##### Table of Contents



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 6, 2004 which contains the Companys Report and Accounts 2004. 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.




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##### Table of Contents



(BOC COVER) BOC The BOC Group plcReport and accounts 2004 REPORT AND ACCOUNTS 2004




---



Report of the directors 02
    
    
    Financial highlights04
    
    
    Chairmans statement06
    
    
    Chief executives review08
    
    
    Board of directors10
    
    
    Executive management board12
    
    
    Group five year record14
    
    
    Group profile23
    
    
    Employees25
    
    
    Social, environmental and ethical performance30
    
    
    Research, development and information technology32
    
    
    Risk factors34
    
    
    Operating review49
    
    
    Financial review56
    
    
    Corporate governance64
    
    
    Report on remuneration
 Financial statements 76
    
    
    Responsibility of the directors77
    
    
    Report by the independent auditors78
    
    
    Group profit and loss account79
    
    
    Group balance sheet80
    
    
    Group cash flow statement81
    
    
    Total recognised gains and losses81
    
    
    Movement in shareholders funds82
    
    
    Balance sheet of The BOC Group plc83
    
    
    Accounting policies85
    
    
    Notes to the financial statements130
    
    
    Group undertakings
 Shareholder information 132
    
    
    Dividends132
    
    
    Nature of trading market133
    
    
    Analysis of shareholdings134
    
    
    Taxation136
    
    
    Financial calendar136
    
    
    Key contacts information138
    
    
    Cross reference to Form 20-F139
    
    
    Glossary of terms140
    
    
    Index




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##### Table of Contents



(CAUTIONARY STATEMENT) THE BOC GROUP plc IS A PUBLIC LIMITED COMPANY LISTED ON THE LONDON AND NEW YORK
STOCK EXCHANGES AND REGISTERED IN ENGLAND. THIS IS THE REPORT AND ACCOUNTS
FOR THE YEAR ENDED 30 SEPTEMBER 2004. IT COMPLIES WITH UK REGULATIONS AND
INCORPORATES THE ANNUAL REPORT ON FORM 20-F FOR THE SECURITIES AND EXCHANGE
COMMISSION TO MEET US REGULATIONS. AN ANNUAL REVIEW AND SUMMARY FINANCIAL
STATEMENTS FOR THE YEAR ENDED
30 SEPTEMBER 2004 HAS BEEN ISSUED TO ALL SHAREHOLDERS WHO HAVE
NOT ELECTED TO RECEIVE  THIS REPORT AND ACCOUNTS. Cautionary statement The report and accounts includes forward-looking information within the
meaning of section 27A of the US Securities Act of 1933 (the Securities Act),
as amended, and section 21E of the US Securities Exchange Act of 1934 (the
Exchange Act), as amended. Certain sections of this annual report including,
without limitation, those concerning (i) the companys strategies, (ii) the
companys research and product development, and information technology, (iii)
the companys investments, (iv) commencement of operations of new plants and
other facilities, (v) efficiencies, including cost savings, for the company
resulting from business reviews and reorganisations, (vi) managements view of
the general development and competition in the economies and markets in which
it does, or plans to do, business, (vii) managements view of the
competitiveness of its products and services, and (viii) the companys
liquidity, capital resources and capital expenditure, contain certain
forward-looking statements concerning the companys operation, economic
performance and financial condition. Although the company believes that the
expectations reflected in such forward-looking statements are reasonable, no
assurance can be given that such expectations will prove to have been
correct. Accordingly, results could differ materially from those set out in the
forward-looking statements as a result of, among other factors, changes in
economic conditions, changes in the level of capital investment by the
semiconductor industry, success of business and operating initiatives and
restructuring objectives, changes in the regulatory environment, outcome of
litigation, other government actions, natural phenomena such as floods and
earthquakes, customer strategies and stability, and fluctuations in interest
and exchange rates. Financial year Throughout the report and accounts, reference to 2004 in the text means the
financial year ended 30 September 2004. Similarly, references to other years,
eg 2005,2003 and 2002, also mean the financial years to 30 September
unless stated otherwise. 01 The BOC Group
plcAnnual
report and
accounts 2004




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##### Table of Contents



BOARD OF DIRECTORS  Rob Margetts CBEnp(01)
58, chairman.
Appointed chairman in January 2002. He is
chairman of Legal & General Group plc, a
non-executive director of Anglo American plc
and chairman of the Natural Environment
Research Council. Previously he was with ICI
PLC for 31 years, becoming a main board
director in 1992 and vice chairman in 1998.
He is a fellow of both the Royal Academy of
Engineering and the Institution of Chemical
Engineers. Tony Isaacnp4ê(02)
62, chief executive.
Appointed an executive director in October
1994 and became chief executive in May 2000.
He was previously finance director of Arjo
Wiggins Appleton plc, which he joined
shortly before the demerger from BAT
Industries p.l.c. in 1990. Prior to that he
had been finance director of GEC Plessey
Telecommunications Ltd since its formation
in 1988. He is a non-executive director of
International Power plc and Schlumberger
Ltd. Julie Baddeleylmnp(03)
53, non-executive director.
Appointed in May 2001. She was an executive
director of Woolwich plc until October 2000,
responsible for e-commerce, information
technology and human resources, and was
previously head of change management for
Maritime Region, Accenture. She is a
non-executive director of the Yorkshire
Building Society, the Government Pensions
Group and director of four venture capital
trusts. She is also an Associate Fellow of
Templeton College, Oxford and a Companion of
the Institute of Management. She has an MA
honours degree in zoology from Oxford
University.
 John Bevan4ê(04)
47, chief executive, Process Gas Solutions.
Appointed an executive director in December
2002. He joined BOC in 1978 as a graduate in
the Australian gases business and has held
various positions in general management in
Australia, Korea,Thailand and the UK. He was
formerly chief executive Asia. He has a
degree in commerce (marketing) from the
University of New South Wales. Andrew Bonfieldlmn(05)
42, non-executive director.
Appointed in July 2003. He is senior
vice-president and chief financial officer of
Bristol-Myers Squibb Company. He qualified as
a chartered accountant in South Africa,
working for Price Waterhouse, before joining
SmithKline Beecham in 1990 and rising to
become chief financial officer in 1999. He
joined BG Group plc in 2001 as executive
director, finance, before assuming his
current role at Bristol-Myers Squibb Company
in September 2002. Guy Dawsonlmnp(06)
51, non-executive director.
Appointed in March 2004. He was chairman of
European investment banking at Merrill
Lynch until 2003. Before joining Merrill
Lynch in 1995 he held senior positions in
Morgan Grenfell and Deutsche Bank. He is a
partner in Tricorn, an independent
corporate advisory business that he
co-founded in 2003, and he is also a
non-executive director of Boots Group PLC. René Médorip4ê(07)
47, group finance director.
Appointed an executive director in July
2000. He joined BOC in 1987 and has held
several finance appointments in the Group.
He was appointed finance director of BOCs
gases business in the Americas in 1997.
Before joining BOC, he worked for Accenture
and Schlumberger Ltd. He is a non-executive
director of Scottish & Southern Energy plc.
He is a finance graduate of the Université de
Paris-Dauphine and has a doctorate degree in
economics.
    (BOARD OF DIRECTORS) 08 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Board of directors  Matthew Miaulmn(08)
58, non-executive director.
Appointed in January 2002. He is chairman of
MiTAC-Synnex Group, one of Taiwans leading
high-tech industrial groups. He is also a
Convenor of Civil Advisory Committee of
National Information and Communications
Initiatives (NICI) and on the Board of
Directors of the Institute for Information
Industry (III),Taiwan. He obtained a BS in
electronic engineering and computer science
from U.C. Berkeley, an MBA from Santa Clara
University and holds an honorary doctorate
degree from the National Chiao Tung
University,Taiwan. Iain Napierlmn(09)
55, non-executive director.
Appointed in May 2004. He is chief executive
of Taylor Woodrow
plc and a non-executive director of Imperial
Tobacco Group PLC. Previously, he was chief
executive of Bass Brewers, a director of Bass
plc and a member of the executive management
committee of Interbrew SA. Sir Christopher ODonnelllmn(10)
58, non-executive director.
Appointed in March 2001. He is chief
executive of Smith & Nephew plc. Previously
he held senior positions with Davy
Ashmore,Vickers Limited and C R Bard Inc.
He has an honours degree in mechanical
engineering from Imperial College, London
and an MBA from the London Business School.
He is a chartered engineer and a member of
the Institution of Mechanical Engineers.
 Anne Quinn CBElmn(11)
53, non-executive director.
Appointed in May 2004. She is group vice
president of BPs gas, power and renewables
business. Previously she was managing
director of BP Gas Marketing Ltd, managing
director of Alliance Gas Ltd and an executive
with Standard Oil of Ohio. She serves on the
Presidents Advisory Committee to the Sloan
School, Massachusetts Institute of
Technology. Dr Raj Rajagopal4ê(12)
51, chief executive, BOC Edwards.
Appointed an executive director in July 2000.
He joined BOC in 1981 and has held several
positions in BOC Edwards including
manufacturing systems manager, director of
manufacturing and managing director, being
appointed chief executive in 1998. He was
appointed a non-executive director of FSI
International Inc in January 2001 and in June
2004 he joined the board of the business
support organisation, Sussex Enterprise. He
was appointed to The Council of Science and
Technology in March 2004. He is a Fellow of
the Royal Academy of Engineers as well as the
Institution of Mechanical Engineers, the
Institution of Electrical Engineers and the
Chartered Management Institute. He has an MSc
in manufacturing technology and a PhD in
mechanical engineering both from
Manchester University and an honorary degree
from Cranfield University received in May
2004. He was awarded the Sir Eric Mensforth
Manufacturing Gold Medal in March 2003. John Walsh4ê(13)
49, chief executive, Industrial and Special Products.
Appointed an executive director in July
2001. He was previously president, Process
Gas Solutions, north America. He joined BOC
in 1986 as vice president, special gases and
has held various senior management positions
in the Group, including president, BOC
Process Plants. He has a BA in economics
from Harvard College and an MBA from Harvard
Business School.
    (BOARD OF DIRECTORS2) Board committeesl Audit committeem Remuneration committeen Nomination committeep Pensions committee4 Executive management boardê Investment committee
    
    (BOARD OF DIRECTORS3)
 09 The BOC Group plcAnnual report and accounts 2004




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EXECUTIVE
MANAGEMENT BOARD  John Bevan (01)
47, chief executive, Process Gas Solutions since January 2003.
Appointed to the executive management board
in June 2000. See page 08 for biographical
details. Nick Deeming (02)
50, group legal director and company secretary since May 2001.
Appointed to the executive management board
in May 2001. He has over 17 years in-house
counsel experience, including Schlumberger
SEMA and Axa PPP Healthcare, specialising in
corporate and commercial law. He has a
degree in law from Guildhall University, an
MBA from Cranfield University and qualified
as a solicitor in 1980. Stephen Dempsey (03)
53, group director, corporate relations since February 1999.
Appointed to the executive management board
in October 1999. He joined BOC in 1990 as
director of marketing services for the UK
gases business and has held various
communications roles in the Group. He has
an MA in geography from Oxford University
and an MBA from Cranfield University.
 Peter Dew (04)
44, group director, information management since February 1998.
Appointed to the executive management board
in October 1999. He joined BOC in 1986. He
has held information technology roles in the
Groups businesses in South Africa, the UK
and most recently as information management
director for the Groups businesses in
Asia/Pacific. Tony Isaac (05)
62, chief executive since May 2000.
Appointed to the executive management board
in July 1996. See page 08 for biographical
details. Rob Lourey (06)
47, group human resources director since June 2000.
Appointed to the executive management
board in June 2000. He joined BOC in
Australia in 1996 and most recently was
human resources director for
Asia/Pacific. Since October 2003 he has
been a non-executive director of Michael
Page International PLC. He has a bachelor
of business degree in personnel
management.
   (BOARD OF DIRECTORS4) 10 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Executive management board  Kent Masters (07)
43, president, Process Gas Solutions, north America, since July 2001.
Appointed to the executive management board
in December 2002. He joined BOC in 1985 and
has held positions of increasing
responsibility in engineering, marketing and
general management, most recently, president,
BOC Process Plants. He holds an engineering
degree from Georgia Institute of Technology
and an MBA from New York University. René Médori (08)
47, group finance director since June 2000.
Appointed to the executive management board
in June 2000. See page 08 for biographical
details.
 Mark Nichols (09)
47, group director, business development since January 2004.
Appointed to the executive management
board in January 2004. He joined BOC in
February 1988 and held senior financial
roles in the UK and US before moving into
general management, most recently as
managing director, Industrial and Special
Products, East Asia. Before joining BOC he
worked for Total Oil and Merck. He is a
Fellow of the Association of Chartered
Certified Accountants. Dr Raj Rajagopal (10)
51, chief executive, BOC Edwards since June 1998.
Appointed to the executive management board
in July 1996. See page 09 for biographical
details. John Walsh (11)
49, chief executive, Industrial and Special Products since June 2001.
Appointed to the executive management board
in June 2000. See page 09 for biographical
details.
   (BOARD OF DIRECTORS5) 11 The BOC Group plcAnnual report and accounts 2004




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GROUP FIVE YEAR RECORD  Turnover (BARCHART) Profit before tax (BARCHART) Adjusted profit before tax4 (BARCHART)
 2000
    
    
    2001
    
    
    2002
    
    
    2003
    
    
    2004Profit and loss
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTurnover1
    
    
    
    3,579.7
    
    
    
    3,772.9
    
    
    
    3,657.7
    
    
    
    3,718.3
    
    
    
    3,885.4Total operating profit before
exceptional
items2
    
    
    
    496.4
    
    
    
    530.6
    
    
    
    500.1
    
    
    
    505.6
    
    
    
    576.9Exceptional items
    
    
    
    (4.4
    )
    
    
    (108.3
    )
    
    
    (74.5
    )
    
    
    (67.0
    )
    
    
    (17.4
    )Total operating profit2
    
    
    
    492.0
    
    
    
    422.3
    
    
    
    425.6
    
    
    
    438.6
    
    
    
    559.5Profit/(loss) on termination/disposal
of businesses
    
    
    
    12.5
    
    
    
    
    
    
    
    (20.2
    )
    
    
    
    
    
    
    (79.5
    )Profit on disposal of fixed assets
    
    
    
    
    
    
    
    3.6
    
    
    
    
    
    
    
    
    
    
    
    4.9Profit before interest
    
    
    
    504.5
    
    
    
    425.9
    
    
    
    405.4
    
    
    
    438.6
    
    
    
    484.9Interest on net debt
    
    
    
    (111.5
    )
    
    
    (123.4
    )
    
    
    (103.1
    )
    
    
    (96.1
    )
    
    
    (88.4
    )Interest on pension scheme liabilities
    
    
    
    (100.7
    )
    
    
    (107.2
    )
    
    
    (106.1
    )
    
    
    (110.2
    )
    
    
    (117.4
    )Expected return on pension scheme assets
    
    
    
    149.5
    
    
    
    166.9
    
    
    
    139.1
    
    
    
    119.6
    
    
    
    133.2Other net financing income
    
    
    
    48.8
    
    
    
    59.7
    
    
    
    33.0
    
    
    
    9.4
    
    
    
    15.8Profit before tax
    
    
    
    441.8
    
    
    
    362.2
    
    
    
    335.3
    
    
    
    351.9
    
    
    
    412.3Tax on profit on ordinary activities
    
    
    
    (135.2
    )
    
    
    (104.6
    )
    
    
    (106.2
    )
    
    
    (96.4
    )
    
    
    (101.7
    )Profit after tax
    
    
    
    306.6
    
    
    
    257.6
    
    
    
    229.1
    
    
    
    255.5
    
    
    
    310.6Minority interests
    
    
    
    (28.0
    )
    
    
    (33.5
    )
    
    
    (26.2
    )
    
    
    (36.4
    )
    
    
    (46.6
    )Profit for the financial year
    
    
    
    278.6
    
    
    
    224.1
    
    
    
    202.9
    
    
    
    219.1
    
    
    
    264.0Earnings per 25p Ordinary shareBasic: on profit for the financial year
    
    
    
    57.2
    p
    
    
    46.0
    p
    
    
    41.4
    p
    
    
    44.5
    p
    
    
    53.5
    p before exceptional items
    
    
    
    53.5
    p
    
    
    57.5
    p
    
    
    55.9
    p
    
    
    52.9
    p
    
    
    63.2
    pDiluted: on profit for the financial year
    
    
    
    56.9
    p
    
    
    45.9
    p
    
    
    41.2
    p
    
    
    44.5
    p
    
    
    53.5
    p before exceptional items
    
    
    
    53.3
    p
    
    
    57.3
    p
    
    
    55.7
    p
    
    
    52.9
    p
    
    
    63.1
    pOrdinary
dividends per
share3Actual
    
    
    
    35.0
    p
    
    
    37.0
    p
    
    
    38.0
    p
    
    
    39.0
    p
    
    
    40.0
    pNumber of fully paid Ordinary shares
in issue at the year end (million)
    
    
    
    492.2
    
    
    
    494.4
    
    
    
    497.3
    
    
    
    497.7
    
    
    
    498.8
 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 pages 34 and 35. A
reconciliation of adjusted profit before tax to profit before
tax is given in the profit and loss account on page 78. A
reconciliation of adjusted return on capital employed to return
on capital employed is given in the operating review on page 35. All turnover and operating profit arose from continuing operations.
   12 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Group five year record  Capital employed (BARCHART) Capital expenditure (BARCHART)
 2000
    
    
    2001
    
    
    2002
    
    
    2003(restated)
    
    
    (restated)
    
    
    (restated)
    
    
    (restated)
    
    
    2004Balance sheet
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionFixed assets intangible assets
    
    
    49.2
    
    
    
    48.1
    
    
    
    150.7
    
    
    
    206.1
    
    
    
    174.9 tangible assets
    
    
    3,294.0
    
    
    
    3,168.6
    
    
    
    3,027.4
    
    
    
    2,913.4
    
    
    
    2,618.4 joint ventures, associates and other
investments
    
    
    395.8
    
    
    
    390.3
    
    
    
    426.1
    
    
    
    608.6
    
    
    
    548.2Working capital(excluding bank balances and short-term loans)
    
    
    282.8
    
    
    
    257.0
    
    
    
    203.1
    
    
    
    220.1
    
    
    
    154.5Deferred tax provisions
    
    
    (295.8
    )
    
    
    (294.3
    )
    
    
    (291.8
    )
    
    
    (279.2
    )
    
    
    (253.0
    )Other non current liabilities and provisions
    
    
    (181.4
    )
    
    
    (184.3
    )
    
    
    (173.7
    )
    
    
    (145.8
    )
    
    
    (126.9
    )Net borrowings and finance leases
    
    
    (1,308.4
    )
    
    
    (1,272.1
    )
    
    
    (1,325.6
    )
    
    
    (1,368.1
    )
    
    
    (962.4
    )Net assets excluding pension assets
and liabilities
    
    
    2,236.2
    
    
    
    2,113.3
    
    
    
    2,016.2
    
    
    
    2,155.1
    
    
    
    2,153.7Pension assets5
    
    
    402.0
    
    
    
    107.0
    
    
    
    54.3
    
    
    
    50.7
    
    
    
    68.9Pension liabilities5
    
    
    (31.1
    )
    
    
    (56.0
    )
    
    
    (311.0
    )
    
    
    (341.8
    )
    
    
    (344.5
    )Net assets including pension assets
and liabilities
    
    
    2,607.1
    
    
    
    2,164.3
    
    
    
    1,759.5
    
    
    
    1,864.0
    
    
    
    1,878.1Shareholders capital and reserves
    
    
    2,333.5
    
    
    
    2,026.7
    
    
    
    1,641.6
    
    
    
    1,686.7
    
    
    
    1,675.3Minority shareholders interests
    
    
    273.6
    
    
    
    137.6
    
    
    
    117.9
    
    
    
    177.3
    
    
    
    202.8Total capital and reserves
    
    
    2,607.1
    
    
    
    2,164.3
    
    
    
    1,759.5
    
    
    
    1,864.0
    
    
    
    1,878.1Other selected financial informationCapital employed6Total capital and reserves
    
    
    2,607.1
    
    
    
    2,164.3
    
    
    
    1,759.5
    
    
    
    1,864.0
    
    
    
    1,878.1Non current liabilities and provisions
    
    
    477.2
    
    
    
    478.6
    
    
    
    465.5
    
    
    
    425.0
    
    
    
    379.9Net borrowings and finance leases7
    
    
    1,308.4
    
    
    
    1,272.1
    
    
    
    1,325.6
    
    
    
    1,368.1
    
    
    
    962.44,392.7
    
    
    
    3,915.0
    
    
    
    3,550.6
    
    
    
    3,657.1
    
    
    
    3,220.4Total assets
    
    
    5,557.8
    
    
    
    5,000.5
    
    
    
    4,904.9
    
    
    
    4,883.7
    
    
    
    4,665.7Long-term liabilities and provisions
    
    
    1,399.0
    
    
    
    1,554.5
    
    
    
    1,897.5
    
    
    
    1,851.5
    
    
    
    1,652.9Capital expenditure1
    
    
    413.7
    
    
    
    352.6
    
    
    
    354.3
    
    
    
    281.2
    
    
    
    256.1Depreciation and amortisation1
    
    
    313.3
    
    
    
    329.5
    
    
    
    330.9
    
    
    
    333.4
    
    
    
    324.0EmployeesUK
    
    
    9,929
    
    
    
    10,597
    
    
    
    11,266
    
    
    
    10,414
    
    
    
    10,682Overseas
    
    
    32,780
    
    
    
    32,574
    
    
    
    35,014
    
    
    
    34,093
    
    
    
    32,701Continuing operations
    
    
    42,709
    
    
    
    43,171
    
    
    
    46,280
    
    
    
    44,507
    
    
    
    43,383RatiosReturn on capital employed8
    
    
    12.6
    %
    
    
    10.4
    %
    
    
    10.6
    %
    
    
    10.9
    %
    
    
    14.9
    %Adjusted return on capital employed4,9
    
    
    12.7
    %
    
    
    13.1
    %
    
    
    12.5
    %
    
    
    12.6
    %
    
    
    15.4
    %Net debt/capital employed
    
    
    29.8
    %
    
    
    32.5
    %
    
    
    37.3
    %
    
    
    37.4
    %
    
    
    29.9
    %Net debt/equity
    
    
    50.2
    %
    
    
    58.8
    %
    
    
    75.3
    %
    
    
    73.4
    %
    
    
    51.2
    %
 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 2004 and 2003 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. Information for years 2000 to 2003 has been restated to be on a
comparable basis with 2004 following the application of UITF37
and UITF38 in 2004, as explained on page 83.
   13 The BOC Group plcAnnual report and accounts 2004




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GROUP PROFILE  
 Introduction          Analysis of results by business
(including share of joint ventures and associates) Turnover
    
    
    Operating profit
    
    
    Adjusted operating profit£ million
    
    
    %
    
    
    £ million
    
    
    %
    
    
    £ million
    
    
    %Process Gas Solutions
    
    
    1,275.2
    
    
    
    28
    
    
    
    189.5
    
    
    
    34
    
    
    
    190.3
    
    
    
    33Industrial and Special Products
    
    
    1,782.3
    
    
    
    39
    
    
    
    253.9
    
    
    
    45
    
    
    
    269.5
    
    
    
    47BOC Edwards
    
    
    816.5
    
    
    
    18
    
    
    
    46.8
    
    
    
    8
    
    
    
    47.8
    
    
    
    8Afrox hospitals
    
    
    432.1
    
    
    
    9
    
    
    
    59.8
    
    
    
    11
    
    
    
    59.8
    
    
    
    11Gist
    
    
    293.2
    
    
    
    6
    
    
    
    25.1
    
    
    
    5
    
    
    
    25.1
    
    
    
    4Corporate
    
    
    
    
    
    
    
    
    
    
    (15.6
    )
    
    
    (3
    )
    
    
    (15.6
    )
    
    
    (3
    )4,599.3
    
    
    
    100
    
    
    
    559.5
    
    
    
    100
    
    
    
    576.9
    
    
    
    100
  The BOC Group contributes to the economies of some 50 countries
throughout the world. The UK is the largest single source of sales
revenue for the Groups products and services, followed by the US.
Other major geographic areas for the Group are Australia, South
Africa, Japan and other markets in the Asia/Pacific region. The
business therefore operates from a broad geographical base with local
manufacturing in most of the key overseas markets.
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Group profile  
 Analysis of results by region
(including share of joint ventures and associates) Turnover
    
    
    Operating profit
    
    
    Adjusted operating profit£ million
    
    
    %
    
    
    £ million
    
    
    %
    
    
    £ million
    
    
    %Europe
    
    
    1,224.6
    
    
    
    27
    
    
    
    155.4
    
    
    
    28
    
    
    
    155.4
    
    
    
    27Americas
    
    
    1,218.3
    
    
    
    26
    
    
    
    62.6
    
    
    
    11
    
    
    
    77.4
    
    
    
    13Africa
    
    
    699.0
    
    
    
    15
    
    
    
    108.9
    
    
    
    19
    
    
    
    108.9
    
    
    
    19Asia/Pacific
    
    
    1,457.4
    
    
    
    32
    
    
    
    232.6
    
    
    
    42
    
    
    
    235.2
    
    
    
    414,599.3
    
    
    
    100
    
    
    
    559.5
    
    
    
    100
    
    
    
    576.9
    
    
    
    100
  The UK accounts for the largest part of the Groups activities in
Europe but BOC has significant gases subsidiaries in Ireland and
Poland, vacuum products manufacturing in France and a pharmaceutical
packaging machinery operation in the Netherlands.      Management organisation
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Group profile  
 The segment reporting as Afrox hospitals operates through Afrox
Healthcare Limited, which is quoted on the Johannesburg Stock
Exchange. It owns and manages private hospitals and clinics in
southern Africa. Additional services include a direct medicines
service for chronic medication, occupational health services, nursing
training, pharmacy management and laboratory services. BOCs
majority-owned subsidiary, African Oxygen Limited (Afrox), holds 69
per cent of Afrox Healthcare Limited (AHealth). In July 2003 Afrox
announced that it was in the process of considering its strategic
options with regard to its shareholding in AHealth. On 17 November
2003, Afrox announced that it had agreed to sell its entire holding
in AHealth to a consortium led by two major black economic
empowerment investors. The sale remains subject to approval by the
South African Competition Tribunal, at which closing hearings are
currently scheduled for March 2005. In addition an application has
been brought in the South African High Court by two shareholders in
Afrox Healthcare Limited to have the Scheme of Arrangement, by which
the disposal would be implemented, declared to have lapsed. This
application, which is being opposed, is currently due to be heard in
the week commencing 29 November 2004.  Corporate development
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Group profile  
 In June 2003, BOC announced an agreement to obtain half the output
of a new helium extraction facility to be constructed in Qatar.
Deliveries from the new source are scheduled to commence in July
2005.    Industrial gases  Industry structure and consolidationThe industrial gases business
is capital-intensive, with increasing demand, together with
economies of scale, leading to the need for large production units
and distribution networks. The need for fixed asset investments,
the trend towards global customers and the benefits from the
transfer of applications technology worldwide have resulted in the
business being handled by a relatively small number of companies
internationally.   Principal industrial gas productsNitrogen possesses two key
characteristics that make it the worlds most widely used and
versatile industrial gas. Nitrogen is almost inert and when
liquefied it is intensely cold. This makes liquid nitrogen a highly
effective, versatile and non-polluting agent for freezing and
chilling.
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Group profile  
 Carbon dioxide supplied by BOC is obtained as a by-product from other
companies manufacturing processes, from natural sources or recovered
in the generation process for hydrogen or syngas and put to
constructive use. Solid carbon dioxide is, like liquid nitrogen, used
for chilling and freezing in the food industry. As a gas it is used
to carbonate and dispense beverages of all kinds.   Production of industrial gasesOxygen was first extracted from the
atmosphere by a chemical process. This was superseded over 80 years
ago by the cryogenic (low temperature) process involving the
liquefaction and distillation of air. The cryogenic process is still
by far the most widely used, but non-cryogenic techniques (pressure
swing adsorption and membrane diffusion), which were first developed
during the 1970s, are becoming increasingly significant for smaller or
less demanding on-site applications.   Distribution of industrial gasesIndustrial gases may be supplied to
customers in a variety of ways; through pipelines from on-site or
nearby cryogenic or non-cryogenic plants, by deliveries of liquefied
gases in road or rail tankers, in portable cryogenic containers or
in cylinders (also called compressed or packaged gases).  Business segments  Process Gas Solutions (PGS)
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Group profile  
 Business development
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Group profile  
 Industrial and Special Products (ISP)      Business developmentIn April 2002, BOC acquired Matheson Gas Products
Canada Inc, one of Canadas leading providers of special gases and
equipment. Unique Gas and Petrochemicals Public Company Limited (UGP),
a leading distributor of liquefied petroleum gas (LPG) and ammonia in
Thailand, was acquired in May 2002. BOCs associated company in
Malaysia acquired 35.6 per cent of the gases company Nissan Industrial
Oxygen Inc (NIOI) in March 2002 and, following a tender offer,
increased its holding to 100 per cent in September 2002. At the end of
August 2002, BOC announced an agreement to purchase Praxairs Polish
gases business. The transaction was completed in January 2003
following approval by the Polish competition authority. The business
acquired includes a high proportion of ISP sales.
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Group profile  
 BOC Edwards           Business developmentThroughout the period 2002 to 2004, new ranges
of dry pumps for the semiconductor industry were introduced as well
as a comprehensive new range of exhaust management products. These
new products meet the needs of 300mm wafer and flat panel
manufacturing facilities.    3
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Group profile  
 BOC Edwards range of electronic materials in Asia was expanded in
2004 with the addition of ultra-pure wet chemicals through a
partnership with Asia Union Electronic Chemical Corporation (AUECC)
and through that company with Huayi, a chemical manufacturer in
China.     Afrox hospitals   
  Gist
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EMPLOYEES  
 At 30 September 2004 the Group had 43,383 employees (2003: 44,507
employees, 2002: 46,280 employees). During the year the disposal of
the US packaged gas business resulted in the successful transfer of
over 1,000 employees to the new owner. Employees of the company and
its subsidiaries were located as follows: Europe
    
    
    12,712Americas
    
    
    6,283Africa
    
    
    16,790Asia/Pacific
    
    
    7,598
 Unplanned employee turnover remains low and as a result the employee
base remains stable. BOC invests time and energy in developing the
potential of its people. Opportunities are reviewed and discussed
with identified individuals to provide cross-line of business
experience or to set up a range of functional and geographical
assignments. This contributes to BOCs success in retaining and
developing the core skills and capabilities it needs to meet its
business, customer service and health and safety targets. BOC
regularly reviews its succession planning processes and the
availability of essential capabilities. Results show it has solid
capability in most areas and adequate succession depth to meet both
its technical and leadership requirements. Employee satisfaction and commitment   Employment policies and Code of Conduct      Communication and involvement     Resourcing, training and development
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Employees  
 BOC continued to place great emphasis on personal and career
development over the past year. Employees are encouraged to be
proactive about their future careers and development opportunities.
The aim is for all employees to have regular discussions with their
managers regarding their aspirations, prospects and development
needs. These result in the formulation of an individual development
plan, which is an agreed course of action to meet employees needs as
well as the needs of the organisation. The GROW process not only aids
the development of individual development plans but also performance
management. Action plans can be developed and monitored incorporating
input from 360 degree appraisals. BOC offers many opportunities for
career and personal development. Employee development takes the form
of on-the-job coaching and training, development projects,
secondments, e-learning, as well as more traditional classroom-based
training.     Reward and recognition   Retirement benefit plans    Diversity   Employee share schemes
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SOCIAL, ENVIRONMENTAL AND ETHICAL PERFORMANCE  
 Exercising sound corporate responsibility is fundamental to the way
BOC operates. The Group aims always to behave ethically and to manage
risk strategically. It has a process for identifying, evaluating and
managing all risks in accordance with best practice.    Executive responsibility     The Code of Conduct  
    
    setting minimum and consistent standards around the world;
    
    communicating Group priorities, principles and
standards to all employees;
    
    stakeholder
engagement to identify, prioritise and respond
to key issues;
    
    training for employees;
    
    setting standards for agents, consultants, distributors and
suppliers through the Groups ethical purchasing policy;
    
    managing Group performance in line with the code;
    
    assurance, using the Groups business assurance audit/risk management, SHEQ and HR
functions as well as external auditors where appropriate. This year the Group moved from the codes implementation phase into
its sustainability phase. This is aimed at further embedding the code
and so far as possible measuring the Groups performance against
standards laid down by the code.
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Social, environmental and ethical performance  
 BOCs global management system (IMSS)  Stakeholders  Identifying and prioritising SEE risks    Managing corporate responsibility performance  Safety, health and the environment      
    
    updated its safety, health and environment policy;
    
    launched Safety in BOC focusing on key safety behaviours across the
organisation;
    
    continued to conduct its audit programme of safety standards and
assessment of the organisations safety culture. Annual safety action
plans are derived from these processes, and integrated into
individual and business performance contracts;
    
    continued to conduct
its annual environment survey. Annual environmental action plans are
derived from the surveys results, which are integrated into
individual and business performance contracts;
    
    commenced the
sustainability phase of its Code of Conduct programme, ensuring that
SHEQ considerations continue to be reinforced and integrated into the
organisations legal and ethical framework. Along with the Code of Conduct and the Groups ACTS operating
principles, Safety in BOC ensures that SHEQ issues are managed
consistently across all countries and businesses.
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##### Table of Contents



Social,
environmental and ethical performance  Overall safety performance 20031
    
    
    20041Lost workday case rate
    
    
    0.45
    
    
    
    0.41Total recordable case rate
    
    
    1.18
    
    
    
    1.18Passenger car avoidable
accident rate
    
    
    1.99
    
    
    
    2.12Truck avoidable accident rate
    
    
    2.75
    
    
    
    2.38
 Lost workday case rate (BAR GRAPH) Total recordable case rate (BAR GRAPH) Passenger car avoidable accidents per million miles (BAR GRAPH) Truck avoidable accidents per million miles (BAR GRAPH) 1.
    
    2003 and 2004
safety statistics
include mergers,
acquisitions and all
joint ventures.
Previous years have
not been restated.
 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. Occupational health and hygiene
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Social,
environmental and ethical performance  Non-compliances   
 Hazardous waste   
 Ozone depleting
potential substance
release (solvents
and refrigerants)  
 General waste disposal 2004 Total 26,675 tonnes 
 Types of general waste Total 26,675 tonnes
 Employees have access to guidance on OH from qualified SHEQ
managers. This is supported by a range of training programmes,
manuals, videos and safety data sheets, which are available through
local and global SHEQ functions and on dedicated SHEQ intranet
sites.   
    
    exposure to noise from gas compression
activities and from cylinder handling;
    
    potential exposure to some
gases filled into cylinders;
    
    potential
exposure to chemicals used in metal cleaning;
    
    painting
operations;
    
    ergonomic and manual handling risks. OH programmes have been developed to deal with these issues and are
applied across the Group. BOC programmes include: a new OH service
with a global provider to enhance the emergency care given to BOC
business travellers taken ill away from home; an AIDS/HIV prevention,
treatment and care programme for employees in southern Africa; an
education programme to raise awareness of the effects of noise; a
manual handling training video; a legionella control programme for
water systems such as cooling towers present on sites; a programme for
the assessment of manual handling and display screen equipment to
minimise ergonomic health risks; a chemical assessment and management
programme; and specific work to reduce the use of solvents. The last
includes a new training video addressing the specific hazards of using
chemicals to clean plant and equipment for use with oxygen.   The environment
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Social,
environmental and ethical performance   1
           1.
    
    BOCs methodology is consistent with all major point sources of
carbon dioxide emissions within Scope 1 of the World Business
Council for Sustainable Development and the World Resources
Institute (March 2004) and all major sources of carbon dioxide
emissions under Scope 2 of the protocol. The figure does not
include non-carbon dioxide global warming gases (N2O, SF6, CH4,
PFCs and HFCs), freight and logistics and minor sources such as
business travel, office electricity at small sites and
decomposition of wastes and carbon dioxide emissions associated
with heat and steam imported to BOC plants.
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RESEARCH, DEVELOPMENT AND INFORMATION TECHNOLOGY   Research and development (R&D)   2
 2
        K
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Research, development and information technology   BOC Edwards, assisted by Gist technology, has developed supply chain
management for gases and chemicals and won a major contract from a
leading microprocessor manufacturer. Total materials management and
total gas and chemical management capability are part of an
innovative and broad
service offering. The use of enhanced metal and dielectric coatings
on process tool parts has helped reduce customer cost of ownership. 2
  Information technology
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RISK FACTORS   This document contains certain forward-looking statements which
involve risk and uncertainty as they relate to future events and
circumstances. The following risk factors, as well as those
discussed on page 50 of the financial review could cause actual
results to differ materially from those expressed or implied by
these forward-looking statements: 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;
    
    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);
    
    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  
    
    fines and penalties for breaches of safety laws;
    
    liability payments and costs to employees or third parties arising from
injury or damage;
    
    exclusion from certain market sectors deemed important for future
development of the business (such as medical gases);
    
    damage to
reputation. 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
   32 The BOC Group plcAnnual report and accounts 2004




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Risk factors   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  Implementation of computer software systems is a key success factor for BOC  Further consolidation between major competitors may impact BOCs competitive position  
    
    an uncompetitive cost base for large projects;
    
    an inability to participate in further
consolidation due to competition concerns;
    
    retention and/or recruitment of key personnel;
    
    weakened geographical positions. Managing joint venture relationships is a key success factor for BOC
   33 The BOC Group plcAnnual report and accounts 2004




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OPERATING REVIEW   Introduction  Impact of currency movements     Impact of
    
    
    2002 results
    
    
    
    
    
    
    Impact of
    
    
    2003 results2002 results
    
    
    movements
    
    
    (at 2003 rates
    
    
    2003 results
    
    
    movements
    
    
    (at 2004 rates(as reported)
    
    
    in currency
    
    
    of exchange)
    
    
    (as reported)
    
    
    in currency
    
    
    of exchange)£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTurnover (including share of
joint ventures and associates)Process Gas Solutions
    
    
    1,200.6
    
    
    
    (50.5
    )
    
    
    1,150.1
    
    
    
    1,242.7
    
    
    
    (71.1
    )
    
    
    1,171.6Industrial and Special Products
    
    
    1,605.3
    
    
    
    (5.0
    )
    
    
    1,600.3
    
    
    
    1,751.2
    
    
    
    (19.6
    )
    
    
    1,731.6BOC Edwards
    
    
    688.2
    
    
    
    (30.3
    )
    
    
    657.9
    
    
    
    684.1
    
    
    
    (39.4
    )
    
    
    644.7Afrox hospitals
    
    
    259.0
    
    
    
    46.9
    
    
    
    305.9
    
    
    
    353.4
    
    
    
    41.4
    
    
    
    394.8Gist
    
    
    264.8
    
    
    
    (0.1
    )
    
    
    264.7
    
    
    
    291.8
    
    
    
    (0.1
    )
    
    
    291.7Total
    
    
    4,017.9
    
    
    
    (39.0
    )
    
    
    3,978.9
    
    
    
    4,323.2
    
    
    
    (88.8
    )
    
    
    4,234.4Operating profitProcess Gas Solutions
    
    
    161.2
    
    
    
    (6.6
    )
    
    
    154.6
    
    
    
    177.1
    
    
    
    (10.3
    )
    
    
    166.8Industrial and Special Products
    
    
    229.3
    
    
    
    2.1
    
    
    
    231.4
    
    
    
    238.2
    
    
    
    3.1
    
    
    
    241.3BOC Edwards
    
    
    (1.4
    )
    
    
    (0.8
    )
    
    
    (2.2
    )
    
    
    7.9
    
    
    
    (1.1
    )
    
    
    6.8Afrox hospitals
    
    
    29.7
    
    
    
    5.4
    
    
    
    35.1
    
    
    
    46.1
    
    
    
    5.4
    
    
    
    51.5Gist
    
    
    25.5
    
    
    
    0.3
    
    
    
    25.8
    
    
    
    29.2
    
    
    
    0.1
    
    
    
    29.3Corporate
    
    
    (18.7
    )
    
    
    0.4
    
    
    
    (18.3
    )
    
    
    (59.9
    )
    
    
    6.1
    
    
    
    (53.8
    )Total
    
    
    425.6
    
    
    
    0.8
    
    
    
    426.4
    
    
    
    438.6
    
    
    
    3.3
    
    
    
    441.9Adjusted operating profitProcess Gas Solutions
    
    
    185.2
    
    
    
    (7.1
    )
    
    
    178.1
    
    
    
    184.0
    
    
    
    (10.5
    )
    
    
    173.5Industrial and Special Products
    
    
    248.0
    
    
    
    2.0
    
    
    
    250.0
    
    
    
    242.7
    
    
    
    2.8
    
    
    
    245.5BOC Edwards
    
    
    26.1
    
    
    
    (1.0
    )
    
    
    25.1
    
    
    
    18.5
    
    
    
    (1.5
    )
    
    
    17.0Afrox hospitals
    
    
    29.7
    
    
    
    5.4
    
    
    
    35.1
    
    
    
    46.1
    
    
    
    5.4
    
    
    
    51.5Gist
    
    
    25.5
    
    
    
    0.3
    
    
    
    25.8
    
    
    
    29.2
    
    
    
    0.1
    
    
    
    29.3Corporate
    
    
    (14.4
    )
    
    
    0.4
    
    
    
    (14.0
    )
    
    
    (14.9
    )
    
    
    1.5
    
    
    
    (13.4
    )Total
    
    
    500.1
    
    
    
    
    
    
    
    500.1
    
    
    
    505.6
    
    
    
    (2.2
    )
    
    
    503.4
 Exceptional or non-recurring items
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Operating review   2004
    
    2003
    
    2002Adjusted
    
    
    Operating
    
    
    
    
    
    
    Adjusted
    
    
    Operating
    
    
    
    
    
    
    Adjusted
    
    
    Operatingoperating
    
    
    exceptional
    
    
    Operating
    
    
    operating
    
    
    exceptional
    
    
    Operating
    
    
    operating
    
    
    exceptional
    
    
    Operatingprofit
    
    
    items
    
    
    profit
    
    
    profit
    
    
    items
    
    
    profit
    
    
    profit
    
    
    items
    
    
    profit£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionProcess Gas Solutions
    
    
    190.3
    
    
    
    (0.8
    )
    
    
    189.5
    
    
    
    184.0
    
    
    
    (6.9
    )
    
    
    177.1
    
    
    
    185.2
    
    
    
    (24.0
    )
    
    
    161.2Industrial and
Special Products
    
    
    269.5
    
    
    
    (15.6
    )
    
    
    253.9
    
    
    
    242.7
    
    
    
    (4.5
    )
    
    
    238.2
    
    
    
    248.0
    
    
    
    (18.7
    )
    
    
    229.3BOC Edwards
    
    
    47.8
    
    
    
    (1.0
    )
    
    
    46.8
    
    
    
    18.5
    
    
    
    (10.6
    )
    
    
    7.9
    
    
    
    26.1
    
    
    
    (27.5
    )
    
    
    (1.4
    )Afrox hospitals
    
    
    59.8
    
    
    
    
    
    
    
    59.8
    
    
    
    46.1
    
    
    
    
    
    
    
    46.1
    
    
    
    29.7
    
    
    
    
    
    
    
    29.7Gist
    
    
    25.1
    
    
    
    
    
    
    
    25.1
    
    
    
    29.2
    
    
    
    
    
    
    
    29.2
    
    
    
    25.5
    
    
    
    
    
    
    
    25.5Corporate
    
    
    (15.6
    )
    
    
    
    
    
    
    (15.6
    )
    
    
    (14.9
    )
    
    
    (45.0
    )
    
    
    (59.9
    )
    
    
    (14.4
    )
    
    
    (4.3
    )
    
    
    (18.7
    )Total Group
    
    
    576.9
    
    
    
    (17.4
    )
    
    
    559.5
    
    
    
    505.6
    
    
    
    (67.0
    )
    
    
    438.6
    
    
    
    500.1
    
    
    
    (74.5
    )
    
    
    425.6
 Other non GAAP measures   2003
    
    20022004
    
    (restated)
    
    (restated)Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageOperating
    
    
    capital
    
    
    
    
    
    
    Operating
    
    
    capital
    
    
    
    
    
    
    Operating
    
    
    capitalprofit
    
    
    employed
    
    
    ROCE
    
    
    profit
    
    
    employed
    
    
    ROCE
    
    
    profit
    
    
    employed
    
    
    ROCE£ million
    
    
    £ million
    
    
    %
    
    
    £ million
    
    
    £ million
    
    
    %
    
    
    £ million
    
    
    £ million
    
    
    %Adjusted ROCE
    
    
    576.9
    
    
    
    3,752.4
    
    
    
    15.4
    
    
    
    505.6
    
    
    
    4,010.5
    
    
    
    12.6
    
    
    
    500.1
    
    
    
    4,002.9
    
    
    
    12.5Operating
exceptional items
    
    
    (17.4
    )
    
    
    
    
    
    
    
    
    
    
    (67.0
    )
    
    
    
    
    
    
    
    
    
    
    (74.5
    )
    
    
    ROCE
    
    
    559.5
    
    
    
    3,752.4
    
    
    
    14.9
    
    
    
    438.6
    
    
    
    4,010.5
    
    
    
    10.9
    
    
    
    425.6
    
    
    
    4,002.9
    
    
    
    10.6
 1.
    
    ROCE is operating profit as a percentage of the average capital employed
excluding net pension liabilities.2.
    
    Average capital employed and ROCE for 2003 and 2002 have been
restated following the application of UK GAAP UITF37 and UITF38
in 2004 (see note 31 to the financial statements). The Group commentary in this review also comments on free cash flow. Free cash
flow is a measure often
referred to by BOC management and other users of financial
information to highlight the cash flow available from underlying
ongoing business operations before acquisition and disposal activity.
Whether or not this remains positive over time is an indicator that
dividends to shareholders are being paid out of cash generated by
existing Group businesses. As such it is a useful additional measure
of financial performance.  2003
    
    
    20022004
    
    
    (restated)
    
    
    (restated)£ million
    
    
    £ million
    
    
    £ millionFree cash flow
    
    
    257.9
    
    
    
    141.8
    
    
    
    166.5Exceptional cash items
    
    
    (11.9
    )
    
    
    (28.3
    )
    
    
    (67.3
    )Acquisitions and disposals
    
    
    92.5
    
    
    
    (118.3
    )
    
    
    (215.5
    )Other items within capital expenditure and financial investment:Purchases of intangible fixed assets
    
    
    (0.2
    )
    
    
    (1.2
    )
    
    
    (0.1
    )Net (purchases)/sales of current asset investments
    
    
    (0.9
    )
    
    
    16.6
    
    
    
    4.3Purchases of trade and other investments
    
    
    (3.8
    )
    
    
    (3.3
    )
    
    
    (19.7
    )Sales of trade and other investments
    
    
    5.6
    
    
    
    5.3
    
    
    
    0.9Net cash inflow/(outflow) before use of liquid resources and financing
    
    
    339.2
    
    
    
    12.6
    
    
    
    (130.9
    )
   35 The BOC Group plcAnnual report and accounts 2004




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OPERATING REVIEW (COMPARING 2004 WITH 2003)  Turnover, including
share of joint
ventures and
associates 
 Profit before tax
 Group    2003 (at 20042004
    
    
    2003
    
    
    exchange rates)1Turnover including share of joint ventures and associates (£ million)
    
    
    4,599.3
    
    
    
    4,323.2
    
    
    
    4,234.4Operating profit (£ million)
    
    
    559.5
    
    
    
    438.6
    
    
    
    441.9Adjusted operating profit (£ million)2
    
    
    576.9
    
    
    
    505.6
    
    
    
    503.4Profit before tax (£ million)
    
    
    412.3
    
    
    
    351.9
    
    
    
    360.3Adjusted profit before tax (£ million)2
    
    
    504.3
    
    
    
    418.9
    
    
    
    421.8Earnings per share
    
    
    53.5
    p
    
    
    44.5
    p
    
    
    44.9
    pAdjusted earnings per share2
    
    
    63.2
    p
    
    
    52.9
    p
    
    
    52.7
    p
 1.
    
    A reconciliation of turnover, operating profit and adjusted operating
profit for 2003 at 2003 and at 2004 rates of exchange is shown on page 34.2.
    
    A reconciliation of adjusted results with UK GAAP results is shown on
page 35 and in the profit and loss account on page 78.       Process Gas Solutions (PGS) Changeon 200312004
    
    
    Change
    
    
    (constant£ million
    
    
    on 2003
    
    
    currency)Turnover
    
    
    1,275.2
    
    
    +3%
    
    +9%Operating profit
    
    
    189.5
    
    
    +7%
    
    +14%Adjusted operating
profit2
    
    
    190.3
    
    
    +3%
    
    +10%
 1.
    
    A reconciliation of results for 2003 at 2003 and at 2004 rates of
exchange is shown on page 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis.
   36 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)   EuropeTurnover increased in all parts of Europe except for
Ireland. Adjusted operating profit increased significantly,
mainly as a result of more efficient plant operation and
careful control of costs.     North AmericaTurnover increased as a result of including a full
year of syngas production for Celanese at Clear Lake, Texas and
the start-up of a new plant supplying hydrogen to Citgos refinery
at Lemont, Illinois, in October 2003.    Latin AmericaRevenues increased across the region during 2004,
although business in Venezuela continued to be affected by political
uncertainty. In Brazil, BOCs new 400 tonnes-a-day plant entered
production serving CST, the worlds biggest producer of slab steel.
   37 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)   AfricaTurnover increased and adjusted operating profit was further
improved by cost savings and firm pricing trends leading to better
margins. Although the stronger rand adversely affected platinum and
gold mining in 2004, strong demand and firmer prices led to increased
activity in the steel industry. New business was obtained for carbon
dioxide in the beverage sector and for the use of oxygen in the
de-lignification of wood pulp. JapanThe combination of BOCs and Air Liquides industrial and
medical gases businesses in Japan took effect from January 2003. This
distorts the comparison of turnover and profit for BOCs three lines
of business between 2004 and 2003 and with earlier years. The results
of Japan Air Gases were consolidated on an equity basis throughout
2004 and for the last three quarters of 2003. In 2004 turnover
increased
mainly as a result of equipment sales and adjusted operating profit
increased faster as a result of achieving integration cost savings as
planned. North AsiaTurnover and adjusted operating profit increased in 2004
but at a more modest pace than in 2003. Production plants across
the region were almost fully utilized and little new capacity came
on stream in 2004. However a number of new plants will add
significantly to production within the next 12 months.      South and South East AsiaThese regions came under the same
business unit management during 2004. The economies continued to
be buoyant across both regions during the year, helped by
generally strong steel demand and a more active electronics
industry in Singapore, Malaysia and the Philippines. The major
market sectors for PGS across the region are steel, petrochemicals
and the food industry.    South PacificTurnover and adjusted operating profit were higher
than a year ago. The Australian and New Zealand economies
remained generally strong in 2004. The strength of local
currencies led to some further customer plant closures but firm
commodity prices for minerals and particularly for steel enabled
leading customers to prosper. There was some increase in tonnage
volumes but volumes overall were similar to a year ago.
   38 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)   Water servicesBOC acquired Environmental Management Corporation
(EMC), a US water services company in October 2002. Turnover
increased modestly in 2004 but the business remained close to
break-even after the amortisation of goodwill as a result of planned
costs to increase business development resources.  Industrial and Special Products (ISP) Changeon 200312004
    
    
    Change
    
    
    (constant£ million
    
    
    on 2003
    
    
    currency)Turnover
    
    
    1,782.3
    
    
    +2%
    
    
    +3%Operating profit
    
    
    253.9
    
    
    +7%
    
    
    +5%Adjusted
operating profit2
    
    
    269.5
    
    
    +11%
    
    
    +10%
 1.
    
    A reconciliation of results for 2003 at 2003 and at 2004 rates of
exchange is shown on page 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Nearly all regions delivered better results in 2004 with increased
turnover in most countries and an overall improvement in operating
margin. Robust economic conditions supported a further improvement
in the south Pacific region and Africa delivered better results
despite the handicap of the stronger currency on manufacturing and
mining. There was also some improvement in the US manufacturing
economy.       EuropeTurnover and adjusted operating profit increased further in
2004. Manufacturing activity continued to decline in the UK but
BOC maintained a strong position in the market. Improved service
levels enabled selling price increases to be implemented. At the
same time costs were reduced through improved productivity.     North AmericaThe BOC Group announced on 27 January 2004 that it had
signed a letter of intent to sell
its US packaged gas business to Airgas. This business had turnover of
approximately US$240 million in 2003. The disposal was completed on 30
July 2004 upon receipt of initial cash proceeds of US$175 million.
   39 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)  
 Following this transaction, the ISP business in north America consists
of bulk medical gases, bulk supplies to distributors, tube trailer and
liquefied helium in the US as well as the Canadian packaged gas
business. In total these elements currently generate turnover of some
US$450 million a year.   Latin AmericaTurnover increased significantly and margins improved.
Growth across the region was driven principally by sales of medical
products supplemented by sales of BOC-branded cutting and welding
equipment. Sales of packaged chemicals increased in Colombia and
Venezuela.   AfricaImportant sections of South African industry were depressed
during 2004 because of the stronger currency. Rand exchange rates
reduced the profitability of gold mining and manufacturing for export
in particular. At the same time the cost of imported goods was lowered
making them more competitive with those manufactured locally. However
lower interest rates began to stimulate domestic consumption towards
the end of the year.      JapanThe basis of accounting for BOCs business in Japan changed
during 2003 as a result of a merger. Full details can be seen in the
PGS section on page 38. In 2004 ISPs turnover in Japan was slightly
less than the previous year but adjusted operating profit was higher
through cost savings following the merger
and from some asset disposals. South and South East AsiaThese regions came under the same business
unit management during 2004. In aggregate there were modest
improvements in both turnover and adjusted operating profit. In
Taiwan, buoyant activity in manufacturing and infrastructure
development was reflected in higher turnover and adjusted operating
profit. There were also sharply better results from the industrial
products business in Thailand but ammonia margins were under strong
competitive pressure and liquefied petroleum gas (LPG) selling prices
remained subject to restrictive regulation. Hong Kong continued to be
affected by the migration of manufacturing to mainland China and in
Singapore shipbuilding and construction activity failed to improve in
2004. Competition intensified in the Malaysian market for industrial
gases. Demand for helium was strong throughout Asia.  South PacificTurnover and adjusted operating profit increased in
2004 and margins were improved by holding down costs. The economic
environment remained favourable across the region. Manufacturing
activity was buoyant in Australia despite a challenging environment
for export-oriented manufacturers created by the stronger currency.
New projects in the oil and gas sector and in mining generated
increased demand for welding and safety products. During 2004 BOC
secured major contracts with Western Mining to meet its requirements
for safety products across Australia.
   40 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)  
 A dedicated refrigerant reclaim fleet was established to help
customers comply with new refrigeration regulations that make it
mandatory to recover, return and safely dispose of
hydrofluorocarbons. BOCs new Heliox gas mixture, which helps the
treatment of patients with airway obstructions, and Inhalo, the new
lightweight cylinder, were both successfully launched into the
medical market.   BOC EdwardsChangeon 200312004
    
    
    Change
    
    
    (constant£ million
    
    
    on 2003
    
    
    currency)Turnover
    
    
    816.5
    
    
    
    +19%
    
    
    
    +27%Operating profit
    
    
    46.8
    
    
    
    +492%
    
    
    
    +588%Adjusted operating profit2
    
    
    47.8
    
    
    
    +158%
    
    
    
    +181%
 1.
    
    A reconciliation of results for 2003 at 2003 and at 2004 rates of
exchange is shown on page 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Operating exceptional items in 2004 were for the integration of
the industrial and medical gases businesses of BOC and Air Liquide
in Japan that began in 2003.
   41 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2004 with 2003)  
 Contracts were won in Asia and Europe furthering a strategy to
expand the range of value-added services to electronic
manufacturers. These include gases management, chemicals supply,
support services and materials logistics. Other developments
included an improved offering of gases and vacuum systems for
lithography and supercritical carbon dioxide cleaning technology. Afrox hospitalsChangeon 200312004
    
    
    Change
    
    
    (constant£ million
    
    
    on 2003
    
    
    currency)Turnover
    
    
    432.1
    
    
    
    +22%
    
    
    
    +9%Operating profit
    
    
    59.8
    
    
    
    +30%
    
    
    
    +16%Adjusted operating profit2
    
    
    59.8
    
    
    
    +30%
    
    
    
    +16%
 1.
    
    A reconciliation of results for 2003 at 2003 and at 2004 rates of
exchange is shown on page 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Adjusted operating profit increased faster than turnover as a result
of careful control of overhead costs and positive pricing trends.
Hospital occupancy rates remained similar to a year ago. Acquisitions
were a minor factor in the turnover increase but 2004 was the first
full year of ownership for Joint Medical Holdings and the Little
Company of Mary hospitals. During the year Afrox Healthcare increased
its holding in the Wilgeheuwel hospital from 28 per cent to 80 per
cent and closed down the Cape Anaesthetic and Brackenfield surgery
centres in Cape Town. It also sold its interest in the 123 bed Jan
Marais hospital in Cape Town. The Lifecare chronic care facilities and
Afrox occupational health services both delivered a good performance
in 2004.    GistChangeon 200312004
    
    
    Change
    
    
    (constant£ million
    
    
    on 2003
    
    
    currency)Turnover
    
    
    293.2
    
    
    no change
    
    
    +1%Operating profit
    
    
    25.1
    
    
    
    14%
    
    
    
    14%Adjusted operating profit2
    
    
    25.1
    
    
    
    14%
    
    
    
    14%
 1.
    
    A reconciliation of results for 2003 at 2003 and at 2004 rates of
exchange is shown on page 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. The comparison of turnover and adjusted operating profit between 2003
and 2004 is distorted by a non-recurrent item during 2003. In 2003 a
gain of some £4.1 million arising principally from the termination of
operations for the Marks & Spencer General Merchandise business was
credited to adjusted operating profit. The termination of this
business also eliminated some £26 million of turnover in 2004
compared with 2003. After adjusting for this item, underlying
turnover grew principally as a result of increased food business for
Marks & Spencer, as well as new contracts and the expansion of
activity with Ocado and Carlsberg UK. On the same basis, adjusted
operating profit in 2004 was at a similar level to 2003. A slowdown
in the previous trend towards outsourcing logistics operations was a
factor in pricing pressures in UK distribution and so were
dislocations arising from recent consolidation in the industry.
   42 The BOC Group plcAnnual report and accounts 2004




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OPERATING REVIEW (COMPARING 2003 WITH 2002)  
 Group    2002 (at 20032003
    
    
    2002
    
    
    exchange rates)1Turnover including share of joint ventures and associates (£ million)
    
    
    4,323.2
    
    
    
    4,017.9
    
    
    
    3,978.9Operating profit (£ million)
    
    
    438.6
    
    
    
    425.6
    
    
    
    426.4Adjusted operating profit (£ million)2
    
    
    505.6
    
    
    
    500.1
    
    
    
    500.1Profit before tax (£ million)
    
    
    351.9
    
    
    
    335.3
    
    
    
    342.8Adjusted profit before tax (£ million)2
    
    
    418.9
    
    
    
    430.0
    
    
    
    435.3Earnings per share
    
    
    44.5
    p
    
    
    41.4
    p
    
    
    41.9
    pAdjusted earnings per share2
    
    
    52.9
    p
    
    
    55.9
    p
    
    
    56.2
    p
 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 34.2.
    
    A reconciliation of adjusted results with UK GAAP results is shown on
page 35 and in the profit and loss account on page 78. Exceptional items in 2003 amounted to a charge of £67.0 million.
This comprised £43.2 million for a litigation settlement, costs
of £15.5 million for completion of restructuring programmes and
£8.3 million relating to the integration of the BOC and Air
Liquide businesses in Japan.     Process Gas Solutions (PGS)Changeon 200212003
    
    
    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 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Increased turnover in 2003 resulted from generally firm price trends
as well as revenues from acquisitions and new plants serving chemical
industry customers. The additional revenues came principally from
BOCs joint venture with Yangtze Petrochemical Corporation (YPC) at
Nanjing, China, from a new hydrogen and carbon monoxide (HyCO) plant
at Map Ta Phut, Thailand and from the acquisitions of a partial
oxidation syngas plant at Clear Lake, Texas, and the US water services
company, Environmental Management Corporation.
   43 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2003 with 2002)  
 Improved adjusted operating profit was also a result of operational
efficiency gains. The closure of facilities in connection with the
combination of BOCs Process Plants business with Linde Engineering
in the US led to lower costs towards the end of 2002 and there was a
full year of savings in 2003. There were also further cost
reductions arising from continued progress in delivery scheduling
and remote plant operation.   EuropeTurnover and adjusted operating profit increased in the UK and
in Poland in 2003 but declined slightly in Ireland. A full year of
revenues from the plant commissioned in January 2002 to supply
hydrogen to Huntsman on Teesside and from the Teesside pipeline
system acquired in July 2002 were contributors to increased turnover
in the UK. Despite continued weakness in UK manufacturing, sales
volumes increased in the merchant market for liquefied gases and
prices were also slightly firmer. The key factors behind the increase
in adjusted operating profit were lower costs in 2003 as a result of
restructuring and a charge of £3.6 million in 2002 for an asset write
down and debt provision after a steel customer went into
receivership.    North AmericaDespite a small increase in turnover, adjusted
operating profit in 2003 was at a similar level to 2002. Selling
price trends were favourable  particularly in the second half of the
year  and were sufficient to offset cost inflation. Sales volumes
were lower as a result of general weakness in manufacturing
industries and some business was lost early in 2003 as customers
changed to alternative supplies. At the same time, a significant
volume of new liquefied gas business was obtained, mainly in the
closing months of the year.     Latin AmericaTurnover increased significantly, although growth was
held back by a general strike in Venezuela in the period December
2002 to February 2003. This inevitably affected customers
requirements for industrial gases. Adjusted operating profit also
increased because of better sales volumes especially in Chile and
Brazil and because of selling price increases that generally exceeded
local rates of inflation.   AfricaBoth turnover and adjusted operating profit increased in 2003.
Sales volumes were broadly similar but selling prices were higher and
cost controls also contributed to better margins. The focus of
business development was on the use of gases in mineral processes in
the extraction of precious metals. JapanThe combination of BOCs and Air Liquides industrial and
medical gases businesses in Japan took effect from January 2003.
Until then the results of OSK, BOCs gases business in Japan, were
consolidated as a subsidiary. Subsequently BOC accounted for its
share of turnover and profit of the merged company, Japan Air Gases,
on an equity basis. This distorts the comparison of turnover and
profit between 2003 and earlier years for BOCs three lines of
business. On the respective bases used in each year, there was an
increase in both turnover and adjusted operating profit for PGS in
Japan for 2003.
   44 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2003 with 2002)  
 The integration process that began in 2003 made good progress. The
two organisations were successfully integrated in the key areas and
the number of branch offices was reduced. Cryogenic equipment
manufacturing was integrated into a single location. North AsiaTurnover and adjusted operating profit were up
significantly in 2003. Margins improved as a result of better
operational efficiency coupled with some price increases.   South East AsiaEconomic growth was generally buoyant across the
region but Singapore continued to be affected by the migration of
electronics and other industries to lower cost countries in Asia. The
outbreak of the SARS infection also curtailed travel and affected
business activity. Economic trends in Thailand, Malaysia and Indonesia
were favourable.    South AsiaEconomic growth in India led to better sales of liquefied
gases in the merchant market and sustained demand from the steel
industry. A new 225 tonnes-a-day oxygen plant was commissioned in
the last quarter of 2003 for the Tata Iron and Steel Company, BOCs
principal tonnage customer in the region. South PacificTurnover and adjusted operating profit were slightly
higher in 2003 than in 2002 despite adverse business trends in some
Australian industries. The strengthening of the Australian dollar in
2003 had a negative impact on the important minerals sector, which
responded by restructuring. There was also an adverse effect on the
food industry. Volumes of liquefied gas sales in the merchant market
were therefore lower.   Process systemsDuring 2003 BOC continued to benefit from lower
costs arising from the combination of its Process Plants business
with Linde Engineering in the US to form the new company, Linde BOC
Process Plants LLC, based in Tulsa, Oklahoma. This transaction was
completed at the end of September 2002, making Linde Engineering the
principal supplier of BOCs industrial gas plants worldwide with
access to Lindes global technical capabilities in air separation,
hydrogen production and other gas technologies.  Water servicesIn October 2002, BOC acquired Environmental
Management Corporation (EMC), a US water services company with the
intention of using a similar business model to that of PGS in
developing additional business with industrial customers.
   45 The BOC Group plcAnnual report and accounts 2004




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Operating review (comparing 2003 with 2002)  
 Industrial and Special Products (ISP)Changeon 2002
    12003
    
    
    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 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Good business performances in most markets were offset by a
disappointing result in the US. Market conditions remained depressed
in the US and in the UK but there was an overall improvement
elsewhere. Trends were particularly favourable in South Africa and
in the south Pacific region during the first half of 2003 but the
pace of growth slowed later in the year as a result of exchange rate
movements, which affected exporting industries.   EuropeTurnover and adjusted operating profit increased in 2003
despite weak manufacturing activity in the key markets.    North AmericaIn total, sales of gases in 2003 were similar to those
of 2002 but sales of welding
products were depressed. Weak conditions in the manufacturing
economy across north America coupled with costs related to the
implementation of a new business system in the US led to a sharp
decline in adjusted operating profit.   Latin AmericaThere was an improvement in both turnover and
adjusted operating profit across the region. This was generally
based on trends that were favourable in terms of both volumes and
selling prices.  AfricaTurnover and adjusted operating profit again increased
significantly in 2003, as manufacturing activity was strong in South
Africa. Although economic growth moderated later in the year as the
rand strengthened, the increased international investment in
manufacturing in South Africa continued to provide a firm base for
sales of gases and welding products.
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Operating review (comparing 2003 with 2002)  
 JapanThe basis of accounting for BOCs business in Japan changed
during 2003 as a result of a merger. Full details can be seen in the
PGS section on page 44. On the respective bases used in each year,
turnover and adjusted operating profit for ISP in Japan were lower
in 2003. East AsiaTurnover increased but adjusted operating profit was
marginally lower in 2003, with the full year benefit of acquisitions
being reduced by the effect of industrial decline in the key market
of Hong Kong and also by the increase in business overheads to
support the future development of business in the region.   South PacificAlthough economic growth was less rapid in 2003 than
it was in 2002, both turnover and adjusted operating profit
improved. Increased turnover was largely a result of better prices
rather than increased sales volume and firm prices were coupled with
effective cost controls.    BOC EdwardsChangeon 200212003
    
    
    Change
    
    
    (constant£ million
    
    
    on 2002
    
    
    currency)Turnover
    
    
    684.1
    
    
    
    1%
    
    
    
    +4%Operating profit
    
    
    7.9
    
    
    note 4a
    
    
    note 4bAdjusted 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 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    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. Operating exceptional items in 2003 were for the completion of
restructuring programmes, including those that were part of the
programme announced in August 2001. Additionally, there were charges
relating to the integration of the BOC and Air Liquide businesses in
Japan to form Japan Air Gases.
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Operating review (comparing 2003 with 2002)  
 Vacuum equipment volumes worldwide were slightly better in 2003 and
much of the increase was derived from pumping products for flat
panel display manufacture. However, these pumps currently earn lower
margins than semiconductor pumping systems. Although semiconductor
equipment demand was weak in 2003, improved products were developed
to strengthen BOC Edwards position in vacuum technology. These
included single axis on-tool semiconductor pumps and a range of
small dry pumps for the growing scientific equipment market.   Afrox hospitalsChangeon 200212003
    
    
    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 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Although hospital occupancy rates increased only marginally in
2003, turnover and adjusted operating profit both increased
significantly. This resulted from some minor acquisitions,
positive price trends and a reduction in overhead costs. New
facilities continued to be added to existing hospitals in order to
widen the range of available services.   GistChangeon 200212003
    
    
    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 34.2.
    
    A reconciliation of adjusted operating profit with operating profit is
shown on page 35.3.
    
    All comments below are on a constant currency basis. Improved turnover reflected both new contracts and increased volumes
with existing customers. The increase in adjusted operating profit
was not only as a result of higher turnover but also because of a
gain of some £4.1 million arising principally from the termination of
operations for the Marks & Spencer General Merchandise business.
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FINANCIAL REVIEW  Net debt/equity (BAR CHART) Net debt/capital employed (BAR CHART)
 Corporate transactions and restructuring     Financial indicators  2003
    
    
    20022004
    
    
    (restated)
    
    
    (restated)Interest cover (times)1
    
    
    6.3
    
    
    
    4.6
    
    
    
    4.1Adjusted interest cover (times)2
    
    
    6.5
    
    
    
    5.3
    
    
    
    4.9Net debt/equity (%)
    
    
    51.2
    
    
    
    73.4
    
    
    
    75.3Net debt/capital employed (%)
    
    
    29.9
    
    
    
    37.4
    
    
    
    37.3Average cost of net borrowings (%)
    
    
    6.2
    
    
    
    5.6
    
    
    
    6.2Group tax rate (%)
    
    
    24.7
    
    
    
    27.4
    
    
    
    31.7Adjusted Group tax rate (%)3
    
    
    29.0
    
    
    
    29.0
    
    
    
    30.0
  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
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Financial review   The gearing ratio (net debt including finance leases as a percentage
of capital employed) was 29.9 per cent in 2004 compared with 37.4
per cent in 2003 and 37.3 per cent in 2002. The 2004 year end net
debt/equity ratio was
51.2 per cent, compared with 73.4 per cent in 2003 and 75.3 per cent in 2002.  Management of financial risks   Currency riskThe 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.    Interest rate riskAt 30 September 2004, the Groups net debt
position after interest rate hedging activity included a net exposure
of £74.6 million (2003: £436.3 million) to floating interest rates.
Based on the Groups 2004 year end level and composition of net debt,
an increase in average interest rates of one per cent per annum would
result in a decrease in future earnings, before tax, of £0.7 million
per annum (2003: £4.4 million).   Foreign exchange riskAt 30 September 2004, the Group had
outstanding forward exchange contracts totalling £224.4 million
(2003: £173.8 million) in respect of its actual and forecast
transaction exposures. The fair value of these contracts at 30
September 2004 amounted to a gain of £7.5 million (2003: a gain of
£5.8 million). A ten per cent appreciation of sterling would
increase the fair value of these contracts by £11.0 million (2003:
£13.7 million).  Counterparty riskCash 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.
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Financial review  Average cost of net borrowings1 (BARCHART)
 Interest on net debt  Net interest on pension financing items  Debt maturity profile  2004
    
    
    2003£ million
    
    
    %
    
    
    £ million
    
    
    %More than five years
    
    
    320.5
    
    
    
    26.9
    
    
    
    521.8
    
    
    
    36.1Three to five years
    
    
    260.9
    
    
    
    21.9
    
    
    
    214.4
    
    
    
    14.8One to three years
    
    
    347.1
    
    
    
    29.2
    
    
    
    348.5
    
    
    
    24.1Within one year
    
    
    262.1
    
    
    
    22.0
    
    
    
    360.9
    
    
    
    25.0Total
    
    
    1,190.6
    
    
    
    100.0
    
    
    
    1,445.6
    
    
    
    100.0
   Other contractual obligations  Other creditors
    
    
    
    
    
    
    
    
    
    
    Total(excluding
    
    
    
    
    
    
    Unconditional
    
    
    contractualdeferred
    
    
    Operating
    
    
    purchase
    
    
    cashincome)
    
    
    leases
    
    
    obligations
    
    
    obligations£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionMore than five years
    
    
    22.2
    
    
    
    115.3
    
    
    
    418.8
    
    
    
    556.3Three to five years
    
    
    0.8
    
    
    
    49.2
    
    
    
    126.3
    
    
    
    176.3One to three years
    
    
    8.5
    
    
    
    71.0
    
    
    
    131.3
    
    
    
    210.8Within one year
    
    
    819.7
    
    
    
    46.5
    
    
    
    57.9
    
    
    
    924.1Total
    
    
    851.2
    
    
    
    282.0
    
    
    
    734.3
    
    
    
    1,867.5
  Off-balance sheet arrangements
    Total group tax rate (BARCHART)
 Taxation
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Financial review   Contingencies  Legal proceedings   Welding fumes litigationA US subsidiary of the Group, The BOC Group,
Inc., has been named in US lawsuits alleging injury from exposure to
welding fumes. 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 a vehicle
for coordinating pre-trial proceedings in cases pending in different
federal district courts in the US. It is currently contemplated that
the MDL court will try three cases during the MDL proceeding. The
first such case is currently scheduled for mid 2005. In addition to
the cases in federal court, The BOC Group, Inc. 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.    Fluorogas litigationIn February 2003, the company was notified that a
jury verdict in the US District Court for the Western District of
Texas (the District Court) was obtained for US$132 million against
Fluorogas Limited, The BOC Group, Inc. and The BOC Group plc. The
verdict arose primarily out of an alleged breach of a memorandum of
understanding by Fluorogas Limited before it was acquired by The BOC
Group plc in September 2001. In March 2003, the court also awarded
interest and costs against the defendants, making them jointly and
severally liable for a total of US$174 million. A bond for the full
amount was posted with the District Court as part of the normal
appeals process.   ERISA litigationAn action was filed in the US District Court for
the Southern District of Illinois (the
District Court) 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.  Insurance  Inflation
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Financial review   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.  Retirement benefitsResults of the Group include costs relating to
the provision of retirement benefits for employees. It is the
directors responsibility to set the assumptions used in determining
the key elements of the costs of meeting such future obligations.
The assumptions are based on actual historical experience and are
set after consultation with the Groups actuaries. They include the
assumptions used for regular service costs and for the financing
elements related to the pension schemes assets and liabilities.
Whilst management believes that the assumptions used are
appropriate, a change in the assumptions used would affect both the
operating profit and net interest cost 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.
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Financial review   Accounting   International Financial Reporting Standards     a)
    
    accounting for options and other share-based payments. This will
require a charge against profit;b)
    
    the treatment of goodwill.
Existing goodwill, and goodwill on future acquisitions, will no longer be amortised.
However, amortisation will continue to be charged on other
intangibles, more of which are expected to be identified in future
business acquisitions. Also, future annual impairment reviews of
goodwill could result in periodic charges against profit;c)
    
    financial instruments. Accounting for derivative financial
instruments may cause some volatility of earnings, although this is
not expected to be significant as the Group has few financial
instruments and they are restricted to managing currency and
interest rate risk. Other areas impacted to a lesser extent include the treatment of
deferred tax and intangible assets. The presentation and layout of
the financial statements will also be affected. As the Group already
reports its obligations for post retirement benefits under UK GAAP
FRS17, there is not expected to be any significant impact as a result
of adopting the equivalent international standard, IAS19 (subject to
ratification of the proposed revision to IAS19).   US GAAP    Related party transactions
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Financial review  Average exchange rates: (BARCHARTS)
 Exchange rates      2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000US dollarAt 30 September
    
    
    1.81
    
    
    
    1.66
    
    
    
    1.57
    
    
    
    1.47
    
    
    
    1.48Average for the year
    
    
    1.79
    
    
    
    1.60
    
    
    
    1.47
    
    
    
    1.44
    
    
    
    1.56Highest rate during year
    
    
    1.90
    
    
    
    1.69
    
    
    
    1.58
    
    
    
    1.50
    
    
    
    1.67Lowest rate during year
    
    
    1.66
    
    
    
    1.54
    
    
    
    1.41
    
    
    
    1.37
    
    
    
    1.40Australian dollarAt 30 September
    
    
    2.50
    
    
    
    2.45
    
    
    
    2.89
    
    
    
    2.98
    
    
    
    2.73Average for the year
    
    
    2.47
    
    
    
    2.62
    
    
    
    2.77
    
    
    
    2.76
    
    
    
    2.56Highest rate during year
    
    
    2.68
    
    
    
    2.89
    
    
    
    3.00
    
    
    
    3.03
    
    
    
    2.85Lowest rate during year
    
    
    2.33
    
    
    
    2.40
    
    
    
    2.54
    
    
    
    2.62
    
    
    
    2.45Japanese yenAt 30 September
    
    
    199.44
    
    
    
    185.60
    
    
    
    191.45
    
    
    
    175.09
    
    
    
    159.77Average for the year
    
    
    195.17
    
    
    
    191.01
    
    
    
    184.34
    
    
    
    170.04
    
    
    
    166.03Highest rate during year
    
    
    206.90
    
    
    
    199.49
    
    
    
    193.05
    
    
    
    181.26
    
    
    
    178.67Lowest rate during year
    
    
    180.80
    
    
    
    182.17
    
    
    
    173.82
    
    
    
    153.13
    
    
    
    149.77South African randAt 30 September
    
    
    11.72
    
    
    
    11.57
    
    
    
    16.58
    
    
    
    13.24
    
    
    
    10.68Average for the year
    
    
    11.85
    
    
    
    13.24
    
    
    
    15.64
    
    
    
    11.47
    
    
    
    10.24Highest rate during year
    
    
    13.33
    
    
    
    16.41
    
    
    
    19.49
    
    
    
    13.26
    
    
    
    11.18Lowest rate during year
    
    
    10.75
    
    
    
    11.40
    
    
    
    13.00
    
    
    
    10.54
    
    
    
    9.92
  The highest and lowest rates of exchange for sterling against the US dollar for the last six months were: May
    
    
    June
    
    
    July
    
    
    August
    
    
    September
    
    
    OctoberHigh
    
    
    1.84
    
    
    
    1.84
    
    
    
    1.87
    
    
    
    1.84
    
    
    
    1.81
    
    
    
    1.84Low
    
    
    1.76
    
    
    
    1.81
    
    
    
    1.82
    
    
    
    1.79
    
    
    
    1.77
    
    
    
    1.78
 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 Ltd, 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
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CORPORATE GOVERNANCE   The BOC Group is committed to business integrity, high ethical
values and professionalism in all its activities. As an essential
part of this commitment, the board supports the highest standards
of corporate governance. Combined Code on Corporate Governance   US Sarbanes-Oxley Act 2002   New York Stock Exchange Corporate Governance Listing Standards  The board
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Corporate governance   The senior independent director is Sir Christopher ODonnell. He has
responsibility for chairing meetings of the non-executive directors
at which the chairmans performance is appraised. He is also
available to shareholders should they have any concerns which
contact through other channels has failed to resolve or for which
such contact may be inappropriate.      Audit
    
    
    Nomination
    
    
    RemunerationBoard
    
    
    committee
    
    
    committee
    
    
    committee(six meetings)
    
    
    (four meetings)
    
    
    (six meetings)
    
    
    (six meetings)Rob Margetts
    
    
    6
    
    
    
    n/a
    
    
    
    6
    
    
    
    n/aTony Isaac
    
    
    6
    
    
    
    n/a
    
    
    
    6
    
    
    
    n/aFabiola Arredondo1
    
    
    3
    
    
    
    1
    
    
    
    3
    
    
    
    3Julie Baddeley
    
    
    6
    
    
    
    4
    
    
    
    6
    
    
    
    6John Bevan
    
    
    6
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aAndrew Bonfield
    
    
    6
    
    
    
    4
    
    
    
    6
    
    
    
    6Guy Dawson2
    
    
    3
    
    
    
    2
    
    
    
    3
    
    
    
    3René Médori
    
    
    6
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRoberto Mendoza3
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    3Matthew Miau
    
    
    5
    
    
    
    2
    
    
    
    5
    
    
    
    4Iain Napier4
    
    
    1
    
    
    
    1
    
    
    
    1
    
    
    
    1Sir Christopher ODonnell
    
    
    5
    
    
    
    4
    
    
    
    5
    
    
    
    5Anne Quinn4
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2Raj Rajagopal
    
    
    6
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aJohn Walsh
    
    
    6
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
 1.
    
    resigned on 28 February 2004.2.
    
    appointed on 1 March 2004.3.
    
    resigned on 12 May 2004.4.
    
    appointed on 1 May 2004. Throughout 2004 the company has continued to maintain directors and officers
liability insurance.
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Corporate governance   Induction and professional development    Performance evaluation    Board committees  Audit committee    Audit committee report  a)
    
    interim and full year financial results and announcement
statements;b)
    
    interim and full year report from the internal audit
function of progress against the 2004 audit plan and effectiveness
of internal controls;c)
    
    the Groups project to comply with the
requirements of Section 404 of the US Sarbanes-Oxley Act. This
review included the project plan, progress against the plan and
matters arising in the implementation of the plan;d)
    
    details of the Groups project to transition to International Financial Reporting
Standards from 2006;e)
    
    the external audit plan for 2004 performed
by 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;
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Corporate governance   f)
    
    the annual report disclosure items relevant to the audit committee.
Included in this review were the Groups critical accounting policies,
the going concern statement, the report on risk and internal controls
and the risk factors statement. The audit committee also reviewed the
disclosure control review procedures employed by the Group which
enabled the chief executive and Group finance director to sign the
Section 302 and 906 certificates pursuant to the US Sarbanes-Oxley
Act;g)
    
    the external auditor report for 2004;h)
    
    the independence and
objectivity of the external auditors, including a review of non-audit
fees. The audit committee has reviewed and approved a policy for the
provision of non-audit services by the external auditor.
This policy has been in place since 2002 and defines services
which can be provided by the auditor. The policy also specifies which
services cannot be provided. The policy requires all non-audit
services to be approved in advance by the audit committee, which has
delegated this task to the chairman of the audit committee. The
approval process requires full disclosure of the objectives and scope
of the services to be performed and fee structure. The audit committee
reviews all approved services at subsequent meetings. The auditor is
permitted to perform non-audit services only if the scope of work is
within the terms of the policy and there is a business benefit to the
Group in these services being performed by the external auditors
rather than an alternative supplier. The level of the fee spend is
closely monitored to ensure independence and objectivity of the audit
is maintained. Further details of actual fees paid to external
auditors are given in note 2c) on page 90;i)
    
    the procedures by
which staff can report, in confidence, any matters of a financial or
non-financial nature alleging breaches of the Groups Code of Conduct.
The audit committee also reviewed the procedures by which allegations
are reported to senior management and the audit committee. During this period the audit committee met with the Groups external
auditors without the presence of management. The audit committee
also met with the Groups head of internal audit without the
presence of management. The head of internal audit has access to the
chairman of the audit committee, if necessary, outside of meetings.   Nomination committee     Remuneration committee   Pensions committee
   59 The BOC Group plcAnnual report and accounts 2004




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Corporate governance   Executive management board   Investment committee   Accountability and audit  Risk management and internal controls    Risk management in BOCThe BOC risk management programme assists
management throughout the Group to identify, assess and mitigate
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.
   60 The BOC Group plcAnnual report and accounts 2004




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Corporate governance   The internal control system is monitored and supported by an internal
audit function that operates on a global basis and reports its
results on the Groups operations to management and the audit
committee. 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
   61 The BOC Group plcAnnual report and accounts 2004




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REPORT ON REMUNERATION   The remuneration committee
    Current expected value (chart 1)
 Remuneration policy  Remuneration components Basic salarySalaries for executive directors and executive
management board members are based on median market rates drawn from
market data provided by Towers Perrin and take account of an
executives experience, responsibilities and performance.
Performance is assessed both from an individual and business
perspective. Executive salaries are reviewed annually by the
remuneration committee. Remuneration for those executives of
businesses outside the UK is denominated in the local currency. Benefits in kindBenefits in kind comprise company car benefits and
membership of BOCs healthcare insurance scheme. Where appropriate
directors on international assignment receive overseas allowances such
as housing and childrens education fees. These allowances are on
similar terms to those applying to other employees on the
international programme. Such benefits are in line with those offered
by peer group companies. Benefits in kind do not form part of
pensionable earnings. Variable compensation plan (VCP)The executive directors and senior
management participate in the variable compensation bonus plan. The
plan focuses on annual objectives and links individual performance
with business plans. The financial targets for the executive directors
and other executive management board members are set on an annual
basis by the remuneration committee and performance against these
targets is reviewed by the remuneration committee on a six monthly
basis. The remuneration committee considers that a six monthly review
acts as a significant incentive and is conducive to sustaining
performance throughout the year. The financial targets are based
equally on adjusted earnings per share (EPS) and adjusted return on
capital employed (ROCE) at Group level. Adjusted means excluding
exceptional items. Bonuses are assessed two-thirds on these financial
targets with the remaining third based on personal objectives. These
are based on BOCs strategic priorities and include safety, growth,
people and change management and productivity. Performance is measured
against key performance indicators determined during formal
appraisals. There is a threshold performance level below which no
bonus is paid. For 2004 the financial targets set by the remuneration
committee were EPS 56.2p and ROCE 13.3 per cent and the achievement
against these targets was EPS 63.2p and ROCE 15.4 per cent. The
remuneration committee agreed that the maximum bonus payable would be
100 per cent of salary.
   64 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration  
 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 2004 to the
chief executive was based on 1.9 times salary and for other board
directors 1.5 times salary. There are three performance conditions:
total shareholder return (TSR), adjusted earnings 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.  UK groupAggregate Industries
    
    BPB
    
    Invensys
    
    Scottish & Southern EnergyAMEC
    
    Centrica
    
    Johnson Matthey
    
    Scottish PowerAnglo American
    
    Corus Group
    
    Kelda Group
    
    Severn TrentAWG
    
    FKI
    
    National Grid Transco
    
    Shell Transport & TradingBAE Systems
    
    Hanson
    
    Pilkington
    
    Smiths GroupBG Group
    
    IMI
    
    Rio Tinto
    
    TomkinsBHP Billiton
    
    ICI
    
    RMC Group
    
    United UtilitiesBP
    
    International Power
    
    Rolls-Royce
 Global gases groupAirgas
    
    
    
    (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  FTSE100 Index)
   65 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration  Current measures and their weights
for variable incentives using on
target VCP awards and the expected
values of long-term incentives
(chart 2) 
 1
 2
 3
 4
     (GRAPHIC)
 Executive Share Option Scheme 2003
    Savings Related Share Option SchemesThese are operated in the UK,
Australia, New Zealand and Ireland and are open to all employees
including executive directors with one years service or more. The UK
scheme is approved by the Inland Revenue. The current schemes are due
to expire in 2005 and a proposal to adopt new schemes is to be put to
shareholders at the Annual General Meeting in January 2005. TSR performance  Former long-term incentive arrangements Executive Share Option Scheme 1995The last grant of options to the
executive directors and members of the executive management board took
place in February 2002 and the last award to other Group employees
took place in December 2002. No further awards will be made under this
scheme. The options vest when the companys adjusted EPS growth is
equal to, or exceeds, the growth in the retail prices index (RPI) by
three per cent per annum over any three year performance period. Senior Executive Share Option SchemeThe last grant under this scheme
took place in November 1994. In line with market practice at the time
when this scheme was introduced the vesting of these awards was not
subject to performance conditions.
   66 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration  
 Retirement benefits        Outside appointments  Remuneration proposals  For the reasons outlined above the remuneration committee proposes: 
    
    to cease making option awards under the Executive Share Option Scheme
(ESOS) to the executive directors and other executives covered by the
VCP. However, the ESOS will be kept in place for the time being for
employees below this level until an alternative scheme can be developed
in the near future. The facility will also be kept to make option awards
to executives who are covered by VCP on an exceptional basis, for
example as part of a hiring package. There is however no intention to
make any further awards to existing executive directors;
    
    to increase
the target and maximum value of the VCP to 110 per cent and 160 per cent
respectively of salary and at the same time introduce a deferred,
share-matching plan, compulsorily deferring one-third of the VCP bonus
(see details below). The current target value of the VCP is 73.4 per
cent and the plan is capped at 100 per cent;
    
    to seek approval to
increase the maximum award levels to be made under the LTIP from 200 per
cent to 250 per cent of salary. The remuneration committees purpose in
seeking approval for a higher maximum is simply to give flexibility to
remain fully competitive in the event that a higher level of award is
required for an appointment to an executive role. In the immediate term,
however, this change would have little practical impact as the intention
next year is simply to increase the chief executives conditional share
award from 1.9 times salary to 2.0 times and to make no increase to the
1.5 times salary award received by other directors last year.
   67 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration  Current expected value(chart 3) 
  Proposed expected value
 
 1 2 3
 Current measures and their weights
for variable incentives using on
target VCP awards and the expected
values of long-term incentives
(chart 5) 
 1 2 3 4
 Proposed measures and their weights
for variable incentives using on
target VCP awards and the expected
values of long-term incentives
 
 1 2 3 4
 Share Matching Plan  
    
    at the same time that the VCP opportunity is increased, one-third of
any VCP award (an amount equivalent to the increase) will be
compulsorily applied to the acquisition of BOC shares;
    
    the executives
will become entitled to these shares only if they are still in service
with BOC three years after the award is made;
    
    executives will then
receive an additional number of shares equal to the value of dividends
paid during the deferral period on these shares;
    
    executives may also
receive a matching share award of up to 100 per cent of the number of
shares originally allotted. The percentage award will depend on BOCs
performance over the deferral period. Adjusted EPS will account for 75
per cent of the performance weighting with TSR accounting for the
remaining 25 per cent;
    
    the adjusted EPS performance condition is based
upon the companys EPS relative to three year targets. These targets will be on a sliding scale, where a five per cent per
annum growth rate over three years is required for the minimum award of
25 per cent of that portion. The maximum award will be achieved if EPS
growth is 12 per cent per annum over the three year period;
    
    the TSR
performance condition compares BOCs TSR performance against the same UK
comparator group as used for the LTIP. Awards will vest for this portion
where BOCs TSR position is at median, measured over three years. At
this point 25 per cent of this portion of the award will vest. A maximum
award of 25 per cent overall will vest if the company is ranked at or
above the upper quartile. As previously stated, it is the view of the remuneration committee that
performance-related remuneration should form a substantial element of
total remuneration. The effect of these proposals would lead to a shift
in the balance of variable performance-related remuneration to fixed
remuneration (see charts 3 and 4).  Non-executive directors
   68 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration  
 Service contracts  Individual service contractsMr Bevan has a contract dated 5 December
2002 that can be terminated by the company on 12 months notice. In
the event of early termination, the contract provides for the payment
of compensation based on the value of salary, car benefit and bonus
entitlement (calculated on the basis of the average of actual payments
over the preceding two years) for the unexpired portion of the notice
period. Mr Bevan would also be entitled to his deferred pension, with
the unexpired portion of the notice period being added to his
pensionable service in the calculation of his pension entitlement.      Shareholding guidelines  69 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration   Directors emoluments and compensationCharged against profit in the year
    
    2004
    
    
    2003£000
    
    
    £000Salaries and benefits
    
    
    2,853
    
    
    
    2,578Annual bonuses payable for the year
    
    
    2,055
    
    
    
    1,038Fees to non-executive directors
    
    
    499
    
    
    
    4235,407
    
    
    
    4,039Company pension contributions to money purchase plans
    
    
    283
    
    
    
    279Company pension contributions to lump sum benefit plans
    
    
    145
    
    
    
    196Provision for share incentive schemes1
    
    
    1,011
    
    
    
    387Payments to former directors and their dependants2
    
    
    31
    
    
    
    2,1606,877
    
    
    
    7,061
 Year ended 30 September 2004
    
    
    2003Allowances
    
    
    
    
    
    
    TotalBasic
    
    
    and
    
    
    Bonus
    
    
    remunera-
    
    
    TotalIndividual remuneration
    
    salary/fees
    
    
    benefits3
    
    
    payable
    
    
    tion
    
    
    remuneration£000
    
    
    £000
    
    
    £000
    
    
    £000
    
    
    £000ChairmanR J Margetts
    
    
    225
    
    
    
    
    
    
    
    
    
    
    
    225
    
    
    
    225Executive directorsJ A Bevan
    
    
    323
    
    
    
    214
    
    
    
    323
    
    
    
    860
    
    
    
    496A E Isaac4
    
    
    686
    
    
    
    136
    
    
    
    686
    
    
    
    1,508
    
    
    
    1,143R Médori5
    
    
    360
    
    
    
    288
    
    
    
    360
    
    
    
    1,008
    
    
    
    810Dr K Rajagopal
    
    
    343
    
    
    
    16
    
    
    
    343
    
    
    
    702
    
    
    
    526J L Walsh
    
    
    343
    
    
    
    144
    
    
    
    343
    
    
    
    830
    
    
    
    641Non-executive directorsJ M Baddeley
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    43A R J Bonfield
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    7G N Dawson6
    
    
    23
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    M F C Miau
    
    
    39
    
    
    
    
    
    
    
    
    
    
    
    39
    
    
    
    35I J G Napier6
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    Sir Christopher ODonnell7
    
    
    49
    
    
    
    
    
    
    
    
    
    
    
    49
    
    
    
    43A C Quinn6
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    Directors retiring in the yearF R Arredondo8
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    35R G Mendoza8
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    35Total
    
    
    2,554
    
    
    
    798
    
    
    
    2,055
    
    
    
    5,407
    
    
    
    4,039
 1.
    
    This represents the amount charged to operating profit for those elements
of the various share incentive schemes relating to directors.2.
    
    Of the amount recognised in 2003, £2,089,000 relates to Mr Grant, who
resigned from the board on 31 December 2002.3.
    
    Includes overseas and relocation expenses.4.
    
    Mr Isaac was the highest paid director in 2004.5.
    
    The allowances and benefits of Mr Médori include a salary supplement of
£103,600 (2003: £97,700) in respect of the pensions earnings cap.6.
    
    Mr Dawson was appointed to the board on 1 March 2004 and Mr
Napier and Ms Quinn were both appointed to the board on 1 May
2004. The remuneration above is the total remuneration earned
since their appointment.7.
    
    Fees in respect of Sir Christopher ODonnell are paid to Smith & Nephew
plc.8.
    
    Mrs Arredondo resigned from the board on 28 February 2004 and Mr
Mendoza resigned from the board on 12 May 2004. The remuneration
above, is the total remuneration earned to their date of
resignation.9.
    
    The aggregate remuneration charged against profits for
directors and members of the executive management board in the
year was £10.0 million. Remuneration of members of the
executive management board other than directors is given on
page 71.
   70 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration   Executive officersThe aggregate remuneration of members of the
executive management board, other than directors, for services in all
capacities during 2004 was as follows: 2004Charged against profit in the year
    
    £'000Salaries, allowances and benefits
    
    
    1,508Annual bonuses payable for the year
    
    
    1,126Provision for share incentive schemes1
    
    
    454Company pension contributions
    
    
    583,146
 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 2004The 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 1 October 2003At 30 September 2004
    
    
    (or at date of appointment if later)Long-term
    
    
    
    
    
    
    
    
    
    
    Long-termOrdinary
    
    
    Share
    
    
    incentive
    
    
    Ordinary
    
    
    Share
    
    
    incentiveshares
    
    
    options
    
    
    plan awards
    
    
    shares
    
    
    options
    
    
    plan awardsJ M Baddeley
    
    
    2,268
    
    
    
    
    
    
    
    
    
    
    
    1,254
    
    
    
    
    
    
    
    J A Bevan
    
    
    17,108
    
    
    
    307,107
    
    
    
    95,490
    
    
    
    16,070
    
    
    
    269,993
    
    
    
    38,659A R J Bonfield
    
    
    1,175
    
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    G N Dawson
    
    
    892
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    A E Isaac
    
    
    8,057
    
    
    
    1,129,824
    
    
    
    279,387
    
    
    
    5,700
    
    
    
    1,096,535
    
    
    
    127,867R J Margetts
    
    
    34,000
    
    
    
    
    
    
    
    
    
    
    
    17,000
    
    
    
    
    
    
    
    R Médori
    
    
    16,772
    
    
    
    442,496
    
    
    
    107,312
    
    
    
    16,772
    
    
    
    435,253
    
    
    
    44,652M F C Miau
    
    
    3,447
    
    
    
    
    
    
    
    
    
    
    
    2,772
    
    
    
    
    
    
    
    I J G Napier
    
    
    779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Sir Christopher ODonnell
    
    
    2,274
    
    
    
    
    
    
    
    
    
    
    
    2,179
    
    
    
    
    
    
    
    A C Quinn
    
    
    779
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Dr K Rajagopal
    
    
    21,816
    
    
    
    549,765
    
    
    
    102,432
    
    
    
    14,416
    
    
    
    526,589
    
    
    
    42,622J L Walsh
    
    
    22,175
    
    
    
    477,412
    
    
    
    102,432
    
    
    
    13,175
    
    
    
    452,089
    
    
    
    42,622Directors retiring in the yearF R Arredondo
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    991
    
    
    
    
    
    
    
    R G Mendoza
    
    
    11,232
    
    
    
    
    
    
    
    
    
    
    
    10,763
    
    
    
    
    
    
    
    
 There has been no change in the interest of any of the
directors between 1 October 2004 and 18 November 2004.
   71 The BOC Group plcAnnual report and accounts 2004




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Report on remuneration   Directors share interests  movements during the year Share optionsOpeningmarket priceAt
    
    
    
    
    
    
    
    
    
    
    
    
    
    At
    
    
    Exercise
    
    
    at date
    
    
    Earliest
    
    
    Latest1 October
    
    
    
    
    
    
    
    
    
    
    
    
    
    30 September
    
    
    price
    
    
    of exercise
    
    
    exercise
    
    
    exercise2003
    
    Granted
    
    
    Exercised
    
    
    Lapsed
    
    
    2004
    
    
    pence
    
    
    pence
    
    
    date
    
    
    date
    
    
    NotesJ A Bevan6,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    26/05/10301
    
    
    
    
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    870
    
    
    
    
    
    
    
    01/07/03
    
    
    
    31/12/03
    
    
    
    a. b.35,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    35,000
    
    
    
    993
    
    
    
    
    
    
    
    07/02/04
    
    
    
    07/02/11619
    
    
    
    
    
    
    619
    
    
    
    
    
    
    
    
    
    
    
    766
    
    
    
    921
    
    
    
    01/04/04
    
    
    
    30/09/04
    
    
    
    a. b.419
    
    
    
    
    
    
    419
    
    
    
    
    
    
    
    
    
    
    
    894
    
    
    
    921
    
    
    
    01/04/04
    
    
    
    30/09/04
    
    
    
    a. b.55,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55,000
    
    
    
    1016
    
    
    
    
    
    
    
    06/02/05
    
    
    
    06/02/1267,654
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,654
    
    
    
    776
    
    
    
    
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    36,574
    
    
    
    
    
    
    
    
    
    
    
    36,574
    
    
    
    820
    
    
    
    
    
    
    
    14/11/06
    
    
    
    14/11/13
    
    
    1,879
    
    
    
    
    
    
    
    
    
    
    
    1,879
    
    
    
    795
    
    
    
    
    
    
    
    01/04/09
    
    
    
    30/09/09
    
    
    
    a.269,993
    
    
    38,453
    
    
    
    1,038
    
    
    
    301
    
    
    
    307,107A E Isaac45,000
    
    
    
    
    
    
    45,000
    
    
    
    
    
    
    
    
    
    
    
    716
    
    
    
    923
    
    
    
    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
    
    
    
    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
    
    
    
    26/05/10200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    993
    
    
    
    
    
    
    
    07/02/04
    
    
    
    07/02/11200,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    1016
    
    
    
    
    
    
    
    06/02/05
    
    
    
    06/02/12149,178
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    149,178
    
    
    
    776
    
    
    
    
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    80,646
    
    
    
    
    
    
    
    
    
    
    
    80,646
    
    
    
    820
    
    
    
    
    
    
    
    14/11/06
    
    
    
    14/11/131,096,535
    
    
    80,646
    
    
    
    47,357
    
    
    
    
    
    
    
    1,129,824R Médori20,000
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    827
    
    
    
    11/02/98
    
    
    
    11/02/04
    
    
    
    b.15,000
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    722
    
    
    
    927
    
    
    
    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
    
    
    
    26/05/102,112
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,112
    
    
    
    870
    
    
    
    
    
    
    
    01/08/07
    
    
    
    31/01/08
    
    
    
    a. b.50,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    993
    
    
    
    
    
    
    
    07/02/04
    
    
    
    07/02/1180,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    1016
    
    
    
    
    
    
    
    06/02/05
    
    
    
    06/02/1278,141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,141
    
    
    
    776
    
    
    
    
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    42,243
    
    
    
    
    
    
    
    
    
    
    
    42,243
    
    
    
    820
    
    
    
    
    
    
    
    14/11/06
    
    
    
    14/11/13435,253
    
    
    42,243
    
    
    
    35,000
    
    
    
    
    
    
    
    442,496
   72 The BOC Group plcAnnual report and accounts 2004




---



##### Table of Contents



Report on remuneration   Openingmarket priceAt
    
    
    
    
    
    
    
    
    
    
    
    
    
    At
    
    
    Exercise
    
    
    at date
    
    
    Earliest
    
    
    Latest1 October
    
    
    
    
    
    
    
    
    
    
    
    
    
    30 September
    
    
    price
    
    
    of exercise
    
    
    exercise
    
    
    exercise2003
    
    Granted
    
    
    Exercised
    
    
    Lapsed
    
    
    2004
    
    
    pence
    
    
    pence
    
    
    date
    
    
    date
    
    
    NotesDr K Rajagopal15,000
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    871
    
    
    
    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
    
    
    
    26/05/1050,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    993
    
    
    
    
    
    
    
    07/02/04
    
    
    
    07/02/1180,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    1016
    
    
    
    
    
    
    
    06/02/05
    
    
    
    06/02/1274,589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,589
    
    
    
    776
    
    
    
    
    
    
    
    06/02/06
    
    
    
    06/02/132,353
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,353
    
    
    
    698
    
    
    
    
    
    
    
    01/05/08
    
    
    
    31/10/08
    
    
    
    a. b.
    
    
    40,323
    
    
    
    
    
    
    
    
    
    
    
    40,323
    
    
    
    820
    
    
    
    
    
    
    
    14/11/06
    
    
    
    14/11/13526,589
    
    
    40,323
    
    
    
    15,000
    
    
    
    2,147
    
    
    
    549,765J L Walsh15,000
    
    
    
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    677
    
    
    
    839
    
    
    
    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
    
    
    
    26/05/1050,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    993
    
    
    
    
    
    
    
    07/02/04
    
    
    
    07/02/1180,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80,000
    
    
    
    1016
    
    
    
    
    
    
    
    06/02/05
    
    
    
    06/02/1274,589
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,589
    
    
    
    776
    
    
    
    
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    40,323
    
    
    
    
    
    
    
    
    
    
    
    40,323
    
    
    
    820
    
    
    
    
    
    
    
    14/11/06
    
    
    
    14/11/13452,089
    
    
    40,323
    
    
    
    15,000
    
    
    
    
    
    
    
    477,412
 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 65
and 66.c.
    
    The performance conditions attaching
to these options have been satisfied. The total gains made by directors on options exercised during the year were
£208,400 (2003: £1,500).
   73 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Report on remuneration   Long-Term Incentive Plan - movements during the yearAt
    
    
    
    
    
    
    At1 October
    
    
    
    
    
    
    30 September
    
    
    
    
    
    
    Earliest
    
    
    Latest2003
    
    
    Granted
    
    
    2004
    
    
    Performance period
    
    
    exercise date
    
    
    exercise dateJ A Bevan
    
    
    38,659
    
    
    
    
    
    
    
    38,659
    
    
    
    01/10/02  30/09/05
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    
    56,831
    
    
    
    56,831
    
    
    
    01/10/03  30/09/06
    
    
    
    04/02/07
    
    
    
    04/02/1438,659
    
    
    
    56,831
    
    
    
    95,490A E Isaac
    
    
    127,867
    
    
    
    
    
    
    
    127,867
    
    
    
    01/10/02  30/09/05
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    
    151,520
    
    
    
    151,520
    
    
    
    01/10/03  30/09/06
    
    
    
    04/02/07
    
    
    
    04/02/14127,867
    
    
    
    151,520
    
    
    
    279,387R Médori
    
    
    44,652
    
    
    
    
    
    
    
    44,652
    
    
    
    01/10/02  30/09/05
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    
    62,660
    
    
    
    62,660
    
    
    
    01/10/03  30/09/06
    
    
    
    04/02/07
    
    
    
    04/02/1444,652
    
    
    
    62,660
    
    
    
    107,312Dr K Rajagopal
    
    
    42,622
    
    
    
    
    
    
    
    42,622
    
    
    
    01/10/02  30/09/05
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    
    59,810
    
    
    
    59,810
    
    
    
    01/10/03  30/09/06
    
    
    
    04/02/07
    
    
    
    04/02/1442,622
    
    
    
    59,810
    
    
    
    102,432J L Walsh
    
    
    42,622
    
    
    
    
    
    
    
    42,622
    
    
    
    01/10/02  30/09/05
    
    
    
    06/02/06
    
    
    
    06/02/13
    
    
    
    59,810
    
    
    
    59,810
    
    
    
    01/10/03  30/09/06
    
    
    
    04/02/07
    
    
    
    04/02/1442,622
    
    
    
    59,810
    
    
    
    102,432
 The performance conditions attaching to the above awards are shown on
page 65. Awards take the form of nil cost options. Pensions        Defined benefit plansTransfervalue ofDeferred
    
    
    Increase in
    
    
    Transfer
    
    
    Transfer
    
    
    Change in
    
    
    Increase in
    
    
    increase inbenefit at
    
    
    deferred
    
    
    value at
    
    
    value at
    
    
    transfer value
    
    
    deferred
    
    
    deferred30 September
    
    
    benefit in
    
    
    1 October
    
    
    30 September
    
    
    less member's
    
    
    benefit (net
    
    
    benefit (net2004
    
    
    year
    
    
    2003
    
    
    2004
    
    
    contributions
    
    
    of inflation)
    
    
    of inflation)£'000
    
    
    £'000
    
    
    £'000
    
    
    £'000
    
    
    £'000
    
    
    £'000
    
    
    £'000Annual pensionR Médori
    
    
    15
    
    
    
    4
    
    
    
    100
    
    
    
    147
    
    
    
    41
    
    
    
    3
    
    
    
    33Dr K Rajagopal
    
    
    165
    
    
    
    15
    
    
    
    1,667
    
    
    
    2,002
    
    
    
    317
    
    
    
    10
    
    
    
    127Lump sum benefit1J A Bevan
    
    
    1,162
    
    
    
    60
    
    
    
    1,102
    
    
    
    1,162
    
    
    
    60
    
    
    
    29
    
    
    
    29R Médori
    
    
    165
    
    
    
    21
    
    
    
    144
    
    
    
    165
    
    
    
    21
    
    
    
    16
    
    
    
    16J L Walsh
    
    
    512
    
    
    
    124
    
    
    
    388
    
    
    
    512
    
    
    
    124
    
    
    
    112
    
    
    
    112
 1.
    
    All amounts have been retranslated at the exchange rate prevailing at 30
September 2004. All transfer values have been calculated in accordance with Actuarial Guidance
Note GN11.
   74 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Report on remuneration   Money purchase plansThe company made contributions in the year to money purchase plans in respect of
the following directors: 2004
    
    
    2003£'000
    
    
    £'000A E Isaac
    
    
    270
    
    
    
    252J L Walsh
    
    
    13
    
    
    
    13Former directorR S Grant
    
    
    
    
    
    
    14283
    
    
    
    279
 Excess retirement benefits  Sums paid to third parties  Auditable part of the report on remuneration   a)
    
    sections relating to Long-Term Incentive Plan, Executive Share
Option Scheme 2003, Pensions, Excess retirement benefits and
Sums paid to third parties;b)
    
    tables headed Individual
remuneration, Directors share interests at 30 September 2004,
Directors share interests  movements during the year, Long-Term
Incentive Plan  movements during the year, Defined benefits plans
and Money purchase plans. The report on remuneration has been approved by the board and signed on its
behalf by: Julie BaddeleyRemuneration committee chairman
22 November 2004
   75 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



GROUP PROFIT AND LOSS ACCOUNT  2004
    
    2003
    
    2002Before
    
    
    
    
    
    
    After
    
    
    Before
    
    
    
    
    
    
    After
    
    
    Before
    
    
    
    
    
    
    Afterexceptional
    
    
    Exceptional
    
    
    exceptional
    
    
    exceptional
    
    
    Exceptional
    
    
    exceptional
    
    
    exceptional
    
    
    Exceptional
    
    
    exceptionalitems
    
    
    items
    
    
    items
    
    
    items
    
    
    items
    
    
    items
    
    
    items
    
    
    items
    
    
    itemsNotes
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTurnover, including share of
joint ventures and associates
    
    
    1
    
    
    
    
    4,599.3
    
    
    
    
    
    
    
    4,599.3
    
    
    
    4,323.2
    
    
    
    
    
    
    
    4,323.2
    
    
    
    4,017.9
    
    
    
    
    
    
    
    4,017.9Less:Share of turnover of joint ventures
    
    
    
    
    
    
    
    647.0
    
    
    
    
    
    
    
    647.0
    
    
    
    544.3
    
    
    
    
    
    
    
    544.3
    
    
    
    324.1
    
    
    
    
    
    
    
    324.1Share of turnover of associates
    
    
    
    
    
    
    
    66.9
    
    
    
    
    
    
    
    66.9
    
    
    
    60.6
    
    
    
    
    
    
    
    60.6
    
    
    
    36.1
    
    
    
    
    
    
    
    36.1Turnover of subsidiary undertakings
    
    
    
    
    
    
    
    3,885.4
    
    
    
    
    
    
    
    3,885.4
    
    
    
    3,718.3
    
    
    
    
    
    
    
    3,718.3
    
    
    
    3,657.7
    
    
    
    
    
    
    
    3,657.7Cost of sales
    
    
    2
    (a)
    
    
    
    (2,181.7
    )
    
    
    
    
    
    
    (2,181.7
    )
    
    
    (2,136.2
    )
    
    
    (1.7
    )
    
    
    (2,137.9
    )
    
    
    (2,089.7
    )
    
    
    (15.1
    )
    
    
    (2,104.8
    )Gross profit
    
    
    
    
    
    
    
    1,703.7
    
    
    
    
    
    
    
    1,703.7
    
    
    
    1,582.1
    
    
    
    (1.7
    )
    
    
    1,580.4
    
    
    
    1,568.0
    
    
    
    (15.1
    )
    
    
    1,552.9Net operating expenses
    
    
    2
    (a)
    
    
    
    (1,239.3
    )
    
    
    (14.8
    )
    
    
    (1,254.1
    )
    
    
    (1,174.7
    )
    
    
    (58.5
    )
    
    
    (1,233.2
    )
    
    
    (1,142.4
    )
    
    
    (58.9
    )
    
    
    (1,201.3
    )Operating profit of subsidiary undertakings
    
    
    
    
    
    
    
    464.4
    
    
    
    (14.8
    )
    
    
    449.6
    
    
    
    407.4
    
    
    
    (60.2
    )
    
    
    347.2
    
    
    
    425.6
    
    
    
    (74.0
    )
    
    
    351.6Share of operating profit of joint ventures
    
    
    
    
    
    
    
    99.4
    
    
    
    (2.6
    )
    
    
    96.8
    
    
    
    86.8
    
    
    
    (6.8
    )
    
    
    80.0
    
    
    
    63.8
    
    
    
    (0.5
    )
    
    
    63.3Share of operating profit of
associates
    
    
    
    
    
    
    
    13.1
    
    
    
    
    
    
    
    13.1
    
    
    
    11.4
    
    
    
    
    
    
    
    11.4
    
    
    
    10.7
    
    
    
    
    
    
    
    10.7Total operating profit including
share of joint ventures and
associates
    
    
    1
    
    
    
    
    576.9
    
    
    
    (17.4
    )
    
    
    559.5
    
    
    
    505.6
    
    
    
    (67.0
    )
    
    
    438.6
    
    
    
    500.1
    
    
    
    (74.5
    )
    
    
    425.6Loss on termination/disposal of businesses
 continuing operations
    
    
    2
    (b)
    
    
    
    
    
    
    
    (79.5
    )
    
    
    (79.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20.2
    )
    
    
    (20.2
    )Profit on disposal of fixed assets
 continuing operations
    
    
    2
    (b)
    
    
    
    
    
    
    
    4.9
    
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Profit on ordinary activities before interest
    
    
    
    
    
    
    
    576.9
    
    
    
    (92.0
    )
    
    
    484.9
    
    
    
    505.6
    
    
    
    (67.0
    )
    
    
    438.6
    
    
    
    500.1
    
    
    
    (94.7
    )
    
    
    405.4Interest on net debt
    
    
    3
    
    
    
    
    (88.4
    )
    
    
    
    
    
    
    (88.4
    )
    
    
    (96.1
    )
    
    
    
    
    
    
    (96.1
    )
    
    
    (103.1
    )
    
    
    
    
    
    
    (103.1
    )Interest on pension scheme
liabilities
    
    
    8
    (a)
    
    
    
    (117.4
    )
    
    
    
    
    
    
    (117.4
    )
    
    
    (110.2
    )
    
    
    
    
    
    
    (110.2
    )
    
    
    (106.1
    )
    
    
    
    
    
    
    (106.1
    )Expected return on pension scheme assets
    
    
    8
    (a)
    
    
    
    133.2
    
    
    
    
    
    
    
    133.2
    
    
    
    119.6
    
    
    
    
    
    
    
    119.6
    
    
    
    139.1
    
    
    
    
    
    
    
    139.1Other net financing income
    
    
    
    
    
    
    
    15.8
    
    
    
    
    
    
    
    15.8
    
    
    
    9.4
    
    
    
    
    
    
    
    9.4
    
    
    
    33.0
    
    
    
    
    
    
    
    33.0Profit on ordinary activities before tax
    
    
    
    
    
    
    
    504.3
    
    
    
    (92.0
    )
    
    
    412.3
    
    
    
    418.9
    
    
    
    (67.0
    )
    
    
    351.9
    
    
    
    430.0
    
    
    
    (94.7
    )
    
    
    335.3Tax on profit on ordinary activities
    
    
    4
    (a)
    
    
    
    (146.2
    )
    
    
    44.5
    
    
    
    (101.7
    )
    
    
    (121.4
    )
    
    
    25.0
    
    
    
    (96.4
    )
    
    
    (129.0
    )
    
    
    22.8
    
    
    
    (106.2
    )Profit on ordinary activities after
tax
    
    
    
    
    
    
    
    358.1
    
    
    
    (47.5
    )
    
    
    310.6
    
    
    
    297.5
    
    
    
    (42.0
    )
    
    
    255.5
    
    
    
    301.0
    
    
    
    (71.9
    )
    
    
    229.1Minority interests  equity
    
    
    
    
    
    
    
    (46.6
    )
    
    
    
    
    
    
    (46.6
    )
    
    
    (36.8
    )
    
    
    0.4
    
    
    
    (36.4
    )
    
    
    (26.7
    )
    
    
    0.5
    
    
    
    (26.2
    )Profit for the financial year
    
    
    
    
    
    
    
    311.5
    
    
    
    (47.5
    )
    
    
    264.0
    
    
    
    260.7
    
    
    
    (41.6
    )
    
    
    219.1
    
    
    
    274.3
    
    
    
    (71.4
    )
    
    
    202.9Dividends
    
    
    9
    
    
    
    
    (197.3
    )
    
    
    
    
    
    
    (197.3
    )
    
    
    (192.1
    )
    
    
    
    
    
    
    (192.1
    )
    
    
    (186.6
    )
    
    
    
    
    
    
    (186.6
    )Retained profit for the financial
year
    
    
    
    
    
    
    
    114.2
    
    
    
    (47.5
    )
    
    
    66.7
    
    
    
    68.6
    
    
    
    (41.6
    )
    
    
    27.0
    
    
    
    87.7
    
    
    
    (71.4
    )
    
    
    16.3Earnings per 25p Ordinary share
    
    
    10 basic
    
    
    
    
    
    
    
    63.2
    p
    
    
    (9.7
    )p
    
    
    53.5
    p
    
    
    52.9
    p
    
    
    (8.4
    )p
    
    
    44.5
    p
    
    
    55.9
    p
    
    
    (14.5
    )p
    
    
    41.4
    p diluted
    
    
    
    
    
    
    
    63.1
    p
    
    
    (9.6
    )p
    
    
    53.5
    p
    
    
    52.9
    p
    
    
    (8.4
    )p
    
    
    44.5
    p
    
    
    55.7
    p
    
    
    (14.5
    )p
    
    
    41.2
    p
 All turnover and operating profit arose from continuing operations.
Acquisitions in 2004 were not material. 78 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



GROUP BALANCE SHEET  20032004
    
    
    (restated)Notes
    
    
    £ million
    
    
    £ millionFixed assetsIntangible assets
    
    
    11
    
    
    
    
    174.9
    
    
    
    206.1Tangible assets
    
    
    12
    
    
    
    
    2,618.4
    
    
    
    2,913.4Investment in joint ventures share of gross assets
    
    
    
    
    
    
    
    996.1
    
    
    
    870.3 share of gross liabilities
    
    
    
    
    
    
    
    (737.4
    )
    
    
    (468.0
    )258.7
    
    
    
    402.3 loans to joint ventures
    
    
    
    
    
    
    
    199.3
    
    
    
    103.0Investment in associates share of net assets
    
    
    
    
    
    
    
    52.4
    
    
    
    59.6 loans to associates
    
    
    
    
    
    
    
    3.3
    
    
    
    4.9Other investments
    
    
    
    
    
    
    
    34.5
    
    
    
    38.8Investments
    
    
    13
    
    
    
    
    548.2
    
    
    
    608.63,341.5
    
    
    
    3,728.1Current assetsStocks
    
    
    14
    
    
    
    
    284.4
    
    
    
    284.2Debtors falling due within one year
    
    
    15
    (a)
    
    
    
    705.6
    
    
    
    697.8Debtors falling due after more than one year
    
    
    15
    (b)
    
    
    
    16.3
    
    
    
    23.6Investments
    
    
    16
    
    
    
    
    20.8
    
    
    
    21.8Cash at bank and in hand
    
    
    17
    
    
    
    
    228.2
    
    
    
    77.51,255.3
    
    
    
    1,104.9Creditors: amounts falling due within one yearBorrowings and finance leases
    
    
    18
    (a)
    
    
    
    (262.1
    )
    
    
    (360.9
    )Other creditors
    
    
    18
    (b)
    
    
    
    (872.6
    )
    
    
    (807.3
    )(1,134.7
    )
    
    
    (1,168.2
    )Net current assets/(liabilities)
    
    
    
    
    
    
    
    120.6
    
    
    
    (63.3
    )Total assets less current liabilities
    
    
    
    
    
    
    
    3,462.1
    
    
    
    3,664.8Creditors: amounts falling due after more than one yearBorrowings and finance leases
    
    
    19
    (a)
    
    
    
    (928.5
    )
    
    
    (1,084.7
    )Other creditors
    
    
    19
    (b)
    
    
    
    (34.7
    )
    
    
    (48.4
    )(963.2
    )
    
    
    (1,133.1
    )Provisions for liabilities and chargesDeferred tax
    
    
    22
    
    
    
    
    (253.0
    )
    
    
    (279.2
    )Other
    
    
    22
    
    
    
    
    (92.2
    )
    
    
    (97.4
    )Total provisions for liabilities and charges
    
    
    
    
    
    
    
    (345.2
    )
    
    
    (376.6
    )Total net assets excluding pension assets and liabilities
    
    
    
    
    
    
    
    2,153.7
    
    
    
    2,155.1Pension assets
    
    
    8
    (a)
    
    
    
    68.9
    
    
    
    50.7Pension liabilities
    
    
    8
    (a)
    
    
    
    (344.5
    )
    
    
    (341.8
    )Total net assets including pension assets and liabilities
    
    
    
    
    
    
    
    1,878.1
    
    
    
    1,864.0Capital and reservesEquity called up share capital
    
    
    23
    
    
    
    
    124.7
    
    
    
    124.4Share premium account
    
    
    24
    (a)
    
    
    
    374.9
    
    
    
    366.0Revaluation reserves
    
    
    24
    (a)
    
    
    
    30.1
    
    
    
    30.8Profit and loss account
    
    
    24
    (a)
    
    
    
    1,181.5
    
    
    
    1,199.1Pensions reserves
    
    
    24
    (a)
    
    
    
    (253.6
    )
    
    
    (291.1
    )Joint ventures reserves
    
    
    24
    (a)
    
    
    
    238.0
    
    
    
    273.3Associates reserves
    
    
    24
    (a)
    
    
    
    26.0
    
    
    
    33.0Own shares
    
    
    24
    (a)
    
    
    
    (46.3
    )
    
    
    (48.8
    )Equity shareholders funds
    
    
    
    
    
    
    
    1,675.3
    
    
    
    1,686.7Minority shareholders equity interests
    
    
    
    
    
    
    
    202.8
    
    
    
    177.3Total capital and reserves
    
    
    
    
    
    
    
    1,878.1
    
    
    
    1,864.0
 The financial statements were approved by the board of directors on 22 November
2004 and are signed on its behalf by: A E IsaacDirector R MédoriDirector 79 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



GROUP CASH FLOW STATEMENT  2003
    
    
    20022004
    
    
    (restated)
    
    
    (restated)Notes
    
    £ million
    
    
    £ million
    
    
    £ millionNet cash inflow from operating activities
    
    
    27
    (a)
    
    
    758.5
    
    
    
    700.1
    
    
    
    759.3Dividends from joint ventures and associatesDividends from joint ventures
    
    
    
    
    
    
    69.0
    
    
    
    31.7
    
    
    
    30.5Dividends from associates
    
    
    
    
    
    
    10.1
    
    
    
    3.3
    
    
    
    3.4Dividends from joint ventures and associates
    
    
    
    
    
    
    79.1
    
    
    
    35.0
    
    
    
    33.9Returns on investments and servicing of financeInterest paid
    
    
    
    
    
    
    (83.3
    )
    
    
    (94.4
    )
    
    
    (89.6
    )Interest received
    
    
    
    
    
    
    13.9
    
    
    
    16.6
    
    
    
    18.5Dividends paid to minorities in subsidiaries
    
    
    
    
    
    
    (19.3
    )
    
    
    (12.4
    )
    
    
    (13.9
    )Interest element of finance lease rental payments
    
    
    
    
    
    
    (2.5
    )
    
    
    (4.2
    )
    
    
    (5.7
    )Returns on investments and servicing of finance
    
    
    
    
    
    
    (91.2
    )
    
    
    (94.4
    )
    
    
    (90.7
    )Tax paid
    
    
    
    
    
    
    (98.2
    )
    
    
    (90.7
    )
    
    
    (96.2
    )Capital expenditure and financial investmentPurchases of tangible fixed assets
    
    
    
    
    
    
    (244.6
    )
    
    
    (281.4
    )
    
    
    (352.1
    )Sales of tangible fixed assets
    
    
    
    
    
    
    39.7
    
    
    
    37.0
    
    
    
    31.6Purchases of intangible fixed assets
    
    
    
    
    
    
    (0.2
    )
    
    
    (1.2
    )
    
    
    (0.1
    )Net (purchases)/sales of current asset investments
    
    
    
    
    
    
    (0.9
    )
    
    
    16.6
    
    
    
    4.3Purchases of trade and other investments
    
    
    
    
    
    
    (3.8
    )
    
    
    (3.3
    )
    
    
    (19.7
    )Sales of trade and other investments
    
    
    
    
    
    
    5.6
    
    
    
    5.3
    
    
    
    0.9Capital expenditure and financial investment
    
    
    
    
    
    
    (204.2
    )
    
    
    (227.0
    )
    
    
    (335.1
    )Acquisitions and disposalsAcquisitions of businesses
    
    
    28
    (a)
    
    
    (50.9
    )
    
    
    (135.5
    )
    
    
    (207.3
    )Net cash/(overdrafts) acquired with subsidiaries
    
    
    
    
    
    
    2.8
    
    
    
    
    
    
    
    (7.4
    )Disposals of businesses
    
    
    28
    (a)
    
    
    98.3
    
    
    
    3.9
    
    
    
    10.6Net cash disposed of with subsidiaries
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    Receipts from capital restructuring of joint ventures1
    
    
    
    
    
    
    53.0
    
    
    
    
    
    
    
    Investments in joint ventures
    
    
    
    
    
    
    (12.9
    )
    
    
    
    
    
    
    (12.6
    )Divestments/repayments from joint ventures
    
    
    
    
    
    
    
    
    
    
    12.4
    
    
    
    Investments in associates
    
    
    
    
    
    
    (3.9
    )
    
    
    (8.4
    )
    
    
    (0.5
    )Divestments/repayments from associates
    
    
    
    
    
    
    6.1
    
    
    
    9.4
    
    
    
    1.7Acquisitions and disposals
    
    
    
    
    
    
    92.5
    
    
    
    (118.3
    )
    
    
    (215.5
    )Equity dividends paid
    
    
    
    
    
    
    (197.3
    )
    
    
    (192.1
    )
    
    
    (186.6
    )Net cash inflow/(outflow) before use of liquid resources and financing
    
    
    
    
    
    
    339.2
    
    
    
    12.6
    
    
    
    (130.9
    )Management of liquid resourcesNet (purchases)/sales of short-term investments
    
    
    
    
    
    
    (20.8
    )
    
    
    16.2
    
    
    
    52.6FinancingIssue of shares
    
    
    
    
    
    
    12.4
    
    
    
    (2.6
    )
    
    
    35.6(Decrease)/increase in debt
    
    
    27
    (d)
    
    
    (180.7
    )
    
    
    (128.7
    )
    
    
    64.1Net cash (outflow)/inflow from financing
    
    
    
    
    
    
    (168.3
    )
    
    
    (131.3
    )
    
    
    99.7Increase/(decrease) in cash
    
    
    
    
    
    
    150.1
    
    
    
    (102.5
    )
    
    
    21.4
 1.
    
    Receipts from capital restructuring of joint ventures relates to an
amount received in September 2004 from Japan Air Gases Ltd. This has no
impact on BOCs effective shareholding.
 A reconciliation of the movement in cash to the movement in net debt in the
year is given in note 27(b). Liquid resources are defined as short-term deposits. 80 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



TOTAL RECOGNISED GAINS AND LOSSES  2004
    
    
    2003
    
    
    2002Notes
   
    £ million
    
    
    £ million
    
    
    £ millionParent1
    
    
    24
    (b)
    
    
    11.4
    
    
    
    218.6
    
    
    
    26.2Subsidiary undertakings
    
    
    
    
    
    
    269.8
    
    
    
    (0.4
    )
    
    
    170.1Joint ventures
    
    
    
    
    
    
    (13.1
    )
    
    
    (0.2
    )
    
    
    4.5Associates
    
    
    
    
    
    
    (4.1
    )
    
    
    1.1
    
    
    
    2.1Profit for the financial year
    
    
    
    
    
    
    264.0
    
    
    
    219.1
    
    
    
    202.9Actuarial loss recognised on the pension schemes
    
    
    
    
    
    
    (2.2
    )
    
    
    (17.5
    )
    
    
    (431.2
    )Movement on deferred tax relating to actuarial loss on pensions
    
    
    
    
    
    
    (8.1
    )
    
    
    2.0
    
    
    
    134.0Movement on current tax relating to actuarial loss on pensions
    
    
    
    
    
    
    3.2
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    0.2
    
    
    
    8.0
    
    
    
    (5.2
    ) results for the year of joint ventures
    
    
    
    
    
    
    (0.7
    )
    
    
    0.2
    
    
    
    (2.6
    ) results for the year of associates
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.2
    )
    
    
    (0.3
    ) foreign currency net investments in subsidiaries
    
    
    
    
    
    
    (76.1
    )
    
    
    15.3
    
    
    
    (114.6
    ) foreign currency net investments in joint ventures
    
    
    
    
    
    
    (21.5
    )
    
    
    9.6
    
    
    
    (11.9
    ) foreign currency net investments in associates
    
    
    
    
    
    
    (2.8
    )
    
    
    (1.4
    )
    
    
    (1.7
    )Total recognised gains and losses for the financial year
    
    
    24
    (a)
    
    
    155.9
    
    
    
    243.3
    
    
    
    (242.1
    )
 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 2004, 2003 and 2002.3.
    
    Profit attributable to the parent company includes dividends received
from subsidiaries, joint ventures and associates, often through
intermediate holding companies. These dividends may include the
distribution of earnings of previous periods. As a result, the
relationship of profit between parent, subsidiaries, joint ventures and
associates may show fluctuations from year to year.4.
    
    Excluding the amounts recognised above, a current tax release of £6.7
million (2003: £9.7 million, 2002: £(13.5) million charge) has been
recognised directly in the Group reserves.
 
 MOVEMENT IN SHAREHOLDERS FUNDS  2003
    
    
    20022004
    
    
    (restated)
    
    
    (restated)Notes
    
    
    £ million
    
    
    £ million
    
    
    £ millionProfit for the financial year
    
    
    
    
    
    
    
    264.0
    
    
    
    219.1
    
    
    
    202.9Dividends
    
    
    
    
    
    
    
    (197.3
    )
    
    
    (192.1
    )
    
    
    (186.6
    )66.7
    
    
    
    27.0
    
    
    
    16.3Other recognised gains and losses
    
    
    
    
    
    
    
    (108.1
    )
    
    
    24.2
    
    
    
    (445.0
    )Reversal of goodwill in total recognised gains and losses on disposal of subsidiaries
    
    
    
    
    
    
    
    15.3
    
    
    
    (4.2
    )
    
    
    Shares issued
    
    
    
    
    
    
    
    8.7
    
    
    
    3.7
    
    
    
    24.6Consideration paid for the purchase of own shares held in an ESOP trust
    
    
    
    
    
    
    
    
    
    
    
    (7.5
    )
    
    
    Consideration received for the sale of own shares held in an ESOP trust
    
    
    
    
    
    
    
    2.5
    
    
    
    1.2
    
    
    
    17.0Credit in respect of employee share schemes
    
    
    
    
    
    
    
    3.5
    
    
    
    0.7
    
    
    
    2.0Net (decrease)/increase in shareholders funds for the financial year
    
    
    
    
    
    
    
    (11.4
    )
    
    
    45.1
    
    
    
    (385.1
    )Shareholders funds at 1 October  previously reported
    
    
    
    
    
    
    
    1,734.8
    
    
    
    1,684.1
    
    
    
    2,086.2Prior year adjustment
    
    
    31
    
    
    
    
    (48.1
    )
    
    
    (42.5
    )
    
    
    (59.5
    )Shareholders funds at 1 October  restated
    
    
    
    
    
    
    
    1,686.7
    
    
    
    1,641.6
    
    
    
    2,026.7Shareholders funds at 30 September
    
    
    
    
    
    
    
    1,675.3
    
    
    
    1,686.7
    
    
    
    1,641.6
 81 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



BALANCE SHEET OF THE BOC GROUP plc  20032004
    
    
    (restated)Notes
    
    £ million
    
    
    £ millionFixed assetsTangible assets
    
    
    12
    (e)
    
    
    11.3
    
    
    
    15.7Investments
    
    
    13
    (d)
    
    
    2,982.6
    
    
    
    3,058.02,993.9
    
    
    
    3,073.7Current assetsDebtors falling due within one year
    
    
    15
    (a)
    
    
    320.4
    
    
    
    694.4Cash at bank and in hand
    
    
    17
    
    
    
    80.8
    
    
    
    401.2
    
    
    
    694.4Creditors: amounts falling due within one yearBorrowings and finance leases
    
    
    18
    (a)
    
    
    (252.1
    )
    
    
    (303.6
    )Other creditors
    
    
    18
    (b)
    
    
    (1,004.1
    )
    
    
    (1,049.9
    )(1,256.2
    )
    
    
    (1,353.5
    )Net current liabilities
    
    
    
    
    
    
    (855.0
    )
    
    
    (659.1
    )Total assets less current liabilities
    
    
    
    
    
    
    2,138.9
    
    
    
    2,414.6Creditors: amounts falling due after more than one yearBorrowings and finance leases
    
    
    19
    (a)
    
    
    (674.5
    )
    
    
    (766.6
    )Other creditors
    
    
    19
    (b)
    
    
    (3.2
    )
    
    
    (10.4
    )(677.7
    )
    
    
    (777.0
    )Total net assets
    
    
    
    
    
    
    1,461.2
    
    
    
    1,637.6Capital and reservesEquity called up share capital
    
    
    23
    
    
    
    124.7
    
    
    
    124.4Share premium account
    
    
    24
    (b)
    
    
    374.9
    
    
    
    366.0Other reserves
    
    
    24
    (b)
    
    
    336.4
    
    
    
    336.4Profit and loss account
    
    
    24
    (b)
    
    
    671.0
    
    
    
    854.0Own shares
    
    
    24
    (b)
    
    
    (45.8
    )
    
    
    (43.2
    )Total capital and reserves
    
    
    
    
    
    
    1,461.2
    
    
    
    1,637.6
 The financial statements were approved by the board of directors on 22
November 2004 and are signed on its behalf by: A E IsaacDirector R MédoriDirector 82 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



ACCOUNTING POLICIES General  
    
    Basis of preparationThese financial statements are based on the
historical cost accounting convention in accordance with the Companies Act
1985 and comply with all applicable UK accounting standards.   
    
    Basis of consolidationThe Group accounts include the accounts of the
parent undertaking and of all subsidiaries, joint ventures and associates.   
    
    Accounting policiesThese accounts have been prepared on an accounting
basis consistent with that applied in the financial year ended 30 September 2003, except for changes arising from the application of UITF37:
Purchases and sales of own shares, and UITF38: Accounting for ESOP trusts.
These deal mainly with the balance sheet accounting treatment for own
shares and do not have an impact on Group earnings. Comparative figures
have been restated accordingly. The impact is explained further in note 31
to the financial statements.  
    
    ExchangeProfit and loss and other period statements of the Groups
overseas operations are translated at average rates of exchange for the
financial year. Assets and liabilities denominated in foreign currencies
are translated at the rates of exchange ruling at the financial year end.
Assets or liabilities swapped into other currencies are accounted for in
those currencies. Exchange differences are dealt with as a movement in
reserves where they arise
from: i)
    
    the translation of the opening net assets of overseas operations;ii)
    
    the retranslation of retained earnings of overseas operations from
average to closing rates of exchange; andiii)
    
    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 55. 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. 83 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Accounting policies Tangible fixed assets  Per annumFreehold 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 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 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 and shown on the Group balance sheet at the
balance sheet date. 84 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



NOTES TO THE FINANCIAL STATEMENTS 1. Segmental information a) Turnover (including share of joint ventures and associates)Continuing operationsIndustrialProcess Gas
    
    
    and Special
    
    
    BOC
    
    
    Afrox
    
    
    
    
    
    
    Total Group
    
    
    Total GroupSolutions
    
    
    Products
    
    
    Edwards
    
    
    hospitals
    
    
    Gist
    
    
    by origin
    
    
    by destination£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Europe
    
    
    292.8
    
    
    
    449.1
    
    
    
    189.5
    
    
    
    
    
    
    
    293.2
    
    
    
    1,224.6
    
    
    
    1,162.7Americas
    
    
    523.4
    
    
    
    422.6
    
    
    
    272.3
    
    
    
    
    
    
    
    
    
    
    
    1,218.3
    
    
    
    1,171.6Africa
    
    
    36.1
    
    
    
    230.8
    
    
    
    
    
    
    
    432.1
    
    
    
    
    
    
    
    699.0
    
    
    
    699.4Asia/Pacific
    
    
    422.9
    
    
    
    679.8
    
    
    
    354.7
    
    
    
    
    
    
    
    
    
    
    
    1,457.4
    
    
    
    1,565.6Turnover
    
    
    1,275.2
    
    
    
    1,782.3
    
    
    
    816.5
    
    
    
    432.1
    
    
    
    293.2
    
    
    
    4,599.3
    
    
    
    4,599.32003Europe
    
    
    278.3
    
    
    
    430.0
    
    
    
    154.3
    
    
    
    
    
    
    
    291.8
    
    
    
    1,154.4
    
    
    
    1,137.4Americas
    
    
    517.5
    
    
    
    461.7
    
    
    
    259.6
    
    
    
    
    
    
    
    
    
    
    
    1,238.8
    
    
    
    1,191.5Africa
    
    
    30.8
    
    
    
    201.3
    
    
    
    
    
    
    
    353.4
    
    
    
    
    
    
    
    585.5
    
    
    
    588.0Asia/Pacific
    
    
    416.1
    
    
    
    658.2
    
    
    
    270.2
    
    
    
    
    
    
    
    
    
    
    
    1,344.5
    
    
    
    1,406.3Turnover
    
    
    1,242.7
    
    
    
    1,751.2
    
    
    
    684.1
    
    
    
    353.4
    
    
    
    291.8
    
    
    
    4,323.2
    
    
    
    4,323.22002Europe
    
    
    257.1
    
    
    
    399.3
    
    
    
    150.0
    
    
    
    
    
    
    
    263.2
    
    
    
    1,069.6
    
    
    
    1,055.3Americas
    
    
    528.1
    
    
    
    464.8
    
    
    
    298.9
    
    
    
    
    
    
    
    
    
    
    
    1,291.8
    
    
    
    1,240.1Africa
    
    
    23.6
    
    
    
    158.4
    
    
    
    
    
    
    
    259.0
    
    
    
    
    
    
    
    441.0
    
    
    
    443.3Asia/Pacific
    
    
    391.8
    
    
    
    582.8
    
    
    
    239.3
    
    
    
    
    
    
    
    1.6
    
    
    
    1,215.5
    
    
    
    1,279.2Turnover
    
    
    1,200.6
    
    
    
    1,605.3
    
    
    
    688.2
    
    
    
    259.0
    
    
    
    264.8
    
    
    
    4,017.9
    
    
    
    4,017.9
 Inter segment turnover is not material. b) Business analysisContinuing operationsIndustrialProcess Gas
    
    
    and Special
    
    
    BOC
    
    
    AfroxSolutions
    
    
    Products
    
    
    Edwards
    
    
    hospitals
    
    
    Gist
    
    
    Corporate
    
    
    Total Group£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Total operating profit before
exceptional items1
    
    
    190.3
    
    
    
    269.5
    
    
    
    47.8
    
    
    
    59.8
    
    
    
    25.1
    
    
    
    (15.6
    )
    
    
    576.9Operating exceptional items1
    
    
    (0.8
    )
    
    
    (15.6
    )
    
    
    (1.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17.4
    )Operating profit
    
    
    189.5
    
    
    
    253.9
    
    
    
    46.8
    
    
    
    59.8
    
    
    
    25.1
    
    
    
    (15.6
    )
    
    
    559.5Loss on disposal of business
    
    
    
    
    
    
    (79.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79.5
    )Profit on disposal of fixed assets
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.9Capital employed2
    
    
    1,625.2
    
    
    
    943.9
    
    
    
    548.1
    
    
    
    162.5
    
    
    
    6.9
    
    
    
    (66.2
    )
    
    
    3,220.4Capital expenditure3
    
    
    100.1
    
    
    
    99.4
    
    
    
    30.1
    
    
    
    17.5
    
    
    
    9.0
    
    
    
    
    
    
    
    256.1Depreciation and amortisation3
    
    
    156.0
    
    
    
    101.5
    
    
    
    40.1
    
    
    
    12.3
    
    
    
    12.9
    
    
    
    1.2
    
    
    
    324.02003 (restated)Total operating profit before
exceptional items1
    
    
    184.0
    
    
    
    242.7
    
    
    
    18.5
    
    
    
    46.1
    
    
    
    29.2
    
    
    
    (14.9
    )
    
    
    505.6Operating 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
    )
    
    
    438.6Capital employed2
    
    
    1,822.9
    
    
    
    1,158.1
    
    
    
    596.1
    
    
    
    167.2
    
    
    
    0.8
    
    
    
    (88.0
    )
    
    
    3,657.1Capital expenditure3
    
    
    93.1
    
    
    
    105.2
    
    
    
    37.6
    
    
    
    17.8
    
    
    
    22.3
    
    
    
    5.2
    
    
    
    281.2Depreciation and amortisation3
    
    
    165.8
    
    
    
    101.2
    
    
    
    39.1
    
    
    
    9.8
    
    
    
    15.8
    
    
    
    1.7
    
    
    
    333.42002 (restated)Total operating profit before
exceptional items1
    
    
    185.2
    
    
    
    248.0
    
    
    
    26.1
    
    
    
    29.7
    
    
    
    25.5
    
    
    
    (14.4
    )
    
    
    500.1Operating 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
    
    
    
    (61.9
    )
    
    
    3,550.6Capital expenditure3
    
    
    157.3
    
    
    
    123.6
    
    
    
    42.0
    
    
    
    9.2
    
    
    
    19.0
    
    
    
    3.2
    
    
    
    354.3Depreciation and amortisation3
    
    
    167.7
    
    
    
    96.8
    
    
    
    41.1
    
    
    
    7.2
    
    
    
    16.1
    
    
    
    2.0
    
    
    
    330.9
 1.
    
    Including share of joint ventures and associates.2.
    
    Capital employed comprises the capital and reserves of the Group, its
long-term liabilities and all current borrowings net of cash and deposits.3.
    
    Subsidiary undertakings only.4.
    
    Net interest and net borrowings are managed centrally and are not
directly attributable to individual business segments or regions.
 85 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 1. Segmental informationcontinued c) Regional analysisTotalEurope
    
    
    Americas
    
    
    Africa
    
    
    Asia/Pacific
    
    
    Group£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Total operating profit before exceptional items1
    
    
    155.4
    
    
    
    77.4
    
    
    
    108.9
    
    
    
    235.2
    
    
    
    576.9Operating exceptional items1
    
    
    
    
    
    
    (14.8
    )
    
    
    
    
    
    
    (2.6
    )
    
    
    (17.4
    )Operating profit
    
    
    155.4
    
    
    
    62.6
    
    
    
    108.9
    
    
    
    232.6
    
    
    
    559.5Loss on disposal of business
    
    
    
    
    
    
    (79.5
    )
    
    
    
    
    
    
    
    
    
    
    (79.5
    )Profit on disposal of fixed assets
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.9Capital employed2
    
    
    796.6
    
    
    
    992.9
    
    
    
    335.4
    
    
    
    1,095.5
    
    
    
    3,220.4Capital expenditure3
    
    
    72.3
    
    
    
    71.8
    
    
    
    44.2
    
    
    
    67.8
    
    
    
    256.12003 (restated)Total operating profit before exceptional items1
    
    
    144.3
    
    
    
    91.8
    
    
    
    85.0
    
    
    
    184.5
    
    
    
    505.6Operating exceptional items1
    
    
    (7.3
    )
    
    
    (49.1
    )
    
    
    
    
    
    
    (10.6
    )
    
    
    (67.0
    )Operating profit
    
    
    137.0
    
    
    
    42.7
    
    
    
    85.0
    
    
    
    173.9
    
    
    
    438.6Capital employed2
    
    
    866.2
    
    
    
    1,225.0
    
    
    
    321.5
    
    
    
    1,244.4
    
    
    
    3,657.1Capital expenditure3
    
    
    102.7
    
    
    
    79.1
    
    
    
    36.7
    
    
    
    62.7
    
    
    
    281.22002 (restated)Total operating profit before exceptional items1
    
    
    155.2
    
    
    
    121.3
    
    
    
    56.7
    
    
    
    166.9
    
    
    
    500.1Operating 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
    
    
    907.4
    
    
    
    1,241.3
    
    
    
    221.2
    
    
    
    1,180.7
    
    
    
    3,550.6Capital expenditure3
    
    
    121.4
    
    
    
    134.7
    
    
    
    25.6
    
    
    
    72.6
    
    
    
    354.3
 1.
    
    Including share of joint ventures and associates.2.
    
    Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all current borrowings net of
cash and deposits.3.
    
    Subsidiary undertakings only.4.
    
    Net interest and net borrowings are managed centrally and are not directly attributable to individual business segments or
regions.
 d) Joint ventures and associates - business analysisJoint ventures
    
    
    AssociatesIndustrial
    
    
    
    
    
    
    
    
    
    
    IndustrialProcess Gas
    
    
    and Special
    
    
    BOC
    
    
    Process Gas
    
    
    and Special
    
    
    BOC
    
    
    AfroxSolutions
    
    
    Products
    
    
    Edwards
    
    
    Solutions
    
    
    Products
    
    
    Edwards
    
    
    hospitals£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Turnover1
    
    
    
    230.0
    
    
    
    238.9
    
    
    
    178.1
    
    
    
    36.3
    
    
    
    7.7
    
    
    
    5.5
    
    
    
    17.4Operating profit before exceptional items1
    
    
    
    40.8
    
    
    
    30.4
    
    
    
    28.2
    
    
    
    6.3
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    4.7Operating exceptional items1
    
    
    
    (0.8
    )
    
    
    (0.8
    )
    
    
    (1.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    -Operating profit
    
    
    
    40.0
    
    
    
    29.6
    
    
    
    27.2
    
    
    
    6.3
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    4.7Capital employed2
    
    
    
    89.5
    
    
    
    69.3
    
    
    
    99.9
    
    
    
    35.3
    
    
    
    4.9
    
    
    
    2.5
    
    
    
    9.7Capital expenditure
    
    
    
    58.5
    
    
    
    15.5
    
    
    
    30.1
    
    
    
    2.1
    
    
    
    2.7
    
    
    
    0.1
    
    
    
    -Group share
    
    
    
    25.7
    
    
    
    7.4
    
    
    
    14.8
    
    
    
    0.6
    
    
    
    0.7
    
    
    
    
    
    
    
    -Other partners
    
    
    
    32.8
    
    
    
    8.1
    
    
    
    15.3
    
    
    
    1.5
    
    
    
    2.0
    
    
    
    0.1
    
    
    
    -Depreciation and amortisation1
    
    
    
    27.0
    
    
    
    10.2
    
    
    
    10.1
    
    
    
    2.7
    
    
    
    0.5
    
    
    
    0.1
    
    
    
    1.02003Turnover1
    
    
    
    191.9
    
    
    
    221.6
    
    
    
    130.8
    
    
    
    30.9
    
    
    
    8.6
    
    
    
    5.7
    
    
    
    15.4Operating profit before exceptional items1
    
    
    
    39.0
    
    
    
    25.6
    
    
    
    22.2
    
    
    
    5.8
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    3.5Operating exceptional items1
    
    
    
    (2.5
    )
    
    
    (1.8
    )
    
    
    (2.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating profit
    
    
    
    36.5
    
    
    
    23.8
    
    
    
    19.7
    
    
    
    5.8
    
    
    
    0.7
    
    
    
    1.4
    
    
    
    3.5Capital employed2
    
    
    
    183.8
    
    
    
    108.2
    
    
    
    118.0
    
    
    
    40.8
    
    
    
    7.2
    
    
    
    3.3
    
    
    
    8.3Capital 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
 1.
    
    Group share.2.
    
    Capital employed comprises the Groups share of the net assets of joint
ventures or associates.3.
    
    The decrease in capital employed of joint ventures in 2004 is principally
due to the acquisition of an additional 30 per cent ownership interest in
the Cantarell joint venture (see note 28a)).4.
    
    The 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.
 86 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 1. Segmental informationcontinued Joint ventures
    
    
    AssociatesIndustrial
    
    
    
    
    
    
    
    
    
    
    IndustrialProcess Gas
    
    
    and Special
    
    
    BOC
    
    
    Process Gas
    
    
    and Special
    
    
    BOC
    
    
    AfroxSolutions
    
    
    Products
    
    
    Edwards
    
    
    Solutions
    
    
    Products
    
    
    Edwards
    
    
    hospitals£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2002Turnover1
    
    
    
    119.9
    
    
    
    142.7
    
    
    
    61.5
    
    
    
    10.6
    
    
    
    7.9
    
    
    
    7.1
    
    
    
    10.5Operating profit before exceptional items1
    
    
    
    30.9
    
    
    
    20.8
    
    
    
    12.1
    
    
    
    5.0
    
    
    
    1.9
    
    
    
    1.7
    
    
    
    2.1Operating exceptional items1
    
    
    
    (0.4
    )
    
    
    (0.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Operating profit
    
    
    
    30.5
    
    
    
    20.7
    
    
    
    12.1
    
    
    
    5.0
    
    
    
    1.9
    
    
    
    1.7
    
    
    
    2.1Capital employed2
    
    
    
    93.6
    
    
    
    63.8
    
    
    
    48.1
    
    
    
    40.1
    
    
    
    11.9
    
    
    
    2.1
    
    
    
    3.4Capital expenditure
    
    
    
    46.5
    
    
    
    7.5
    
    
    
    8.0
    
    
    
    8.3
    
    
    
    1.8
    
    
    
    1.5
    
    
    
    0.6Group share
    
    
    
    23.0
    
    
    
    3.7
    
    
    
    4.0
    
    
    
    2.6
    
    
    
    0.6
    
    
    
    0.4
    
    
    
    0.2Other partners
    
    
    
    23.5
    
    
    
    3.8
    
    
    
    4.0
    
    
    
    5.7
    
    
    
    1.2
    
    
    
    1.1
    
    
    
    0.4Depreciation 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. e) Joint ventures and associates  regional analysis Joint ventures
    
    
    AssociatesAmericas
    
    
    Asia/Pacific
    
    
    Americas
    
    
    Africa
    
    
    Asia/Pacific£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Turnover1
    
    
    
    87.6
    
    
    
    559.4
    
    
    
    26.5
    
    
    
    17.4
    
    
    
    23.0Operating profit before exceptional items1
    
    
    
    17.2
    
    
    
    82.2
    
    
    
    1.1
    
    
    
    4.7
    
    
    
    7.3Operating exceptional items1
    
    
    
    
    
    
    
    (2.6
    )
    
    
    
    
    
    
    
    
    
    
    Operating profit
    
    
    
    17.2
    
    
    
    79.6
    
    
    
    1.1
    
    
    
    4.7
    
    
    
    7.3Capital employed2
    
    
    
    (30.0
    )
    
    
    288.7
    
    
    
    12.5
    
    
    
    9.7
    
    
    
    30.2Capital expenditure
    
    
    
    6.0
    
    
    
    98.1
    
    
    
    0.1
    
    
    
    
    
    
    
    4.8Group share
    
    
    
    2.4
    
    
    
    45.5
    
    
    
    
    
    
    
    
    
    
    
    1.3Other partners
    
    
    
    3.6
    
    
    
    52.6
    
    
    
    0.1
    
    
    
    
    
    
    
    3.52003Turnover1
    
    
    
    68.0
    
    
    
    476.3
    
    
    
    19.1
    
    
    
    15.4
    
    
    
    26.1Operating profit before exceptional items1
    
    
    
    19.1
    
    
    
    67.7
    
    
    
    (0.7
    )
    
    
    3.5
    
    
    
    8.6Operating exceptional items1
    
    
    
    
    
    
    
    (6.8
    )
    
    
    
    
    
    
    
    
    
    
    Operating profit
    
    
    
    19.1
    
    
    
    60.9
    
    
    
    (0.7
    )
    
    
    3.5
    
    
    
    8.6Capital employed2
    
    
    
    26.5
    
    
    
    383.5
    
    
    
    13.1
    
    
    
    8.3
    
    
    
    38.2Capital expenditure
    
    
    
    13.8
    
    
    
    58.1
    
    
    
    6.0
    
    
    
    
    
    
    
    3.5Group share
    
    
    
    5.4
    
    
    
    27.7
    
    
    
    1.8
    
    
    
    
    
    
    
    1.2Other partners
    
    
    
    8.4
    
    
    
    30.4
    
    
    
    4.2
    
    
    
    
    
    
    
    2.32002Turnover1
    
    
    
    85.4
    
    
    
    238.7
    
    
    
    
    
    
    
    10.5
    
    
    
    25.6Operating profit before exceptional items1
    
    
    
    21.9
    
    
    
    41.9
    
    
    
    
    
    
    
    2.1
    
    
    
    8.6Operating exceptional items1
    
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    Operating profit
    
    
    
    21.9
    
    
    
    41.4
    
    
    
    
    
    
    
    2.1
    
    
    
    8.6Capital employed2
    
    
    
    25.2
    
    
    
    180.3
    
    
    
    13.7
    
    
    
    3.4
    
    
    
    40.4Capital expenditure
    
    
    
    3.4
    
    
    
    58.6
    
    
    
    5.5
    
    
    
    0.6
    
    
    
    6.1Group share
    
    
    
    1.4
    
    
    
    29.3
    
    
    
    1.7
    
    
    
    0.2
    
    
    
    1.9Other partners
    
    
    
    2.0
    
    
    
    29.3
    
    
    
    3.8
    
    
    
    0.4
    
    
    
    4.2
 1.
    
    Group share.2.
    
    Capital employed comprises the Groups share of the net assets of joint
ventures or associates.3.
    
    The decrease in capital employed of joint ventures in 2004 is principally
due to the acquisition of an additional 30 per cent ownership interest in
the Cantarell joint venture (see note 28a)).4.
    
    The 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. 87 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 1. Segmental informationcontinued f) Significant country analysis UK
    
    
    US2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTurnover1
    
    
    973.9
    
    
    
    914.3
    
    
    
    868.7
    
    
    
    959.7
    
    
    
    1,013.5
    
    
    
    1,065.6Total operating profit before exceptional items1
    
    
    112.9
    
    
    
    110.4
    
    
    
    115.2
    
    
    
    21.5
    
    
    
    31.3
    
    
    
    50.5Operating exceptional items1
    
    
    
    
    
    
    (5.0
    )
    
    
    (36.5
    )
    
    
    (14.8
    )
    
    
    (48.9
    )
    
    
    (25.7
    )Operating profit
    
    
    112.9
    
    
    
    105.4
    
    
    
    78.7
    
    
    
    6.7
    
    
    
    (17.6
    )
    
    
    24.8Loss on disposal of business
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79.5
    )
    
    
    
    
    
    
    Profit on disposal of fixed assets
    
    
    4.9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Capital employed2 (restated)
    
    
    575.8
    
    
    
    629.5
    
    
    
    696.9
    
    
    
    820.7
    
    
    
    1,039.5
    
    
    
    1,088.9Capital expenditure3
    
    
    60.7
    
    
    
    92.4
    
    
    
    110.0
    
    
    
    56.2
    
    
    
    71.0
    
    
    
    124.8
 1.
    
    Including share of joint ventures and associates.2.
    
    Capital employed comprises the capital and reserves of the Group, its long-term liabilities and all
current borrowings net of cash and deposits.3.
    
    Subsidiary undertakings only. 2. Profit and loss a) Analysis of costs 2004
    
    
    2003
    
    
    2002i) Expense category
    
    £ million
    
    
    £ million
    
    
    £ millionCost of sales
    
    
    (2,181.7
    )
    
    
    (2,137.9
    )
    
    
    (2,104.8
    )Distribution costs
    
    
    (317.7
    )
    
    
    (321.7
    )
    
    
    (344.1
    )Administrative expenses1
    
    
    (936.6
    )
    
    
    (913.2
    )
    
    
    (861.4
    )Income from other fixed asset investments
    
    
    0.2
    
    
    
    1.7
    
    
    
    4.2Net operating expenses
    
    
    (1,254.1
    )
    
    
    (1,233.2
    )
    
    
    (1,201.3
    )
 Continuingoperationsbeforeexceptional
    
    
    Exceptionalitems
    
    
    items2
    
    
    Totalii) 2004 analysis
    
    £ million
    
    
    £ million
    
    
    £ millionCost of sales
    
    
    (2,181.7
    )
    
    
    
    
    
    
    (2,181.7
    )Distribution costs
    
    
    (317.7
    )
    
    
    
    
    
    
    (317.7
    )Administrative expenses1
    
    
    (921.8
    )
    
    
    (14.8
    )
    
    
    (936.6
    )Income from other fixed asset investments
    
    
    0.2
    
    
    
    
    
    
    
    0.2Net operating expenses
    
    
    (1,239.3
    )
    
    
    (14.8
    )
    
    
    (1,254.1
    )iii) 2003 analysisCost of sales
    
    
    (2,136.2
    )
    
    
    (1.7
    )
    
    
    (2,137.9
    )Distribution costs
    
    
    (318.6
    )
    
    
    (3.1
    )
    
    
    (321.7
    )Administrative expenses1
    
    
    (857.8
    )
    
    
    (55.4
    )
    
    
    (913.2
    )Income from other fixed asset investments
    
    
    1.7
    
    
    
    
    
    
    
    1.7Net operating expenses
    
    
    (1,174.7
    )
    
    
    (58.5
    )
    
    
    (1,233.2
    )iv) 2002 analysisCost 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
    
    
    
    
    
    
    
    4.2Net operating expenses
    
    
    (1,142.4
    )
    
    
    (58.9
    )
    
    
    (1,201.3
    )
 1.
    
    Included in total administrative expenses is research and development
expenditure of £41.6 million (2003: £39.9 million, 2002: £47.0 million).2.
    
    All exceptional items arose in continuing operations. 88 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 2. Profit and losscontinued b) Exceptional items analysis 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionCharged in arriving at operating profitRestructuring costs
    
    
    (17.4
    )
    
    
    (23.8
    )
    
    
    (47.2
    )Litigation settlement
    
    
    
    
    
    
    (43.2
    )
    
    
    Write-down of assets
    
    
    
    
    
    
    
    
    
    
    (21.2
    )Costs of proposed takeover
    
    
    
    
    
    
    
    
    
    
    (6.1
    )Total operating exceptional items
    
    
    (17.4
    )
    
    
    (67.0
    )
    
    
    (74.5
    )
 i) Restructuring costs    ii) Litigation settlement  iii) Write-down of assets  iv) Costs of proposed takeover  2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ million(Charged)/credited after operating profitLoss on disposal of business  continuing operations
    
    
    (79.5
    )
    
    
    
    
    
    
    Profit on disposal of fixed assets  continuing operations
    
    
    4.9
    
    
    
    
    
    
    
    Profit on disposal of businesses  continuing operations
    
    
    
    
    
    
    
    
    
    
    1.1Closure of business  continuing operations
    
    
    
    
    
    
    
    
    
    
    (21.3
    )Total non-operating exceptional items
    
    
    (74.6
    )
    
    
    
    
    
    
    (20.2
    )
 v) Disposal of businesses   vi) Profit on disposal of fixed assets  vii) Closure of business  89 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 2. Profit and losscontinued c) Fees to auditors 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionAudit fees (Parent: £0.4 million, 2003: £0.3 million, 2002: £0.3 million)
    
    
    2.5
    
    
    
    2.0
    
    
    
    1.9Non-audit feesTax services
    
    
    1.1
    
    
    
    1.6
    
    
    
    2.5Audit related services
    
    
    0.9
    
    
    
    0.5
    
    
    
    0.8Other services (principally expatriate tax and administration services)
    
    
    1.1
    
    
    
    1.4
    
    
    
    1.8Total non-audit fees
    
    
    3.1
    
    
    
    3.5
    
    
    
    5.1Total fees paid to auditors
    
    
    5.6
    
    
    
    5.5
    
    
    
    7.0
  3. Interest on net debt 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionInterest payable on borrowings totally repayable within five years
    
    
    55.9
    
    
    
    48.0
    
    
    
    47.5Interest payable on all other borrowings
    
    
    35.9
    
    
    
    46.5
    
    
    
    55.7Interest payable and similar charges
    
    
    91.8
    
    
    
    94.5
    
    
    
    103.2Interest capitalised
    
    
    (0.1
    )
    
    
    (0.8
    )
    
    
    (2.0
    )Interest payable (net of interest capitalised)
    
    
    91.7
    
    
    
    93.7
    
    
    
    101.2Interest receivable and similar income
    
    
    (21.2
    )
    
    
    (17.9
    )
    
    
    (22.6
    )Interest (net)
    
    
    70.5
    
    
    
    75.8
    
    
    
    78.6Share of interest of joint ventures (net)
    
    
    17.0
    
    
    
    19.3
    
    
    
    23.2Share of interest of associates (net)
    
    
    0.9
    
    
    
    1.0
    
    
    
    1.3Total interest on net debt
    
    
    88.4
    
    
    
    96.1
    
    
    
    103.1Interest payable on finance leases
    
    
    1.7
    
    
    
    3.5
    
    
    
    5.3Interest payable on borrowings repayable by installments
    
    
    10.0
    
    
    
    14.1
    
    
    
    19.5
  4. Tax a) Tax on profit on ordinary activities 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionCurrent tax:Payable in the UKCorporation tax at 30% (2003: 30%, 2002: 30%)
    
    
    79.8
    
    
    
    85.7
    
    
    
    51.7Double tax relief
    
    
    (52.9
    )
    
    
    (57.5
    )
    
    
    (19.7
    )26.9
    
    
    
    28.2
    
    
    
    32.0Payable overseasUS  Federal tax at 35% (2003: 35%, 2002: 35%)
    
    
    0.1
    
    
    
    0.2
    
    
    
    (1.0
    ) State and local taxes
    
    
    0.1
    
    
    
    (0.3
    )
    
    
    0.6Australia at 30% (2003: 30%, 2002: 30%)
    
    
    23.2
    
    
    
    16.4
    
    
    
    14.6South Africa at 30% (2003: 30%, 2002: 30%)
    
    
    35.5
    
    
    
    26.0
    
    
    
    18.0Japan at 42% (2003: 42%, 2002: 42%)
    
    
    14.1
    
    
    
    11.3
    
    
    
    8.3Other countries
    
    
    14.3
    
    
    
    35.6
    
    
    
    30.987.3
    
    
    
    89.2
    
    
    
    71.4Total current tax
    
    
    114.2
    
    
    
    117.4
    
    
    
    103.4Deferred tax:Origination and reversal of timing differences
    
    
    (12.4
    )
    
    
    (20.9
    )
    
    
    3.4Effect of change in tax rate on opening liability
    
    
    (0.1
    )
    
    
    (0.1
    )
    
    
    (0.6
    )Total deferred tax1
    
    
    (12.5
    )
    
    
    (21.0
    )
    
    
    2.8Tax on profit on ordinary activities
    
    
    101.7
    
    
    
    96.4
    
    
    
    106.2
 90 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 4. Taxcontinued 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionAnalysis of charge in the year by entity typeSubsidiary undertakings
    
    
    75.9
    
    
    
    77.9
    
    
    
    100.3Share of joint ventures
    
    
    23.5
    
    
    
    16.0
    
    
    
    3.6Share of associates
    
    
    2.3
    
    
    
    2.5
    
    
    
    2.3Tax on profit on ordinary activities
    
    
    101.7
    
    
    
    96.4
    
    
    
    106.2
 1.
    
    The deferred tax includes a credit of £13.5 million (2003: £18.5 million
credit, 2002: £9.5 million charge) relating to subsidiary undertakings.
The balance relates to the Groups share of joint ventures and associates. The tax charge includes a credit of £18.9 million for operating exceptional
items (2003: £25.0 million, 2002: £15.3 million) and a credit of £25.6 million
for non-operating exceptional items (2003: £nil, 2002: £7.5 million). The
credit in respect of operating exceptional items includes a credit of
£12.5 million relating to prior year exceptional items. The effective rate of
tax on adjusted profit was 29.0 per cent (2003: 29.0 per cent, 2002: 30.0 per
cent). The total rate of tax was 24.7 per cent (2003: 27.4 per cent, 2002: 31.7
per cent). b) Deferred tax i) Deferred tax  UK GAAP
    
    2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionAnalysisArising from accelerated depreciation allowances
    
    
    312.2
    
    
    
    346.5
    
    
    
    362.1Other timing differences
    
    
    (34.2
    )
    
    
    (43.7
    )
    
    
    (53.5
    )Tax losses and other credits available
    
    
    (30.8
    )
    
    
    (30.2
    )
    
    
    (24.7
    )247.2
    
    
    
    272.6
    
    
    
    283.9Movement during the year1At 1 October 2003
    
    
    272.6
    
    
    
    283.9
    
    
    
    285.9Exchange adjustment
    
    
    (3.8
    )
    
    
    5.7
    
    
    
    (8.6
    )Arising during the year
    
    
    (13.5
    )
    
    
    (18.5
    )
    
    
    9.5Transfers (to)/from current tax
    
    
    (0.2
    )
    
    
    (1.0
    )
    
    
    0.8Acquisitions/(disposals) of businesses
    
    
    
    
    
    
    (18.7
    )
    
    
    Other movements
    
    
    (7.9
    )
    
    
    21.2
    
    
    
    (3.7
    )At 30 September 2004
    
    
    247.2
    
    
    
    272.6
    
    
    
    283.9
 1.
    
    Subsidiary undertakings only. The balance at 30 September 2004 is shown in:Provisions for liabilities and charges (note 22)
    
    
    253.0
    
    
    
    279.2
    
    
    
    291.8Less:Debtors falling due after more than one year (note 15 b))
    
    
    5.8
    
    
    
    6.6
    
    
    
    7.9247.2
    
    
    
    272.6
    
    
    
    283.9
 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 2004. AdjustmentsUK GAAP
    
    
    to US GAAP
    
    
    US GAAP£ million
    
    
    £ million
    
    
    £ millionAccelerated capital allowances
    
    
    312.2
    
    
    
    
    
    
    
    312.2Other temporary differences
    
    
    (34.2
    )
    
    
    (10.2
    )
    
    
    (44.4
    )Tax losses and other credits available
    
    
    (30.8
    )
    
    
    
    
    
    
    (30.8
    )247.2
    
    
    
    (10.2
    )
    
    
    237.0
 1.
    
    The UK deferred tax balance of £247.2 million does not include the
deferred tax asset of £106.4 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 8 a)). If it was included above, it would be wholly
reversed in the adjustments to US GAAP. US GAAP£ millionMovement during the yearAt 1 October 2003
    
    
    223.0Exchange adjustment
    
    
    (6.3
    )Arising during the year
    
    
    1.3Transfers to current tax
    
    
    (0.2
    )Acquisitions/(disposals) of businesses
    
    
    Other movements2
    
    
    19.2At 30 September 2004
    
    
    237.0
 2.
    
    This mainly relates to the deferred tax on an additional minimum pension liability under US GAAP. See note 8 c) and 30 e). 91 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 4. TaxcontinuedThe components of deferred tax assets/(liabilities) at 30 September 2004 were: 2004
    
    
    2003£ million
    
    
    £ millionLong-termAsset
    
    
    153.6
    
    
    
    188.0Liability
    
    
    (383.9
    )
    
    
    (431.8
    )Net liability
    
    
    (230.3
    )
    
    
    (243.8
    )Short-termAsset
    
    
    19.1
    
    
    
    25.8Liability
    
    
    (25.8
    )
    
    
    (5.0
    )Net (liability)/asset
    
    
    (6.7
    )
    
    
    20.8Total deferred tax assets
    
    
    172.7
    
    
    
    213.8Total deferred tax liabilities
    
    
    (409.7
    )
    
    
    (436.8
    )(237.0
    )
    
    
    (223.0
    )
 c) Factors affecting the current and total tax charge for the period  Reconciliation of total tax rate
    
    
    Reconciliation of effective tax rate on adjusted profit2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002%
    
    
    %
    
    
    %
    
    
    %
    
    
    %
    
    
    %UK corporation tax rate
    
    
    30.0
    
    
    
    30.0
    
    
    
    30.0
    
    
    
    30.0
    
    
    
    30.0
    
    
    
    30.0Difference in tax rates of overseas subsidiaries,
joint ventures and associates
    
    
    1.1
    
    
    
    0.5
    
    
    
    0.6
    
    
    
    0.9
    
    
    
    0.4
    
    
    
    0.5Excess of tax depreciation over book depreciation
    
    
    (2.5
    )
    
    
    (3.3
    )
    
    
    (5.2
    )
    
    
    (2.1
    )
    
    
    (2.8
    )
    
    
    (3.9
    )Other timing differences
    
    
    (0.9
    )
    
    
    2.1
    
    
    
    3.5
    
    
    
    (0.7
    )
    
    
    1.8
    
    
    
    2.7State and local taxes
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.6
    
    
    
    0.2
    
    
    
    0.3
    
    
    
    0.5Net creation/(utilisation) of losses
    
    
    
    
    
    
    0.9
    
    
    
    (1.4
    )
    
    
    
    
    
    
    0.7
    
    
    
    (1.1
    )Investment tax credits
    
    
    
    
    
    
    (0.1
    )
    
    
    (3.0
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    (2.4
    )Prior year tax
    
    
    (3.0
    )
    
    
    (0.1
    )
    
    
    1.2
    
    
    
    (2.4
    )
    
    
    
    
    
    
    0.9Tax effect of exceptional items
    
    
    3.6
    
    
    
    4.4
    
    
    
    4.4
    
    
    
    
    
    
    
    
    
    
    
    Permanent items and other items with less than a 5% net effect
    
    
    (0.8
    )
    
    
    (1.3
    )
    
    
    0.1
    
    
    
    (0.7
    )
    
    
    (1.1
    )
    
    
    0.1Current total tax rate/effective tax rate
    
    
    27.7
    
    
    
    33.4
    
    
    
    30.8
    
    
    
    25.2
    
    
    
    29.2
    
    
    
    27.3Deferred tax timing differences
    
    
    (3.0
    )
    
    
    (6.0
    )
    
    
    0.9
    
    
    
    3.8
    
    
    
    (0.2
    )
    
    
    2.7Total tax rate/effective tax rate
    
    
    24.7
    
    
    
    27.4
    
    
    
    31.7
    
    
    
    29.0
    
    
    
    29.0
    
    
    
    30.0
 Profit on ordinary activities before tax, as shown in the consolidated profit and loss account, is analysed over its component parts as follows: 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionUK
    
    
    83.7
    
    
    
    67.0
    
    
    
    66.6Overseas
    
    
    328.6
    
    
    
    284.9
    
    
    
    268.7412.3
    
    
    
    351.9
    
    
    
    335.3
 92 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 4. Taxcontinued d) Factors that may affect future tax charges  e) Unused tax credits  Netoperating lossYear
    
    £ million2005
    
    
    0.92006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    Thereafter, or no expiry date
    
    
    56.1
    5. Directors  6. Employee numbers a) Subsidiaries 2004
    
    
    2003Year end
    
    
    Average
    
    
    Year end
    
    
    Averagei) Employees by businessProcess Gas Solutions
    
    
    5,836
    
    
    
    5,631
    
    
    
    5,730
    
    
    
    5,837Industrial and Special Products
    
    
    13,874
    
    
    
    14,895
    
    
    
    15,267
    
    
    
    15,142BOC Edwards
    
    
    4,911
    
    
    
    4,823
    
    
    
    4,790
    
    
    
    4,931Afrox hospitals
    
    
    13,392
    
    
    
    13,654
    
    
    
    13,694
    
    
    
    13,804Gist
    
    
    4,961
    
    
    
    4,852
    
    
    
    4,613
    
    
    
    5,343Corporate
    
    
    409
    
    
    
    405
    
    
    
    413
    
    
    
    40543,383
    
    
    
    44,260
    
    
    
    44,507
    
    
    
    45,462ii) Employees by regionEurope
    
    
    12,712
    
    
    
    12,504
    
    
    
    12,353
    
    
    
    13,101Americas
    
    
    6,283
    
    
    
    7,140
    
    
    
    7,451
    
    
    
    7,411Africa
    
    
    16,790
    
    
    
    17,073
    
    
    
    17,138
    
    
    
    17,178Asia/Pacific
    
    
    7,598
    
    
    
    7,543
    
    
    
    7,565
    
    
    
    7,77243,383
    
    
    
    44,260
    
    
    
    44,507
    
    
    
    45,462b) Joint ventures and associatesJoint ventures
    
    
    6,094
    
    
    
    5,993
    
    
    
    6,064
    
    
    
    5,626Associates
    
    
    906
    
    
    
    885
    
    
    
    878
    
    
    
    8777,000
    
    
    
    6,878
    
    
    
    6,942
    
    
    
    6,503
 c) Employment costs 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionWages and salaries
    
    
    855.2
    
    
    
    844.7
    
    
    
    813.9Social security costs
    
    
    79.6
    
    
    
    77.7
    
    
    
    77.7Other pension costs
    
    
    80.8
    
    
    
    115.4
    
    
    
    66.31,015.6
    
    
    
    1,037.8
    
    
    
    957.9
  93 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 7. Options and incentive schemes a) Policy  b) Summary of movements  Long-term
    
    
    Executiveincentive
    
    
    share awardEmployee options
    
    Executive options
    
    plan1
    
    
    plan
    1Number of
    
    
    
    
    
    
    Weighted
    
    
    Number of
    
    
    
    
    
    
    Weighted
    
    
    Number of
    
    
    Number ofshares
    
    
    Range of
    
    
    average
    
    
    shares
    
    
    Range of
    
    
    average
    
    
    shares
    
    
    sharesmillion
    
    
    option prices
    
    
    option price
    
    
    million
    
    
    option prices
    
    
    option price
    
    
    million
    
    
    millionOutstanding at 1 October 2001
    
    
    5.7
    
    
    
    610p-894p
    
    
    
    835p
    
    
    
    21.7
    
    
    
    627p-1119p
    
    
    
    914p
    
    
    
    
    
    
    
    0.7Granted
    
    
    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
    
    
    
    Granted
    
    
    1.2
    
    
    
    795p
    
    
    
    795p
    
    
    
    2.9
    
    
    
    820p-896p
    
    
    
    820p
    
    
    
    1.4
    
    
    
    Exercised
    
    
    (0.7
    )
    
    
    698p-914p
    
    
    
    811p
    
    
    
    (0.7
    )
    
    
    677p-919p
    
    
    
    749p
    
    
    
    
    
    
    
    Lapsed
    
    
    (1.2
    )
    
    
    698p-914p
    
    
    
    821p
    
    
    
    (2.0
    )
    
    
    677p-1119p
    
    
    
    940p
    
    
    
    (0.1
    )
    
    
    Outstanding at 30 September 2004
    
    
    5.6
    
    
    
    698p-914p
    
    
    
    794p
    
    
    
    26.6
    
    
    
    722p-1079p
    
    
    
    919p
    
    
    
    2.5
    
    
    
    Number of participants at 30 September 2004
    
    
    5,700
    
    
    
    
    
    
    
    
    
    
    
    1,173
    
    
    
    
    
    
    
    
    
    
    
    81
    
    
    
    Options exercisable:At 30 September 2004
    
    
    0.2
    
    
    
    766p-894p
    
    
    
    875p
    
    
    
    6.3
    
    
    
    722p-980p
    
    
    
    892p
    
    
    
    
    
    
    
    At 30 September 2003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7.5
    
    
    
    677p-1119p
    
    
    
    880p
    
    
    
    
    
    
    
    Fair value of options granted during:Year ended 30 September 2004
    
    
    205p
    
    
    
    
    
    
    
    
    
    
    
    175p
    
    
    
    
    
    
    
    
    
    
    
    705pYear ended 30 September 2003
    
    
    174p
    
    
    
    
    
    
    
    
    
    
    
    177p
    
    
    
    
    
    
    
    
    
    
    
    609p
 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
    
    
    Long-term incentive plan
    1Number of
    
    
    Weighted
    
    
    Normal
    
    
    Number of
    
    
    Weighted
    
    
    Normal
    
    
    Number
    
    
    Normaloptions
    
    
    average
    
    
    exercisable
    
    
    options
    
    
    average
    
    
    exercisable
    
    
    of awards
    
    
    exercisablethousand
    
    
    option price
    
    
    date
    
    
    thousand
    
    
    option price
    
    
    date
    
    
    thousand
    
    
    dateOutstanding at 30 September 2004Date of grant1995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    432
    
    
    
    722p
    
    
    
    1998-2005
    
    
    
    
    
    
    
    1996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    886
    
    
    
    916p
    
    
    
    1999-2006
    
    
    
    
    
    
    
    1997
    
    
    63
    
    
    
    882p
    
    
    
    2004-2005
    
    
    
    1,004
    
    
    
    980p
    
    
    
    2000-2007
    
    
    
    
    
    
    
    1998
    
    
    293
    
    
    
    823p
    
    
    
    2005-2006
    
    
    
    1,700
    
    
    
    915p
    
    
    
    2001-2008
    
    
    
    
    
    
    
    1999
    
    
    276
    
    
    
    766p
    
    
    
    2004-2007
    
    
    
    2,239
    
    
    
    860p
    
    
    
    2002-2009
    
    
    
    
    
    
    
    2000
    
    
    588
    
    
    
    870p
    
    
    
    2005-2008
    
    
    
    4,564
    
    
    
    937p
    
    
    
    2003-2010
    
    
    
    
    
    
    
    2001
    
    
    578
    
    
    
    894p
    
    
    
    2004-2009
    
    
    
    3,630
    
    
    
    994p
    
    
    
    2004-2011
    
    
    
    
    
    
    
    2002
    
    
    650
    
    
    
    914p
    
    
    
    2005-2010
    
    
    
    4,759
    
    
    
    1016p
    
    
    
    2005-2012
    
    
    
    
    
    
    
    2003
    
    
    1,980
    
    
    
    698p
    
    
    
    2006-2011
    
    
    
    4,606
    
    
    
    836p
    
    
    
    2006-2013
    
    
    
    1,173
    
    
    
    2006-20132004
    
    
    1,133
    
    
    
    795p
    
    
    
    2007-2012
    
    
    
    2,825
    
    
    
    820p
    
    
    
    2007-2014
    
    
    
    1,353
    
    
    
    2007-20145,561
    
    
    
    
    
    
    
    
    
    
    
    26,645
    
    
    
    
    
    
    
    
    
    
    
    2,526
 1.
    
    The long-term incentive plan was granted at an option price of £nil. 94 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefits a) UK GAAP Group          Main assumptions for FRS17 purposes
    
    Europe
    
    Americas
    
    Africa
    
    Asia/PacificDate of latest actuarial funding valuation
    
    
    31 Mar 02
    
    
    1 Jan 03
    
    
    30 Jun 03
    
    
    31 Dec 032004Rate of increase in salaries
    
    
    4.4%
    
    
    
    3.8%
    
    
    
    7.5%
    
    
    
    3.6%Rate of increase in pensions in payment
    
    
    2.9%
    
    
    
    
    
    
    
    5.3%
    
    
    
    2.4%Discount rate
    
    
    5.5%
    
    
    
    5.7%
    
    
    
    10.0%
    
    
    
    6.1%Inflation
    
    
    2.9%
    
    
    
    2.5%
    
    
    
    5.5%
    
    
    
    2.5%2003Rate 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%2002Rate 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%
 The assumptions used for the US health care benefits for FRS17 purposes are a
discount rate of 5.7 per cent (2003: 5.9 per cent, 2002: 6.5 per cent) and an
ultimate health care cost trend rate of 4.5 per cent (2003: 4.5 per cent, 2002:
4.5 per cent).  95 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinued  Equities
    
    Bonds
    
    Other
    
    TotalLong-term rate of return expected at 30 September 2004Europe
    
    
    8.5%
    
    
    
    5.1%
    
    
    
    7.5%
    
    
    
    Americas
    
    
    9.5%
    
    
    
    3.2%
    
    
    
    3.5%
    
    
    
    Africa
    
    
    13.5%
    
    
    
    10.0%
    
    
    
    9.0%
    
    
    
    Asia/Pacific
    
    
    8.1%
    
    
    
    4.6%
    
    
    
    5.0%
    
    
    
    Value at 30 September 2004 (£ million)Europe
    
    
    870.3
    
    
    
    260.5
    
    
    
    106.9
    
    
    
    1,237.7Americas
    
    
    292.7
    
    
    
    76.1
    
    
    
    0.3
    
    
    
    369.1Africa
    
    
    93.8
    
    
    
    17.5
    
    
    
    6.9
    
    
    
    118.2Asia/Pacific
    
    
    116.7
    
    
    
    15.6
    
    
    
    37.1
    
    
    
    169.4Total
    
    
    1,373.5
    
    
    
    369.7
    
    
    
    151.2
    
    
    
    1,894.4Long-term rate of return expected at 30 September 2003Europe
    
    
    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
    
    
    
    1,072.3Americas
    
    
    307.0
    
    
    
    66.2
    
    
    
    
    
    
    
    373.2Africa
    
    
    73.6
    
    
    
    16.8
    
    
    
    7.9
    
    
    
    98.3Asia/Pacific
    
    
    105.6
    
    
    
    15.1
    
    
    
    25.2
    
    
    
    145.9Total
    
    
    1,280.1
    
    
    
    314.2
    
    
    
    95.4
    
    
    
    1,689.7Long-term rate of return expected at 30 September 2002Europe
    
    
    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
    
    
    
    940.0Americas
    
    
    289.2
    
    
    
    51.0
    
    
    
    
    
    
    
    340.2Africa
    
    
    49.6
    
    
    
    15.3
    
    
    
    5.4
    
    
    
    70.3Asia/Pacific
    
    
    89.8
    
    
    
    16.3
    
    
    
    16.7
    
    
    
    122.8Total
    
    
    1,114.8
    
    
    
    317.6
    
    
    
    40.9
    
    
    
    1,473.3
 96 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinued  Americas
    
    
    AmericasEurope
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million2004Total market value of assets
    
    
    1,237.7
    
    
    
    369.1
    
    
    
    
    
    
    
    118.2
    
    
    
    169.4
    
    
    
    1,894.4Present value of scheme liabilities
    
    
    (1,682.0
    )
    
    
    (266.0
    )
    
    
    (46.4
    )
    
    
    (91.8
    )
    
    
    (163.8
    )
    
    
    (2,250.0
    )Irrecoverable surplus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26.4
    )
    
    
    
    
    
    
    (26.4
    )(Deficit)/surplus in the scheme
    
    
    (444.3
    )
    
    
    103.1
    
    
    
    (46.4
    )
    
    
    
    
    
    
    5.6
    
    
    
    (382.0
    )Related deferred tax asset/(liability)
    
    
    130.4
    
    
    
    (41.0
    )
    
    
    18.3
    
    
    
    
    
    
    
    (1.3
    )
    
    
    106.4Net pension (liabilities)/assets1
    
    
    (313.9
    )
    
    
    62.1
    
    
    
    (28.1
    )
    
    
    
    
    
    
    4.3
    
    
    
    (275.6
    )2003Total market value of assets
    
    
    1,072.3
    
    
    
    373.2
    
    
    
    
    
    
    
    98.3
    
    
    
    145.9
    
    
    
    1,689.7Present 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
    )
    
    
    121.0Net pension (liabilities)/assets1
    
    
    (311.2
    )
    
    
    48.0
    
    
    
    (30.6
    )
    
    
    
    
    
    
    2.7
    
    
    
    (291.1
    )2002Total market value of assets
    
    
    940.0
    
    
    
    340.2
    
    
    
    
    
    
    
    70.3
    
    
    
    122.8
    
    
    
    1,473.3Present 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
    
    
    
    106.4Net pension (liabilities)/assets1
    
    
    (274.1
    )
    
    
    54.3
    
    
    
    (30.3
    )
    
    
    
    
    
    
    (6.6
    )
    
    
    (256.7
    )
 1.
    
    Included in the net pension (liabilities)/assets are assets of £68.9
million (2003: £50.7 million, 2002: £54.3 million) and liabilities of
£344.5 million (2003: £341.8 million, 2002: £311.0 million). In addition
to deferred tax on pension assets and liabilities, a further £22.0 million
of current tax relating to pension assets and liabilities is included
within Creditors: amounts falling due within one year. Of this, £3.2
million has been accounted for in the total recognised gains and losses
and £18.8 million has been included in the profit and loss account. There
were no equivalent current tax items in 2003 or 2002. Americas
    
    
    AmericasEurope
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    TotalAnalysis of the amount charged to operating profit
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionYear to 30 September 2004Current service cost
    
    
    (47.4
    )
    
    
    (10.1
    )
    
    
    (1.5
    )
    
    
    (2.4
    )
    
    
    (7.7
    )
    
    
    (69.1
    )Past service cost
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )Curtailments/settlements2
    
    
    
    
    
    
    1.6
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    4.4Total operating charge
    
    
    (47.9
    )
    
    
    (8.5
    )
    
    
    1.3
    
    
    
    (2.4
    )
    
    
    (7.7
    )
    
    
    (65.2
    )Year to 30 September 2003Current service cost
    
    
    (39.4
    )
    
    
    (12.3
    )
    
    
    (1.6
    )
    
    
    (2.1
    )
    
    
    (7.9
    )
    
    
    (63.3
    )Past service cost3
    
    
    (0.4
    )
    
    
    (43.2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (43.6
    )Curtailments/settlements
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.5Total operating charge
    
    
    (36.3
    )
    
    
    (55.5
    )
    
    
    (1.6
    )
    
    
    (2.1
    )
    
    
    (7.9
    )
    
    
    (103.4
    )Year to 30 September 2002Current service cost
    
    
    (33.5
    )
    
    
    (12.8
    )
    
    
    (1.6
    )
    
    
    (1.7
    )
    
    
    (7.2
    )
    
    
    (56.8
    )Past service cost3
    
    
    (0.6
    )
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.1Total operating charge
    
    
    (34.1
    )
    
    
    (12.1
    )
    
    
    (1.6
    )
    
    
    (1.7
    )
    
    
    (7.2
    )
    
    
    (56.7
    )
 2.
    
    The curtailment gains in Americas pensions and Americas health care in
2004 relate to the sale of the US packaged gas business and were accounted
for as exceptional items (see note 2b)).3.
    
    The past service cost amounts in Americas pensions in 2003 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. 97 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinued Americas
    
    
    AmericasEurope
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    TotalAnalysis of the amount included in other net financing income
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionYear to 30 September 2004Expected return on pension scheme assets4
    
    
    83.1
    
    
    
    28.1
    
    
    
    
    
    
    
    11.2
    
    
    
    10.7
    
    
    
    133.1Interest on pension scheme liabilities4
    
    
    (80.4
    )
    
    
    (15.4
    )
    
    
    (2.6
    )
    
    
    (8.9
    )
    
    
    (9.7
    )
    
    
    (117.0
    )Net interest on FRS17 pension schemes
    
    
    2.7
    
    
    
    12.7
    
    
    
    (2.6
    )
    
    
    2.3
    
    
    
    1.0
    
    
    
    16.1Year to 30 September 2003Expected return on pension scheme assets4
    
    
    70.2
    
    
    
    29.1
    
    
    
    
    
    
    
    10.8
    
    
    
    9.4
    
    
    
    119.5Interest on pension scheme liabilities4
    
    
    (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
    
    
    
    9.7Year to 30 September 2002Expected return on pension scheme assets
    
    
    87.4
    
    
    
    36.2
    
    
    
    
    
    
    
    7.2
    
    
    
    8.3
    
    
    
    139.1Interest 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
 4.
    
    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 (2003: £0.1 million and £(0.4) million). There were no
corresponding amounts for joint ventures and associates in 2002. Americas
    
    
    AmericasAnalysis of the amount recognised in the statement
    
    Europe
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    Totalof total recognised gains and losses
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionYear to 30 September 2004Actual return less expected return on pension scheme assets
    
    
    31.9
    
    
    
    17.6
    
    
    
    
    
    
    
    12.5
    
    
    
    14.2
    
    
    
    76.2Experience gains and losses arising on the scheme liabilities
    
    
    (28.6
    )
    
    
    12.5
    
    
    
    0.2
    
    
    
    
    
    
    
    (14.2
    )
    
    
    (30.1
    )Changes in assumptions underlying the present value of the
scheme liabilities
    
    
    (29.4
    )
    
    
    (3.3
    )
    
    
    (2.0
    )
    
    
    5.9
    
    
    
    
    
    
    
    (28.8
    )Irrecoverable surplus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20.6
    )
    
    
    
    
    
    
    (20.6
    )Actuarial (loss)/gain recognised in the statement
of total recognised gains and losses5
    
    
    (26.1
    )
    
    
    26.8
    
    
    
    (1.8
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    (3.3
    )Year to 30 September 2003Actual return less expected return on pension scheme assets
    
    
    73.7
    
    
    
    44.2
    
    
    
    
    
    
    
    (10.8
    )
    
    
    4.7
    
    
    
    111.8Experience gains and losses arising on the scheme liabilities
    
    
    8.3
    
    
    
    (1.7
    )
    
    
    0.1
    
    
    
    0.1
    
    
    
    (2.6
    )
    
    
    4.2Changes in assumptions underlying the present value of the
scheme liabilities
    
    
    (134.8
    )
    
    
    (6.3
    )
    
    
    (2.0
    )
    
    
    
    
    
    
    
    
    
    
    (143.1
    )Irrecoverable surplus
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.7
    
    
    
    
    
    
    
    8.7Actuarial (loss)/gain recognised in the statement
of total recognised gains and losses5
    
    
    (52.8
    )
    
    
    36.2
    
    
    
    (1.9
    )
    
    
    (2.0
    )
    
    
    2.1
    
    
    
    (18.4
    )Year to 30 September 2002Actual 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 losses5
    
    
    (347.8
    )
    
    
    (67.1
    )
    
    
    (0.1
    )
    
    
    (12.5
    )
    
    
    (9.4
    )
    
    
    (436.9
    )
 5.
    
    Included in the actuarial (loss)/gain for the year is £(1.1) million in respect of minority interests (2003:
£(0.9) million, 2002: £(5.7) million). 98 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinued Americas
    
    
    AmericasHistory of experience gains and losses
    
    Europe
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    TotalYear to 30 September 2004Difference between the expected and actual return on scheme assetsAmount (£ million)
    
    
    31.9
    
    
    
    17.6
    
    
    
    
    
    
    
    12.5
    
    
    
    14.2
    
    
    
    76.2Percentage of scheme assets
    
    
    2.6%
    
    
    
    4.8%
    
    
    
    
    
    
    
    10.6%
    
    
    
    8.4%
    
    
    
    4.0%Experience gains and losses on scheme liabilitiesAmount (£ million)
    
    
    (28.6
    )
    
    
    12.5
    
    
    
    0.2
    
    
    
    
    
    
    
    (14.2
    )
    
    
    (30.1
    )Percentage of the present value of scheme liabilities
    
    
    (1.7%
    )
    
    
    4.7%
    
    
    
    0.4%
    
    
    
    
    
    
    
    (8.7%
    )
    
    
    (1.3%
    )Total amount recognised in the statement of total recognised gains and lossesAmount (£ million)
    
    
    (26.1
    )
    
    
    26.8
    
    
    
    (1.8
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    (3.3
    )Percentage of the present value of scheme liabilities
    
    
    (1.6%
    )
    
    
    10.0%
    
    
    
    (3.9%
    )
    
    
    (2.4%
    )
    
    
    
    
    
    
    (0.1%
    )Year to 30 September 2003Difference between the expected and actual return on scheme assetsAmount (£ million)
    
    
    73.7
    
    
    
    44.2
    
    
    
    
    
    
    
    (10.8
    )
    
    
    4.7
    
    
    
    111.8Percentage of scheme assets
    
    
    6.9%
    
    
    
    11.8%
    
    
    
    
    
    
    
    (11.0%
    )
    
    
    3.2%
    
    
    
    6.6%Experience gains and losses on scheme liabilitiesAmount (£ million)
    
    
    8.3
    
    
    
    (1.7
    )
    
    
    0.1
    
    
    
    0.1
    
    
    
    (2.6
    )
    
    
    4.2Percentage 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 lossesAmount (£ 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 2002Difference between the expected and actual return on scheme assetsAmount (£ 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 liabilitiesAmount (£ 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 lossesAmount (£ 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 2001Difference between the expected and actual return on scheme assetsAmount (£ 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 liabilitiesAmount (£ 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 lossesAmount (£ 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 2000Difference between the expected and actual return on scheme assetsAmount (£ million)
    
    
    109.0
    
    
    
    57.2
    
    
    
    
    
    
    
    8.5
    
    
    
    9.0
    
    
    
    183.7Percentage of scheme assets
    
    
    7.6%
    
    
    
    10.6%
    
    
    
    
    
    
    
    8.3%
    
    
    
    6.0%
    
    
    
    8.3%Experience gains and losses on scheme liabilitiesAmount (£ 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 lossesAmount (£ million)
    
    
    98.8
    
    
    
    26.3
    
    
    
    (14.8
    )
    
    
    12.4
    
    
    
    (2.8
    )
    
    
    119.9Percentage of the present value of scheme liabilities
    
    
    8.5%
    
    
    
    11.3%
    
    
    
    (33.9%
    )
    
    
    17.5%
    
    
    
    (1.9%
    )
    
    
    7.2%
 99 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinued Americas
    
    
    AmericasEurope
    
    
    pensions
    
    
    health care
    
    
    Africa
    
    
    Asia/Pacific
    
    
    TotalMovement in (deficit)/surplus during the year
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionYear to 30 September 2004(Deficit)/surplus in scheme at 1 October
    
    
    (444.6
    )
    
    
    79.2
    
    
    
    (50.5
    )
    
    
    
    
    
    
    3.8
    
    
    
    (412.1
    )Movement in the year:Current service cost
    
    
    (47.4
    )
    
    
    (10.1
    )
    
    
    (1.5
    )
    
    
    (2.4
    )
    
    
    (7.7
    )
    
    
    (69.1
    )Past service cost
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.5
    )Curtailments/settlements
    
    
    
    
    
    
    1.6
    
    
    
    2.8
    
    
    
    
    
    
    
    
    
    
    
    4.4Contributions
    
    
    71.6
    
    
    
    
    
    
    
    2.9
    
    
    
    2.3
    
    
    
    8.7
    
    
    
    85.5Disposals of businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other finance income
    
    
    2.7
    
    
    
    12.7
    
    
    
    (2.6
    )
    
    
    2.3
    
    
    
    1.0
    
    
    
    16.1Actuarial (loss)/gain
    
    
    (26.1
    )
    
    
    26.8
    
    
    
    (1.8
    )
    
    
    (2.2
    )
    
    
    
    
    
    
    (3.3
    )Exchange adjustment
    
    
    
    
    
    
    (7.1
    )
    
    
    4.3
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (3.0
    )(Deficit)/surplus in scheme at 30 September
    
    
    (444.3
    )
    
    
    103.1
    
    
    
    (46.4
    )
    
    
    
    
    
    
    5.6
    
    
    
    (382.0
    )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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.5Contributions
    
    
    38.8
    
    
    
    
    
    
    
    3.5
    
    
    
    2.1
    
    
    
    10.2
    
    
    
    54.6Disposals of businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10.4
    
    
    
    10.4Other finance income
    
    
    (2.7
    )
    
    
    13.3
    
    
    
    (3.1
    )
    
    
    2.0
    
    
    
    0.2
    
    
    
    9.7Actuarial (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
    )
 b) UK GAAP parent company    c) US GAAP   At 30 June 2004 the measurement date for SFAS132 reporting, the target asset
allocation and actual asset allocation of the main UK scheme was: 2004
    
    
    2003Target
    
    
    Actual
    
    
    ActualEquity securities
    
    
    70.0%
    
    
    
    71.9%
    
    
    
    73.0%Debt securities
    
    
    20.0%
    
    
    
    19.2%
    
    
    
    20.5%Real estate
    
    
    10.0%
    
    
    
    7.8%
    
    
    
    5.0%Cash
    
    
    0.0%
    
    
    
    1.1%
    
    
    
    1.5%
  2004
    
    
    2003Equity securities
    
    
    77.5%
    
    
    
    87.4%Debt securities
    
    
    22.5%
    
    
    
    12.6%
  100 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 8. Pensions and other retirement benefitscontinuedPension benefits
    
    
    Other benefits12004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionChange in benefit obligationProjected benefit obligation at 1 October 2003
    
    
    2,089.3
    
    
    
    1,695.9
    
    
    
    50.5
    
    
    
    50.1Exchange adjustment
    
    
    (28.4
    )
    
    
    31.3
    
    
    
    (4.2
    )
    
    
    (2.8
    )Service cost
    
    
    67.4
    
    
    
    53.0
    
    
    
    1.7
    
    
    
    1.8Interest cost
    
    
    114.0
    
    
    
    108.7
    
    
    
    2.6
    
    
    
    3.1Plan participants contributions
    
    
    13.5
    
    
    
    13.9
    
    
    
    
    
    
    
    Actuarial (gains)/losses
    
    
    6.6
    
    
    
    242.9
    
    
    
    1.7
    
    
    
    1.8Benefits paid
    
    
    (93.6
    )
    
    
    (96.1
    )
    
    
    (2.9
    )
    
    
    (3.5
    )Other (income) less expenses
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    Curtailments, settlements, termination benefits
    
    
    (1.0
    )
    
    
    (3.1
    )
    
    
    (3.1
    )
    
    
    Plan amendments
    
    
    
    
    
    
    43.2
    
    
    
    
    
    
    
    Projected benefit obligation at 30 September 2004
    
    
    2,167.6
    
    
    
    2,089.3
    
    
    
    46.3
    
    
    
    50.5Change in fair value of assetsFair value of assets at 1 October 2003
    
    
    1,640.5
    
    
    
    1,706.0
    
    
    
    
    
    
    
    Exchange adjustment
    
    
    (34.8
    )
    
    
    29.5
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    279.5
    
    
    
    (57.1
    )
    
    
    
    
    
    
    Employer contributions
    
    
    72.2
    
    
    
    44.7
    
    
    
    
    
    
    
    Plan participants contributions
    
    
    13.5
    
    
    
    13.9
    
    
    
    
    
    
    
    Other income less (expenses)
    
    
    (0.2
    )
    
    
    (0.4
    )
    
    
    
    
    
    
    Benefits paid
    
    
    (93.6
    )
    
    
    (96.1
    )
    
    
    
    
    
    
    Fair value of assets at 30 September 2004
    
    
    1,877.1
    
    
    
    1,640.5
    
    
    
    
    
    
    
    Funded status and unrecognised (gains)/lossesFunded status
    
    
    (290.5
    )
    
    
    (448.8
    )
    
    
    (46.3
    )
    
    
    (50.5
    )Unrecognised net transition asset
    
    
    (10.8
    )
    
    
    (14.3
    )
    
    
    
    
    
    
    Unrecognised prior service cost/(credit)
    
    
    13.2
    
    
    
    19.5
    
    
    
    (1.7
    )
    
    
    (2.8
    )Unrecognised net loss
    
    
    535.8
    
    
    
    669.6
    
    
    
    7.7
    
    
    
    10.2Adjustment for post measurement date contributions
    
    
    17.2
    
    
    
    9.5
    
    
    
    
    
    
    
    Prepaid/(accrued) pension cost
    
    
    264.9
    
    
    
    235.5
    
    
    
    (40.3
    )
    
    
    (43.1
    )Amounts recognised in the statement of financial position consist of:Prepaid benefit cost
    
    
    165.2
    
    
    
    165.0Accrued benefit liability
    
    
    (263.4
    )
    
    
    (383.6
    )Intangible asset
    
    
    5.4
    
    
    
    6.9Accumulated other comprehensive income
    
    
    357.7
    
    
    
    447.2Prepaid pension cost
    
    
    264.9
    
    
    
    235.5
 1.
    
    Other benefits relate to post retirement medical benefits. The weighted-average asset allocation, by asset category, for the pension plans are as follows: Europe
    
    
    Americas
    
    
    Africa
    
    
    Asia/PacificAt 30 September 2004Equity securities
    
    
    70.3%
    
    
    
    79.3%
    
    
    
    79.4%
    
    
    
    68.9%Debt securities
    
    
    21.1%
    
    
    
    20.6%
    
    
    
    14.8%
    
    
    
    9.2%Real estate
    
    
    8.6%
    
    
    
    
    
    
    
    1.0%
    
    
    
    7.2%Other
    
    
    
    
    
    
    0.1%
    
    
    
    4.8%
    
    
    
    14.7%At 30 September 2003Equity securities
    
    
    74.0%
    
    
    
    82.3%
    
    
    
    74.8%
    
    
    
    72.3%Debt securities
    
    
    20.2%
    
    
    
    17.7%
    
    
    
    17.1%
    
    
    
    10.4%Real estate
    
    
    5.1%
    
    
    
    
    
    
    
    0.3%
    
    
    
    7.5%Other
    
    
    0.7%
    
    
    
    
    
    
    
    7.8%
    
    
    
    9.8%
 The accumulated benefit obligation for all pension plans totalled £1,962.2
million (2003: £1,848.5 million).  101 The BOC Group plcAnnual report and accounts 2004




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Notes to the financial statements 8. Pensions and other retirement benefitscontinued  Europe
    
    
    Americas
    
    
    Africa
    
    
    Asia/PacificAt 30 September 2004Discount rate
    
    
    5.75%
    
    
    
    6.1%
    
    
    
    10.0%
    
    
    
    6.1%Expected return on all plan assets
    
    
    7.75%
    
    
    
    8.0%
    
    
    
    12.0%
    
    
    
    7.1%Rate of compensation increase
    
    
    4.5%
    
    
    
    3.75%
    
    
    
    7.5%
    
    
    
    3.5%At 30 September 2003Discount 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%
 The weighted-average assumptions used to determine the net benefit cost are as follows: Europe
    
    
    Americas
    
    
    Africa
    
    
    Asia/PacificAt 30 September 2004Discount 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 2003Discount 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%
    
    
    
    4.75%
    
    
    
    9.5%
    
    
    
    3.5%
 The Group presently expects its contributions to its pension plans and post
retirement medical plans to be at a similar level in 2005 to the amounts
contributed in 2004. The following benefit payments, which reflect future service, as appropriate, are expected to be paid: Total pension
    
    
    OtherEurope
    
    
    Americas
    2
    
    Africa
    
    
    Asia/Pacific
    
    
    benefits
    
    
    benefits
    3£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionYear ending 30 September2005
    
    
    64.6
    
    
    
    38.4
    
    
    
    3.9
    
    
    
    8.3
    
    
    
    115.2
    
    
    
    3.22006
    
    
    65.5
    
    
    
    15.3
    
    
    
    4.0
    
    
    
    9.0
    
    
    
    93.8
    
    
    
    3.32007
    
    
    68.9
    
    
    
    15.6
    
    
    
    4.2
    
    
    
    9.6
    
    
    
    98.3
    
    
    
    3.32008
    
    
    72.6
    
    
    
    16.3
    
    
    
    4.4
    
    
    
    10.3
    
    
    
    103.6
    
    
    
    3.22009
    
    
    76.9
    
    
    
    17.1
    
    
    
    4.6
    
    
    
    11.2
    
    
    
    109.8
    
    
    
    3.32010  2014
    
    
    448.7
    
    
    
    93.4
    
    
    
    25.8
    
    
    
    70.3
    
    
    
    638.2
    
    
    
    17.4
 2.
    
    Payments in the Americas in 2005 include £21.5 million relating to a
litigation settlement reached in November 2003 (see notes 2b) and 26b)). For the post retirement medical benefits plan at 30 September 2004, the initial
health care cost trend rates for valuing the medical benefits and drug benefits
post age 65 were 9.0 per cent (2003: 9.0 per cent) and 3.2 per cent (2003: 3.5
per cent) respectively. The rates for valuing post age 65 medical benefits are
assumed to reduce gradually to 4.5 per cent in 2011 (2003: 4.5 per cent in
2009). The rates for valuing drug benefits post age 65 are assumed to reduce
gradually to 0.65 per cent in 2011 (2003: 1.1 per cent in 2010). For valuing
pre age 65 medical and drug benefits, a blended health care trend rate of 9.0
per cent was used for 30 September 2004 (2003: 9.0 per cent). This blended rate
was assumed to reduce gradually to 4.5 per cent in 2011 (2003: 4.5 per cent in
2010). Pensionable benefits
    
    
    Other benefits
    32004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionService cost net of employees contributions
    
    
    67.4
    
    
    
    53.0
    
    
    
    54.6
    
    
    
    1.7
    
    
    
    1.8
    
    
    
    1.6Interest cost on projected benefits obligation
    
    
    114.0
    
    
    
    108.7
    
    
    
    102.9
    
    
    
    2.6
    
    
    
    3.1
    
    
    
    3.6Expected return on assets
    
    
    (157.4
    )
    
    
    (166.2
    )
    
    
    (156.7
    )
    
    
    
    
    
    
    
    
    
    
    Amortisation of net transition asset
    
    
    (2.9
    )
    
    
    (14.8
    )
    
    
    (14.7
    )
    
    
    
    
    
    
    
    
    
    
    Amortisation of prior service cost/(credit)4
    
    
    3.1
    
    
    
    46.4
    
    
    
    3.5
    
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    (0.5
    )Amortisation of net loss/(gain)
    
    
    14.8
    
    
    
    (1.6
    )
    
    
    (7.2
    )
    
    
    0.3
    
    
    
    0.3
    
    
    
    0.3Cost of special termination benefits
    
    
    0.7
    
    
    
    0.9
    
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    Curtailment
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    (0.4
    )
    
    
    
    
    
    
    Net periodic pension cost/(credit)
    
    
    40.3
    
    
    
    26.4
    
    
    
    (17.0
    )
    
    
    3.7
    
    
    
    4.7
    
    
    
    5.0
 3.
    
    Other benefits relate to post retirement medical benefits.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 2004: One percentage pointIncrease
    
    
    DecreaseAccumulated benefit obligation
    
    
    4.0
    
    
    
    (3.8
    )Net periodic pension cost
    
    
    0.6
    
    
    
    (0.5
    )
 102 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 9. DividendsPer share2004
    
    
    2003
    
    
    2002
    
    
    2004
    
    
    2003
    
    
    2002pence
    
    
    pence
    
    
    pence
    
    
    £ million
    
    
    £ million
    
    
    £ millionOrdinaryFirst interim
    
    
    15.5
    
    
    
    15.5
    
    
    
    15.5
    
    
    
    76.3
    
    
    
    76.4
    
    
    
    75.8Second interim
    
    
    24.5
    
    
    
    23.5
    
    
    
    22.5
    
    
    
    121.0
    
    
    
    115.7
    
    
    
    110.840.0
    
    
    
    39.0
    
    
    
    38.0
    
    
    
    197.3
    
    
    
    192.1
    
    
    
    186.6
 10. Earnings per share    2004
    
    
    2003
    
    
    2002i) Earnings
    
    £ million
    
    
    £ million
    
    
    £ millionAmounts used in computing the earnings per shareEarnings attributable to Ordinary shareholders for the financial year
    
    
    264.0
    
    
    
    219.1
    
    
    
    202.9Adjustment for exceptional items1
    
    
    47.5
    
    
    
    41.6
    
    
    
    71.4Adjusted earnings
    
    
    311.5
    
    
    
    260.7
    
    
    
    274.3
 1.
    
    This comprises the exceptional items before interest of £(92.0) million
(2003: £(67.0) million, 2002: £(94.7) million) adjusted for the impact of
tax of £44.5 million (2003: £25.0 million, 2002: £22.8 million) and
minority interests of £nil (2003: £0.4 million, 2002: £0.5 million). 2004
    
    
    2003
    
    
    2002ii) Average number of 25p Ordinary shares
    
    million
    
    
    million
    
    
    millionAverage issued share capital
    
    
    498.2
    
    
    
    497.5
    
    
    
    496.0Less:Average own shares held in trust
    
    
    5.2
    
    
    
    5.0
    
    
    
    5.6Basic
    
    
    493.0
    
    
    
    492.5
    
    
    
    490.4Add:Dilutive share options
    
    
    0.8
    
    
    
    0.2
    
    
    
    1.8Diluted
    
    
    493.8
    
    
    
    492.7
    
    
    
    492.2
 11. Fixed assets  intangible assets a) Group summaryOtherGoodwill
    
    
    intangibles
    
    
    Total£ million
    
    
    £ million
    
    
    £ millionGross book valueAt 1 October 2003
    
    
    232.3
    
    
    
    6.2
    
    
    
    238.5Exchange adjustment
    
    
    (13.3
    )
    
    
    (0.4
    )
    
    
    (13.7
    )Acquired during the year
    
    
    3.9
    
    
    
    0.2
    
    
    
    4.1Adjustments relating to prior year acquisitions
    
    
    (1.0
    )
    
    
    
    
    
    
    (1.0
    )Disposed of during the year
    
    
    (9.1
    )
    
    
    (1.2
    )
    
    
    (10.3
    )At 30 September 2004
    
    
    212.8
    
    
    
    4.8
    
    
    
    217.6AmortisationAt 1 October 2003
    
    
    31.1
    
    
    
    1.3
    
    
    
    32.4Exchange adjustment
    
    
    (1.9
    )
    
    
    (0.1
    )
    
    
    (2.0
    )Provided during the year
    
    
    14.0
    
    
    
    0.5
    
    
    
    14.5Impairment
    
    
    2.5
    
    
    
    
    
    
    
    2.5Disposed of during the year
    
    
    (4.5
    )
    
    
    (0.2
    )
    
    
    (4.7
    )At 30 September 2004
    
    
    41.2
    
    
    
    1.5
    
    
    
    42.7Net book valueAt 1 October 2003
    
    
    201.2
    
    
    
    4.9
    
    
    
    206.1At 30 September 2004
    
    
    171.6
    
    
    
    3.3
    
    
    
    174.9
  103 The BOC Group plcAnnual report and accounts 2004




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Notes to the financial statements 11. Fixed assets  intangible assetscontinued b) Analysis of acquisitions and disposals  Positive
    
    
    Negative
    
    
    Amortisationgoodwill
    
    
    goodwill
    
    
    periodi) Businesses acquired
    
    £ million
    
    
    £ million
    
    
    Years
    42004There was no significant goodwill on acquisitions of
subsidiary undertakings in the year.2003Praxair Polska
    
    
    10.1
    
    
    
    
    
    
    
    20Environmental Management Corporation1
    
    
    32.9
    
    
    
    
    
    
    
    152002Seiko Instruments Inc  turbomolecular pumps business2
    
    
    59.4
    
    
    
    
    
    
    
    20Unique Gas and Petrochemicals Public Company Limited
    
    
    17.5
    
    
    
    
    
    
    
    20Enron Teesside Operations Limited  industrial assets
    
    
    9.6
    
    
    
    
    
    
    
    15Hydromatix Inc
    
    
    5.6
    
    
    
    
    
    
    
    15Semco3
    
    
    3.8
    
    
    
    
    
    
    
    15Minorities in Osaka Sanso Kogyo KK
    
    
    
    
    
    
    (5.0
    )
    
    
    10
 1.
    
    Restated in 2004 to reflect an adjustment of £1.4 million to the fair
value of the consideration.2.
    
    Restated in 2003 to reflect an adjustment of £0.8 million to the fair
value of the net assets.3.
    
    Restated in 2003 to reflect an adjustment of £0.6 million to the fair
value of the consideration.4.
    
    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. Goodwillii) Businesses disposed of
    
    £ million2004US packaged gas business
    
    
    9.12003Osaka Sanso Kogyo KK (see note 28c))
    
    
    (10.5
    )
 104 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 12. Fixed assets  tangible assets a) Group summaryPlant,Land and
    
    
    machinery
    
    
    
    
    
    
    Constructionbuildings
    
    
    and vehicles
    
    
    Cylinders
    
    
    in progress
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionGross book valueAt 1 October 2003
    
    
    640.4
    
    
    
    4,392.3
    
    
    
    690.0
    
    
    
    158.4
    
    
    
    5,881.1Exchange adjustment
    
    
    (17.5
    )
    
    
    (190.6
    )
    
    
    (17.5
    )
    
    
    (8.6
    )
    
    
    (234.2
    )Capital expenditure2
    
    
    20.6
    
    
    
    135.5
    
    
    
    24.0
    
    
    
    76.0
    
    
    
    256.1Disposals
    
    
    (13.2
    )
    
    
    (121.0
    )
    
    
    (11.1
    )
    
    
    (5.3
    )
    
    
    (150.6
    )Transfers
    
    
    (10.1
    )
    
    
    77.9
    
    
    
    9.9
    
    
    
    (77.7
    )
    
    
    Acquisitions of businesses
    
    
    2.8
    
    
    
    0.9
    
    
    
    
    
    
    
    
    
    
    
    3.7Disposals of businesses
    
    
    (22.7
    )
    
    
    (78.1
    )
    
    
    (124.0
    )
    
    
    (0.9
    )
    
    
    (225.7
    )At 30 September 2004
    
    
    600.3
    
    
    
    4,216.9
    
    
    
    571.3
    
    
    
    141.9
    
    
    
    5,530.4DepreciationAt 1 October 2003
    
    
    207.7
    
    
    
    2,440.4
    
    
    
    319.6
    
    
    
    
    
    
    
    2,967.7Exchange adjustment
    
    
    (7.2
    )
    
    
    (109.7
    )
    
    
    (8.0
    )
    
    
    
    
    
    
    (124.9
    )Provided during the year
    
    
    17.1
    
    
    
    261.3
    
    
    
    31.1
    
    
    
    
    
    
    
    309.5Disposals
    
    
    (5.6
    )
    
    
    (102.3
    )
    
    
    (9.0
    )
    
    
    
    
    
    
    (116.9
    )Disposals of businesses
    
    
    (7.8
    )
    
    
    (49.9
    )
    
    
    (65.7
    )
    
    
    
    
    
    
    (123.4
    )Transfers
    
    
    (10.4
    )
    
    
    10.4
    
    
    
    
    
    
    
    
    
    
    
    At 30 September 2004
    
    
    193.8
    
    
    
    2,450.2
    
    
    
    268.0
    
    
    
    
    
    
    
    2,912.0Net book value at 1 October 20033Owned assets
    
    
    395.2
    
    
    
    1,945.1
    
    
    
    342.0
    
    
    
    158.4
    
    
    
    2,840.7Leased assets4
    
    
    37.5
    
    
    
    6.8
    
    
    
    28.4
    
    
    
    
    
    
    
    72.7432.7
    
    
    
    1,951.9
    
    
    
    370.4
    
    
    
    158.4
    
    
    
    2,913.4Net book value at 30 September 20043Owned assets
    
    
    368.5
    
    
    
    1,761.3
    
    
    
    278.3
    
    
    
    141.9
    
    
    
    2,550.0Leased assets4
    
    
    38.0
    
    
    
    5.4
    
    
    
    25.0
    
    
    
    
    
    
    
    68.4406.5
    
    
    
    1,766.7
    
    
    
    303.3
    
    
    
    141.9
    
    
    
    2,618.4
 1.
    
    Net book value of land and buildings at cost was £369.7 million (2003:
£395.0 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 £47.8 million (2003:
£56.4 million). The tax effect of this is included in the deferred tax
provision.4.
    
    Leased assets are shown net of accumulated depreciation of £121.1 million
(2003: £119.1 million). b) Depreciation and operating lease rentals2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionDepreciation on leased assets included above
    
    
    6.5
    
    
    
    8.1
    
    
    
    8.5Amortisation of capitalised interest included above
    
    
    5.5
    
    
    
    4.0
    
    
    
    4.2Operating lease rentals hire of plant and machinery
    
    
    27.1
    
    
    
    19.7
    
    
    
    7.7 property rent
    
    
    31.6
    
    
    
    34.3
    
    
    
    23.1 other
    
    
    18.3
    
    
    
    17.6
    
    
    
    14.0
 c) Regional analysis  £ million
    
    
    %Europe (mainly the UK)
    
    
    941.9
    
    
    
    36Americas (mainly the US)
    
    
    736.9
    
    
    
    28Africa
    
    
    278.4
    
    
    
    11Asia/Pacific
    
    
    661.2
    
    
    
    252,618.4
    
    
    
    100
  105 The BOC Group plcAnnual report and accounts 2004




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Notes to the financial statements 12. Fixed assets  tangible assetscontinued d) Asset revaluations  e) Parent summaryPlant,Land and
    
    
    machinerybuildings
    
    
    and vehicles
    
    
    Total£ million
    
    
    £ million
    
    
    £ millionGross book valueAt 1 October 2003
    
    
    14.3
    
    
    
    18.5
    
    
    
    32.8Capital expenditure
    
    
    0.1
    
    
    
    1.1
    
    
    
    1.2Disposals
    
    
    
    
    
    
    (5.6
    )
    
    
    (5.6
    )At 30 September 2004
    
    
    14.4
    
    
    
    14.0
    
    
    
    28.4DepreciationAt 1 October 2003
    
    
    4.2
    
    
    
    12.9
    
    
    
    17.1Provided during the year
    
    
    0.5
    
    
    
    0.5
    
    
    
    1.0Disposals
    
    
    
    
    
    
    (1.0
    )
    
    
    (1.0
    )At 30 September 2004
    
    
    4.7
    
    
    
    12.4
    
    
    
    17.1Net book valueAt 1 October 2003
    
    
    10.1
    
    
    
    5.6
    
    
    
    15.7At 30 September 2004
    
    
    9.7
    
    
    
    1.6
    
    
    
    11.3
 f) Net book value of land and buildings at 30 September 2004Group
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionFreehold property
    
    
    368.5
    
    
    
    395.2
    
    
    
    9.7
    
    
    
    10.1Leasehold
property  long-term
    
    
    33.9
    
    
    
    34.2
    
    
    
    
    
    
    
     short-term
    
    
    4.1
    
    
    
    3.3
    
    
    
    
    
    
    
    406.5
    
    
    
    432.7
    
    
    
    9.7
    
    
    
    10.1
 g) Capital commitmentsGroup2004
    
    
    2003£ million
    
    
    £ millionAgainst which orders had been placed
    
    
    26.2
    
    
    
    20.9Authorised but not committed
    
    
    101.2
    
    
    
    101.9127.4
    
    
    
    122.8
 There were no capital commitments by The BOC Group plc at either 30 September 2004 or 30 September 2003. The Groups share of its joint ventures and associates capital commitments was: 2004
    
    
    2003£ million
    
    
    £ millionAgainst which orders had been placed
    
    
    33.6
    
    
    
    14.5Authorised but not committed
    
    
    24.8
    
    
    
    12.258.4
    
    
    
    26.7
 106 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 13. Fixed assets  investments a)
Group summaryGroup
    
    
    
    
    
    
    Group
    
    
    Group
    
    
    
    
    
    
    
    
    
    
    Provisionsshare of
    
    
    Negative
    
    
    share of
    
    
    loans to
    
    
    Other
    
    
    
    
    
    
    againstGoodwill
    
    
    net assets of
    
    
    goodwill of
    
    
    net assets of
    
    
    joint ventures
    
    
    investments
    
    
    Own
    
    
    otherof associates
    
    
    associates
    
    
    joint ventures
    
    
    joint ventures
    
    
    and associates
    
    
    at cost
    
    
    shares
    
    
    investments
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionAt 1 October 2003 -
previously reported
    
    
    7.0
    
    
    
    52.6
    
    
    
    
    
    
    
    402.3
    
    
    
    107.9
    
    
    
    39.4
    
    
    
    48.1
    
    
    
    (0.6
    )
    
    
    656.7Prior year adjustment
(see note 31)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48.1
    )
    
    
    
    
    
    
    (48.1
    )At 1 October 2003 - restated
    
    
    7.0
    
    
    
    52.6
    
    
    
    
    
    
    
    402.3
    
    
    
    107.9
    
    
    
    39.4
    
    
    
    
    
    
    
    (0.6
    )
    
    
    608.6Exchange adjustment
    
    
    (0.6
    )
    
    
    (3.9
    )
    
    
    0.5
    
    
    
    (26.7
    )
    
    
    (9.9
    )
    
    
    (1.9
    )
    
    
    
    
    
    
    0.1
    
    
    
    (42.4
    )Acquisitions/additions
    
    
    
    
    
    
    0.1
    
    
    
    (41.5
    )
    
    
    (2.5
    )
    
    
    107.7
    
    
    
    6.0
    
    
    
    
    
    
    
    
    
    
    
    69.8(Charged)/credited to profit
    
    
    (0.5
    )
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.3
    )Disposals/repayments/transfers
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    (10.1
    )
    
    
    (3.1
    )
    
    
    (7.8
    )
    
    
    
    
    
    
    (0.7
    )
    
    
    (24.2
    )Increase/(decrease) in
net assets
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    (10.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10.3
    )JAG capital restructuring
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (53.0
    )At 30 September 2004
    
    
    5.9
    
    
    
    46.5
    
    
    
    (40.8
    )
    
    
    299.5
    
    
    
    202.6
    
    
    
    35.7
    
    
    
    
    
    
    
    (1.2
    )
    
    
    548.2
 i) Joint ventures   Share of
    
    
    Negativenet assets
    
    
    goodwill
    
    
    Total£ million
    
    
    £ million
    
    
    £ millionShare of fixed assets
    
    
    748.9
    
    
    
    
    
    
    
    748.9Negative goodwill
    
    
    
    
    
    
    (40.8
    )
    
    
    (40.8
    )Share of current assets
    
    
    288.0
    
    
    
    
    
    
    
    288.01,036.9
    
    
    
    (40.8
    )
    
    
    996.1Share of liabilities due within one year
    
    
    (207.6
    )
    
    
    
    
    
    
    (207.6
    )Share of liabilities due after more than one year
    
    
    (529.8
    )
    
    
    
    
    
    
    (529.8
    )(737.4
    )
    
    
    
    
    
    
    (737.4
    )Share of net assets
    
    
    299.5
    
    
    
    (40.8
    )
    
    
    258.7
 The negative goodwill represents the excess of the fair value of the net assets
over the fair value of the purchase consideration and is being amortised over
17 years. The Groups share of the borrowings of joint ventures at 30 September 2004 was: Gross
    
    
    Netborrowings
    
    
    borrowingsCompania de Nitrogeno de Cantarell1
    
    
    127.2
    
    
    
    79.6Japan Air Gases
    
    
    55.5
    
    
    
    51.5Elgas
    
    
    32.0
    
    
    
    29.5Other joint ventures
    
    
    56.2
    
    
    
    33.7Total
    
    
    270.9
    
    
    
    194.3
 1.
    
    Excluding loans from joint venture partners. Of the net borrowings, £185.4 million was non-recourse. ii) Associates   107 The BOC Group plcAnnual report and accounts 2004




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Notes to the financial statements 13. Fixed assets  investmentscontinued b) Valuation20032004
    
    
    (restated)£ million
    
    
    £ millionListed on stock exchanges in the UK and overseas
    
    
    34.7
    
    
    
    44.5Unlisted  equity at directors valuation
    
    
    300.6
    
    
    
    441.5 other at directors valuation
    
    
    212.9
    
    
    
    122.6Total book value
    
    
    548.2
    
    
    
    608.6Market value of listed investments
    
    
    85.8
    
    
    
    84.3
 c) Income2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionListed securities
    
    
    9.9
    
    
    
    4.7
    
    
    
    7.5Unlisted securities
    
    
    69.4
    
    
    
    32.0
    
    
    
    30.679.3
    
    
    
    36.7
    
    
    
    38.1Less:Dividends receivable from joint ventures
    
    
    69.0
    
    
    
    31.7
    
    
    
    30.5Dividends receivable from associates
    
    
    10.1
    
    
    
    3.3
    
    
    
    3.4Income from other fixed asset investments
    
    
    0.2
    
    
    
    1.7
    
    
    
    4.2
 d) ParentAmountsInvestments
    
    
    Investments
    
    
    due fromin subsidiary
    
    
    in related
    
    
    subsidiary
    
    
    Own
    
    
    Otherundertakings
    
    
    undertakings
    
    
    undertakings
    
    
    shares
    
    
    investments
    
    
    Provisions
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionAt 1 October 2003  previously reported
    
    
    1,703.0
    
    
    
    8.7
    
    
    
    1,351.7
    
    
    
    42.5
    
    
    
    11.1
    
    
    
    (16.5
    )
    
    
    3,100.5Prior year adjustment (see note 31)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42.5
    )
    
    
    
    
    
    
    
    
    
    
    (42.5
    )At 1 October 2003  restated
    
    
    1,703.0
    
    
    
    8.7
    
    
    
    1,351.7
    
    
    
    
    
    
    
    11.1
    
    
    
    (16.5
    )
    
    
    3,058.0Additions
    
    
    463.8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    463.8Charged to profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.3
    )
    
    
    (4.3
    )Disposals
    
    
    (29.1
    )
    
    
    (8.7
    )
    
    
    
    
    
    
    
    
    
    
    (3.3
    )
    
    
    
    
    
    
    (41.1
    )Advances/repayments (net)
    
    
    
    
    
    
    
    
    
    
    (493.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (493.8
    )At 30 September 2004
    
    
    2,137.7
    
    
    
    
    
    
    
    857.9
    
    
    
    
    
    
    
    7.8
    
    
    
    (20.8
    )
    
    
    2,982.6
  14. StocksGroup2004
    
    
    2003£ million
    
    
    £ millionRaw materials
    
    
    89.5
    
    
    
    81.3Work in progress
    
    
    68.0
    
    
    
    51.1Gases and other finished goods
    
    
    162.3
    
    
    
    172.0Payments on account
    
    
    (35.4
    )
    
    
    (20.2
    )284.4
    
    
    
    284.2
  108 The BOC Group plcAnnual report and accounts 2004




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Notes to the financial statements 15. Debtors a) Debtors falling due within one yearGroup
            
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTrade debtors
    
    
    561.5
    
    
    
    569.8
    
    
    
    
    
    
    
    Amounts due from subsidiary undertakings
    
    
    
    
    
    
    
    
    
    
    286.5
    
    
    
    669.4Amounts due from joint ventures and associates
    
    
    7.6
    
    
    
    5.7
    
    
    
    5.7
    
    
    
    5.0Other debtors
    
    
    106.4
    
    
    
    93.5
    
    
    
    28.2
    
    
    
    15.0Prepayments and accrued income
    
    
    30.1
    
    
    
    28.8
    
    
    
    
    
    
    
    5.0705.6
    
    
    
    697.8
    
    
    
    320.4
    
    
    
    694.4
 Trade debtors are shown net of provisions for bad and doubtful
debts of £29.8 million (2003: £31.6 million). b) Debtors falling due after more than one yearGroup2004
    
    
    2003£ million
    
    
    £ millionDeferred tax
    
    
    5.8
    
    
    
    6.6Other debtors
    
    
    10.5
    
    
    
    17.016.3
    
    
    
    23.6
 There were no debtors falling due after more than one year on the balance sheet of The BOC
Group plc at either 30 September 2004 or
30 September 2003. 16. Current asset investmentsGroup2004
    
    
    2003£ million
    
    
    £ millionListed investments
    
    
    20.8
    
    
    
    21.8Total current asset investments
    
    
    20.8
    
    
    
    21.8Market value of listed investments
    
    
    20.8
    
    
    
    21.8
 There were no current asset investments on the balance sheet of The BOC Group plc at either 30 September
2004 or 30 September 2003. 17. Cash at bank and in handGroup
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionDeposits
    
    
    26.5
    
    
    
    4.7
    
    
    
    
    
    
    
    Cash at bank and in hand
    
    
    201.7
    
    
    
    72.8
    
    
    
    80.8
    
    
    
    228.2
    
    
    
    77.5
    
    
    
    80.8
    
    
    
    
 109 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 18. Creditors: amounts falling due within one year a) Borrowings and finance leases1Group
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionBank loans and overdrafts
    
    
    80.1
    
    
    
    164.6
    
    
    
    83.2
    
    
    
    178.6Loans other than from banks
    
    
    179.4
    
    
    
    182.0
    
    
    
    168.9
    
    
    
    125.0Finance leases
    
    
    2.6
    
    
    
    14.3
    
    
    
    
    
    
    
    262.1
    
    
    
    360.9
    
    
    
    252.1
    
    
    
    303.6
 1.
    
    Details of borrowings and finance leases are given in note 20. b) Other creditorsDeposits and advance payments by customers
    
    
    55.0
    
    
    
    62.8
    
    
    
    
    
    
    
    Trade creditors
    
    
    329.2
    
    
    
    308.9
    
    
    
    
    
    
    
    Amounts due to subsidiary undertakings
    
    
    
    
    
    
    
    
    
    
    949.7
    
    
    
    992.3Taxation
    
    
    139.2
    
    
    
    132.7
    
    
    
    
    
    
    
    Other taxes and social security payable
    
    
    32.4
    
    
    
    34.8
    
    
    
    
    
    
    
    Other creditors
    
    
    159.9
    
    
    
    117.3
    
    
    
    0.9
    
    
    
    2.6Accruals and deferred income
    
    
    156.9
    
    
    
    150.8
    
    
    
    53.5
    
    
    
    55.0872.6
    
    
    
    807.3
    
    
    
    1,004.1
    
    
    
    1,049.9
 19. Creditors: amounts falling due after more than one year a) Borrowings and finance leases1Group
    
        
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionBank loans
    
    
    88.5
    
    
    
    108.9
    
    
    
    (2.7
    )
    
    
    (20.7
    )Loans other than from banks
    
    
    834.5
    
    
    
    968.2
    
    
    
    677.2
    
    
    
    787.3Finance leases
    
    
    5.5
    
    
    
    7.6
    
    
    
    
    
    
    
    928.5
    
    
    
    1,084.7
    
    
    
    674.5
    
    
    
    766.6
 1.
    
    Details of borrowings and finance leases are given in note 20. b) Other creditorsDeposits and advance payments by customers
    
    
    22.2
    
    
    
    25.2
    
    
    
    
    
    
    
    Other creditors
    
    
    6.7
    
    
    
    13.1
    
    
    
    
    
    
    
    4.3Accruals and deferred income
    
    
    5.8
    
    
    
    10.1
    
    
    
    3.2
    
    
    
    6.134.7
    
    
    
    48.4
    
    
    
    3.2
    
    
    
    10.4
 110 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 20. Net borrowings and finance leases a) AnalysisGroup
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionSecuredFinance leases
    
    
    8.1
    
    
    
    21.9
    
    
    
    
    
    
    
    Other secured borrowings
    
    
    55.2
    
    
    
    64.9
    
    
    
    
    
    
    
    Unsecured121⁄4% Unsecured Loan Stock 2012/2017
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.07.45% Guaranteed Notes 2006
    
    
    138.1
    
    
    
    150.6
    
    
    
    
    
    
    
    Pollution Control and Industrial Bonds
    
    
    16.7
    
    
    
    18.3
    
    
    
    
    
    
    
    European Investment Bank loans
    
    
    15.7
    
    
    
    15.3
    
    
    
    
    
    
    
    6.75% Bonds 2004
    
    
    
    
    
    
    125.0
    
    
    
    
    
    
    
    125.01.00% Euroyen Bond 2006
    
    
    125.4
    
    
    
    134.7
    
    
    
    125.4
    
    
    
    134.757⁄8% Bonds 2009
    
    
    200.0
    
    
    
    200.0
    
    
    
    200.0
    
    
    
    200.06.50% Bonds 2016
    
    
    200.0
    
    
    
    200.0
    
    
    
    200.0
    
    
    
    200.0Medium-term notes
    
    
    224.1
    
    
    
    156.1
    
    
    
    224.1
    
    
    
    156.1Commercial paper
    
    
    5.5
    
    
    
    55.2
    
    
    
    
    
    
    
    Other borrowings
    
    
    101.8
    
    
    
    203.6
    
    
    
    77.1
    
    
    
    154.4Total borrowings and finance leases
    
    
    1,190.6
    
    
    
    1,445.6
    
    
    
    926.6
    
    
    
    1,070.2Less:Cash at bank and in hand
    
    
    228.2
    
    
    
    77.5
    
    
    
    80.8
    
    
    
    Net borrowings and finance leases
    
    
    962.4
    
    
    
    1,368.1
    
    
    
    845.8
    
    
    
    1,070.2
 A reconciliation of net cash flow to the movement in
net debt is given in note 27 b). b) MaturityGroup
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionLong and medium-term bank loansRepayable  beyond five years
    
    
    17.0
    
    
    
    19.1
    
    
    
    
    
    
    
     two to five years
    
    
    26.1
    
    
    
    59.1
    
    
    
    0.2
    
    
    
    (2.9
    ) one to two years
    
    
    45.4
    
    
    
    30.7
    
    
    
    (2.9
    )
    
    
    (17.8
    )Loans other than from banksRepayable  beyond five years
    
    
    303.5
    
    
    
    502.2
    
    
    
    298.3
    
    
    
    496.6 two to five years
    
    
    383.6
    
    
    
    352.1
    
    
    
    378.9
    
    
    
    193.4 one to two years
    
    
    147.4
    
    
    
    113.9
    
    
    
    
    
    
    
    97.3Finance leases repayable beyond one year
    
    
    5.5
    
    
    
    7.6
    
    
    
    
    
    
    
    Borrowings and finance leases (note 19 a))
    
    
    928.5
    
    
    
    1,084.7
    
    
    
    674.5
    
    
    
    766.6Short-term  repayable within one yearBank loans and overdrafts
    
    
    80.1
    
    
    
    164.6
    
    
    
    83.2
    
    
    
    178.6Loans other than from banks
    
    
    179.4
    
    
    
    182.0
    
    
    
    168.9
    
    
    
    125.0Finance leases
    
    
    2.6
    
    
    
    14.3
    
    
    
    
    
    
    
    Total borrowings and finance leases
    
    
    1,190.6
    
    
    
    1,445.6
    
    
    
    926.6
    
    
    
    1,070.2Less:Cash at bank and in hand
    
    
    228.2
    
    
    
    77.5
    
    
    
    80.8
    
    
    
    Net borrowings and finance leases
    
    
    962.4
    
    
    
    1,368.1
    
    
    
    845.8
    
    
    
    1,070.2
 2004
    
    
    2003Finance
    
    
    Other
    
    
    
    
    
    
    Finance
    
    
    Otherleases
    
    
    borrowings
    
    
    Total
    
    
    leases
    
    
    borrowings
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionRepayment profile of
borrowings and finance
leasesLong-term repayable beyond five years
    
    
    
    
    
    
    320.5
    
    
    
    320.5
    
    
    
    0.5
    
    
    
    521.3
    
    
    
    521.8 four to five years
    
    
    0.1
    
    
    
    201.4
    
    
    
    201.5
    
    
    
    0.2
    
    
    
    62.6
    
    
    
    62.8 three to four years
    
    
    0.8
    
    
    
    58.6
    
    
    
    59.4
    
    
    
    2.3
    
    
    
    149.3
    
    
    
    151.6 two to three years
    
    
    2.6
    
    
    
    149.7
    
    
    
    152.3
    
    
    
    2.7
    
    
    
    199.3
    
    
    
    202.0 one to two years
    
    
    2.0
    
    
    
    192.8
    
    
    
    194.8
    
    
    
    1.9
    
    
    
    144.6
    
    
    
    146.5Total
    
    
    5.5
    
    
    
    923.0
    
    
    
    928.5
    
    
    
    7.6
    
    
    
    1,077.1
    
    
    
    1,084.7
 111 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 20. Net borrowings and finance leasescontinued c) Short-term interest rates  d) Facilities  2004
    
    
    2003$ million
    
    
    $ millionFour to five years
    
    
    
    
    
    
    450.0Three to four years
    
    
    450.0
    
    
    
    Two to three years
    
    
    
    
    
    
    One to two years
    
    
    
    
    
    
    Within one year
    
    
    
    
    
    
    450.0
    
    
    
    450.0
  e) Security  21. Financial instruments a) Interest rate, currency
and counterparty exposure  Interest rate swaps  2004
    
    
    2003Maturity profile
    
    £ million
    
    
    £ millionBeyond five years
    
    
    
    
    
    
    200.0Four to five years
    
    
    200.0
    
    
    
    92.6Three to four years
    
    
    85.3
    
    
    
    Two to three years
    
    
    
    
    
    
    One to two years
    
    
    
    
    
    
    Within one year
    
    
    
    
    
    
    125.0285.3
    
    
    
    417.6
 %
    
    
    %Weighted average receivable swap rate
    
    
    3.8
    
    
    
    5.2Weighted average payable swap rate
    
    
    4.5
    
    
    
    4.0
   112 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 21. Financial instrumentscontinued Currency swaps  2004
    
    
    2003Net
    
    
    
    
    
    
    NetCash at
    
    
    
    
    
    
    borrowings
    
    
    Capital
    
    
    borrowingsCapital
    
    
    Gross
    
    
    bank and
    
    
    Currency
    
    
    and finance
    
    
    employed
    
    
    and financeemployed
    
    
    borrowings
    
    
    in hand
    
    
    swaps
    
    
    leases
    
    
    (restated)
    
    
    leases£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionSterling
    
    
    593.6
    
    
    
    (478.1
    )
    
    
    71.5
    
    
    
    302.0
    
    
    
    (104.6
    )
    
    
    626.6
    
    
    
    (285.3
    )US dollar
    
    
    918.9
    
    
    
    (178.1
    )
    
    
    15.5
    
    
    
    (189.8
    )
    
    
    (352.4
    )
    
    
    1,152.0
    
    
    
    (444.4
    )Australian dollar
    
    
    298.7
    
    
    
    (0.1
    )
    
    
    16.1
    
    
    
    (92.0
    )
    
    
    (76.0
    )
    
    
    333.7
    
    
    
    (95.7
    )South African rand
    
    
    314.0
    
    
    
    (54.6
    )
    
    
    40.2
    
    
    
    (85.2
    )
    
    
    (99.6
    )
    
    
    306.4
    
    
    
    (47.7
    )Japanese yen
    
    
    186.7
    
    
    
    (204.8
    )
    
    
    2.6
    
    
    
    48.1
    
    
    
    (154.1
    )
    
    
    265.6
    
    
    
    (237.9
    )Canadian dollar
    
    
    104.2
    
    
    
    (6.7
    )
    
    
    1.7
    
    
    
    (35.0
    )
    
    
    (40.0
    )
    
    
    115.1
    
    
    
    (56.0
    )Thai baht
    
    
    121.0
    
    
    
    (54.9
    )
    
    
    2.9
    
    
    
    
    
    
    
    (52.0
    )
    
    
    134.2
    
    
    
    (67.2
    )Other
    
    
    683.3
    
    
    
    (213.3
    )
    
    
    77.7
    
    
    
    51.9
    
    
    
    (83.7
    )
    
    
    723.5
    
    
    
    (133.9
    )Total
    
    
    3,220.4
    
    
    
    (1,190.6
    )
    
    
    228.2
    
    
    
    
    
    
    
    (962.4
    )
    
    
    3,657.1
    
    
    
    (1,368.1
    )
   2004
    
    
    2003Fixed rate
    
    
    Floating rate
    
    
    Total
    
    
    Fixed rate
    
    
    Floating rate
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionSterling
    
    
    296.8
    
    
    
    (192.2
    )
    
    
    104.6
    
    
    
    300.2
    
    
    
    (14.9
    )
    
    
    285.3US dollar
    
    
    279.1
    
    
    
    73.3
    
    
    
    352.4
    
    
    
    303.6
    
    
    
    140.8
    
    
    
    444.4Australian dollar
    
    
    0.1
    
    
    
    75.9
    
    
    
    76.0
    
    
    
    1.1
    
    
    
    94.6
    
    
    
    95.7South African rand
    
    
    38.0
    
    
    
    61.6
    
    
    
    99.6
    
    
    
    40.7
    
    
    
    7.0
    
    
    
    47.7Japanese yen
    
    
    151.7
    
    
    
    2.4
    
    
    
    154.1
    
    
    
    163.3
    
    
    
    74.6
    
    
    
    237.9Canadian dollar
    
    
    22.8
    
    
    
    17.2
    
    
    
    40.0
    
    
    
    22.3
    
    
    
    33.7
    
    
    
    56.0Thai baht
    
    
    54.9
    
    
    
    (2.9
    )
    
    
    52.0
    
    
    
    58.3
    
    
    
    8.9
    
    
    
    67.2Other
    
    
    44.4
    
    
    
    39.3
    
    
    
    83.7
    
    
    
    42.3
    
    
    
    91.6
    
    
    
    133.9Total
    
    
    887.8
    
    
    
    74.6
    
    
    
    962.4
    
    
    
    931.8
    
    
    
    436.3
    
    
    
    1,368.1
 Counterparty risk  113 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 21. Financial instrumentscontinued b) Fair value information i) Fair values of financial instruments
  2004
    
    
    2003Carrying
    
    
    
    
    
    
    Carryingamount
    
    
    Fair value
    
    
    amount
    
    
    Fair valueNotes
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionPrimary financial instrumentsLoans to joint ventures and associates
    
    
    1
    
    
    
    202.6
    
    
    
    202.6
    
    
    
    107.9
    
    
    
    107.9Other fixed asset investments
    
    
    2
    
    
    
    34.5
    
    
    
    41.8
    
    
    
    38.8
    
    
    
    39.7Current asset investments
    
    
    3
    
    
    
    20.8
    
    
    
    20.8
    
    
    
    21.8
    
    
    
    21.8Cash at bank and in hand
    
    
    4
    
    
    
    228.2
    
    
    
    228.2
    
    
    
    77.5
    
    
    
    77.5Borrowings and finance leases (excluding swap agreements)
    
    
    5
    
    
    
    (1,218.5
    )
    
    
    (1,286.9
    )
    
    
    (1,463.3
    )
    
    
    (1,559.4
    )Other creditors: amounts falling due after more than one year
    
    
    6
    
    
    
    (26.8
    )
    
    
    (26.8
    )
    
    
    (37.1
    )
    
    
    (37.1
    )Provisions for liabilities and charges
    
    
    6
    
    
    
    (10.5
    )
    
    
    (10.5
    )
    
    
    (10.6
    )
    
    
    (10.6
    )Derivative financial instruments held to manage the Groups interest rate and
currency risk profileForeign currency and interest rate swap agreements
    
    
    7
    
    
    
    27.9
    
    
    
    18.4
    
    
    
    17.7
    
    
    
    25.6Forward foreign exchange contracts
    
    
    8
    
    
    
    
    
    
    
    7.5
    
    
    
    
    
    
    
    5.8Net financial instruments
    
    
    
    
    
    
    (741.8
    )
    
    
    (804.9
    )
    
    
    (1,247.3
    )
    
    
    (1,328.8
    )Financial assets
    
    
    
    
    
    
    486.1
    
    
    
    
    
    
    
    246.0Financial liabilities
    
    
    9
    
    
    
    (1,227.9
    )
    
    
    
    
    
    
    (1,493.3
    )Net financial instruments
    
    
    
    
    
    
    (741.8
    )
    
    
    
    
    
    
    (1,247.3
    )
 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 based on market valuations at the balance sheet date.8.
    
    The fair value is based on market prices and exchange rates at the
balance sheet date.9.
    
    Includes foreign currency and interest rate swap agreements. ii) Hedges    Swap agreementsGains
    
    
    Losses
    
    
    Net£ million
    
    
    £ million
    
    
    £ millionDeferred gains and lossesDeferred gains and losses on hedges at 1 October 2003
    
    
    23.4
    
    
    
    (5.7
    )
    
    
    17.7Gains and losses on hedges maturing in 2004
    
    
    (2.7
    )
    
    
    5.7
    
    
    
    3.0Deferred gains and losses on hedges recognised in the
statement of total recognised gains and losses in 2004
    
    
    14.2
    
    
    
    (7.0
    )
    
    
    7.2Deferred gains and losses on hedges at 30 September 2004
    
    
    34.9
    
    
    
    (7.0
    )
    
    
    27.9
 114 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 21. Financial instrumentscontinued  Forward foreignexchange contracts
    
    
    Swap agreementsGains
    
    
    Losses
    
    
    Gains
    
    
    Losses
    
    
    Net total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionUnrecognised gains and lossesUnrecognised gains and losses on hedges at 1 October 2003
    
    
    6.9
    
    
    
    (1.1
    )
    
    
    18.9
    
    
    
    (11.0
    )
    
    
    13.7Gains and losses arising in previous years that were recognised in 2004
    
    
    (5.1
    )
    
    
    0.7
    
    
    
    (18.0
    )
    
    
    0.6
    
    
    
    (21.8
    )Gains and losses arising before 2003 that were not recognised in 2004
    
    
    1.8
    
    
    
    (0.4
    )
    
    
    0.9
    
    
    
    (10.4
    )
    
    
    (8.1
    )Gains and losses arising in 2004 that were not recognised in 2004
    
    
    6.6
    
    
    
    (0.5
    )
    
    
    0.3
    
    
    
    (0.3
    )
    
    
    6.1Unrecognised gains and losses on hedges at 30 September 2004
    
    
    8.4
    
    
    
    (0.9
    )
    
    
    1.2
    
    
    
    (10.7
    )
    
    
    (2.0
    )Of whichGains and losses expected to be recognised in 2005
    
    
    7.9
    
    
    
    (0.7
    )
    
    
    0.6
    
    
    
    (0.5
    )
    
    
    7.3Gains and losses expected to be recognised in 2006 or later
    
    
    0.5
    
    
    
    (0.2
    )
    
    
    0.6
    
    
    
    (10.2
    )
    
    
    (9.3
    )
 c) Currency exposures   d) Financial instruments i) Financial assets
  2004
    
    
    2003Financial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financialassets on
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    assets onFloating rate
    
    
    Fixed rate
    
    
    which no
    
    
    Total
    
    
    Floating rate
    
    
    Fixed rate
    
    
    which no
    
    
    Totalfinancial
    
    
    financial
    
    
    interest is
    
    
    financial
    
    
    financial
    
    
    financial
    
    
    interest is
    
    
    financialassets
    
    
    assets
    
    
    received
    
    
    assets
    
    
    assets
    
    
    assets
    
    
    received
    
    
    assets£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionSterling
    
    
    81.0
    
    
    
    
    
    
    
    2.3
    
    
    
    83.3
    
    
    
    14.7
    
    
    
    
    
    
    
    2.3
    
    
    
    17.0US dollar
    
    
    34.0
    
    
    
    184.1
    
    
    
    32.6
    
    
    
    250.7
    
    
    
    23.1
    
    
    
    100.7
    
    
    
    20.2
    
    
    
    144.0Australian dollar
    
    
    16.1
    
    
    
    
    
    
    
    
    
    
    
    16.1
    
    
    
    3.0
    
    
    
    
    
    
    
    
    
    
    
    3.0South African rand
    
    
    44.2
    
    
    
    
    
    
    
    3.8
    
    
    
    48.0
    
    
    
    32.3
    
    
    
    
    
    
    
    3.1
    
    
    
    35.4Japanese yen
    
    
    2.6
    
    
    
    
    
    
    
    
    
    
    
    2.6
    
    
    
    0.8
    
    
    
    
    
    
    
    
    
    
    
    0.8Canadian dollar
    
    
    1.7
    
    
    
    
    
    
    
    
    
    
    
    1.7
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    0.2Thai baht
    
    
    5.1
    
    
    
    
    
    
    
    0.7
    
    
    
    5.8
    
    
    
    4.7
    
    
    
    
    
    
    
    0.8
    
    
    
    5.5Other
    
    
    69.1
    
    
    
    8.7
    
    
    
    0.1
    
    
    
    77.9
    
    
    
    40.1
    
    
    
    
    
    
    
    
    
    
    
    40.1Total
    
    
    253.8
    
    
    
    192.8
    
    
    
    39.5
    
    
    
    486.1
    
    
    
    118.9
    
    
    
    100.7
    
    
    
    26.4
    
    
    
    246.0
 2004
    
    
    2003Fixed rate financial assets
    
    
    Fixed rate financial assetsWeighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageWeighted
    
    
    period for
    
    
    Weighted
    
    
    period foraverage
    
    
    which rate
    
    
    average
    
    
    which rateinterest rate
    
    
    is fixed
    
    
    interest rate
    
    
    is fixed%
    
    
    years
    
    
    %
    
    
    yearsUS dollar
    
    
    8.2
    
    
    
    3.5
    
    
    
    7.2
    
    
    
    4.5Other
    
    
    5.2
    
    
    
    0.3
    
    
    
    
    
    
    
    
    115 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 21. Financial instrumentscontinued ii) Financial liabilities  2004
    
    
    2003Financial
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Financialliabilities on
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    liabilities onFloating rate
    
    
    Fixed rate
    
    
    which no
    
    
    Total
    
    
    Floating rate
    
    
    Fixed rate
    
    
    which no
    
    
    Totalfinancial
    
    
    financial
    
    
    interest
    
    
    financial
    
    
    financial
    
    
    financial
    
    
    interest
    
    
    financialliabilities
    
    
    liabilities
    
    
    is paid
    
    
    liabilities
    
    
    liabilities
    
    
    liabilities
    
    
    is paid
    
    
    liabilities£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionSterling
    
    
    (120.7
    )
    
    
    296.8
    
    
    
    2.5
    
    
    
    178.6
    
    
    
    (13.2
    )
    
    
    300.2
    
    
    
    4.0
    
    
    
    291.0US dollar
    
    
    99.3
    
    
    
    279.1
    
    
    
    4.8
    
    
    
    383.2
    
    
    
    155.0
    
    
    
    303.6
    
    
    
    9.2
    
    
    
    467.8Australian dollar
    
    
    92.0
    
    
    
    0.1
    
    
    
    
    
    
    
    92.1
    
    
    
    97.6
    
    
    
    1.1
    
    
    
    
    
    
    
    98.7South African rand
    
    
    101.8
    
    
    
    38.0
    
    
    
    
    
    
    
    139.8
    
    
    
    33.0
    
    
    
    40.7
    
    
    
    
    
    
    
    73.7Japanese yen
    
    
    5.0
    
    
    
    151.7
    
    
    
    0.7
    
    
    
    157.4
    
    
    
    75.4
    
    
    
    163.3
    
    
    
    0.8
    
    
    
    239.5Canadian dollar
    
    
    18.9
    
    
    
    22.8
    
    
    
    
    
    
    
    41.7
    
    
    
    33.9
    
    
    
    22.3
    
    
    
    0.9
    
    
    
    57.1Thai baht
    
    
    
    
    
    
    54.9
    
    
    
    10.9
    
    
    
    65.8
    
    
    
    11.0
    
    
    
    58.3
    
    
    
    13.0
    
    
    
    82.3Other
    
    
    108.3
    
    
    
    53.1
    
    
    
    7.9
    
    
    
    169.3
    
    
    
    131.7
    
    
    
    42.3
    
    
    
    9.2
    
    
    
    183.2Total
    
    
    304.6
    
    
    
    896.5
    
    
    
    26.8
    
    
    
    1,227.9
    
    
    
    524.4
    
    
    
    931.8
    
    
    
    37.1
    
    
    
    1,493.3
 2004
    
    
    2003Fixed rate financial liabilities
    
    
    Fixed rate financial liabilitiesWeighted
    
    
    
    
    
    
    Weightedaverage
    
    
    
    
    
    
    averageWeighted
    
    
    period for
    
    
    Weighted
    
    
    period foraverage
    
    
    which rate is
    
    
    average
    
    
    which rate isinterest rate
    
    
    fixed
    
    
    interest rate
    
    
    fixed%
    
    
    years
    
    
    %
    
    
    yearsSterling
    
    
    9.2
    
    
    
    11.9
    
    
    
    8.3
    
    
    
    12.9US dollar
    
    
    5.8
    
    
    
    2.0
    
    
    
    5.8
    
    
    
    3.0Australian dollar
    
    
    5.7
    
    
    
    1.8
    
    
    
    6.2
    
    
    
    3.0South African rand
    
    
    12.8
    
    
    
    3.3
    
    
    
    12.2
    
    
    
    4.9Japanese yen
    
    
    0.9
    
    
    
    1.9
    
    
    
    0.9
    
    
    
    2.9Canadian dollar
    
    
    4.7
    
    
    
    4.0
    
    
    
    4.7
    
    
    
    1.0Thai baht
    
    
    3.7
    
    
    
    1.4
    
    
    
    3.9
    
    
    
    1.8Other
    
    
    6.0
    
    
    
    2.6
    
    
    
    6.9
    
    
    
    3.0
    22. Provisions for liabilities and charges Deferredtax
    
    
    Other provisionsIncentiveand otheremployee
    
    
    Uninsuredprovisions
    
    
    losses
    
    
    Environmental
    
    
    Other
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionAt 1 October 2003
    
    
    279.2
    
    
    
    26.1
    
    
    
    21.8
    
    
    
    19.7
    
    
    
    29.8
    
    
    
    97.4Exchange adjustment
    
    
    (4.1
    )
    
    
    (1.7
    )
    
    
    (1.7
    )
    
    
    (1.6
    )
    
    
    (0.8
    )
    
    
    (5.8
    )Provided in the year
    
    
    
    
    
    
    3.9
    
    
    
    0.8
    
    
    
    6.0
    
    
    
    10.3
    
    
    
    21.0Released in the year
    
    
    (14.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (1.2
    )Utilised in the year
    
    
    
    
    
    
    (5.9
    )
    
    
    (0.2
    )
    
    
    (4.8
    )
    
    
    (9.9
    )
    
    
    (20.8
    )Acquisitions/(disposals) of businesses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.1
    
    
    
    
    
    
    
    3.1Other movements1
    
    
    (7.3
    )
    
    
    (1.2
    )
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    (1.5
    )At 30 September 2004
    
    
    253.0
    
    
    
    21.2
    
    
    
    20.7
    
    
    
    22.4
    
    
    
    27.9
    
    
    
    92.2
 1.
    
    The other movements in deferred tax relate mainly to the net profit and
loss charge on pensions which, for balance sheet purposes, is included
within the corresponding net pension asset/(liability) in accordance with
FRS17. 116 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 22. Provisions for liabilities and chargescontinued      23. Share capital Number of shares2004
    
    
    2003
    
    
    2004
    
    
    2003i) Analysis at 30 September
    
    million
    
    
    million
    
    
    £ million
    
    
    £ millionEquity capital:Issued capital  Ordinary shares of 25p each, called up and fully paid
    
    
    498.8
    
    
    
    497.7
    
    
    
    124.7
    
    
    
    124.4Unissued capital  unclassified shares of 25p each
    
    
    91.2
    
    
    
    92.3
    
    
    
    22.8
    
    
    
    23.1Authorised
    
    
    
    
    
    
    
    
    
    
    147.5
    
    
    
    147.5
 Numberii) Share issues
    
    millionIssues of Ordinary shares of 25p each during the year were:Under the savings related share option scheme
    
    
    0.7Under the senior executives share option scheme
    
    
    0.4
 24. Reserves a) Group Share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Jointpremium
    
    
    Revaluation
    
    
    Profit and
    
    
    Pensions
    
    
    ventures
    
    
    Associates
    
    
    Ownaccount
    
    
    reserves
    
    
    loss account
    
    
    reserves
    
    
    reserves
    
    
    reserves
    
    
    shares
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionAt 1 October 2003  previously reported
    
    
    366.0
    
    
    
    30.8
    
    
    
    1,198.4
    
    
    
    (291.1
    )
    
    
    273.3
    
    
    
    33.0
    
    
    
    
    
    
    
    1,610.4Prior year adjustment (see note 31)
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48.8
    )
    
    
    (48.1
    )At 1 October 2003  restated
    
    
    366.0
    
    
    
    30.8
    
    
    
    1,199.1
    
    
    
    (291.1
    )
    
    
    273.3
    
    
    
    33.0
    
    
    
    (48.8
    )
    
    
    1,562.3Total recognised gains and losses for the
year
    
    
    
    
    
    
    (0.7
    )
    
    
    198.9
    
    
    
    
    
    
    
    (35.3
    )
    
    
    (7.0
    )
    
    
    
    
    
    
    155.9Transfers in relation to pensions
    
    
    
    
    
    
    
    
    
    
    (37.5
    )
    
    
    37.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Reversal of goodwill on disposal of
a business
    
    
    
    
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15.3Consideration received for the sale of own
shares held in an ESOP trust
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.5
    
    
    
    2.5Credit in respect of employee share
schemes
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.5Dividends
    
    
    
    
    
    
    
    
    
    
    (197.3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (197.3
    )Premium on share issues (net)
    
    
    8.9
    
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8.4At 30 September 2004
    
    
    374.9
    
    
    
    30.1
    
    
    
    1,181.5
    
    
    
    (253.6
    )
    
    
    238.0
    
    
    
    26.0
    
    
    
    (46.3
    )
    
    
    1,550.6
          117 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 24. Reservescontinued b) Parent company Share
    
    
    
    
    
    
    Profitpremium
    
    
    Other
    
    
    and loss
    
    
    Ownaccount
    
    
    reserves
    
    
    account
    
    
    shares
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionAt 1 October 2003 - previously reported
    
    
    366.0
    
    
    
    336.4
    
    
    
    853.3
    
    
    
    
    
    
    
    1,555.7Prior year adjustment (see note 31)
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    (43.2
    )
    
    
    (42.5
    )At 1 October 2003 - restated
    
    
    366.0
    
    
    
    336.4
    
    
    
    854.0
    
    
    
    (43.2
    )
    
    
    1,513.2Profit for the financial year
    
    
    
    
    
    
    
    
    
    
    11.4
    
    
    
    
    
    
    
    11.4Dividends
    
    
    
    
    
    
    
    
    
    
    (197.4
    )
    
    
    
    
    
    
    (197.4
    )Premium on share issues (net)
    
    
    8.9
    
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    8.4Credit in respect of employee share schemes
    
    
    
    
    
    
    
    
    
    
    3.5
    
    
    
    
    
    
    
    3.5Net increase in investment in own shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.6
    )
    
    
    (2.6
    )At 30 September 2004
    
    
    374.9
    
    
    
    336.4
    
    
    
    671.0
    
    
    
    (45.8
    )
    
    
    1,336.5
   25. Financial commitments a) Annual operating lease commitments 2004
    
    
    2003Other
    
    
    
    
    
    
    OtherProperty
    
    
    operating
    
    
    Property
    
    
    operatingleases
    
    
    leases
    
    
    leases
    
    
    leases£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionOn leases expiring:Within one year
    
    
    2.1
    
    
    
    2.1
    
    
    
    2.3
    
    
    
    3.3Between one and two years
    
    
    2.2
    
    
    
    5.6
    
    
    
    1.8
    
    
    
    5.6Between two and five years
    
    
    5.4
    
    
    
    11.0
    
    
    
    6.3
    
    
    
    10.7Over five years
    
    
    14.9
    
    
    
    3.2
    
    
    
    16.5
    
    
    
    8.924.6
    
    
    
    21.9
    
    
    
    26.9
    
    
    
    28.5
 Operatingleases£ millionRentals are due under operating leases from
1 October 2004 to completion as follows:Year to 30 September 2005
    
    
    46.5Year to 30 September 2006
    
    
    39.4Year to 30 September 2007
    
    
    31.6Year to 30 September 2008
    
    
    26.0Year to 30 September 2009
    
    
    23.2Thereafter
    
    
    115.3282.0
 b) Other commitments  Year ending 30 September
    
    £ million2005
    
    
    57.92006
    
    
    66.32007
    
    
    65.02008
    
    
    65.82009
    
    
    60.5Thereafter
    
    
    418.8734.3
  118 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 26. Contingent liabilities and legal proceedings a) Contingent liabilities Group
    
    
    Parent2004
    
    
    2003
    
    
    2004
    
    
    2003£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionGuarantees of joint ventures borrowings
    
    
    8.9
    
    
    
    2.8
    
    
    
    8.9
    
    
    
    2.8Guarantees of subsidiaries borrowings
    
    
    
    
    
    
    
    
    
    
    289.5
    
    
    
    387.6Other guarantees
    
    
    32.9
    
    
    
    24.0
    
    
    
    18.0
    
    
    
    10.541.8
    
    
    
    26.8
    
    
    
    316.4
    
    
    
    400.9
 b) Legal proceedings   Welding fumes litigation     Fluorogas litigation    ERISA litigation   119 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 27. Cash flow a) Net cash inflow from operating activities 2004
    
    
    2003
    
    
    2002Notes
    
    £ million
    
    
    £ million
    
    
    £ millionTotal operating profit before exceptional items
    
    
    
    
    
    
    576.9
    
    
    
    505.6
    
    
    
    500.1Depreciation and amortisation
    
    
    
    
    
    
    324.0
    
    
    
    333.4
    
    
    
    330.9Net retirement benefits charge less contributions
    
    
    
    
    
    
    (15.9
    )
    
    
    5.6
    
    
    
    49.9Operating profit before exceptional items of joint ventures
    
    
    
    
    
    
    (99.4
    )
    
    
    (86.8
    )
    
    
    (63.8
    )Operating profit before exceptional items of associates
    
    
    
    
    
    
    (13.1
    )
    
    
    (11.4
    )
    
    
    (10.7
    )Change in stocks
    
    
    
    
    
    
    (25.0
    )
    
    
    (16.6
    )
    
    
    13.7Change in debtors
    
    
    
    
    
    
    (35.1
    )
    
    
    2.5
    
    
    
    (38.4
    )Change in creditors
    
    
    
    
    
    
    44.0
    
    
    
    10.8
    
    
    
    57.3Exceptional cash flows
    
    
    
    
    
    
    (11.9
    )
    
    
    (28.3
    )
    
    
    (67.3
    )Other
    
    
    
    
    
    
    14.0
    
    
    
    (14.7
    )
    
    
    (12.4
    )Net cash inflow from operating activities
    
    
    
    
    
    
    758.5
    
    
    
    700.1
    
    
    
    759.3b) Reconciliation of net cash flow to movement in net debt(Increase)/decrease in cash
    
    
    
    
    
    
    (150.1
    )
    
    
    102.5
    
    
    
    (21.4
    )(Decrease)/increase in debt
    
    
    27
    (d)
    
    
    (180.7
    )
    
    
    (128.7
    )
    
    
    64.1(Increase)/decrease in liquid resources
    
    
    
    
    
    
    (20.8
    )
    
    
    16.2
    
    
    
    52.6Change in net debt resulting from cash flows
    
    
    
    
    
    
    (351.6
    )
    
    
    (10.0
    )
    
    
    95.3Net borrowings assumed at acquisition
    
    
    
    
    
    
    4.7
    
    
    
    0.8
    
    
    
    0.5Net liquid resources eliminated on disposal
    
    
    
    
    
    
    
    
    
    
    31.0
    
    
    
    Inception of finance leases
    
    
    
    
    
    
    0.2
    
    
    
    
    
    
    
    0.4Exchange adjustment
    
    
    
    
    
    
    (59.0
    )
    
    
    20.7
    
    
    
    (42.7
    )Movement in net debt in the year
    
    
    
    
    
    
    (405.7
    )
    
    
    42.5
    
    
    
    53.5Net debt at 1 October
    
    
    
    
    
    
    1,368.1
    
    
    
    1,325.6
    
    
    
    1,272.1Net debt at 30 September
    
    
    
    
    
    
    962.4
    
    
    
    1,368.1
    
    
    
    1,325.6
 c) Analysis of net debt Acquisitions/disposalsAt
    
    
    
    
    
    
    (excluding
    
    
    Other
    
    
    
    
    
    
    At1 October
    
    
    
    
    
    
    cash and
    
    
    non-cash
    
    
    Exchange
    
    
    30 September2003
    
    
    Cash flow
    
    
    overdrafts)
    
    
    changes
    
    
    adjustment
    
    
    2004£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionCash at bank and in hand due within one year
    
    
    77.5
    
    
    
    153.5
    
    
    
    
    
    
    
    
    
    
    
    (2.8
    )
    
    
    228.2Borrowings and finance leases due within one year
    
    
    (360.9
    )
    
    
    230.6
    
    
    
    (4.6
    )
    
    
    (146.1
    )
    
    
    18.9
    
    
    
    (262.1
    )Borrowings and finance leases due beyond one year
    
    
    (1,084.7
    )
    
    
    (32.5
    )
    
    
    (0.1
    )
    
    
    145.9
    
    
    
    42.9
    
    
    
    (928.5
    )Net borrowings and finance leases
    
    
    (1,368.1
    )
    
    
    351.6
    
    
    
    (4.7
    )
    
    
    (0.2
    )
    
    
    59.0
    
    
    
    (962.4
    )
 d) (Decrease)/increase in debt 2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ million6.75% Bonds 2004
    
    
    (125.0
    )
    
    
    
    
    
    
    6 1/4% Notes 2002
    
    
    
    
    
    
    (38.2
    )
    
    
    5 7/8 % Bonds 2009
    
    
    
    
    
    
    
    
    
    
    200.07 1/4% Notes 2002
    
    
    
    
    
    
    
    
    
    
    (150.0
    )Medium-term notes
    
    
    74.8
    
    
    
    93.7
    
    
    
    59.7European Investment Bank loans
    
    
    
    
    
    
    (72.4
    )
    
    
    (5.0
    )Pollution Control and Industrial Bonds
    
    
    
    
    
    
    
    
    
    
    (18.5
    )(Repayment)/net issues of commercial paper
    
    
    (42.6
    )
    
    
    (90.7
    )
    
    
    59.5Other (net)
    
    
    (87.9
    )
    
    
    (21.1
    )
    
    
    (81.6
    )(Decrease)/increase in debt
    
    
    (180.7
    )
    
    
    (128.7
    )
    
    
    64.1
 120 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 28. Acquisitions and disposals a) Cash flow 2004
    
    
    2003
    
    
    2002Acquisitions
    
    
    Disposals
    
    
    Acquisitions
    
    
    Disposals
    
    
    Acquisitions
    
    
    Disposals£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionCash flow arising on the acquisition and disposal of
businessesGoodwill
    
    
    
    
    
    
    4.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Intangible fixed assets
    
    
    
    
    
    
    
    
    
    
    (2.4
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    0.2Tangible fixed assets
    
    
    (3.7
    )
    
    
    102.3
    
    
    
    (61.5
    )
    
    
    0.8
    
    
    
    (85.7
    )
    
    
    1.3Joint ventures, associates and other investments
    
    
    (80.6
    )
    
    
    10.2
    
    
    
    (4.8
    )
    
    
    1.1
    
    
    
    (12.4
    )
    
    
    0.2Stocks
    
    
    (0.5
    )
    
    
    16.2
    
    
    
    (2.7
    )
    
    
    0.1
    
    
    
    (20.9
    )
    
    
    2.4Debtors
    
    
    (5.3
    )
    
    
    25.2
    
    
    
    (15.3
    )
    
    
    0.1
    
    
    
    (37.5
    )
    
    
    0.7Cash at bank and in hand
    
    
    (2.8
    )
    
    
    
    
    
    
    
    
    
    
    0.2
    
    
    
    (13.5
    )
    
    
    Creditors including taxation
    
    
    2.5
    
    
    
    3.8
    
    
    
    7.8
    
    
    
    (0.1
    )
    
    
    55.7
    
    
    
    (1.2
    )Borrowings
    
    
    4.7
    
    
    
    
    
    
    
    0.8
    
    
    
    
    
    
    
    21.4
    
    
    
    Minorities
    
    
    (0.8
    )
    
    
    0.2
    
    
    
    (2.2
    )
    
    
    0.3
    
    
    
    (8.6
    )
    
    
    7.8Net assets (acquired)/disposed of
    
    
    (86.5
    )
    
    
    162.5
    
    
    
    (80.3
    )
    
    
    2.5
    
    
    
    (102.0
    )
    
    
    11.4Goodwill on
acquisitions of
subsidiaries1
    
    
    (2.9
    )
    
    
    
    
    
    
    (46.7
    )
    
    
    
    
    
    
    (112.3
    )
    
    
    Goodwill on acquisitions of joint ventures and associates
    
    
    41.5
    
    
    
    
    
    
    
    (8.0
    )
    
    
    
    
    
    
    
    
    
    
    Goodwill in reserves written off on disposals
    
    
    
    
    
    
    15.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (Deficits)/surplus over book value on disposals
    
    
    
    
    
    
    (79.5
    )
    
    
    
    
    
    
    (0.7
    )
    
    
    
    
    
    
    2.5(Acquisition)/disposal price
    
    
    (47.9
    )
    
    
    98.3
    
    
    
    (135.0
    )
    
    
    1.8
    
    
    
    (214.3
    )
    
    
    13.9Deferred
(payments)/receipts2
    
    
    (3.0
    )
    
    
    
    
    
    
    (0.5
    )
    
    
    2.1
    
    
    
    7.0
    
    
    
    (3.3
    )(50.9
    )
    
    
    98.3
    
    
    
    (135.5
    )
    
    
    3.9
    
    
    
    (207.3
    )
    
    
    10.6
 1.
    
    Goodwill on acquisition of subsidiaries comprises £3.9 million in respect
of acquisitions in 2004 and an adjustment of £1.0 million relating to
prior year acquisitions. See note 11 a).2.
    
    Deferred payments and receipts include amounts for current years and
payments and/or receipts in respect of prior years. In September 2004, BOC acquired an additional 30 per cent ownership interest in
Compania de Nitrogeno de Cantarell
(CNC) from Duke Energy, increasing BOCs overall stake in CNC to 65 per cent.
This followed a decision by Duke Energy that a sale of their interest was more
in line with their long-term strategy. BOC continues to account for CNC as a
joint venture as, in accordance with UK GAAP FRS9 (Associates and joint
ventures), it is a company jointly controlled by BOC and another party.  b) Fair value of acquisitions Total bookvalue ofCNC
    
    
    Other
    
    
    businessesbook value
    
    
    book value
    
    
    acquired£ million
    
    
    £ million
    
    
    £ millionTangible fixed assets
    
    
    
    
    
    
    (3.7
    )
    
    
    (3.7
    )Joint ventures, associates and other investments
    
    
    (74.1
    )
    
    
    (6.5
    )
    
    
    (80.6
    )Stocks
    
    
    
    
    
    
    (0.5
    )
    
    
    (0.5
    )Debtors
    
    
    
    
    
    
    (5.3
    )
    
    
    (5.3
    )Cash at bank and in hand
    
    
    
    
    
    
    (2.8
    )
    
    
    (2.8
    )Creditors including taxation
    
    
    
    
    
    
    2.5
    
    
    
    2.5Borrowings
    
    
    
    
    
    
    4.7
    
    
    
    4.7Minorities
    
    
    
    
    
    
    (0.8
    )
    
    
    (0.8
    )Net (assets) acquired
    
    
    (74.1
    )
    
    
    (12.4
    )
    
    
    (86.5
    )Payment
    
    
    32.6
    
    
    
    18.3
    
    
    
    50.9Deferred payment
    
    
    
    
    
    
    (3.0
    )
    
    
    (3.0
    )Consideration
    
    
    32.6
    
    
    
    15.3
    
    
    
    47.9Goodwill on acquisitions of subsidiaries
    
    
    
    
    
    
    (2.9
    )
    
    
    (2.9
    )Goodwill on acquisitions of joint ventures and associates
    
    
    41.5
    
    
    
    
    
    
    
    41.574.1
    
    
    
    12.4
    
    
    
    86.5
  121 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 28. Acquisitions and disposalscontinued  Air ProductsCanada
    
    
    
    
    
    
    Total book
    
    
    
    
    
    
    Total fairEMC
    
    
    Praxair
    
    
    packaged
    
    
    
    
    
    
    value of
    
    
    
    
    
    
    value ofWater Services
    
    
    Polska
    
    
    gases business
    
    
    Other
    
    
    businesses
    
    
    Total
    
    
    businessesbook value
    
    
    book value
    
    
    book value
    
    
    book value
    
    
    acquired
    
    
    adjustments
    
    
    acquired£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionIntangible 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
    
    
    
    
    
    
    
    7.8Borrowings
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    0.7
    
    
    
    0.8
    
    
    
    
    
    
    
    0.8Minorities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (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
    
    
    
    
    
    
    
    135.5Deferred payment
    
    
    1.0
    
    
    
    
    
    
    
    0.9
    
    
    
    (2.4
    )
    
    
    (0.5
    )
    
    
    
    
    
    
    (0.5
    )Consideration
    
    
    32.1
    
    
    
    29.2
    
    
    
    26.5
    
    
    
    47.2
    
    
    
    135.0
    
    
    
    
    
    
    
    135.0Goodwill 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
 The fair value adjustments were all in respect of the acquisition of the Canadian packaged gases business of Air Products. The fair value of acquisitions in 2002 were: UniqueGas andPetrochemicals
    
    
    Seiko
    
    
    
    
    
    
    Total book
    
    
    
    
    
    
    Total fairSmiths
    
    
    Public
    
    
    Instruments
    
    
    
    
    
    
    value of
    
    
    
    
    
    
    value ofGroup
    
    
    Company Ltd
    
    
    Inc
    
    
    Other
    
    
    businesses
    
    
    Total
    
    
    businessesbook value
    
    
    book value
    
    
    book value
    
    
    book value
    
    
    acquired
    
    
    adjustments
    
    
    acquired£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionIntangible 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
    )
    
    
    55.7Borrowings
    
    
    7.7
    
    
    
    0.3
    
    
    
    0.1
    
    
    
    13.3
    
    
    
    21.4
    
    
    
    
    
    
    
    21.4Minorities
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    207.3Deferred payment
    
    
    
    
    
    
    
    
    
    
    2.4
    
    
    
    4.6
    
    
    
    7.0
    
    
    
    
    
    
    
    7.0Consideration
    
    
    6.6
    
    
    
    39.7
    
    
    
    74.5
    
    
    
    93.5
    
    
    
    214.3
    
    
    
    
    
    
    
    214.3Goodwill 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
 122 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 28. Acquisitions and disposalscontinued  UniqueGas andPetrochemicals
    
    
    SeikoSmiths
    
    
    Public
    
    
    Instruments
    
    
    TotalGroup
    
    
    Company Ltd
    
    
    Inc
    
    
    adjustments£ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionValuationsTangible fixed assets
    
    
    
    
    
    
    (0.6
    )
    
    
    
    
    
    
    (0.6
    )Joint ventures, associates and other investments
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    0.6Alignment of accounting policiesTangible fixed assets
    
    
    1.5
    
    
    
    (4.5
    )
    
    
    
    
    
    
    (3.0
    )Stocks
    
    
    4.8
    
    
    
    
    
    
    
    0.3
    
    
    
    5.1Debtors
    
    
    0.1
    
    
    
    0.4
    
    
    
    
    
    
    
    0.5Taxation
    
    
    
    
    
    
    2.2
    
    
    
    
    
    
    
    2.2OtherCreditors
    
    
    
    
    
    
    (7.8
    )
    
    
    0.1
    
    
    
    (7.7
    )6.4
    
    
    
    (9.7
    )
    
    
    0.4
    
    
    
    (2.9
    )
 c) Exchange of business   Totalbook valueof businessdisposedValue of assets disposed
    
    £ millionTangible fixed assets
    
    
    169.3Joint ventures, associates and other investments
    
    
    3.0Stocks
    
    
    10.3Debtors
    
    
    69.2Net liquid resources
    
    
    30.9Creditors including taxation
    
    
    (86.5
    )Minorities
    
    
    (3.1
    )193.1Adjustment to reflect retention of 45 per cent share
    
    
    (86.9
    )Net assets disposed
    
    
    106.2
 Air Liquide
    
    
    
    
    
    
    Air LiquideJapan
    
    
    
    
    
    
    Japan
    
    
    OSK
    
    
    Total fairassets
    
    
    
    
    
    
    assets
    
    
    assets
    
    
    value ofcontributed
    
    
    Valuation
    
    
    contributed
    
    
    contributed
    
    
    combinedbook value
    
    
    adjustments
    
    
    at fair value
    
    
    at fair value
    
    
    businessValue of assets acquired
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionTangible fixed assets
    
    
    185.0
    
    
    
    40.8
    
    
    
    225.8
    
    
    
    169.3
    
    
    
    395.1Joint ventures, associates and other investments
    
    
    10.7
    
    
    
    
    
    
    
    10.7
    
    
    
    3.0
    
    
    
    13.7Stocks
    
    
    19.4
    
    
    
    
    
    
    
    19.4
    
    
    
    10.3
    
    
    
    29.7Debtors
    
    
    141.6
    
    
    
    
    
    
    
    141.6
    
    
    
    69.2
    
    
    
    210.8Net (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
    
    
    
    414.7BOC Group share of assets (45 per cent)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186.6Value of OSK retained by the Group (45 per cent)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (86.9
    )Fair value of assets acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99.7
 123 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 28. Acquisitions and disposalscontinued  Totaladjustments£ millionValuationsTangible fixed assets
    
    
    40.8Provisions
    
    
    9.3Alignment of accounting policiesPension liabilities
    
    
    (9.1
    )41.0
 Unrealised gain on disposal
    
    £ millionConsideration, fair value of assets acquired
    
    
    99.7Net assets disposed
    
    
    (106.2
    )(6.5
    )Negative goodwill credited on disposal of a subsidiary
    
    
    14.7Unrealised profit on disposal of a subsidiary
    
    
    8.2
 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  124 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 30. US accounting informationcontinued Revaluation of fixed assets  Impairment of tangible fixed assets    Restructuring costs   Pensions      Post retirement medical costs    Securities investments   Contingent consideration   Financial instruments   Accounting for swaps   125 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 30. US accounting informationcontinued Share of results and net assets of joint ventures and associates  Sale and leaseback transactions   Comprehensive income  b) Income statement in US GAAP format  2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionRevenue
    
    
    3,885.4
    
    
    
    3,718.3
    
    
    
    3,657.7Operating expensesPayroll costs
    
    
    (1,015.6
    )
    
    
    (1,037.8
    )
    
    
    (957.9
    )Depreciation and amortisation
    
    
    (324.0
    )
    
    
    (333.4
    )
    
    
    (330.9
    )Other operating expenses
    
    
    (2,060.9
    )
    
    
    (1,908.5
    )
    
    
    (1,963.5
    )Total operating expenses
    
    
    (3,400.5
    )
    
    
    (3,279.7
    )
    
    
    (3,252.3
    )Net operating income
    
    
    484.9
    
    
    
    438.6
    
    
    
    405.4Other income, net
    
    
    15.8
    
    
    
    9.4
    
    
    
    33.0Net interest expense
    
    
    (88.4
    )
    
    
    (96.1
    )
    
    
    (103.1
    )Income taxes
    
    
    (101.7
    )
    
    
    (96.4
    )
    
    
    (106.2
    )Minority interests
    
    
    (46.6
    )
    
    
    (36.4
    )
    
    
    (26.2
    )Net income
    
    
    264.0
    
    
    
    219.1
    
    
    
    202.9Earnings per share  basic
    
    
    53.5p
    
    
    
    44.5p
    
    
    
    41.4pEarnings per share  diluted
    
    
    53.5p
    
    
    
    44.5p
    
    
    
    41.2p
 c) Reconciliation of net profit 2004
    
    
    2003
    
    
    2002Years ended 30 September
    
    £ million
    
    
    £ million
    
    
    £ millionNet profit as reported in the Group profit
and loss account under UK GAAP
    
    
    264.0
    
    
    
    219.1
    
    
    
    202.9Pensions
    
    
    7.5
    
    
    
    62.5
    
    
    
    35.4Post retirement medical costs
    
    
    (2.4
    )
    
    
    
    
    
    
    0.3Revaluations realised on asset disposals
    
    
    
    
    
    
    1.1
    
    
    
    5.8Write-down of previously revalued assets
    
    
    
    
    
    
    
    
    
    
    20.5Depreciation of revalued fixed assets
    
    
    0.2
    
    
    
    0.1
    
    
    
    0.7Amortisation of goodwill previously charged to reserves
    
    
    
    
    
    
    
    
    
    
    (7.2
    )Non-amortisation of goodwill under SFAS142
    
    
    14.0
    
    
    
    13.9
    
    
    
    3.5Amortisation of other intangibles
    
    
    (0.5
    )
    
    
    (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
    
    
    0.3
    
    
    
    0.6
    
    
    
    Interest rate swaps
    
    
    1.6
    
    
    
    1.7
    
    
    
    1.9Financial instruments
    
    
    (15.7
    )
    
    
    (2.8
    )
    
    
    19.5Adjustment on disposal of the US packaged gas business
    
    
    39.9
    
    
    
    
    
    
    
    ESOPs and other share options
    
    
    3.5
    
    
    
    1.7
    
    
    
    (3.4
    )Sale and leaseback
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.2Taxation effect of above adjustments
    
    
    (14.8
    )
    
    
    (20.7
    )
    
    
    (24.7
    )Net income under US GAAP
    
    
    297.7
    
    
    
    264.3
    
    
    
    255.4
  126 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 30. US accounting informationcontinued 2004
    
    
    2003
    
    
    2002Average number of 25p Ordinary shares
    
    million
    
    
    million
    
    
    millionBasic
    
    
    493.0
    
    
    
    492.5
    
    
    
    490.4Diluted
    
    
    493.8
    
    
    
    492.7
    
    
    
    492.2
 2004
    
    
    2003
    
    
    2002pence
    
    
    pence
    
    
    penceEarnings per shareBasic
    
    
    60.4
    
    
    
    53.7
    
    
    
    52.1Diluted
    
    
    60.3
    
    
    
    53.6
    
    
    
    51.9
 d) Reconciliation of
shareholders funds 20032004
    
    
    (restated)At 30 September
    
    £ million
    
    
    £ millionShareholders funds reported in the Group balance sheet under UK GAAP
    
    
    1,675.3
    
    
    
    1,686.7UK minority interests
    
    
    202.8
    
    
    
    177.31,878.1
    
    
    
    1,864.0Pensions
    
    
    154.7
    
    
    
    48.8Post retirement medical costs
    
    
    (12.2
    )
    
    
    (12.5
    )Revaluations of fixed assets
    
    
    (36.8
    )
    
    
    (37.7
    )Goodwill previously charged to reserves
    
    
    62.7
    
    
    
    65.7Non-amortisation of goodwill under SFAS142
    
    
    31.4
    
    
    
    17.4Amortisation of other intangibles
    
    
    (1.0
    )
    
    
    (0.5
    )Goodwill on fair value adjustments
    
    
    
    
    
    
    1.8Interest rate swaps
    
    
    (2.7
    )
    
    
    (4.6
    )Share of net assets of joint ventures and associates
    
    
    17.6
    
    
    
    4.5Securities investments
    
    
    7.3
    
    
    
    39.8Consolidation of variable interest entity under FIN46
    
    
    (29.7
    )
    
    
    Goodwill on disposal
    
    
    4.4
    
    
    
    Fixed asset impairments
    
    
    13.3
    
    
    
    Restructuring provisions
    
    
    6.5
    
    
    
    Financial instruments
    
    
    (2.0
    )
    
    
    13.7Provision for executive share schemes
    
    
    0.9
    
    
    
    0.9Sale and leaseback
    
    
    (1.9
    )
    
    
    (2.2
    )Deferred tax
    
    
    10.2
    
    
    
    49.6Minority interests
    
    
    (180.7
    )
    
    
    (176.2
    )Shareholders funds under US GAAP
    
    
    1,920.1
    
    
    
    1,872.5e)
Movements in shareholders funds on a US GAAP basisShareholders funds at 1 October
    
    
    1,872.5
    
    
    
    2,061.0Net income for the year
    
    
    297.7
    
    
    
    264.3Dividends
    
    
    (197.3
    )
    
    
    (192.1
    )Shares issued
    
    
    8.7
    
    
    
    3.7Movement in treasury stock
    
    
    2.5
    
    
    
    (6.3
    )Pensions
    
    
    53.3
    
    
    
    (291.8
    )Exchange adjustment
    
    
    (98.1
    )
    
    
    30.6Other movements
    
    
    (19.2
    )
    
    
    3.1Shareholders funds at 30 September
    
    
    1,920.1
    
    
    
    1,872.5
 127 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 30. US accounting informationcontinued f) Consolidated cash flow statement     2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionNet cash provided by operating activities
    
    
    673.5
    
    
    
    562.4
    
    
    
    620.2Net cash used by investing activities
    
    
    (45.2
    )
    
    
    (389.2
    )
    
    
    (550.6
    )Net cash used by financing activities
    
    
    (413.0
    )
    
    
    (292.7
    )
    
    
    (112.1
    )Net increase/(decrease) in cash and cash equivalents
    
    
    215.3
    
    
    
    (119.5
    )
    
    
    (42.5
    )Cash and cash equivalents at 1 October
    
    
    76.4
    
    
    
    181.9
    
    
    
    259.0Exchange and other movements
    
    
    (2.0
    )
    
    
    14.0
    
    
    
    (34.6
    )Cash and cash equivalents at 30 September
    
    
    289.7
    
    
    
    76.4
    
    
    
    181.9
 g) Stock-based compensation   2004
    
    
    2003
    
    
    2002£ million
    
    
    £ million
    
    
    £ millionReported net income
    
    
    297.7
    
    
    
    264.3
    
    
    
    255.4Add stock compensation expense recognised in accordance with APB25 (net of related tax)
    
    
    
    
    
    
    
    
    
    
    2.5Deduct stock compensation expense determined in accordance with SFAS123 (net of related tax)
    
    
    (5.7
    )
    
    
    (7.1
    )
    
    
    (6.9
    )Pro forma net income
    
    
    292.0
    
    
    
    257.2
    
    
    
    251.0
 2004
    
    
    2003
    
    
    2002pence
    
    
    pence
    
    
    penceEarnings per share:Basic  as reported
    
    
    60.4
    
    
    
    53.7
    
    
    
    52.1Basic  pro forma
    
    
    59.2
    
    
    
    52.2
    
    
    
    51.2Diluted  as reported
    
    
    60.3
    
    
    
    53.6
    
    
    
    51.9Diluted  pro forma
    
    
    59.1
    
    
    
    52.2
    
    
    
    51.0
  128 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Notes to the financial statements 30. US accounting informationcontinued h) Goodwill  IndustrialProcess
    
    
    and Special
    
    
    BOC
    
    
    AfroxGas Solutions
    
    
    Products
    
    
    Edwards
    
    
    hospitals
    
    
    Gist
    
    
    Corporate
    
    
    Total£ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ million
    
    
    £ millionBalance at 1 October
    
    
    59.5
    
    
    
    82.7
    
    
    
    121.0
    
    
    
    11.6
    
    
    
    0.7
    
    
    
    2.7
    
    
    
    278.2Acquired during year
    
    
    
    
    
    
    0.6
    
    
    
    
    
    
    
    3.3
    
    
    
    
    
    
    
    
    
    
    
    3.9Adjustments related to prior year acquisitions
    
    
    
    
    
    
    
    
    
    
    (2.9
    )
    
    
    0.4
    
    
    
    
    
    
    
    
    
    
    
    (2.5
    )Impairments in year
    
    
    
    
    
    
    
    
    
    
    (2.5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2.5
    )Exchange adjustment
    
    
    (3.7
    )
    
    
    (4.2
    )
    
    
    (6.6
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    (0.2
    )
    
    
    (15.0
    )Balance at 30 September
    
    
    55.8
    
    
    
    79.1
    
    
    
    109.0
    
    
    
    15.0
    
    
    
    0.7
    
    
    
    2.5
    
    
    
    262.1
 i) Recently issued accounting pronouncements implemented in the year SFAS132 (revised)  Employers disclosures about pensions and other post
retirement benefits
  FIN46 (revised)  Consolidation of variable interest entities  EITF018  Determining whether an arrangement contains a lease   j) Recently issued accounting pronouncements not yet implemented EITF041  Accounting for Pre-existing Relationships between the Parties to a
Business Combination
  k) Other information Use of estimates
  31. Comparative information  The prior year adjustment of £48.1 million (Parent: £42.5 million) comprises:   The restatement impact is shown in the relevant notes: 13 (Fixed assets 
investments) and 24 (Reserves). 129 The BOC Group plcAnnual report and accounts 2004




---



##### Table of Contents



GROUP UNDERTAKINGS 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 holdingactivity
    
    
    %ArubaBOC Gases Aruba NV
    
    
    m
    
    
    
    100AustraliaBOC Ltd3
    
    
    nm
    
    
    
    100Elgas Ltd5
    
    
    m
    
    
    
    50BangladeshBOC Bangladesh Ltd
    
    
    m
    
    
    
    60
    *BelgiumSA BOC Edwards NV
    
    
    l
    
    
    
    100BermudaPriestley Company Ltd
    
    
    u
    
    
    
    100The Hydrogen Company of Paraguana Ltd
    
    
    n
    
    
    
    100BrazilBOC Edwards Brasil Ltda
    
    
    lu
    
    
    
    100BOC Gases do Brasil Ltda
    
    
    n
    
    
    
    100BruneiBrunei Oxygen Sdn Bhd(a),5
    
    
    m
    
    
    
    25CanadaBOC Canada Ltd
    
    
    m
    
    
    
    100Hibon Inc
    
    
    l
    
    
    
    100ChileCompania de Hidrogeno de Talcahuano Ltda5
    
    
    n
    
    
    
    100Indura S.A., Industria y Comercio5
    
    
    m
    
    
    
    41ColombiaGases Industriales de Colombia SA5
    
    
    nm
    
    
    
    74Czech RepublicBOC Edwards s.r.o.
    
    
    l
    
    
    
    100Gist Czech Republic s.r.o.5
    
    
    4
    
    
    
    100EnglandBOC Edwards Chemical
Management Europe Ltd
    
    
    l
    
    
    
    100
    *BOC Holdings1, 3
    
    
    u
    
    
    
    100
    *BOC Ltd
    
    
    nml
    
    
    
    100BOC Netherlands Holdings Ltd
    
    
    u
    
    
    
    100
    *BOC Overseas Finance Ltd
    
    
    u
    
    
    
    100
    *Edwards High Vacuum International Ltd
    
    
    l
    
    
    
    100Fluorogas Ltd8
    
    
    l
    
    
    
    100
    *Gist Ltd
    
    
    4
    
    
    
    100Leengate Welding Group Ltd
    
    
    m
    
    
    
    100Welding Products Holdings Ltd
    
    
    m
    
    
    
    100
    *FijiBOC Fiji Ltd
    
    
    m
    
    
    
    90
 Principal
    
    
    Group holdingactivity
    
    
    %FranceCryostar SAS
    
    
    n
    
    
    
    100Edwards SAS
    
    
    l
    
    
    
    100Hibon International SA
    
    
    l
    
    
    
    100Hibon SAS
    
    
    l
    
    
    
    100Société de Mécanique Magnétique
    
    
    l
    
    
    
    87GermanyBOC Edwards GmbH
    
    
    l
    
    
    
    100BOC Gase Deutschland GmbH
    
    
    n
    
    
    
    100Wilhelm Klein GmbH
    
    
    l
    
    
    
    100Hong KongHong Kong Oxygen & Acetylene Co Ltd
    
    
    nm
    
    
    
    50The BOC Group Ltd
    
    
    lu
    
    
    
    100IndiaBOC India Ltd5
    
    
    nm
    
    
    
    55
    *IndonesiaPT BOC Gases Indonesia
    
    
    nm
    
    
    
    100PT Gresik Gases Indonesia
    
    
    n
    
    
    
    90PT Gresik Power Indonesia
    
    
    n
    
    
    
    90IrelandBOC Gases Ireland Ltd3
    
    
    nm
    
    
    
    100Priestley Dublin Reinsurance Company Ltd
    
    
    u
    
    
    
    100ItalyBOC Edwards SpA
    
    
    l
    
    
    
    100JapanBOC Japan Ltd
    
    
    u
    
    
    
    98BOC Edwards Japan Ltd
    
    
    l
    
    
    
    100Japan Air Gases
Ltd5,9
    
    
    nml
    
    
    
    44KenyaBOC Kenya Ltd
    
    
    m
    
    
    
    65KoreaBOC Gases Korea Co Ltd
    
    
    n
    
    
    
    100Songwon Edwards Ltd
    
    
    l
    
    
    
    97LuxembourgBOC Luxembourg No. 1 Sarl
    
    
    u
    
    
    
    100BOC Luxembourg No. 2 Sarl
    
    
    u
    
    
    
    100MalawiBOC Malawi
Ltd(c)
    
    
    m
    
    
    
    42MalaysiaMalaysian Oxygen Bhd(a),4
    
    
    nml
    
    
    
    23MOX Gases Sdn Bhd
    
    
    m
    
    
    
    23MauritiusLes Gaz
Industriels Ltee(b)
    
    
    m
    
    
    
    21MexicoBOC Gases de Mexico, SA de CV5
    
    
    n
    
    
    
    100Compania de Nitrogeno de Cantarell,
SA de CV5,10
    
    
    n
    
    
    
    65
   130 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Group undertakings  Principal
    
    
    Group holdingactivity
    
    
    %NamibiaIGL Properties (Pty) Ltd
    
    
    m
    
    
    
    56NetherlandsBOC Edwards Pharmaceutical Systems BV
    
    
    l
    
    
    
    100Gist BV
    
    
    4
    
    
    
    100The BOC Group BV3
    
    
    u
    
    
    
    100Netherlands AntillesBOC Gases Curaçao NV
    
    
    m
    
    
    
    100New ZealandBOC Ltd
    
    
    nm
    
    
    
    100NigeriaBOC Gases Nigeria plc
    
    
    m
    
    
    
    60PakistanBOC Pakistan Ltd
    
    
    nm
    
    
    
    60
    *Papua New GuineaBOC Papua New Guinea Pty Ltd
    
    
    m
    
    
    
    74Peoples Republic of ChinaBOC (China) Holdings Co Ltd3,5
    
    
    n
    
    
    
    100BOC Gases (North) Co Ltd5
    
    
    n
    
    
    
    100BOC Gases (Shanghai) Corporation Ltd5
    
    
    n
    
    
    
    100BOC Gases (Suzhou) Co Ltd5
    
    
    n
    
    
    
    100BOC Gases (Tianjin) Co Ltd5
    
    
    n
    
    
    
    100
    *BOC Gases (Wuhan) Co Ltd5
    
    
    n
    
    
    
    100BOC TISCO Gases Co Ltd5
    
    
    n
    
    
    
    50
    *BOC Trading (Shanghai) Co Ltd5
    
    
    l
    
    
    
    100Edwards Tianli (Beijing)
Pharmaceutical Systems Co Ltd5
    
    
    l
    
    
    
    50Nanjing BOC-YPC Gases Co Ltd5
    
    
    n
    
    
    
    50Shanghai BOC Industrial Gases Co Ltd5
    
    
    n
    
    
    
    50
    *PhilippinesConsolidated Industrial Gases Inc
    
    
    nml
    
    
    
    100Southern Industrial Gases Philippines Inc
    
    
    m
    
    
    
    100PolandBOC Gazy Sp. z o.o.
    
    
    nm
    
    
    
    98SamoaBOC Samoa Ltd
    
    
    m
    
    
    
    96SingaporeBOC Gases Pte Ltd
    
    
    u
    
    
    
    100
    *Singapore Oxygen Air Liquide Pte Ltd
    
    
    nml
    
    
    
    50Solomon IslandsBOC Gases Solomon Islands Ltd
    
    
    m
    
    
    
    100
 Principal
    
    
    Group holdingactivity
    
    
    %South AfricaAfrican Oxygen Ltd3
    
    
    nmp
    
    
    
    56Afrox Healthcare Ltd(c),3
    
    
    p
    
    
    
    38Afrox Ltd
    
    
    nm
    
    
    
    56BOC Edwards South Africa (Pty) Ltd
    
    
    l
    
    
    
    100SwitzerlandBOC AG
    
    
    n
    
    
    
    100TaiwanAsia Union Electronic Chemical Corporation5
    
    
    l
    
    
    
    50BOC Lienhwa Industrial Gases Co Ltd
    
    
    nml
    
    
    
    50ThailandMIG Production Company Ltd
    
    
    n
    
    
    
    54Thai Industrial Gases Public Co Ltd3
    
    
    nml
    
    
    
    99TIG HyCO Ltd
    
    
    n
    
    
    
    99Unique Gas and Petrochemical Public Co Ltd
    
    
    m
    
    
    
    99USBOC, Inc
    
    
    u
    
    
    
    100Environmental Management Corporation
    
    
    n
    
    
    
    100Linde BOC Process Plants LLC(a)5
    
    
    n
    
    
    
    30The BOC Group, Inc3
    
    
    nmlu
    
    
    
    100US Virgin IslandsBOC Gases Virgin Islands Inc5
    
    
    n
    
    
    
    100VenezuelaBOC Gases de Venezuela, C.A.
    
    
    nm
    
    
    
    100VietnamNorth Vietnam Industrial Gases Ltd5
    
    
    n
    
    
    
    40ZambiaBOC Gases Zambia plc(c)
    
    
    m
    
    
    
    39ZimbabweBOC 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 83 and
84.3.
    
    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 Solutionsm
    
    Industrial and Special Productsl
    
    BOC Edwardsp
    
    Afrox hospitals4
    
    Gistu
    
    Corporate/holding company7.
    
    *
    
    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.10.
    
    Accounted for as joint venture.
   131 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



SHAREHOLDER INFORMATION Dividends Ordinary shares   The table below sets out, in UK pence, the total of the cash amounts of the dividends per
share. Pence per Ordinary share$ perFirst
    
    
    Second
    
    
    
    
    
    
    Ordinaryinterim paid
    
    
    interim paid
    
    
    Total
    
    
    share total
    12000
    
    
    15.50
    
    
    
    19.50
    
    
    
    35.00
    
    
    
    0.542001
    
    
    15.50
    
    
    
    21.50
    
    
    
    37.00
    
    
    
    0.532002
    
    
    15.50
    
    
    
    22.50
    
    
    
    38.00
    
    
    
    0.572003
    
    
    15.50
    
    
    
    23.50
    
    
    
    39.00
    
    
    
    0.632004
    
    
    15.50
    
    
    
    24.50
    
    
    
    40.00
    
    
    
    0.73
 1.
    
    The dollar equivalents of the dividend per Ordinary share are based on the exchange rate at the date of payment of the dividend. 12 1/4% Unsecured Loan Stock 2012/2017  American Depositary Shares  2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000$
    
    
    $
    
    
    $
    
    
    $
    
    
    $First interim
    
    
    0.56
    
    
    
    0.51
    
    
    
    0.44
    
    
    
    0.45
    
    
    
    0.50Second interim
    
    
    0.89
    
    
    
    0.75
    
    
    
    0.70
    
    
    
    0.61
    
    
    
    0.58
 Nature of trading market     2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Financial year
    
    High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Low
    
    
    High
    
    
    Lowquarter
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    pence
    
    
    penceFirst quarter
    
    
    906.5
    
    
    
    791.5
    
    
    
    947.0
    
    
    
    818.0
    
    
    
    1108.0
    
    
    
    907.0
    
    
    
    1050.0
    
    
    
    850.5
    
    
    
    1336.0
    
    
    
    1242.0Second quarter
    
    
    948.0
    
    
    
    841.0
    
    
    
    904.0
    
    
    
    670.0
    
    
    
    1100.0
    
    
    
    988.0
    
    
    
    1076.0
    
    
    
    909.0
    
    
    
    1376.0
    
    
    
    1132.0Third quarter
    
    
    949.0
    
    
    
    875.5
    
    
    
    828.5
    
    
    
    755.0
    
    
    
    1088.0
    
    
    
    999.0
    
    
    
    1114.0
    
    
    
    928.0
    
    
    
    1245.0
    
    
    
    901.0Fourth quarter
    
    
    943.0
    
    
    
    867.0
    
    
    
    912.5
    
    
    
    767.5
    
    
    
    1035.0
    
    
    
    836.0
    
    
    
    1060.0
    
    
    
    780.0
    
    
    
    1020.0
    
    
    
    871.0
 2004
    
    May
    
    
    June
    
    
    July
    
    
    August
    
    
    September
    
    
    OctoberHigh pence
    
    
    909.0
    
    
    
    949.0
    
    
    
    943.0
    
    
    
    933.5
    
    
    
    900.0
    
    
    
    906.5Low pence
    
    
    875.5
    
    
    
    890.5
    
    
    
    896.0
    
    
    
    870.0
    
    
    
    867.0
    
    
    
    870.0
 132 The BOC Group plcAnnual report and accounts 2004




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##### Table of Contents



Shareholder information 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. 2004
    
    
    2003
    
    
    2002
    
    
    2001
    
    
    2000Financial yearquarter
    
    High $
    
    
    Low $
    
    
    High $
    
    
    Low $
    
    
    High $
    
    
    Low $
    
    
    High $
    
    
    Low $
    
    
    High $
    
    
    Low $First quarter
    
    
    31.09
    
    
    
    27.60
    
    
    
    29.11
    
    
    
    25.69
    
    
    
    31.76
    
    
    
    26.60
    
    
    
    31.25
    
    
    
    24.31
    
    
    
    43.81
    
    
    
    41.00Second quarter
    
    
    36.15
    
    
    
    31.00
    
    
    
    29.31
    
    
    
    22.00
    
    
    
    31.60
    
    
    
    27.83
    
    
    
    32.75
    
    
    
    26.70
    
    
    
    44.75
    
    
    
    35.87Third quarter
    
    
    35.13
    
    
    
    31.15
    
    
    
    27.30
    
    
    
    24.19
    
    
    
    31.74
    
    
    
    29.75
    
    
    
    31.50
    
    
    
    26.05
    
    
    
    40.18
    
    
    
    26.81Fourth quarter
    
    
    34.95
    
    
    
    31.67
    
    
    
    29.63
    
    
    
    25.86
    
    
    
    31.80
    
    
    
    26.02
    
    
    
    30.24
    
    
    
    22.50
    
    
    
    30.00
    
    
    
    25.06
 2004
    
    May
    
    
    June
    
    
    July
    
    
    August
    
    
    September
    
    
    OctoberHigh $
    
    
    33.30
    
    
    
    35.13
    
    
    
    34.95
    
    
    
    34.57
    
    
    
    32.54
    
    
    
    33.06Low $
    
    
    31.15
    
    
    
    32.97
    
    
    
    33.40
    
    
    
    32.37
    
    
    
    31.67
    
    
    
    31.53
 Analysis of shareholdings a) Substantial holdings  at 18 November 2004 Numberof shares
    
    
    % of issuedmillion
    
    
    capitalOrdinary shares of 25p eachLegal & General Investment Management Limited
    
    
    15.00
    
    
    
    3.02
   b) By size of holding  at 30 September 2004 % of
    
    
    
    
    Number of
    
    
    %Number of
    
    
    total number
    
    
    
    
    25p shares
    
    
    of ordinaryaccounts
    
    
    of accounts
    
    
    Size of holding 25p shares
    
    million
    
    
    capital19,259
    
    
    
    46
    
    
    1  500
    
    
    4.9
    
    
    
    111,221
    
    
    
    26
    
    
    501  1,000
    
    
    8.3
    
    
    
    210,310
    
    
    
    24
    
    
    1,001  5,000
    
    
    20.2
    
    
    
    41,300
    
    
    
    3
    
    
    5,001  50,000
    
    
    18.9
    
    
    
    4551
    
    
    
    1
    
    
    50,001  1,000,000
    
    
    129.1
    
    
    
    2681
    
    
    
    0
    
    
    Over 1,000,000
    
    
    317.4
    
    
    
    6342,722
    
    
    
    100
    
    
    
    
    
    498.8
    
    
    
    100
 c) By investor type  at 30 September 2004 % of
    
    
    
    
    Number of
    
    
    %Number of
    
    
    total number
    
    
    
    
    25p shares
    
    
    of ordinaryaccounts
    
    
    of accounts
    
    
    Type of investor
    
    million
    
    
    capital31,778
9,987
957
    
    
    
    75
23
2
    
    
    Individuals
Institutional investors
Other corporate investors
    
    
    28.0
460.6
10.2
    
    
    
    6
92
242,722
    
    
    
    100
    
    
    
    
    
    498.8
    
    
    
    100
 d) Close company status  e) Stock ownership of management  133 The BOC Group plcAnnual report and accounts 2004




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Shareholder information Taxation   UK shareholders  Taxation of capital gains   Taxation of dividends      Stamp duty  Inheritance tax  US holders    134 The BOC Group plcAnnual report and accounts 2004




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Shareholder information Taxation of dividends 1 9
       Taxation of capital gains  US information reporting and backup withholding  Stamp duty  Estate and gift tax  Exchange controls and other limitations affecting security holders  135 The BOC Group plc Annual report and accounts 2004




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Shareholder information Payment of dividends  Overseas dividend
payments  Share dealing services  Lloyds TSB Registrars also offer a postal share dealing service. For further
information contact: Share Dealing Services
Lloyds TSB Registrars
PO Box 1357
The Causeway, Worthing
West Sussex, BN99 6UB
England American Depositary
Shares  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  Agent for service of
process in the US
CT Corporation System
111 Eighth Avenue, New York, New York 10011, USA ShareGift  Unsolicited mail   Special needs  137 The BOC Group plcAnnual report and accounts 2004




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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
    
    
    
    Page1
    
    Identity of directors, senior management and advisers
    
    
    n/a2
    
    Offer statistics and expected timetable
    
    
    n/a3
    
    Key informationSelected financial data
    
    
    12-13, 54-55, 126-128, 132Capitalization and indebtedness
    
    
    n/aReasons for the offer and use of proceeds
    
    
    n/aRisk factors
    
    
    32-33, 504
    
    Information on the companyHistory and development
of the company
    
    1, 14-22, 34-48, 137, outside back coverBusiness overview
    
    
    1, 14-22, 25-31, 34-48Organizational structure
    
    
    130-131Property, plants and equipment
    
    
    14-22, 105-1065
    
    Operating and financial review and prospectsOperating results
    
    
    1, 34-55Critical accounting policies
    
    
    53Liquidity and
capital resources
    
    
    36, 49-51, 55, 106, 111-118, 128Research and development, patents
and licenses, etc
    
    
    30-31Trend information
    
    
    36-48Off-balance sheet arrangements
    
    
    51, 119Tabular disclosure of contractual obligations
    
    
    51, 1186
    
    Directors, senior management and employeesDirectors and senior management
    
    
    8-11Compensation
    
    
    64-75Board practices
    
    
    8-11, 56-61, 64-75Employees
    
    
    13, 23, 93Share ownership
    
    
    24, 65-757
    
    Major shareholders and related party transactionsMajor shareholders
    
    
    132-133Related party transactions
    
    
    54, 124Interests of experts and counsel
    
    
    n/a8
    
    Financial informationConsolidated statements and other
financial information
    
    
    52, 78-129, 132,see Item 18 of the company's Form 20-F filing with the Securities and Exchange CommissionSignificant changes
    
    
    n/a
 Item
    
    
    
    Page9
    
    The offer and listingOffer and listing details
    
    
    132-133Plan of distribution
    
    
    n/aMarkets
    
    
    132Selling shareholders
    
    
    n/aDilution
    
    
    n/aExpenses of the issue
    
    
    n/a10
    
    Additional informationShare capital
    
    
    n/aMemorandum and articles of association
    
    see Item 10 of the company's Form 20-F filing with the Securities and Exchange CommissionMaterial contracts
    
    
    n/aExchange controls
    
    
    135Taxation
    
    
    134-135Dividends and paying agents
    
    
    n/aStatement by experts
    
    
    n/aDocuments on display
    
    
    137Subsidiary information
    
    
    n/a11
    
    Quantitative and qualitative disclosures
about market risk
    
    
    50, 84, 112-11612
    
    Description of securities other than equity securities
    
    
    n/a13
    
    Defaults, dividend arrearages and delinquencies
    
    
    n/a14
    
    Material modifications to the rights of security holders
and use of proceeds
    
    
    n/a15
    
    Controls and procedures
    
    
    60-6116A
    
    Audit committee financial expert
    
    
    5816B
    
    Code of ethics
    
    
    23, 2516C
    
    Principal accountant fees and services
    
    
    9016D
    
    Exemptions from the Listings Standards for audit committees
    
    
    n/a16E
    
    Purchases of equity securities by the issuer
and affiliated purchasers
    
    see Item 16E of the company's Form 20-F filing with the Securities and Exchange Commission17
    
    Financial statements
    
    
    n/a18
    
    Financial statements
    
    
    78-129,see Item 18 of the company's Form 20-F filing with the Securities and Exchange Commission19
    
    Exhibits
    
    
    n/a
   138 The BOC Group plcAnnual report and accounts 2004




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GLOSSARY OF TERMS  Terms used in the report and accounts
    
    US equivalent or brief descriptionAcquisition accounting
    
    Purchase accountingAssociate
    
    Equity investmentCapital allowances
    
    Tax term equivalent to US tax depreciation allowancesCash at bank
    
    CashCreditors
    
    PayablesDebtors
    
    ReceivablesFinance lease
    
    Capital leaseFinancial year
    
    Fiscal yearFreehold
    
    Ownership with absolute rights in perpetuityInterest receivable
    
    Interest incomeInterest payable
    
    Interest expenseJoint venture
    
    Equity investmentNet asset value
    
    Book valueOwn shares
    
    Treasury stockProfit
    
    IncomeProfit and loss account
    
    Income statementProfit and loss account reserves
    
    Retained earningsProfit for the financial year
    
    Net incomeProvisions
    
    ReservesCalled up share capital
    
    Ordinary shares, capital stock or common stock issued and fully paidScrip dividend
    
    Stock dividendSecured loan
    
    Collateralised loanShareholders funds
    
    Shareholders equityShare premium account
    
    Additional paid-up capital or paid-in capital (not distributable)Shares issued
    
    Stock outstandingStocks
    
    InventoriesTangible fixed assets
    
    Property, plant and equipmentTurnover
    
    Revenue
 139 The BOC Group plcAnnual report and accounts 2004




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INDEX  Item
    
    PageAAccounting policies
    
    
    83Acquisitions
    
    
    121American Depositary Shares (ADSs)
    
    
    132Annual General Meeting
    
    
    62Auditors remuneration
    
    
    90Auditors report
    
    
    77Audit committee
    
    
    58BBalance sheets
    
    
    79, 82Board committees
    
    
    58Board of directors
    
    
    8Borrowings facilities
    
    
    49, 112CCapital expenditure
    
    
    36Cash flow statement
    
    
    80Cautionary statement
    
    
    1Chairmans statement
    
    
    4Charitable donations
    
    
    63Chief executives review
    
    
    6Commitments
    
    
    51, 118Contact information
    
    
    136Contingent liabilities
    
    
    52, 119Corporate governance
    
    
    56Creditors
    
    
    110Critical accounting policies
    
    
    53Cross reference to Form 20-F
    
    
    138DDebtors
    
    
    109Depreciation
    
    
    105Directors interests
    
    
    71Directors remuneration (see Remuneration)
    
    
    93Directors report
    
    
    2Directors responsibilities statement
    
    
    76Directors service contracts
    
    
    69Disposals
    
    
    121Dividend reinvestment plan (DRIP)
    
    
    136Dividends
    
    
    103Donations (see Charitable donations)
    
    
    63EEarnings per share
    
    
    103Employees
    
    
    23, 93Employment policies and principles
    
    
    23Environment (see Social, environmental and ethical performance)
    
    
    28Exceptional items
    
    
    34, 49, 89Exchange rates
    
    
    55Executive management board
    
    
    10FFair value of acquisitions
    
    
    122Financial calendar
    
    
    136Financial highlights
    
    
    2Financial instruments
    
    
    112Financial review
    
    
    49Five year record
    
    
    12GGlossary of terms
    
    
    139Going concern
    
    
    55Goodwill
    
    
    103Group profile
    
    
    14Group undertakings
    
    
    130
  Item
    
    PageHHealth (see Social, environmental and ethical performance)
    
    
    27IInformation technology
    
    
    31Intangible fixed assets
    
    
    103Interest
    
    
    90Internal controls
    
    
    60JJoint ventures and associates
    
    
    107LLeases
    
    
    105, 118Legal proceedings
    
    
    52, 119Liquid resources
    
    
    80MMinority interests
    
    
    78Movement in shareholders funds
    
    
    81NNotes to the financial statements
    
    
    85OOperating review
    
    
    34Operating review  Process Gas Solutions
    
    
    36Operating review  Industrial and Special Products
    
    
    39Operating review  BOC Edwards
    
    
    41Operating review  Afrox hospitals
    
    
    42Operating review  Gist
    
    
    42PPensions and retirement benefits
    
    
    95Profit and loss account
    
    
    78Provisions for liabilities and charges
    
    
    116RRatios
    
    
    49Registered office
    
    outside back coverRegistrars
    
    
    136Related party transactions
    
    
    124Remuneration
    
    
    93Report on remuneration
    
    
    64Research and development
    
    
    30Reserves
    
    
    117Risk
    
    
    32SSafety (see Social, environmental and ethical performance)
    
    
    27Segmental information
    
    
    85Share option and incentive schemes
    
    
    94Share price
    
    
    132Shareholder analysis
    
    
    133Shareholder information
    
    
    132Social, environmental and ethical performance
    
    
    25Statement of total recognised gains and losses
    
    
    81Stocks
    
    
    108Substantial shareholdings
    
    
    133Supplier payment policy
    
    
    55TTangible fixed assets
    
    
    105Taxation
    
    
    90Total shareholder return
    
    
    65, 67UUS GAAP information and reconciliations
    
    
    124US investor information
    
    
    134WWebsite
    
    
    136
   140 The BOC Group plcAnnual report and accounts 2004




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(©The BOC Group plc 2004.) ©The BOC Group plc 2004.
Designed and produced by Radley
Yeldar (London) using RingMaster®.
Photography by Keith Waldegrave.
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##### Table of Contents



() The BOC Group plc
Registered office:
Chertsey
Road,Windlesham,
Surrey GU20 6HJ,
England Tel: 01276
477222 Fax: 01276
471333 Registered in
England No. 22096
Website: www.boc.com