 30,000 | 914 | 11/02/01 | 11/02/08 | c. | ||||||||||||||||||||||||||||||||
70,000 | – | – | – | 70,000 | 851 | 10/02/02 | 10/02/09 | c. | ||||||||||||||||||||||||||||||||
100,000 | – | – | – | 100,000 | 937 | 26/05/03 | 26/05/10 | |||||||||||||||||||||||||||||||||
50,000 | – | – | – | 50,000 | 993 | 07/02/04 | 07/02/11 | |||||||||||||||||||||||||||||||||
80,000 | – | – | – | 80,000 | 1016 | 06/02/05 | 06/02/12 | |||||||||||||||||||||||||||||||||
– | 74,589 | – | – | 74,589 | 776 | 06/02/06 | 06/02/13 | |||||||||||||||||||||||||||||||||
387,500 | 74,589 | 10,000 | – | 452,089 | ||||||||||||||||||||||||||||||||||||
Former director | ||||||||||||||||||||||||||||||||||||||||
R S Grant | ||||||||||||||||||||||||||||||||||||||||
19,896 | – | – | – | 19,896 | 677 | 11/02/98 | 11/02/04 | b. | ||||||||||||||||||||||||||||||||
25,000 | – | – | – | 25,000 | 722 | 10/02/98 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
25,000 | – | – | – | 25,000 | 919 | 14/02/99 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
20,000 | – | – | – | 20,000 | 848 | 14/08/99 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
35,000 | �� | – | – | 35,000 | 980 | 21/02/00 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
75,000 | – | – | – | 75,000 | 914 | 11/02/01 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
67,801 | – | – | – | 67,801 | 851 | 10/02/02 | 30/12/04 | c. d. | ||||||||||||||||||||||||||||||||
120,000 | – | – | – | 120,000 | 937 | 26/05/03 | 30/12/04 | d. | ||||||||||||||||||||||||||||||||
75,000 | – | – | – | 75,000 | 993 | 07/02/04 | 30/12/04 | d. | ||||||||||||||||||||||||||||||||
80,000 | – | – | – | 80,000 | 1016 | – | 30/09/04 | d. | ||||||||||||||||||||||||||||||||
542,697 | – | – | – | 542,697 | ||||||||||||||||||||||||||||||||||||
a. | Options granted under the Savings Related Share Option scheme. All other options shown above are granted under the executive share option schemes. |
b. | Options with no performance conditions attached. All other options shown above have performance related conditions attached to them. These conditions are described on pages 61 and 62. |
c. | The performance conditions attaching to these options have been satisfied. |
d. | Option exercise period in accordance with severance agreement and scheme rules. |
67 The BOC Group plcAnnual report and accounts 2003
Report on remuneration continued
Long-Term Incentive Plan The following awards were made to directors during the year under the Long-Term Incentive Plan: | ||||||||||||||||||||||||
Market price | ||||||||||||||||||||||||
of shares at | ||||||||||||||||||||||||
date of grant | Earliest | Latest | ||||||||||||||||||||||
Date of award | Number | pence | Performance period | exercise date | exercise date | |||||||||||||||||||
J A Bevan | 06/02/03 | 38,659 | 776 | 01/10/02 – 30/09/05 | 06/02/06 | 06/02/13 | ||||||||||||||||||
A E Isaac | 06/02/03 | 127,867 | 776 | 01/10/02 – 30/09/05 | 06/02/06 | 06/02/13 | ||||||||||||||||||
R Médori | 06/02/03 | 44,652 | 776 | 01/10/02 – 30/09/05 | 06/02/06 | 06/02/13 | ||||||||||||||||||
Dr K Rajagopal | 06/02/03 | 42,622 | 776 | 01/10/02 – 30/09/05 | 06/02/06 | 06/02/13 | ||||||||||||||||||
J L Walsh | 06/02/03 | 42,622 | 776 | 01/10/02 – 30/09/05 | 06/02/06 | 06/02/13 | ||||||||||||||||||
Share incentive units – exercised during the year | ||||||||||||||||
Market price | ||||||||||||||||
at date | ||||||||||||||||
Exercise price | of exercise | |||||||||||||||
Date of grant | Number | pence | pence | |||||||||||||
A E Isaac | 16/11/94 | 45,000 | 716 | 856 | ||||||||||||
Pensions
Defined benefit plans | ||||||||||||||||||||||||||||
Transfer | ||||||||||||||||||||||||||||
value of | ||||||||||||||||||||||||||||
Deferred | Increase in | Transfer | Transfer | Change in | Increase in | increase in | ||||||||||||||||||||||
benefit at | deferred | value at | value at | transfer value | deferred | deferred | ||||||||||||||||||||||
30 September | benefit in | 1 October | 30 September | less member's | benefit (net | benefit (net | ||||||||||||||||||||||
2003 | year | 2002 | 2003 | contributions | of inflation) | of inflation) | ||||||||||||||||||||||
Annual pension | ||||||||||||||||||||||||||||
R Médori (£’000) | 11 | 4 | 50 | 100 | 45 | 3 | 30 | |||||||||||||||||||||
Dr K Rajagopal (£’000) | 150 | 13 | 1,103 | 1,667 | 548 | 11 | 126 | |||||||||||||||||||||
Lump sum benefit | ||||||||||||||||||||||||||||
J A Bevan (A$’000) | 2,755 | 1,071 | 1,684 | 2,755 | 1,071 | 1,043 | 1,043 | |||||||||||||||||||||
R Médori (US$’000) | 261 | 20 | 241 | 261 | 20 | 17 | 17 | |||||||||||||||||||||
J L Walsh (US$’000) | 703 | 113 | 590 | 703 | 113 | 103 | 103 | |||||||||||||||||||||
R S Grant (US$’000)1 | 4,199 | 1,676 | 2,523 | 4,199 | 1,676 | 1,633 | 1,633 | |||||||||||||||||||||
1. | Former director |
68 The BOC Group plcAnnual report and accounts 2003
Money purchase plans The company made contributions in the year to money purchase plans in respect of the following directors: | ||||||||
2003 | 2002 | |||||||
£’000 | £’000 | |||||||
A E Isaac | 252 | 155 | ||||||
J L Walsh | 13 | 13 | ||||||
Former director: | ||||||||
R S Grant | 14 | 16 | ||||||
279 | 184 | |||||||
Excess retirement benefits
Compensation for past director
Sums paid to third parties
Auditable section of the report on remuneration
21 November 2003
69 The BOC Group plcAnnual report and accounts 2003
Responsibility of the directors
• | select suitable accounting policies and then apply them consistently. |
• | make judgements and estimates that are reasonable and prudent. |
• | state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements. |
• | prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company and the Group will continue in business. |
70 The BOC Group plcAnnual report and accounts 2003
Report by the independent auditors
Respective responsibilities of directors and auditors
Basis of audit opinion
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, England
21 November 2003
71 The BOC Group plcAnnual report and accounts 2003
Group profit and loss account
2003 | 2002 | 2001 | |||||||||||||||||||||||||||||||||||||||
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 | |||||||||||||||||||||||||||||||||||||||||
Continuing operations | 4,253.0 | – | 4,253.0 | 4,017.9 | – | 4,017.9 | 4,159.2 | – | 4,159.2 | ||||||||||||||||||||||||||||||||
Acquisitions | 70.2 | – | 70.2 | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||
Turnover, including share of joint ventures and associates | 1 | 4,323.2 | – | 4,323.2 | 4,017.9 | – | 4,017.9 | 4,159.2 | – | 4,159.2 | |||||||||||||||||||||||||||||||
Less:Share of turnover of joint ventures | 544.3 | – | 544.3 | 324.1 | – | 324.1 | 340.0 | – | 340.0 | ||||||||||||||||||||||||||||||||
Share of turnover of associates | 60.6 | – | 60.6 | 36.1 | – | 36.1 | 46.3 | – | 46.3 | ||||||||||||||||||||||||||||||||
Turnover of subsidiary undertakings | 3,718.3 | – | 3,718.3 | 3,657.7 | – | 3,657.7 | 3,772.9 | – | 3,772.9 | ||||||||||||||||||||||||||||||||
Cost of sales | 2 | (a) | (2,136.2 | ) | (1.7 | ) | (2,137.9 | ) | (2,089.7 | ) | (15.1 | ) | (2,104.8 | ) | (2,164.2 | ) | (44.6 | ) | (2,208.8 | ) | |||||||||||||||||||||
Gross profit | 1,582.1 | (1.7 | ) | 1,580.4 | 1,568.0 | (15.1 | ) | 1,552.9 | 1,608.7 | (44.6 | ) | 1,564.1 | |||||||||||||||||||||||||||||
Net operating expenses | 2 | (a) | (1,174.7 | ) | (58.5 | ) | (1,233.2 | ) | (1,142.4 | ) | (58.9 | ) | (1,201.3 | ) | (1,150.3 | ) | (61.1 | ) | (1,211.4 | ) | |||||||||||||||||||||
Operating profit | |||||||||||||||||||||||||||||||||||||||||
Continuing operations | 403.1 | (60.2 | ) | 342.9 | 425.6 | (74.0 | ) | 351.6 | 458.4 | (105.7 | ) | 352.7 | |||||||||||||||||||||||||||||
Acquisitions | 4.3 | – | 4.3 | – | – | – | – | – | – | ||||||||||||||||||||||||||||||||
Operating profit of subsidiary undertakings | 407.4 | (60.2 | ) | 347.2 | 425.6 | (74.0 | ) | 351.6 | 458.4 | (105.7 | ) | 352.7 | |||||||||||||||||||||||||||||
Share of operating profit of joint ventures | 86.8 | (6.8 | ) | 80.0 | 63.8 | (0.5 | ) | 63.3 | 59.0 | (2.2 | ) | 56.8 | |||||||||||||||||||||||||||||
Share of operating profit of associates | 11.4 | – | 11.4 | 10.7 | – | 10.7 | 13.2 | (0.4 | ) | 12.8 | |||||||||||||||||||||||||||||||
Total operating profit including share of joint ventures and associates | 1 | 505.6 | (67.0 | ) | 438.6 | 500.1 | (74.5 | ) | 425.6 | 530.6 | (108.3 | ) | 422.3 | ||||||||||||||||||||||||||||
Loss on termination/disposal of businesses – continuing operations | 2 | (b) | – | – | – | – | (20.2 | ) | (20.2 | ) | – | – | – | ||||||||||||||||||||||||||||
Profit on disposal of fixed assets – continuing operations | 2 | (b) | – | – | – | – | – | – | – | 3.6 | 3.6 | ||||||||||||||||||||||||||||||
Profit on ordinary activities before interest | 505.6 | (67.0 | ) | 438.6 | 500.1 | (94.7 | ) | 405.4 | 530.6 | (104.7 | ) | 425.9 | |||||||||||||||||||||||||||||
Interest on net debt | 3 | (96.1 | ) | – | (96.1 | ) | (103.1 | ) | – | (103.1 | ) | (123.4 | ) | – | (123.4 | ) | |||||||||||||||||||||||||
Interest on pension scheme liabilities | 8 | (a) | (110.2 | ) | – | (110.2 | ) | (106.1 | ) | – | (106.1 | ) | (107.2 | ) | – | (107.2 | ) | ||||||||||||||||||||||||
Expected return on pension scheme assets | 8 | (a) | 119.6 | – | 119.6 | 139.1 | – | 139.1 | 166.9 | – | 166.9 | ||||||||||||||||||||||||||||||
Other net financing income | 9.4 | – | 9.4 | 33.0 | – | 33.0 | 59.7 | – | 59.7 | ||||||||||||||||||||||||||||||||
Profit on ordinary activities before tax | 418.9 | (67.0 | ) | 351.9 | 430.0 | (94.7 | ) | 335.3 | 466.9 | (104.7 | ) | 362.2 | |||||||||||||||||||||||||||||
Tax on profit on ordinary activities | 4 | (a) | (121.4 | ) | 25.0 | (96.4 | ) | (129.0 | ) | 22.8 | (106.2 | ) | (151.5 | ) | 46.9 | (104.6 | ) | ||||||||||||||||||||||||
Profit on ordinary activities after tax | 297.5 | (42.0 | ) | 255.5 | 301.0 | (71.9 | ) | 229.1 | 315.4 | (57.8 | ) | 257.6 | |||||||||||||||||||||||||||||
Minority interests – equity | (36.8 | ) | 0.4 | (36.4 | ) | (26.7 | ) | 0.5 | (26.2 | ) | (35.4 | ) | 1.9 | (33.5 | ) | ||||||||||||||||||||||||||
Profit for the financial year | 260.7 | (41.6 | ) | 219.1 | 274.3 | (71.4 | ) | 202.9 | 280.0 | (55.9 | ) | 224.1 | |||||||||||||||||||||||||||||
Dividends | 9 | (192.1 | ) | – | (192.1 | ) | (186.6 | ) | – | (186.6 | ) | (180.3 | ) | – | (180.3 | ) | |||||||||||||||||||||||||
Retained profit for the financial year | 68.6 | (41.6 | ) | 27.0 | 87.7 | (71.4 | ) | 16.3 | 99.7 | (55.9 | ) | 43.8 | |||||||||||||||||||||||||||||
Earnings per 25p Ordinary share | 10 | ||||||||||||||||||||||||||||||||||||||||
– basic | 52.9 | p | (8.4 | )p | 44.5 | p | 55.9 | p | (14.5 | )p | 41.4 | p | 57.5 | p | (11.5 | )p | 46.0 | p | |||||||||||||||||||||||
– diluted | 52.9 | p | (8.4 | )p | 44.5 | p | 55.7 | p | (14.5 | )p | 41.2 | p | 57.3 | p | (11.4 | )p | 45.9 | p | |||||||||||||||||||||||
72 The BOC Group plcAnnual report and accounts 2003
Group balance sheet
2003 | 2002 | |||||||||||
Notes | £ million | £ million | ||||||||||
Fixed assets | ||||||||||||
Intangible assets | 11 | 206.1 | 150.7 | |||||||||
Tangible assets | 12 | 2,913.4 | 3,027.4 | |||||||||
Investment in joint ventures | ||||||||||||
– share of gross assets | 870.3 | 616.2 | ||||||||||
– share of gross liabilities | (468.0 | ) | (410.7 | ) | ||||||||
402.3 | 205.5 | |||||||||||
– loans to joint ventures | 103.0 | 111.8 | ||||||||||
Investment in associates | ||||||||||||
– share of net assets | 59.6 | 57.5 | ||||||||||
– loans to associates | 4.9 | 6.2 | ||||||||||
Investment in own shares | 48.1 | 42.5 | ||||||||||
Other investments | 38.8 | 45.1 | ||||||||||
Investments | 13 | 656.7 | 468.6 | |||||||||
3,776.2 | 3,646.7 | |||||||||||
Current assets | ||||||||||||
Stocks | 14 | 284.2 | 260.0 | |||||||||
Debtors falling due within one year | 15 | (a) | 697.8 | 733.8 | ||||||||
Debtors falling due after more than one year | 15 | (b) | 23.6 | 28.3 | ||||||||
Investments | 16 | 21.8 | 38.8 | |||||||||
Cash at bank and in hand | 17 | 77.5 | 185.5 | |||||||||
1,104.9 | 1,246.4 | |||||||||||
Current liabilities | ||||||||||||
Creditors: amounts falling due within one year | ||||||||||||
Borrowings and finance leases | 18 | (a) | (360.9 | ) | (390.1 | ) | ||||||
Other creditors | 18 | (b) | (807.3 | ) | (857.8 | ) | ||||||
(1,168.2 | ) | (1,247.9 | ) | |||||||||
Net current liabilities | (63.3 | ) | (1.5 | ) | ||||||||
Total assetsless current liabilities | 3,712.9 | 3,645.2 | ||||||||||
Long-term liabilities | ||||||||||||
Creditors: amounts falling due after more than one year | ||||||||||||
Borrowings and finance leases | 19 | (a) | (1,084.7 | ) | (1,121.0 | ) | ||||||
Other creditors | 19 | (b) | (48.4 | ) | (58.0 | ) | ||||||
(1,133.1 | ) | (1,179.0 | ) | |||||||||
Provisions for liabilities and charges | 22 | (376.6 | ) | (407.5 | ) | |||||||
Total net assets excluding pension assets and liabilities | 2,203.2 | 2,058.7 | ||||||||||
Pension assets | 8 | (a) | 50.7 | 54.3 | ||||||||
Pension liabilities | 8 | (a) | (341.8 | ) | (311.0 | ) | ||||||
Total net assets including pension assets and liabilities | 1,912.1 | 1,802.0 | ||||||||||
Capital and reserves | ||||||||||||
Equity called up share capital | 23 | 124.4 | 124.3 | |||||||||
Share premium account | 24 | (a) | 366.0 | 362.1 | ||||||||
Revaluation reserves | 24 | (a) | 30.8 | 27.8 | ||||||||
Profit and loss account | 24 | (a) | 1,198.4 | 1,304.8 | ||||||||
Pensions reserves | 24 | (a) | (291.1 | ) | (256.5 | ) | ||||||
Joint ventures’ reserves | 24 | (a) | 273.3 | 88.1 | ||||||||
Associates’ reserves | 24 | (a) | 33.0 | 33.5 | ||||||||
Equity shareholders’ funds | 1,734.8 | 1,684.1 | ||||||||||
Minority shareholders’ equity interests | 177.3 | 117.9 | ||||||||||
Total capital and reserves | 1,912.1 | 1,802.0 | ||||||||||
The financial statements were approved by the board of directors on 21 November 2003 and are signed on its behalf by:
A E IsaacDirectorR MédoriDirector
73 The BOC Group plcAnnual report and accounts 2003
Group cash flow statement
2003 | 2002 | 2001 | ||||||||||||||
Notes | £ million | £ million | £ million | |||||||||||||
Net cash inflow from operating activities | 27 | (a) | 700.1 | 759.3 | 787.8 | |||||||||||
Dividends from joint ventures and associates | ||||||||||||||||
Dividends from joint ventures | 31.7 | 30.5 | 19.4 | |||||||||||||
Dividends from associates | 3.3 | 3.4 | 4.1 | |||||||||||||
Dividends from joint ventures and associates | 35.0 | 33.9 | 23.5 | |||||||||||||
Returns on investments and servicing of finance | ||||||||||||||||
Interest paid | (94.4 | ) | (89.6 | ) | (95.4 | ) | ||||||||||
Interest received | 16.6 | 18.5 | 23.1 | |||||||||||||
Dividends paid to minorities in subsidiaries | (12.4 | ) | (13.9 | ) | (7.7 | ) | ||||||||||
Interest element of finance lease rental payments | (4.2 | ) | (5.7 | ) | (7.2 | ) | ||||||||||
Returns on investments and servicing of finance | (94.4 | ) | (90.7 | ) | (87.2 | ) | ||||||||||
Tax paid | (90.7 | ) | (96.2 | ) | (100.6 | ) | ||||||||||
Capital expenditure and financial investment | ||||||||||||||||
Purchases of tangible fixed assets | (281.4 | ) | (352.1 | ) | (349.8 | ) | ||||||||||
Sales of tangible fixed assets | 37.0 | 31.6 | 47.1 | |||||||||||||
Purchases of intangible fixed assets | (1.2 | ) | (0.1 | ) | (0.3 | ) | ||||||||||
Net sales/(purchases) of current asset investments | 16.6 | 4.3 | (6.5 | ) | ||||||||||||
Purchases of trade and other investments | (10.8 | ) | (19.7 | ) | (10.2 | ) | ||||||||||
Sales of trade and other investments | 6.5 | 11.5 | 7.8 | |||||||||||||
Capital expenditure and financial investment | (233.3 | ) | (324.5 | ) | (311.9 | ) | ||||||||||
Acquisitions and disposals | ||||||||||||||||
Acquisitions of businesses | 28 | (a) | (135.5 | ) | (207.3 | ) | (145.9 | ) | ||||||||
Net overdrafts acquired with subsidiaries | – | (7.4 | ) | – | ||||||||||||
Disposals of businesses | 28 | (a) | 3.9 | 10.6 | 2.7 | |||||||||||
Net cash disposed of with subsidiaries | (0.1 | ) | – | – | ||||||||||||
Investments in joint ventures | – | (12.6 | ) | – | ||||||||||||
Divestments/repayments from joint ventures | 12.4 | – | 10.8 | |||||||||||||
Investments in associates | (8.4 | ) | (0.5 | ) | (2.7 | ) | ||||||||||
Divestments/repayments from associates | 9.4 | 1.7 | 1.5 | |||||||||||||
Acquisitions and disposals | (118.3 | ) | (215.5 | ) | (133.6 | ) | ||||||||||
Equity dividends paid | (192.1 | ) | (186.6 | ) | (180.3 | ) | ||||||||||
Net cash inflow/(outflow) before use of liquid resources and financing | 6.3 | (120.3 | ) | (2.3 | ) | |||||||||||
Management of liquid resources | ||||||||||||||||
Net sales of short-term investments | 16.2 | 52.6 | 102.8 | |||||||||||||
Financing | ||||||||||||||||
Issue of shares | 3.7 | 25.0 | 16.9 | |||||||||||||
(Decrease)/increase in debt | 27 | (d) | (128.7 | ) | 64.1 | (51.3 | ) | |||||||||
Net cash (outflow)/inflow from financing | (125.0 | ) | 89.1 | (34.4 | ) | |||||||||||
(Decrease)/increase in cash | (102.5 | ) | 21.4 | 66.1 | ||||||||||||
Liquid resources are defined as short-term deposits.
74 The BOC Group plcAnnual report and accounts 2003
Total recognised gains and losses
2003 | 2002 | 2001 | ||||||||||||||
Notes | £ million | £ million | £ million | |||||||||||||
Parent1 | 218.6 | 26.2 | 12.1 | |||||||||||||
Subsidiary undertakings | (0.4 | ) | 170.1 | 199.8 | ||||||||||||
Joint ventures | (0.2 | ) | 4.5 | 10.3 | ||||||||||||
Associates | 1.1 | 2.1 | 1.9 | |||||||||||||
Profit for the financial year | 219.1 | 202.9 | 224.1 | |||||||||||||
Actuarial loss recognised on the pension schemes | (17.5 | ) | (431.2 | ) | (464.9 | ) | ||||||||||
Movement on deferred tax relating to actuarial loss on pensions | 2.0 | 134.0 | 154.5 | |||||||||||||
Unrealised loss on write down of revaluation reserve | – | (11.5 | ) | – | ||||||||||||
Unrealised profit on disposal of a subsidiary | 8.2 | – | – | |||||||||||||
Exchange translation effect on: | ||||||||||||||||
– results for the year of subsidiaries | 8.0 | (5.2 | ) | (3.9 | ) | |||||||||||
– results for the year of joint ventures | 0.2 | (2.6 | ) | (1.5 | ) | |||||||||||
– results for the year of associates | (0.2 | ) | (0.3 | ) | (0.1 | ) | ||||||||||
– foreign currency net investments in subsidiaries | 15.3 | (114.6 | ) | (55.8 | ) | |||||||||||
– foreign currency net investments in joint ventures | 9.6 | (11.9 | ) | (1.6 | ) | |||||||||||
– foreign currency net investments in associates | (1.4 | ) | (1.7 | ) | 0.4 | |||||||||||
Total recognised gains and losses for the financial year | 24 | (a) | 243.3 | (242.1 | ) | (148.8 | ) | |||||||||
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 2003, 2002 and 2001. |
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. | A current tax release/(charge) of £9.7 million (2002: £(13.5) million, 2001: £nil) has been recognised directly in the Group reserves. |
Movement in shareholders’ funds
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Profit for the financial year | 219.1 | 202.9 | 224.1 | |||||||||
Dividends | (192.1 | ) | (186.6 | ) | (180.3 | ) | ||||||
27.0 | 16.3 | 43.8 | ||||||||||
Other recognised gains and losses | 24.2 | (445.0 | ) | (372.9 | ) | |||||||
Reversal of goodwill credit in total recognised gains and losses on disposal of subsidiaries | (4.2 | ) | – | – | ||||||||
Shares issued | 3.7 | 24.6 | 16.9 | |||||||||
Credit in relation to share options | – | 2.0 | 4.4 | |||||||||
Net increase/(decrease) in shareholders’ funds for the financial year | 50.7 | (402.1 | ) | (307.8 | ) | |||||||
Shareholders’ funds at 1 October | 1,684.1 | 2,086.2 | 2,394.0 | |||||||||
Shareholders’ funds at 30 September | 1,734.8 | 1,684.1 | 2,086.2 | |||||||||
75 The BOC Group plcAnnual report and accounts 2003
Balance sheet of The BOC Group plc
2003 | 2002 | |||||||||||
Notes | £ million | £ million | ||||||||||
Fixed assets | ||||||||||||
Tangible assets | 12(e) | 15.7 | 14.0 | |||||||||
Investments | 13(e) | 3,100.5 | 2,844.4 | |||||||||
3,116.2 | 2,858.4 | |||||||||||
Current assets | ||||||||||||
Debtors falling due within one year | 15(a) | 694.4 | 515.6 | |||||||||
Current liabilities | ||||||||||||
Creditors: amounts falling due within one year | ||||||||||||
Borrowings and finance leases | 18(a) | (303.6 | ) | (178.9 | ) | |||||||
Other creditors | 18(b) | (1,049.9 | ) | (953.8 | ) | |||||||
(1,353.5 | ) | (1,132.7 | ) | |||||||||
Net current liabilities | (659.1 | ) | (617.1 | ) | ||||||||
Total assetslesscurrent liabilities | 2,457.1 | 2,241.3 | ||||||||||
Long-term liabilities | ||||||||||||
Creditors: amounts falling due after more than one year | ||||||||||||
Borrowings and finance leases | 19(a) | (766.6 | ) | (801.0 | ) | |||||||
Other creditors | 19(b) | (10.4 | ) | (13.0 | ) | |||||||
(777.0 | ) | (814.0 | ) | |||||||||
Total net assets | 1,680.1 | 1,427.3 | ||||||||||
Capital and reserves | ||||||||||||
Equity called up share capital | 23 | 124.4 | 124.3 | |||||||||
Share premium account | 24(b) | 366.0 | 362.1 | |||||||||
Other reserves | 24(b) | 336.4 | 113.7 | |||||||||
Profit and loss account | 24(b) | 853.3 | 827.2 | |||||||||
Total capital and reserves | 1,680.1 | 1,427.3 | ||||||||||
The financial statements were approved by the board of directors on 21 November 2003 and are signed on its behalf by:
A E IsaacDirectorR MédoriDirector
76 The BOC Group plcAnnual report and accounts 2003
Accounting policies
General
• | Basis of preparationThese accounts are based on the historical cost accounting convention 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 consolidationThe 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 policiesThese accounts have been prepared on an accounting basis consistent with that applied in the financial year ended 30 September 2002. |
• | ExchangeProfit and loss and other period statements of the Group’s overseas operations are translated at average rates of exchange. 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 52. |
Revenue recognition
Retirement benefits
Research and development
Operating leases
Intangible fixed assets
• | GoodwillGoodwill 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. |
• | IntangiblesOther material intangible assets acquired, such as patents and trademarks, are capitalised and written off on the straight line basis over their effective economic lives. |
77 The BOC Group plcAnnual report and accounts 2003
Accounting policies continued
Tangible fixed assets
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 FRS15, 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
Stocks
Deferred tax
Provisions
Financial instruments
• | Foreign exchange transaction exposuresThe 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 subsequent gains and losses are recognised through the profit and loss account. |
• | Balance sheet translation exposuresA large proportion of the Group’s net assets are denominated in currencies other than sterling. Where practicable and cost effective the Group hedges these balance sheet translation exposures by borrowing in relevant currencies and markets and by the use of currency swaps. Currency swaps are used only as balance sheet hedging instruments, and the Group does not hedge the currency translation of its profit and loss account. Exchange gains and losses arising on the notional principal of these currency swaps during their life and at termination or maturity are dealt with as a movement in reserves. If the swap ceases to be a hedge of the underlying transaction, any subsequent gains or losses are recognised in the profit and loss account. |
• | Interest rate risk exposuresThe 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 or shown on the Group balance sheet at the balance sheet date. |
78 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements
1. Segmental information
a) Turnover (including share of joint ventures and associates) | ||||||||||||||||||||||||||||
Continuing operations | ||||||||||||||||||||||||||||
Industrial | ||||||||||||||||||||||||||||
Process Gas | and Special | BOC | Afrox | Total Group | Total Group | |||||||||||||||||||||||
Solutions | Products | Edwards | hospitals | Gist | by origin | by destination | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
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 | |||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||
Europe | 257.1 | 399.3 | 150.0 | – | 263.2 | 1,069.6 | 1,055.3 | |||||||||||||||||||||
Americas | 528.1 | 464.8 | 298.9 | – | – | 1,291.8 | 1,240.1 | |||||||||||||||||||||
Africa | 23.6 | 158.4 | – | 259.0 | – | 441.0 | 443.3 | |||||||||||||||||||||
Asia/Pacific | 391.8 | 582.8 | 239.3 | – | 1.6 | 1,215.5 | 1,279.2 | |||||||||||||||||||||
Turnover | 1,200.6 | 1,605.3 | 688.2 | 259.0 | 264.8 | 4,017.9 | 4,017.9 | |||||||||||||||||||||
2001 | ||||||||||||||||||||||||||||
Europe | 240.2 | 375.3 | 157.4 | – | 229.6 | 1,002.5 | 979.6 | |||||||||||||||||||||
Americas | 529.7 | 464.5 | 393.3 | – | – | 1,387.5 | 1,326.1 | |||||||||||||||||||||
Africa | 25.6 | 192.2 | – | 287.8 | – | 505.6 | 504.9 | |||||||||||||||||||||
Asia/Pacific | 397.5 | 541.9 | 322.4 | – | 1.8 | 1,263.6 | 1,348.6 | |||||||||||||||||||||
Turnover | 1,193.0 | 1,573.9 | 873.1 | 287.8 | 231.4 | 4,159.2 | 4,159.2 | |||||||||||||||||||||
Inter segment turnover is not material.
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 | ||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||
Total operating profit before exceptional items1 | 184.0 | 242.7 | 18.5 | 46.1 | 29.2 | (14.9 | ) | 505.6 | ||||||||||||||||||||
Operating exceptional items1 | (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 employed2 | 1,822.9 | 1,158.1 | 596.1 | 167.2 | 0.8 | (39.9 | ) | 3,705.2 | ||||||||||||||||||||
Capital expenditure3 | 93.1 | 105.2 | 37.6 | 17.8 | 22.3 | 5.2 | 281.2 | |||||||||||||||||||||
Depreciation and amortisation3 | 165.8 | 101.2 | 39.1 | 9.8 | 15.8 | 1.7 | 333.4 | |||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||
Total operating profit before exceptional items1 | 185.2 | 248.0 | 26.1 | 29.7 | 25.5 | (14.4 | ) | 500.1 | ||||||||||||||||||||
Operating exceptional items1 | (24.0 | ) | (18.7 | ) | (27.5 | ) | – | – | (4.3 | ) | (74.5 | ) | ||||||||||||||||
Operating profit | 161.2 | 229.3 | (1.4 | ) | 29.7 | 25.5 | (18.7 | ) | 425.6 | |||||||||||||||||||
(Loss)/profit on termination/disposal of businesses1 | (21.3 | ) | – | 1.1 | – | – | – | (20.2 | ) | |||||||||||||||||||
Capital employed2 | 1,831.3 | 1,058.1 | 595.3 | 105.0 | 22.8 | (19.4 | ) | 3,593.1 | ||||||||||||||||||||
Capital expenditure3 | 157.3 | 123.6 | 42.0 | 9.2 | 19.0 | 3.2 | 354.3 | |||||||||||||||||||||
Depreciation and amortisation3 | 167.7 | 96.8 | 41.1 | 7.2 | 16.1 | 2.0 | 330.9 | |||||||||||||||||||||
2001 | ||||||||||||||||||||||||||||
Total operating profit before exceptional items1 | 156.5 | 248.8 | 78.8 | 32.3 | 21.3 | (7.1 | ) | 530.6 | ||||||||||||||||||||
Operating exceptional items1 | (52.8 | ) | (21.8 | ) | (16.1 | ) | – | (0.7 | ) | (16.9 | ) | (108.3 | ) | |||||||||||||||
Operating profit | 103.7 | 227.0 | 62.7 | 32.3 | 20.6 | (24.0 | ) | 422.3 | ||||||||||||||||||||
(Loss)/profit on disposal of fixed assets1 | (0.3 | ) | (3.1 | ) | (1.3 | ) | 0.9 | – | 7.4 | 3.6 | ||||||||||||||||||
Capital employed2 | 2,004.9 | 1,152.7 | 589.9 | 98.5 | 81.4 | 47.1 | 3,974.5 | |||||||||||||||||||||
Capital expenditure3 | 170.6 | 95.5 | 53.8 | 10.3 | 17.9 | 4.5 | 352.6 | |||||||||||||||||||||
Depreciation and amortisation3 | 169.4 | 97.4 | 37.2 | 6.7 | 15.6 | 3.2 | 329.5 | |||||||||||||||||||||
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.
79 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
1. Segmental information continued
c) Regional analysis | ||||||||||||||||||||
Total | ||||||||||||||||||||
Europe | Americas | Africa | Asia/Pacific | Group | ||||||||||||||||
£ million | £ million | £ million | £ million | £ million | ||||||||||||||||
2003 | ||||||||||||||||||||
Total operating profit before exceptional items1 | 144.3 | 91.8 | 85.0 | 184.5 | 505.6 | |||||||||||||||
Operating exceptional items1 | (7.3 | ) | (49.1 | ) | – | (10.6 | ) | (67.0 | ) | |||||||||||
Operating profit | 137.0 | 42.7 | 85.0 | 173.9 | 438.6 | |||||||||||||||
Capital employed2 | 909.7 | 1,226.7 | 321.5 | 1,247.3 | 3,705.2 | |||||||||||||||
Capital expenditure3 | 102.7 | 79.1 | 36.7 | 62.7 | 281.2 | |||||||||||||||
2002 | ||||||||||||||||||||
Total operating profit before exceptional items1 | 155.2 | 121.3 | 56.7 | 166.9 | 500.1 | |||||||||||||||
Operating exceptional items1 | (38.4 | ) | (8.1 | ) | (0.4 | ) | (27.6 | ) | (74.5 | ) | ||||||||||
Operating profit | 116.8 | 113.2 | 56.3 | 139.3 | 425.6 | |||||||||||||||
(Loss)/profit on termination/disposal of businesses1 | (1.5 | ) | (18.7 | ) | – | – | (20.2 | ) | ||||||||||||
Capital employed2 | 944.4 | 1,244.0 | 221.2 | 1,183.5 | 3,593.1 | |||||||||||||||
Capital expenditure3 | 121.4 | 134.7 | 25.6 | 72.6 | 354.3 | |||||||||||||||
2001 | ||||||||||||||||||||
Total operating profit before exceptional items1 | 165.5 | 137.2 | 69.4 | 158.5 | 530.6 | |||||||||||||||
Operating exceptional items1 | (42.9 | ) | (40.5 | ) | – | (24.9 | ) | (108.3 | ) | |||||||||||
Operating profit | 122.6 | 96.7 | 69.4 | 133.6 | 422.3 | |||||||||||||||
(Loss)/profit on disposal of fixed assets1 | (2.2 | ) | 4.6 | 2.6 | (1.4 | ) | 3.6 | |||||||||||||
Capital employed2 | 1,221.1 | 1,305.5 | 259.0 | 1,188.9 | 3,974.5 | |||||||||||||||
Capital expenditure3 | 134.6 | 108.6 | 26.4 | 83.0 | 352.6 | |||||||||||||||
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.
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 | ||||||||||||||||||||||
2003 | ||||||||||||||||||||||||||||
Turnover1 | 191.9 | 221.6 | 130.8 | 30.9 | 8.6 | 5.7 | 15.4 | |||||||||||||||||||||
Operating profit before exceptional items1 | 39.0 | 25.6 | 22.2 | 5.8 | 0.7 | 1.4 | 3.5 | |||||||||||||||||||||
Operating exceptional items1 | (2.5 | ) | (1.8 | ) | (2.5 | ) | – | – | – | – | ||||||||||||||||||
Operating profit | 36.5 | 23.8 | 19.7 | 5.8 | 0.7 | 1.4 | 3.5 | |||||||||||||||||||||
Capital employed2 | 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 amortisation1 | 28.0 | 10.1 | 9.6 | 5.4 | 1.2 | 0.6 | 0.7 | |||||||||||||||||||||
2002 | ||||||||||||||||||||||||||||
Turnover1 | 119.9 | 142.7 | 61.5 | 10.6 | 7.9 | 7.1 | 10.5 | |||||||||||||||||||||
Operating profit before exceptional items1 | 30.9 | 20.8 | 12.1 | 5.0 | 1.9 | 1.7 | 2.1 | |||||||||||||||||||||
Operating exceptional items1 | (0.4 | ) | (0.1 | ) | – | – | – | – | – | |||||||||||||||||||
Operating profit | 30.5 | 20.7 | 12.1 | 5.0 | 1.9 | 1.7 | 2.1 | |||||||||||||||||||||
Capital employed2 | 93.6 | 63.8 | 48.1 | 40.1 | 11.9 | 2.1 | 3.4 | |||||||||||||||||||||
Capital expenditure | 46.5 | 7.5 | 8.0 | 8.3 | 1.8 | 1.5 | 0.6 | |||||||||||||||||||||
Group share | 23.0 | 3.7 | 4.0 | 2.6 | 0.6 | 0.4 | 0.2 | |||||||||||||||||||||
Other partners | 23.5 | 3.8 | 4.0 | 5.7 | 1.2 | 1.1 | 0.4 | |||||||||||||||||||||
Depreciation and amortisation1 | 20.9 | 8.2 | 6.1 | 2.9 | 0.7 | 0.1 | 0.2 | |||||||||||||||||||||
1. | Group share. |
2. | Capital employed comprises the Group’s share of the net assets of joint ventures or associates. |
3. | The increase in joint ventures in 2003 is principally due to the formation of the Japan Air Gases business in January 2003. Prior to that all of BOC’s turnover in Japan was reported by subsidiary companies. |
80 The BOC Group plcAnnual report and accounts 2003
1. Segmental information continued
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 | ||||||||||||||||||||||
2001 | ||||||||||||||||||||||||||||
Turnover1 | 122.1 | 144.4 | 73.5 | 9.2 | 7.7 | 8.0 | 21.4 | |||||||||||||||||||||
Operating profit before exceptional items1 | 28.2 | 16.8 | 14.0 | 4.1 | 3.0 | 2.1 | 4.0 | |||||||||||||||||||||
Operating exceptional items1 | (0.6 | ) | (1.6 | ) | – | (0.2 | ) | (0.1 | ) | (0.1 | ) | – | ||||||||||||||||
Operating profit | 27.6 | 15.2 | 14.0 | 3.9 | 2.9 | 2.0 | 4.0 | |||||||||||||||||||||
Capital employed2 | 99.3 | 61.6 | 43.9 | 27.4 | 10.5 | 2.4 | 6.8 | |||||||||||||||||||||
Capital expenditure | 55.9 | 12.0 | 35.4 | 2.5 | 0.4 | 0.2 | 3.3 | |||||||||||||||||||||
Group share | 27.8 | 5.9 | 17.7 | 0.7 | 0.1 | 0.1 | 1.0 | |||||||||||||||||||||
Other partners | 28.1 | 6.1 | 17.7 | 1.8 | 0.3 | 0.1 | 2.3 | |||||||||||||||||||||
Depreciation and amortisation1 | 20.5 | 7.9 | 5.4 | 2.5 | 0.5 | 0.1 | 0.6 | |||||||||||||||||||||
1. | Group share. | |
2. | Capital employed comprises the Group’s share of the net assets of joint ventures or associates. |
e) Joint ventures and associates – regional analysis
Joint ventures | Associates | |||||||||||||||||||
Americas | Asia/Pacific | Americas | Africa | Asia/Pacific | ||||||||||||||||
£ million | £ million | £ million | £ million | £ million | ||||||||||||||||
2003 | ||||||||||||||||||||
Turnover1 | 68.0 | 476.3 | 19.1 | 15.4 | 26.1 | |||||||||||||||
Operating profit before exceptional items1 | 19.1 | 67.7 | (0.7 | ) | 3.5 | 8.6 | ||||||||||||||
Operating exceptional items1 | – | (6.8 | ) | – | – | – | ||||||||||||||
Operating profit | 19.1 | 60.9 | (0.7 | ) | 3.5 | 8.6 | ||||||||||||||
Capital employed2 | 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 | |||||||||||||||
Depreciation and amortisation1 | 14.0 | 33.7 | 3.3 | 0.6 | 4.0 | |||||||||||||||
2002 | ||||||||||||||||||||
Turnover1 | 85.4 | 238.7 | – | 10.5 | 25.6 | |||||||||||||||
Operating profit before exceptional items1 | 21.9 | 41.9 | – | 2.1 | 8.6 | |||||||||||||||
Operating exceptional items1 | – | (0.5 | ) | – | – | – | ||||||||||||||
Operating profit | 21.9 | 41.4 | – | 2.1 | 8.6 | |||||||||||||||
Capital employed2 | 25.2 | 180.3 | 13.7 | 3.4 | 40.4 | |||||||||||||||
Capital expenditure | 3.4 | 58.6 | 5.5 | 0.6 | 6.1 | |||||||||||||||
Group share | 1.4 | 29.3 | 1.7 | 0.2 | 1.9 | |||||||||||||||
Other partners | 2.0 | 29.3 | 3.8 | 0.4 | 4.2 | |||||||||||||||
Depreciation and amortisation1 | 14.6 | 20.6 | – | 0.2 | 3.7 | |||||||||||||||
2001 | ||||||||||||||||||||
Turnover1 | 88.5 | 251.5 | – | 21.4 | 24.9 | |||||||||||||||
Operating profit before exceptional items1 | 18.5 | 40.5 | – | 4.0 | 9.2 | |||||||||||||||
Operating exceptional items1 | – | (2.2 | ) | – | – | (0.4 | ) | |||||||||||||
Operating profit | 18.5 | 38.3 | – | 4.0 | 8.8 | |||||||||||||||
Capital employed2 | 27.7 | 177.1 | – | 6.8 | 40.3 | |||||||||||||||
Capital expenditure | 35.2 | 68.1 | – | 3.3 | 3.1 | |||||||||||||||
Group share | 17.4 | 34.0 | – | 1.0 | 0.9 | |||||||||||||||
Other partners | 17.8 | 34.1 | – | 2.3 | 2.2 | |||||||||||||||
Depreciation and amortisation1 | 14.7 | 19.1 | – | 0.6 | 3.1 | |||||||||||||||
1. | Group share. | |
2. | Capital employed comprises the Group’s share of the net assets of joint ventures or associates. | |
3. | The increase in joint ventures in 2003 is principally due to the formation of the Japan Air Gases business in January 2003. Prior to that all of BOC’s turnover in Japan was reported by subsidiary companies. |
81 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
1. Segmental information continued
f) Significant country analysis
UK | US | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Turnover | 914.3 | 868.7 | 837.2 | 1,013.5 | 1,065.6 | 1,167.7 | ||||||||||||||||||
Total operating profit before exceptional items | 110.4 | 115.2 | 125.5 | 31.3 | 50.5 | 66.9 | ||||||||||||||||||
Operating exceptional items | (5.0 | ) | (36.5 | ) | (41.9 | ) | (48.9 | ) | (25.7 | ) | (34.5 | ) | ||||||||||||
Operating profit | 105.4 | 78.7 | 83.6 | (17.6 | ) | 24.8 | 32.4 | |||||||||||||||||
Exceptional (loss)/profit on disposal of fixed assets | – | – | (1.7 | ) | – | – | 4.6 | |||||||||||||||||
Capital employed1 | 673.0 | 733.9 | 928.6 | 1,041.2 | 1,091.6 | 1,231.0 | ||||||||||||||||||
Capital expenditure | 92.4 | 110.0 | 126.3 | 71.0 | 124.8 | 99.8 | ||||||||||||||||||
1. | Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all current borrowings net of cash and deposits. |
2. Profit and loss
a) Analysis of costs
2003 | 2002 | 2001 | ||||||||||
i) Expense category | £ million | £ million | £ million | |||||||||
Cost of sales | (2,137.9 | ) | (2,104.8 | ) | (2,208.8 | ) | ||||||
Distribution costs | (321.7 | ) | (344.1 | ) | (339.3 | ) | ||||||
Administrative expenses1 | (913.2 | ) | (861.4 | ) | (874.1 | ) | ||||||
Income from other fixed asset investments | 1.7 | 4.2 | 2.0 | |||||||||
Net operating expenses | (1,233.2 | ) | (1,201.3 | ) | (1,211.4 | ) | ||||||
1. | Included in total administrative expenses is research and development expenditure of £39.9 million (2002: £47.0 million, 2001: £59.7 million). |
Total | ||||||||||||||||||||
before | ||||||||||||||||||||
Continuing | exceptional | Exceptional | ||||||||||||||||||
operations | Acquisitions | items | items | Total | ||||||||||||||||
ii) 2003 analysis | £ million | £ million | £ million | £ million | £ million | |||||||||||||||
Cost of sales | (2,090.8 | ) | (45.4 | ) | (2,136.2 | ) | (1.7 | ) | (2,137.9 | ) | ||||||||||
Distribution costs | (316.2 | ) | (2.4 | ) | (318.6 | ) | (3.1 | ) | (321.7 | ) | ||||||||||
Administrative expenses1 | (839.7 | ) | (18.1 | ) | (857.8 | ) | (55.4 | ) | (913.2 | ) | ||||||||||
Income from other fixed asset investments | 1.7 | – | 1.7 | – | 1.7 | |||||||||||||||
Net operating expenses | (1,154.2 | ) | (20.5 | ) | (1,174.7 | ) | (58.5 | ) | (1,233.2 | ) | ||||||||||
Continuing | ||||||||||||
operations | ||||||||||||
before | ||||||||||||
exceptional | Exceptional | |||||||||||
items | items | Total | ||||||||||
iii) 2002 analysis | £ million | £ million | £ million | |||||||||
Cost of sales | (2,089.7 | ) | (15.1 | ) | (2,104.8 | ) | ||||||
Distribution costs | (341.9 | ) | (2.2 | ) | (344.1 | ) | ||||||
Administrative expenses1 | (804.7 | ) | (56.7 | ) | (861.4 | ) | ||||||
Income from other fixed asset investments | 4.2 | – | 4.2 | |||||||||
Net operating expenses | (1,142.4 | ) | (58.9 | ) | (1,201.3 | ) | ||||||
iv) 2001 analysis | ||||||||||||
Cost of sales | (2,164.2 | ) | (44.6 | ) | (2,208.8 | ) | ||||||
Distribution costs | (338.1 | ) | (1.2 | ) | (339.3 | ) | ||||||
Administrative expenses1 | (814.2 | ) | (59.9 | ) | (874.1 | ) | ||||||
Income from other fixed asset investments | 2.0 | – | 2.0 | |||||||||
Net operating expenses | (1,150.3 | ) | (61.1 | ) | (1,211.4 | ) | ||||||
1. | Included in total administrative expenses is research and development expenditure of £39.9 million (2002: £47.0 million, 2001: £59.7 million). |
82 The BOC Group plcAnnual report and accounts 2003
2. Profit and loss continued
b) Exceptional items analysis
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Charged in arriving at operating profit | ||||||||||||
Litigation settlement | (43.2 | ) | – | – | ||||||||
Restructuring costs | (23.8 | ) | (47.2 | ) | (35.8 | ) | ||||||
Write-down and impairment of assets | – | (21.2 | ) | (24.5 | ) | |||||||
Write-down of unproductive assets identified for disposal | – | – | (21.0 | ) | ||||||||
FRS17 retirement plan benefit amendments | – | – | (16.7 | ) | ||||||||
Costs of proposed takeover | – | (6.1 | ) | (10.3 | ) | |||||||
Total operating exceptional items | (67.0 | ) | (74.5 | ) | (108.3 | ) | ||||||
i) Litigation settlement
ii) Restructuring costs
iii) Write-downs of assets
iv) Costs of proposed takeover
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
(Charged)/credited after operating profit | ||||||||||||
Closure of businesses – continuing operations | – | (21.3 | ) | – | ||||||||
Profit on disposal of businesses – continuing operations | – | 1.1 | – | |||||||||
Profit on disposal of fixed assets – continuing operations | – | – | 13.6 | |||||||||
Loss on disposal of fixed assets – continuing operations | – | – | (10.0 | ) | ||||||||
Total non-operating exceptional items | – | (20.2 | ) | 3.6 | ||||||||
v)In March 2002 BOC announced plans to merge its Process Plants business with Linde Engineering in the US to form a new company, Linde BOC Process Plants LLC. The costs of £21.3 million for closing BOC’s Process Plants business were charged as an exceptional item in 2002. This included severance costs for 215 employees, the write-down of assets and the costs of winding down the business. Cash flow from operating activities above includes an outflow of £4.1 million (2002: £12.5 million, 2001: £nil) in respect of these exceptional costs.
vi)In 2001, proceeds from the disposal of fixed assets were £41.2 million. Of this, £39.0 million was from those assets which were sold at a profit and £2.2 million was from those assets which were sold at a loss.
c) Fees to auditors
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Audit fees (Parent: £0.3 million, 2002: £0.3 million, 2001: £0.3 million) | 2.0 | 1.9 | 2.0 | |||||||||
Non audit fees | ||||||||||||
Tax services | 1.6 | 2.5 | 1.6 | |||||||||
Audit related services | 0.5 | 0.8 | – | |||||||||
Other services (principally expatriate tax and administration services) | 1.4 | 1.8 | 0.6 | |||||||||
Total non audit fees | 3.5 | 5.1 | 2.2 | |||||||||
Total fees paid to auditors | 5.5 | 7.0 | 4.2 | |||||||||
83 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
3. Interest on net debt
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Interest payable on borrowings totally repayable within five years | 48.0 | 47.5 | 75.1 | |||||||||
Interest payable on all other borrowings | 46.5 | 55.7 | 50.1 | |||||||||
Interest payable and similar charges | 94.5 | 103.2 | 125.2 | |||||||||
Interest capitalised | (0.8 | ) | (2.0 | ) | (2.5 | ) | ||||||
Interest payable (net of interest capitalised) | 93.7 | 101.2 | 122.7 | |||||||||
Interest receivable and similar income | (17.9 | ) | (22.6 | ) | (24.2 | ) | ||||||
Interest (net) | 75.8 | 78.6 | 98.5 | |||||||||
Share of interest of joint ventures (net) | 19.3 | 23.2 | 22.6 | |||||||||
Share of interest of associates (net) | 1.0 | 1.3 | 2.3 | |||||||||
Total interest on net debt | 96.1 | 103.1 | 123.4 | |||||||||
Interest payable on finance leases | 3.5 | 5.3 | 6.9 | |||||||||
Interest payable on borrowings repayable by instalments | 14.1 | 19.5 | 29.1 | |||||||||
4. Tax
a) Tax on profit on ordinary activities
2003 | 2002 | 2001 | |||||||||||
£ million | £ million | £ million | |||||||||||
Current tax: | |||||||||||||
Payable in the UK | |||||||||||||
Corporation tax at 30% (2002: 30%, 2001: 30%) | 85.7 | 51.7 | 60.4 | ||||||||||
Double tax relief | (57.5 | ) | (19.7 | ) | (17.0 | ) | |||||||
28.2 | 32.0 | 43.4 | |||||||||||
Payable overseas | |||||||||||||
US – Federal tax at 35% (2002: 35%, 2001: 35%) | 0.2 | (1.0 | ) | (2.2 | ) | ||||||||
– State and local taxes | (0.3 | ) | 0.6 | 1.3 | |||||||||
Australia at 30% (2002: 30%, 2001: 34%) | 16.4 | 14.6 | 14.0 | ||||||||||
South Africa at 30% (2002: 30%, 2001: 30%) | 26.0 | 18.0 | 15.2 | ||||||||||
Japan at 42% (2002: 42%, 2001: 42%) | 11.3 | 8.3 | 12.7 | ||||||||||
Other countries | 35.6 | 30.9 | 27.3 | ||||||||||
89.2 | 71.4 | 68.3 | |||||||||||
Total current tax | 117.4 | 103.4 | 111.7 | ||||||||||
Deferred tax: | |||||||||||||
Origination and reversal of timing differences | (20.9 | ) | 3.4 | (7.1 | ) | ||||||||
Effect of change in tax rate on opening liability | (0.1 | ) | (0.6 | ) | – | ||||||||
Total deferred tax1 | (21.0 | ) | 2.8 | (7.1 | ) | ||||||||
Tax on profit on ordinary activities | 96.4 | 106.2 | 104.6 | ||||||||||
Analysis of charge in the period by entity type | |||||||||||||
Subsidiary undertakings | 77.9 | 100.3 | 97.6 | ||||||||||
Share of joint ventures | 16.0 | 3.6 | 4.3 | ||||||||||
Share of associates | 2.5 | 2.3 | 2.7 | ||||||||||
Tax on profit on ordinary activities | 96.4 | 106.2 | 104.6 | ||||||||||
1. | The deferred tax includes a credit of £18.5 million (2002: £9.5 million charge, 2001: £3.1 million credit) relating to subsidiary undertakings. The balance relates to the Group’s share of joint ventures and associates. |
The tax charge includes a credit of £25.0 million for the operating exceptional charges (2002: £15.3 million, 2001: £48.8 million) and a credit of £nil for the non-operating exceptional charges (2002: £7.5 million, 2001: £1.9 million charge). The effective rate of tax on adjusted profit was 29.0 per cent (2002: 30.0 per cent, 2001: 32.5 per cent). The total rate of tax was 27.4 per cent (2002: 31.7 per cent, 2001: 28.9 per cent).
84 The BOC Group plcAnnual report and accounts 2003
4. Tax continued
b) Deferred tax
2003 | 2002 | 2001 | ||||||||||
i) Deferred tax – UK GAAP | £ million | £ million | £ million | |||||||||
Analysis | ||||||||||||
Arising from accelerated depreciation allowances | 346.5 | 362.1 | 344.8 | |||||||||
Other timing differences | (43.7 | ) | (53.5 | ) | (32.5 | ) | ||||||
Tax losses and other credits available | (30.2 | ) | (24.7 | ) | (26.4 | ) | ||||||
272.6 | 283.9 | 285.9 | ||||||||||
Movement during the year1 | ||||||||||||
At 1 October 2002 | 283.9 | 285.9 | 287.3 | |||||||||
Exchange adjustment | 5.7 | (8.6 | ) | (7.3 | ) | |||||||
Arising during the year | (18.5 | ) | 9.5 | (3.1 | ) | |||||||
Transfers (to)/from current tax | (1.0 | ) | 0.8 | 3.3 | ||||||||
Acquisitions/(disposals) of businesses | (18.7 | ) | – | – | ||||||||
Other movements | 21.2 | (3.7 | ) | 5.7 | ||||||||
At 30 September 20032 | 272.6 | 283.9 | 285.9 | |||||||||
1. | Subsidiary undertakings only. | |
2. | The balance at 30 September 2003 represents deferred tax assets of £6.6 million (2002: £7.9 million, 2001: £8.4 million) and deferred tax liabilities of £279.2 million (2002: £291.8 million, 2001: £294.3 million). |
ii) Deferred tax – US GAAP
The table below provides a reconciliation of deferred taxes from a UK GAAP basis to a US GAAP basis at 30 September 2003.
Adjustments | ||||||||||||
UK GAAP | to US GAAP | US GAAP | ||||||||||
£ million | £ million | £ million | ||||||||||
Accelerated capital allowances | 346.5 | – | 346.5 | |||||||||
Other temporary differences | (43.7 | ) | (49.6 | ) | (93.3 | ) | ||||||
Tax losses and other credits available | (30.2 | ) | – | (30.2 | ) | |||||||
272.6 | 1 | (49.6 | ) | 223.0 | ||||||||
1. | The UK deferred tax balance of £272.6 million does not include the deferred tax asset of £121.0 million relating to the Group’s net pension liabilities. As required by the applicable UK GAAP accounting standard, FRS17, this asset is set against the relevant retirement benefit liability to show the net position (see note 8a)). 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 2002 | 356.6 | |||
Exchange adjustment | 7.4 | |||
Arising during the year | 3.1 | |||
Transfers to current tax | (1.0 | ) | ||
Acquisitions/(disposals) of businesses | (18.7 | ) | ||
Other movements2 | (124.4 | ) | ||
At 30 September 2003 | 223.0 | |||
2. | This mainly relates to the deferred tax on an additional minimum pension liability under US GAAP. See note 8 c) and 30 c). |
The components of deferred tax assets/(liabilities) at 30 September 2003 were:
2003 | 2002 | |||||||
£ million | £ million | |||||||
Long-term | ||||||||
Asset | 188.0 | 130.4 | ||||||
Liability | (431.8 | ) | (507.0 | ) | ||||
Net liability | (243.8 | ) | (376.6 | ) | ||||
Short-term | ||||||||
Asset | 25.8 | 25.5 | ||||||
Liability | (5.0 | ) | (5.5 | ) | ||||
Net asset | 20.8 | 20.0 | ||||||
Total deferred tax assets | 213.8 | 155.9 | ||||||
Total deferred tax liabilities | (436.8 | ) | (512.5 | ) | ||||
(223.0 | ) | (356.6 | ) | |||||
85 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
4. Tax continued
c) Factors affecting the current and total tax charge for the period
Reconciliation of total tax rate | Reconciliation of effective tax rate on adjusted profit | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||
% | % | % | % | % | % | |||||||||||||||||||
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 | 0.5 | 0.6 | 1.7 | 0.4 | 0.5 | 1.3 | ||||||||||||||||||
Excess of tax depreciation over book depreciation | (3.3 | ) | (5.2 | ) | (4.8 | ) | (2.8 | ) | (3.9 | ) | (3.7 | ) | ||||||||||||
Other timing differences | 2.1 | 3.5 | (1.1 | ) | 1.8 | 2.7 | (1.5 | ) | ||||||||||||||||
State and local taxes | 0.3 | 0.6 | 0.9 | 0.3 | 0.5 | 0.7 | ||||||||||||||||||
Net creation/(utilisation) of losses | 0.9 | (1.4 | ) | (0.9 | ) | 0.7 | (1.1 | ) | (0.7 | ) | ||||||||||||||
Investment tax credits | (0.1 | ) | (3.0 | ) | (1.4 | ) | (0.1 | ) | (2.4 | ) | (1.1 | ) | ||||||||||||
Prior year tax | (0.1 | ) | 1.2 | (0.8 | ) | – | 0.9 | (0.6 | ) | |||||||||||||||
Tax effect of exceptional items | 4.4 | 4.4 | 5.9 | – | – | – | ||||||||||||||||||
Permanent items and other items with less than a 5% net effect | (1.3 | ) | 0.1 | 1.4 | (1.1 | ) | 0.1 | 1.1 | ||||||||||||||||
Effective current tax rate | 33.4 | 30.8 | 30.9 | 29.2 | 27.3 | 25.5 | ||||||||||||||||||
Deferred tax timing differences | (6.0 | ) | 0.9 | (2.0 | ) | (0.2 | ) | 2.7 | 7.0 | |||||||||||||||
Total tax rate/effective tax rate | 27.4 | 31.7 | 28.9 | 29.0 | 30.0 | 32.5 | ||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
UK | 67.0 | 66.6 | 86.4 | |||||||||
Overseas | 284.9 | 268.7 | 275.8 | |||||||||
351.9 | 335.3 | 362.2 | ||||||||||
d) Factors that may affect future tax charges
e) Unused tax credits
Net | ||||
operating loss | ||||
Year | £ million | |||
2004 | 8.4 | |||
2005 | – | |||
2006 | 0.4 | |||
2007 | – | |||
2008 | – | |||
Thereafter, or no expiry date | 42.9 | |||
86 The BOC Group plcAnnual report and accounts 2003
5. Directors
6. Employee numbers
a) Subsidiaries
2003 | 2002 | |||||||||||||||
Year end | Average | Year end | Average | |||||||||||||
i) Employees by business | ||||||||||||||||
Process Gas Solutions | 5,730 | 5,837 | 5,806 | 5,979 | ||||||||||||
Industrial and Special Products | 15,267 | 15,142 | 15,266 | 14,681 | ||||||||||||
BOC Edwards | 4,790 | 4,931 | 5,367 | 5,186 | ||||||||||||
Afrox hospitals | 13,694 | 13,804 | 14,152 | 13,934 | ||||||||||||
Gist | 4,613 | 5,343 | 5,302 | 5,100 | ||||||||||||
Corporate | 413 | 405 | 387 | 376 | ||||||||||||
44,507 | 45,462 | 46,280 | 45,256 | |||||||||||||
ii) Employees by region | ||||||||||||||||
Europe | 12,353 | 13,101 | 13,213 | 12,739 | ||||||||||||
Americas | 7,451 | 7,411 | 7,243 | 7,312 | ||||||||||||
Africa | 17,138 | 17,178 | 17,435 | 17,213 | ||||||||||||
Asia/Pacific | 7,565 | 7,772 | 8,389 | 7,992 | ||||||||||||
44,507 | 45,462 | 46,280 | 45,256 | |||||||||||||
b) Joint ventures and associates | ||||||||||||||||
Joint ventures | 6,064 | 5,626 | 3,570 | 3,596 | ||||||||||||
Associates | 878 | 877 | 742 | 728 | ||||||||||||
6,942 | 6,503 | 4,312 | 4,324 | |||||||||||||
c) Employment costs
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Wages and salaries | 844.7 | 813.9 | 758.8 | |||||||||
Social security costs | 77.7 | 77.7 | 74.0 | |||||||||
Other pension costs | 115.4 | 66.3 | 76.0 | |||||||||
1,037.8 | 957.9 | 908.8 | ||||||||||
87 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
7. Options and incentive schemes
a) Policy
b) Summary of movements
Long-term | Executive | |||||||||||||||||||||||||||||||
incentive | share award | |||||||||||||||||||||||||||||||
Employee options | Executive options | plan1 | plan1 | |||||||||||||||||||||||||||||
Number of | Weighted | Number of | Weighted | Number of | Number of | |||||||||||||||||||||||||||
shares | Range of | average | shares | Range of | average | shares | shares | |||||||||||||||||||||||||
million | option prices | option price | million | option prices | option price | million | million | |||||||||||||||||||||||||
Outstanding at 1 October 2000 | 5.9 | 610p-882p | 810p | 21.6 | 532p-1119p | 877p | – | 0.8 | ||||||||||||||||||||||||
Granted | 1.2 | 894p | 894p | 4.4 | 986p-1034p | 994p | – | – | ||||||||||||||||||||||||
Exercised | (0.4 | ) | 610p-894p | 765p | (2.5 | ) | 532p-980p | 740p | – | – | ||||||||||||||||||||||
Lapsed | (1.0 | ) | 610p-894p | 830p | (1.8 | ) | 722p-993p | 929p | – | (0.1 | ) | |||||||||||||||||||||
Outstanding at 30 September 2001 | 5.7 | 610p-894p | 835p | 21.7 | 627p-1119p | 914p | – | 0.7 | ||||||||||||||||||||||||
Granted | 1.2 | 914p | 914p | 5.5 | 1016p-1079p | 1016p | – | – | ||||||||||||||||||||||||
Exercised | (1.0 | ) | 610p-914p | 787p | (3.1 | ) | 627p-980p | 868p | – | (0.7 | ) | |||||||||||||||||||||
Lapsed | (0.5 | ) | 610p-914p | 857p | (0.6 | ) | 742p-1119p | 957p | – | – | ||||||||||||||||||||||
Outstanding at 30 September 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 | – | ||||||||||||||||||||||||
Number of participants at 30 September 2003 | 6,102 | 1,172 | 77 | – | ||||||||||||||||||||||||||||
Options exercisable: | ||||||||||||||||||||||||||||||||
At 30 September 2003 | – | – | – | 7.5 | 677p-1119p | 880p | – | – | ||||||||||||||||||||||||
At 30 September 2002 | – | – | – | 8.6 | 677p-1119p | 877p | – | – | ||||||||||||||||||||||||
Fair value of options granted during: | ||||||||||||||||||||||||||||||||
Year ended 30 September 2003 | 174p | 177p | 609p | |||||||||||||||||||||||||||||
Year ended 30 September 2002 | 289p | 242p | – | |||||||||||||||||||||||||||||
1. | The long-term incentive and executive share award plans were granted at an option price of £nil. |
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 g).
c) Analysis of options outstanding
Employee options | Executive options | |||||||||||||||||||||||
Number of | Weighted | Normal | Number of | Weighted | Normal | |||||||||||||||||||
shares | average | exercisable | shares | average | exercisable | |||||||||||||||||||
thousand | option price | date | thousand | option price | date | |||||||||||||||||||
Outstanding at 30 September 2003 | ||||||||||||||||||||||||
Date of grant | ||||||||||||||||||||||||
1994 | – | – | – | 315 | 678p | 1997-2004 | ||||||||||||||||||
1995 | – | – | – | 605 | 722p | 1998-2005 | ||||||||||||||||||
1996 | 173 | 827p | 2003-2004 | 981 | 915p | 1999-2006 | ||||||||||||||||||
1997 | 210 | 882p | 2004-2005 | 1,111 | 981p | 2000-2007 | ||||||||||||||||||
1998 | 648 | 823p | 2003-2006 | 1,894 | 915p | 2001-2008 | ||||||||||||||||||
1999 | 670 | 766p | 2004-2007 | 2,594 | 860p | 2002-2009 | ||||||||||||||||||
2000 | 844 | 870p | 2003-2008 | 5,032 | 937p | 2003-2010 | ||||||||||||||||||
2001 | 752 | 894p | 2004-2009 | 3,945 | 994p | 2004-2011 | ||||||||||||||||||
2002 | 765 | 914p | 2005-2010 | 5,080 | 1016p | 2005-2012 | ||||||||||||||||||
2003 | 2,227 | 698p | 2006-2011 | 4,800 | 836p | 2006-2013 | ||||||||||||||||||
6,289 | 26,357 | |||||||||||||||||||||||
88 The BOC Group plcAnnual report and accounts 2003
8. Pensions and other retirement benefits
a) UK GAAP Group
Main assumptions for FRS17 purposes | Europe | Americas | Africa | Asia/Pacific | ||||||||||||
Date of latest actuarial funding valuation | 31 Mar 02 | 1 Jan 02 | 30 Jun 03 | 31 Dec 00 | ||||||||||||
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 | % | ||||||||
2002 | ||||||||||||||||
Rate of increase in salaries | 3.9 | % | 3.75 | % | 9.5 | % | 3.5 | % | ||||||||
Rate of increase in pensions in payment | 2.4 | % | – | 6.8 | % | 2.5 | % | |||||||||
Discount rate | 5.5 | % | 6.5 | % | 12.0 | % | 6.1 | % | ||||||||
Inflation | 2.4 | % | 2.5 | % | 7.0 | % | 2.5 | % | ||||||||
2001 | ||||||||||||||||
Rate of increase in salaries | 4.55 | % | 4.75 | % | 7.5 | % | 4.0 | % | ||||||||
Rate of increase in pensions in payment | 2.5 | % | – | 4.8 | % | 3.0 | % | |||||||||
Discount rate | 6.1 | % | 7.25 | % | 10.0 | % | 5.75 | % | ||||||||
Inflation | 2.5 | % | 3.75 | % | 7.5 | % | 3.0 | % | ||||||||
89 The BOC Group plcAnnual report and accounts 2003
Notes to the financial statements continued
8. Pensions and other retirement benefitscontinued 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 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 | ||||||||||||
Long-term rate of return expected at 30 September 2002 | ||||||||||||||||
Europe | 8.5 | % | 4.9 | % | 4.0 | % | – | |||||||||
Americas | 9.5 | % | 6.0 | % | – | – | ||||||||||
Africa | 14.0 | % | 12.0 | % | 8.5 | % | – | |||||||||
Asia/Pacific | 7.7 | % | 4.7 | % | 5.7 | % | – | |||||||||
Value at 30 September 2002 (£ million) | ||||||||||||||||
Europe | 686.2 | 235.0 | 18.8 | 940.0 | ||||||||||||
Americas | 289.2 | 51.0 | – | 340.2 | ||||||||||||
Africa | 49.6 | 15.3 | 5.4 | 70.3 | ||||||||||||
Asia/Pacific | 89.8 | 16.3 | 16.7 | 122.8 | ||||||||||||
Total | 1,114.8 | 317.6 | 40.9 | 1,473.3 | ||||||||||||
Long-term rate of return expected at 30 September 2001 | ||||||||||||||||
Europe | 8.5 | % | 5.2 | % | 4.6 | % | – | |||||||||
Americas | 9.5 | % | 6.0 | % | – | – | ||||||||||
Africa | 12.0 | % | 10.0 | % | 8.4 | % | – | |||||||||
Asia/Pacific | 7.4 | % | 5.1 | % | 6.1 | % | – | |||||||||
Value at 30 September 2001 (£ million) | ||||||||||||||||
Europe | 897.6 | 226.8 | 18.8 | 1,143.2 | ||||||||||||
Americas | 345.0 | 70.7 | – | 415.7 | ||||||||||||
Africa | 54.7 | 18.2 | 6.3 | 79.2 | ||||||||||||
Asia/Pacific | 92.3 | 18.0 | 17.3 | 127.6 | ||||||||||||
Total | 1,389.6 | 333.7 | 42.4 | 1,765.7 | ||||||||||||
The following amounts at 30 September 2003 were measured in accordance with the requirements of FRS17: | ||||||||||||||||||||||||
Americas | Americas | |||||||||||||||||||||||
Europe | pensions | health care | Africa | Asia/Pacific | Total | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
2003 | ||||||||||||||||||||||||
Total market value of assets | 1,072.3 | 373.2 | – | 98.3 | 145.9 | 1,689.7 | ||||||||||||||||||
Present value of scheme liabilities | (1,516.9 | ) | (294.0 | ) | (50.5 | ) | (92.5 | ) | (142.1 | ) | (2,096.0 | ) | ||||||||||||
Irrecoverable surplus | – | – | – | (5.8 | ) | – | (5.8 | ) | ||||||||||||||||
(Deficit)/surplus in the scheme | (444.6 | ) | 79.2 | (50.5 | ) | – | 3.8 | (412.1 | ) | |||||||||||||||
Related deferred tax asset/(liability) | 133.4 | (31.2 | ) | 19.9 | – | (1.1 | ) | 121.0 | ||||||||||||||||
Net pension (liabilities)/assets1 | (311.2 | ) | 48.0 | (30.6 | ) | – | 2.7 | (291.1 | ) | |||||||||||||||
2002 | ||||||||||||||||||||||||
Total market value of assets | 940.0 | 340.2 | – | 70.3 | 122.8 | 1,473.3 | ||||||||||||||||||
Present value of scheme liabilities | (1,331.6 | ) | (250.4 | ) | (50.1 | ) | (59.3 | ) | (134.0 | ) | (1,825.4 | ) | ||||||||||||
Irrecoverable surplus | – | – | – | (11.0 | ) | – | (11.0 | ) | ||||||||||||||||
(Deficit)/surplus in the scheme | (391.6 | ) | 89.8 | (50.1 | ) | – | (11.2 | ) | (363.1 | ) | ||||||||||||||
Related deferred tax asset/(liability) | 117.5 | (35.5 | ) | 19.8 | – | 4.6 | 106.4 | |||||||||||||||||
Net pension (liabilities)/assets1 | (274.1 | ) | 54.3 | (30.3 | ) | – | (6.6 | ) | (256.7 | ) | ||||||||||||||
2001 | ||||||||||||||||||||||||
Total market value of assets | 1,143.2 | 415.7 | – | 79.2 | 127.6 | 1,765.7 | ||||||||||||||||||
Present value of scheme liabilities | (1,172.0 | ) | (258.2 | ) | (52.0 | ) | (66.4 | ) | (130.8 | ) | (1,679.4 | ) | ||||||||||||
(Deficit)/surplus in the scheme | (28.8 | ) | 157.5 | (52.0 | ) | 12.8 | (3.2 | ) | 86.3 | |||||||||||||||
Related deferred tax asset/(liability) | 8.6 | (62.2 | ) | 20.5 | (3.9 | ) | 1.7 | (35.3 | ) | |||||||||||||||
Net pension (liabilities)/assets1 | (20.2 | ) | 95.3 | (31.5 | ) | 8.9 | (1.5 | ) | 51.0 | |||||||||||||||
1. | Included in the net pension (liabilities)/assets are assets of £50.7 million (2002: £54.3 million, 2001: £107.0 million) and liabilities of £341.8 million (2002: £311.0 million, 2001: £56.0 million). |
90 The BOC Group plc Annual report and accounts 2003
8. Pensions and other retirement benefitscontinued | ||||||||||||||||||||||||
Americas | Americas | |||||||||||||||||||||||
Europe | pensions | health care | Africa | Asia/Pacific | Total | |||||||||||||||||||
Analysis of the amount charged to operating profit | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||
Year to 30 September 2003 | ||||||||||||||||||||||||
Current service cost | (39.4 | ) | (12.3 | ) | (1.6 | ) | (2.1 | ) | (7.9 | ) | (63.3 | ) | ||||||||||||
Past service cost2 | (0.4 | ) | (43.2 | ) | – | – | – | (43.6 | ) | |||||||||||||||
Curtailments/settlements | 3.5 | – | – | – | – | 3.5 | ||||||||||||||||||
Total operating charge | (36.3 | ) | (55.5 | ) | (1.6 | ) | (2.1 | ) | (7.9 | ) | (103.4 | ) | ||||||||||||
Year to 30 September 2002 | ||||||||||||||||||||||||
Current service cost | (33.5 | ) | (12.8 | ) | (1.6 | ) | (1.7 | ) | (7.2 | ) | (56.8 | ) | ||||||||||||
Past service cost2 | (0.6 | ) | 0.7 | – | – | – | 0.1 | |||||||||||||||||
Total operating charge | (34.1 | ) | (12.1 | ) | (1.6 | ) | (1.7 | ) | (7.2 | ) | (56.7 | ) | ||||||||||||
Year to 30 September 2001 | ||||||||||||||||||||||||
Current service cost | (35.8 | ) | (8.6 | ) | (1.3 | ) | (2.2 | ) | (4.7 | ) | (52.6 | ) | ||||||||||||
Past service cost2 | (0.4 | ) | (16.7 | ) | – | – | – | (17.1 | ) | |||||||||||||||
Total operating charge | (36.2 | ) | (25.3 | ) | (1.3 | ) | (2.2 | ) | (4.7 | ) | (69.7 | ) | ||||||||||||
2. | The past service cost amounts in Americas pensions in 2003 and 2001 were accounted for as exceptional items (see note 2 b)). Two amendments were made to the US pension plan in 2002 relating to the allocation of the interest credit to plan members, both retrospectively and in the future. The net impact of the amendments was a £0.7 million credit against past service cost in the year. |
Americas | Americas | |||||||||||||||||||||||
Europe | pensions | health care | Africa | Asia/Pacific | Total | |||||||||||||||||||
Analysis of the amount included in other net financing income | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||
Year to 30 September 2003 | ||||||||||||||||||||||||
Expected return on pension scheme assets3 | 70.2 | 29.1 | – | 10.8 | 9.4 | 119.5 | ||||||||||||||||||
Interest on pension scheme liabilities3 | (72.9 | ) | (15.8 | ) | (3.1 | ) | (8.8 | ) | (9.2 | ) | (109.8 | ) | ||||||||||||
Net interest on FRS17 pension schemes | (2.7 | ) | 13.3 | (3.1 | ) | 2.0 | 0.2 | 9.7 | ||||||||||||||||
Year to 30 September 2002 | ||||||||||||||||||||||||
Expected return on pension scheme assets | 87.4 | 36.2 | – | 7.2 | 8.3 | 139.1 | ||||||||||||||||||
Interest on pension scheme liabilities | (71.1 | ) | (18.6 | ) | (3.7 | ) | (5.6 | ) | (7.1 | ) | (106.1 | ) | ||||||||||||
Net interest on FRS17 pension schemes | 16.3 | 17.6 | (3.7 | ) | 1.6 | 1.2 | 33.0 | |||||||||||||||||
Year to 30 September 2001 | ||||||||||||||||||||||||
Expected return on pension scheme assets | 99.3 | 46.7 | – | 11.9 | 9.0 | 166.9 | ||||||||||||||||||
Interest on pension scheme liabilities | (71.9 | ) | (18.1 | ) | – | (9.7 | ) | (7.5 | ) | (107.2 | ) | |||||||||||||
Net interest on FRS17 pension schemes | 27.4 | 28.6 | – | 2.2 | 1.5 | 59.7 | ||||||||||||||||||
3. | The profit and loss account includes amounts relating to joint ventures and associates of £0.1 million and £(0.4) million in respect of expected return on pension scheme assets and interest on pension scheme liabilities respectively. There were no corresponding amounts for joint ventures and associates in 2002 and 2001. |
91 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
8. Pensions and other retirement benefits continued | ||||||||||||||||||||||||
Americas | Americas | |||||||||||||||||||||||
Analysis of the amount recognised in the statement | Europe | pensions | health care | Africa | Asia/Pacific | Total | ||||||||||||||||||
of total recognised gains and losses | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||
Year to 30 September 2003 | ||||||||||||||||||||||||
Actual return less expected return on pension scheme assets | 73.7 | 44.2 | – | (10.8 | ) | 4.7 | 111.8 | |||||||||||||||||
Experience gains and losses arising on the scheme liabilities | 8.3 | (1.7 | ) | 0.1 | 0.1 | (2.6 | ) | 4.2 | ||||||||||||||||
Changes in assumptions underlying the present value of the scheme liabilities | (134.8 | ) | (6.3 | ) | (2.0 | ) | – | – | (143.1 | ) | ||||||||||||||
Irrecoverable surplus | – | – | – | 8.7 | – | 8.7 | ||||||||||||||||||
Actuarial (loss)/gain recognised in the statement of total recognised gains and losses4 | (52.8 | ) | 36.2 | (1.9 | ) | (2.0 | ) | 2.1 | (18.4 | ) | ||||||||||||||
Year to 30 September 2002 | ||||||||||||||||||||||||
Actual return less expected return on pension scheme assets | (246.4 | ) | (71.6 | ) | – | 3.0 | (13.6 | ) | (328.6 | ) | ||||||||||||||
Experience gains and losses arising on the scheme liabilities | (9.7 | ) | 6.7 | 5.8 | (3.9 | ) | (1.3 | ) | (2.4 | ) | ||||||||||||||
Changes in assumptions underlying the present value of the scheme liabilities | (91.7 | ) | (2.2 | ) | (5.9 | ) | – | 5.5 | (94.3 | ) | ||||||||||||||
Irrecoverable surplus | – | – | – | (11.6 | ) | – | (11.6 | ) | ||||||||||||||||
Actuarial (loss) recognised in the statement of total recognised gains and losses4 | (347.8 | ) | (67.1 | ) | (0.1 | ) | (12.5 | ) | (9.4 | ) | (436.9 | ) | ||||||||||||
Year to 30 September 2001 | ||||||||||||||||||||||||
Actual return less expected return on pension scheme assets | (346.2 | ) | (156.4 | ) | – | (11.9 | ) | (13.3 | ) | (527.8 | ) | |||||||||||||
Experience gains and losses arising on the scheme liabilities | (7.6 | ) | (0.9 | ) | (6.9 | ) | (0.3 | ) | 10.7 | (5.0 | ) | |||||||||||||
Changes in assumptions underlying the present value of the scheme liabilities | 64.0 | – | – | (2.9 | ) | – | 61.1 | |||||||||||||||||
Actuarial (loss) recognised in the statement of total recognised gains and losses4 | (289.8 | ) | (157.3 | ) | (6.9 | ) | (15.1 | ) | (2.6 | ) | (471.7 | ) | ||||||||||||
4. | Included in the actuarial (loss)/gain for the year is £(0.9) million in respect of minority interests (2002: £(5.7) million, 2001: £(6.8) million). |
Americas | Americas | |||||||||||||||||||||||
Europe | pensions | health care | Africa | Asia/Pacific | Total | |||||||||||||||||||
Movement in (deficit)/surplus during the year | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||
Year to 30 September 2003 | ||||||||||||||||||||||||
(Deficit)/surplus in scheme at 1 October | (391.6 | ) | 89.8 | (50.1 | ) | – | (11.2 | ) | (363.1 | ) | ||||||||||||||
Movement in the year: | ||||||||||||||||||||||||
Current service cost | (39.4 | ) | (12.3 | ) | (1.6 | ) | (2.1 | ) | (7.9 | ) | (63.3 | ) | ||||||||||||
Past service cost | (0.4 | ) | (43.2 | ) | – | – | – | (43.6 | ) | |||||||||||||||
Curtailments/settlements | 3.5 | – | – | – | – | 3.5 | ||||||||||||||||||
Contributions | 38.8 | – | 3.5 | 2.1 | 10.2 | 54.6 | ||||||||||||||||||
Disposals of businesses | – | – | – | – | 10.4 | 10.4 | ||||||||||||||||||
Other finance income | (2.7 | ) | 13.3 | (3.1 | ) | 2.0 | 0.2 | 9.7 | ||||||||||||||||
Actuarial (loss)/gain | (52.8 | ) | 36.2 | (1.9 | ) | (2.0 | ) | 2.1 | (18.4 | ) | ||||||||||||||
Exchange adjustment | – | (4.6 | ) | 2.7 | – | – | (1.9 | ) | ||||||||||||||||
(Deficit)/surplus in scheme at 30 September | (444.6 | ) | 79.2 | (50.5 | ) | – | 3.8 | (412.1 | ) | |||||||||||||||
Year to 30 September 2002 | ||||||||||||||||||||||||
(Deficit)/surplus in scheme at 1 October | (28.8 | ) | 157.5 | (52.0 | ) | 12.8 | (3.2 | ) | 86.3 | |||||||||||||||
Movement in the year: | ||||||||||||||||||||||||
Current service cost | (33.5 | ) | (12.8 | ) | (1.6 | ) | (1.7 | ) | (7.2 | ) | (56.8 | ) | ||||||||||||
Past service cost | (0.6 | ) | 0.7 | – | – | – | 0.1 | |||||||||||||||||
Contributions | 2.8 | – | 3.9 | 1.8 | 6.3 | 14.8 | ||||||||||||||||||
Other finance income | 16.3 | 17.6 | (3.7 | ) | 1.6 | 1.2 | 33.0 | |||||||||||||||||
Actuarial (loss) | (347.8 | ) | (67.1 | ) | (0.1 | ) | (12.5 | ) | (9.4 | ) | (436.9 | ) | ||||||||||||
Exchange adjustment | – | (6.1 | ) | 3.4 | (2.0 | ) | 1.1 | (3.6 | ) | |||||||||||||||
(Deficit)/surplus in scheme at 30 September | (391.6 | ) | 89.8 | (50.1 | ) | – | (11.2 | ) | (363.1 | ) | ||||||||||||||
8. Pensions and other retirement benefits continued | ||||||||||||||||||||||||
Americas | Americas | |||||||||||||||||||||||
History of experience gains and losses | Europe | pensions | health care | Africa | Asia/Pacific | Total | ||||||||||||||||||
Year to 30 September 2003 | ||||||||||||||||||||||||
Difference between the expected and actual return on scheme assets | ||||||||||||||||||||||||
Amount (£ million) | 73.7 | 44.2 | – | (10.8 | ) | 4.7 | 111.8 | |||||||||||||||||
Percentage of scheme assets | 6.9 | % | 11.8 | % | – | (11.0 | %) | 3.2 | % | 6.6 | % | |||||||||||||
Experience gains and losses on scheme liabilities | ||||||||||||||||||||||||
Amount (£ million) | 8.3 | (1.7 | ) | 0.1 | 0.1 | (2.6 | ) | 4.2 | ||||||||||||||||
Percentage of the present value of scheme liabilities | 0.5 | % | (0.6 | %) | 0.2 | % | 0.1 | % | (1.8 | %) | 0.2 | % | ||||||||||||
Total amount recognised in the statement of total recognised gains and losses | ||||||||||||||||||||||||
Amount (£ million) | (52.8 | ) | 36.2 | (1.9 | ) | (2.0 | ) | 2.1 | (18.4 | ) | ||||||||||||||
Percentage of the present value of scheme liabilities | (3.5 | %) | 12.3 | % | (3.8 | %) | (2.2 | %) | 1.5 | % | (0.9 | %) | ||||||||||||
Year to 30 September 2002 | ||||||||||||||||||||||||
Difference between the expected and actual return on scheme assets | ||||||||||||||||||||||||
Amount (£ million) | (246.4 | ) | (71.6 | ) | – | 3.0 | (13.6 | ) | (328.6 | ) | ||||||||||||||
Percentage of scheme assets | (26.2 | %) | (21.0 | %) | – | 4.3 | % | (11.1 | %) | (22.3 | %) | |||||||||||||
Experience gains and losses on scheme liabilities | ||||||||||||||||||||||||
Amount (£ million) | (9.7 | ) | 6.7 | 5.8 | (3.9 | ) | (1.3 | ) | (2.4 | ) | ||||||||||||||
Percentage of the present value of scheme liabilities | (0.7 | %) | 2.7 | % | 11.6 | % | (6.6 | %) | (1.0 | %) | (0.1 | %) | ||||||||||||
Total amount recognised in the statement of total recognised gains and losses | ||||||||||||||||||||||||
Amount (£ million) | (347.8 | ) | (67.1 | ) | (0.1 | ) | (12.5 | ) | (9.4 | ) | (436.9 | ) | ||||||||||||
Percentage of the present value of scheme liabilities | (26.1 | %) | (26.8 | %) | (0.2 | %) | (21.1 | %) | (7.0 | %) | (23.9 | %) | ||||||||||||
Year to 30 September 2001 | ||||||||||||||||||||||||
Difference between the expected and actual return on scheme assets | ||||||||||||||||||||||||
Amount (£ million) | (346.2 | ) | (156.4 | ) | – | (11.9 | ) | (13.3 | ) | (527.8 | ) | |||||||||||||
Percentage of scheme assets | (30.3 | %) | (37.6 | %) | – | (15.0 | %) | (10.4 | %) | (29.9 | %) | |||||||||||||
Experience gains and losses on scheme liabilities | ||||||||||||||||||||||||
Amount (£ million) | (7.6 | ) | (0.9 | ) | (6.9 | ) | (0.3 | ) | 10.7 | (5.0 | ) | |||||||||||||
Percentage of the present value of scheme liabilities | (0.6 | %) | (0.3 | %) | (13.3 | %) | (0.4 | %) | 8.2 | % | (0.3 | %) | ||||||||||||
Total amount recognised in the statement of total recognised gains and losses | ||||||||||||||||||||||||
Amount (£ million) | (289.8 | ) | (157.3 | ) | (6.9 | ) | (15.1 | ) | (2.6 | ) | (471.7 | ) | ||||||||||||
Percentage of the present value of scheme liabilities | (24.7 | %) | (60.9 | %) | (13.3 | %) | (22.7 | %) | (2.0 | %) | (28.1 | %) | ||||||||||||
Year to 30 September 2000 | ||||||||||||||||||||||||
Difference between the expected and actual return on scheme assets | ||||||||||||||||||||||||
Amount (£ million) | 109.0 | 57.2 | – | 8.5 | 9.0 | 183.7 | ||||||||||||||||||
Percentage of scheme assets | 7.6 | % | 10.6 | % | – | 8.3 | % | 6.0 | % | 8.3 | % | |||||||||||||
Experience gains and losses on scheme liabilities | ||||||||||||||||||||||||
Amount (£ million) | 22.2 | (30.9 | ) | (17.8 | ) | 3.9 | (11.8 | ) | (34.4 | ) | ||||||||||||||
Percentage of the present value of scheme liabilities | 1.9 | % | (13.3 | %) | (40.7 | %) | 5.5 | % | (8.0 | %) | (2.1 | %) | ||||||||||||
Total amount recognised in the statement of total recognised gains and losses | ||||||||||||||||||||||||
Amount (£ million) | 98.8 | 26.3 | (14.8 | ) | 12.4 | (2.8 | ) | 119.9 | ||||||||||||||||
Percentage of the present value of scheme liabilities | 8.5 | % | 11.3 | % | (33.9 | %) | 17.5 | % | (1.9 | %) | 7.2 | % | ||||||||||||
93 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
8. Pensions and other retirement benefits continued
c) US GAAP
For the purposes of US GAAP, the pension costs of the largest schemes have been restated in the following tables in accordance with the requirement of SFAS 132. The changes in projected benefit obligation, plan assets and details of the funded status of these retirement plans, together with the changes in the accumulated other post-retirement benefit obligations of the Group’s US business, are given below. The measurement date for UK and US pension plans is 30 June and the measurement date for the Australian and South African plans is 30 September. The difference between the UK and US GAAP information disclosed in note 8a) and c) is included in note 30.
Pension benefits | Other benefits1 | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Change in benefit obligation | ||||||||||||||||
Projected benefit obligation at 1 October 2002 | 1,695.9 | 1,599.5 | 50.1 | 52.0 | ||||||||||||
Exchange adjustment | 31.3 | (27.3 | ) | (2.8 | ) | (3.4 | ) | |||||||||
Service cost | 53.0 | 54.6 | 1.8 | 1.6 | ||||||||||||
Interest cost | 108.7 | 102.9 | 3.1 | 3.6 | ||||||||||||
Plan participants’ contributions | 13.9 | 12.9 | – | – | ||||||||||||
Actuarial losses | 242.9 | 44.7 | 1.8 | 0.2 | ||||||||||||
Benefits paid | (96.1 | ) | (91.9 | ) | (3.5 | ) | (3.9 | ) | ||||||||
Other (income) less expenses | (0.4 | ) | 0.6 | – | – | |||||||||||
Curtailments, settlements, termination benefits | (3.1 | ) | 0.6 | – | – | |||||||||||
Plan amendments2 | 43.2 | (0.7 | ) | – | – | |||||||||||
Projected benefit obligation at 30 September 2003 | 2,089.3 | 1,695.9 | 50.5 | 50.1 | ||||||||||||
Change in fair value of assets | ||||||||||||||||
Fair value of assets at 1 October 2002 | 1,706.0 | 1,995.7 | – | – | ||||||||||||
Exchange adjustment | 29.5 | (39.8 | ) | – | – | |||||||||||
Actual return on plan assets | (57.1 | ) | (180.4 | ) | – | – | ||||||||||
Employer contributions | 44.7 | 8.9 | – | – | ||||||||||||
Plan participants’ contributions | 13.9 | 12.9 | – | – | ||||||||||||
Other income less (expenses) | (0.4 | ) | 0.6 | – | – | |||||||||||
Benefits paid | (96.1 | ) | (91.9 | ) | – | – | ||||||||||
Fair value of assets at 30 September 2003 | 1,640.5 | 1,706.0 | – | – | ||||||||||||
Funded status and unrecognised (gains)/losses | ||||||||||||||||
Funded status | (448.8 | ) | 10.1 | (50.5 | ) | (50.1 | ) | |||||||||
Unrecognised net transition asset | (14.3 | ) | (26.1 | ) | – | – | ||||||||||
Unrecognised prior service cost/(credit) | 19.5 | 23.9 | (2.8 | ) | (3.4 | ) | ||||||||||
Unrecognised net loss | 669.6 | 195.5 | 10.2 | 9.3 | ||||||||||||
Adjustment for post measurement date contributions | 9.5 | – | – | – | ||||||||||||
Prepaid/(accrued) pension cost | 235.5 | 203.4 | (43.1 | ) | (44.2 | ) | ||||||||||
Amounts recognised in the statement of financial position consist of: | ||||||||||||||||
Prepaid benefit cost | 165.0 | 183.0 | ||||||||||||||
Accrued benefit liability | (383.6 | ) | (1.5 | ) | ||||||||||||
Intangible asset | 6.9 | 0.7 | ||||||||||||||
Accumulated other comprehensive income | 447.2 | 21.2 | ||||||||||||||
Prepaid pension cost | 235.5 | 203.4 | ||||||||||||||
The fair value of plan assets exceeds the accumulated benefit obligation for all plans except the UK plans, where the accumulated benefit obligation, projected benefit obligation and fair value of plan assets were £1,305.1 million, £1,560.6 million and £1,037.3 million respectively (2002: £1,278.0 million, £1,278.0 million and £1,123.9 million).
The main assumptions are as follows:
Europe | Americas | Africa | Asia/Pacific | |||||||||||||
At 30 September 2003 | ||||||||||||||||
Discount rate | 5.2 | % | 5.8 | % | 10.0 | % | 6.2 | % | ||||||||
Expected return on all plan assets | 7.6 | % | 8.0 | % | 12.0 | % | 7.6 | % | ||||||||
Rate of compensation increase | 4.0 | % | 3.75 | % | 7.5 | % | 3.5 | % | ||||||||
At 30 September 2002 | ||||||||||||||||
Discount rate | 5.8 | % | 7.0 | % | 12.0 | % | 7.0 | % | ||||||||
Expected return on all plan assets | 7.7 | % | 9.0 | % | 12.0 | % | 8.0 | % | ||||||||
Rate of compensation increase | 3.9 | % | 3.75 | % | 9.5 | % | 3.5 | % | ||||||||
94 The BOC Group plc Annual report and accounts 2003
8. Pensions and other retirement benefits continued
Pensionable benefits | Other benefits3 | |||||||||||||||||||||||
2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Service cost net of employees’ contributions | 53.0 | 54.6 | 54.0 | 1.8 | 1.6 | 1.2 | ||||||||||||||||||
Interest cost on projected benefits obligation | 108.7 | 102.9 | 107.5 | 3.1 | 3.6 | 3.3 | ||||||||||||||||||
Expected return on assets | (166.2 | ) | (156.7 | ) | (158.8 | ) | – | – | – | |||||||||||||||
Amortisation of net transition asset | (14.8 | ) | (14.7 | ) | (15.2 | ) | – | – | – | |||||||||||||||
Amortisation of prior service cost/(credit)4 | 46.4 | 3.5 | 2.6 | (0.5 | ) | (0.5 | ) | (0.5 | ) | |||||||||||||||
Amortisation of net (gain)/loss | (1.6 | ) | (7.2 | ) | (2.7 | ) | 0.3 | 0.3 | – | |||||||||||||||
Cost of special termination benefits | 0.9 | 0.6 | 0.4 | – | – | – | ||||||||||||||||||
Net periodic pension cost/(credit) | 26.4 | (17.0 | ) | (12.2 | ) | 4.7 | 5.0 | 4.0 | ||||||||||||||||
4. In 2003 the amortisation of pension prior service cost includes £43.2 million in respect of a settlement of litigation from which the company will derive
no future economic benefit.
It is estimated that a one per cent change in the weighted average health care costs trend would have the following effects on the accumulated benefit obligation and net periodic pension cost at 30 September 2003:
One percentage point | ||||||||
Increase | Decrease | |||||||
Accumulated benefit obligation | 4.6 | (4.3 | ) | |||||
Net periodic pension cost | 0.5 | (0.5 | ) | |||||
9. Dividends | ||||||||||||||||||||||||
Per share | ||||||||||||||||||||||||
2003 | 2002 | 2001 | 2003 | 2002 | 2001 | |||||||||||||||||||
pence | pence | pence | £ million | £ million | £ million | |||||||||||||||||||
Ordinary | ||||||||||||||||||||||||
First interim | 15.5 | 15.5 | 15.5 | 76.4 | 75.8 | 75.5 | ||||||||||||||||||
Second interim | 23.5 | 22.5 | 21.5 | 115.7 | 110.8 | 104.8 | ||||||||||||||||||
39.0 | 38.0 | 37.0 | 192.1 | 186.6 | 180.3 | |||||||||||||||||||
10. Earnings per share
2003 | 2002 | 2001 | ||||||||||
i) Earnings | £ million | £ million | £ million | |||||||||
Amounts used in computing the earnings per share | ||||||||||||
Earnings attributable to Ordinary shareholders for the financial year | 219.1 | 202.9 | 224.1 | |||||||||
Adjustment for exceptional items1 | 41.6 | 71.4 | 55.9 | |||||||||
Adjusted earnings | 260.7 | 274.3 | 280.0 | |||||||||
1. | This comprises the exceptional items before interest of £(67.0) million (2002: £(94.7) million, 2001: £(104.7) million) adjusted for the impact of tax of £25.0 million (2002: £22.8 million, 2001: £46.9 million) and minority interests of £0.4 million (2002: £0.5 million, 2001: £1.9 million). |
2003 | 2002 | 2001 | ||||||||||
ii) Average number of 25p Ordinary shares | million | million | million | |||||||||
Average issued share capital | 497.5 | 496.0 | 493.3 | |||||||||
Less:Average own shares held in trust | 5.0 | 5.6 | 6.4 | |||||||||
Basic | 492.5 | 490.4 | 486.9 | |||||||||
Add:Dilutive share options | 0.2 | 1.8 | 1.7 | |||||||||
Diluted | 492.7 | 492.2 | 488.6 | |||||||||
95 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
11. Fixed assets – intangible assets
a) Group summary | ||||||||||||||||
Negative | Other | |||||||||||||||
Goodwill | goodwill | intangibles | Total | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Gross book value | ||||||||||||||||
At 1 October 2002 | 183.7 | (26.2 | ) | 6.5 | 164.0 | |||||||||||
Exchange adjustment | 2.9 | (0.1 | ) | 0.2 | 3.0 | |||||||||||
Acquired during the year | 47.3 | – | 3.6 | 50.9 | ||||||||||||
Adjustments relating to prior year acquisitions | (1.3 | ) | – | (4.1 | ) | (5.4 | ) | |||||||||
Transfers | – | 11.6 | – | 11.6 | ||||||||||||
Disposed of during the year | (0.3 | ) | 14.7 | – | 14.4 | |||||||||||
At 30 September 2003 | 232.3 | – | 6.2 | 238.5 | ||||||||||||
Amortisation | ||||||||||||||||
At 1 October 2002 | 16.8 | (6.9 | ) | 3.4 | 13.3 | |||||||||||
Exchange adjustment | 0.4 | – | – | 0.4 | ||||||||||||
Provided during the year | 13.9 | (1.1 | ) | 0.8 | 13.6 | |||||||||||
Adjustments relating to prior year acquisitions | – | – | (2.9 | ) | (2.9 | ) | ||||||||||
Transfers | – | 3.8 | – | 3.8 | ||||||||||||
Disposed of during the year | – | 4.2 | – | 4.2 | ||||||||||||
At 30 September 2003 | 31.1 | – | 1.3 | 32.4 | ||||||||||||
Net book value | ||||||||||||||||
At 1 October 2002 | 166.9 | (19.3 | ) | 3.1 | 150.7 | |||||||||||
At 30 September 2003 | 201.2 | – | 4.9 | 206.1 | ||||||||||||
b) Analysis of acquisitions and disposals The increase in positive goodwill represents the excess of the fair value of the purchase price over the provisional fair value of the net assets of businesses acquired. The most significant amounts are as follows: | ||||||||||||
Positive | Negative | Amortisation | ||||||||||
goodwill | goodwill | period | ||||||||||
i) Businesses acquired | £ million | £ million | Years2 | |||||||||
2003 | ||||||||||||
Praxair Polska | 10.1 | – | 20 | |||||||||
Environmental Management Corporation | 31.5 | – | 15 | |||||||||
2002 | ||||||||||||
Seiko Instruments Inc – turbomolecular pumps business1 | 59.4 | – | 20 | |||||||||
Unique Gas and Petrochemicals Public Company Limited | 17.5 | – | 20 | |||||||||
Enron Teesside Operations Limited – industrial assets | 9.6 | – | 15 | |||||||||
Hydromatix Inc | 5.6 | – | 15 | |||||||||
Semco1 | 3.8 | – | 15 | |||||||||
Minorities in Osaka Sanso Kogyo KK | – | (5.0 | ) | 10 | ||||||||
2001 | ||||||||||||
Remaining 50 per cent of joint ventures in Venezuela and Chile | 7.5 | – | 12 | |||||||||
UK Fluorogas | 8.2 | – | 15 | |||||||||
Minorities in Osaka Sanso Kogyo KK | – | (20.4 | ) | 10 | ||||||||
2000 | ||||||||||||
Kachina Semiconductor Services | 7.9 | – | 15 | |||||||||
1. | Restated to reflect final adjustments to provisional fair value of net assets. The adjustment to Seiko Instruments Inc reflects the finalisation of the fair value of the net assets. The adjustment to Semco reflects a cash adjustment of £0.6 million to the consideration. |
2. | Amortisation periods are those over which it is estimated that the value of the business acquired will exceed the value of the identifiable net assets of the business acquired. |
Negative | ||||
goodwill | ||||
ii) Businesses disposed of | £ million | |||
2003 | ||||
Osaka Sanso Kogyo KK1 | 10.5 | |||
1. | Under UK GAAP (UITF31) the combination of Osaka Sanso Kogyo KK with the industrial and medical gases businesses of Air Liquide Japan to form Japan Air Gases Limited has been accounted for as a part disposal. BOC’s Japanese subsidiary retained a 45 per cent interest in Japan Air Gases Limited. Accordingly, 55 per cent of any previously recognised goodwill relating to Osaka Sanso Kogyo KK has been deemed to have been disposed. The remaining 45 per cent has been transferred to fixed asset investments as part of the Group share of the net assets of the Japan Air Gases joint venture. |
96 The BOC Group plc Annual report and accounts 2003
12. Fixed assets – tangible assets
a) Group summary | ||||||||||||||||||||
Plant, | ||||||||||||||||||||
Land and | machinery | Construction | ||||||||||||||||||
buildings | and vehicles | Cylinders | in progress | Total | ||||||||||||||||
£ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Gross book value | ||||||||||||||||||||
At 1 October 2002 | 714.7 | 4,489.6 | 620.1 | 200.9 | 6,025.3 | |||||||||||||||
Exchange adjustment | 22.3 | 10.3 | 37.5 | (5.6 | ) | 64.5 | ||||||||||||||
Capital expenditure2 | 32.7 | 127.4 | 23.3 | 97.8 | 281.2 | |||||||||||||||
Disposals | (18.3 | ) | (98.2 | ) | (15.0 | ) | (3.8 | ) | (135.3 | ) | ||||||||||
Transfers | 7.3 | 107.9 | 11.5 | (126.7 | ) | – | ||||||||||||||
Acquisitions of businesses | 8.0 | 36.8 | 16.5 | 0.2 | 61.5 | |||||||||||||||
Disposals of businesses | (126.3 | ) | (281.5 | ) | (3.9 | ) | (4.4 | ) | (416.1 | ) | ||||||||||
At 30 September 2003 | 640.4 | 4,392.3 | 690.0 | 158.4 | 5,881.1 | |||||||||||||||
Depreciation | ||||||||||||||||||||
At 1 October 2002 | 276.2 | 2,433.3 | 288.4 | – | 2,997.9 | |||||||||||||||
Exchange adjustment | (14.0 | ) | (7.1 | ) | 16.7 | – | (4.4 | ) | ||||||||||||
Provided during the year | 20.1 | 268.8 | 30.9 | – | 319.8 | |||||||||||||||
Disposals | (5.9 | ) | (80.1 | ) | (13.6 | ) | – | (99.6 | ) | |||||||||||
Disposals of businesses | (68.7 | ) | (174.5 | ) | (2.8 | ) | – | (246.0 | ) | |||||||||||
At 30 September 2003 | 207.7 | 2,440.4 | 319.6 | – | 2,967.7 | |||||||||||||||
Net book value at 1 October 2002 | ||||||||||||||||||||
Owned assets | 407.4 | 2,047.8 | 299.8 | 200.9 | 2,955.9 | |||||||||||||||
Leased assets | 31.1 | 8.5 | 31.9 | – | 71.5 | |||||||||||||||
438.5 | 2,056.3 | 331.7 | 200.9 | 3,027.4 | ||||||||||||||||
Net book value at 30 September 2003 3 | ||||||||||||||||||||
Owned assets | 395.2 | 1,945.1 | 342.0 | 158.4 | 2,840.7 | |||||||||||||||
Leased assets4 | 37.5 | 6.8 | 28.4 | – | 72.7 | |||||||||||||||
432.7 | 1,951.9 | 370.4 | 158.4 | 2,913.4 | ||||||||||||||||
1. | Net book value of land and buildings at cost was £395.0 million (2002: £405.4 million). |
2. | Subsidiary undertakings only. Capital expenditure of joint ventures and associates is given in note 1. |
3. | Net book value includes net interest capitalised of £56.4 million (2002: £63.8 million).The tax effect of this is included in the deferred tax provision. |
4. | Leased assets are shown net of accumulated depreciation of £119.1 million (2002: £111.0 million). |
b) Depreciation and operating lease rentals | ||||||||||||
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Depreciation on leased assets included above | 8.1 | 8.5 | 6.8 | |||||||||
Amortisation of capitalised interest included above | 4.0 | 4.2 | 3.0 | |||||||||
Operating lease rentals | ||||||||||||
– hire of plant and machinery | 19.7 | 7.7 | 15.0 | |||||||||
– property rent | 34.3 | 23.1 | 25.0 | |||||||||
– other | 17.6 | 14.0 | 11.9 | |||||||||
c) Regional analysis The Group has numerous manufacturing, distribution and office facilities which are located in some 50 countries. At 30 September 2003, the Group’s property, plant and equipment, comprising land and buildings, plant, machinery, vehicles and cylinders were located regionally as follows: | ||||||||
£ million | % | |||||||
Europe (mainly the UK) | 1,003.3 | 34 | ||||||
Americas (mainly the US) | 945.9 | 33 | ||||||
Africa | 260.0 | 9 | ||||||
Asia/Pacific | 704.2 | 24 | ||||||
2,913.4 | 100 | |||||||
97 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
12. Fixed assets – tangible assets continued
d) Asset revaluations
Following the adoption of FRS15 – Tangible fixed assets in 2000, land and buildings are no longer revalued (see Accounting policies on page 78). The net book value of properties revalued in earlier years was £156.1 million. Properties not revalued were £276.6 million.
e) Parent summary | ||||||||||||
Plant, | ||||||||||||
Land and | machinery | |||||||||||
buildings | and vehicles | Total | ||||||||||
£ million | £ million | £ million | ||||||||||
Gross book value | ||||||||||||
At 1 October 2002 | 14.3 | 15.7 | 30.0 | |||||||||
Capital expenditure | – | 3.4 | 3.4 | |||||||||
Disposals | – | (0.6 | ) | (0.6 | ) | |||||||
At 30 September 2003 | 14.3 | 18.5 | 32.8 | |||||||||
Depreciation | ||||||||||||
At 1 October 2002 | 3.7 | 12.3 | 16.0 | |||||||||
Provided during the year | 0.5 | 0.9 | 1.4 | |||||||||
Disposals | – | (0.3 | ) | (0.3 | ) | |||||||
At 30 September 2003 | 4.2 | 12.9 | 17.1 | |||||||||
Net book value | ||||||||||||
At 1 October 2002 | 10.6 | 3.4 | 14.0 | |||||||||
At 30 September 2003 | 10.1 | 5.6 | 15.7 | |||||||||
f) Net book value of land and buildings at 30 September 2003 | |||||||||||||||||
Group | Parent | ||||||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||||||
£ million | £ million | £ million | £ million | ||||||||||||||
Freehold property | 395.2 | 407.4 | 10.1 | 10.6 | |||||||||||||
Leasehold property | – long-term | 34.2 | 27.4 | – | – | ||||||||||||
– short-term | 3.3 | 3.7 | – | – | |||||||||||||
432.7 | 438.5 | 10.1 | 10.6 | ||||||||||||||
g) Capital commitments | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Against which orders had been placed | 20.9 | 33.3 | – | – | ||||||||||||
Authorised but not committed | 101.9 | 66.7 | – | – | ||||||||||||
122.8 | 100.0 | – | – | |||||||||||||
The Group’s share of its joint ventures’ and associates’ capital commitments was: | ||||||||
2003 | 2002 | |||||||
£ million | £ million | |||||||
Against which orders had been placed | 14.5 | 3.1 | ||||||
Authorised but not committed | 12.2 | 8.6 | ||||||
26.7 | 11.7 | |||||||
98 The BOC Group plc Annual report and accounts 2003
13. Fixed assets – investments
a) Group summary | ||||||||||||||||||||||||||||||||
Group | Group | Group | Provisions | |||||||||||||||||||||||||||||
share of | share of | loans to | Other | against | ||||||||||||||||||||||||||||
Goodwill | net assets of | net assets of | joint ventures | investments | Own | other | ||||||||||||||||||||||||||
of associates | joint ventures | associates | and associates | at cost | shares | investments | Total | |||||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||||
At 1 October 2002 | 8.1 | 205.5 | 49.4 | 118.0 | 47.2 | 42.5 | (2.1 | ) | 468.6 | |||||||||||||||||||||||
Exchange adjustment | (0.3 | ) | 9.9 | 0.2 | (3.3 | ) | 0.5 | – | – | 7.0 | ||||||||||||||||||||||
Acquisitions/additions | – | 192.4 | 2.6 | 14.0 | 5.9 | 7.5 | – | 222.4 | ||||||||||||||||||||||||
Charged to profit | (0.8 | ) | – | – | – | – | (0.7 | ) | (0.1 | ) | (1.6 | ) | ||||||||||||||||||||
Disposals/repayments/transfers | – | – | (5.2 | ) | (20.8 | ) | (13.7 | ) | (1.2 | ) | 1.2 | (39.7 | ) | |||||||||||||||||||
Increase in net assets | – | 2.3 | 5.5 | – | – | – | – | 7.8 | ||||||||||||||||||||||||
Other | – | (7.8 | ) | 0.1 | – | (0.5 | ) | – | 0.4 | (7.8 | ) | |||||||||||||||||||||
At 30 September 2003 | 7.0 | 402.3 | 52.6 | 107.9 | 39.4 | 48.1 | (0.6 | ) | 656.7 | |||||||||||||||||||||||
i) Joint ventures
The cost of investment in joint ventures was £308.6 million (2002: £116.9 million) and the attributable profit before tax was £60.4 million (2002: £40.1 million, 2001: £34.2 million).
The Group’s share of net assets of joint ventures at 30 September 2003 can be analysed as follows:
£ million | ||||
Share of fixed assets | 658.4 | |||
Share of current assets | 211.9 | |||
870.3 | ||||
Share of liabilities due within one year | (167.8 | ) | ||
Share of liabilities due after more than one year | (300.2 | ) | ||
(468.0 | ) | |||
Share of net assets | 402.3 | |||
ii) Associates
The cost of investment in associates was £26.6 million (2002: £15.1 million) and the attributable profit before tax was £10.4 million (2002: £9.4 million, 2001: £10.5 million).
iii) Own shares
For share-based incentive schemes which do not use new issue shares, options are satisfied by the transfer of shares held in trust for the purpose. At 30 September 2003, options over 5.9 million shares were outstanding under these schemes, for which 5.6 million shares in the company were held pending exercise.
99 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
13. Fixed assets – investments continued
b) Valuation | |||||||||
2003 | 2002 | ||||||||
£ million | £ million | ||||||||
Listed on stock exchanges in the UK and overseas | 92.6 | 91.1 | |||||||
Unlisted | – equity at directors’ valuation | 441.5 | 244.9 | ||||||
– other at directors’ valuation | 122.6 | 132.6 | |||||||
Total book value | 656.7 | 468.6 | |||||||
Market value of listed investments | 130.9 | 123.1 | |||||||
c) Income | |||||||||||||
2003 | 2002 | 2001 | |||||||||||
£ million | £ million | £ million | |||||||||||
Listed securities | 4.7 | 7.5 | 6.0 | ||||||||||
Unlisted securities | 32.0 | 30.6 | 19.5 | ||||||||||
36.7 | 38.1 | 25.5 | |||||||||||
Less: | Dividends receivable from joint ventures | 31.7 | 30.5 | 19.4 | |||||||||
Dividends receivable from associates | 3.3 | 3.4 | 4.1 | ||||||||||
Income from other fixed asset investments | 1.7 | 4.2 | 2.0 | ||||||||||
d) Parent | ||||||||||||||||||||||||||||
Amounts | ||||||||||||||||||||||||||||
Investments | Investments | due from | ||||||||||||||||||||||||||
in subsidiary | in related | subsidiary | Own | Other | ||||||||||||||||||||||||
undertakings | undertakings | undertakings | shares | investments | Provisions | Total | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
At 1 October 2002 | 1,470.1 | 8.7 | 1,331.9 | 36.3 | 13.9 | (16.5 | ) | 2,844.4 | ||||||||||||||||||||
Additions | 234.4 | – | – | 7.5 | – | – | 241.9 | |||||||||||||||||||||
Charged to profit | – | – | – | (0.5 | ) | – | – | (0.5 | ) | |||||||||||||||||||
Disposals | (1.5 | ) | – | – | (0.8 | ) | (2.8 | ) | – | (5.1 | ) | |||||||||||||||||
Advances/repayments (net) | – | – | 19.8 | – | – | – | 19.8 | |||||||||||||||||||||
At 30 September 2003 | 1,703.0 | 8.7 | 1,351.7 | 42.5 | 11.1 | (16.5 | ) | 3,100.5 | ||||||||||||||||||||
14. Stocks | ||||||||
Group | ||||||||
2003 | 2002 | |||||||
£ million | £ million | |||||||
Raw materials | 81.3 | 67.8 | ||||||
Work in progress | 51.1 | 47.8 | ||||||
Gases and other finished goods | 172.0 | 159.0 | ||||||
Payments on account | (20.2 | ) | (14.6 | ) | ||||
284.2 | 260.0 | |||||||
100 The BOC Group plc Annual report and accounts 2003
15. Debtors
a) Debtors falling due within one year | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Trade debtors | 569.8 | 601.2 | – | – | ||||||||||||
Amounts due from subsidiary undertakings | – | – | 669.4 | 485.8 | ||||||||||||
Amounts due from joint ventures and associates | 5.7 | 1.4 | 5.0 | 1.4 | ||||||||||||
Other debtors | 93.5 | 100.0 | 15.0 | 21.7 | ||||||||||||
Prepayments and accrued income | 28.8 | 31.2 | 5.0 | 6.7 | ||||||||||||
697.8 | 733.8 | 694.4 | 515.6 | |||||||||||||
b) Debtors falling due after more than one year | ||||||||
Group | ||||||||
2003 | 2002 | |||||||
£ million | £ million | |||||||
Deferred tax | 6.6 | 7.9 | ||||||
Other debtors | 17.0 | 20.4 | ||||||
23.6 | 28.3 | |||||||
16. Current asset investments | ||||||||
Group | ||||||||
2003 | 2002 | |||||||
£ million | £ million | |||||||
Listed investments | 21.8 | 38.3 | ||||||
Unlisted investments | – | 0.5 | ||||||
Total current asset investments | 21.8 | 38.8 | ||||||
Market value of listed investments | 21.8 | 39.0 | ||||||
17. Cash at bank and in hand | ||||||||
Group | ||||||||
2003 | 2002 | |||||||
£ million | £ million | |||||||
Deposits | 4.7 | 20.5 | ||||||
Cash at bank and in hand | 72.8 | 165.0 | ||||||
77.5 | 185.5 | |||||||
101 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
18. Creditors: amounts falling due within one year
a) Borrowings and finance leases1 | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Bank loans and overdrafts | 164.6 | 196.7 | 178.6 | 178.9 | ||||||||||||
Loans other than from banks | 182.0 | 182.3 | 125.0 | – | ||||||||||||
Finance leases | 14.3 | 11.1 | – | – | ||||||||||||
360.9 | 390.1 | 303.6 | 178.9 | |||||||||||||
1. | Details of borrowings and finance leases are given in note 20. |
b) Other creditors | ||||||||||||||||
Deposits and advance payments by customers | 62.8 | 41.5 | – | – | ||||||||||||
Trade creditors | 308.9 | 367.3 | – | – | ||||||||||||
Amounts due to subsidiary undertakings | – | – | 992.3 | 906.6 | ||||||||||||
Taxation – UK | 58.4 | 69.0 | – | – | ||||||||||||
– Overseas | 74.3 | 78.5 | – | – | ||||||||||||
Other taxes and social security payable | 34.8 | 27.3 | – | – | ||||||||||||
Other creditors | 117.3 | 130.0 | 2.6 | 2.0 | ||||||||||||
Accruals and deferred income | 150.8 | 144.2 | 55.0 | 45.2 | ||||||||||||
807.3 | 857.8 | 1,049.9 | 953.8 | |||||||||||||
19. Creditors: amounts falling due after more than one year
a) Borrowings and finance leases1 | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Loans other than from banks | 968.2 | 1,008.1 | 787.3 | 808.9 | ||||||||||||
Bank loans | 108.9 | 90.2 | (20.7 | ) | (7.9 | ) | ||||||||||
Finance leases | 7.6 | 22.7 | – | – | ||||||||||||
1,084.7 | 1,121.0 | 766.6 | 801.0 | |||||||||||||
1. | Details of borrowings and finance leases are given in note 20. |
b) Other creditors | ||||||||||||||||
Deposits and advance payments by customers | 25.2 | 28.7 | – | – | ||||||||||||
Other creditors | 13.1 | 15.7 | 4.3 | 3.9 | ||||||||||||
Accruals and deferred income | 10.1 | 13.6 | 6.1 | 9.1 | ||||||||||||
48.4 | 58.0 | 10.4 | 13.0 | |||||||||||||
102 The BOC Group plc Annual report and accounts 2003
20. Net borrowings and finance leases
a) Analysis | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Secured | ||||||||||||||||
Finance leases | 21.9 | 33.8 | – | – | ||||||||||||
Other secured borrowings | 64.9 | 68.0 | – | – | ||||||||||||
Unsecured | ||||||||||||||||
12 1/4% Unsecured Loan Stock 2012/2017 | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||
6 1/4% Notes 2002 | – | 34.6 | – | – | ||||||||||||
7.45% Guaranteed Notes 2006 | 150.6 | 159.2 | – | – | ||||||||||||
Pollution Control and Industrial Bonds | 18.3 | 19.3 | – | – | ||||||||||||
European Investment Bank loans | 15.3 | 82.8 | – | – | ||||||||||||
6.75% Bonds 2004 | 125.0 | 125.0 | 125.0 | 125.0 | ||||||||||||
1.00% Euroyen Bond 2006 | 134.7 | 130.6 | 134.7 | 130.6 | ||||||||||||
5 7/8% Bonds 2009 | 200.0 | 200.0 | 200.0 | 200.0 | ||||||||||||
6.50% Bonds 2016 | 200.0 | 200.0 | 200.0 | 200.0 | ||||||||||||
Medium-term notes | 156.1 | 57.4 | 156.1 | 57.4 | ||||||||||||
Commercial paper | 55.2 | 147.0 | – | – | ||||||||||||
Other borrowings | 203.6 | 153.4 | 154.4 | 166.9 | ||||||||||||
Total borrowings and finance leases | 1,445.6 | 1,511.1 | 1,070.2 | 979.9 | ||||||||||||
Less:Cash at bank and in hand | 77.5 | 185.5 | – | – | ||||||||||||
Net borrowings and finance leases | 1,368.1 | 1,325.6 | 1,070.2 | 979.9 | ||||||||||||
b) Maturity | |||||||||||||||||
Group | Parent | ||||||||||||||||
2003 | 2002 | 2003 | 2002 | ||||||||||||||
£ million | £ million | £ million | £ million | ||||||||||||||
Long and medium-term bank loans | |||||||||||||||||
Repayable – beyond five years | 19.1 | 11.5 | – | – | |||||||||||||
– two to five years | 59.1 | 41.8 | (2.9 | ) | (7.9 | ) | |||||||||||
– one to two years | 30.7 | 36.9 | (17.8 | ) | – | ||||||||||||
Loans other than from banks | |||||||||||||||||
Repayable – beyond five years | 502.2 | 536.0 | 496.6 | 531.3 | |||||||||||||
– two to five years | 352.1 | 342.7 | 193.4 | 156.7 | |||||||||||||
– one to two years | 113.9 | 129.4 | 97.3 | 120.9 | |||||||||||||
Finance leases –repayable beyond one year | 7.6 | 22.7 | – | – | |||||||||||||
Borrowings and finance leases (note 19 a)) | 1,084.7 | 1,121.0 | 766.6 | 801.0 | |||||||||||||
Short-term – repayable within one year | |||||||||||||||||
Bank loans and overdrafts | 164.6 | 196.7 | 178.6 | 178.9 | |||||||||||||
Loans other than from banks | 182.0 | 182.3 | 125.0 | – | |||||||||||||
Finance leases | 14.3 | 11.1 | – | – | |||||||||||||
Total borrowings and finance leases | 1,445.6 | 1,511.1 | 1,070.2 | 979.9 | |||||||||||||
Less:Cash at bank and in hand | 77.5 | 185.5 | – | – | |||||||||||||
Net borrowings and finance leases | 1,368.1 | 1,325.6 | 1,070.2 | 979.9 | |||||||||||||
2003 | 2002 | |||||||||||||||||||||||
Finance | Other | Finance | Other | |||||||||||||||||||||
leases | borrowings | Total | leases | borrowings | Total | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Repayment profile of borrowings and finance leases | ||||||||||||||||||||||||
Long-term repayable | ||||||||||||||||||||||||
– beyond five years | 0.5 | 521.3 | 521.8 | 2.0 | 547.5 | 549.5 | ||||||||||||||||||
– four to five years | 0.2 | 62.6 | 62.8 | 2.0 | 142.5 | 144.5 | ||||||||||||||||||
– three to four years | 2.3 | 149.3 | 151.6 | 2.4 | 179.7 | 182.1 | ||||||||||||||||||
– two to three years | 2.7 | 199.3 | 202.0 | 1.7 | 62.3 | 64.0 | ||||||||||||||||||
– one to two years | 1.9 | 144.6 | 146.5 | 14.6 | 166.3 | 180.9 | ||||||||||||||||||
Total | 7.6 | 1,077.1 | 1,084.7 | 22.7 | 1,098.3 | 1,121.0 | ||||||||||||||||||
103 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
20. Net borrowings and finance leases continued
c) Short-term interest rates
d) Facilities
2003 | 2002 | ||||||||
$ million | $ million | ||||||||
Four to five years | 450.0 | – | |||||||
Three to four years | – | – | |||||||
Two to three years | – | – | |||||||
One to two years | – | 220.0 | |||||||
Within one year | – | 200.0 | |||||||
450.0 | 420.0 | ||||||||
e) Security
21. Financial instruments
a) Interest rate, currency and counterparty exposure
Interest rate swaps
2003 | 2002 | |||||||
Maturity profile | £ million | £ million | ||||||
Beyond five years | 200.0 | 295.0 | ||||||
Four to five years | 92.6 | – | ||||||
Three to four years | – | – | ||||||
Two to three years | – | – | ||||||
One to two years | – | 125.0 | ||||||
Within one year | 125.0 | – | ||||||
417.6 | 420.0 | |||||||
% | % | |||||||
Weighted average receivable swap rate | 5.2 | 5.5 | ||||||
Weighted average payable swap rate | 4.0 | 4.8 | ||||||
104 The BOC Group plc Annual report and accounts 2003
21. Financial instruments continued
Currency swaps
2003 | 2002 | |||||||||||||||||||||||||||
Net | Net | |||||||||||||||||||||||||||
Cash at | borrowings | borrowings | ||||||||||||||||||||||||||
Capital | Gross | bank and | Currency | and finance | Capital | and finance | ||||||||||||||||||||||
employed | borrowings | in hand | swaps | leases | employed | leases | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
Sterling | 674.7 | (671.1 | ) | 1.7 | 384.1 | (285.3 | ) | 781.7 | (345.2 | ) | ||||||||||||||||||
US dollar | 1,152.0 | (231.4 | ) | 3.6 | (216.6 | ) | (444.4 | ) | 1,190.5 | (504.4 | ) | |||||||||||||||||
Australian dollar | 333.7 | (4.8 | ) | 3.0 | (93.9 | ) | (95.7 | ) | 263.1 | (44.0 | ) | |||||||||||||||||
South African rand | 306.4 | (65.1 | ) | 26.0 | (8.6 | ) | (47.7 | ) | 202.5 | (42.2 | ) | |||||||||||||||||
Japanese yen | 265.6 | (220.6 | ) | 0.8 | (18.1 | ) | (237.9 | ) | 237.4 | (206.9 | ) | |||||||||||||||||
Canadian dollar | 115.1 | (33.9 | ) | 0.2 | (22.3 | ) | (56.0 | ) | 85.8 | (40.1 | ) | |||||||||||||||||
Thai baht | 134.2 | (69.3 | ) | 2.1 | – | (67.2 | ) | 120.6 | (57.7 | ) | ||||||||||||||||||
Other | 723.5 | (149.4 | ) | 40.1 | (24.6 | ) | (133.9 | ) | 711.5 | (85.1 | ) | |||||||||||||||||
Total | 3,705.2 | (1,445.6 | ) | 77.5 | – | (1,368.1 | ) | 3,593.1 | (1,325.6 | ) | ||||||||||||||||||
2003 | 2002 | |||||||||||||||||||||||
Fixed rate | Floating rate | Total | Fixed rate | Floating rate | Total | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Sterling | 300.2 | (14.9 | ) | 285.3 | 300.0 | 45.2 | 345.2 | |||||||||||||||||
US dollar | 303.6 | 140.8 | 444.4 | 225.5 | 278.9 | 504.4 | ||||||||||||||||||
Australian dollar | 1.1 | 94.6 | 95.7 | 35.6 | 8.4 | 44.0 | ||||||||||||||||||
South African rand | 40.7 | 7.0 | 47.7 | 23.7 | 18.5 | 42.2 | ||||||||||||||||||
Japanese yen | 163.3 | 74.6 | 237.9 | 165.9 | 41.0 | 206.9 | ||||||||||||||||||
Canadian dollar | 22.3 | 33.7 | 56.0 | – | 40.1 | 40.1 | ||||||||||||||||||
Thai baht | 58.3 | 8.9 | 67.2 | 52.1 | 5.6 | 57.7 | ||||||||||||||||||
Other | 42.3 | 91.6 | 133.9 | 25.5 | 59.6 | 85.1 | ||||||||||||||||||
Total | 931.8 | 436.3 | 1,368.1 | 828.3 | 497.3 | 1,325.6 | ||||||||||||||||||
Counterparty risk
105 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
21. Financial instruments continued
b) Fair value information
i) Fair values of financial instruments
2003 | 2002 | |||||||||||||||||||
Carrying | Carrying | |||||||||||||||||||
amount | Fair value | amount | Fair value | |||||||||||||||||
Notes | £ million | £ million | £ million | £ million | ||||||||||||||||
Primary financial instruments | ||||||||||||||||||||
Loans to joint ventures and associates | 1 | 107.9 | 107.9 | 118.0 | 118.0 | |||||||||||||||
Other fixed asset investments | 2 | 38.8 | 39.7 | 45.1 | 44.0 | |||||||||||||||
Current asset investments | 3 | 21.8 | 21.8 | 38.8 | 39.5 | |||||||||||||||
Cash at bank and in hand | 4 | 77.5 | 77.5 | 185.5 | 185.5 | |||||||||||||||
Borrowings and finance leases (excluding swap agreements) | 5 | (1,463.3 | ) | (1,559.4 | ) | (1,530.6 | ) | (1,635.7 | ) | |||||||||||
Other creditors: amounts falling due after more than one year | 6 | (37.1 | ) | (37.1 | ) | (41.4 | ) | (41.4 | ) | |||||||||||
Provisions for liabilities and charges | 6 | (10.6 | ) | (10.6 | ) | (16.9 | ) | (16.9 | ) | |||||||||||
Derivative financial instruments held to manage the Group’s interest rate and currency risk profile | ||||||||||||||||||||
Foreign currency and interest rate swap agreements | 7 | 17.7 | 25.6 | 19.5 | 31.1 | |||||||||||||||
Forward foreign exchange contracts | 8 | – | 5.8 | – | 4.9 | |||||||||||||||
Net financial instruments | (1,247.3 | ) | (1,328.8 | ) | (1,182.0 | ) | (1,271.0 | ) | ||||||||||||
Financial assets | 246.0 | 387.4 | ||||||||||||||||||
Financial liabilities | 9 | (1,493.3 | ) | (1,569.4 | ) | |||||||||||||||
Net financial instruments | (1,247.3 | ) | (1,182.0 | ) | ||||||||||||||||
1. | For those bearing either no interest or a floating rate of interest it is deemed that the carrying amount approximates to the fair value. For those bearing a fixed rate of interest an assessment of the interest rate at which the Group could make the same loan under current conditions has been made. Unless this differs significantly from the fixed rate it is also deemed that the carrying amount approximates to the fair value. Where this does differ significantly, the fair value is based on the discounted value of future cash flows. |
2. | For equity instruments listed on a recognised stock exchange the fair value is the quoted market price. For other equity instruments it is deemed that the carrying amount approximates to the fair value. |
3. | The fair value is the quoted market price. Where no quoted market price exists, it is deemed that the carrying amount approximates to the fair value. |
4. | As all bear either no interest or a floating rate of interest it is deemed that the carrying amount approximates to the fair value. |
5. | For those bearing a floating rate of interest it is deemed that the carrying amount approximates to the fair value. For those bearing a fixed rate of interest the fair value is either the quoted market price where a liquid market exists or has been calculated using well established pricing models. |
6. | The carrying amount is deemed to approximate to the fair value. |
7. | The fair value is the estimated amount the Group would receive or pay to terminate the agreements. |
8. | The fair value represents the net effect on the Group of closing out all outstanding contracts. |
9. | Includes foreign currency and interest rate swap agreements. |
ii) Hedges
Swap agreements | ||||||||||||
Gains | Losses | Net | ||||||||||
£ million | £ million | £ million | ||||||||||
Deferred gains and losses | ||||||||||||
Deferred gains and losses on hedges at 1 October 2002 | 25.9 | (6.4 | ) | 19.5 | ||||||||
Gains and losses on hedges maturing in 2003 | (18.1 | ) | 6.4 | (11.7 | ) | |||||||
Deferred gains and losses on hedges recognised in the statement of total recognised gains and losses in 2003 | 15.6 | (5.7 | ) | 9.9 | ||||||||
Deferred gains and losses on hedges at 30 September 2003 | 23.4 | (5.7 | ) | 17.7 | ||||||||
106 The BOC Group plc Annual report and accounts 2003
21. Financial instruments continued
Forward foreign | ||||||||||||||||||||
exchange contracts | Swap agreements | |||||||||||||||||||
Gains | Losses | Gains | Losses | Net total | ||||||||||||||||
£ million | £ million | £ million | £ million | £ million | ||||||||||||||||
Unrecognised gains and losses | ||||||||||||||||||||
Unrecognised gains and losses on hedges at 1 October 2002 | 5.6 | (0.7 | ) | 22.1 | (10.5 | ) | 16.5 | |||||||||||||
Gains and losses arising in previous years that were recognised in 2003 | (5.2 | ) | 0.7 | (0.8 | ) | 0.5 | (4.8 | ) | ||||||||||||
Gains and losses arising before 2003 that were not recognised in 2003 | 0.4 | – | 21.3 | (10.0 | ) | 11.7 | ||||||||||||||
Gains and losses arising in 2003 that were not recognised in 2003 | 6.5 | (1.1 | ) | (2.4 | ) | (1.0 | ) | 2.0 | ||||||||||||
Unrecognised gains and losses on hedges at 30 September 2003 | 6.9 | (1.1 | ) | 18.9 | (11.0 | ) | 13.7 | |||||||||||||
Of which | ||||||||||||||||||||
Gains and losses expected to be recognised in 2004 | 5.1 | (0.7 | ) | 6.5 | (0.5 | ) | 10.4 | |||||||||||||
Gains and losses expected to be recognised in 2005 or later | 1.8 | (0.4 | ) | 12.4 | (10.5 | ) | 3.3 | |||||||||||||
c) Currency exposures
d) Financial instruments
i) Financial assets
2003 | 2002 | |||||||||||||||||||||||||||||||
Financial | Financial | |||||||||||||||||||||||||||||||
assets on | assets on | |||||||||||||||||||||||||||||||
Floating rate | Fixed rate | which no | Total | Floating rate | Fixed rate | which no | Total | |||||||||||||||||||||||||
financial | financial | interest is | financial | financial | financial | interest is | financial | |||||||||||||||||||||||||
assets | assets | received | assets | assets | assets | received | assets | |||||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||||
Sterling | 14.7 | – | 2.3 | �� | 17.0 | 28.1 | 11.5 | 1.7 | 41.3 | |||||||||||||||||||||||
US dollar | 23.1 | 100.7 | 20.2 | 144.0 | 10.4 | 123.4 | 21.3 | 155.1 | ||||||||||||||||||||||||
Australian dollar | 3.0 | – | – | 3.0 | 82.4 | – | – | 82.4 | ||||||||||||||||||||||||
South African rand | 32.3 | – | 3.1 | 35.4 | 9.0 | – | 1.6 | 10.6 | ||||||||||||||||||||||||
Japanese yen | 0.8 | – | – | 0.8 | 51.5 | – | 6.7 | 58.2 | ||||||||||||||||||||||||
Other | 45.0 | – | 0.8 | 45.8 | 39.2 | – | 0.6 | 39.8 | ||||||||||||||||||||||||
Total | 118.9 | 100.7 | 26.4 | 246.0 | 220.6 | 134.9 | 31.9 | 387.4 | ||||||||||||||||||||||||
2003 | 2002 | |||||||||||||||
Fixed rate financial assets | Fixed rate financial assets | |||||||||||||||
Weighted | Weighted | |||||||||||||||
average | average | |||||||||||||||
Weighted | period for | Weighted | period for | |||||||||||||
average | which rate | average | which rate | |||||||||||||
interest rate | is fixed | interest rate | is fixed | |||||||||||||
% | years | % | years | |||||||||||||
Sterling | – | – | 6.7 | 2.1 | ||||||||||||
US dollar | 7.2 | 4.5 | 10.3 | 4.8 | ||||||||||||
107 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
21. Financial instruments continued
ii) Financial liabilities
2003 | 2002 | |||||||||||||||||||||||||||||||
Financial | Financial | |||||||||||||||||||||||||||||||
liabilities on | liabilities on | |||||||||||||||||||||||||||||||
Floating rate | Fixed rate | which no | Total | Floating rate | Fixed rate | which no | Total | |||||||||||||||||||||||||
financial | financial | interest | financial | financial | financial | interest | financial | |||||||||||||||||||||||||
liabilities | liabilities | is paid | liabilities | liabilities | liabilities | is paid | liabilities | |||||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||||||||
Sterling | (13.2 | ) | 300.2 | 4.0 | 291.0 | 58.8 | 300.0 | 6.6 | 365.4 | |||||||||||||||||||||||
US dollar | 155.0 | 303.6 | 9.2 | 467.8 | 304.3 | 225.5 | 11.9 | 541.7 | ||||||||||||||||||||||||
Australian dollar | 97.6 | 1.1 | – | 98.7 | 79.6 | 35.6 | – | 115.2 | ||||||||||||||||||||||||
South African rand | 33.0 | 40.7 | – | 73.7 | 22.9 | 23.7 | – | 46.6 | ||||||||||||||||||||||||
Japanese yen | 75.4 | 163.3 | 0.8 | 239.5 | 92.5 | 165.9 | 0.2 | 258.6 | ||||||||||||||||||||||||
Canadian dollar | 33.9 | 22.3 | 0.9 | 57.1 | 41.1 | – | – | 41.1 | ||||||||||||||||||||||||
Thai baht | 11.0 | 58.3 | 13.0 | 82.3 | 11.9 | 52.1 | 13.4 | 77.4 | ||||||||||||||||||||||||
Other | 131.7 | 42.3 | 9.2 | 183.2 | 88.6 | 25.5 | 9.3 | 123.4 | ||||||||||||||||||||||||
Total | 524.4 | 931.8 | 37.1 | 1,493.3 | 699.7 | 828.3 | 41.4 | 1,569.4 | ||||||||||||||||||||||||
2003 | 2002 | |||||||||||||||
Fixed rate financial liabilities | Fixed rate financial liabilities | |||||||||||||||
Weighted | Weighted | |||||||||||||||
average | average | |||||||||||||||
Weighted | period for | Weighted | period for | |||||||||||||
average | which rate is | average | which rate is | |||||||||||||
interest rate | fixed | interest rate | fixed | |||||||||||||
% | years | % | years | |||||||||||||
Sterling | 8.3 | 12.9 | 8.3 | 13.9 | ||||||||||||
US dollar | 5.8 | 3.0 | 7.1 | 4.2 | ||||||||||||
Australian dollar | 6.2 | 3.0 | 6.2 | 0.2 | ||||||||||||
South African rand | 12.2 | 4.9 | 11.9 | 3.9 | ||||||||||||
Japanese yen | 0.9 | 2.9 | 0.9 | 3.8 | ||||||||||||
Canadian dollar | 4.7 | 1.0 | – | – | ||||||||||||
Thai baht | 3.9 | 1.8 | 4.0 | 1.8 | ||||||||||||
Other | 6.9 | 3.0 | 9.7 | 2.8 | ||||||||||||
22. Provisions for liabilities and charges | ||||||||||||||||||||||||||||
Incentive | ||||||||||||||||||||||||||||
and other | ||||||||||||||||||||||||||||
Deferred | employee | Uninsured | Restructuring | |||||||||||||||||||||||||
tax | provisions | losses | provisions | Environmental | Other | Total | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
At 1 October 2002 | 291.8 | 37.1 | 19.4 | 7.7 | 22.8 | 28.7 | 407.5 | |||||||||||||||||||||
Exchange adjustment | 5.7 | 0.4 | (0.8 | ) | 0.2 | (1.1 | ) | – | 4.4 | |||||||||||||||||||
Provided in the year | – | 1.5 | 3.4 | 2.0 | 2.3 | 13.6 | 22.8 | |||||||||||||||||||||
Released in the year | (18.5 | ) | (1.5 | ) | – | (0.3 | ) | – | (3.3 | ) | (23.6 | ) | ||||||||||||||||
Utilised in the year | – | (12.7 | ) | (0.2 | ) | (5.1 | ) | (4.2 | ) | (14.8 | ) | (37.0 | ) | |||||||||||||||
Acquisitions/(disposals) of businesses | (18.7 | ) | – | – | – | – | – | (18.7 | ) | |||||||||||||||||||
Other movements1 | 18.9 | 1.3 | – | (0.3 | ) | (0.1 | ) | 1.4 | 21.2 | |||||||||||||||||||
At 30 September 2003 | 279.2 | 26.1 | 21.8 | 4.2 | 19.7 | 25.6 | 376.6 | |||||||||||||||||||||
1. | The other movements in deferred tax relate mainly to the net profit and loss credit on pensions which, for balance sheet purposes, is included within the corresponding net pension asset/(liability) in accordance with FRS17. |
108 The BOC Group plc Annual report and accounts 2003
22. Provisions for liabilities and charges continued
23. Share capital | ||||||||||||||||
Number of shares | ||||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
i) Analysis at 30 September | million | million | £ million | £ million | ||||||||||||
Equity capital: | ||||||||||||||||
Issued capital – Ordinary shares of 25p each, called up and fully paid | 497.7 | 497.3 | 124.4 | 124.3 | ||||||||||||
Unissued capital – unclassified shares of 25p each | 92.3 | 92.7 | 23.1 | 23.2 | ||||||||||||
Authorised | 147.5 | 147.5 | ||||||||||||||
Number | ||||
ii) Share issues | million | |||
Issues of Ordinary shares of 25p each during the year were: | ||||
Under the savings related share option scheme | 0.2 | |||
Under the senior executives share option scheme | 0.2 | |||
24. Reserves
a) Group
Share | Joint | |||||||||||||||||||||||||||
premium | Revaluation | Profit and | Pensions’ | ventures’ | Associates’ | |||||||||||||||||||||||
account | reserves | loss account | reserves | reserves | reserves | Total | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
At 1 October 2002 | 362.1 | 27.8 | 1,304.8 | (256.5 | ) | 88.1 | 33.5 | 1,559.8 | ||||||||||||||||||||
Total recognised gains and losses for the year | – | 3.0 | 271.8 | (40.6 | ) | 9.6 | (0.5 | ) | 243.3 | |||||||||||||||||||
Reversal of goodwill credit on disposal of a subsidiary | – | – | (4.2 | ) | – | – | – | (4.2 | ) | |||||||||||||||||||
Subsidiary interest disposed of for interest in joint venture | – | – | (192.6 | ) | 6.0 | 186.6 | – | – | ||||||||||||||||||||
Goodwill on subsidiary interest disposed of for interest in joint venture | – | – | 7.8 | – | (7.8 | ) | – | – | ||||||||||||||||||||
Goodwill previously written off to reserves reclassified on subsidiary interest disposed of for interest in joint venture | – | – | 3.2 | – | (3.2 | ) | – | – | ||||||||||||||||||||
Dividends | – | – | (192.1 | ) | – | – | – | (192.1 | ) | |||||||||||||||||||
Premium on share issues (net) | 3.9 | – | (0.3 | ) | – | – | – | 3.6 | ||||||||||||||||||||
At 30 September 2003 | 366.0 | 30.8 | 1,198.4 | (291.1 | ) | 273.3 | 33.0 | 1,610.4 | ||||||||||||||||||||
109 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
24. Reserves continued
b) Parent company | ||||||||||||||||
Share | Profit | |||||||||||||||
premium | Other | and loss | ||||||||||||||
account | reserves | account | Total | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
At 1 October 2002 | 362.1 | 113.7 | 827.2 | 1,303.0 | ||||||||||||
Profit for the financial year | – | – | 218.6 | 218.6 | ||||||||||||
Unrealised profit on intra-Group disposal of subsidiary company | – | 222.7 | – | 222.7 | ||||||||||||
Dividends | – | – | (192.2 | ) | (192.2 | ) | ||||||||||
Premium on share issues (net) | 3.9 | – | (0.3 | ) | 3.6 | |||||||||||
At 30 September 2003 | 366.0 | 336.4 | 853.3 | 1,555.7 | ||||||||||||
25. Financial commitments
a) Annual operating lease commitments | ||||||||||||||||
2003 | 2002 | |||||||||||||||
Other | Other | |||||||||||||||
Property | operating | Property | operating | |||||||||||||
leases | leases | leases | leases | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
On leases expiring: | ||||||||||||||||
Within one year | 2.3 | 3.3 | 2.9 | 1.3 | ||||||||||||
Between one and two years | 1.8 | 5.6 | 1.8 | 6.5 | ||||||||||||
Between two and five years | 6.3 | 10.7 | 5.7 | 8.5 | ||||||||||||
Over five years | 16.5 | 8.9 | 7.0 | 1.9 | ||||||||||||
26.9 | 28.5 | 17.4 | 18.2 | |||||||||||||
Operating | ||||
leases | ||||
£ million | ||||
Rentals are due under operating leases from 1 October 2003 to completion as follows: | ||||
Year to 30 September 2004 | 55.4 | |||
Year to 30 September 2005 | 46.6 | |||
Year to 30 September 2006 | 38.3 | |||
Year to 30 September 2007 | 30.4 | |||
Year to 30 September 2008 | 24.6 | |||
Thereafter | 120.7 | |||
316.0 | ||||
b) Other commitments
Year ending 30 September | £ million | |||
2004 | 70.1 | |||
2005 | 69.3 | |||
2006 | 81.3 | |||
2007 | 82.5 | |||
2008 | 83.6 | |||
Thereafter | 575.7 | |||
962.5 | ||||
110 The BOC Group plc Annual report and accounts 2003
26. Contingent liabilities and legal proceedings
a) Contingent liabilities | ||||||||||||||||
Group | Parent | |||||||||||||||
2003 | 2002 | 2003 | 2002 | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Guarantees of joint ventures’ borrowings | 2.8 | 119.3 | 2.8 | 119.3 | ||||||||||||
Guarantees of subsidiaries’ borrowings | – | – | 387.6 | 558.1 | ||||||||||||
Other guarantees | 24.0 | 38.7 | 10.5 | 22.3 | ||||||||||||
26.8 | 158.0 | 400.9 | 699.7 | |||||||||||||
b) Legal proceedings
Welding fumes litigation
Fluorogas litigation
ERISA Litigation
111 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
27. Cash flow a) Net cash inflow from operating activities | ||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||
Notes | £ million | £ million | £ million | |||||||||||||
Total operating profit before exceptional items | 505.6 | 500.1 | 530.6 | |||||||||||||
Depreciation and amortisation | 333.4 | 330.9 | 329.5 | |||||||||||||
Net retirement benefits charge less contributions | 5.6 | 49.9 | 53.0 | |||||||||||||
Operating profit before exceptional items of joint ventures | (86.8 | ) | (63.8 | ) | (59.0 | ) | ||||||||||
Operating profit before exceptional items of associates | (11.4 | ) | (10.7 | ) | (13.2 | ) | ||||||||||
Change in stocks | (16.6 | ) | 13.7 | 8.8 | ||||||||||||
Change in debtors | 2.5 | (38.4 | ) | 39.5 | ||||||||||||
Change in creditors | 10.8 | 57.3 | (20.9 | ) | ||||||||||||
Exceptional cash flows | (28.3 | ) | (67.3 | ) | (51.8 | ) | ||||||||||
Other | (14.7 | ) | (12.4 | ) | (28.7 | ) | ||||||||||
Net cash inflow from operating activities | 700.1 | 759.3 | 787.8 | |||||||||||||
b) Reconciliation of net cash flow to movement in net debt | ||||||||||||||||
Decrease/(increase) in cash | 102.5 | (21.4 | ) | (66.1 | ) | |||||||||||
(Decrease)/increase in debt | 27 | (d) | (128.7 | ) | 64.1 | (51.3 | ) | |||||||||
Decrease in liquid resources | 16.2 | 52.6 | 102.8 | |||||||||||||
Change in net debt resulting from cash flows | (10.0 | ) | 95.3 | (14.6 | ) | |||||||||||
Net borrowings assumed at acquisition | 0.8 | 0.5 | – | |||||||||||||
Net liquid resources eliminated on disposal | 31.0 | – | – | |||||||||||||
Inception of finance leases | – | 0.4 | 0.5 | |||||||||||||
Exchange adjustment | 20.7 | (42.7 | ) | (22.2 | ) | |||||||||||
Movement in net debt in the year | 42.5 | 53.5 | (36.3 | ) | ||||||||||||
Net debt at 1 October | 1,325.6 | 1,272.1 | 1,308.4 | |||||||||||||
Net debt at 30 September | 1,368.1 | 1,325.6 | 1,272.1 | |||||||||||||
c) Analysis of net debt | ||||||||||||||||||||||||
Acquisitions/ | ||||||||||||||||||||||||
disposals | ||||||||||||||||||||||||
At | (excluding | Other | At | |||||||||||||||||||||
1 October | cash and | non-cash | Exchange | 30 September | ||||||||||||||||||||
2002 | Cash flow | overdrafts) | changes | adjustment | 2003 | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Cash at bank and in hand due within one year | 185.5 | (76.4 | ) | (44.0 | ) | – | 12.4 | 77.5 | ||||||||||||||||
Borrowings and finance leases due within one year | (390.1 | ) | 197.3 | 9.8 | (171.5 | ) | (6.4 | ) | (360.9 | ) | ||||||||||||||
Borrowings and finance leases due beyond one year | (1,121.0 | ) | (110.9 | ) | 2.4 | 171.5 | (26.7 | ) | (1,084.7 | ) | ||||||||||||||
Net borrowings and finance leases | (1,325.6 | ) | 10.0 | (31.8 | ) | – | (20.7 | ) | (1,368.1 | ) | ||||||||||||||
d) (Decrease)/increase in debt | ||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||
£ million | £ million | £ million | ||||||||||||||||||||||
6 1/4% Notes 2002 | (38.2 | ) | – | – | ||||||||||||||||||||
5 7/8% Bonds 2009 | – | 200.0 | – | |||||||||||||||||||||
7 1/4% Notes 2002 | – | (150.0 | ) | – | ||||||||||||||||||||
Medium-term notes | 93.7 | 59.7 | – | |||||||||||||||||||||
6.50% Bonds 2016 | – | – | 200.0 | |||||||||||||||||||||
1.00% Euroyen Bond 2006 | – | – | 147.0 | |||||||||||||||||||||
5 7/8% Notes 2001 | – | – | (138.9 | ) | ||||||||||||||||||||
European Investment Bank loans | (72.4 | ) | (5.0 | ) | 10.3 | |||||||||||||||||||
Pollution Control and Industrial Bonds | – | (18.5 | ) | (2.4 | ) | |||||||||||||||||||
(Repayment)/net issues of commercial paper | (90.7 | ) | 59.5 | (212.5 | ) | |||||||||||||||||||
Other (net) | (21.1 | ) | (81.6 | ) | (54.8 | ) | ||||||||||||||||||
(Decrease)/increase in debt | (128.7 | ) | 64.1 | (51.3 | ) | |||||||||||||||||||
112 The BOC Group plc Annual report and accounts 2003
28. Acquisitions and disposals a) Cash flow | ||||||||||||||||||||||||
2003 | 2002 | 2001 | ||||||||||||||||||||||
Acquisitions | Disposals | Acquisitions | Disposals | Acquisitions | Disposals | |||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | |||||||||||||||||||
Cash flow arising on the acquisition and disposal of businesses | ||||||||||||||||||||||||
Intangible fixed assets | (2.4 | ) | – | (0.5 | ) | 0.2 | – | – | ||||||||||||||||
Tangible fixed assets | (61.5 | ) | 0.8 | (85.7 | ) | 1.3 | (34.8 | ) | 1.1 | |||||||||||||||
Joint ventures, associates and other investments | (4.8 | ) | 1.1 | (12.4 | ) | 0.2 | 20.7 | 0.4 | ||||||||||||||||
Stocks | (2.7 | ) | 0.1 | (20.9 | ) | 2.4 | (2.4 | ) | 0.5 | |||||||||||||||
Debtors | (15.3 | ) | 0.1 | (37.5 | ) | 0.7 | (16.7 | ) | 1.1 | |||||||||||||||
Cash at bank and in hand | – | 0.2 | (13.5 | ) | – | – | – | |||||||||||||||||
Creditors including taxation | 7.8 | (0.1 | ) | 55.7 | (1.2 | ) | 4.7 | (0.4 | ) | |||||||||||||||
Borrowings | 0.8 | – | 21.4 | – | – | – | ||||||||||||||||||
Minorities | (2.2 | ) | 0.3 | (8.6 | ) | 7.8 | (117.5 | ) | – | |||||||||||||||
Net assets (acquired)/disposed of | (80.3 | ) | 2.5 | (102.0 | ) | 11.4 | (146.0 | ) | 2.7 | |||||||||||||||
Goodwill on acquisitions of subsidiaries1 | (46.7 | ) | – | (112.3 | ) | – | (3.3 | ) | – | |||||||||||||||
Goodwill on acquisitions of joint ventures and associates2 | (8.0 | ) | – | – | – | – | – | |||||||||||||||||
Surplus over book value on disposals | – | (0.7 | ) | – | 2.5 | – | – | |||||||||||||||||
(Acquisition)/disposal price | (135.0 | ) | 1.8 | (214.3 | ) | 13.9 | (149.3 | ) | 2.7 | |||||||||||||||
Deferred (payments)/receipts3 | (0.5 | ) | 2.1 | 7.0 | (3.3 | ) | 3.4 | – | ||||||||||||||||
(135.5 | ) | 3.9 | (207.3 | ) | 10.6 | (145.9 | ) | 2.7 | ||||||||||||||||
1. | Goodwill on acquisition of subsidiaries comprises £47.3 million in respect of acquisitions in 2003 and a cash adjustment of £0.6 million to the consideration for a prior year acquisition. See note 11 b). |
2. | This represents goodwill arising in 2002 for which the cash consideration was not paid until 2003. |
3. | Deferred payments and receipts include amounts for current years and payments and/or receipts in respect of prior years. |
b) Fair value of acquisitions | ||||||||||||||||||||||||||||
Air Products | ||||||||||||||||||||||||||||
Canada | Total book | Total fair | ||||||||||||||||||||||||||
EMC | Praxair | packaged | value of | value of | ||||||||||||||||||||||||
Water Services | Polska | gases business | Other | businesses | Total | businesses | ||||||||||||||||||||||
book value | book value | book value | book value | acquired | adjustments | acquired | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
Intangible assets | – | – | – | (2.4 | ) | (2.4 | ) | – | (2.4 | ) | ||||||||||||||||||
Tangible fixed assets | (0.6 | ) | (17.1 | ) | (13.3 | ) | (24.6 | ) | (55.6 | ) | (5.9 | ) | (61.5 | ) | ||||||||||||||
Joint ventures, associates and other investments | – | – | – | (4.8 | ) | (4.8 | ) | – | (4.8 | ) | ||||||||||||||||||
Stocks | – | (0.6 | ) | (1.9 | ) | (0.2 | ) | (2.7 | ) | – | (2.7 | ) | ||||||||||||||||
Debtors | (3.9 | ) | (3.4 | ) | (6.0 | ) | (2.0 | ) | (15.3 | ) | – | (15.3 | ) | |||||||||||||||
Creditors including taxation | 3.8 | 2.0 | 0.6 | 1.4 | 7.8 | – | 7.8 | |||||||||||||||||||||
Borrowings | 0.1 | – | – | 0.7 | 0.8 | – | 0.8 | |||||||||||||||||||||
Minorities | – | – | – | (2.2 | ) | (2.2 | ) | – | (2.2 | ) | ||||||||||||||||||
Net (assets) acquired | (0.6 | ) | (19.1 | ) | (20.6 | ) | (34.1 | ) | (74.4 | ) | (5.9 | ) | (80.3 | ) | ||||||||||||||
Payment | 31.1 | 29.2 | 25.6 | 49.6 | 135.5 | – | 135.5 | |||||||||||||||||||||
Deferred payment | 1.0 | – | 0.9 | (2.4 | ) | (0.5 | ) | – | (0.5 | ) | ||||||||||||||||||
Consideration | 32.1 | 29.2 | 26.5 | 47.2 | 135.0 | – | 135.0 | |||||||||||||||||||||
Goodwill on acquisitions of subsidiaries | (31.5 | ) | (10.1 | ) | – | (5.1 | ) | (46.7 | ) | – | (46.7 | ) | ||||||||||||||||
Goodwill on acquisitions of joint ventures and associates | – | – | – | (8.0 | ) | (8.0 | ) | – | (8.0 | ) | ||||||||||||||||||
0.6 | 19.1 | 26.5 | 34.1 | 80.3 | – | 80.3 | ||||||||||||||||||||||
113 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
28. Acquisitions and disposals continued The fair value of acquisitions in 2002 were: | ||||||||||||||||||||||||||||
Unique | ||||||||||||||||||||||||||||
Gas and | ||||||||||||||||||||||||||||
Petrochemicals | Seiko | Total book | Total fair | |||||||||||||||||||||||||
Smiths | Public | Instruments | value of | value of | ||||||||||||||||||||||||
Group | Company Ltd | Inc | Other | businesses | Total | businesses | ||||||||||||||||||||||
book value | book value | book value | book value | acquired | adjustments | acquired | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
Intangible assets | – | – | (0.5 | ) | – | (0.5 | ) | – | (0.5 | ) | ||||||||||||||||||
Tangible fixed assets | (9.0 | ) | (25.3 | ) | (2.9 | ) | (44.9 | ) | (82.1 | ) | (3.6 | ) | (85.7 | ) | ||||||||||||||
Joint ventures, associates and other investments | – | (0.6 | ) | (0.1 | ) | (12.3 | ) | (13.0 | ) | 0.6 | (12.4 | ) | ||||||||||||||||
Stocks | (11.5 | ) | (1.5 | ) | (9.2 | ) | (3.8 | ) | (26.0 | ) | 5.1 | (20.9 | ) | |||||||||||||||
Debtors | (12.6 | ) | (9.7 | ) | (4.6 | ) | (11.1 | ) | (38.0 | ) | 0.5 | (37.5 | ) | |||||||||||||||
Cash at bank and in hand | – | (11.7 | ) | (1.3 | ) | (0.5 | ) | (13.5 | ) | – | (13.5 | ) | ||||||||||||||||
Creditors including taxation | 12.4 | 35.8 | 3.8 | 9.2 | 61.2 | (5.5 | ) | 55.7 | ||||||||||||||||||||
Borrowings | 7.7 | 0.3 | 0.1 | 13.3 | 21.4 | – | 21.4 | |||||||||||||||||||||
Minorities | – | 0.2 | – | (8.8 | ) | (8.6 | ) | – | (8.6 | ) | ||||||||||||||||||
Net (assets) acquired | (13.0 | ) | (12.5 | ) | (14.7 | ) | (58.9 | ) | (99.1 | ) | (2.9 | ) | (102.0 | ) | ||||||||||||||
Payment | 6.6 | 39.7 | 72.1 | 88.9 | 207.3 | – | 207.3 | |||||||||||||||||||||
Deferred payment | – | – | 2.4 | 4.6 | 7.0 | – | 7.0 | |||||||||||||||||||||
Consideration | 6.6 | 39.7 | 74.5 | 93.5 | 214.3 | – | 214.3 | |||||||||||||||||||||
Goodwill on acquisitions of subsidiaries | – | (17.5 | ) | (60.2 | ) | (34.6 | ) | (112.3 | ) | – | (112.3 | ) | ||||||||||||||||
6.6 | 22.2 | 14.3 | 58.9 | 102.0 | – | 102.0 | ||||||||||||||||||||||
The following fair value adjustments were made to the book value of the assets and liabilities of the businesses acquired in 2002: | ||||||||||||||||
Unique | ||||||||||||||||
Gas and | ||||||||||||||||
Petrochemicals | Seiko | |||||||||||||||
Smiths | Public | Instruments | Total | |||||||||||||
Group | Company Ltd | Inc | adjustments | |||||||||||||
£ million | £ million | £ million | £ million | |||||||||||||
Valuations | ||||||||||||||||
Tangible fixed assets | – | (0.6 | ) | – | (0.6 | ) | ||||||||||
Joint ventures, associates and other investments | – | 0.6 | – | 0.6 | ||||||||||||
Alignment of accounting policies | ||||||||||||||||
Tangible fixed assets | 1.5 | (4.5 | ) | – | (3.0 | ) | ||||||||||
Stocks | 4.8 | – | 0.3 | 5.1 | ||||||||||||
Debtors | 0.1 | 0.4 | – | 0.5 | ||||||||||||
Taxation | – | 2.2 | – | 2.2 | ||||||||||||
Other | ||||||||||||||||
Creditors | – | (7.8 | ) | 0.1 | (7.7 | ) | ||||||||||
6.4 | (9.7 | ) | 0.4 | (2.9 | ) | |||||||||||
114 The BOC Group plc Annual report and accounts 2003
28. Acquisitions and disposals continued
c) Exchange of business
Total | ||||
book value | ||||
of business | ||||
disposed | ||||
Value of assets disposed | £ million | |||
Tangible fixed assets | 169.3 | |||
Joint ventures, associates and other investments | 3.0 | |||
Stocks | 10.3 | |||
Debtors | 69.2 | |||
Net liquid resources | 30.9 | |||
Creditors including taxation | (86.5 | ) | ||
Minorities | (3.1 | ) | ||
193.1 | ||||
Adjustment to reflect retention of 45 per cent share | (86.9 | ) | ||
Net assets disposed | 106.2 | |||
Air Liquide | Air Liquide | |||||||||||||||||||
Japan | Japan | OSK | Total fair | |||||||||||||||||
assets | assets | assets | value of | |||||||||||||||||
contributed | Valuation | contributed | contributed | combined | ||||||||||||||||
book value | adjustments | at fair value | at fair value | business | ||||||||||||||||
Value of assets acquired | £ million | £ million | £ million | £ million | £ million | |||||||||||||||
Tangible fixed assets | 185.0 | 40.8 | 225.8 | 169.3 | 395.1 | |||||||||||||||
Joint ventures, associates and other investments | 10.7 | – | 10.7 | 3.0 | 13.7 | |||||||||||||||
Stocks | 19.4 | – | 19.4 | 10.3 | 29.7 | |||||||||||||||
Debtors | 141.6 | – | 141.6 | 69.2 | 210.8 | |||||||||||||||
Net (borrowings)/liquid resources | (37.9 | ) | – | (37.9 | ) | 30.9 | (7.0 | ) | ||||||||||||
Creditors including taxation | (129.0 | ) | 0.2 | (128.8 | ) | (86.5 | ) | (215.3 | ) | |||||||||||
Minorities | (9.2 | ) | – | (9.2 | ) | (3.1 | ) | (12.3 | ) | |||||||||||
180.6 | 41.0 | 221.6 | 193.1 | 414.7 | ||||||||||||||||
BOC Group share of assets (45 per cent) | 186.6 | |||||||||||||||||||
Value of OSK retained by the Group (45 per cent) | (86.9 | ) | ||||||||||||||||||
Fair value of assets acquired | 99.7 | |||||||||||||||||||
Total | ||||
adjustments | ||||
£ million | ||||
Valuations Tangible fixed assets | 40.8 | |||
Provisions | 9.3 | |||
Alignment of accounting policies Pension liabilities | (9.1 | ) | ||
41.0 | ||||
Unrealised gain on disposal | £ million | |||
Consideration, fair value of assets acquired | 99.7 | |||
Net assets disposed | (106.2 | ) | ||
(6.5 | ) | |||
Negative goodwill credited on disposal of a subsidiary | 14.7 | |||
Unrealised profit on disposal of a subsidiary | 8.2 | |||
115 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
29. Related party transactions
30. US accounting information
a) Summary of differences between UK and US generally accepted accounting principles and other US accounting information
Goodwill and other intangible assets
Impairment of goodwill
Profit or loss on the partial disposal of Group companies
Deferred tax
Revaluation of fixed assets
Impairment of tangible fixed assets
Restructuring costs
116 The BOC Group plc Annual report and accounts 2003
30. US accounting information continued
Pensions
Post retirement medical costs
Securities investments
Employee share option plans (ESOPs) and other share options
Contingent consideration
Financial instruments
Accounting for swaps
Share of results and net assets of joint ventures and associates
Sale and leaseback transactions
Comprehensive income
117 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
30. US accounting information continued
b) Reconciliation of net profit
2003 | 2002 | 2001 | ||||||||||
Years ended 30 September | £ million | £ million | £ million | |||||||||
Net profit as reported in the Group profit and loss account under UK GAAP | 219.1 | 202.9 | 224.1 | |||||||||
Pensions | 62.5 | 35.4 | 24.9 | |||||||||
Post retirement medical costs | – | 0.3 | (2.7 | ) | ||||||||
Revaluations realised on asset disposals | 1.1 | 5.8 | 1.1 | |||||||||
Write-down of previously revalued assets | – | 20.5 | – | |||||||||
Depreciation of revalued fixed assets | 0.1 | 0.7 | 3.8 | |||||||||
Amortisation of goodwill previously charged to reserves | – | (7.2 | ) | (7.9 | ) | |||||||
Non-amortisation of goodwill under SFAS142 | 13.9 | 3.5 | – | |||||||||
Amortisation of other intangibles | (0.5 | ) | – | – | ||||||||
Unrealised profit on disposal of subsidiary | 8.2 | – | – | |||||||||
Other adjustments on profit on disposal of subsidiary | (20.7 | ) | – | – | ||||||||
Share of results of joint ventures and associates | 0.6 | – | (4.8 | ) | ||||||||
Interest rate swaps | 1.7 | 1.9 | 1.9 | |||||||||
Financial instruments | (2.8 | ) | 19.5 | 8.5 | ||||||||
Restructuring costs | – | – | (6.5 | ) | ||||||||
ESOPs and other share options | 1.7 | (3.4 | ) | (2.0 | ) | |||||||
Sale and leaseback | 0.1 | 0.2 | 0.1 | |||||||||
Taxation effect of above adjustments | (20.7 | ) | (24.7 | ) | (6.3 | ) | ||||||
Net income under US GAAP | 264.3 | 255.4 | 234.2 | |||||||||
2003 | 2002 | 2001 | ||||||||||
Average number of 25p Ordinary shares | million | million | million | |||||||||
Basic | 492.5 | 490.4 | 486.9 | |||||||||
Diluted | 492.7 | 492.2 | 488.6 | |||||||||
2003 | 2002 | 2001 | ||||||||||
pence | pence | pence | ||||||||||
Earnings per share | ||||||||||||
Basic | 53.7 | 52.1 | 48.1 | |||||||||
Diluted | 53.6 | 51.9 | 47.9 | |||||||||
c) Reconciliation of other comprehensive income | ||||||||||||
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Other recognised gains and losses, as reported under UK GAAP | 24.2 | (445.0 | ) | (372.9 | ) | |||||||
UK pensions accounting | 15.5 | 297.2 | 310.4 | |||||||||
Additional US GAAP pension liability | (291.8 | ) | (21.2 | ) | – | |||||||
Unrealised profit on disposal of subsidiary | (8.2 | ) | – | – | ||||||||
Credit in relation to share options | – | 2.0 | 4.4 | |||||||||
Write-down of revaluation reserve | – | 11.5 | – | |||||||||
Securities investments | 3.8 | (4.0 | ) | (15.9 | ) | |||||||
Exchange adjustment | (1.0 | ) | (4.1 | ) | (1.4 | ) | ||||||
Other movements | (0.6 | ) | (24.7 | ) | 2.6 | |||||||
Other comprehensive income under US GAAP | (258.1 | ) | (188.3 | ) | (72.8 | ) | ||||||
118 The BOC Group plc Annual report and accounts 2003
30. US accounting information continued
d) Reconciliation of shareholders’ funds | |||||||||
2003 | 2002 | ||||||||
At 30 September | £ million | £ million | |||||||
Shareholders’ funds reported in the Group balance sheet under UK GAAP | 1,734.8 | 1,684.1 | |||||||
UK minority interests | 177.3 | 117.9 | |||||||
1,912.1 | 1,802.0 | ||||||||
Pensions | 48.8 | 408.6 | |||||||
Post retirement medical costs | (12.5 | ) | (13.9 | ) | |||||
Revaluations of fixed assets | (37.7 | ) | (33.1 | ) | |||||
Goodwill previously charged to reserves | 65.7 | 80.4 | |||||||
Non-amortisation of goodwill under SFAS142 | 16.9 | 3.5 | |||||||
Goodwill on fair value adjustments | 1.8 | – | |||||||
Write-down of previously revalued assets | – | 21.2 | |||||||
Interest rate swaps | (4.6 | ) | (6.6 | ) | |||||
Share of net assets of joint ventures and associates | 4.5 | (14.4 | ) | ||||||
Securities investments – gross unrealised gains | 39.8 | 36.7 | |||||||
– gross unrealised losses | – | (1.7 | ) | ||||||
Financial instruments | 13.7 | 16.5 | |||||||
ESOPs and other shares held in trust | (48.1 | ) | (42.5 | ) | |||||
Provision for executive share schemes | 0.9 | (3.6 | ) | ||||||
Sale and leaseback | (2.2 | ) | (2.5 | ) | |||||
Deferred tax | 49.6 | (72.7 | ) | ||||||
Minority interests | (176.2 | ) | (116.9 | ) | |||||
Shareholders’ funds under US GAAP | 1,872.5 | 2,061.0 | |||||||
e) Movements in shareholders’ funds on a US GAAP basis | ||||||||
Shareholders’ funds at 1 October | 2,061.0 | 2,138.9 | ||||||
Net income for the year | 264.3 | 255.4 | ||||||
Dividends | (192.1 | ) | (186.6 | ) | ||||
Shares issued | 3.7 | 24.6 | ||||||
Movement in treasury stock | (6.3 | ) | 17.0 | |||||
Other comprehensive income | (258.1 | ) | (188.3 | ) | ||||
Shareholders’ funds at 30 September | 1,872.5 | 2,061.0 | ||||||
f) Consolidated cash flow statement
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Net cash provided by operating activities | 562.4 | 620.2 | 631.2 | |||||||||
Net cash used by investing activities | (395.5 | ) | (540.0 | ) | (445.5 | ) | ||||||
Net cash used by financing activities | (286.4 | ) | (122.7 | ) | (225.6 | ) | ||||||
Net decrease in cash and cash equivalents | (119.5 | ) | (42.5 | ) | (39.9 | ) | ||||||
Cash and cash equivalents at 1 October | 181.9 | 259.0 | 305.6 | |||||||||
Exchange and other movements | 14.0 | (34.6 | ) | (6.7 | ) | |||||||
Cash and cash equivalents at 30 September | 76.4 | 181.9 | 259.0 | |||||||||
119 The BOC Group plc Annual report and accounts 2003
Notes to the financial statements continued
30. US accounting information continued
g) Stock-based compensation
2003 | 2002 | 2001 | ||||||||||
£ million | £ million | £ million | ||||||||||
Reported net income | 264.3 | 255.4 | 234.2 | |||||||||
Add stock compensation expense recognised in accordance with APB25 (net of related tax) | – | 2.5 | – | |||||||||
Deduct stock compensation expense determined in accordance with SFAS123 (net of related tax) | (7.1 | ) | (6.9 | ) | (6.8 | ) | ||||||
Pro forma net income | 257.2 | 251.0 | 227.4 | |||||||||
2003 | 2002 | 2001 | ||||||||||
pence | pence | pence | ||||||||||
Earnings per share: | ||||||||||||
Basic – as reported | 53.7 | 52.1 | 48.1 | |||||||||
Basic – pro forma | 52.2 | 51.2 | 46.7 | |||||||||
Diluted – as reported | 53.6 | 51.9 | 47.9 | |||||||||
Diluted – pro forma | 52.2 | 51.0 | 46.5 | |||||||||
h) Recently issued accounting pronouncements implemented in the year
2002 | 2001 | |||||||
£ million | £ million | |||||||
Reported US GAAP net income | 255.4 | 234.2 | ||||||
Add back: amortisation of goodwill | ||||||||
– charged against profit under both UK and US GAAP | 3.7 | 3.4 | ||||||
– charged against profit under US GAAP | 7.2 | 7.9 | ||||||
US GAAP net income on SFAS142 basis | 266.3 | 245.5 | ||||||
The changes in the carrying amount of goodwill for the year ended 30 September 2003 are as follows: | ||||||||||||||||||||||||||||
Industrial | ||||||||||||||||||||||||||||
Process | and Special | BOC | Afrox | |||||||||||||||||||||||||
Gas Solutions | Products | Edwards | hospitals | Gist | Corporate | Total | ||||||||||||||||||||||
£ million | £ million | £ million | £ million | £ million | £ million | £ million | ||||||||||||||||||||||
Balance at 1 October | 34.3 | 86.4 | 120.3 | 6.1 | 0.7 | 3.0 | 250.8 | |||||||||||||||||||||
Acquired during year | 26.0 | 11.0 | 1.8 | 3.1 | – | – | 41.9 | |||||||||||||||||||||
Disposed of during year | – | (17.0 | ) | (1.2 | ) | (0.3 | ) | – | – | (18.5 | ) | |||||||||||||||||
Exchange adjustment | (0.8 | ) | 2.3 | 0.1 | 2.7 | – | (0.3 | ) | 4.0 | |||||||||||||||||||
Balance at 30 September | 59.5 | 82.7 | 121.0 | 11.6 | 0.7 | 2.7 | 278.2 | |||||||||||||||||||||
SFAS143 – Accounting for asset retirement obligations
SFAS144 – Accounting for the impairment or disposal of long-lived assets
120 The BOC Group plc Annual report and accounts 2003
30. US accounting information continued
SFAS146 – Accounting for costs associated with exit or disposal activities
SFAS146 is effective for all exit or disposal activities initiated after 31 December 2002. The statement addresses financial accounting and reporting for costs associated with exit or disposal activities. It requires that a liability for a cost associated with an exit or disposal activity are recognised when the liability is incurred, rather than the date at which a commitment is made to an exit or disposal plan. The impact of the standard is reflected in restructuring costs in the US GAAP reconciliation statements.
SFAS148 – Accounting for stock-based compensation – transition and disclosure – an amendment to SFAS123
In December 2002, the US Financial Accounting Standards Board issued SFAS148. This statement provides alternative methods of transition for companies electing to adopt a fair value method of accounting for stock-based employee compensation. It also amends the disclosure requirements of SFAS123 Accounting for Stock-Based Compensation, but makes no changes to the fair value principles of SFAS123.
SFAS149 – Amendment of Statement 133 on derivative instruments and hedging activities
In April 2003, the US Financial Accounting Standards Board issued SFAS149. This statement amends and clarifies financial reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities. This statement is effective for contracts entered into or modified after 30 June 2003, and has not had a material effect on the results or financial position in the current period. Management does not believe that this statement will have a material effect on the Group’s results and financial position under US GAAP in future periods.
SFAS150 – Accounting for certain financial instruments with characteristics of both debt and equity
In May 2003, the US Financial Accounting Standards Board issued SFAS150. This statement establishes how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. Some financial instruments will be classified as a liability, and others will be classified as equity. This statement is effective for financial instruments entered into or modified after 31 May 2003 and has not had a material effect on the results or financial position in the current period. Management does not believe that this statement will have a material effect on the Group’s results and financial position under US GAAP in future periods.
EITF 00-21 – Accounting for revenue arrangements with multiple deliverables
In May 2003, the Emerging Issues Task Force (EITF) finalised amendments made to Issue 00-21 following a consensus being reached in November 2002. Issue 00-21 addresses certain aspects of accounting by a seller, especially relating to the identification of single units of accounting for arrangements where the company will perform multiple revenue-generating activities. Issue 00-21 is effective prospectively for arrangements initiated on or after 1 July 2003. Issue 00-21 has not had a material impact on the Group’s results and financial position in the current period. Management does not believe that this issue will have a material effect on the results and financial position under US GAAP in future periods.
EITF 01-8 – Determining whether an arrangement contains a lease
In May 2003, the Emerging Issues Task Force (EITF) reached a consensus on EITF Issue 01-8. Issue 01-8 provides guidance for determining whether an arrangement contains a lease that is within the scope of SFAS13 Accounting for Leases. If it is determined that a lease exists, the lease and non-lease components of a combined sales arrangement must be accounted for separately. Issue 01-8 is effective prospectively for arrangements initiated, modified, or acquired after 1 July 2003.
i) Recently issued accounting pronouncements not yet implemented
FIN46 – Consolidation of variable interest entities
In January 2003, the US Financial Accounting Standards Board issued FASB Interpretation Number (FIN) 46. In the current period, this interpretation is applicable to all variable interest entities created after 31 January 2003. It will apply to all variable interest entities for accounting periods beginning after 31 December 2003. This interpretation requires the primary beneficiary to consolidate a variable interest entity if it holds a variable interest that will absorb a majority of the entity’s expected losses if they occur, receive a majority of the entity’s expected residual returns if they occur, or both. This interpretation has not had a material effect on the results or financial position in the current period. Management is currently assessing whether this interpretation is likely to have a material effect on the Group’s results and financial position under US GAAP in future periods.
j) Other information
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
31. Post balance sheet events
b)An action was filed against The BOC Group Cash Balance Retirement Plan (the Plan) in the US. At the time of the preliminary announcement of the Group’s results on 13 November 2003, no provision was made in respect of this case, as at that time the outcome of the litigation was uncertain and the amount of any loss could not be reliably estimated. Subsequently, the parties have reached an agreement in principle to settle at US$69 million, subject to approval by the court at a fairness hearing. Under UK accounting principles (FRS17) this amount has been recognised as a charge in the profit and loss account of the Group. It has been shown as an exceptional item. The settlement will be paid out of Plan assets.
121 The BOC Group plcAnnual report and accounts 2003
A list of the Group’s major operating undertakings, certain financing undertakings and undertakings in which the Group has a material interest is detailed below. All holdings shown are Ordinary shares. Undertakings are held either by The BOC Group plc directly (where indicated by*) or through other operating undertakings or through undertakings formed for the convenient holding of shares in certain subsidiaries, joint ventures or associates. The Group holding percentages shown below represent the ultimate interest of The BOC Group plc. All companies are incorporated and registered in the country in which they operate as listed below.
Principal | Group holding | |||||||
activity | % | |||||||
Aruba | ||||||||
BOC Gases Aruba NV | m | 100 | ||||||
Australia | ||||||||
BOC Ltd3 | nm | 100 | ||||||
Elgas Ltd5 | m | 50 | ||||||
Bangladesh | ||||||||
BOC Bangladesh Ltd | m | 60 | * | |||||
Belgium | ||||||||
SA BOC Edwards NV5 | l | 100 | ||||||
Bermuda | ||||||||
Priestley Company Ltd | u | 100 | ||||||
The Hydrogen Company of Paraguana Ltd | n | 100 | ||||||
Brazil | ||||||||
BOC Edwards Brasil Ltda | lu | 100 | ||||||
BOC Gases do Brasil Ltda | n | 100 | ||||||
Brunei | ||||||||
Brunei Oxygen Sdn Bhd(a),5 | m | 25 | ||||||
Canada | ||||||||
BOC Canada Ltd3 | m | 100 | ||||||
Hibon Inc | l | 100 | ||||||
Chile | ||||||||
Compania de Hidrogeno de Talcahuano Ltda5 | n | 100 | ||||||
Indura S.A., Industria y Comercio5 | m | 41 | ||||||
Colombia | ||||||||
Gases Industriales de Colombia SA5 | nm | 74 | ||||||
Czech Republic | ||||||||
BOC Edwards s.r.o | l | 100 | ||||||
Gist Czech Republic s.r.o.5 | 4 | 100 | ||||||
England | ||||||||
BOC Edwards Chemical Management Europe Ltd | l | 100 | * | |||||
BOC Holdings1,3 | u | 100 | * | |||||
BOC Ltd3 | nml | 100 | ||||||
BOC Netherlands Holdings Ltd3 | u | 100 | * | |||||
BOC Overseas Finance Ltd | u | 100 | * | |||||
Edwards High Vacuum International Ltd | l | 100 | ||||||
Fluorogas Ltd8 | l | 100 | * | |||||
Gist Ltd | 4 | 100 | ||||||
Leengate Welding Group Ltd | m | 100 | ||||||
Welding Products Holdings Ltd | m | 100 | * | |||||
Fiji | ||||||||
BOC Fiji Ltd | m | 90 | ||||||
Principal | Group holding | |||||||
activity | % | |||||||
France | ||||||||
Cryostar-France SA | n | 100 | ||||||
Edwards SA | l | 100 | ||||||
Hibon International SA5 | l | 100 | ||||||
Hibon SAS5 | l | 100 | ||||||
Société de Mécanique Magnétique | l | 87 | ||||||
Germany | ||||||||
BOC Edwards GmbH | l | 100 | ||||||
Wilhelm Klein GmbH | l | 100 | ||||||
Hong Kong | ||||||||
Hong Kong Oxygen & Acetylene Co Ltd | nm | 50 | ||||||
The BOC Group Ltd | lu | 100 | ||||||
India | ||||||||
BOC India Ltd5 | nm | 55 | * | |||||
Indonesia | ||||||||
PT BOC Gases Indonesia | nm | 100 | ||||||
PT Gresik Gases Indonesia | n | 90 | ||||||
PT Gresik Power Indonesia | n | 90 | ||||||
Ireland | ||||||||
BOC Gases Ireland Ltd3 | nm | 100 | ||||||
Priestley Dublin Reinsurance Company Ltd | u | 100 | ||||||
Italy | ||||||||
BOC Edwards SpA | l | 100 | ||||||
Japan | ||||||||
BOC Edwards Technologies KK | l | 100 | ||||||
BOC Japan Ltd | u | 98 | ||||||
Edwards Japan Ltd | l | 100 | ||||||
Japan Air Gases Ltd9 | nml | 44 | ||||||
Kenya | ||||||||
BOC Kenya Ltd | m | 65 | ||||||
Korea | ||||||||
BOC Gases Korea Co Ltd | n | 100 | ||||||
Songwon Edwards Ltd | l | 97 | ||||||
Luxembourg | ||||||||
BOC Luxembourg No.1 Sarl | u | 100 | ||||||
BOC Luxembourg No.2 Sarl | u | 100 | ||||||
Malawi | ||||||||
BOC Malawi Ltd(c) | m | 42 | ||||||
Malaysia | ||||||||
Malaysian Oxygen Bhd(a),3,4 | nml | 23 | ||||||
MOX Gases Bhd (formerly NIOI) | m | 23 | ||||||
Mauritius | ||||||||
Les Gaz Industriels Ltee(b) | m | 21 | ||||||
Mexico | ||||||||
Compania de Nitrogeno de Cantarell, SA de CV5 | n | 35 | ||||||
122 The BOC Group plcAnnual report and accounts 2003
Principal | Group holding | |||||||
activity | % | |||||||
Namibia | ||||||||
IGL Properties (Pty) Ltd | m | 56 | ||||||
Netherlands | ||||||||
BOC Edwards Pharmaceutical Systems BV | l | 100 | ||||||
Gist BV | 4 | 100 | ||||||
The BOC Group BV3 | u | 100 | ||||||
Netherlands Antilles BOC Gases Curaçao NV | m | 100 | ||||||
New Zealand | ||||||||
BOC Ltd | nm | 100 | ||||||
Nigeria | ||||||||
BOC Gases Nigeria plc | m | 60 | ||||||
Pakistan | ||||||||
BOC Pakistan Ltd | nm | 60 | * | |||||
Papua New Guinea | ||||||||
BOC Papua New Guinea Pty Ltd | m | 74 | ||||||
Peoples’ Republic of China | ||||||||
BOC (China) Holdings Co Ltd3,5 | n | 100 | ||||||
BOC Gases (North) Co Ltd5 | n | 100 | ||||||
BOC Gases (Shanghai) Corporation Ltd5 | n | 100 | ||||||
BOC Gases (Suzhou) Co Ltd5 | n | 100 | ||||||
BOC Gases (Tianjin) Co Ltd5 | n | 100 | * | |||||
BOC Gases (Wuhan) Co Ltd5 | n | 100 | ||||||
BOC TISCO Gases Co Ltd5 | n | 50 | * | |||||
BOC Trading (Shanghai) Co Ltd5 | l | 100 | ||||||
Nanjing BOC-YPC Gases Co Ltd5 | n | 50 | ||||||
Shanghai BOC Industrial Gases Co Ltd5 | n | 50 | * | |||||
Philippines | ||||||||
Consolidated Industrial Gases Inc | nml | 100 | ||||||
Southern Industrial Gases Philippines Inc | m | 100 | ||||||
Poland | ||||||||
BOC Gazy Sp.z o.o.3 | nm | 98 | ||||||
Samoa BOC Gases (Samoa) Ltd | m | 96 | ||||||
Singapore | ||||||||
BOC Gases Pte Ltd | u | 100 | * | |||||
Singapore Oxygen Air Liquide Pte Ltd | nml | 50 | ||||||
Solomon Islands | ||||||||
BOC Gases Solomon Islands Ltd | m | 100 | ||||||
Principal | Group holding | |||||||
activity | % | |||||||
South Africa | ||||||||
African Oxygen Ltd3 | nmo | 56 | ||||||
Afrox Healthcare Ltd(c),3 | o | 39 | ||||||
Afrox Ltd | nm | 56 | ||||||
BOC Edwards South Africa (Pty) Ltd | l | 100 | ||||||
Switzerland | ||||||||
BOC AG | n | 100 | ||||||
Taiwan | ||||||||
BOC Lienhwa Industrial Gases Co Ltd | nml | 50 | ||||||
Thailand | ||||||||
Thai Industrial Gases Public Co Ltd3 | nml | 99 | ||||||
TIG HyCO Ltd | n | 99 | ||||||
Unique Gas and Petrochemical Public Co Ltd | m | 99 | ||||||
Turkey | ||||||||
Birlesik Oksijen Sanayi AS | nm | 50 | * | |||||
US | ||||||||
BOC, Inc | u | 100 | ||||||
Environmental Management Corporation | n | 100 | ||||||
Linde BOC Process Plants LLC(a) | n | 30 | ||||||
The BOC Group, Inc3 | nmlu | 100 | ||||||
US Virgin Islands | ||||||||
BOC Gases Virgin Islands Inc5 | n | 100 | ||||||
Venezuela | ||||||||
BOC Gases de Venezuela, C.A. | nm | 100 | ||||||
Vietnam | ||||||||
North Vietnam Industrial Gases Ltd5 | n | 40 | ||||||
Zambia | ||||||||
BOC Gases Zambia plc(c) | m | 39 | ||||||
Zimbabwe | ||||||||
BOC Zimbabwe (Pvt) Ltd | m | 100 | ||||||
1. | Unlimited company having share capital with registered office at the same address as The BOC Group plc. |
2. | Businesses where the Group percentage ownership is 50 per cent or less are accounted for as joint ventures, except as follows: (a) accounted for as associates, (b) accounted for as investment or (c) accounted for as subsidiary (controlled through partly owned intermediate undertaking). See also accounting policies on pages 77 and 78. |
3. | Group undertakings which made acquisitions or investments during the year. |
4. | Group holding for dividend purposes is 28 per cent. |
5. | Group undertakings with financial year ends other than 30 September. |
6. | The principal activity of each undertaking is indicated as follows: |
n | Process Gas Solutions |
m | Industrial and Special Products |
l | BOC Edwards |
o | Afrox hospitals |
4 | Gist |
u | Corporate/holding company |
7. | * | Indicates where investment is held directly by The BOC Group plc. |
8. | In administration. |
9. | BOC Japan Ltd holds 45 per cent of Japan Air Gases Ltd. |
123 The BOC Group plcAnnual report and accounts 2003
Shareholder information
Dividends
Ordinary shares
The company has paid cash dividends on its Ordinary shares in every year since 1899. Since 1988, the dividend policy has been to pay two interim dividends, one in February and one in August. The dividends are reported in the accounts in the year in which they are paid.
The table below sets out, in UK pence, the total of the cash amounts of the dividends per share. | ||||||||||||||||
Pence per Ordinary share | ||||||||||||||||
$ per | ||||||||||||||||
First | Second | Ordinary | ||||||||||||||
interim paid | interim paid | Total | share total1 | |||||||||||||
1999 | 15.70 | 17.00 | 32.70 | 0.58 | ||||||||||||
2000 | 15.50 | 19.50 | 35.00 | 0.60 | ||||||||||||
2001 | 15.50 | 21.50 | 37.00 | 0.59 | ||||||||||||
2002 | 15.50 | 22.50 | 38.00 | 0.63 | ||||||||||||
2003 | 15.50 | 23.50 | 39.00 | 0.66 | ||||||||||||
1. | The dollar equivalents of the dividend per Ordinary share are based on the exchange rate at the date of payment of the dividend. |
12¼% Unsecured Loan Stock 2012/2017
Interest payments are made twice each year on 2 April and 2 October at such amounts as will result in an annual rate of 12¼ per cent.
American Depositary Shares Since listing on the New York Stock Exchange on 18 September 1996 the gross dividends applicable to an American Depositary Share representing two Ordinary shares, before deduction of withholding tax but including the UK imputed tax credit, where applicable, are as follows: | ||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||
$ | $ | $ | $ | $ | ||||||||||||||||
First interim | 0.56 | 0.48 | 0.50 | 0.55 | 0.55 | |||||||||||||||
Second interim | 0.75 | 0.77 | 0.68 | 0.65 | 0.60 | |||||||||||||||
Nature of trading market
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||||||||||||||||||
Financial year | High | Low | High | Low | High | Low | High | Low | High | Low | ||||||||||||||||||||||||||||||
quarter | pence | pence | pence | pence | pence | pence | pence | pence | pence | pence | ||||||||||||||||||||||||||||||
First quarter | 947.0 | 818.0 | 1108.0 | 907.0 | 1050.0 | 850.5 | 1336.0 | 1242.0 | 927.0 | 698.0 | ||||||||||||||||||||||||||||||
Second quarter | 904.0 | 670.0 | 1100.0 | 988.0 | 1076.0 | 909.0 | 1376.0 | 1132.0 | 917.5 | 801.0 | ||||||||||||||||||||||||||||||
Third quarter | 828.5 | 755.0 | 1088.0 | 999.0 | 1114.0 | 928.0 | 1245.0 | 901.0 | 1262.0 | 870.0 | ||||||||||||||||||||||||||||||
Fourth quarter | 912.5 | 767.5 | 1035.0 | 836.0 | 1060.0 | 780.0 | 1020.0 | 871.0 | 1387.0 | 1228.0 | ||||||||||||||||||||||||||||||
2003 | May | June | July | August | September | October | ||||||||||||||||||
High pence | 790.0 | 809.0 | 871.5 | 889.5 | 912.5 | 906.5 | ||||||||||||||||||
Low pence | 755.0 | 755.5 | 767.5 | 824.0 | 826.0 | 803.5 | ||||||||||||||||||
124 The BOC Group plcAnnual report and accounts 2003
The table below sets out the highest and lowest reported sales prices for the company’s ADSs as reported on the NYSE as notified by the depositary for the periods indicated. | ||||||||||||||||||||||||||||||||||||||||
2003 | 2002 | 2001 | 2000 | 1999 | ||||||||||||||||||||||||||||||||||||
Financial year | ||||||||||||||||||||||||||||||||||||||||
quarter | High $ | Low $ | High $ | Low $ | High $ | Low $ | High $ | Low $ | High $ | Low $ | ||||||||||||||||||||||||||||||
First quarter | 29.11 | 25.69 | 31.76 | 26.60 | 31.25 | 24.31 | 43.81 | 41.00 | 30.56 | 22.75 | ||||||||||||||||||||||||||||||
Second quarter | 29.31 | 22.00 | 31.60 | 27.83 | 32.75 | 26.70 | 44.75 | 35.87 | 29.12 | 26.56 | ||||||||||||||||||||||||||||||
Third quarter | 27.30 | 24.19 | 31.74 | 29.75 | 31.50 | 26.05 | 40.18 | 26.81 | 40.31 | 27.25 | ||||||||||||||||||||||||||||||
Fourth quarter | 29.63 | 25.86 | 31.80 | 26.02 | 30.24 | 22.50 | 30.00 | 25.06 | 43.56 | 39.37 | ||||||||||||||||||||||||||||||
2003 | May | June | July | August | September | October | ||||||||||||||||||
High $ | 25.90 | 27.30 | 28.48 | 28.55 | 29.63 | 30.59 | ||||||||||||||||||
Low $ | 24.95 | 25.50 | 25.86 | 26.80 | 27.68 | 27.95 | ||||||||||||||||||
Analysis of shareholdings
a) Substantial holdings – at 13 November 2003 | ||||||||
Number | ||||||||
of shares | % of issued | |||||||
million | capital | |||||||
Ordinary shares of 25p each | ||||||||
FMR Corp and Fidelity International Limited | 15.30 | 3.08 | ||||||
Legal & General Investment Management Limited | 15.00 | 3.02 | ||||||
b) By size of holding – at 30 September 2003 | ||||||||||||||||||
% of | Number of | % | ||||||||||||||||
Number of | total number | 25p shares | of ordinary | |||||||||||||||
accounts | of accounts | Size of holding 25p shares | million | capital | ||||||||||||||
19,936 | 44 | 1 – 500 | 5.2 | 1 | ||||||||||||||
12,002 | 27 | 501 – 1,000 | 9.0 | 2 | ||||||||||||||
11,087 | 25 | 1,001 – 5,000 | 21.7 | 4 | ||||||||||||||
1,478 | 3 | 5,001 – 50,000 | 21.3 | 4 | ||||||||||||||
601 | 1 | 50,001 – 1,000,000 | 139.3 | 28 | ||||||||||||||
85 | 0 | Over 1,000,000 | 301.2 | 61 | ||||||||||||||
45,189 | 100 | 497.7 | 100 | |||||||||||||||
c) By investor type – at 30 September 2003 | ||||||||||||||||||
% of | Number of | % | ||||||||||||||||
Number of | total number | 25p shares | of ordinary | |||||||||||||||
accounts | of accounts | Type of investor | million | capital | ||||||||||||||
32,828 | 73 | Individuals | 29.2 | 6 | ||||||||||||||
11,412 | 25 | Institutional investors | 455.1 | 91 | ||||||||||||||
949 | 2 | Other corporate investors | 13.4 | 3 | ||||||||||||||
45,189 | 100 | 497.7 | 100 | |||||||||||||||
d) Close company status
The company is not a close company within the meaning of the Income and Corporation Taxes Act 1988. There has been no change in that status since 30 September 2003.
e) Stock ownership of management
The interests of the directors and officers of the company in the shares and options of the company are given in the report on remuneration on pages 60 to 69.
125 The BOC Group plcAnnual report and accounts 2003
Shareholder information continued
Taxation
UK shareholders
The following information applies to individuals who hold Ordinary shares and who are resident or ordinarily resident in the UK for UK tax purposes (UK resident holders).
Taxation of capital gains
A UK resident holder will be liable to UK tax on the gain from the disposal of Ordinary shares. For the purposes of calculating the gain from the disposal of Ordinary shares, a UK resident holder who held Ordinary shares prior to 31 March 1982 may substitute the market value of such shares as at that date for the original cost of such shares. The market value of Ordinary shares on 31 March 1982 was 168.75p per Ordinary share.
Taxation of dividends
A UK resident holder is entitled to a tax credit on receipt of a cash dividend. The tax credit is a fixed proportion of the dividend and is currently 1/9th of the cash dividend received.
Stamp duty
Stamp duty or stamp duty reserve tax at the rate of 0.5 per cent of consideration payable is normally payable on the purchase price of shares.
Inheritance tax
Individual shareholders may be liable to inheritance tax on the transfer of Ordinary shares. Inheritance tax may be charged on the amount by which the value of a shareholder’s estate is reduced as a result of any transfer by way of gift or other gratuitous transaction made by them or treated as made by them.
US holders
For the purposes of this summary, a US holder is a beneficial owner of ADSs who is an individual citizen or resident of the US, a corporation or other entity organised under the laws of the US or any state thereof, an estate whose income is subject to US federal income tax regardless of its source, or a trust if a court within the US is able to exercise primary supervision over the administration of the trust and one or more US persons have the authority to control all substantial decisions of the trust.
126 The BOC Group plcAnnual report and accounts 2003
Under current UK tax legislation, no tax will be withheld from dividend payments made by BOC. Under the 1980 Convention US holders of ADSs are treated as receiving dividend income equal to the sum of the dividend and the associated tax credit, reduced by UK withholding tax at a rate not exceeding 15 per cent of the amount of the dividend and the associated tax credit. As the tax credit is equal to 1/9th of the dividend the withholding tax is equal to the tax credit.
Recent United States tax law changes applicable to individuals
Recent US tax legislation (the 2003 Tax Act) generally has reduced the rates of tax payable by individuals (as well as certain trusts and estates) on many items of income. Under the 2003 Tax Act, the marginal tax rates applicable to ordinary income generally have been lowered with effect from 1 January 2003. In addition, for capital assets held for over one year and sold or exchanged on or after 6 May 2003 but in taxable years beginning before 1 January 2009, the maximum applicable US federal rate of tax generally will be 15 per cent (rather than the higher rates of tax generally applicable to items of ordinary income). Furthermore, ‘qualified dividend income’ received by individuals in taxable years beginning after 31 December 2002 and beginning before 1 January 2009, generally will be taxed at a maximum US federal rate of 15 per cent (rather than the higher rates of tax generally applicable to other items of ordinary income) provided certain holding period requirements are met. For this purpose, ‘qualified dividend income’ generally includes dividends paid on stock in US corporations as well as dividends paid on stock in certain non-US corporations if, among other things, (i) the shares of the non-US corporation (including ADSs) are readily tradable on an established securities market in the US, or (ii) the non-US corporation is eligible with respect to substantially all of its income for the benefits of a comprehensive income tax treaty with the US which contains an exchange of information program. The New Convention has been identified by the US Treasury as a qualifying treaty. BOC currently anticipates that dividends paid with respect to Ordinary shares and ADSs should constitute ‘qualified dividend income’ for US federal income tax purposes and that US holders who are individuals should be entitled to the reduced rates of tax, as applicable. However, the precise extent to which dividends paid by non-US corporations will constitute ‘qualified dividend income’ and the effect of such status on the ability of a taxpayer to utilise any associated foreign tax credits is not entirely clear at present. It is anticipated that there will be administrative pronouncements concerning these provisions in the future. In the meantime, US holders are urged to consult their own tax advisers regarding the impact of the provisions of the 2003 Tax Act on their particular situation.
Taxation of capital gains
Generally, a US holder who is not resident or ordinarily resident in the UK for tax purposes should not be subject to UK tax on any gain from the disposal of ADSs, but will be subject to US tax on any capital gain realised on the sale or other disposal of ADSs.
US information reporting and backup withholding
Dividend payments with respect to ADSs and proceeds from the sale or other disposal of ADSs may be subject to information reporting to the US Internal Revenue Service and backup withholding at a current rate of 28 per cent. Holders should consult their own advisors as to the application to them of the information reporting and backup withholding rules.
Stamp duty
In practice no UK stamp duty is payable on the transfer of an ADS, provided that the separate instrument of transfer is not executed in, and always remains outside of, the UK. No stamp duty reserve tax is payable on an agreement to transfer ADSs.
Estate and gift tax
Under the Estate Tax Convention, a US holder generally is not subject to UK inheritance tax.
Exchange controls and other limitations affecting security holders
There are currently no exchange controls or other limitations in the UK affecting security holders.
127 The BOC Group plcAnnual report and accounts 2003
Ordinary shareholders and loan stock holders may arrange to have their dividends or interest paid directly into a bank or building society account through the Bankers Automated Clearing System (BACS). Mandate forms are available from Lloyds TSB Registrars whose details appear on page 128 or alternatively you can set up a new, or change an existing, dividend mandate via the Lloyds TSB Registrars shareview website at www.shareview.co.uk Tax vouchers relating to any dividend or interest payments made via BACS will be mailed directly to the registered address of the share or loan stock holder.
Share dealing services
For Internet and telephone share dealing services contact Lloyds TSB Registrars by either logging on to www.shareview.co.uk/dealing or by calling 0870 850 0852 between 8.30 am and 4.30 pm on any business day (excluding bank holidays).
Details of a postal share dealing service can be obtained from:
Cazenove & Co. Ltd
20 Moorgate, London EC2R 6DA, England
Telephone: 020 7155 5155
American Depositary Shares
The BOC Group plc American Depositary Shares (ADS) are listed on the New York Stock Exchange and trade under the symbol BOX. One ADS represents two The BOC Group plc Ordinary shares. JPMorgan Chase Bank is the depositary and their address for enquiries is:
JPMorgan Chase Bank
JPMorgan Service Center, PO Box 43013, Providence, RI 02940-3013, USA
Telephone: +1 781 575 4328
Website: www.adr.com/shareholder
A dividend reinvestment plan is available through JPMorgan Chase Bank as depositary for holders of ADSs. All enquiries regarding this plan should be addressed to:
Global Invest Direct, JPMorgan Chase Bank
PO Box 43013, Providence, RI 02940-3013, USA
Telephone, toll free: JPMorgan Service Center on +1 800 749 1687 or +1 800 428 4237
US report filings
All reports and other information filed with the US Securities and Exchange Commission (SEC) may be inspected at the public reference facilities maintained by the SEC at 450 Fifth Street, NW, Washington DC 20549, USA. These reports may also be accessed via the SEC’s website at www.sec.gov
Agent for service of process in the US
J Blake, General Counsel
The BOC Group, 575 Mountain Avenue, Murray Hill, New Jersey 07974-2082,USA.
ShareGift
Shareholders with a small number of shares, the value of which makes it uneconomic to sell them, may wish to consider donating them to charity through ShareGift, a registered charity administered by The Orr Mackintosh Foundation. A ShareGift donation form can be obtained from Lloyds TSB Registrars whose details appear on page 128. Further information about ShareGift is available at www.sharegift.org or by writing to: ShareGift, The Orr Mackintosh Foundation, 46 Grosvenor Street, London W1K 3HN, England. Telephone: 020 7337 0501.
Unsolicited mail
The company is obliged by law to make its share register publicly available and as a consequence some shareholders may receive unsolicited mail. If you wish to limit the amount of unsolicited mail you receive, contact: The Mailing Preference Service, FREEPOST 29 (LON.20771), London W1E 0ZT, England. Telephone: 020 7291 3310 or register on-line at www.mpsonline.org.uk
Special needs
If you would like to receive this report in an appropriate alternative format, such as large print, Braille, or audio cassette, please contact Lloyds TSB Registrars on 0870 600 3958 or for shareholders with hearing difficulties on Teltex 0870 600 3950.
129 The BOC Group plcAnnual report and accounts 2003
Cross reference to Form 20-F
The information in this document that is referred to in the following table shall be deemed to be filed with the US Securities and Exchange Commission for all purposes.
Item | Page | |||||||
1 | Identity of directors, senior management and advisors | n/a | ||||||
2 | Offer statistics and expected timetable | n/a | ||||||
3 | Key information | |||||||
Selected financial data | 12-13, 52 | |||||||
Capitalization and indebtedness | n/a | |||||||
Reasons for the offer and use of proceeds | n/a | |||||||
Risk factors | 29-30, 47-48 | |||||||
4 | Information on the company | |||||||
History and development of the company | 1, 14-22, 31-45, outside back cover | |||||||
Business overview | 1, 14-22, 25-28, 31-45 | |||||||
Organizational structure | 122-123 | |||||||
Property plants and equipment | 14-22, 97-98 | |||||||
5 | Operating and financial review and prospects | |||||||
Operating results | 1, 31-52 | |||||||
Critical accounting policies | 50-51 | |||||||
Liquidity and | ||||||||
capital resources | 46-52, 84, 102-108 | |||||||
Research and development, patents and licenses, etc | 28 | |||||||
Trend information | 31-45 | |||||||
Off-balance sheet arrangements | 49, 110-111 | |||||||
Contractual obligations | 49, 110 | |||||||
6 | Directors, senior management and employees | |||||||
Directors and senior management | 8-11 | |||||||
Compensation | 60-69 | |||||||
Board practices | 8-11, 53-59, 63, 70 | |||||||
Employees | 23-24, 87 | |||||||
Share ownership | 60-69 | |||||||
7 | Major shareholders and related party transactions | |||||||
Major shareholders | 125 | |||||||
Related party transactions | 99, 111, 116 | |||||||
Interests of experts and counsel | n/a | |||||||
Item | Page | |||||||
8 | Financial information | |||||||
Consolidated statements and other financial information | 49-51, 71-121, 124 | |||||||
Significant changes | 46,121 | |||||||
9 | The offer and listing | |||||||
Offer and listing details | 124-125 | |||||||
Plan of distribution | n/a | |||||||
Markets | 124 | |||||||
Selling shareholders | n/a | |||||||
Dilution | n/a | |||||||
Expenses of the issue | n/a | |||||||
10 | Additional information | |||||||
Share capital | n/a | |||||||
Memorandum and articles of association | n/a | |||||||
Material contracts | n/a | |||||||
Exchange controls | 127 | |||||||
Taxation | 126-127 | |||||||
Dividends and paying agents | n/a | |||||||
Statement by experts | n/a | |||||||
Documents on display | 129 | |||||||
Subsidiary information | 122-123 | |||||||
11 | Quantitative and qualitative disclosures about market risk | 46-52, 78, 104-108 | ||||||
12 | Description of securities other than equity securities | n/a | ||||||
13 | Defaults, dividend arrearages and delinquencies | n/a | ||||||
14 | Material modifications to the rights of security holders and use of proceeds | n/a | ||||||
15 | Controls and procedures | 56-57 | ||||||
16A | Audit committee financial expert | 54 | ||||||
16B | Code of ethics | 57-58 | ||||||
16C | Principal accountant fees and services | 55, 83 | ||||||
16D | Exemptions from Listings Standards for audit committees | n/a | ||||||
17 | Financial statements | n/a | ||||||
18 | Financial statements | 71-121 | ||||||
19 | Exhibits | n/a | ||||||
130 The BOC Group plcAnnual report and accounts 2003
Glossary of terms
Terms used in the report and accounts | US equivalent or brief description | |
Acquisition accounting | Purchase accounting | |
Associate | Equity investment | |
Capital allowances | Tax term equivalent to US tax depreciation allowances | |
Cash at bank | Cash | |
Creditors | Payables | |
Debtors | Receivables | |
Finance lease | Capital lease | |
Financial year | Fiscal year | |
Freehold | Ownership with absolute rights in perpetuity | |
Interest receivable | Interest income | |
Interest payable | Interest expense | |
Joint venture | Equity investment | |
Net asset value | Book value | |
Own shares | Treasury stock | |
Profit | Income | |
Profit and loss account | Income statement | |
Profit and loss account reserves | Retained earnings | |
Profit for the financial year | Net income | |
Provisions | Reserves | |
Called up share capital | Ordinary shares, capital stock or common stock issued and fully paid | |
Scrip dividend | Stock dividend | |
Secured loan | Collateralised loan | |
Shareholders’ funds | Shareholders’ equity | |
Share premium account | Additional paid-up capital or paid-in capital (not distributable) | |
Share issues | Stock outstanding | |
Stocks | Inventories | |
Tangible fixed assets | Property, plant and equipment | |
Turnover | Revenue | |
131 The BOC Group plcAnnual report and accounts 2003
Index
Item | Page | |||
A | ||||
Accounting policies | 77 | |||
Acquisitions | 113 | |||
American Depositary Shares (ADSs) | 124 | |||
Annual General Meeting | 59 | |||
Auditors’ remuneration | 83 | |||
Auditors’ report | 71 | |||
Audit committee | 54 | |||
B | ||||
Balance sheets | 73, 76 | |||
Board committees | 54 | |||
Board of directors | 8 | |||
Borrowings facilities | 47, 104 | |||
C | ||||
Capital expenditure | 33 | |||
Cash flow statement | 74 | |||
Cautionary statement | 1 | |||
Chairman’s statement | 4 | |||
Charitable donations | 58 | |||
Chief executive’s review | 6 | |||
Commitments | 49, 110 | |||
Contact information | 128 | |||
Contingent liabilities | 49, 111 | |||
Corporate governance | 53 | |||
Creditors | 102 | |||
Critical accounting policies | 50 | |||
Cross reference to Form 20-F | 130 | |||
D | ||||
Debtors | 101 | |||
Depreciation | 97 | |||
Directors’ interests | 65 | |||
Directors’ remuneration (see Remuneration) | 87 | |||
Directors’ report | 2 | |||
Directors’ responsibilities statement | 70 | |||
Directors’ service contracts | 63 | |||
Disposals | 113 | |||
Dividend reinvestment plan (DRIP) | 128 | |||
Dividends | 95 | |||
Donations (see Charitable donations) | 58 | |||
E | ||||
Earnings per share | 95 | |||
Employees | 23, 87 | |||
Employment policies and principles | 23 | |||
Environment (see Safety, health and the environment) | 25 | |||
Exceptional items | 31, 46, 83 | |||
Exchange rates | 52 | |||
Executive management board | 10 | |||
F | ||||
Fair value of acquisitions | 113 | |||
Financial calendar | 128 | |||
Financial highlights | 2 | |||
Financial instruments | 104 | |||
Financial review | 46 | |||
Five year record | 12 | |||
G | ||||
Glossary of terms | 131 | |||
Going concern | 52 | |||
Goodwill | 96 | |||
Group profile | 14 | |||
Group undertakings | 122 | |||
Item | Page | |||
H | ||||
Health (see Safety, health and the environment) | 25 | |||
I | ||||
Information technology | 28 | |||
Intangible fixed assets | 96 | |||
Interest | 84 | |||
Internal controls | 56 | |||
J | ||||
Joint ventures and associates | 99 | |||
L | ||||
Leases | 97, 102 | |||
Legal proceedings | 49, 111 | |||
Liquid resources | 74 | |||
M | ||||
Minority interests | 72 | |||
Movement in shareholders’ funds | 75 | |||
N | ||||
Notes to the financial statements | 79 | |||
O | ||||
Operating review | 31 | |||
Operating review – Process Gas Solutions | 33 | |||
Operating review – Industrial and Special Products | 36 | |||
Operating review – BOC Edwards | 37 | |||
Operating review – Afrox hospitals | 38 | |||
Operating review – Gist | 38 | |||
P | ||||
Pensions and retirement benefits | 89 | |||
Profit and loss account | 72 | |||
Provisions for liabilities and charges | 108 | |||
R | ||||
Ratios | 46 | |||
Registered office | outside back cover | |||
Registrars | 128 | |||
Related party transactions | 116 | |||
Remuneration | 87 | |||
Research and development | 28 | |||
Reserves | 109 | |||
Risk | 29 | |||
S | ||||
Safety, health and the environment | 25 | |||
Segmental information | 79 | |||
Share option and incentive schemes | 88 | |||
Share price | 124 | |||
Shareholder analysis | 125 | |||
Shareholder information | 124 | |||
Statement of total recognised gains and losses | 75 | |||
Stocks | 100 | |||
Substantial shareholdings | 125 | |||
Supplier payment policy | 52 | |||
T | ||||
Tangible fixed assets | 97 | |||
Taxation | 84 | |||
Total shareholder return | 61, 63 | |||
U | ||||
US GAAP information and reconciliations | 116 | |||
US investor information | 126 | |||
W | ||||
Website | 128 | |||
132 The BOC Group plcAnnual report and accounts 2003
©The BOC Group plc 2003.
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Photography by George Brooks.
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