##### 



Exhibit 10.1

Group profit and loss account

Years ended 30 September

|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|----------------------------------------------------------------------- |  | ----- | -- | --------- |  | ----------- | -------- | ----------- |  | ----------- | ----- | ----------- |  | ----------- | -------- | ----------- |  | ----------- | -------- | ----------- |  | ----------- | ------ | - |  |  | -------- | ----- |  |  | -------- | - |  |  | ---- | - |  |  | -------- | -
|                                                                        |  |       |    |           |  | 2002        |          | 2001        |  | 2000       
|                                                                        |  |       |    |           |  |             |          | (restated)  |  | (restated) 
|                                                                        |  |       |    |           |  |             |          |             |  |            
|                                                                        |  |       |    |           |  | Before      |          |             |  |             |       | After       |  | Before      |          |             |  |             |          | After       |  | Before      |        |   |  |  |          | After
|                                                                        |  |       |    |           |  | exceptional |          | Exceptional |  | exceptional |       | exceptional |  | Exceptional |          | exceptional |  | exceptional |          | Exceptional |  | exceptional
|                                                                        |  |       |    |           |  | items       |          | items       |  | items       |       | items       |  | items       |          | items       |  | items       |          | items       |  | items      
|                                                                        |  | Notes |    | £ million |  | £ million   |          | £ million   |  | £ million   |       | £ million   |  | £ million   |          | £ million   |  | £ million   |          | £ million  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |            
|Turnover                                                                |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Continuing operations                                                   |  |       |    |           |  |             | 3,890.8  |             |  |             |      |             |  |             | 3,890.8  |             |  |             | 4,159.2  |             |  |             |       |   |  |  | 4,159.2  |       |  |  | 3,878.8  |   |  |  |     |   |  |  | 3,878.8  |  
|Acquisitions                                                            |  |       |    |           |  |             | 127.1    |             |  |             |      |             |  |             | 127.1    |             |  |             |         |             |  |             |       |   |  |  |         |       |  |  |         |   |  |  |     |   |  |  |         |  
|Turnover, including share of
joint ventures and associates              |  |       | 1  |           |  |             | 4,017.9  |             |  |             |      |             |  |             | 4,017.9  |             |  |             | 4,159.2  |             |  |             |       |   |  |  | 4,159.2  |       |  |  | 3,878.8  |   |  |  |     |   |  |  | 3,878.8  |  
|Less:Share of turnover of
joint ventures                                |  |       |    |           |  |             | 324.1    |             |  |             |      |             |  |             | 324.1    |             |  |             | 340.0    |             |  |             |       |   |  |  | 340.0    |       |  |  | 258.0    |   |  |  |     |   |  |  | 258.0    |  
|Share of turnover of
associates                                         |  |       |    |           |  |             | 36.1     |             |  |             |      |             |  |             | 36.1     |             |  |             | 46.3     |             |  |             |       |   |  |  | 46.3     |       |  |  | 41.1     |   |  |  |     |   |  |  | 41.1     |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Turnover of subsidiary undertakings                                     |  |       |    |           |  |             | 3,657.7  |             |  |             |      |             |  |             | 3,657.7  |             |  |             | 3,772.9  |             |  |             |       |   |  |  | 3,772.9  |       |  |  | 3,579.7  |   |  |  |     |   |  |  | 3,579.7  |  
|Cost of sales                                                           |  |       | 2  | (a)       |  |             | (2,089.7 | )           |  |             | (15.1 | )           |  |             | (2,104.8 | )           |  |             | (2,164.2 | )           |  |             | (44.6  | ) |  |  | (2,208.8 | )     |  |  | (2,035.2 | ) |  |  | (0.6 | ) |  |  | (2,035.8 | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Gross profit                                                            |  |       |    |           |  |             | 1,568.0  |             |  |             | (15.1 | )           |  |             | 1,552.9  |             |  |             | 1,608.7  |             |  |             | (44.6  | ) |  |  | 1,564.1  |       |  |  | 1,544.5  |   |  |  | (0.6 | ) |  |  | 1,543.9  |  
|Net operating expenses                                                  |  |       | 2  | (a)       |  |             | (1,142.4 | )           |  |             | (58.9 | )           |  |             | (1,201.3 | )           |  |             | (1,150.3 | )           |  |             | (61.1  | ) |  |  | (1,211.4 | )     |  |  | (1,104.7 | ) |  |  | (3.8 | ) |  |  | (1,108.5 | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Operating profit                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Continuing operations                                                   |  |       |    |           |  |             | 421.2    |             |  |             | (67.8 | )           |  |             | 353.4    |             |  |             | 458.4    |             |  |             | (105.7 | ) |  |  | 352.7    |       |  |  | 439.8    |   |  |  | (4.4 | ) |  |  | 435.4    |  
|Acquisitions                                                            |  |       |    |           |  |             | 4.4      |             |  |             | (6.2  | )           |  |             | (1.8     | )           |  |             |         |             |  |             |       |   |  |  |         |       |  |  |         |   |  |  |     |   |  |  |         |  
|Operating profit of
subsidiary undertakings                             |  |       |    |           |  |             | 425.6    |             |  |             | (74.0 | )           |  |             | 351.6    |             |  |             | 458.4    |             |  |             | (105.7 | ) |  |  | 352.7    |       |  |  | 439.8    |   |  |  | (4.4 | ) |  |  | 435.4    |  
|Share of operating profit of
joint ventures                             |  |       |    |           |  |             | 63.8     |             |  |             | (0.5  | )           |  |             | 63.3     |             |  |             | 59.0     |             |  |             | (2.2   | ) |  |  | 56.8     |       |  |  | 48.1     |   |  |  |     |   |  |  | 48.1     |  
|Share of operating profit of associates                                 |  |       |    |           |  |             | 10.7     |             |  |             |      |             |  |             | 10.7     |             |  |             | 13.2     |             |  |             | (0.4   | ) |  |  | 12.8     |       |  |  | 8.5      |   |  |  |     |   |  |  | 8.5      |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Total operating profit including
share of joint ventures
and associates |  |       | 1  |           |  |             | 500.1    |             |  |             | (74.5 | )           |  |             | 425.6    |             |  |             | 530.6    |             |  |             | (108.3 | ) |  |  | 422.3    |       |  |  | 496.4    |   |  |  | (4.4 | ) |  |  | 492.0    |  
|Loss on termination/disposal of
businesses  continuing operations      |  |       | 2  | (b)       |  |             |         |             |  |             | (20.2 | )           |  |             | (20.2    | )           |  |             |         |             |  |             |       |   |  |  |         |       |  |  |         |   |  |  |     |   |  |  |         |  
|Profit on disposal of health care
discontinued business                 |  |       | 2  | (b)       |  |             |         |             |  |             |      |             |  |             |         |             |  |             |         |             |  |             |       |   |  |  |         |       |  |  |         |   |  |  | 12.5 |   |  |  | 12.5     |  
|Profit on disposal of fixed assets
 continuing operations              |  |       | 2  | (b)       |  |             |         |             |  |             |      |             |  |             |         |             |  |             |         |             |  |             | 3.6    |   |  |  | 3.6      |       |  |  |         |   |  |  |     |   |  |  |         |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Profit on ordinary activities
before interest                           |  |       |    |           |  |             | 500.1    |             |  |             | (94.7 | )           |  |             | 405.4    |             |  |             | 530.6    |             |  |             | (104.7 | ) |  |  | 425.9    |       |  |  | 496.4    |   |  |  | 8.1  |   |  |  | 504.5    |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Interest on net debt                                                    |  |       | 3  | (a)       |  |             |          |             |  |             |       |             |  |             | (103.1   | )           |  |             |          |             |  |             |        |   |  |  | (123.4   | )     |  |  |          |   |  |  |      |   |  |  | (111.5   | )
|Interest on pension scheme liabilities                                  |  |       | 6  | (e)       |  |             |          |             |  |             |       |             |  |             | (106.1   | )           |  |             |          |             |  |             |        |   |  |  | (107.2   | )     |  |  |          |   |  |  |      |   |  |  | (100.7   | )
|Expected return on pension
scheme assets                                |  |       | 6  | (e)       |  |             |          |             |  |             |       |             |  |             | 139.1    |             |  |             |          |             |  |             |        |   |  |  | 166.9    |       |  |  |          |   |  |  |      |   |  |  | 149.5    |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Net interest                                                            |  |       |    |           |  |             |          |             |  |             |       |             |  |             | (70.1    | )           |  |             |          |             |  |             |        |   |  |  | (63.7    | )     |  |  |          |   |  |  |      |   |  |  | (62.7    | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Profit on ordinary activities
before tax                                |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 335.3    |             |  |             |          |             |  |             |        |   |  |  | 362.2    |       |  |  |          |   |  |  |      |   |  |  | 441.8    |  
|Tax on profit on ordinary activities                                    |  |       | 4  | (a)       |  |             |          |             |  |             |       |             |  |             | (106.2   | )           |  |             |          |             |  |             |        |   |  |  | (104.6   | )     |  |  |          |   |  |  |      |   |  |  | (135.2   | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Profit on ordinary activities after tax                                 |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 229.1    |             |  |             |          |             |  |             |        |   |  |  | 257.6    |       |  |  |          |   |  |  |      |   |  |  | 306.6    |  
|Minority interests  equity                                             |  |       |    |           |  |             |          |             |  |             |       |             |  |             | (26.2    | )           |  |             |          |             |  |             |        |   |  |  | (33.5    | )     |  |  |          |   |  |  |      |   |  |  | (28.0    | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Profit for the financial year                                           |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 202.9    |             |  |             |          |             |  |             |        |   |  |  | 224.1    |       |  |  |          |   |  |  |      |   |  |  | 278.6    |  
|Dividends                                                               |  |       | 12 | (a)       |  |             |          |             |  |             |       |             |  |             | (186.6   | )           |  |             |          |             |  |             |        |   |  |  | (180.3   | )     |  |  |          |   |  |  |      |   |  |  | (170.2   | )
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Retained profit for the financial year                                  |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 16.3     |             |  |             |          |             |  |             |        |   |  |  | 43.8     |       |  |  |          |   |  |  |      |   |  |  | 108.4    |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Earnings per 25p                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Ordinary share, basic                                                   |  |       | 2  | (d)       |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
| on published earnings                                                 |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 41.36p   |             |  |             |          |             |  |             |        |   |  |  | 46.03p   |       |  |  |          |   |  |  |      |   |  |  | 57.19p   |  
| on exceptional items                                                  |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 14.58p   |             |  |             |          |             |  |             |        |   |  |  | 11.48p   |       |  |  |          |   |  |  |      |   |  |  | (3.66)p  |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
| before exceptional items                                              |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 55.94p   |             |  |             |          |             |  |             |        |   |  |  | 57.51p   |       |  |  |          |   |  |  |      |   |  |  | 53.53p   |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Earnings per 25p                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
|Ordinary share, diluted                                                 |  |       | 2  | (d)       |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
| on published earnings                                                 |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 41.21p   |             |  |             |          |             |  |             |        |   |  |  | 45.87p   |       |  |  |          |   |  |  |      |   |  |  | 56.90p   |  
| on exceptional items                                                  |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 14.53p   |             |  |             |          |             |  |             |        |   |  |  | 11.44p   |       |  |  |          |   |  |  |      |   |  |  | (3.64)p  |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  
| before exceptional items                                              |  |       |    |           |  |             |          |             |  |             |       |             |  |             | 55.74p   |             |  |             |          |             |  |             |        |   |  |  | 57.31p   |       |  |  |          |   |  |  |      |   |  |  | 53.26p   |  
|                                                                        |  |       |    |           |  |             |          |             |  |             |       |             |  |             |          |             |  |             |          |             |  |             |        |   |  |  |          |       |  |  |          |   |  |  |      |   |  |  |          |  

All turnover and operating profit arose from continuing operations.

66  The BOC Group plc  Report and accounts 2002



---



##### 



Group balance sheet

At 30 September

|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|--------------------------------------------------------- |  | ----- | -- | --------- |  | --------- | -------- | ---------- |  | ---- | -------- | -
|                                                          |  |       |    |           |  |           |          |            |  | 2001
|                                                          |  |       |    |           |  | 2002      |          | (restated)
|                                                          |  | Notes |    | £ million |  | £ million
|                                                          |  |       |    |           |  |          
|Fixed assets                                              |  |       |    |           |  |           |          |            |  |      |          |  
|Intangible assets                                         |  |       | 7  |           |  |           | 150.7    |            |  |      | 48.1     |  
|Tangible assets                                           |  |       | 8  |           |  |           | 3,027.4  |            |  |      | 3,168.6  |  
|Investment
in joint ventures                              |  |       |    |           |  |           |          |            |  |      |          |  
| share of gross assets                                   |  |       |    |           |  |           | 616.2    |            |  |      | 615.2    |  
| share of gross liabilities                              |  |       |    |           |  |           | (410.7   | )          |  |      | (410.4   | )
|                                                          |  |       |    |           |  |           | 205.5    |            |  |      | 204.8    |  
| loans to joint ventures                                 |  |       |    |           |  |           | 111.8    |            |  |      | 97.6     |  
|Investment in associates                                  |  |       |    |           |  |           |          |            |  |      |          |  
| share of net assets                                     |  |       |    |           |  |           | 57.5     |            |  |      | 47.1     |  
| loans to associates                                     |  |       |    |           |  |           | 6.2      |            |  |      | 9.1      |  
|Investment in own shares                                  |  |       |    |           |  |           | 42.5     |            |  |      | 59.5     |  
|Other investments                                         |  |       |    |           |  |           | 45.1     |            |  |      | 31.7     |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Investments                                               |  |       | 9  |           |  |           | 468.6    |            |  |      | 449.8    |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|                                                          |  |       |    |           |  |           | 3,646.7  |            |  |      | 3,666.5  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Current assets                                            |  |       |    |           |  |           |          |            |  |      |          |  
|Stocks                                                    |  |       | 10 | (a)       |  |           | 260.0    |            |  |      | 275.2    |  
|Debtors falling due within one year                       |  |       | 10 | (b)       |  |           | 733.8    |            |  |      | 713.3    |  
|Debtors falling due after more than one year              |  |       | 10 | (c)       |  |           | 28.3     |            |  |      | 21.3     |  
|Investments                                               |  |       |    |           |  |           | 38.8     |            |  |      | 43.2     |  
|Cash at bank and in hand                                  |  |       | 10 | (d)       |  |           | 185.5    |            |  |      | 233.5    |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|                                                          |  |       |    |           |  |           | 1,246.4  |            |  |      | 1,286.5  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Current liabilities                                       |  |       |    |           |  |           |          |            |  |      |          |  
|Creditors: amounts falling due within one year            |  |       |    |           |  |           |          |            |  |      |          |  
|Borrowings and finance leases                             |  |       | 10 | (e)       |  |           | (390.1   | )          |  |      | (486.4   | )
|Other creditors                                           |  |       | 10 | (f)       |  |           | (857.8   | )          |  |      | (795.3   | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|                                                          |  |       |    |           |  |           | (1,247.9 | )          |  |      | (1,281.7 | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Net current (liabilities)/assets                          |  |       |    |           |  |           | (1.5     | )          |  |      | 4.8      |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Total assetslesscurrent liabilities                       |  |       |    |           |  |           | 3,645.2  |            |  |      | 3,671.3  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Long-term liabilities                                     |  |       |    |           |  |           |          |            |  |      |          |  
|Creditors: amounts falling due after more than one year   |  |       |    |           |  |           |          |            |  |      |          |  
|Borrowings and finance leases                             |  |       | 11 | (a)       |  |           | (1,121.0 | )          |  |      | (1,019.9 | )
|Other creditors                                           |  |       |    |           |  |           | (58.0    | )          |  |      | (59.4    | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|                                                          |  |       |    |           |  |           | (1,179.0 | )          |  |      | (1,079.3 | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Provisions for liabilities and charges                    |  |       | 11 | (b)       |  |           | (407.5   | )          |  |      | (419.2   | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Total net assets excluding pension assets and liabilities |  |       |    |           |  |           | 2,058.7  |            |  |      | 2,172.8  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Pension assets                                            |  |       | 6  | (e)       |  |           | 54.3     |            |  |      | 107.0    |  
|Pension liabilities                                       |  |       | 6  | (e)       |  |           | (311.0   | )          |  |      | (56.0    | )
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Total net assets including pension assets and liabilities |  |       |    |           |  |           | 1,802.0  |            |  |      | 2,223.8  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Capital and reserves                                      |  |       |    |           |  |           |          |            |  |      |          |  
|Equity called up share capital                            |  |       | 12 | (b)       |  |           | 124.3    |            |  |      | 123.6    |  
|Share premium account                                     |  |       | 12 | (c)       |  |           | 362.1    |            |  |      | 335.8    |  
|Revaluation reserves                                      |  |       | 12 | (c)       |  |           | 27.8     |            |  |      | 47.9     |  
|Profit and loss account                                   |  |       | 12 | (c)       |  |           | 1,304.8  |            |  |      | 1,400.3  |  
|Pensions reserves                                         |  |       | 12 | (c)       |  |           | (256.5   | )          |  |      | 47.1     |  
|Joint ventures reserves                                  |  |       | 12 | (c)       |  |           | 88.1     |            |  |      | 98.1     |  
|Associates reserves                                      |  |       | 12 | (c)       |  |           | 33.5     |            |  |      | 33.4     |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Equity shareholders funds                                |  |       |    |           |  |           | 1,684.1  |            |  |      | 2,086.2  |  
|Minority shareholders equity interests                   |  |       |    |           |  |           | 117.9    |            |  |      | 137.6    |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  
|Total capital and reserves                                |  |       |    |           |  |           | 1,802.0  |            |  |      | 2,223.8  |  
|                                                          |  |       |    |           |  |           |          |            |  |      |          |  

The financial statements were approved by the board of directors on 22 November
2002 and are signed on its behalf by:

A E IsaacDirector R MédoriDirector

67  The BOC Group plc  Report and accounts 2002



---



##### 



Group cash flow statementYears ended 30 September

2001
        
        20002002
        
        (restated)
        
        (restated)Notes
        
        £ million
        
        £ million
        
        £ millionNet cash inflow from operating activities
        
        
        14
        (a)
        
        
        759.3
        
        
        
        787.8
        
        
        
        705.0Dividends from joint ventures and associatesDividends from joint ventures
        
        
        
        
        
        
        30.5
        
        
        
        19.4
        
        
        
        20.0Dividends from associates
        
        
        
        
        
        
        3.4
        
        
        
        4.1
        
        
        
        2.1Dividends from joint ventures and associates
        
        
        
        
        
        
        33.9
        
        
        
        23.5
        
        
        
        22.1Returns on investments and servicing of financeInterest paid
        
        
        
        
        
        
        (89.6
        )
        
        
        (95.4
        )
        
        
        (124.9
        )Interest received
        
        
        
        
        
        
        18.5
        
        
        
        23.1
        
        
        
        27.2Dividends paid to minorities in subsidiaries
        
        
        
        
        
        
        (13.9
        )
        
        
        (7.7
        )
        
        
        (6.1
        )Interest element of finance lease rental payments
        
        
        
        
        
        
        (5.7
        )
        
        
        (7.2
        )
        
        
        (1.4
        )Returns on investments and servicing of finance
        
        
        
        
        
        
        (90.7
        )
        
        
        (87.2
        )
        
        
        (105.2
        )Tax paid
        
        
        
        
        
        
        (96.2
        )
        
        
        (100.6
        )
        
        
        (62.8
        )Capital expenditure and financial investmentPurchases of tangible fixed assets
        
        
        
        
        
        
        (352.1
        )
        
        
        (349.8
        )
        
        
        (405.8
        )Sales of tangible fixed assets
        
        
        
        
        
        
        31.6
        
        
        
        47.1
        
        
        
        24.2Purchases of intangible fixed assets
        
        
        
        
        
        
        (0.1
        )
        
        
        (0.3
        )
        
        
        (0.4
        )Net sales/(purchases) of current asset investments
        
        
        
        
        
        
        4.3
        
        
        
        (6.5
        )
        
        
        0.9Purchases of trade and other investments
        
        
        
        
        
        
        (19.7
        )
        
        
        (10.2
        )
        
        
        (29.8
        )Sales of trade and other investments
        
        
        
        
        
        
        11.5
        
        
        
        7.8
        
        
        
        2.6Capital expenditure and financial investment
        
        
        
        
        
        
        (324.5
        )
        
        
        (311.9
        )
        
        
        (408.3
        )Acquisitions and disposalsAcquisitions of businesses
        
        
        15
        (a)
        
        
        (207.3
        )
        
        
        (145.9
        )
        
        
        (32.1
        )Net overdrafts acquired with subsidiaries
        
        
        
        
        
        
        (7.4
        )
        
        
        
        
        
        
        Disposals of businesses
        
        
        15
        (a)
        
        
        10.6
        
        
        
        2.7
        
        
        
        0.4Investments in joint ventures
        
        
        
        
        
        
        (12.6
        )
        
        
        
        
        
        
        (33.6
        )Divestments/repayments from joint ventures
        
        
        
        
        
        
        
        
        
        
        10.8
        
        
        
        3.0Investments in associates
        
        
        
        
        
        
        (0.5
        )
        
        
        (2.7
        )
        
        
        (0.7
        )Divestments/repayments from associates
        
        
        
        
        
        
        1.7
        
        
        
        1.5
        
        
        
        1.0Acquisitions and disposals
        
        
        
        
        
        
        (215.5
        )
        
        
        (133.6
        )
        
        
        (62.0
        )Equity dividends paid
        
        
        
        
        
        
        (186.6
        )
        
        
        (180.3
        )
        
        
        (170.2
        )Net cash outflow before use of liquid resources and financing
        
        
        
        
        
        
        (120.3
        )
        
        
        (2.3
        )
        
        
        (81.4
        )Management of liquid resourcesNet sales of short-term investments
        
        
        
        
        
        
        52.6
        
        
        
        102.8
        
        
        
        9.6FinancingIssue of shares
        
        
        
        
        
        
        25.0
        
        
        
        16.9
        
        
        
        10.1Increase/(decrease) in debt
        
        
        14
        (d)
        
        
        64.1
        
        
        
        (51.3
        )
        
        
        64.9Net cash inflow/(outflow) from financing
        
        
        
        
        
        
        89.1
        
        
        
        (34.4
        )
        
        
        75.0Increase in cash
        
        
        
        
        
        
        21.4
        
        
        
        66.1
        
        
        
        3.2


A reconciliation of the increase in cash to the movement in net debt in
the year is given in note 14 b).

Liquid resources are defined as
short-term deposits.

68  The BOC Group plcReport and accounts 2002





---



##### 



Total recognised gains and lossesYears ended 30 September

2001
        
        20002002
        
        (restated)
        
        (restated)Notes
        
        £ million
        
        £ million
        
        £ millionParent1
        
        
        
        
        
        
        26.2
        
        
        
        12.1
        
        
        
        129.7Subsidiary undertakings
        
        
        
        
        
        
        170.1
        
        
        
        199.8
        
        
        
        141.1Joint ventures
        
        
        
        
        
        
        4.5
        
        
        
        10.3
        
        
        
        6.5Associates
        
        
        
        
        
        
        2.1
        
        
        
        1.9
        
        
        
        1.3Profit for the financial year
        
        
        
        
        
        
        202.9
        
        
        
        224.1
        
        
        
        278.6Actuarial (loss)/gain recognised on the pension schemes
        
        
        
        
        
        
        (431.2
        )
        
        
        (464.9
        )
        
        
        114.2Movement on deferred tax relating to actuarial loss/(gain) on pensions
        
        
        
        
        
        
        134.0
        
        
        
        154.5
        
        
        
        (35.2
        )Unrecognised loss on write down of revaluation reserve
        
        
        
        
        
        
        (11.5
        )
        
        
        
        
        
        
        Exchange translation effect on: results for the year of subsidiaries
        
        
        
        
        
        
        (5.2
        )
        
        
        (3.9
        )
        
        
        (2.2
        ) results for the year of joint ventures
        
        
        
        
        
        
        (2.6
        )
        
        
        (1.5
        )
        
        
        0.8 results for the year of associates
        
        
        
        
        
        
        (0.3
        )
        
        
        (0.1
        )
        
        
        0.2 foreign currency net investments in subsidiaries
        
        
        
        
        
        
        (114.6
        )
        
        
        (55.8
        )
        
        
        95.1 foreign currency net investments in joint ventures
        
        
        
        
        
        
        (11.9
        )
        
        
        (1.6
        )
        
        
        7.9 foreign currency net investments in associates
        
        
        
        
        
        
        (1.7
        )
        
        
        0.4
        
        
        
        6.8Total recognised gains and losses for the financial year
        
        
        12
        (c)
        
        
        (242.1
        )
        
        
        (148.8
        )
        
        
        466.2Prior year adjustment
        
        
        
        
        
        
        (220.1
        )Total recognised gains and losses since last annual report
        
        
        
        
        
        
        (462.2
        )


---

|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 2002, 2001 and 2000.                                                                                                                                                                                                                        
|3. |  | Profit attributable to the parent company includes dividends received
from subsidiaries, joint ventures and associates, often through
intermediate holding companies. These dividends may include the
distribution of earnings of previous periods. As a result, the
relationship of profit between parent, subsidiaries, joint ventures and
associates may show fluctuations from year to year.
|4. |  | A current tax charge of
£13.5 million (2001: £nil, 2000: £nil) has been
recognised directly in the Group reserves.                                                                                                                                                                                                                                                                              

Movement in shareholders fundsYears ended 30 September

2001
        
        20002002
        
        (restated)
        
        (restated)£ million
        
        £ million
        
        £ millionProfit for the financial year
        
        
        202.9
        
        
        
        224.1
        
        
        
        278.6Dividends
        
        
        (186.6
        )
        
        
        (180.3
        )
        
        
        (170.2
        )16.3
        
        
        
        43.8
        
        
        
        108.4Other recognised gains and losses
        
        
        (445.0
        )
        
        
        (372.9
        )
        
        
        187.6Shares issued
        
        
        24.6
        
        
        
        16.9
        
        
        
        8.9Credit in relation to share options
        
        
        2.0
        
        
        
        4.4
        
        
        
        3.6Net (decrease)/increase in shareholders funds for the financial year
        
        
        (402.1
        )
        
        
        (307.8
        )
        
        
        308.5Shareholders funds at 1 October  previously reported
        
        
        2,306.3
        
        
        
        2,273.6
        
        
        
        2,013.1Prior year adjustment
        
        
        (220.1
        )
        
        
        120.4
        
        
        
        72.4Shareholders funds at 1 October  restated
        
        
        2,086.2
        
        
        
        2,394.0
        
        
        
        2,085.5Shareholders funds at 30 September
        
        
        1,684.1
        
        
        
        2,086.2
        
        
        
        2,394.0


69  The BOC Group plcReport and accounts 2002





---



##### 



Balance sheet of The BOC Group plcAt 30 September

20012002
        
        (restated)Notes
        
        £ million
        
        £ millionFixed assetsTangible assets
        
        
        8
        (e)
        
        
        14.0
        
        
        
        18.8Investments
        
        
        9
        (d)
        
        
        2,844.4
        
        
        
        2,702.02,858.4
        
        
        
        2,720.8Current assetsDebtors falling due within one year
        
        
        10
        (b)
        
        
        515.6
        
        
        
        408.6Cash at bank and in hand
        
        
        10
        (d)
        
        
        
        
        
        
        51.7515.6
        
        
        
        460.3Current liabilitiesCreditors: amounts falling due within one yearBorrowings and finance leases
        
        
        10
        (e)
        
        
        (178.9
        )
        
        
        (315.6
        )Other creditors
        
        
        10
        (f)
        
        
        (953.8
        )
        
        
        (717.3
        )(1,132.7
        )
        
        
        (1,032.9
        )Net current liabilities
        
        
        
        
        
        
        (617.1
        )
        
        
        (572.6
        )Total assetslesscurrent liabilities
        
        
        
        
        
        
        2,241.3
        
        
        
        2,148.2Long-term liabilitiesCreditors: amounts falling due after more than one yearBorrowings and finance leases
        
        
        11
        (a)
        
        
        (801.0
        )
        
        
        (570.4
        )Other creditors
        
        
        
        
        
        
        (13.0
        )
        
        
        (16.5
        )(814.0
        )
        
        
        (586.9
        )Total net assets
        
        
        
        
        
        
        1,427.3
        
        
        
        1,561.3Capital and reservesEquity called up share capital
        
        
        12
        (b)
        
        
        124.3
        
        
        
        123.6Share premium account
        
        
        12
        (d)
        
        
        362.1
        
        
        
        335.8Other reserves
        
        
        12
        (d)
        
        
        113.7
        
        
        
        111.7Profit and loss account
        
        
        12
        (d)
        
        
        827.2
        
        
        
        990.2Total capital and reserves
        
        
        
        
        
        
        1,427.3
        
        
        
        1,561.3


The financial statements were approved by the board of directors on 22 November
2002 and are signed on its behalf by:

A E IsaacDirector R MédoriDirector











70  The BOC Group plcReport and accounts 2002





---



##### 



Accounting
policies

General

| |  | Basis of preparationThese accounts are based on the historical cost
accounting convention and comply with all applicable UK accounting
standards.                                                                                                                                                                                                                           
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  | UK accounting standards differ in certain respects from those generally
accepted in the US and the major effects of these differences in the
determination of profit before tax and shareholders funds are shown in note
16 to the financial statements. Disclosure requirements of both the UK and US
are incorporated throughout the notes to these financial statements.



| |  | Basis of consolidationThe Group accounts include the accounts of the
parent undertaking and of all subsidiaries, joint ventures and associates.                                                                                                                                                                                                                                                                
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  | The results of businesses acquired during the year are included from the
effective date of acquisition. The results of businesses disposed of during
the year are included up to the date of relinquishing control. Material,
separately identifiable business segments disposed of are analysed as
discontinued operations and prior years analyses are restated to reflect
those businesses as discontinued.



| |  | New accounting policiesThis year, the Group has fully adopted the
following two new accounting standards issued by the UK Accounting
Standards Board:                                                                                                                                                                                                                                                                                                                                                            
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  | FRS17  Retirement benefits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|  |  | FRS19  Deferred tax                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  |  | For the
year ended 30 September 2001, the Group followed the transitional
arrangements permitted by FRS17 under which disclosure on retirement
benefits was given in the notes to the financial statements. For the year
ended 30 September 2002, the standard has been fully adopted and the
accounting impact reflected throughout the financial statements. The
impact of FRS19 is also reflected throughout the financial statements. The
impact is explained further in note 17 to the financial statements.
|  |  | Comparative figures
have been restated for both FRS17 and FRS19. Changes
to existing policies as a result of adopting these new standards are
described, where appropriate, below.                                                                                                                                                                                                                                                                                                                               



| |  | ExchangeProfit and loss and other period statements of the Groups
overseas operations are translated at average rates of exchange. Assets
and liabilities denominated in foreign currencies are translated at the
rates of exchange ruling at the financial year end. Assets or liabilities
swapped into other currencies are accounted for in those currencies.
Exchange differences are dealt with as a movement in reserves where they
arise from:
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | i)   |  | the translation of the opening net assets of overseas
operations;                                           
| | ---- |  | ------------------------------------------------------------------------------------------------------------
| | ii)  |  | the retranslation of retained earnings of overseas
operations from average to closing rates of exchange; and
| | iii) |  | the
translation or conversion of foreign currency borrowings taken to hedge
overseas assets.                

| |  | All other exchange differences are taken to the profit and loss account. The
principal exchange rates affecting the Group are shown on page 49.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------

Revenue recognitionTurnover is based on the invoiced value of the sale of goods and services, and
includes the sales value of long-term contracts appropriate to the state of
completion. It excludes sales between Group undertakings, VAT and similar
sales-based taxes. Turnover for goods and services is recognised when delivery
has occurred, title of the goods has passed to the purchaser, and where the
price is fixed or determinable and reflects the commercial substance of the
transaction.     Profit
on contracts is only recognised close to contract completion and
when profits can be reasonably determined. Provision is made for all losses
incurred together with any foreseeable future losses.

Retirement benefitsFollowing the full adoption of FRS17, the regular service cost of providing
retirement benefits to employees during the year is charged to operating profit
in the year. The full cost of providing amendments to benefits in respect of
past service is also charged to operating profit in the year.     A
credit representing the expected return on the assets of the retirement
benefit schemes during the year is included within net interest. This is based
on the market value of the assets of the schemes at the start of the financial
year.     A
charge representing the expected increase in the liabilities of the
retirement benefit schemes during the year is included within net interest.
This arises from the liabilities of the schemes being one year closer to
payment.     Differences
between actual and expected returns on assets during the year
are recognised in the statement of total recognised gains and losses in the
year, together with differences arising from changes in assumptions.

Research and developmentRevenue expenditure on research and development is written off when incurred.

Operating leasesThe cost of operating leases is written off on the straight line basis over the
period of the lease.







71  The BOC Group plcReport and accounts 2002





---



##### 



Accounting policies

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.                                                                                                                                                                                                                                                                                                                                                                                                                   



| |  | 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.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Tangible fixed assetsNo depreciation is charged on freehold land or construction in progress.
Depreciation is charged on all other fixed assets on the straight line basis
over the effective lives. Straight line depreciation rates vary according to
the class of asset, but are typically:

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 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 discounting
estimated future cash flows, is dealt with in the profit and loss account
in the period in which it arises.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

InvestmentsInvestments which are held for the long term and in which the Group has a
participating interest and exercises joint control with one or more other
parties are treated as joint ventures and accounted for on the gross equity
method. Investments which are held for the long term and in which the Group has
a participating interest and exercises significant influence are treated as
associates and accounted for on the equity method. In both cases, the Groups
share of the results of the investment is included in the profit and loss
account, and the Groups share of the net assets is included in investments in
the balance sheet. Other investments are shown on the balance sheet at cost
less any provision for impairment.

StocksStocks and work in progress are valued at the lower of cost and net realisable
value. Cost where appropriate includes a proportion of overhead expenses. Work
in progress is stated at cost less progress payments received or receivable.
Cost is arrived at principally on the average and first-in, first-out (FIFO)
basis. The amount of long-term contracts, net of amounts transferred to cost of sales and after
deducting foreseeable losses and payments on account, is included in stocks as
long-term contract amounts.













72  The BOC Group plcReport and accounts 2002





---



##### 



Deferred taxFollowing the adoption of FRS19, the Group provides for deferred tax assets and
liabilities arising from timing differences between the recognition of gains
and losses in the financial statements and their recognition for tax purposes.
Deferred tax assets are only recognised where it is more likely than not that
they will be recovered. Deferred tax assets and liabilities are not discounted.

ProvisionsProvisions are made when an obligation exists for a future liability in respect
of a past event and where the amount of the obligation can be reliably
estimated. Restructuring provisions are made for direct expenditures of a
business reorganisation where the plans are sufficiently detailed and well
advanced, and where appropriate communication to those affected has been
undertaken at the balance sheet date.

Financial instrumentsThe Group uses financial instruments, including interest rate and currency
swaps, to raise finance for its operations and to manage the risks arising from
those operations. All transactions are undertaken only to manage interest and
currency risk associated with the Groups underlying business activities and
the financing of those activities. The Group does not undertake any trading
activity in financial instruments.



| |  | Foreign exchange transaction exposuresThe Group generally hedges actual
and forecast foreign exchange exposures up to two years ahead. Forward
contracts are used to hedge the forecast exposure and any gains or losses
resulting from changes in exchange rates on contracts designated as hedges
of forecast foreign exchange are deferred until the financial period in
which they are realised. If the contract ceases to be a hedge, any
subsequent gains and losses are recognised through the profit and loss
account.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Balance sheet translation exposuresA large proportion of the Groups net
assets are denominated in currencies other than sterling. Where
practicable and cost effective the Group hedges these balance sheet
translation exposures by borrowing in relevant currencies and markets and
by the use of currency swaps. Currency swaps are used only as balance
sheet hedging instruments, and the Group does not hedge the currency
translation of its profit and loss account. Exchange gains and losses
arising on the notional principal of these currency swaps during their
life and at termination or maturity are dealt with as a movement in
reserves. If the swap ceases to be a hedge of the underlying transaction,
any subsequent gains or losses are recognised in the profit and loss
account.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Interest rate risk exposuresThe Group hedges its exposure to movements
in interest rates associated with its borrowings primarily by means of
interest rate swaps and forward rate agreements. Interest payments and
receipts on these agreements are included with net interest payable. They
are not revalued to fair value or shown on the Group balance sheet at the
balance sheet date.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------













73  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

1. Segmental information
a) Turnover (including share of joint ventures and
associates)

|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|------------ |  | --------------------- | ------- | ----------- |  | ---------- | ------- | --------- |  | --------- | ----- | --------- |  | -------------- | ----- | ----------- |  |  | ----- |  |  |  | ------- |  |  |  | ------- | 
|             |  | Continuing operations
|             |  |                      
|             |  |                       |         |             |  | Industrial |         |           |  |           |       |           |  |                |       |             |  |  |       | 
|             |  | Process Gas           |         | and Special |  | BOC        |         | Afrox     |  |           |       |           |  | Total Group    |       | Total Group
|             |  | Solutions             |         | Products    |  | Edwards    |         | hospitals |  | Gist      |       | by origin |  | by destination
|             |  | £ million             |         | £ million   |  | £ million  |         | £ million |  | £ million |       | £ million |  | £ million     
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |               
|2002         |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Europe       |  |                       | 257.1   |             |  |            | 399.3   |           |  |           | 150.0 |           |  |                |      |             |  |  | 263.2 |  |  |  | 1,069.6 |  |  |  | 1,055.3 | 
|Americas     |  |                       | 528.1   |             |  |            | 464.8   |           |  |           | 298.9 |           |  |                |      |             |  |  |      |  |  |  | 1,291.8 |  |  |  | 1,240.1 | 
|Africa       |  |                       | 23.6    |             |  |            | 158.4   |           |  |           |      |           |  |                | 259.0 |             |  |  |      |  |  |  | 441.0   |  |  |  | 443.3   | 
|Asia/Pacific |  |                       | 391.8   |             |  |            | 582.8   |           |  |           | 239.3 |           |  |                |      |             |  |  | 1.6   |  |  |  | 1,215.5 |  |  |  | 1,279.2 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Turnover     |  |                       | 1,200.6 |             |  |            | 1,605.3 |           |  |           | 688.2 |           |  |                | 259.0 |             |  |  | 264.8 |  |  |  | 4,017.9 |  |  |  | 4,017.9 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|2001         |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Europe       |  |                       | 240.2   |             |  |            | 375.3   |           |  |           | 157.4 |           |  |                |      |             |  |  | 229.6 |  |  |  | 1,002.5 |  |  |  | 979.6   | 
|Americas     |  |                       | 529.7   |             |  |            | 464.5   |           |  |           | 393.3 |           |  |                |      |             |  |  |      |  |  |  | 1,387.5 |  |  |  | 1,326.1 | 
|Africa       |  |                       | 25.6    |             |  |            | 192.2   |           |  |           |      |           |  |                | 287.8 |             |  |  |      |  |  |  | 505.6   |  |  |  | 504.9   | 
|Asia/Pacific |  |                       | 397.5   |             |  |            | 541.9   |           |  |           | 322.4 |           |  |                |      |             |  |  | 1.8   |  |  |  | 1,263.6 |  |  |  | 1,348.6 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Turnover     |  |                       | 1,193.0 |             |  |            | 1,573.9 |           |  |           | 873.1 |           |  |                | 287.8 |             |  |  | 231.4 |  |  |  | 4,159.2 |  |  |  | 4,159.2 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|2000         |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Europe       |  |                       | 226.6   |             |  |            | 357.3   |           |  |           | 171.3 |           |  |                |      |             |  |  | 225.3 |  |  |  | 980.5   |  |  |  | 948.9   | 
|Americas     |  |                       | 433.3   |             |  |            | 428.5   |           |  |           | 378.1 |           |  |                |      |             |  |  |      |  |  |  | 1,239.9 |  |  |  | 1,160.6 | 
|Africa       |  |                       | 26.7    |             |  |            | 181.3   |           |  |           |      |           |  |                | 292.8 |             |  |  |      |  |  |  | 500.8   |  |  |  | 499.9   | 
|Asia/Pacific |  |                       | 358.6   |             |  |            | 548.3   |           |  |           | 249.6 |           |  |                |      |             |  |  | 1.1   |  |  |  | 1,157.6 |  |  |  | 1,269.4 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 
|Turnover     |  |                       | 1,045.2 |             |  |            | 1,515.4 |           |  |           | 799.0 |           |  |                | 292.8 |             |  |  | 226.4 |  |  |  | 3,878.8 |  |  |  | 3,878.8 | 
|             |  |                       |         |             |  |            |         |           |  |           |       |           |  |                |       |             |  |  |       |  |  |  |         |  |  |  |         | 

b) Business analysis

|                                                     |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|---------------------------------------------------- |  | --------------------- | ------- | ----------- |  | ---------- | ------- | --------- |  | --------- | ----- | --------- |  | ----------- | ----- |  |  |  | ----- | - |  |  | ----- | - |  |  | ------- | -
|                                                     |  | Continuing operations
|                                                     |  |                      
|                                                     |  |                       |         |             |  | Industrial |         |           |  |           |       |           |  |             |       |  |  |  |      
|                                                     |  | Process Gas           |         | and Special |  | BOC        |         | Afrox     |  |           |       |           |  |             |       |  |  |  |       |  
|                                                     |  | Solutions             |         | Products    |  | Edwards    |         | hospitals |  | Gist      |       | Corporate |  | Total Group
|                                                     |  | £ million             |         | £ million   |  | £ million  |         | £ million |  | £ million |       | £ million |  | £ million  
|                                                     |  |                       |         |             |  |            |         |           |  |           |       |           |  |            
|2002                                                 |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|Total operating profit before exceptional items1     |  |                       | 185.2   |             |  |            | 248.0   |           |  |           | 26.1  |           |  |             | 29.7  |  |  |  | 25.5  |   |  |  | (14.4 | ) |  |  | 500.1   |  
|Operating exceptional items1                         |  |                       | (24.0   | )           |  |            | (18.7   | )         |  |           | (27.5 | )         |  |             |      |  |  |  |      |   |  |  | (4.3  | ) |  |  | (74.5   | )
|(Loss)/profit on termination/disposal of businesses1 |  |                       | (21.3   | )           |  |            |        |           |  |           | 1.1   |           |  |             |      |  |  |  |      |   |  |  |      |   |  |  | (20.2   | )
|Capital employed2                                    |  |                       | 1,831.3 |             |  |            | 1,058.1 |           |  |           | 595.3 |           |  |             | 105.0 |  |  |  | 22.8  |   |  |  | (19.4 | ) |  |  | 3,593.1 |  
|Capital expenditure3                                 |  |                       | 157.3   |             |  |            | 123.6   |           |  |           | 42.0  |           |  |             | 9.2   |  |  |  | 19.0  |   |  |  | 3.2   |   |  |  | 354.3   |  
|Depreciation and amortisation3                       |  |                       | 167.7   |             |  |            | 96.8    |           |  |           | 41.1  |           |  |             | 7.2   |  |  |  | 16.1  |   |  |  | 2.0   |   |  |  | 330.9   |  
|                                                     |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|2001 (restated)                                      |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|Total operating profit before exceptional items1     |  |                       | 156.5   |             |  |            | 248.8   |           |  |           | 78.8  |           |  |             | 32.3  |  |  |  | 21.3  |   |  |  | (7.1  | ) |  |  | 530.6   |  
|Operating exceptional items1                         |  |                       | (52.8   | )           |  |            | (21.8   | )         |  |           | (16.1 | )         |  |             |      |  |  |  | (0.7  | ) |  |  | (16.9 | ) |  |  | (108.3  | )
|(Loss)/profit on disposal of fixed assets1           |  |                       | (0.3    | )           |  |            | (3.1    | )         |  |           | (1.3  | )         |  |             | 0.9   |  |  |  |      |   |  |  | 7.4   |   |  |  | 3.6     |  
|Capital employed2                                    |  |                       | 2,004.9 |             |  |            | 1,152.7 |           |  |           | 589.9 |           |  |             | 98.5  |  |  |  | 81.4  |   |  |  | 47.1  |   |  |  | 3,974.5 |  
|Capital expenditure3                                 |  |                       | 170.6   |             |  |            | 95.5    |           |  |           | 53.8  |           |  |             | 10.3  |  |  |  | 17.9  |   |  |  | 4.5   |   |  |  | 352.6   |  
|Depreciation and amortisation3                       |  |                       | 169.4   |             |  |            | 97.4    |           |  |           | 37.2  |           |  |             | 6.7   |  |  |  | 15.6  |   |  |  | 3.2   |   |  |  | 329.5   |  
|                                                     |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|2000 (restated)                                      |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  
|Total operating profit before exceptional items1     |  |                       | 127.2   |             |  |            | 254.6   |           |  |           | 71.1  |           |  |             | 27.2  |  |  |  | 18.6  |   |  |  | (2.3  | ) |  |  | 496.4   |  
|Operating exceptional items1                         |  |                       | (5.5    | )           |  |            | (15.8   | )         |  |           | (4.5  | )         |  |             |      |  |  |  | 1.5   |   |  |  | 19.9  |   |  |  | (4.4    | )
|Capital employed2                                    |  |                       | 2,120.8 |             |  |            | 1,374.7 |           |  |           | 640.5 |           |  |             | 120.5 |  |  |  | 128.0 |   |  |  | 68.7  |   |  |  | 4,453.2 |  
|Capital expenditure3                                 |  |                       | 222.2   |             |  |            | 99.1    |           |  |           | 59.1  |           |  |             | 15.5  |  |  |  | 16.8  |   |  |  | 1.0   |   |  |  | 413.7   |  
|Depreciation and amortisation3                       |  |                       | 157.9   |             |  |            | 93.8    |           |  |           | 33.3  |           |  |             | 7.2   |  |  |  | 17.1  |   |  |  | 4.0   |   |  |  | 313.3   |  
|                                                     |  |                       |         |             |  |            |         |           |  |           |       |           |  |             |       |  |  |  |       |   |  |  |       |   |  |  |         |  



---

|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.                                                                                                                   

74  The BOC Group plcReport and accounts 2002





---



##### 



1. Segmental informationcontinued

c) Regional analysis

|                                                     |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|---------------------------------------------------- |  | --------- | ------- | --------- |  | --------- | ------- | ------------ |  | --------- | ----- | - |  |  | ------- | - |  | ----- | ------- | -
|                                                     |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  | Total
|                                                     |  | Europe    |         | Americas  |  | Africa    |         | Asia/Pacific |  | Group    
|                                                     |  | £ million |         | £ million |  | £ million |         | £ million    |  | £ million
|                                                     |  |           |         |           |  |           |         |              |  |          
|2002                                                 |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|Total operating profit before exceptional items1     |  |           | 155.2   |           |  |           | 121.3   |              |  |           | 56.7  |   |  |  | 166.9   |   |  |       | 500.1   |  
|Operating exceptional items1                         |  |           | (38.4   | )         |  |           | (8.1    | )            |  |           | (0.4  | ) |  |  | (27.6   | ) |  |       | (74.5   | )
|(Loss)/profit on termination/disposal of businesses1 |  |           | (1.5    | )         |  |           | (18.7   | )            |  |           |      |   |  |  |        |   |  |       | (20.2   | )
|Capital employed2                                    |  |           | 944.4   |           |  |           | 1,244.0 |              |  |           | 221.2 |   |  |  | 1,183.5 |   |  |       | 3,593.1 |  
|Capital expenditure3                                 |  |           | 121.4   |           |  |           | 134.7   |              |  |           | 25.6  |   |  |  | 72.6    |   |  |       | 354.3   |  
|                                                     |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|2001 (restated)                                      |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|Total operating profit before exceptional items1     |  |           | 165.5   |           |  |           | 137.2   |              |  |           | 69.4  |   |  |  | 158.5   |   |  |       | 530.6   |  
|Operating exceptional items1                         |  |           | (42.9   | )         |  |           | (40.5   | )            |  |           |      |   |  |  | (24.9   | ) |  |       | (108.3  | )
|(Loss)/profit on disposal of fixed assets1           |  |           | (2.2    | )         |  |           | 4.6     |              |  |           | 2.6   |   |  |  | (1.4    | ) |  |       | 3.6     |  
|Capital employed2                                    |  |           | 1,221.1 |           |  |           | 1,305.5 |              |  |           | 259.0 |   |  |  | 1,188.9 |   |  |       | 3,974.5 |  
|Capital expenditure3                                 |  |           | 134.6   |           |  |           | 108.6   |              |  |           | 26.4  |   |  |  | 83.0    |   |  |       | 352.6   |  
|                                                     |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|2000 (restated)                                      |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  
|Total operating profit before exceptional items1     |  |           | 171.3   |           |  |           | 117.3   |              |  |           | 66.1  |   |  |  | 141.7   |   |  |       | 496.4   |  
|Operating exceptional items1                         |  |           | 22.9    |           |  |           | (25.4   | )            |  |           | (0.6  | ) |  |  | (1.3    | ) |  |       | (4.4    | )
|Capital employed2                                    |  |           | 1,412.5 |           |  |           | 1,424.9 |              |  |           | 328.3 |   |  |  | 1,287.5 |   |  |       | 4,453.2 |  
|Capital expenditure3                                 |  |           | 127.2   |           |  |           | 121.9   |              |  |           | 31.8  |   |  |  | 132.8   |   |  |       | 413.7   |  
|                                                     |  |           |         |           |  |           |         |              |  |           |       |   |  |  |         |   |  |       |         |  



---

|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.                                                                                                                   

d) Joint ventures and associates  business analysis

|                                           |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|------------------------------------------ |  | -------------- | ----- | ----------- |  | ---------- | ----- | ----------- | ---------- | ----------- | ---- | --------- |  | --------- | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ---- | 
|                                           |  | Joint ventures |       | Associates 
|                                           |  |                |       |            
|                                           |  |                |       |             |  | Industrial |       |             | Industrial |             |      |           |  |          
|                                           |  | Process Gas    |       | and Special |  | BOC        |       | Process Gas |            | and Special |      | BOC       |  | Afrox    
|                                           |  | Solutions      |       | Products    |  | Edwards    |       | Solutions   |            | Products    |      | Edwards   |  | hospitals
|                                           |  | £ million      |       | £ million   |  | £ million  |       | £ million   |            | £ million   |      | £ million |  | £ million
|                                           |  |                |       |             |  |            |       |             |            |             |      |           |  |          
|2002                                       |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|Turnover1                                  |  |                | 119.9 |             |  |            | 142.7 |             |            |             | 61.5 |           |  |           | 10.6 |   |  |  | 7.9  |   |  |  | 7.1  |   |  |  | 10.5 | 
|Operating profit before exceptional items1 |  |                | 30.9  |             |  |            | 20.8  |             |            |             | 12.1 |           |  |           | 5.0  |   |  |  | 1.9  |   |  |  | 1.7  |   |  |  | 2.1  | 
|Operating exceptional items1               |  |                | (0.4  | )           |  |            | (0.1  | )           |            |             |     |           |  |           |     |   |  |  |     |   |  |  |     |   |  |  |     | 
|Capital employed2                          |  |                | 93.6  |             |  |            | 63.8  |             |            |             | 48.1 |           |  |           | 40.1 |   |  |  | 11.9 |   |  |  | 2.1  |   |  |  | 3.4  | 
|Capital expenditure                        |  |                | 46.5  |             |  |            | 7.5   |             |            |             | 8.0  |           |  |           | 8.3  |   |  |  | 1.8  |   |  |  | 1.5  |   |  |  | 0.6  | 
|Group share                                |  |                | 23.0  |             |  |            | 3.7   |             |            |             | 4.0  |           |  |           | 2.6  |   |  |  | 0.6  |   |  |  | 0.4  |   |  |  | 0.2  | 
|Other partners                             |  |                | 23.5  |             |  |            | 3.8   |             |            |             | 4.0  |           |  |           | 5.7  |   |  |  | 1.2  |   |  |  | 1.1  |   |  |  | 0.4  | 
|Depreciation and amortisation1             |  |                | 20.9  |             |  |            | 8.2   |             |            |             | 6.1  |           |  |           | 2.9  |   |  |  | 0.7  |   |  |  | 0.1  |   |  |  | 0.2  | 
|                                           |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|2001 (restated)                            |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|Turnover1                                  |  |                | 122.1 |             |  |            | 144.4 |             |            |             | 73.5 |           |  |           | 9.2  |   |  |  | 7.7  |   |  |  | 8.0  |   |  |  | 21.4 | 
|Operating profit before exceptional items1 |  |                | 28.2  |             |  |            | 16.8  |             |            |             | 14.0 |           |  |           | 4.1  |   |  |  | 3.0  |   |  |  | 2.1  |   |  |  | 4.0  | 
|Operating exceptional items1               |  |                | (0.6  | )           |  |            | (1.6  | )           |            |             |     |           |  |           | (0.2 | ) |  |  | (0.1 | ) |  |  | (0.1 | ) |  |  |     | 
|Capital employed2                          |  |                | 99.3  |             |  |            | 61.6  |             |            |             | 43.9 |           |  |           | 27.4 |   |  |  | 10.5 |   |  |  | 2.4  |   |  |  | 6.8  | 
|Capital expenditure                        |  |                | 55.9  |             |  |            | 12.0  |             |            |             | 35.4 |           |  |           | 2.5  |   |  |  | 0.4  |   |  |  | 0.2  |   |  |  | 3.3  | 
|Group share                                |  |                | 27.8  |             |  |            | 5.9   |             |            |             | 17.7 |           |  |           | 0.7  |   |  |  | 0.1  |   |  |  | 0.1  |   |  |  | 1.0  | 
|Other partners                             |  |                | 28.1  |             |  |            | 6.1   |             |            |             | 17.7 |           |  |           | 1.8  |   |  |  | 0.3  |   |  |  | 0.1  |   |  |  | 2.3  | 
|Depreciation and amortisation1             |  |                | 20.5  |             |  |            | 7.9   |             |            |             | 5.4  |           |  |           | 2.5  |   |  |  | 0.5  |   |  |  | 0.1  |   |  |  | 0.6  | 
|                                           |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|2000 (restated)                            |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 
|Turnover1                                  |  |                | 72.4  |             |  |            | 135.4 |             |            |             | 50.2 |           |  |           | 8.3  |   |  |  | 6.9  |   |  |  | 5.8  |   |  |  | 20.1 | 
|Operating profit1                          |  |                | 19.6  |             |  |            | 16.9  |             |            |             | 11.6 |           |  |           | 1.6  |   |  |  | 2.5  |   |  |  | 1.2  |   |  |  | 3.2  | 
|Capital employed2                          |  |                | 96.2  |             |  |            | 74.8  |             |            |             | 44.9 |           |  |           | 25.5 |   |  |  | 9.7  |   |  |  | 1.3  |   |  |  | 7.5  | 
|Capital expenditure                        |  |                | 146.2 |             |  |            | 36.1  |             |            |             | 28.6 |           |  |           | 0.8  |   |  |  | 1.2  |   |  |  | 0.4  |   |  |  | 4.0  | 
|Group share                                |  |                | 49.5  |             |  |            | 17.9  |             |            |             | 14.3 |           |  |           | 0.3  |   |  |  | 0.3  |   |  |  | 0.1  |   |  |  | 1.1  | 
|Other partners                             |  |                | 96.7  |             |  |            | 18.2  |             |            |             | 14.3 |           |  |           | 0.5  |   |  |  | 0.9  |   |  |  | 0.3  |   |  |  | 2.9  | 
|Depreciation and amortisation1             |  |                | 9.9   |             |  |            | 10.1  |             |            |             | 3.8  |           |  |           | 2.3  |   |  |  | 0.5  |   |  |  |     |   |  |  | 0.5  | 
|                                           |  |                |       |             |  |            |       |             |            |             |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |      | 



---

|1. |  | Group share.                                                                                   
|-- |  | -----------------------------------------------------------------------------------------------
|2. |  | Capital employed comprises the Groups share of the net assets of joint
ventures or associates.

75  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

1. Segmental informationcontinued

e) Joint ventures and associates  regional analysis

|                                           |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|------------------------------------------ |  | -------------- | ----- | ------------ | ---------- | --------- | ----- | --------- |  | ------------ | ---- |  |  |  | ---- |  |  |  | ---- | -
|                                           |  | Joint ventures |       |              | Associates
|                                           |  |                |       |             
|                                           |  | Americas       |       | Asia/Pacific |            | Americas  |       | Africa    |  | Asia/Pacific
|                                           |  | £ million      |       | £ million    |            | £ million |       | £ million |  | £ million   
|                                           |  |                |       |              |            |           |       |           |  |             
|2002                                       |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|Turnover1                                  |  |                | 85.4  |              |            |           | 238.7 |           |  |              |     |  |  |  | 10.5 |  |  |  | 25.6 |  
|Operating profit before exceptional items1 |  |                | 21.9  |              |            |           | 41.9  |           |  |              |     |  |  |  | 2.1  |  |  |  | 8.6  |  
|Operating exceptional items1               |  |                |      |              |            |           | (0.5  | )         |  |              |     |  |  |  |     |  |  |  |     |  
|Capital employed2                          |  |                | 25.2  |              |            |           | 180.3 |           |  |              | 13.7 |  |  |  | 3.4  |  |  |  | 40.4 |  
|Capital expenditure                        |  |                | 3.4   |              |            |           | 58.6  |           |  |              | 5.5  |  |  |  | 0.6  |  |  |  | 6.1  |  
|Group share                                |  |                | 1.4   |              |            |           | 29.3  |           |  |              | 1.7  |  |  |  | 0.2  |  |  |  | 1.9  |  
|Other partners                             |  |                | 2.0   |              |            |           | 29.3  |           |  |              | 3.8  |  |  |  | 0.4  |  |  |  | 4.2  |  
|Depreciation and amortisation1             |  |                | 14.6  |              |            |           | 20.6  |           |  |              |     |  |  |  | 0.2  |  |  |  | 3.7  |  
|                                           |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|2001 (restated)                            |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|Turnover1                                  |  |                | 88.5  |              |            |           | 251.5 |           |  |              |     |  |  |  | 21.4 |  |  |  | 24.9 |  
|Operating profit before exceptional items1 |  |                | 18.5  |              |            |           | 40.5  |           |  |              |     |  |  |  | 4.0  |  |  |  | 9.2  |  
|Operating exceptional items1               |  |                |      |              |            |           | (2.2  | )         |  |              |     |  |  |  |     |  |  |  | (0.4 | )
|Capital employed2                          |  |                | 27.7  |              |            |           | 177.1 |           |  |              |     |  |  |  | 6.8  |  |  |  | 40.3 |  
|Capital expenditure                        |  |                | 35.2  |              |            |           | 68.1  |           |  |              |     |  |  |  | 3.3  |  |  |  | 3.1  |  
|Group share                                |  |                | 17.4  |              |            |           | 34.0  |           |  |              |     |  |  |  | 1.0  |  |  |  | 0.9  |  
|Other partners                             |  |                | 17.8  |              |            |           | 34.1  |           |  |              |     |  |  |  | 2.3  |  |  |  | 2.2  |  
|Depreciation and amortisation1             |  |                | 14.7  |              |            |           | 19.1  |           |  |              |     |  |  |  | 0.6  |  |  |  | 3.1  |  
|                                           |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|2000 (restated)                            |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  
|Turnover1                                  |  |                | 43.1  |              |            |           | 214.9 |           |  |              |     |  |  |  | 20.1 |  |  |  | 21.0 |  
|Operating profit1                          |  |                | 12.6  |              |            |           | 35.5  |           |  |              |     |  |  |  | 3.2  |  |  |  | 5.3  |  
|Capital employed2                          |  |                | 33.6  |              |            |           | 182.3 |           |  |              |     |  |  |  | 7.5  |  |  |  | 36.5 |  
|Capital expenditure                        |  |                | 120.7 |              |            |           | 90.2  |           |  |              |     |  |  |  | 4.0  |  |  |  | 2.4  |  
|Group share                                |  |                | 36.6  |              |            |           | 45.1  |           |  |              |     |  |  |  | 1.1  |  |  |  | 0.7  |  
|Other partners                             |  |                | 84.1  |              |            |           | 45.1  |           |  |              |     |  |  |  | 2.9  |  |  |  | 1.7  |  
|Depreciation and amortisation1             |  |                | 6.5   |              |            |           | 17.3  |           |  |              |     |  |  |  | 0.5  |  |  |  | 2.8  |  
|                                           |  |                |       |              |            |           |       |           |  |              |      |  |  |  |      |  |  |  |      |  



---

|1. |  | Group share.                                                                                   
|-- |  | -----------------------------------------------------------------------------------------------
|2. |  | Capital employed comprises the Groups share of the net assets of joint
ventures or associates.

f) Significant country analysis

|                                                      |  |           |       |            |  |            |       |           |  |            |         |            |  |      |         |      |  |  |         |   |  |  |         |  
|----------------------------------------------------- |  | --------- | ----- | ---------- |  | ---------- | ----- | --------- |  | ---------- | ------- | ---------- |  | ---- | ------- | ---- |  |  | ------- | - |  |  | ------- | -
|                                                      |  | UK        |       | US        
|                                                      |  |           |       |           
|                                                      |  |           |       |            |  | 2001       |       | 2000      |  |            |         |            |  | 2001 |         | 2000
|                                                      |  | 2002      |       | (restated) |  | (restated) |       | 2002      |  | (restated) |         | (restated)
|                                                      |  | £ million |       | £ million  |  | £ million  |       | £ million |  | £ million  |         | £ million 
|                                                      |  |           |       |            |  |            |       |           |  |            |         |           
|Turnover                                              |  |           | 868.7 |            |  |            | 837.2 |           |  |            | 835.5   |            |  |      | 1,065.6 |      |  |  | 1,167.7 |   |  |  | 1,082.7 |  
|Total operating profit before exceptional items       |  |           | 115.2 |            |  |            | 125.5 |           |  |            | 136.4   |            |  |      | 50.5    |      |  |  | 66.9    |   |  |  | 77.6    |  
|Operating exceptional items                           |  |           | (36.5 | )          |  |            | (41.9 | )         |  |            | 22.7    |            |  |      | (25.7   | )    |  |  | (34.5   | ) |  |  | (24.8   | )
|Exceptional (loss)/profit on disposal of fixed assets |  |           |      |            |  |            | (1.7  | )         |  |            |        |            |  |      |        |      |  |  | 4.6     |   |  |  |        |  
|Capital employed1                                     |  |           | 733.9 |            |  |            | 928.6 |           |  |            | 1,180.8 |            |  |      | 1,091.6 |      |  |  | 1,231.0 |   |  |  | 1,275.5 |  
|Capital expenditure                                   |  |           | 110.0 |            |  |            | 126.3 |           |  |            | 116.8   |            |  |      | 124.8   |      |  |  | 99.8    |   |  |  | 106.0   |  
|                                                      |  |           |       |            |  |            |       |           |  |            |         |            |  |      |         |      |  |  |         |   |  |  |         |  



---

|1. |  | Capital employed comprises the
capital and reserves of the Group, its
long-term liabilities and all current borrowings net of cash and deposits.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------

2. Profit and
loss

a) Analysis of costs

|                                          |  |  |           |   |  |  |            |   |  |  |            |   | 
|----------------------------------------- |  |  | --------- | - |  |  | ---------- | - |  |  | ---------- | - | 
|                                          |  |  |           |   |  |  | 2001       |   |  |  | 2000       |  
|                                          |  |  | 2002      |   |  |  | (restated) |   |  |  | (restated) |  
|i) Expense category                       |  |  | £ million |   |  |  | £ million  |   |  |  | £ million  |  
|                                          |  |  |           |   |  |  |            |   |  |  |            |  
|Cost of sales                             |  |  | (2,104.8  | ) |  |  | (2,208.8   | ) |  |  | (2,035.8   | )
|                                          |  |  |           |   |  |  |            |   |  |  |            |  
|Distribution costs                        |  |  | (344.1    | ) |  |  | (339.3     | ) |  |  | (327.2     | )
|Administrative expenses1                  |  |  | (861.4    | ) |  |  | (874.1     | ) |  |  | (781.9     | )
|Income from other fixed asset investments |  |  | 4.2       |   |  |  | 2.0        |   |  |  | 0.6        |  
|                                          |  |  |           |   |  |  |            |   |  |  |            |  
|Net operating expenses                    |  |  | (1,201.3  | ) |  |  | (1,211.4   | ) |  |  | (1,108.5   | )
|                                          |  |  |           |   |  |  |            |   |  |  |            |  



---

|1. |  | Included in total administrative expenses is research and development
expenditure of £47.0 million (2001:
£59.7 million, 2000: £59.2 million).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

76  The BOC Group plcReport and accounts 2002





---



##### 



2. Profit and losscontinued

|                                          |  |            |          |              |  |           |       |             |  |             |          |   |  |  |       |   |  |  |          |  
|----------------------------------------- |  | ---------- | -------- | ------------ |  | --------- | ----- | ----------- |  | ----------- | -------- | - |  |  | ----- | - |  |  | -------- | -
|                                          |  |            |          |              |  |           |       |             |  | Total       |          |   |  |  |       |   |  | 
|                                          |  |            |          |              |  |           |       |             |  | before      |          |   |  |  |       |   |  | 
|                                          |  | Continuing |          |              |  |           |       | exceptional |  | Exceptional |         
|                                          |  | operations |          | Acquisitions |  | items     |       | items       |  | Total      
|ii) 2002 analysis                         |  | £ million  |          | £ million    |  | £ million |       | £ million   |  | £ million  
|                                          |  |            |          |              |  |           |       |             |  |            
|Cost of sales                             |  |            | (1,998.2 | )            |  |           | (91.5 | )           |  |             | (2,089.7 | ) |  |  | (15.1 | ) |  |  | (2,104.8 | )
|                                          |  |            |          |              |  |           |       |             |  |             |          |   |  |  |       |   |  |  |          |  
|Distribution costs                        |  |            | (332.2   | )            |  |           | (9.7  | )           |  |             | (341.9   | ) |  |  | (2.2  | ) |  |  | (344.1   | )
|Administrative expenses1                  |  |            | (783.2   | )            |  |           | (21.5 | )           |  |             | (804.7   | ) |  |  | (56.7 | ) |  |  | (861.4   | )
|Income from other fixed asset investments |  |            | 4.2      |              |  |           |      |             |  |             | 4.2      |   |  |  |      |   |  |  | 4.2      |  
|                                          |  |            |          |              |  |           |       |             |  |             |          |   |  |  |       |   |  |  |          |  
|Net operating expenses                    |  |            | (1,111.2 | )            |  |           | (31.2 | )           |  |             | (1,142.4 | ) |  |  | (58.9 | ) |  |  | (1,201.3 | )
|                                          |  |            |          |              |  |           |       |             |  |             |          |   |  |  |       |   |  |  |          |  

|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|----------------------------------------- |  | ----------- | -------- | ----------- |  | --------- | ----- | - |  |  | -------- | -
|                                          |  | Continuing  |          |             |  |           |       |   |  | 
|                                          |  | operations  |          |             |  |           |       |   |  | 
|                                          |  | before      |          |             |  |           |       |   |  | 
|                                          |  | exceptional |          | Exceptional |  |           |       |  
|                                          |  | items       |          | items       |  | Total    
|iii) 2001 analysis (restated)             |  | £ million   |          | £ million   |  | £ million
|                                          |  |             |          |             |  |          
|Cost of sales                             |  |             | (2,164.2 | )           |  |           | (44.6 | ) |  |  | (2,208.8 | )
|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|Distribution costs                        |  |             | (338.1   | )           |  |           | (1.2  | ) |  |  | (339.3   | )
|Administrative expenses1                  |  |             | (814.2   | )           |  |           | (59.9 | ) |  |  | (874.1   | )
|Income from other fixed asset investments |  |             | 2.0      |             |  |           |      |   |  |  | 2.0      |  
|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|Net operating expenses                    |  |             | (1,150.3 | )           |  |           | (61.1 | ) |  |  | (1,211.4 | )
|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|iv) 2000 analysis (restated)              |  |             |          |             |  |           |       |   |  |  |          |  
|Cost of sales                             |  |             | (2,035.2 | )           |  |           | (0.6  | ) |  |  | (2,035.8 | )
|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|Distribution costs                        |  |             | (327.2   | )           |  |           |      |   |  |  | (327.2   | )
|Administrative expenses1                  |  |             | (778.1   | )           |  |           | (3.8  | ) |  |  | (781.9   | )
|Income from other fixed asset investments |  |             | 0.6      |             |  |           |      |   |  |  | 0.6      |  
|                                          |  |             |          |             |  |           |       |   |  |  |          |  
|Net operating expenses                    |  |             | (1,104.7 | )           |  |           | (3.8  | ) |  |  | (1,108.5 | )
|                                          |  |             |          |             |  |           |       |   |  |  |          |  



---

|1. |  | Included in total administrative expenses is research and development
expenditure of £47.0 million (2001:
£59.7 million, 2000: £59.2 million).
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------

b) Exceptional items analysis

|                                                          |  |           |       |            |  |           |        |   |  |  |       |  
|--------------------------------------------------------- |  | --------- | ----- | ---------- |  | --------- | ------ | - |  |  | ----- | -
|                                                          |  |           |       |            |  | 2001      |        |   |  | 
|                                                          |  | 2002      |       | (restated) |  | 2000     
|                                                          |  | £ million |       | £ million  |  | £ million
|                                                          |  |           |       |            |  |          
|(Charged)/credited in arriving at operating profit        |  |           |       |            |  |           |        |   |  |  |       |  
|Restructuring costs                                       |  |           | (47.2 | )          |  |           | (35.8  | ) |  |  | (18.8 | )
|Write-down and impairment of assets                       |  |           | (21.2 | )          |  |           | (24.5  | ) |  |  |      |  
|Write-down
of unproductive assets identified for disposal |  |           |      |            |  |           | (21.0  | ) |  |  |      |  
|FRS17 retirement plan benefit amendments                  |  |           |      |            |  |           | (16.7  | ) |  |  |      |  
|Business systems investments                              |  |           |      |            |  |           |       |   |  |  | (6.0  | )
|Costs of proposed takeover                                |  |           | (6.1  | )          |  |           | (10.3  | ) |  |  | (45.6 | )
|Break fee                                                 |  |           |      |            |  |           |       |   |  |  | 66.0  |  
|                                                          |  |           |       |            |  |           |        |   |  |  |      
|Total operating exceptional items                         |  |           | (74.5 | )          |  |           | (108.3 | ) |  |  | (4.4  | )
|                                                          |  |           |       |            |  |           |        |   |  |  |      



i) Restructuring costs
The business initiative announced in August 2001 included a number of
restructuring programmes. The major programmes included the restructuring of BOC
Edwards manufacturing capacity, closure of production at the Process Plants
Edmonton site in the UK, investments in information technology and information
management systems, restructuring to deliver operational efficiencies in Process
Gas Solutions and restructuring of operational networks in Industrial and
Special Products. Cash flow from operating activities includes an outflow of
£48.0 million in 2002 in respect of these exceptional items.

ii) Write-downs of assets
In September 2002 BOC and Air Liquide announced a conditional agreement to
merge their industrial and medical gases businesses in Japan to form a combined
company to be called Japan Air Gases. The net assets of OSK (the existing BOC
gases business in Japan), which had included an increase in the value of fixed
assets through property revaluations in the 1980s and early 1990s, have been
reduced to an appropriate amount based on valuations performed ahead of the
merger. This has resulted in a write-down of £32.7 million, of which £11.5
million has been taken against the revaluation reserves, and the balance of
£21.2 million has been charged as an exceptional item in the profit and loss
account in 2002.

The write-downs in 2001 related to the business initiative announced in
August 2001 with the objective of releasing cash tied up in unproductive assets
and improving cash generation.

77  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

2. Profit and losscontinued
iii) Costs of proposed takeover and break fee

The final costs associated with the pre-conditional offer for the Group have
been incurred in 2002 in respect of share options and other costs related to
the retention of key employees. There are no further costs to come. The break fee
was received in 2000 from the potential bidders on the failure of the
pre-conditional offer. Cash flow from operating activities includes an outflow
of £4.5 million in 2002 in respect of these exceptional items.


|                                                           |  |           |       |           |  |           |       |   |  |  |      | 
|---------------------------------------------------------- |  | --------- | ----- | --------- |  | --------- | ----- | - |  |  | ---- | 
|                                                           |  | 2002      |       | 2001      |  | 2000     
|                                                           |  | £ million |       | £ million |  | £ million
|                                                           |  |           |       |           |  |          
|(Charged)/credited after operating profit                  |  |           |       |           |  |           |       |   |  |  |      | 
|Closure of businesses  continuing operations              |  |           | (21.3 | )         |  |           |      |   |  |  |     | 
|Profit on disposal of businesses  continuing operations   |  |           | 1.1   |           |  |           |      |   |  |  |     | 
|Profit on disposal of businesses  discontinued business   |  |           |      |           |  |           |      |   |  |  | 12.5 | 
|Profit on disposal of fixed assets  continuing operations |  |           |      |           |  |           | 13.6  |   |  |  |     | 
|Loss on disposal of fixed assets  continuing operations   |  |           |      |           |  |           | (10.0 | ) |  |  |     | 
|                                                           |  |           |       |           |  |           |       |   |  |  |      | 
|Total non-operating exceptional items                      |  |           | (20.2 | )         |  |           | 3.6   |   |  |  | 12.5 | 
|                                                           |  |           |       |           |  |           |       |   |  |  |      | 

iv)In March 2002 BOC announced plans to merge its Process Plants business with
Linde Engineering in the US to form a new company, Linde BOC Process Plants
LLC. The costs of £21.3 million for closing BOCs Process Plants business have
been charged as an exceptional item this year. This includes severance costs for
215 employees, the write-down of assets and the costs of winding down the
business. Cash flow from operating activities includes an outflow of £12.5
million in 2002 in respect of these exceptional costs.

In April 2002 BOC Edwards agreed the sale of its US glass coating
business, resulting in a profit on disposal of £1.1 million.


v)The profit on
disposal of the health care discontinued business in 2000 of £12.5 million
arose from the release of provisions established at the time of disposal in
1998.


vi)In 2001, proceeds from the disposal of fixed assets were £41.2
million. Of this, £39.0 million was from those assets which were sold at a profit
and £2.2 million was from those assets which were sold at a loss.


c) Fees to auditors

|                                                                           |  |           |     |           |  |           |     |  |  |  |     | 
|-------------------------------------------------------------------------- |  | --------- | --- | --------- |  | --------- | --- |  |  |  | --- | 
|                                                                           |  | 2002      |     | 2001      |  | 2000     
|                                                                           |  | £ million |     | £ million |  | £ million
|                                                                           |  |           |     |           |  |          
|Audit
fees (Parent: £0.3 million, 2001: £0.3  million,
2000: £0.3 million) |  |           | 1.9 |           |  |           | 2.0 |  |  |  | 1.8 | 
|Non audit fees                                                             |  |           |     |           |  |           |     |  |  |  |     | 
|Tax advice and compliance                                                  |  |           | 2.5 |           |  |           | 1.6 |  |  |  | 2.3 | 
|Expatriate tax administration                                              |  |           | 1.4 |           |  |           | 0.5 |  |  |  |    | 
|Acquisition related work                                                   |  |           | 0.8 |           |  |           |    |  |  |  |    | 
|Other advice                                                               |  |           | 0.4 |           |  |           | 0.1 |  |  |  | 1.0 | 
|                                                                           |  |           |     |           |  |           |     |  |  |  |     | 
|Total non audit fees                                                       |  |           | 5.1 |           |  |           | 2.2 |  |  |  | 3.3 | 
|                                                                           |  |           |     |           |  |           |     |  |  |  |     | 
|Total fees paid to auditors                                                |  |           | 7.0 |           |  |           | 4.2 |  |  |  | 5.1 | 
|                                                                           |  |           |     |           |  |           |     |  |  |  |     | 

Tax compliance and expatriate administration work was outsourced following
competitive tender processes. See also page 52 of the corporate governance
report.

d) Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable to
Ordinary shareholders by the weighted average number of shares in issue during
the year.


For
diluted earnings per share, the weighted average number of shares in
issue is adjusted to assume conversion of all dilutive potential
shares. The
company has only one category of dilutive potential shares: those share options
granted to employees where the exercise price is less than the average market
price of the companys shares during the year and where any performance
conditions have been met at the balance sheet date.


Earnings per share before exceptional items are presented in order to show the
underlying earnings performance of the Group.


|                                                                      |  |           |       |            |  |            |       |      |  |  |       |  
|--------------------------------------------------------------------- |  | --------- | ----- | ---------- |  | ---------- | ----- | ---- |  |  | ----- | -
|                                                                      |  |           |       |            |  | 2001       |       | 2000
|                                                                      |  | 2002      |       | (restated) |  | (restated)
|i) Earnings                                                           |  | £ million |       | £ million  |  | £ million 
|                                                                      |  |           |       |            |  |           
|Amounts used in computing the earnings per share                      |  |           |       |            |  |            |       |      |  |  |       |  
|Earnings attributable to Ordinary shareholders for the financial year |  |           | 202.9 |            |  |            | 224.1 |      |  |  | 278.6 |  
|Adjustment for exceptional items1                                     |  |           | 71.4  |            |  |            | 55.9  |      |  |  | (17.8 | )
|                                                                      |  |           |       |            |  |            |       |      |  |  |       |  
|Adjusted earnings before exceptional items                            |  |           | 274.3 |            |  |            | 280.0 |      |  |  | 260.8 |  
|                                                                      |  |           |       |            |  |            |       |      |  |  |       |  



---

|1. |  | This comprises the exceptional items before interest of £(94.7) million
(2001: £(104.7) million, 2000: £8.1 million) adjusted for the impact of tax
of £22.8 million (2001: £46.9 million, 2000: £9.7 million) and minority
interests of £0.5 million (2001: £1.9 million,
2000: £nil).
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

78  The BOC Group plcReport and accounts 2002



---



##### 



2. Profit and losscontinued

|                                          |  |         |       |         |  |         |       |  |  |  |       | 
|----------------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- |  |  |  | ----- | 
|                                          |  | 2002    |       | 2001    |  | 2000   
|ii) Average number of 25p Ordinary shares |  | million |       | million |  | million
|                                          |  |         |       |         |  |        
|Average issued share capital              |  |         | 496.0 |         |  |         | 493.3 |  |  |  | 491.5 | 
|Less:Average own shares held in trust     |  |         | 5.6   |         |  |         | 6.4   |  |  |  | 4.4   | 
|                                          |  |         |       |         |  |         |       |  |  |  |       | 
|Basic                                     |  |         | 490.4 |         |  |         | 486.9 |  |  |  | 487.1 | 
|Add:Dilutive share options                |  |         | 1.8   |         |  |         | 1.7   |  |  |  | 2.5   | 
|                                          |  |         |       |         |  |         |       |  |  |  |       | 
|Diluted                                   |  |         | 492.2 |         |  |         | 488.6 |  |  |  | 489.6 | 
|                                          |  |         |       |         |  |         |       |  |  |  |       | 

3. Treasury information
a) Interest on net debt

|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|------------------------------------------------------------------ |  | --------- | ----- | --------- |  | --------- | ----- | - |  |  | ----- | -
|                                                                   |  | 2002      |       | 2001      |  | 2000     
|                                                                   |  | £ million |       | £ million |  | £ million
|                                                                   |  |           |       |           |  |          
|Interest payable on borrowings totally repayable within five years |  |           | 47.5  |           |  |           | 75.1  |   |  |  | 94.1  |  
|Interest payable on all other borrowings                           |  |           | 55.7  |           |  |           | 50.1  |   |  |  | 41.4  |  
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|Interest payable and similar charges                               |  |           | 103.2 |           |  |           | 125.2 |   |  |  | 135.5 |  
|Interest capitalised                                               |  |           | (2.0  | )         |  |           | (2.5  | ) |  |  | (7.1  | )
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|Interest payable (net of interest capitalised)                     |  |           | 101.2 |           |  |           | 122.7 |   |  |  | 128.4 |  
|Interest receivable and similar income                             |  |           | (22.6 | )         |  |           | (24.2 | ) |  |  | (27.7 | )
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|Interest (net)                                                     |  |           | 78.6  |           |  |           | 98.5  |   |  |  | 100.7 |  
|Share of interest of joint ventures (net)                          |  |           | 23.2  |           |  |           | 22.6  |   |  |  | 7.9   |  
|Share of interest of associates                                    |  |           | 1.3   |           |  |           | 2.3   |   |  |  | 2.9   |  
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|Total interest on net debt                                         |  |           | 103.1 |           |  |           | 123.4 |   |  |  | 111.5 |  
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  
|Interest payable on finance leases                                 |  |           | 5.3   |           |  |           | 6.9   |   |  |  | 4.6   |  
|Interest payable on borrowings repayable by instalments            |  |           | 19.5  |           |  |           | 29.1  |   |  |  | 27.3  |  
|                                                                   |  |           |       |           |  |           |       |   |  |  |       |  

Share of interest of joint ventures and associates is after deducting
capitalised interest of £nil (2001: £1.0 million, 2000: £12.9 million). The
interest capitalised in 2000 was mainly in BOCs joint venture in Mexico.

b) Currency, interest rate and counterparty exposure
The Groups approach to managing currency and interest rate risk and its use of
swaps in that process is described on pages 45 and 46 in the finance and
treasury review under the heading management of financial risks.

Interest rate swaps
At 30 September 2002, the Group had entered into six interest rate swap
agreements (2001:five) with notional principal amounts of £420.0 million
(2001: £375.4 million). The swaps underlying currencies are sterling, US dollars
and Japanese yen. The following table shows the maturity profile and weighted
average interest rates payable and receivable on interest rate swaps at 30
September:

|                             |  |           |       |           |  |  |       | 
|---------------------------- |  | --------- | ----- | --------- |  |  | ----- | 
|                             |  | 2002      |       | 2001     
|Maturity profile             |  | £ million |       | £ million
|                             |  |           |       |          
|Beyond five years            |  |           | 295.0 |           |  |  | 68.0  | 
|Four to five years           |  |           |      |           |  |  |      | 
|Three to four years          |  |           |      |           |  |  |      | 
|Two to three years           |  |           |      |           |  |  | 125.0 | 
|One to two years             |  |           | 125.0 |           |  |  |      | 
|Within one year              |  |           |      |           |  |  | 182.4 | 
|                             |  |           |       |           |  |  |       | 
|                             |  |           | 420.0 |           |  |  | 375.4 | 
|                             |  |           |       |           |  |  |       | 
|                             |  |           | %     |           |  |  | %     | 
|Average receivable swap rate |  |           | 5.5   |           |  |  | 6.0   | 
|Average payable swap rate    |  |           | 4.8   |           |  |  | 5.2   | 
|                             |  |           |       |           |  |  |       | 

The weighted average receivable/payable swap interest rate is calculated by
applying the notional swap interest received or paid, using rates applicable at
the financial year end, to the notional principal of outstanding swaps at the
financial year end.

79  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

3. Treasury informationcontinued

Currency swaps
At 30 September
2002, the Group had entered into eight currency swap agreements
(2001: nine) with notional principal amounts of £360.7 million
(2001: £359.6 million). The maturity dates range between one month and 33 months
from the balance sheet date (2001: between one month and 24 months). The
following table illustrates the impact of the currency swaps on the Groups net
debt at 30 September:

|                   |  |           |         |            |  |           |          |           |  |              |       |            |  |              |        |   |  |  |          |         |  |  |         |  |  |  |          |  
|------------------ |  | --------- | ------- | ---------- |  | --------- | -------- | --------- |  | ------------ | ----- | ---------- |  | ------------ | ------ | - |  |  | -------- | ------- |  |  | ------- |  |  |  | -------- | -
|                   |  | 2002      |         | 2001      
|                   |  |           |         |           
|                   |  |           |         |            |  |           |          |           |  | Cash at      |       |            |  |              |        |   |  |  |          | Capital |  |  |         | 
|                   |  | Capital   |         | Gross      |  | bank and  |          | Currency  |  | Adjusted net |       | employed   |  | Adjusted net
|                   |  | employed  |         | borrowings |  | in hand   |          | swaps     |  | borrowings   |       | (restated) |  | borrowings  
|                   |  | £ million |         | £ million  |  | £ million |          | £ million |  | £ million    |       | £ million  |  | £ million   
|                   |  |           |         |            |  |           |          |           |  |              |       |            |  |             
|Sterling           |  |           | 781.7   |            |  |           | (615.4   | )         |  |              | 13.6  |            |  |              | 256.6  |   |  |  | (345.2   | )       |  |  | 1,103.0 |  |  |  | (298.2   | )
|US dollar          |  |           | 1,190.5 |            |  |           | (327.2   | )         |  |              | 8.5   |            |  |              | (185.7 | ) |  |  | (504.4   | )       |  |  | 1,249.6 |  |  |  | (469.5   | )
|Australian dollar  |  |           | 263.1   |            |  |           | (35.6    | )         |  |              | 71.2  |            |  |              | (79.6  | ) |  |  | (44.0    | )       |  |  | 268.5   |  |  |  | (109.6   | )
|South African rand |  |           | 202.5   |            |  |           | (46.6    | )         |  |              | 4.4   |            |  |              |       |   |  |  | (42.2    | )       |  |  | 218.6   |  |  |  | (47.8    | )
|Japanese yen       |  |           | 237.4   |            |  |           | (206.2   | )         |  |              | 51.5  |            |  |              | (52.2  | ) |  |  | (206.9   | )       |  |  | 260.8   |  |  |  | (199.2   | )
|Canadian dollar    |  |           | 85.8    |            |  |           | (41.1    | )         |  |              | 1.0   |            |  |              |       |   |  |  | (40.1    | )       |  |  | 80.9    |  |  |  | (38.5    | )
|Thai baht          |  |           | 120.6   |            |  |           | (64.0    | )         |  |              | 6.3   |            |  |              |       |   |  |  | (57.7    | )       |  |  | 73.7    |  |  |  | (38.7    | )
|Other              |  |           | 711.5   |            |  |           | (175.0   | )         |  |              | 29.0  |            |  |              | 60.9   |   |  |  | (85.1    | )       |  |  | 719.4   |  |  |  | (70.6    | )
|                   |  |           |         |            |  |           |          |           |  |              |       |            |  |              |        |   |  |  |          |         |  |  |         |  |  |  |          |  
|Total              |  |           | 3,593.1 |            |  |           | (1,511.1 | )         |  |              | 185.5 |            |  |              |       |   |  |  | (1,325.6 | )       |  |  | 3,974.5 |  |  |  | (1,272.1 | )
|                   |  |           |         |            |  |           |          |           |  |              |       |            |  |              |        |   |  |  |          |         |  |  |         |  |  |  |          |  

The average receivable interest rate on currency swaps was 4.0 per cent
(2001: 4.9 per cent) and the average payable interest rate was 2.8 per cent
(2001: 3.5 per cent). The weighted average receivable/payable swap interest rate
is calculated by applying the notional swap interest received or paid, using
rates applicable at the financial year end, to the notional principal of
outstanding swaps at the financial year end.
The currency and interest rate exposure of the net borrowings of the Group
at 30 September, after taking into account interest rate and currency swaps
entered into by the Group, is given in the table below.

|                   |  |            |       |               |  |           |       |            |  |               |         |           |  |  |       |  |  |  |       |   |  |  |         | 
|------------------ |  | ---------- | ----- | ------------- |  | --------- | ----- | ---------- |  | ------------- | ------- | --------- |  |  | ----- |  |  |  | ----- | - |  |  | ------- | 
|                   |  | 2002       |       | 2001         
|                   |  |            |       |              
|                   |  | Fixed rate |       | Floating rate |  | Total     |       | Fixed rate |  | Floating rate |         | Total    
|                   |  | £ million  |       | £ million     |  | £ million |       | £ million  |  | £ million     |         | £ million
|                   |  |            |       |               |  |           |       |            |  |               |         |          
|Sterling           |  |            | 300.0 |               |  |           | 45.2  |            |  |               | 345.2   |           |  |  | 299.0 |  |  |  | (0.8  | ) |  |  | 298.2   | 
|US dollar          |  |            | 225.5 |               |  |           | 278.9 |            |  |               | 504.4   |           |  |  | 241.2 |  |  |  | 228.3 |   |  |  | 469.5   | 
|Australian dollar  |  |            | 35.6  |               |  |           | 8.4   |            |  |               | 44.0    |           |  |  | 35.9  |  |  |  | 73.7  |   |  |  | 109.6   | 
|South African rand |  |            | 23.7  |               |  |           | 18.5  |            |  |               | 42.2    |           |  |  | 78.0  |  |  |  | (30.2 | ) |  |  | 47.8    | 
|Japanese yen       |  |            | 165.9 |               |  |           | 41.0  |            |  |               | 206.9   |           |  |  | 178.2 |  |  |  | 21.0  |   |  |  | 199.2   | 
|Canadian dollar    |  |            |      |               |  |           | 40.1  |            |  |               | 40.1    |           |  |  | 1.0   |  |  |  | 37.5  |   |  |  | 38.5    | 
|Thai baht          |  |            | 52.1  |               |  |           | 5.6   |            |  |               | 57.7    |           |  |  | 30.4  |  |  |  | 8.3   |   |  |  | 38.7    | 
|Other              |  |            | 25.5  |               |  |           | 59.6  |            |  |               | 85.1    |           |  |  | 29.0  |  |  |  | 41.6  |   |  |  | 70.6    | 
|                   |  |            |       |               |  |           |       |            |  |               |         |           |  |  |       |  |  |  |       |   |  |  |         | 
|Total              |  |            | 828.3 |               |  |           | 497.3 |            |  |               | 1,325.6 |           |  |  | 892.7 |  |  |  | 379.4 |   |  |  | 1,272.1 | 
|                   |  |            |       |               |  |           |       |            |  |               |         |           |  |  |       |  |  |  |       |   |  |  |         | 

Counterparty risk
The Group is exposed to credit-related losses in the event of non-performance
by counterparties to financial instruments, but does not expect any
counterparties to fail to meet their obligations. There are procedures and
policies in place limiting the Groups exposure to concentrations of credit or
country risk.

80  The BOC Group plc  Report and accounts 2002



---



##### 



3. Treasury informationcontinued

c) Net borrowings and finance leases

|                                                    |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|--------------------------------------------------- |  | --------- | ------- | --------- |  | --------- | ------- | --------- |  |  | ----- |  |  |  | ----- | 
|                                                    |  | Group     |         | Parent   
|                                                    |  |           |         |          
|                                                    |  | 2002      |         | 2001      |  | 2002      |         | 2001     
|i) Analysis                                         |  | £ million |         | £ million |  | £ million |         | £ million
|                                                    |  |           |         |           |  |           |         |          
|Secured                                             |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Finance leases                                      |  |           | 33.8    |           |  |           | 45.6    |           |  |  |      |  |  |  |      | 
|Other secured borrowings                            |  |           | 68.0    |           |  |           | 71.7    |           |  |  |      |  |  |  |      | 
|Unsecured                                           |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|12 1/4% Unsecured Loan Stock 2012/2017              |  |           | 100.0   |           |  |           | 100.0   |           |  |  | 100.0 |  |  |  | 100.0 | 
|7 1/4% Notes 2002                                   |  |           |        |           |  |           | 150.0   |           |  |  |      |  |  |  | 150.0 | 
|6 1/4% Notes 2002                                   |  |           | 34.6    |           |  |           | 33.6    |           |  |  |      |  |  |  |      | 
|7.45% Guaranteed Notes 2006                         |  |           | 159.2   |           |  |           | 170.0   |           |  |  |      |  |  |  |      | 
|Pollution Control and Industrial Bonds              |  |           | 19.3    |           |  |           | 39.2    |           |  |  |      |  |  |  |      | 
|European Investment Bank loans                      |  |           | 82.8    |           |  |           | 85.1    |           |  |  |      |  |  |  |      | 
|6.75% Bonds 2004                                    |  |           | 125.0   |           |  |           | 125.0   |           |  |  | 125.0 |  |  |  | 125.0 | 
|1.00% Euroyen Bond 2006                             |  |           | 130.6   |           |  |           | 142.8   |           |  |  | 130.6 |  |  |  | 142.8 | 
|5 7/8% Bonds 2009                                   |  |           | 200.0   |           |  |           |        |           |  |  | 200.0 |  |  |  |      | 
|6.50% Bonds 2016                                    |  |           | 200.0   |           |  |           | 200.0   |           |  |  | 200.0 |  |  |  | 200.0 | 
|Medium term notes                                   |  |           | 57.4    |           |  |           |        |           |  |  | 57.4  |  |  |  |      | 
|Commercial paper                                    |  |           | 147.0   |           |  |           | 94.7    |           |  |  |      |  |  |  | 36.5  | 
|Other borrowings                                    |  |           | 153.4   |           |  |           | 248.6   |           |  |  | 166.9 |  |  |  | 131.7 | 
|                                                    |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Total borrowings and finance leases                 |  |           | 1,511.1 |           |  |           | 1,506.3 |           |  |  | 979.9 |  |  |  | 886.0 | 
|Less:Cash at bank and in hand  due within one year |  |           | 185.5   |           |  |           | 233.5   |           |  |  |      |  |  |  | 51.7  | 
| due beyond one year                               |  |           |        |           |  |           | 0.7     |           |  |  |      |  |  |  |      | 
|                                                    |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Net borrowings and finance leases                   |  |           | 1,325.6 |           |  |           | 1,272.1 |           |  |  | 979.9 |  |  |  | 834.3 | 
|                                                    |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 

A reconciliation of net cash flow to the movement in net debt is given in note 14 b).

|                                                          |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|--------------------------------------------------------- |  | --------- | ------- | --------- |  | --------- | ------- | --------- |  |  | ----- |  |  |  | ----- | 
|                                                          |  | Group     |         | Parent   
|                                                          |  |           |         |          
|                                                          |  | 2002      |         | 2001      |  | 2002      |         | 2001     
|ii) Maturity                                              |  | £ million |         | £ million |  | £ million |         | £ million
|                                                          |  |           |         |           |  |           |         |          
|Long and medium-term bank loans                           |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Repayable  beyond five years                             |  |           | 11.5    |           |  |           | 7.3     |           |  |  |      |  |  |  |      | 
| two to five years                                       |  |           | 41.8    |           |  |           | 58.2    |           |  |  |      |  |  |  |      | 
| one to two years                                        |  |           | 36.9    |           |  |           | 40.0    |           |  |  |      |  |  |  |      | 
|Loans other than from banks                               |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Repayable  beyond five years                             |  |           | 536.0   |           |  |           | 618.5   |           |  |  | 531.3 |  |  |  | 442.8 | 
| two to five years                                       |  |           | 342.7   |           |  |           | 159.7   |           |  |  | 148.8 |  |  |  | 127.6 | 
| one to two years                                        |  |           | 129.4   |           |  |           | 101.0   |           |  |  | 120.9 |  |  |  |      | 
|Finance leases                                            |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Repayable beyond one year                                 |  |           | 22.7    |           |  |           | 35.2    |           |  |  |      |  |  |  |      | 
|                                                          |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Borrowings
and finance leases (note 11 a))                |  |           | 1,121.0 |           |  |           | 1,019.9 |           |  |  | 801.0 |  |  |  | 570.4 | 
|Short-term  repayable within one year                    |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Bank loans and overdrafts                                 |  |           | 196.7   |           |  |           | 187.9   |           |  |  | 178.9 |  |  |  | 119.1 | 
|Loans other than from banks                               |  |           | 182.3   |           |  |           | 288.1   |           |  |  |      |  |  |  | 196.5 | 
|Finance leases                                            |  |           | 11.1    |           |  |           | 10.4    |           |  |  |      |  |  |  |      | 
|                                                          |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Total borrowings and finance leases                       |  |           | 1,511.1 |           |  |           | 1,506.3 |           |  |  | 979.9 |  |  |  | 886.0 | 
|Less:Cash at bank and in hand  repayable within one year |  |           | 185.5   |           |  |           | 233.5   |           |  |  |      |  |  |  | 51.7  | 
| repayable beyond one year                               |  |           |        |           |  |           | 0.7     |           |  |  |      |  |  |  |      | 
|                                                          |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|Net borrowings and finance leases                         |  |           | 1,325.6 |           |  |           | 1,272.1 |           |  |  | 979.9 |  |  |  | 834.3 | 
|                                                          |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 

|                                                   |  |           |      |            |  |           |         |           |  |            |         |           |  |  |      |  |  |  |       |  |  |  |         | 
|-------------------------------------------------- |  | --------- | ---- | ---------- |  | --------- | ------- | --------- |  | ---------- | ------- | --------- |  |  | ---- |  |  |  | ----- |  |  |  | ------- | 
|                                                   |  | 2002      |      | 2001      
|                                                   |  |           |      |           
|                                                   |  | Finance   |      |            |  |           |         |           |  |            |         | Finance   |  |  |      |  |  |  |       | 
|                                                   |  | leases    |      | Borrowings |  | Total     |         | leases    |  | Borrowings |         | Total    
|                                                   |  | £ million |      | £ million  |  | £ million |         | £ million |  | £ million  |         | £ million
|                                                   |  |           |      |            |  |           |         |           |  |            |         |          
|Repayment profile of borrowings and finance leases |  |           |      |            |  |           |         |           |  |            |         |           |  |  |      |  |  |  |       |  |  |  |         | 
|Long-term repayable                                |  |           |      |            |  |           |         |           |  |            |         |           |  |  |      | 
| beyond five years                                |  |           | 2.0  |            |  |           | 547.5   |           |  |            | 549.5   |           |  |  | 4.3  |  |  |  | 625.8 |  |  |  | 630.1   | 
| four to five years                               |  |           | 2.0  |            |  |           | 142.5   |           |  |            | 144.5   |           |  |  | 2.2  |  |  |  | 31.6  |  |  |  | 33.8    | 
| three to four years                              |  |           | 2.4  |            |  |           | 179.7   |           |  |            | 182.1   |           |  |  | 2.4  |  |  |  | 33.3  |  |  |  | 35.7    | 
| two to three years                               |  |           | 1.7  |            |  |           | 62.3    |           |  |            | 64.0    |           |  |  | 14.5 |  |  |  | 153.0 |  |  |  | 167.5   | 
| one to two years                                 |  |           | 14.6 |            |  |           | 166.3   |           |  |            | 180.9   |           |  |  | 11.8 |  |  |  | 141.0 |  |  |  | 152.8   | 
|                                                   |  |           |      |            |  |           |         |           |  |            |         |           |  |  |      |  |  |  |       |  |  |  |         | 
|Total                                              |  |           | 22.7 |            |  |           | 1,098.3 |           |  |            | 1,121.0 |           |  |  | 35.2 |  |  |  | 984.7 |  |  |  | 1,019.9 | 
|                                                   |  |           |      |            |  |           |         |           |  |            |         |           |  |  |      |  |  |  |       |  |  |  |         | 

81  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

3. Treasury informationcontinued
iii) Short-term interest rates
The average interest rate on commercial paper for the year to 30 September 2002
was 3.4 per cent (2001: 6.4 per cent) and on other short-term borrowings was 9.0
per cent (2001: 11.4 per cent).

iv) Facilities
The Group maintains a number of short and medium-term committed lines of
credit. The main medium-term facilities are multi-currency agreements with a
group of relationship banks, under which the Group may borrow up to US$420.0
million (2001: US$420.0 million) for general corporate purposes. These
facilities were undrawn both at 30 September 2002 and 30 September 2001. The
following table shows the maturity profile of these facilities.

|                   |  |           |       |           |  |  |       | 
|------------------ |  | --------- | ----- | --------- |  |  | ----- | 
|                   |  | 2002      |       | 2001     
|                   |  | $ million |       | $ million
|                   |  |           |       |          
|Within one year    |  |           | 200.0 |           |  |  |      | 
|One to two years   |  |           | 220.0 |           |  |  | 200.0 | 
|Two to three years |  |           |      |           |  |  | 220.0 | 
|                   |  |           |       |           |  |  |       | 
|                   |  |           | 420.0 |           |  |  | 420.0 | 
|                   |  |           |       |           |  |  |       | 

Additional committed facilities are maintained by the principal
operating units in the Group.

v) Security
The secured loans, maturing between 2002 and 2019, are principally secured by
charges over the property, plant and machinery, stocks and trade debtors of
certain overseas subsidiaries.

d) Fair value information
i) Fair values of financial instruments
Set out below is a comparison of the carrying amount of the Groups financial
instruments (excluding short-term debtors and creditors) at 30 September
2002. Further details of the Groups financial instruments are
given in notes 3 f) i) and ii).

|                                                                                                    |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|--------------------------------------------------------------------------------------------------- |  | ---- | - | --------- |  | --------- | -------- | ---------- |  | --------- | -------- | ---------- |  |  | -------- | - |  |  | -------- | -
|                                                                                                    |  |      |   |           |  | 2002      |          | 2001      
|                                                                                                    |  |      |   |           |  |           |          |           
|                                                                                                    |  |      |   |           |  | Carrying  |          |            |  |           |          | Carrying   |  |  |          |  
|                                                                                                    |  |      |   |           |  | amount    |          | Fair value |  | amount    |          | Fair value
|                                                                                                    |  | Note |   | £ million |  | £ million |          | £ million  |  | £ million
|                                                                                                    |  |      |   |           |  |           |          |            |  |          
|Primary financial instruments                                                                       |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|Loans to joint ventures and associates                                                              |  |      | 1 |           |  |           | 118.0    |            |  |           | 118.0    |            |  |  | 106.7    |   |  |  | 106.7    |  
|Other fixed asset investments                                                                       |  |      | 2 |           |  |           | 45.1     |            |  |           | 44.0     |            |  |  | 31.7     |   |  |  | 32.6     |  
|Current asset investments                                                                           |  |      | 3 |           |  |           | 38.8     |            |  |           | 39.5     |            |  |  | 43.2     |   |  |  | 44.1     |  
|Cash at bank and in hand                                                                            |  |      | 4 |           |  |           | 185.5    |            |  |           | 185.5    |            |  |  | 234.2    |   |  |  | 234.2    |  
|Borrowings and finance leases (excluding swap agreements)                                           |  |      | 5 |           |  |           | (1,530.6 | )          |  |           | (1,635.7 | )          |  |  | (1,491.7 | ) |  |  | (1,563.5 | )
|Provisions for liabilities and charges                                                              |  |      | 6 |           |  |           | (16.9    | )          |  |           | (16.9    | )          |  |  | (21.7    | ) |  |  | (21.7    | )
|Derivative financial instruments held to manage the Groups interest rate and
currency risk profile |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|Foreign currency and interest rate swap agreements                                                  |  |      | 7 |           |  |           | 19.5     |            |  |           | 31.1     |            |  |  | (14.6    | ) |  |  | (8.5     | )
|Forward foreign exchange contracts                                                                  |  |      | 8 |           |  |           |         |            |  |           | 4.9      |            |  |  |         |   |  |  | (9.1     | )
|                                                                                                    |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|Net financial instruments                                                                           |  |      |   |           |  |           | (1,140.6 | )          |  |           | (1,229.6 | )          |  |  | (1,112.2 | ) |  |  | (1,185.2 | )
|                                                                                                    |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|Financial assets                                                                                    |  |      |   |           |  |           | 387.4    |            |  |           |          |            |  |  | 415.8    |   |  |  |          |  
|Financial liabilities9                                                                              |  |      |   |           |  |           | (1,528.0 | )          |  |           |          |            |  |  | (1,528.0 | ) |  |  |          |  
|                                                                                                    |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  
|Net financial instruments                                                                           |  |      |   |           |  |           | (1,140.6 | )          |  |           |          |            |  |  | (1,112.2 | ) |  |  |          |  
|                                                                                                    |  |      |   |           |  |           |          |            |  |           |          |            |  |  |          |   |  |  |          |  



---

|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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|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. |  | Both the carrying amount and the fair value are based on current market
prices and interest rates.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|7. |  | The fair value is the estimated amount the Group would receive or pay to
terminate the agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|8. |  | The fair value represents the net effect on the Group of closing out all
outstanding contracts.                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|9. |  | Includes foreign currency and interest rate swap agreements.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

82  The BOC Group plc  Report and accounts 2002



---



##### 



3. Treasury informationcontinued

ii) Hedges
As explained on pages 45 and 46 of the finance and treasury review under the
heading management of financial risks, the Groups policies are to use
forward foreign exchange contracts to hedge transactional currency exposures
(principally arising through anticipated sales and purchase transactions) and
swap agreements to manage interest rate risks and hedge structural currency
exposures.
Currency swaps are only held to change the currency of the Groups
borrowings to match better its net investments in its overseas subsidiaries. In
accordance with the Groups accounting policies, the assets and liabilities
arising from these swap agreements are translated into sterling at the spot
rate ruling at the balance sheet date. The resulting exchange gains or losses
are recognised in the statement of total recognised gains and losses (to match
the exchange gains or losses on the net investments in the overseas
subsidiaries).
The carrying amount of the swap agreements (as shown in note 3 d) i)) is
the result of the exchange gains and losses recognised in the statement of
total recognised gains and losses, and is analysed in the deferred gains and
losses table shown below.

|                                                                                                             |  |                 |      |           |  |           |       |   |  |  |       |  
|------------------------------------------------------------------------------------------------------------ |  | --------------- | ---- | --------- |  | --------- | ----- | - |  |  | ----- | -
|                                                                                                             |  | Swap agreements
|                                                                                                             |  |                
|                                                                                                             |  | Gains           |      | Losses    |  | Net      
|                                                                                                             |  | £ million       |      | £ million |  | £ million
|                                                                                                             |  |                 |      |           |  |          
|Deferred gains and losses                                                                                    |  |                 |      |           |  |           |       |   |  |  |       |  
|Deferred gains and losses on hedges at 1 October 2001                                                        |  |                 | 7.3  |           |  |           | (21.9 | ) |  |  | (14.6 | )
|Gains and losses on hedges maturing in 2002                                                                  |  |                 | (5.0 | )         |  |           | 12.1  |   |  |  | 7.1   |  
|Deferred gains and losses on hedges recognised in the
statement of total recognised gains and losses in 2002 |  |                 | 23.6 |           |  |           | 3.4   |   |  |  | 27.0  |  
|                                                                                                             |  |                 |      |           |  |           |       |   |  |  |       |  
|Deferred gains and losses on hedges at 30 September 2002                                                     |  |                 | 25.9 |           |  |           | (6.4  | ) |  |  | 19.5  |  
|                                                                                                             |  |                 |      |           |  |           |       |   |  |  |       |  

The unrecognised difference between the carrying amount and the fair value of
the forward foreign exchange contracts and the swap agreements (as shown in
note 3 d) i)) is analysed in the unrecognised gains and losses table below.

|                                                                        |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|----------------------------------------------------------------------- |  | ------------------ | ---- | --------------- |  | --------- | ----- | --------- |  | --------- | ---- | - |  |  | ----- | - |  |  | ---- | -
|                                                                        |  | Forward foreign    |      |                 |  |           |       |           |  |           |      |   |  | 
|                                                                        |  | exchange contracts |      | Swap agreements
|                                                                        |  |                    |      |                
|                                                                        |  | Gains              |      | Losses          |  | Gains     |       | Losses    |  | Net total
|                                                                        |  | £ million          |      | £ million       |  | £ million |       | £ million |  | £ million
|                                                                        |  |                    |      |                 |  |           |       |           |  |          
|Unrecognised gains and losses                                           |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|Unrecognised gains and losses on hedges at 1 October 2001               |  |                    | 1.7  |                 |  |           | (10.8 | )         |  |           | 12.3 |   |  |  | (6.2  | ) |  |  | (3.0 | )
|Gains and losses arising in previous years that were recognised in 2002 |  |                    | (1.5 | )               |  |           | 7.8   |           |  |           | (4.3 | ) |  |  | 0.1   |   |  |  | 2.1  |  
|                                                                        |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|Gains and losses arising before 2002 that were not recognised in 2002   |  |                    | 0.2  |                 |  |           | (3.0  | )         |  |           | 8.0  |   |  |  | (6.1  | ) |  |  | (0.9 | )
|Gains and losses arising in 2002 that were not recognised in 2002       |  |                    | 5.4  |                 |  |           | 2.3   |           |  |           | 14.1 |   |  |  | (4.4  | ) |  |  | 17.4 |  
|                                                                        |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|Unrecognised gains and losses on hedges at 30 September 2002            |  |                    | 5.6  |                 |  |           | (0.7  | )         |  |           | 22.1 |   |  |  | (10.5 | ) |  |  | 16.5 |  
|                                                                        |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|Of which                                                                |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  
|Gains and losses expected to be recognised in 2003                      |  |                    | 5.2  |                 |  |           | (0.7  | )         |  |           | 0.8  |   |  |  | (0.5  | ) |  |  | 4.8  |  
|Gains and losses expected to be recognised in 2004 or later             |  |                    | 0.4  |                 |  |           |      |           |  |           | 21.3 |   |  |  | (10.0 | ) |  |  | 11.7 |  
|                                                                        |  |                    |      |                 |  |           |       |           |  |           |      |   |  |  |       |   |  |  |      |  

e) Currency exposures
As outlined on page 45 in the finance and treasury review under the heading
currency risk, it is the Groups policy to hedge against the potential impact
on its profit and loss account of the currency gains and losses arising from
monetary assets and liabilities not denominated in the operating or functional
currency of the operating unit involved.

After taking account of the hedging transactions, there was no significant
net profit and loss account exposure to currency gains and losses arising from
monetary assets and liabilities at 30 September 2002.

f) Financial instruments
i) Financial assets
The interest rate and currency profile of the Groups financial assets
(excluding short-term debtors) at 30 September 2002 is shown below. The
categories of the Groups financial assets are shown in note
3 d) i).

|                   |  |               |       |            |  |             |       |           |  |               |      |            |  |             |       |           |  |  |       |  |  |  |       |           |  |  |      |  |  |  |       | 
|------------------ |  | ------------- | ----- | ---------- |  | ----------- | ----- | --------- |  | ------------- | ---- | ---------- |  | ----------- | ----- | --------- |  |  | ----- |  |  |  | ----- | --------- |  |  | ---- |  |  |  | ----- | 
|                   |  | 2002          |       | 2001      
|                   |  |               |       |           
|                   |  |               |       |            |  |             |       |           |  | Financial     |      |            |  |             |       |           |  |  |       |  |  |  |       | Financial |  |  |      | 
|                   |  |               |       |            |  |             |       |           |  | assets on     |      |            |  |             |       |           |  |  |       |  |  |  |       | assets on |  |  |      | 
|                   |  | Floating rate |       | Fixed rate |  | which no    |       | Total     |  | Floating rate |      | Fixed rate |  | which no    |       | Total    
|                   |  | financial     |       | financial  |  | interest is |       | financial |  | financial     |      | financial  |  | interest is |       | financial
|                   |  | assets        |       | assets     |  | received    |       | assets    |  | assets        |      | assets     |  | received    |       | assets   
|                   |  | £ million     |       | £ million  |  | £ million   |       | £ million |  | £ million     |      | £ million  |  | £ million   |       | £ million
|                   |  |               |       |            |  |             |       |           |  |               |      |            |  |             |       |          
|Sterling           |  |               | 28.1  |            |  |             | 11.5  |           |  |               | 1.7  |            |  |             | 41.3  |           |  |  | 65.8  |  |  |  | 10.0  |           |  |  | 2.3  |  |  |  | 78.1  | 
|US dollar          |  |               | 10.4  |            |  |             | 123.4 |           |  |               | 21.3 |            |  |             | 155.1 |           |  |  | 13.9  |  |  |  | 115.8 |           |  |  | 21.2 |  |  |  | 150.9 | 
|Australian dollar  |  |               | 82.4  |            |  |             |      |           |  |               |     |            |  |             | 82.4  |           |  |  | 20.6  |  |  |  |      |           |  |  |     |  |  |  | 20.6  | 
|South African rand |  |               | 9.0   |            |  |             |      |           |  |               | 1.6  |            |  |             | 10.6  |           |  |  | 44.4  |  |  |  |      |           |  |  | 2.3  |  |  |  | 46.7  | 
|Japanese yen       |  |               | 51.5  |            |  |             |      |           |  |               | 6.7  |            |  |             | 58.2  |           |  |  | 26.5  |  |  |  |      |           |  |  | 7.7  |  |  |  | 34.2  | 
|Other              |  |               | 39.2  |            |  |             |      |           |  |               | 0.6  |            |  |             | 39.8  |           |  |  | 85.2  |  |  |  |      |           |  |  | 0.1  |  |  |  | 85.3  | 
|                   |  |               |       |            |  |             |       |           |  |               |      |            |  |             |       |           |  |  |       |  |  |  |       |           |  |  |      |  |  |  |       | 
|Total              |  |               | 220.6 |            |  |             | 134.9 |           |  |               | 31.9 |            |  |             | 387.4 |           |  |  | 256.4 |  |  |  | 125.8 |           |  |  | 33.6 |  |  |  | 415.8 | 
|                   |  |               |       |            |  |             |       |           |  |               |      |            |  |             |       |           |  |  |       |  |  |  |       |           |  |  |      |  |  |  |       | 

83  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

3. Treasury informationcontinued

|          |  |                             |      |                             |  |               |     |               |  |  |      |          |  |  |     | 
|--------- |  | --------------------------- | ---- | --------------------------- |  | ------------- | --- | ------------- |  |  | ---- | -------- |  |  | --- | 
|          |  | 2002                        |      | 2001                       
|          |  | Fixed rate financial assets |      | Fixed rate financial assets
|          |  |                             |      |                            
|          |  |                             |      |                             |  | Weighted      |     |               |  |  |      | Weighted
|          |  |                             |      |                             |  | average       |     |               |  |  |      | average 
|          |  | Weighted                    |      | period for                  |  | Weighted      |     | period for   
|          |  | average                     |      | which rate is               |  | average       |     | which rate is
|          |  | interest rate               |      | fixed                       |  | interest rate |     | fixed        
|          |  | %                           |      | years                       |  | %             |     | years        
|          |  |                             |      |                             |  |               |     |              
|Sterling  |  |                             | 6.7  |                             |  |               | 2.1 |               |  |  | 6.1  |          |  |  | 2.9 | 
|US dollar |  |                             | 10.3 |                             |  |               | 4.8 |               |  |  | 10.1 |          |  |  | 5.4 | 
|          |  |                             |      |                             |  |               |     |               |  |  |      |          |  |  |     | 

Financial assets on which no interest is received comprise £30.3 million
(2001: £31.7 million) of non-redeemable equity instruments in other companies
and £1.6 million (2001: £1.9 million) of loans to joint ventures and associates
which have no fixed date of repayment.
The floating rate financial assets, which principally comprise cash and
deposits and loans to joint ventures and associates, carry interest based on
different benchmark rates depending on the currency of the balance.
The principal benchmark rates for floating rate financial assets are LIBOR
for sterling balances, US LIBOR for US dollar balances, Australian bank bill
rate for Australian dollar balances, South African prime rate for South African
rand balances and Japanese yen LIBOR for Japanese yen balances.

ii) Financial liabilities
The interest rate and currency profile of the Groups financial liabilities
including swaps (excluding short-term creditors) at 30 September 2002 is shown
below. The categories of the Groups financial liabilities are
shown in note 3 d) i).

|                   |  |               |       |             |  |           |       |             |  |                |   |             |  |           |         |             |  |  |       |  |  |  |       |                |  |  |     |  |  |  |         | 
|------------------ |  | ------------- | ----- | ----------- |  | --------- | ----- | ----------- |  | -------------- | - | ----------- |  | --------- | ------- | ----------- |  |  | ----- |  |  |  | ----- | -------------- |  |  | --- |  |  |  | ------- | 
|                   |  | 2002          |       | 2001       
|                   |  |               |       |            
|                   |  |               |       |             |  |           |       |             |  | Financial      |   |             |  |           |         |             |  |  |       |  |  |  |       | Financial      |  |  |     | 
|                   |  |               |       |             |  |           |       |             |  | liabilities on |   |             |  |           |         |             |  |  |       |  |  |  |       | liabilities on |  |  |     | 
|                   |  | Floating rate |       | Fixed rate  |  | which no  |       | Total       |  | Floating rate  |   | Fixed rate  |  | which no  |         | Total      
|                   |  | financial     |       | financial   |  | interest  |       | financial   |  | financial      |   | financial   |  | interest  |         | financial  
|                   |  | liabilities   |       | liabilities |  | is paid   |       | liabilities |  | liabilities    |   | liabilities |  | is paid   |         | liabilities
|                   |  | £ million     |       | £ million   |  | £ million |       | £ million   |  | £ million      |   | £ million   |  | £ million |         | £ million  
|                   |  |               |       |             |  |           |       |             |  |                |   |             |  |           |         |            
|Sterling           |  |               | 58.8  |             |  |           | 300.0 |             |  |                |  |             |  |           | 358.8   |             |  |  | 66.6  |  |  |  | 299.0 |                |  |  | 1.9 |  |  |  | 367.5   | 
|US dollar          |  |               | 304.3 |             |  |           | 225.5 |             |  |                |  |             |  |           | 529.8   |             |  |  | 257.9 |  |  |  | 241.2 |                |  |  |    |  |  |  | 499.1   | 
|Australian dollar  |  |               | 79.6  |             |  |           | 35.6  |             |  |                |  |             |  |           | 115.2   |             |  |  | 83.4  |  |  |  | 35.9  |                |  |  |    |  |  |  | 119.3   | 
|South African rand |  |               | 22.9  |             |  |           | 23.7  |             |  |                |  |             |  |           | 46.6    |             |  |  | 8.3   |  |  |  | 78.0  |                |  |  |    |  |  |  | 86.3    | 
|Japanese yen       |  |               | 92.5  |             |  |           | 165.9 |             |  |                |  |             |  |           | 258.4   |             |  |  | 47.5  |  |  |  | 178.2 |                |  |  |    |  |  |  | 225.7   | 
|Canadian dollar    |  |               | 41.1  |             |  |           |      |             |  |                |  |             |  |           | 41.1    |             |  |  | 39.3  |  |  |  | 1.0   |                |  |  |    |  |  |  | 40.3    | 
|Thai baht          |  |               | 11.9  |             |  |           | 52.1  |             |  |                |  |             |  |           | 64.0    |             |  |  | 11.5  |  |  |  | 30.4  |                |  |  |    |  |  |  | 41.9    | 
|Other              |  |               | 88.6  |             |  |           | 25.5  |             |  |                |  |             |  |           | 114.1   |             |  |  | 118.9 |  |  |  | 29.0  |                |  |  |    |  |  |  | 147.9   | 
|                   |  |               |       |             |  |           |       |             |  |                |   |             |  |           |         |             |  |  |       |  |  |  |       |                |  |  |     |  |  |  |         | 
|Total              |  |               | 699.7 |             |  |           | 828.3 |             |  |                |  |             |  |           | 1,528.0 |             |  |  | 633.4 |  |  |  | 892.7 |                |  |  | 1.9 |  |  |  | 1,528.0 | 
|                   |  |               |       |             |  |           |       |             |  |                |   |             |  |           |         |             |  |  |       |  |  |  |       |                |  |  |     |  |  |  |         | 

|                   |  |                                  |      |                                  |  |               |      |               |  |  |      |          |  |  |      | 
|------------------ |  | -------------------------------- | ---- | -------------------------------- |  | ------------- | ---- | ------------- |  |  | ---- | -------- |  |  | ---- | 
|                   |  | 2002                             |      | 2001                            
|                   |  | Fixed rate financial liabilities |      | Fixed rate financial liabilities
|                   |  |                                  |      |                                 
|                   |  |                                  |      |                                  |  | Weighted      |      |               |  |  |      | Weighted
|                   |  |                                  |      |                                  |  | average       |      |               |  |  |      | average 
|                   |  | Weighted                         |      | period for                       |  | Weighted      |      | period for   
|                   |  | average                          |      | which rate is                    |  | average       |      | which rate is
|                   |  | interest rate                    |      | fixed                            |  | interest rate |      | fixed        
|                   |  | %                                |      | years                            |  | %             |      | years        
|                   |  |                                  |      |                                  |  |               |      |              
|Sterling           |  |                                  | 8.3  |                                  |  |               | 13.9 |               |  |  | 8.4  |          |  |  | 14.9 | 
|US dollar          |  |                                  | 7.1  |                                  |  |               | 4.2  |               |  |  | 7.1  |          |  |  | 5.2  | 
|Australian dollar  |  |                                  | 6.2  |                                  |  |               | 0.2  |               |  |  | 6.2  |          |  |  | 1.3  | 
|South African rand |  |                                  | 11.9 |                                  |  |               | 3.9  |               |  |  | 12.4 |          |  |  | 2.9  | 
|Japanese yen       |  |                                  | 0.9  |                                  |  |               | 3.8  |               |  |  | 1.0  |          |  |  | 4.2  | 
|Thai baht          |  |                                  | 4.0  |                                  |  |               | 1.8  |               |  |  | 6.2  |          |  |  | 0.4  | 
|Other              |  |                                  | 9.7  |                                  |  |               | 2.8  |               |  |  | 10.2 |          |  |  | 3.2  | 
|                   |  |                                  |      |                                  |  |               |      |               |  |  |      |          |  |  |      | 

The floating rate financial liabilities principally comprise debt which carries
interest based on different benchmark rates depending on the currency of the
balance.
The principal benchmark rates for floating rate financial liabilities are
LIBOR for sterling balances, US LIBOR for US dollar balances, Australian bank
bill rate for Australian dollar balances, South African prime rate for South
African rand balances and Japanese yen LIBOR for Japanese yen balances.
The maturity profile
of the net borrowings is set out in note 3 c) ii). Other floating rate financial liabilities are mainly employee incentive
provisions. These are expected to be utilised over the period to 2004 depending
on the future choices of the relevant employees.

84  The BOC Group plc  Report and accounts 2002



---



##### 



4. Tax

a) Tax on profit on ordinary activities

|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|------------------------------------------------- |  | --------- | ----- | ---------- |  | ---------- | ----- | ---- |  |  | ----- | -
|                                                  |  |           |       |            |  | 2001       |       | 2000
|                                                  |  | 2002      |       | (restated) |  | (restated)
|                                                  |  | £ million |       | £ million  |  | £ million 
|                                                  |  |           |       |            |  |           
|Current tax:                                      |  |           |       |            |  |            |       |      |  |  |       |  
|Payable in the UK                                 |  |           |       |            |  |            |       |      |  |  |       |  
|Corporation tax at 30% (2001: 30%, 2000: 30%)     |  |           | 51.7  |            |  |            | 60.4  |      |  |  | 54.8  |  
|Double tax relief                                 |  |           | (19.7 | )          |  |            | (17.0 | )    |  |  | (16.3 | )
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|                                                  |  |           | 32.0  |            |  |            | 43.4  |      |  |  | 38.5  |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Payable overseas                                  |  |           |       |            |  |            |       |      |  |  |       |  
|US
 Federal tax at 35% (2001: 35%, 2000: 35%)    |  |           | (1.0  | )          |  |            |      |      |  |  | 2.1   |  
| State and local taxes                           |  |           | 0.6   |            |  |            | 1.3   |      |  |  | 1.6   |  
| Prior year tax                                  |  |           |      |            |  |            | (2.2  | )    |  |  | (1.1  | )
|Australia
at 30% (2001: 34%, 2000: 36%)           |  |           | 14.6  |            |  |            | 14.0  |      |  |  | 18.2  |  
|South
Africa at 30% (2001: 30%, 2000: 30%)        |  |           | 18.0  |            |  |            | 15.2  |      |  |  | 14.5  |  
|Japan
at 42% (2001: 42%, 2000: 48%)               |  |           | 8.3   |            |  |            | 12.7  |      |  |  | 11.2  |  
|Other countries                                   |  |           | 30.9  |            |  |            | 27.3  |      |  |  | 20.3  |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|                                                  |  |           | 71.4  |            |  |            | 68.3  |      |  |  | 66.8  |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Total current tax                                 |  |           | 103.4 |            |  |            | 111.7 |      |  |  | 105.3 |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Deferred tax:                                     |  |           |       |            |  |            |       |      |  |  |       |  
|Origination and reversal of timing differences    |  |           | 3.4   |            |  |            | (7.1  | )    |  |  | 29.9  |  
|Effect of change in tax rate on opening liability |  |           | (0.6  | )          |  |            |      |      |  |  |      |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Total deferred tax                                |  |           | 2.8   |            |  |            | (7.1  | )    |  |  | 29.9  |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Tax on profit on ordinary activities              |  |           | 106.2 |            |  |            | 104.6 |      |  |  | 135.2 |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Analysis of charge in the period by entity type   |  |           |       |            |  |            |       |      |  |  |       |  
|Subsidiary undertakings                           |  |           | 100.3 |            |  |            | 97.6  |      |  |  | 121.6 |  
|Share of joint ventures                           |  |           | 3.6   |            |  |            | 4.3   |      |  |  | 11.5  |  
|Share of associates                               |  |           | 2.3   |            |  |            | 2.7   |      |  |  | 2.1   |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  
|Tax on profit on ordinary activities              |  |           | 106.2 |            |  |            | 104.6 |      |  |  | 135.2 |  
|                                                  |  |           |       |            |  |            |       |      |  |  |       |  

The tax charge includes a credit of £15.3 million for the operating exceptional
charges (2001: £48.8 million, 2000: £12.4 million) and a credit of £7.5 million
for the non-operating exceptional charges (2001: £1.9 million charge, 2000: £2.7
million charge). The effective rate of tax excluding exceptional items was 30.0
per cent (2001: 32.5 per cent, 2000: 33.4 per cent).

b) Deferred tax

|                                                 |  |           |       |            |  |            |       |      |  |  |       |  
|------------------------------------------------ |  | --------- | ----- | ---------- |  | ---------- | ----- | ---- |  |  | ----- | -
|                                                 |  |           |       |            |  | 2001       |       | 2000
|                                                 |  | 2002      |       | (restated) |  | (restated)
|i) Deferred tax UK GAAP                          |  | £ million |       | £ million  |  | £ million 
|                                                 |  |           |       |            |  |           
|Analysis                                         |  |           |       |            |  |            |       |      |  |  |       |  
|Arising from accelerated depreciation allowances |  |           | 362.1 |            |  |            | 344.8 |      |  |  | 326.5 |  
|Other timing differences                         |  |           | (53.5 | )          |  |            | (32.5 | )    |  |  | (20.7 | )
|Tax losses and other credits available           |  |           | (24.7 | )          |  |            | (26.4 | )    |  |  | (18.5 | )
|                                                 |  |           |       |            |  |            |       |      |  |  |       |  
|                                                 |  |           | 283.9 |            |  |            | 285.9 |      |  |  | 287.3 |  
|                                                 |  |           |       |            |  |            |       |      |  |  |       |  
|Movement during the year                         |  |           |       |            |  |            |       |      |  |  |       |  
|At 1 October 2001                                |  |           | 285.9 |            |  |            | 287.3 |      |  |  | 256.8 |  
|Exchange adjustment                              |  |           | (8.6  | )          |  |            | (7.3  | )    |  |  | 10.6  |  
|Arising
during the year1                         |  |           | 9.5   |            |  |            | (3.1  | )    |  |  | 23.7  |  
|Transfers to current tax                         |  |           | 0.8   |            |  |            | 3.3   |      |  |  | 2.3   |  
|Other movements                                  |  |           | (3.7  | )          |  |            | 5.7   |      |  |  | (6.1  | )
|                                                 |  |           |       |            |  |            |       |      |  |  |       |  
|At 30 September 20022                            |  |           | 283.9 |            |  |            | 285.9 |      |  |  | 287.3 |  
|                                                 |  |           |       |            |  |            |       |      |  |  |       |  



---

|1. |  | Subsidiary undertakings only.                                                                                                                                                                                        
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2. |  | The balance at 30 September 2002 represents deferred tax assets of £7.9
million (2001: £8.4 million, 2000: £8.5 million) and deferred tax liabilities
of £291.8 million (2001: £294.3 million, 2000: £295.8 million).

85  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

4. Taxcontinued

ii) Deferred tax  US GAAP
For US GAAP reporting, the Group follows SFAS109, Accounting for Income Taxes,
in respect of deferred taxation. SFAS109 requires deferred tax to be fully
provided on all temporary differences.
The table below provides a reconciliation of deferred taxes from a UK GAAP
basis to a US GAAP basis at 30 September 2002.

|                                       |  |           |       |            |  |             |      |  |  |  |       |  
|-------------------------------------- |  | --------- | ----- | ---------- |  | ----------- | ---- |  |  |  | ----- | -
|                                       |  |           |       |            |  | Adjustments |      |  |  | 
|                                       |  | UK GAAP   |       | to US GAAP |  | US GAAP    
|                                       |  | £ million |       | £ million  |  | £ million  
|                                       |  |           |       |            |  |            
|Accelerated capital allowances         |  |           | 362.1 |            |  |             |     |  |  |  | 362.1 |  
|Other temporary differences            |  |           | (53.5 | )          |  |             | 72.7 |  |  |  | 19.2  |  
|Tax losses and other credits available |  |           | (24.7 | )          |  |             |     |  |  |  | (24.7 | )
|                                       |  |           |       |            |  |             |      |  |  |  |       |  
|                                       |  |           | 283.9 | 1          |  |             | 72.7 |  |  |  | 356.6 |  
|                                       |  |           |       |            |  |             |      |  |  |  |       |  



---

|1. |  | The UK deferred tax balance of £283.9 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 6 e)). If it was included
above, it would be wholly reversed in the adjustments to US GAAP.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                           |  |           |       |  
|-------------------------- |  | --------- | ----- | -
|                           |  | US GAAP  
|                           |  | £ million
|                           |  |          
|Movement during the year   |  |           |       |  
|At 1 October 2001          |  |           | 333.8 |  
|Exchange adjustment        |  |           | (7.2  | )
|Arising during the year    |  |           | 37.5  |  
|Transfers from current tax |  |           | 0.8   |  
|Other movements            |  |           | (8.3  | )
|                           |  |           |       |  
|At 30 September 2002       |  |           | 356.6 |  
|                           |  |           |       |  

The components of deferred tax assets/(liabilities) at 30 September 2002 were:

|                               |  |           |        |           |  |  |        |  
|------------------------------ |  | --------- | ------ | --------- |  |  | ------ | -
|                               |  | 2002      |        | 2001     
|                               |  | £ million |        | £ million
|                               |  |           |        |          
|Long-term                      |  |           |        |           |  |  |        |  
|Asset                          |  |           | 130.4  |           |  |  | 44.8   |  
|Liability                      |  |           | (507.0 | )         |  |  | (399.3 | )
|                               |  |           |        |           |  |  |        |  
|Net liability                  |  |           | (376.6 | )         |  |  | (354.5 | )
|                               |  |           |        |           |  |  |        |  
|Short-term                     |  |           |        |           |  |  |        |  
|Asset                          |  |           | 25.5   |           |  |  | 22.8   |  
|Liability                      |  |           | (5.5   | )         |  |  | (2.1   | )
|                               |  |           |        |           |  |  |        |  
|Net asset                      |  |           | 20.0   |           |  |  | 20.7   |  
|                               |  |           |        |           |  |  |        |  
|Total deferred tax assets      |  |           | 155.9  |           |  |  | 67.6   |  
|Total deferred tax liabilities |  |           | (512.5 | )         |  |  | (401.4 | )
|                               |  |           |        |           |  |  |        |  
|                               |  |           | (356.6 | )         |  |  | (333.8 | )
|                               |  |           |        |           |  |  |        |  

86  The BOC Group plc  Report and accounts 2002



---



##### 



4. Taxcontinued

c) Factors affecting the current and Group effective tax charge for the period
The table set out below provides a reconciliation between the UK corporation
tax rate and the Groups effective tax rate, excluding exceptional items,
computed by taking the various elements of the tax reconciliation as a
percentage of the profit before tax, excluding exceptional items.

|                                                                                |  |      |      |            |  |            |      |      |  |  |      |  
|------------------------------------------------------------------------------- |  | ---- | ---- | ---------- |  | ---------- | ---- | ---- |  |  | ---- | -
|                                                                                |  |      |      |            |  | 2001       |      | 2000
|                                                                                |  | 2002 |      | (restated) |  | (restated)
|                                                                                |  | %    |      | %          |  | %         
|                                                                                |  |      |      |            |  |           
|UK corporation tax rate                                                         |  |      | 30.0 |            |  |            | 30.0 |      |  |  | 30.0 |  
|Difference in tax rates of overseas subsidiaries, joint ventures and associates |  |      | 0.5  |            |  |            | 1.3  |      |  |  | 1.2  |  
|Excess of tax depreciation over book depreciation                               |  |      | (3.9 | )          |  |            | (3.7 | )    |  |  | (3.2 | )
|Other timing differences                                                        |  |      | 2.7  |            |  |            | (1.5 | )    |  |  | (2.0 | )
|State and local taxes                                                           |  |      | 0.5  |            |  |            | 0.7  |      |  |  | 1.0  |  
|Net utilisation of losses                                                       |  |      | (1.1 | )          |  |            | (0.7 | )    |  |  | (0.7 | )
|Investment tax credits                                                          |  |      | (2.4 | )          |  |            | (1.1 | )    |  |  | (1.8 | )
|Prior year tax                                                                  |  |      | 0.9  |            |  |            | (0.6 | )    |  |  | (1.3 | )
|Permanent items and other items with less than a 5% net effect                  |  |      | 0.1  |            |  |            | 1.1  |      |  |  | 2.5  |  
|                                                                                |  |      |      |            |  |            |      |      |  |  |      |  
|Effective current tax rate before exceptional items                             |  |      | 27.3 |            |  |            | 25.5 |      |  |  | 25.7 |  
|Timing differences                                                              |  |      | 2.7  |            |  |            | 7.0  |      |  |  | 7.7  |  
|                                                                                |  |      |      |            |  |            |      |      |  |  |      |  
|Effective Group tax rate before exceptional items                               |  |      | 30.0 |            |  |            | 32.5 |      |  |  | 33.4 |  
|                                                                                |  |      |      |            |  |            |      |      |  |  |      |  

Profit on ordinary activities before tax (including
exceptional items), as shown
in the consolidated profit and loss account, is analysed over its component
parts as follows:

|         |  |           |       |            |  |            |       |      |  |  |       | 
|-------- |  | --------- | ----- | ---------- |  | ---------- | ----- | ---- |  |  | ----- | 
|         |  |           |       |            |  | 2001       |       | 2000
|         |  | 2002      |       | (restated) |  | (restated)
|         |  | £ million |       | £ million  |  | £ million 
|         |  |           |       |            |  |           
|UK       |  |           | 66.6  |            |  |            | 86.4  |      |  |  | 148.1 | 
|Overseas |  |           | 268.7 |            |  |            | 275.8 |      |  |  | 293.7 | 
|         |  |           |       |            |  |            |       |      |  |  |       | 
|         |  |           | 335.3 |            |  |            | 362.2 |      |  |  | 441.8 | 
|         |  |           |       |            |  |            |       |      |  |  |       | 

d) Factors that may affect future tax charges
The total charge in future periods will be affected by any changes to the
corporation tax rates in force in the countries in which the Group operates.
The current tax charges will also be affected by changes in the excess of tax
depreciation over book depreciation and the use of tax credits.

e) Unused tax credits
On a consolidated basis, the Group has net operating loss carryforwards of
£44.4 million. If not offset against taxable income, these losses will expire
as follows:

|                              |  |                |      | 
|----------------------------- |  | -------------- | ---- | 
|                              |  | Net           
|                              |  | operating loss
|Year                          |  | £ million     
|                              |  |               
|2003                          |  |                |     | 
|2004                          |  |                | 11.7 | 
|2005                          |  |                |     | 
|2006                          |  |                |     | 
|2007                          |  |                |     | 
|Thereafter, or no expiry date |  |                | 32.7 | 
|                              |  |                |      | 

For US Federal tax purposes, the Group has investment tax credits and general
business tax credits to carry forward of approximately £12.9 million, which are
available to reduce income taxes otherwise payable. These do not expire until
2003 or thereafter.
In addition, the Group has alternative minimum tax credits for US Federal
income tax purposes of approximately £27.7 million which can be carried forward
to reduce regular tax liabilities of future years. There is no expiration date
on these credits.
Investment tax credits are accounted for by the flow-through method
whereby they reduce income taxes currently payable and the provision for income
taxes in the period in which the assets giving rise to such credits are placed
in service. Deferred tax assets, subject to the need for a valuation allowance,
are recognised to the extent that the investment tax credits are not currently
utilised.

87  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

5. Directors

Directors remuneration and interests are given in the report on remuneration
on pages 56 to 63.

6. Employees

a) Subsidiaries

|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|-------------------------------- |  | -------- | ------ | ------- | ---- | -------- | ------ | ------- |  |  | ------ |  |  |  | ------ | 
|                                 |  |          |        |         | 2002 |          |        |         |  |  | 2001  
|                                 |  |          |        |         |      |          |       
|                                 |  | Year end |        | Average |      | Year end |        | Average
|                                 |  |          |        |         |      |          |        |        
|i) Employees by business         |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|Process Gas Solutions            |  |          | 5,806  |         |      |          | 5,979  |         |  |  | 6,037  |  |  |  | 6,076  | 
|Industrial and Special Products  |  |          | 15,266 |         |      |          | 14,681 |         |  |  | 14,369 |  |  |  | 14,201 | 
|BOC Edwards                      |  |          | 5,367  |         |      |          | 5,186  |         |  |  | 4,830  |  |  |  | 4,916  | 
|Afrox hospitals                  |  |          | 14,152 |         |      |          | 13,934 |         |  |  | 12,833 |  |  |  | 12,804 | 
|Gist                             |  |          | 5,302  |         |      |          | 5,100  |         |  |  | 4,774  |  |  |  | 4,284  | 
|Corporate                        |  |          | 387    |         |      |          | 376    |         |  |  | 328    |  |  |  | 296    | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|                                 |  |          | 46,280 |         |      |          | 45,256 |         |  |  | 43,171 |  |  |  | 42,577 | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|ii) Employees by region          |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|Europe                           |  |          | 13,213 |         |      |          | 12,739 |         |  |  | 12,173 |  |  |  | 11,750 | 
|Americas                         |  |          | 7,243  |         |      |          | 7,312  |         |  |  | 7,305  |  |  |  | 7,262  | 
|Africa                           |  |          | 17,435 |         |      |          | 17,213 |         |  |  | 16,120 |  |  |  | 16,137 | 
|Asia/Pacific                     |  |          | 8,389  |         |      |          | 7,992  |         |  |  | 7,573  |  |  |  | 7,428  | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|                                 |  |          | 46,280 |         |      |          | 45,256 |         |  |  | 43,171 |  |  |  | 42,577 | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|b) Joint ventures and associates |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|Joint ventures                   |  |          | 3,570  |         |      |          | 3,596  |         |  |  | 3,595  |  |  |  | 3,874  | 
|Associates                       |  |          | 742    |         |      |          | 728    |         |  |  | 712    |  |  |  | 684    | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 
|                                 |  |          | 4,312  |         |      |          | 4,324  |         |  |  | 4,307  |  |  |  | 4,558  | 
|                                 |  |          |        |         |      |          |        |         |  |  |        |  |  |  |        | 

c) Employment costs

|                      |  |           |       |            |  |            |       |      |  |  |       | 
|--------------------- |  | --------- | ----- | ---------- |  | ---------- | ----- | ---- |  |  | ----- | 
|                      |  |           |       |            |  | 2001       |       | 2000
|                      |  | 2002      |       | (restated) |  | (restated)
|                      |  | £ million |       | £ million  |  | £ million 
|                      |  |           |       |            |  |           
|Wages and salaries    |  |           | 813.9 |            |  |            | 758.8 |      |  |  | 729.5 | 
|Social security costs |  |           | 77.7  |            |  |            | 74.0  |      |  |  | 64.3  | 
|Other pension costs   |  |           | 66.3  |            |  |            | 76.0  |      |  |  | 54.4  | 
|                      |  |           |       |            |  |            |       |      |  |  |       | 
|                      |  |           | 957.9 |            |  |            | 908.8 |      |  |  | 848.2 | 
|                      |  |           |       |            |  |            |       |      |  |  |       | 

Other pension costs includes an exceptional charge of £nil (2001: £16.7
million, 2000: £nil). See also note 2 b).

88  The BOC Group plc  Report and accounts 2002



---



##### 



6. Employeescontinued

d) Option and incentive schemes
BOC operates share option schemes for both
executives and employees. The
features of these are given in the report on remuneration and the employees
report.

|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|------------------------------------------- |  | ---------------- | ----- | ------------------ |  | ------------ | --------- | -------- |  | ------------- | ---- | ------------ |  | ------- | ----- | -------- |  | --------- | ----------- |  |  |  | ----- |  |  | ----------- | ---- | -
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  | Executive  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  | share award
|                                            |  | Employee options |       | Executive options1 |  | plan2       
|                                            |  |                  |       |                    |  |             
|                                            |  | Number of        |       |                    |  |              |           | Weighted |  | Number of     |      |              |  |         |       | Weighted |  | Number of
|                                            |  | shares           |       | Range of           |  | average      |           | shares   |  | Range of      |      | average      |  | shares 
|i) Summary of movements in share options    |  | million          |       | option prices      |  | option price |           | million  |  | option prices |      | option price |  | million
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |        
|Outstanding at 1 October 1999               |  |                  | 6.1   |                    |  |              | 489p-882p |          |  |               | 776p |              |  |         | 16.7  |          |  |           | 532p-1119p  |  |  |  | 847p  |  |  |             |     |  
|Granted                                     |  |                  | 1.3   |                    |  |              | 870p      |          |  |               | 870p |              |  |         | 6.7   |          |  |           | 937p        |  |  |  | 937p  |  |  |             | 0.8  |  
|Exercised                                   |  |                  | (1.1  | )                  |  |              | 489p-762p |          |  |               | 692p |              |  |         | (0.6  | )        |  |           | 536p-980p   |  |  |  | 670p  |  |  |             |     |  
|Lapsed                                      |  |                  | (0.4  | )                  |  |              | 489p-882p |          |  |               | 797p |              |  |         | (1.2  | )        |  |           | 722p-1119p  |  |  |  | 904p  |  |  |             |     |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Outstanding at 30 September 2000            |  |                  | 5.9   |                    |  |              | 610p-882p |          |  |               | 810p |              |  |         | 21.6  |          |  |           | 532p-1119p  |  |  |  | 877p  |  |  |             | 0.8  |  
|Granted                                     |  |                  | 1.2   |                    |  |              | 894p      |          |  |               | 894p |              |  |         | 4.4   |          |  |           | 986p-1034p  |  |  |  | 994p  |  |  |             |     |  
|Exercised                                   |  |                  | (0.4  | )                  |  |              | 610p-894p |          |  |               | 765p |              |  |         | (2.5  | )        |  |           | 532p-980p   |  |  |  | 740p  |  |  |             |     |  
|Lapsed                                      |  |                  | (1.0  | )                  |  |              | 610p-894p |          |  |               | 830p |              |  |         | (1.8  | )        |  |           | 722p-993p   |  |  |  | 929p  |  |  |             | (0.1 | )
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Outstanding at 30 September 2001            |  |                  | 5.7   |                    |  |              | 610p-894p |          |  |               | 835p |              |  |         | 21.7  |          |  |           | 627p-1119p  |  |  |  | 914p  |  |  |             | 0.7  |  
|Granted                                     |  |                  | 1.2   |                    |  |              | 914p      |          |  |               | 914p |              |  |         | 5.5   |          |  |           | 1016p-1079p |  |  |  | 1016p |  |  |             |     |  
|Exercised                                   |  |                  | (1.0  | )                  |  |              | 610p-914p |          |  |               | 787p |              |  |         | (3.1  | )        |  |           | 627p-980p   |  |  |  | 868p  |  |  |             | (0.7 | )
|Lapsed                                      |  |                  | (0.5  | )                  |  |              | 610p-914p |          |  |               | 857p |              |  |         | (0.6  | )        |  |           | 742p-1119p  |  |  |  | 957p  |  |  |             |     |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Outstanding at 30 September 2002            |  |                  | 5.4   |                    |  |              | 650p-914p |          |  |               | 855p |              |  |         | 23.5  |          |  |           | 677p-1119p  |  |  |  | 943p  |  |  |             |     |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Number of participants at 30 September 2002 |  |                  | 6,100 |                    |  |              |           |          |  |               |      |              |  |         | 1,097 |          |  |           |             |  |  |  |       |  |  |             |     |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Options exercisable:                        |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|At 30 September 2002                        |  |                  |      |                    |  |              |          |          |  |               |     |              |  |         | 8.6   |          |  |           | 677p-1119p  |  |  |  | 877p  |  |  |             |     |  
|At 30 September 2001                        |  |                  |      |                    |  |              |          |          |  |               |     |              |  |         | 2.0   |          |  |           | 627p-742p   |  |  |  | 705p  |  |  |             |     |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Fair value of options granted during:       |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  
|Year ended 30 September 2002                |  |                  | 289p  |                    |  |              |           |          |  |               |      |              |  |         | 242p  |          |  |           |             |  |  |  |       |  |  |             |      |  
|Year ended 30 September 2001                |  |                  | 264p  |                    |  |              |           |          |  |               |      |              |  |         | 232p  |          |  |           |             |  |  |  |       |  |  |             |      |  
|                                            |  |                  |       |                    |  |              |           |          |  |               |      |              |  |         |       |          |  |           |             |  |  |  |       |  |  |             |      |  



---

|1. |  | Executive options include share options and rights and long-term share
incentive units.
|-- |  | ---------------------------------------------------------------------------------------
|2. |  | The executive share award plan was 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 (ii) below.

|                                 |  |                  |       |                    |  |             |      |           |  |              |           |             |  |  |        |  |  |  |       |  |  |  |           | 
|-------------------------------- |  | ---------------- | ----- | ------------------ |  | ----------- | ---- | --------- |  | ------------ | --------- | ----------- |  |  | ------ |  |  |  | ----- |  |  |  | --------- | 
|                                 |  | Employee options |       | Executive options3
|                                 |  |                  |       |                   
|                                 |  | Number of        |       | Weighted           |  | Normal      |      | Number of |  | Weighted     |           | Normal     
|                                 |  | shares           |       | average            |  | exercisable |      | shares    |  | average      |           | exercisable
|ii) Analysis of share options    |  | thousand         |       | option price       |  | date        |      | thousand  |  | option price |           | date       
|                                 |  |                  |       |                    |  |             |      |           |  |              |           |            
|Outstanding at 30 September 2002 |  |                  |       |                    |  |             |      |           |  |              |           |             |  |  |        |  |  |  |       |  |  |  |           | 
|Date of grant                    |  |                  |       |                    |  |             |      |           |  |              |           |             |  |  |        |  |  |  |       |  |  |  |           | 
|1993                             |  |                  |      |                    |  |             |     |           |  |              |          |             |  |  | 242    |  |  |  | 742p  |  |  |  | 1996-2003 | 
|1994                             |  |                  |      |                    |  |             |     |           |  |              |          |             |  |  | 361    |  |  |  | 678p  |  |  |  | 1997-2004 | 
|1995                             |  |                  | 5     |                    |  |             | 650p |           |  |              | 2002-2003 |             |  |  | 712    |  |  |  | 722p  |  |  |  | 1999-2005 | 
|1996                             |  |                  | 270   |                    |  |             | 827p |           |  |              | 2001-2004 |             |  |  | 1,110  |  |  |  | 915p  |  |  |  | 1999-2006 | 
|1997                             |  |                  | 258   |                    |  |             | 882p |           |  |              | 2002-2005 |             |  |  | 1,276  |  |  |  | 981p  |  |  |  | 2000-2007 | 
|1998                             |  |                  | 843   |                    |  |             | 823p |           |  |              | 2001-2006 |             |  |  | 2,100  |  |  |  | 915p  |  |  |  | 2001-2008 | 
|1999                             |  |                  | 779   |                    |  |             | 766p |           |  |              | 2002-2007 |             |  |  | 2,809  |  |  |  | 860p  |  |  |  | 2002-2009 | 
|2000                             |  |                  | 1,090 |                    |  |             | 870p |           |  |              | 2003-2008 |             |  |  | 5,384  |  |  |  | 937p  |  |  |  | 2003-2010 | 
|2001                             |  |                  | 1,037 |                    |  |             | 894p |           |  |              | 2004-2009 |             |  |  | 4,126  |  |  |  | 994p  |  |  |  | 2004-2011 | 
|2002                             |  |                  | 1,147 |                    |  |             | 914p |           |  |              | 2005-2010 |             |  |  | 5,353  |  |  |  | 1016p |  |  |  | 2005-2012 | 
|                                 |  |                  |       |                    |  |             |      |           |  |              |           |             |  |  |        |  |  |  |       |  |  |  |           | 
|                                 |  |                  | 5,429 |                    |  |             |      |           |  |              |           |             |  |  | 23,473 |  |  |  |       |  |  |  |           | 
|                                 |  |                  |       |                    |  |             |      |           |  |              |           |             |  |  |        |  |  |  |       |  |  |  |           | 



---

|3. |  | Executive options include share options and rights and long-term share
incentive units.
|-- |  | ---------------------------------------------------------------------------------------

89  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

6. Employeescontinued

Executive options are granted at the market price of the companys shares at
the time of the grant and consequently there is no compensation expense under
UK GAAP. The Group also takes advantage of the exemption granted under
UITF 17, Employee Share Schemes, whereby no compensation expense need be recorded
for employee schemes.
For US reporting
purposes the company applies APB Opinion 25, Accounting
for Stock Issued to Employees and related interpretations in accounting for its
plans. By applying this statement the employee share schemes are deemed
non-compensatory and therefore do not result in an expense for financial
reporting purposes. Under the executive schemes, grants of share options are at
the market price of the companys shares at the time of grant.
If compensation cost for the Groups share option plans had been
determined based on the fair value at the grant dates for awards under those
plans consistent with the method of US SFAS123, Accounting for Stock Based
Compensation, the Groups profit before tax under US GAAP would have been
charged with an additional cost of £6.3 million (2001:
£9.7 million, 2000: £8.3
million), basic earnings per share would have been 51.18p
(2001: 46.71p, 2000: 53.99p) and diluted earnings per share would have been 50.99p
(2001: 46.54p, 2000: 53.72p).
The Black-Scholes model was used to measure the compensation expense under
US SFAS123. The assumptions used for grants in 2002 included a dividend yield of
4.0 per cent (2001: 4.0 per cent, 2000: 3.3 per cent), expected share price
volatility of 31.0 per cent (2001: 30.0 per cent, 2000: 24.6 per
cent), a weighted
average expected life of 5.0 years (2001: 4.2 years, 2000: 4.2 years) and a
weighted average interest rate of 4.9 per cent (2001:5.1 per cent, 2000: 5.9 per
cent). The weighted average interest rate is based on UK Gilts on the date of
grant with a maturity similar to the related options.

e) Retirement benefits
i) UK GAAP FRS17 Retirement benefits  Group
The Group operates a number of pension schemes throughout the world. The
majority of the schemes are self-administered and the schemes assets are held
independently of the Groups finances. Pension costs are assessed in accordance
with the advice of independent, professionally qualified actuaries.
The Group operates defined benefit schemes in Europe, Americas, Africa and
Asia/Pacific. The largest schemes are located in the UK, US, South Africa and
Australia. The UK and South African schemes are based on final salary and the
US on annual salary. With effect from 1 January 1998 the Australian scheme
changed to operate primarily as a defined contribution scheme, although it
retains some defined benefit guarantees. The geographical split of the pension
schemes has been amended in 2002 to be consistent with the segmental analysis.
The most recent actuarial valuations have been updated by an independent
qualified actuary to take account of the requirements of FRS17 in order to
assess the liabilities of the schemes at 30 September 2002. Scheme assets are
stated at their market value at 30 September 2002.
On the advice of the actuaries, company contributions to the principal UK
scheme will resume from 1 October 2002 at a rate of 14.4 per cent of payroll.
In accordance with South African legislation, contributions recommenced on 7
December 2001 at rates ranging from 10.5 per cent to 12 per cent. Contribution
rates were increased in June 2002 and now range from 14.9 per cent to 19.5 per
cent. As the South African schemes and the defined benefit guarantees of the
Australian scheme are closed schemes, the current service cost as a percentage
of pensionable salaries under the projected unit method will increase as the
members approach retirement. Contributions recommenced to the Australian scheme
on 1 October 2001 at rates ranging from 11 per cent to 17 per cent. In the
US, company contributions to the pension plan remain suspended.
During the year, the
Pension Funds Second Amendment Act, 2001 was passed in
South Africa. Under this Act, surpluses in pension funds have to be used in a
manner specified under Regulations to the Act to improve current and former
members benefits prior to the employer obtaining any benefit from the
surpluses. Consequently, it is considered unlikely that the company will obtain
any benefit from the surpluses in the South African schemes. Therefore the
surpluses at 30 September 2002 have been written off in the statement of total
recognised gains and losses in accordance with FRS17.

|                                        |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|--------------------------------------- |  | --------- | ---- | -------- |  | --------- | ---- | ------------ |  |  | ---- | - |  |  | ---- | -
|Main assumptions for FRS17 purposes     |  | Europe    |      | Americas |  | Africa    |      | Asia/Pacific
|                                        |  |           |      |          |  |           |      |             
|Date of latest actuarial valuation      |  | 31 Mar 02 |      | 1 Jan 01 |  | 30 Jun 01 |      | 31 Dec 00   
|2002                                    |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|Rate of increase in salaries            |  |           | 3.9  | %        |  |           | 3.75 | %            |  |  | 9.5  | % |  |  | 3.5  | %
|Rate of increase in pensions in payment |  |           | 2.4  | %        |  |           |     |              |  |  | 6.8  | % |  |  | 2.5  | %
|Discount rate                           |  |           | 5.5  | %        |  |           | 6.5  | %            |  |  | 12.0 | % |  |  | 6.1  | %
|Inflation                               |  |           | 2.4  | %        |  |           | 2.5  | %            |  |  | 7.0  | % |  |  | 2.5  | %
|                                        |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|2001                                    |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|Rate of increase in salaries            |  |           | 4.55 | %        |  |           | 4.75 | %            |  |  | 7.5  | % |  |  | 4.0  | %
|Rate of increase in pensions in payment |  |           | 2.5  | %        |  |           |     |              |  |  | 4.8  | % |  |  | 3.0  | %
|Discount rate                           |  |           | 6.1  | %        |  |           | 7.25 | %            |  |  | 10.0 | % |  |  | 5.75 | %
|Inflation                               |  |           | 2.5  | %        |  |           | 3.75 | %            |  |  | 7.5  | % |  |  | 3.0  | %
|                                        |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|2000                                    |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  
|Rate of increase in salaries            |  |           | 5.0  | %        |  |           | 4.85 | %            |  |  | 12.5 | % |  |  | 3.5  | %
|Rate of increase in pensions in payment |  |           | 3.0  | %        |  |           |     |              |  |  | 9.4  | % |  |  | 3.5  | %
|Discount rate                           |  |           | 6.2  | %        |  |           | 7.75 | %            |  |  | 15.0 | % |  |  | 6.25 | %
|Inflation                               |  |           | 3.0  | %        |  |           | 3.75 | %            |  |  | 12.5 | % |  |  | 2.5  | %
|                                        |  |           |      |          |  |           |      |              |  |  |      |   |  |  |      |  

The assumptions used for the US health care benefits for FRS17 purposes are a
discount rate of 6.5 per cent (2001: 7.25 per cent, 2000: 7.75 per cent) and an
ultimate health care cost trend rate of 4.5 per cent (2001: 4.75 per
cent, 2000: 5.25 per cent).
Contributions to non defined benefit schemes in the year were £9.6 million
(2001: £6.3 million,2000: £5.5 million) and are included in note 6 c).

90  The BOC Group plc  Report and accounts 2002



---



##### 



6. Employeescontinued

The assets in the schemes and the expected rates of return were:

|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|------------------------------------------------------ |  | -------- | ------- | ----- |  | ----- | ----- | ----- |  |  | ---- | - |  |  | ------- | 
|                                                       |  | Equities |         | Bonds |  | Other |       | Total
|                                                       |  |          |         |       |  |       |       |      
|Long-term rate of return expected at 30 September 2002 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 8.5     | %     |  |       | 4.9   | %     |  |  | 4.0  | % |  |  |        | 
|Americas                                               |  |          | 9.5     | %     |  |       | 6.0   | %     |  |  |     |   |  |  |        | 
|Africa                                                 |  |          | 14.0    | %     |  |       | 12.0  | %     |  |  | 8.5  | % |  |  |        | 
|Asia/Pacific                                           |  |          | 7.7     | %     |  |       | 4.7   | %     |  |  | 5.7  | % |  |  |        | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Value at 30 September 2002 (£ million)                 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 686.2   |       |  |       | 235.0 |       |  |  | 18.8 |   |  |  | 940.0   | 
|Americas                                               |  |          | 289.2   |       |  |       | 51.0  |       |  |  |     |   |  |  | 340.2   | 
|Africa                                                 |  |          | 49.6    |       |  |       | 15.3  |       |  |  | 5.4  |   |  |  | 70.3    | 
|Asia/Pacific                                           |  |          | 89.8    |       |  |       | 16.3  |       |  |  | 16.7 |   |  |  | 122.8   | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Total                                                  |  |          | 1,114.8 |       |  |       | 317.6 |       |  |  | 40.9 |   |  |  | 1,473.3 | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Long-term rate of return expected at 30 September 2001 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 8.5     | %     |  |       | 5.2   | %     |  |  | 4.6  | % |  |  |        | 
|Americas                                               |  |          | 9.5     | %     |  |       | 6.0   | %     |  |  |     |   |  |  |        | 
|Africa                                                 |  |          | 12.0    | %     |  |       | 10.0  | %     |  |  | 8.4  | % |  |  |        | 
|Asia/Pacific                                           |  |          | 7.4     | %     |  |       | 5.1   | %     |  |  | 6.1  | % |  |  |        | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Value at 30 September 2001 (£ million)                 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 897.6   |       |  |       | 226.8 |       |  |  | 18.8 |   |  |  | 1,143.2 | 
|Americas                                               |  |          | 345.0   |       |  |       | 70.7  |       |  |  |     |   |  |  | 415.7   | 
|Africa                                                 |  |          | 54.7    |       |  |       | 18.2  |       |  |  | 6.3  |   |  |  | 79.2    | 
|Asia/Pacific                                           |  |          | 92.3    |       |  |       | 18.0  |       |  |  | 17.3 |   |  |  | 127.6   | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Total                                                  |  |          | 1,389.6 |       |  |       | 333.7 |       |  |  | 42.4 |   |  |  | 1,765.7 | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Long-term rate of return expected at 30 September 2000 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 7.5     | %     |  |       | 5.0   | %     |  |  | 6.0  | % |  |  |        | 
|Americas                                               |  |          | 9.0     | %     |  |       | 6.0   | %     |  |  |     |   |  |  |        | 
|Africa                                                 |  |          | 15.5    | %     |  |       | 13.5  | %     |  |  | 12.2 | % |  |  |        | 
|Asia/Pacific                                           |  |          | 7.5     | %     |  |       | 5.4   | %     |  |  | 5.9  | % |  |  |        | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Value at 30 September 2000 (£ million)                 |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Europe                                                 |  |          | 1,162.0 |       |  |       | 250.1 |       |  |  | 17.2 |   |  |  | 1,429.3 | 
|Americas                                               |  |          | 469.2   |       |  |       | 70.1  |       |  |  |     |   |  |  | 539.3   | 
|Africa                                                 |  |          | 74.8    |       |  |       | 21.3  |       |  |  | 6.8  |   |  |  | 102.9   | 
|Asia/Pacific                                           |  |          | 111.7   |       |  |       | 18.4  |       |  |  | 18.9 |   |  |  | 149.0   | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 
|Total                                                  |  |          | 1,817.7 |       |  |       | 359.9 |       |  |  | 42.9 |   |  |  | 2,220.5 | 
|                                                       |  |          |         |       |  |       |       |       |  |  |      |   |  |  |         | 

The following amounts at 30 September 2002 were measured in accordance with the
requirements of FRS17:

|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|-------------------------------------- |  | --------- | -------- | --------- |  | ----------- | ------ | --------- |  | ------------ | ----- | --------- |  |  | ----- | - |  |  | ------ | - |  |  | -------- | -
|                                       |  |           |          |           |  | Americas    |        | Americas  |  |              |       |           |  |  |       |   |  |  |        |  
|                                       |  | Europe    |          | pensions  |  | health care |        | Africa    |  | Asia/Pacific |       | Total    
|                                       |  | £ million |          | £ million |  | £ million   |        | £ million |  | £ million    |       | £ million
|                                       |  |           |          |           |  |             |        |           |  |              |       |          
|2002                                   |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Total market value of assets           |  |           | 940.0    |           |  |             | 340.2  |           |  |              |      |           |  |  | 70.3  |   |  |  | 122.8  |   |  |  | 1,473.3  |  
|Present value of scheme liabilities    |  |           | (1,331.6 | )         |  |             | (250.4 | )         |  |              | (50.1 | )         |  |  | (59.3 | ) |  |  | (134.0 | ) |  |  | (1,825.4 | )
|Irrecoverable surplus                  |  |           |         |           |  |             |       |           |  |              |      |           |  |  | (11.0 | ) |  |  |       |   |  |  | (11.0    | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|(Deficit)/surplus in the scheme        |  |           | (391.6   | )         |  |             | 89.8   |           |  |              | (50.1 | )         |  |  |      |   |  |  | (11.2  | ) |  |  | (363.1   | )
|Related deferred tax asset/(liability) |  |           | 117.5    |           |  |             | (35.5  | )         |  |              | 19.8  |           |  |  |      |   |  |  | 4.6    |   |  |  | 106.4    |  
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Net
pension (liabilities)/assets1      |  |           | (274.1   | )         |  |             | 54.3   |           |  |              | (30.3 | )         |  |  |      |   |  |  | (6.6   | ) |  |  | (256.7   | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|2001                                   |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Total market value of assets           |  |           | 1,143.2  |           |  |             | 415.7  |           |  |              |      |           |  |  | 79.2  |   |  |  | 127.6  |   |  |  | 1,765.7  |  
|Present value of scheme liabilities    |  |           | (1,172.0 | )         |  |             | (258.2 | )         |  |              | (52.0 | )         |  |  | (66.4 | ) |  |  | (130.8 | ) |  |  | (1,679.4 | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|(Deficit)/surplus in the scheme        |  |           | (28.8    | )         |  |             | 157.5  |           |  |              | (52.0 | )         |  |  | 12.8  |   |  |  | (3.2   | ) |  |  | 86.3     |  
|Related deferred tax asset/(liability) |  |           | 8.6      |           |  |             | (62.2  | )         |  |              | 20.5  |           |  |  | (3.9  | ) |  |  | 1.7    |   |  |  | (35.3    | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Net pension (liabilities)/assets1      |  |           | (20.2    | )         |  |             | 95.3   |           |  |              | (31.5 | )         |  |  | 8.9   |   |  |  | (1.5   | ) |  |  | 51.0     |  
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|2000                                   |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Total market value of assets           |  |           | 1,429.3  |           |  |             | 539.3  |           |  |              |      |           |  |  | 102.9 |   |  |  | 149.0  |   |  |  | 2,220.5  |  
|Present value of scheme liabilities    |  |           | (1,161.9 | )         |  |             | (233.0 | )         |  |              | (43.7 | )         |  |  | (70.8 | ) |  |  | (146.6 | ) |  |  | (1,656.0 | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Surplus/(deficit) in the scheme        |  |           | 267.4    |           |  |             | 306.3  |           |  |              | (43.7 | )         |  |  | 32.1  |   |  |  | 2.4    |   |  |  | 564.5    |  
|Related deferred tax (liability)/asset |  |           | (80.2    | )         |  |             | (121.0 | )         |  |              | 17.3  |           |  |  | (9.6  | ) |  |  | (0.1   | ) |  |  | (193.6   | )
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  
|Net pension assets/(liabilities)1      |  |           | 187.2    |           |  |             | 185.3  |           |  |              | (26.4 | )         |  |  | 22.5  |   |  |  | 2.3    |   |  |  | 370.9    |  
|                                       |  |           |          |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |        |   |  |  |          |  



---

|1. |  | Included in the net pension (liabilities)/assets are assets of £54.3 million
(2001: £107.0 million, 2000: £402.0 million) and liabilities of £311.0 million
(2001: £56.0 million, 2000: £31.1 million).
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

91  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

6. Employeescontinued

|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|-------------------------------------------------- |  | --------- | ----- | --------- |  | ----------- | ----- | --------- |  | ------------ | ---- | --------- |  |  | ---- | - |  |  | ---- | - |  |  | ----- | -
|                                                   |  |           |       |           |  | Americas    |       | Americas  |  |              |      |           |  |  |      |   |  |  |      |  
|                                                   |  | Europe    |       | pensions  |  | health care |       | Africa    |  | Asia/Pacific |      | Total    
|Analysis of the amount charged to operating profit |  | £ million |       | £ million |  | £ million   |       | £ million |  | £ million    |      | £ million
|                                                   |  |           |       |           |  |             |       |           |  |              |      |          
|Year to 30 September 2002                          |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Current service cost                               |  |           | (33.5 | )         |  |             | (12.8 | )         |  |              | (1.6 | )         |  |  | (1.7 | ) |  |  | (7.2 | ) |  |  | (56.8 | )
|Past
service cost2                                 |  |           | (0.6  | )         |  |             | 0.7   |           |  |              |     |           |  |  |     |   |  |  |     |   |  |  | 0.1   |  
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Total operating charge                             |  |           | (34.1 | )         |  |             | (12.1 | )         |  |              | (1.6 | )         |  |  | (1.7 | ) |  |  | (7.2 | ) |  |  | (56.7 | )
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Year to 30 September 2001                          |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Current service cost                               |  |           | (35.8 | )         |  |             | (8.6  | )         |  |              | (1.3 | )         |  |  | (2.2 | ) |  |  | (4.7 | ) |  |  | (52.6 | )
|Past service cost                                  |  |           | (0.4  | )         |  |             | (16.7 | )         |  |              |     |           |  |  |     |   |  |  |     |   |  |  | (17.1 | )
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Total operating charge                             |  |           | (36.2 | )         |  |             | (25.3 | )         |  |              | (1.3 | )         |  |  | (2.2 | ) |  |  | (4.7 | ) |  |  | (69.7 | )
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Year to 30 September 2000                          |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Current service cost                               |  |           | (31.1 | )         |  |             | (8.0  | )         |  |              | (1.0 | )         |  |  | (2.5 | ) |  |  | (4.7 | ) |  |  | (47.3 | )
|Past service cost                                  |  |           | (1.6  | )         |  |             |      |           |  |              |     |           |  |  |     |   |  |  |     |   |  |  | (1.6  | )
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  
|Total operating charge                             |  |           | (32.7 | )         |  |             | (8.0  | )         |  |              | (1.0 | )         |  |  | (2.5 | ) |  |  | (4.7 | ) |  |  | (48.9 | )
|                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  |       |  



---

|2. |  | Two amendments have been 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 is a £0.7 million credit against
past service cost in the year.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|----------------------------------------------- |  | --------- | ----- | --------- |  | ----------- | ----- | --------- |  | ------------ | ---- | --------- |  |  | ----- | - |  |  | ---- | - |  |  | ------ | -
|                                                |  |           |       |           |  | Americas    |       | Americas  |  |              |      |           |  |  |       |   |  |  |      |  
|                                                |  | Europe    |       | pensions  |  | health care |       | Africa    |  | Asia/Pacific |      | Total    
|Analysis of the amount included in net interest |  | £ million |       | £ million |  | £ million   |       | £ million |  | £ million    |      | £ million
|                                                |  |           |       |           |  |             |       |           |  |              |      |          
|Year to 30 September 2002                       |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Expected return on pension scheme assets        |  |           | 87.4  |           |  |             | 36.2  |           |  |              |     |           |  |  | 7.2   |   |  |  | 8.3  |   |  |  | 139.1  |  
|Interest on pension scheme liabilities          |  |           | (71.1 | )         |  |             | (18.6 | )         |  |              | (3.7 | )         |  |  | (5.6  | ) |  |  | (7.1 | ) |  |  | (106.1 | )
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Net interest on FRS17 pension schemes           |  |           | 16.3  |           |  |             | 17.6  |           |  |              | (3.7 | )         |  |  | 1.6   |   |  |  | 1.2  |   |  |  | 33.0   |  
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Year to 30 September 2001                       |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Expected return on pension scheme assets        |  |           | 99.3  |           |  |             | 46.7  |           |  |              |     |           |  |  | 11.9  |   |  |  | 9.0  |   |  |  | 166.9  |  
|Interest on pension scheme liabilities          |  |           | (71.9 | )         |  |             | (18.1 | )         |  |              |     |           |  |  | (9.7  | ) |  |  | (7.5 | ) |  |  | (107.2 | )
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Net interest on FRS17 pension schemes           |  |           | 27.4  |           |  |             | 28.6  |           |  |              |     |           |  |  | 2.2   |   |  |  | 1.5  |   |  |  | 59.7   |  
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Year to 30 September 2000                       |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Expected return on pension scheme assets        |  |           | 88.7  |           |  |             | 38.4  |           |  |              |     |           |  |  | 13.0  |   |  |  | 9.4  |   |  |  | 149.5  |  
|Interest on pension scheme liabilities          |  |           | (69.4 | )         |  |             | (13.7 | )         |  |              |     |           |  |  | (10.3 | ) |  |  | (7.3 | ) |  |  | (100.7 | )
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  
|Net interest on FRS17 pension schemes           |  |           | 19.3  |           |  |             | 24.7  |           |  |              |     |           |  |  | 2.7   |   |  |  | 2.1  |   |  |  | 48.8   |  
|                                                |  |           |       |           |  |             |       |           |  |              |      |           |  |  |       |   |  |  |      |   |  |  |        |  

|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|--------------------------------------------------------------------------------------- |  | --------- | ------ | --------- |  | ----------- | ------ | --------- |  | ------------ | ----- | --------- |  |  | ----- | - |  |  | ----- | - |  |  | ------ | -
|                                                                                        |  |           |        |           |  | Americas    |        | Americas  |  |              |       |           |  |  |       |   |  |  |       |  
|Analysis of the amount recognised in the statement                                      |  | Europe    |        | pensions  |  | health care |        | Africa    |  | Asia/Pacific |       | Total    
|of total recognised gains and losses                                                    |  | £ million |        | £ million |  | £ million   |        | £ million |  | £ million    |       | £ million
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |          
|Year to 30 September 2002                                                               |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actual return less expected return on pension scheme assets                             |  |           | (246.4 | )         |  |             | (71.6  | )         |  |              |      |           |  |  | 3.0   |   |  |  | (13.6 | ) |  |  | (328.6 | )
|Experience gains and losses arising on the scheme liabilities                           |  |           | (9.7   | )         |  |             | 6.7    |           |  |              | 5.8   |           |  |  | (3.9  | ) |  |  | (1.3  | ) |  |  | (2.4   | )
|Changes in assumptions underlying the present value of the
scheme liabilities           |  |           | (91.7  | )         |  |             | (2.2   | )         |  |              | (5.9  | )         |  |  |      |   |  |  | 5.5   |   |  |  | (94.3  | )
|Irrecoverable surplus                                                                   |  |           |       |           |  |             |       |           |  |              |      |           |  |  | (11.6 | ) |  |  |      |   |  |  | (11.6  | )
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actuarial (loss) recognised in the statement
of total recognised gains and losses3      |  |           | (347.8 | )         |  |             | (67.1  | )         |  |              | (0.1  | )         |  |  | (12.5 | ) |  |  | (9.4  | ) |  |  | (436.9 | )
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Year to 30 September 2001                                                               |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actual return less expected return on pension scheme assets                             |  |           | (346.2 | )         |  |             | (156.4 | )         |  |              |      |           |  |  | (11.9 | ) |  |  | (13.3 | ) |  |  | (527.8 | )
|Experience gains and losses arising on the scheme liabilities                           |  |           | (7.6   | )         |  |             | (0.9   | )         |  |              | (6.9  | )         |  |  | (0.3  | ) |  |  | 10.7  |   |  |  | (5.0   | )
|Changes in assumptions underlying the present value of the
scheme liabilities           |  |           | 64.0   |           |  |             |       |           |  |              |      |           |  |  | (2.9  | ) |  |  |      |   |  |  | 61.1   |  
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actuarial (loss) recognised in the statement
of total recognised gains and losses3      |  |           | (289.8 | )         |  |             | (157.3 | )         |  |              | (6.9  | )         |  |  | (15.1 | ) |  |  | (2.6  | ) |  |  | (471.7 | )
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Year to 30 September 2000                                                               |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actual return less expected return on pension scheme assets                             |  |           | 109.0  |           |  |             | 57.2   |           |  |              |      |           |  |  | 8.5   |   |  |  | 9.0   |   |  |  | 183.7  |  
|Experience gains and losses arising on the scheme liabilities                           |  |           | 22.2   |           |  |             | (30.9  | )         |  |              | (17.8 | )         |  |  | 3.9   |   |  |  | (11.8 | ) |  |  | (34.4  | )
|Changes in assumptions underlying the present value of the
scheme liabilities           |  |           | (32.4  | )         |  |             |       |           |  |              | 3.0   |           |  |  |      |   |  |  |      |   |  |  | (29.4  | )
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Actuarial gain/(loss) recognised in the statement
of total recognised gains and losses3 |  |           | 98.8   |           |  |             | 26.3   |           |  |              | (14.8 | )         |  |  | 12.4  |   |  |  | (2.8  | ) |  |  | 119.9  |  
|                                                                                        |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  



---

|3. |  | Included in the actuarial gain/(loss) for the year is £(5.7) million in
respect of minority interests (2001: £(6.8) million, 2000: £5.7 million).
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

92  The BOC Group plc  Report and accounts 2002



---



##### 



6. Employeescontinued

|                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|--------------------------------------------- |  | --------- | ------ | --------- |  | ----------- | ------ | --------- |  | ------------ | ----- | --------- |  |  | ----- | - |  |  | ----- | - |  |  | ------ | -
|                                              |  |           |        |           |  | Americas    |        | Americas  |  |              |       |           |  |  |       |   |  |  |       |  
|                                              |  | Europe    |        | pensions  |  | health care |        | Africa    |  | Asia/Pacific |       | Total    
|Movement in (deficit)/surplus during the year |  | £ million |        | £ million |  | £ million   |        | £ million |  | £ million    |       | £ million
|                                              |  |           |        |           |  |             |        |           |  |              |       |          
|Year to 30 September 2002                     |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|(Deficit)/surplus in scheme at 1 October      |  |           | (28.8  | )         |  |             | 157.5  |           |  |              | (52.0 | )         |  |  | 12.8  |   |  |  | (3.2  | ) |  |  | 86.3   |  
|Movement in the year:                         |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Current service cost                          |  |           | (33.5  | )         |  |             | (12.8  | )         |  |              | (1.6  | )         |  |  | (1.7  | ) |  |  | (7.2  | ) |  |  | (56.8  | )
|Past service cost                             |  |           | (0.6   | )         |  |             | 0.7    |           |  |              |      |           |  |  |      |   |  |  |      |   |  |  | 0.1    |  
|Contributions                                 |  |           | 2.8    |           |  |             |       |           |  |              | 3.9   |           |  |  | 1.8   |   |  |  | 6.3   |   |  |  | 14.8   |  
|Other finance income                          |  |           | 16.3   |           |  |             | 17.6   |           |  |              | (3.7  | )         |  |  | 1.6   |   |  |  | 1.2   |   |  |  | 33.0   |  
|Actuarial (loss)                              |  |           | (347.8 | )         |  |             | (67.1  | )         |  |              | (0.1  | )         |  |  | (12.5 | ) |  |  | (9.4  | ) |  |  | (436.9 | )
|Exchange adjustment                           |  |           |       |           |  |             | (6.1   | )         |  |              | 3.4   |           |  |  | (2.0  | ) |  |  | 1.1   |   |  |  | (3.6   | )
|                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|(Deficit)/surplus in scheme at 30 September   |  |           | (391.6 | )         |  |             | 89.8   |           |  |              | (50.1 | )         |  |  |      |   |  |  | (11.2 | ) |  |  | (363.1 | )
|                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Year to 30 September 2001                     |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Surplus/(deficit) in scheme at 1 October      |  |           | 267.4  |           |  |             | 306.3  |           |  |              | (43.7 | )         |  |  | 32.1  |   |  |  | 2.4   |   |  |  | 564.5  |  
|Movement in the year:                         |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|Current service cost                          |  |           | (35.8  | )         |  |             | (8.6   | )         |  |              | (1.3  | )         |  |  | (2.2  | ) |  |  | (4.7  | ) |  |  | (52.6  | )
|Past service cost                             |  |           | (0.4   | )         |  |             | (16.7  | )         |  |              |      |           |  |  |      |   |  |  |      |   |  |  | (17.1  | )
|Contributions                                 |  |           | 2.4    |           |  |             |       |           |  |              | 3.7   |           |  |  |      |   |  |  |      |   |  |  | 6.1    |  
|Other finance income                          |  |           | 27.4   |           |  |             | 28.6   |           |  |              |      |           |  |  | 2.2   |   |  |  | 1.5   |   |  |  | 59.7   |  
|Actuarial (loss)                              |  |           | (289.8 | )         |  |             | (157.3 | )         |  |              | (6.9  | )         |  |  | (15.1 | ) |  |  | (2.6  | ) |  |  | (471.7 | )
|Exchange adjustment                           |  |           |       |           |  |             | 5.2    |           |  |              | (3.8  | )         |  |  | (4.2  | ) |  |  | 0.2   |   |  |  | (2.6   | )
|                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  
|(Deficit)/surplus in scheme at 30 September   |  |           | (28.8  | )         |  |             | 157.5  |           |  |              | (52.0 | )         |  |  | 12.8  |   |  |  | (3.2  | ) |  |  | 86.3   |  
|                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |       |   |  |  |       |   |  |  |        |  

|                                                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|----------------------------------------------------------------------------- |  | --------- | ------ | --------- |  | ----------- | ------ | --------- |  | ------------ | ----- | --------- |  |  | ------ | -- |  |  | ------ | -- |  |  | ------ | --
|                                                                              |  |           |        |           |  | Americas    |        | Americas  |  |              |       |           |  |  |        |    |  |  |        |   
|                                                                              |  | Europe    |        | pensions  |  | health care |        | Africa    |  | Asia/Pacific |       | Total    
|History of experience gains and losses                                        |  | £ million |        | £ million |  | £ million   |        | £ million |  | £ million    |       | £ million
|                                                                              |  |           |        |           |  |             |        |           |  |              |       |          
|Year to 30 September 2002                                                     |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Difference between the expected and actual return on scheme assets            |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (246.4 | )         |  |             | (71.6  | )         |  |              |      |           |  |  | 3.0    |    |  |  | (13.6  | )  |  |  | (328.6 | ) 
|Percentage of scheme assets                                                   |  |           | (26.2% | )         |  |             | (21.0% | )         |  |              |      |           |  |  | 4.3%   |    |  |  | (11.1% | )  |  |  | (22.3% | ) 
|Experience gains and losses on scheme liabilities                             |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (9.7   | )         |  |             | 6.7    |           |  |              | 5.8   |           |  |  | (3.9   | )  |  |  | (1.3   | )  |  |  | (2.4   | ) 
|Percentage of the present value of scheme liabilities                         |  |           | (0.7%  | )         |  |             | 2.7%   |           |  |              | 11.6% |           |  |  | (6.6%  | )  |  |  | (1.0%  | )  |  |  | (0.1%  | ) 
|Total amount recognised in the statement of total recognised
gains and losses |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (347.8 | )         |  |             | (67.1  | )         |  |              | (0.1  | )         |  |  | (12.5  | )  |  |  | (9.4   | )  |  |  | (436.9 | ) 
|Percentage of the present value of scheme liabilities                         |  |           | (26.1% | )         |  |             | (26.8% | )         |  |              | (0.2% | )         |  |  | (21.1% | )  |  |  | (7.0%  | )  |  |  | (23.9% | ) 
|                                                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Year to 30 September 2001                                                     |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Difference between the expected and actual return on scheme assets            |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (346.2 | )         |  |             | (156.4 | )         |  |              |      |           |  |  | (11.9  | )  |  |  | (13.3  | )  |  |  | (527.8 | ) 
|Percentage of scheme assets                                                   |  |           | (30.3  | %)        |  |             | (37.6  | %)        |  |              |      |           |  |  | (15.0  | %) |  |  | (10.4  | %) |  |  | (29.9  | %)
|Experience gains and losses on scheme liabilities                             |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (7.6   | )         |  |             | (0.9   | )         |  |              | (6.9  | )         |  |  | (0.3   | )  |  |  | 10.7   |    |  |  | (5.0   | ) 
|Percentage of the present value of scheme liabilities                         |  |           | (0.6   | %)        |  |             | (0.3   | %)        |  |              | (13.3 | %)        |  |  | (0.4   | %) |  |  | 8.2    | %  |  |  | (0.3   | %)
|Total amount recognised in the statement of total recognised
gains and losses |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | (289.8 | )         |  |             | (157.3 | )         |  |              | (6.9  | )         |  |  | (15.1  | )  |  |  | (2.6   | )  |  |  | (471.7 | ) 
|Percentage of the present value of scheme liabilities                         |  |           | (24.7  | %)        |  |             | (60.9  | %)        |  |              | (13.3 | %)        |  |  | (22.7  | %) |  |  | (2.0   | %) |  |  | (28.1  | %)
|                                                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Year to 30 September 2000                                                     |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Difference between the expected and actual return on scheme assets            |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | 109.0  |           |  |             | 57.2   |           |  |              |      |           |  |  | 8.5    |    |  |  | 9.0    |    |  |  | 183.7  |   
|Percentage of scheme assets                                                   |  |           | 7.6    | %         |  |             | 10.6   | %         |  |              |      |           |  |  | 8.3    | %  |  |  | 6.0    | %  |  |  | 8.3    | % 
|Experience gains and losses on scheme liabilities                             |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | 22.2   |           |  |             | (30.9  | )         |  |              | (17.8 | )         |  |  | 3.9    |    |  |  | (11.8  | )  |  |  | (34.4  | ) 
|Percentage of the present value of scheme liabilities                         |  |           | 1.9    | %         |  |             | (13.3  | %)        |  |              | (40.7 | %)        |  |  | 5.5    | %  |  |  | (8.0   | %) |  |  | (2.1   | %)
|Total amount recognised in the statement of total recognised
gains and losses |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   
|Amount (£ million)                                                            |  |           | 98.8   |           |  |             | 26.3   |           |  |              | (14.8 | )         |  |  | 12.4   |    |  |  | (2.8   | )  |  |  | 119.9  |   
|Percentage of the present value of scheme liabilities                         |  |           | 8.5    | %         |  |             | 11.3   | %         |  |              | (33.9 | %)        |  |  | 17.5   | %  |  |  | (1.9   | %) |  |  | 7.2    | % 
|                                                                              |  |           |        |           |  |             |        |           |  |              |       |           |  |  |        |    |  |  |        |    |  |  |        |   

93  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

6. Employeescontinued

ii) UK GAAP FRS17 Retirement benefits  parent company
The pension rights of UK BOC Group employees are dealt with through a
self-administered scheme, the assets of which are held independently of the
Groups finances. The scheme is a defined benefit scheme that is funded partly
by contributions from members and partly by contributions from Group
undertakings at rates advised by independent professionally qualified
actuaries. Acting on the advice of the actuaries, company contributions to the
principal UK scheme will resume from 1 October 2002.
The company accounts for pension costs in accordance with UK Financial
Reporting Standard 17 (FRS17) on retirement benefits. In accordance with the
standard, the company treats contributions to the pension scheme as if it were
a defined contribution scheme. This is because the underlying assets and
liabilities of the scheme cover a number of UK BOC Group undertakings and
cannot readily be split between each Group undertaking on a consistent and
reliable basis.

iii) Pensions  US GAAP
For the purposes of US GAAP, the pension costs of the largest schemes have been
restated in the following tables in accordance with the requirement of
SFAS132. The changes in projected benefit obligation, plan assets and details of
the funded status of these retirement plans, together with the changes in the
accumulated other post-retirement benefit obligations of the Groups US
business, are given below. The measurement date for UK and US pension plans is
30 June. The difference between the UK and US GAAP information, disclosed in
note 6 e) i) and ii) is included in note 16.

|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|--------------------------------------------------------------------- |  | ---------------- | ------- | --------------- |  | --------- | ------- | --------- |  |  | ----- | - |  |  | ----- | -
|                                                                      |  | Pension benefits |         | Other benefits1
|                                                                      |  |                  |         |                
|                                                                      |  | 2002             |         | 2001            |  | 2002      |         | 2001     
|                                                                      |  | £ million        |         | £ million       |  | £ million |         | £ million
|                                                                      |  |                  |         |                 |  |           |         |          
|Change in benefit obligation                                          |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Projected benefit obligation at 1 October                             |  |                  | 1,599.5 |                 |  |           | 1,666.0 |           |  |  | 52.0  |   |  |  | 47.1  |  
|Change due to re-measurement                                          |  |                  |        |                 |  |           |        |           |  |  |      |   |  |  | (3.4  | )
|Exchange adjustment                                                   |  |                  | (27.3   | )               |  |           | (7.6    | )         |  |  | (3.4  | ) |  |  | 0.3   |  
|Service cost                                                          |  |                  | 54.6    |                 |  |           | 54.0    |           |  |  | 1.6   |   |  |  | 1.2   |  
|Interest cost                                                         |  |                  | 102.9   |                 |  |           | 107.5   |           |  |  | 3.6   |   |  |  | 3.3   |  
|Plan participants contributions                                      |  |                  | 12.9    |                 |  |           | 14.6    |           |  |  |      |   |  |  |      |  
|Actuarial losses/(gains)                                              |  |                  | 44.7    |                 |  |           | (151.1  | )         |  |  | 0.2   |   |  |  | 7.2   |  
|Benefits paid                                                         |  |                  | (91.9   | )               |  |           | (86.6   | )         |  |  | (3.9  | ) |  |  | (3.7  | )
|Other (income) less expenses                                          |  |                  | 0.6     |                 |  |           | 2.3     |           |  |  |      |   |  |  |      |  
|Curtailments, settlements, termination benefits                       |  |                  | 0.6     |                 |  |           | 0.4     |           |  |  |      |   |  |  |      |  
|Plan amendments2                                                      |  |                  | (0.7    | )               |  |           |        |           |  |  |      |   |  |  |      |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Projected benefit obligation at 30 September                          |  |                  | 1,695.9 |                 |  |           | 1,599.5 |           |  |  | 50.1  |   |  |  | 52.0  |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Change in fair value of assets                                        |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Fair value of assets at 1 October                                     |  |                  | 1,995.7 |                 |  |           | 2,203.4 |           |  |  |      |   |  |  |      |  
|Exchange adjustment                                                   |  |                  | (39.8   | )               |  |           | (24.9   | )         |  |  |      |   |  |  |      |  
|Actual return on plan assets                                          |  |                  | (180.4  | )               |  |           | (115.5  | )         |  |  |      |   |  |  |      |  
|Employer contributions                                                |  |                  | 8.9     |                 |  |           | 2.4     |           |  |  |      |   |  |  |      |  
|Plan participants contributions                                      |  |                  | 12.9    |                 |  |           | 14.6    |           |  |  |      |   |  |  |      |  
|Other income less (expenses)                                          |  |                  | 0.6     |                 |  |           | 2.3     |           |  |  |      |   |  |  |      |  
|Benefits paid                                                         |  |                  | (91.9   | )               |  |           | (86.6   | )         |  |  |      |   |  |  |      |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Fair value of assets at 30 September                                  |  |                  | 1,706.0 |                 |  |           | 1,995.7 |           |  |  |      |   |  |  |      |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Funded status and unrecognised (gains)/losses                         |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Funded status                                                         |  |                  | 10.1    |                 |  |           | 396.2   |           |  |  | (50.1 | ) |  |  | (52.0 | )
|Unrecognised net transition asset                                     |  |                  | (26.1   | )               |  |           | (42.9   | )         |  |  |      |   |  |  |      |  
|Unrecognised prior service cost/(credit)                              |  |                  | 23.9    |                 |  |           | 28.9    |           |  |  | (3.4  | ) |  |  | (4.1  | )
|Unrecognised net loss/(gain)                                          |  |                  | 195.5   |                 |  |           | (191.2  | )         |  |  | 9.3   |   |  |  | 10.1  |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Prepaid/(accrued) pension cost                                        |  |                  | 203.4   |                 |  |           | 191.0   |           |  |  | (44.2 | ) |  |  | (46.0 | )
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Amounts recognised in the statement of financial position consist of: |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Prepaid benefit cost                                                  |  |                  | 183.0   |                 |  |           | 191.0   |           |  |  |       |   |  |  |       |  
|Accrued benefit liability                                             |  |                  | (1.5    | )               |  |           |        |           |  |  |       |   |  |  |       |  
|Intangible asset                                                      |  |                  | 0.7     |                 |  |           |        |           |  |  |       |   |  |  |       |  
|Accumulated other comprehensive income                                |  |                  | 21.2    |                 |  |           |        |           |  |  |       |   |  |  |       |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  
|Prepaid pension cost                                                  |  |                  | 203.4   |                 |  |           | 191.0   |           |  |  |       |   |  |  |       |  
|                                                                      |  |                  |         |                 |  |           |         |           |  |  |       |   |  |  |       |  



---

|1. |  | Other benefits relate to post retirement medical benefits.    
|-- |  | --------------------------------------------------------------
|2. |  | Plan amendments relate to changes made to the US pension plan.

The fair value of plan assets exceeds the accumulated benefit obligation for
all plans except the Australian plan, where the accumulated benefit obligation,
projected benefit obligation and fair value of plan assets were £110.6
million, £110.6 million and £109.1 million respectively (2001: £108.4
million, £108.4 million and £112.5 million).

94  The BOC Group plc  Report and accounts 2002



---



##### 



6. Employeescontinued

The main assumptions are as follows:

|                               |  |        |      |          |  |        |      |              |  |  |      |   |  |  |      |  
|------------------------------ |  | ------ | ---- | -------- |  | ------ | ---- | ------------ |  |  | ---- | - |  |  | ---- | -
|                               |  | Europe |      | Americas |  | Africa |      | Asia/Pacific
|                               |  |        |      |          |  |        |      |             
|At 30 September 2002           |  |        |      |          |  |        |      |              |  |  |      |   |  |  |      |  
|Discount rate                  |  |        | 5.8  | %        |  |        | 7.0  | %            |  |  | 12.0 | % |  |  | 7.0  | %
|Expected return on plan assets |  |        | 7.7  | %        |  |        | 9.0  | %            |  |  | 12.0 | % |  |  | 8.0  | %
|Rate of compensation increase  |  |        | 3.9  | %        |  |        | 3.75 | %            |  |  | 9.5  | % |  |  | 3.5  | %
|                               |  |        |      |          |  |        |      |              |  |  |      |   |  |  |      |  
|At 30 September 2001           |  |        |      |          |  |        |      |              |  |  |      |   |  |  |      |  
|Discount rate                  |  |        | 6.2  | %        |  |        | 7.25 | %            |  |  | 10.0 | % |  |  | 5.75 | %
|Expected return on plan assets |  |        | 7.4  | %        |  |        | 9.0  | %            |  |  | 10.0 | % |  |  | 6.5  | %
|Rate of compensation increase  |  |        | 4.75 | %        |  |        | 4.75 | %            |  |  | 7.5  | % |  |  | 3.0  | %
|                               |  |        |      |          |  |        |      |              |  |  |      |   |  |  |      |  

For the post retirement medical benefits plan at 30
September 2002, the initial
health care cost trend rates for valuing the medical benefits and drug benefits
were 10.0 per cent (2001:9.0 per cent) and 2.4 per cent (2001:2.0 per cent)
respectively. These rates are assumed to reduce gradually to 4.5 per cent in
2009 (2001:4.75 per cent in 2009) for valuing medical benefits but no reduction
is assumed for valuing the drug benefits.

|                                               |  |                      |        |                 |  |           |        |           |  |           |        |           |  |  |      |   |  |  |      |   |  |  |      |  
|---------------------------------------------- |  | -------------------- | ------ | --------------- |  | --------- | ------ | --------- |  | --------- | ------ | --------- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                               |  | Pensionable benefits |        | Other benefits3
|                                               |  |                      |        |                
|                                               |  | 2002                 |        | 2001            |  | 2000      |        | 2002      |  | 2001      |        | 2000     
|                                               |  | £ million            |        | £ million       |  | £ million |        | £ million |  | £ million |        | £ million
|                                               |  |                      |        |                 |  |           |        |           |  |           |        |          
|Service cost net of employees contributions   |  |                      | 54.6   |                 |  |           | 54.0   |           |  |           | 51.1   |           |  |  | 1.6  |   |  |  | 1.2  |   |  |  | 1.0  |  
|Interest cost on projected benefits obligation |  |                      | 102.9  |                 |  |           | 107.5  |           |  |           | 99.5   |           |  |  | 3.6  |   |  |  | 3.3  |   |  |  | 1.8  |  
|Expected return on assets                      |  |                      | (156.7 | )               |  |           | (158.8 | )         |  |           | (141.1 | )         |  |  |     |   |  |  |     |   |  |  |     |  
|Amortisation of net transition asset           |  |                      | (14.7  | )               |  |           | (15.2  | )         |  |           | (15.3  | )         |  |  |     |   |  |  |     |   |  |  |     |  
|Amortisation of prior service cost/(credit)    |  |                      | 3.5    |                 |  |           | 2.6    |           |  |           | 5.7    |           |  |  | (0.5 | ) |  |  | (0.5 | ) |  |  | (0.4 | )
|Amortisation of net (gain)/loss                |  |                      | (7.2   | )               |  |           | (2.7   | )         |  |           |       |           |  |  | 0.3  |   |  |  |     |   |  |  | (0.7 | )
|Cost of special termination benefits           |  |                      | 0.6    |                 |  |           | 0.4    |           |  |           | 1.6    |           |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                      |        |                 |  |           |        |           |  |           |        |           |  |  |      |   |  |  |      |   |  |  |      |  
|Net periodic pension (credit)/cost             |  |                      | (17.0  | )               |  |           | (12.2  | )         |  |           | 1.5    |           |  |  | 5.0  |   |  |  | 4.0  |   |  |  | 1.7  |  
|                                               |  |                      |        |                 |  |           |        |           |  |           |        |           |  |  |      |   |  |  |      |   |  |  |      |  



---

|3. |  | Other benefits relate to post retirement medical benefits.
|-- |  | ----------------------------------------------------------

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 2002:

|                               |  |                      |     |          |  |  |      |  
|------------------------------ |  | -------------------- | --- | -------- |  |  | ---- | -
|                               |  | One percentage point
|                               |  |                     
|                               |  | increase             |     | decrease
|                               |  |                      |     |         
|Accumulated benefit obligation |  |                      | 6.0 |          |  |  | (5.5 | )
|Net periodic pension cost      |  |                      | 0.9 |          |  |  | (0.8 | )
|                               |  |                      |     |          |  |  |      |  

95  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

7. Fixed assets  intangible assets

|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|------------------------ |  | --------- | ----- | --------- |  | ----------- | ----- | --------- |  |  | ---- | - |  |  | ----- | -
|                         |  |           |       |           |  | Negative    |       | Other     |  |  |      |  
|                         |  | Goodwill  |       | Goodwill  |  | intangibles |       | Total    
|                         |  | £ million |       | £ million |  | £ million   |       | £ million
|                         |  |           |       |           |  |             |       |          
|Gross book value         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|At 1 October 2001        |  |           | 73.1  |           |  |             | (20.4 | )         |  |  | 6.0  |   |  |  | 58.7  |  
|Exchange adjustment      |  |           | (6.7  | )         |  |             | (0.8  | )         |  |  | (0.1 | ) |  |  | (7.6  | )
|Acquired during the year |  |           | 117.3 |           |  |             | (5.0  | )         |  |  | 0.6  |   |  |  | 112.9 |  
|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|At 30 September 2002     |  |           | 183.7 |           |  |             | (26.2 | )         |  |  | 6.5  |   |  |  | 164.0 |  
|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|Amortisation             |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|At 1 October 2001        |  |           | 8.8   |           |  |             | (1.1  | )         |  |  | 2.9  |   |  |  | 10.6  |  
|Exchange adjustment      |  |           | (0.8  | )         |  |             |      |           |  |  | (0.1 | ) |  |  | (0.9  | )
|Impairment               |  |           |      |           |  |             | (3.8  | )         |  |  |     |   |  |  | (3.8  | )
|Provided during the year |  |           | 8.8   |           |  |             | (2.0  | )         |  |  | 0.6  |   |  |  | 7.4   |  
|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|At 30 September 2002     |  |           | 16.8  |           |  |             | (6.9  | )         |  |  | 3.4  |   |  |  | 13.3  |  
|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|Net book value           |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  
|At 1 October 2001        |  |           | 64.3  |           |  |             | (19.3 | )         |  |  | 3.1  |   |  |  | 48.1  |  
|At 30 September 2002     |  |           | 166.9 |           |  |             | (19.3 | )         |  |  | 3.1  |   |  |  | 150.7 |  
|                         |  |           |       |           |  |             |       |           |  |  |      |   |  |  |       |  

The increase in positive goodwill represents the excess of the fair value of
the purchase price over the provisional fair value of the net assets of
businesses acquired. The increase in negative goodwill represents the excess of
the provisional fair value of the net assets of businesses acquired over the
fair value of the purchase price. The most significant amounts are as follows:

|                                                               |  |           |      |           |  |              |       |   |  |  |    | 
|-------------------------------------------------------------- |  | --------- | ---- | --------- |  | ------------ | ----- | - |  |  | -- | 
|                                                               |  | Positive  |      | Negative  |  | Amortisation
|                                                               |  | Goodwill  |      | Goodwill  |  | period      
|Business acquired                                              |  | £ million |      | £ million |  | Years       
|                                                               |  |           |      |           |  |             
|2002                                                           |  |           |      |           |  |              |       |   |  |  |    | 
|Seiko Instruments Inc  turbomolecular pumps business          |  |           | 60.2 |           |  |              |      |   |  |  | 20 | 
|Unique Gas and Petrochemicals Public Company Limited           |  |           | 17.5 |           |  |              |      |   |  |  | 20 | 
|Enron Teesside Operations Limited  industrial assets          |  |           | 9.6  |           |  |              |      |   |  |  | 15 | 
|Hydromatix Inc                                                 |  |           | 5.6  |           |  |              |      |   |  |  | 15 | 
|Semco                                                          |  |           | 4.4  |           |  |              |      |   |  |  | 15 | 
|Minorities in Osaka Sanso Kogyo KK                             |  |           |     |           |  |              | (5.0  | ) |  |  | 10 | 
|                                                               |  |           |      |           |  |              |       |   |  |  |    | 
|2001                                                           |  |           |      |           |  |              |       |   |  |  |    | 
|Remaining 50 per cent of joint ventures in Venezuela and Chile |  |           | 7.5  |           |  |              |      |   |  |  | 12 | 
|UK Fluorogas                                                   |  |           | 8.2  |           |  |              |      |   |  |  | 15 | 
|Minorities in Osaka Sanso Kogyo KK                             |  |           |     |           |  |              | (20.4 | ) |  |  | 10 | 
|                                                               |  |           |      |           |  |              |       |   |  |  |    | 
|2000                                                           |  |           |      |           |  |              |       |   |  |  |    | 
|Kachina Semiconductor Services                                 |  |           | 7.9  |           |  |              |      |   |  |  | 15 | 
|                                                               |  |           |      |           |  |              |       |   |  |  |    | 
|1999                                                           |  |           |      |           |  |              |       |   |  |  |    | 
|Chemical management division of FSI International Inc          |  |           | 16.4 |           |  |              |      |   |  |  | 15 | 
|                                                               |  |           |      |           |  |              |       |   |  |  |    | 

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.

96  The BOC Group plc  Report and accounts 2002



---



##### 



8. Fixed assets  tangible assets

a) Group summary

|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|------------------------------------ |  | ---------- | ----- | ------------ |  | --------- | ------- | ----------- |  | ------------ | ----- | - |  |  | ------ | - |  |  | ------- | -
|                                     |  |            |       |              |  | Plant,    |         |             |  |              |       |   |  |  |        |   |  | 
|                                     |  | Land and   |       | machinery    |  |           |         |             |  | Construction |       |   |  | 
|                                     |  | buildings1 |       | and vehicles |  | Cylinders |         | in progress |  | Total       
|                                     |  | £ million  |       | £ million    |  | £ million |         | £ million   |  | £ million   
|                                     |  |            |       |              |  |           |         |             |  |             
|Gross book value                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|At 1 October 2001                    |  |            | 704.8 |              |  |           | 4,437.3 |             |  |              | 606.7 |   |  |  | 308.1  |   |  |  | 6,056.9 |  
|Exchange adjustment                  |  |            | (33.5 | )            |  |           | (222.0  | )           |  |              | (38.4 | ) |  |  | (18.5  | ) |  |  | (312.4  | )
|Capital expenditure2                 |  |            | 17.8  |              |  |           | 143.1   |             |  |              | 45.4  |   |  |  | 148.0  |   |  |  | 354.3   |  
|Disposals                            |  |            | (26.8 | )            |  |           | (106.1  | )           |  |              | (20.2 | ) |  |  | (0.1   | ) |  |  | (153.2  | )
|Transfers                            |  |            | 9.5   |              |  |           | 218.1   |             |  |              | 9.3   |   |  |  | (236.9 | ) |  |  |        |  
|Acquisitions/disposals of businesses |  |            | 42.9  |              |  |           | 19.2    |             |  |              | 17.3  |   |  |  | 0.3    |   |  |  | 79.7    |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|At 30 September 2002                 |  |            | 714.7 |              |  |           | 4,489.6 |             |  |              | 620.1 |   |  |  | 200.9  |   |  |  | 6,025.3 |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|Depreciation                         |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|At 1 October 2001                    |  |            | 222.8 |              |  |           | 2,390.1 |             |  |              | 275.4 |   |  |  |       |   |  |  | 2,888.3 |  
|Exchange adjustment                  |  |            | (5.5  | )            |  |           | (112.5  | )           |  |              | (16.6 | ) |  |  |       |   |  |  | (134.6  | )
|Provided during the year             |  |            | 35.3  |              |  |           | 242.6   |             |  |              | 45.6  |   |  |  |       |   |  |  | 323.5   |  
|Impairment                           |  |            | 37.4  |              |  |           | 7.2     |             |  |              |      |   |  |  |       |   |  |  | 44.6    |  
|Disposals                            |  |            | (13.4 | )            |  |           | (89.8   | )           |  |              | (16.0 | ) |  |  |       |   |  |  | (119.2  | )
|Disposals of businesses              |  |            | (0.4  | )            |  |           | (4.3    | )           |  |              |      |   |  |  |       |   |  |  | (4.7    | )
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|At 30 September 2002                 |  |            | 276.2 |              |  |           | 2,433.3 |             |  |              | 288.4 |   |  |  |       |   |  |  | 2,997.9 |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|Net book value at 1 October 2001     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|Owned assets                         |  |            | 448.4 |              |  |           | 2,038.1 |             |  |              | 295.5 |   |  |  | 308.1  |   |  |  | 3,090.1 |  
|Leased assets                        |  |            | 33.6  |              |  |           | 9.1     |             |  |              | 35.8  |   |  |  |       |   |  |  | 78.5    |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|                                     |  |            | 482.0 |              |  |           | 2,047.2 |             |  |              | 331.3 |   |  |  | 308.1  |   |  |  | 3,168.6 |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|Net book value at 30
September 20023 |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|Owned assets                         |  |            | 407.4 |              |  |           | 2,047.8 |             |  |              | 299.8 |   |  |  | 200.9  |   |  |  | 2,955.9 |  
|Leased assets4                       |  |            | 31.1  |              |  |           | 8.5     |             |  |              | 31.9  |   |  |  |       |   |  |  | 71.5    |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  
|                                     |  |            | 438.5 |              |  |           | 2,056.3 |             |  |              | 331.7 |   |  |  | 200.9  |   |  |  | 3,027.4 |  
|                                     |  |            |       |              |  |           |         |             |  |              |       |   |  |  |        |   |  |  |         |  



---

|1. |  | Net book value of land and buildings at cost was £405.4 million
(2001: £407.6 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 £63.8 million
(2001: £67.7 million). The tax effect of this is included in the deferred
tax provision.
|4. |  | Leased assets are shown net of accumulated depreciation of £111.0 million
(2001: £105.6 million).                                                         

b) Depreciation and operating lease rentals

|                                                    |  |           |      |           |  |           |      |  |  |  |      | 
|--------------------------------------------------- |  | --------- | ---- | --------- |  | --------- | ---- |  |  |  | ---- | 
|                                                    |  | 2002      |      | 2001      |  | 2000     
|                                                    |  | £ million |      | £ million |  | £ million
|                                                    |  |           |      |           |  |          
|Depreciation on leased assets included above        |  |           | 8.5  |           |  |           | 6.8  |  |  |  | 6.7  | 
|Amortisation of capitalised interest included above |  |           | 4.2  |           |  |           | 3.0  |  |  |  | 4.0  | 
|Operating lease rentals                             |  |           |      |           |  |           |      |  |  |  |      | 
| hire of plant and machinery                       |  |           | 7.7  |           |  |           | 15.0 |  |  |  | 8.1  | 
| property rent                                     |  |           | 23.1 |           |  |           | 25.0 |  |  |  | 26.4 | 
| other                                             |  |           | 14.0 |           |  |           | 11.9 |  |  |  | 10.8 | 
|                                                    |  |           |      |           |  |           |      |  |  |  |      | 

c) Regional analysis

The Group has numerous manufacturing, distribution and office facilities which
are located in some 50 countries. At 30 September 2002, the Groups property,
plant and equipment, comprising land and buildings, plant, machinery, vehicles
and cylinders was located regionally as follows:

|                         |  |           |         |   |  |  |     | 
|------------------------ |  | --------- | ------- | - |  |  | --- | 
|                         |  | £ million |         | %
|                         |  |           |         |  
|Europe (mainly the UK)   |  |           | 1,024.7 |   |  |  | 34  | 
|Americas (mainly the US) |  |           | 978.4   |   |  |  | 32  | 
|Africa                   |  |           | 178.3   |   |  |  | 6   | 
|Asia/Pacific             |  |           | 846.0   |   |  |  | 28  | 
|                         |  |           |         |   |  |  |     | 
|                         |  |           | 3,027.4 |   |  |  | 100 | 
|                         |  |           |         |   |  |  |     | 

The above amounts are stated at cost net of accumulated depreciation.

97  The BOC Group plc  Report and accounts 2002



---



##### 



Notes to the financial statements

8. Fixed assets  tangible assets continued

d)  Asset revaluationsFollowing the adoption of FRS15  Tangible fixed
assets in 2000, land and
buildings are no longer revalued (see Accounting policies on page
72). The net
book value of properties revalued in earlier years was £136.4 million.
Properties not revalued were £302.1 million.

e)  Parent summary

Plant,Land and
        
        machinerybuildings
        
        and vehicles
        
        Total£ million
        
        £ million
        
        £ millionGross book valueAt 1 October 2001
        
        
        14.3
        
        
        
        18.9
        
        
        
        33.2Capital expenditure
        
        
        
        
        
        
        0.1
        
        
        
        0.1Disposals
        
        
        
        
        
        
        (3.3
        )
        
        
        (3.3
        )At 30 September 2002
        
        
        14.3
        
        
        
        15.7
        
        
        
        30.0DepreciationAt 1 October 2001
        
        
        3.3
        
        
        
        11.1
        
        
        
        14.4Provided during the year
        
        
        0.4
        
        
        
        1.3
        
        
        
        1.7Disposals
        
        
        
        
        
        
        (0.1
        )
        
        
        (0.1
        )At 30 September 2002
        
        
        3.7
        
        
        
        12.3
        
        
        
        16.0Net book valueAt 1 October 2001
        
        
        11.0
        
        
        
        7.8
        
        
        
        18.8At 30 September 2002
        
        
        10.6
        
        
        
        3.4
        
        
        
        14.0


f)  Net book value of land and buildings at 30 September 2002

Group
        
        Parent£ million
        
        £ millionFreehold property
        
        
        407.4
        
        
        
        10.6Leasehold property  long-term
        
        
        27.4
        
        
        
         short-term
        
        
        3.7
        
        
        
        438.5
        
        
        
        10.6


g)  Capital commitments

Group
        
        Parent2002
        
        2001
        
        2002
        
        2001£ million
        
        £ million
        
        £ million
        
        £ millionAgainst which orders had been placed
        
        
        33.3
        
        
        
        96.0
        
        
        
        
        
        
        
        2.5Authorised but not committed
        
        
        66.7
        
        
        
        80.4
        
        
        
        
        
        
        
        100.0
        
        
        
        176.4
        
        
        
        
        
        
        
        2.5


The Groups share of its joint ventures and associates capital commitments
was:

2002
        
        2001£ million
        
        £ millionAgainst which orders had been placed
        
        
        3.1
        
        
        
        2.4Authorised but not committed
        
        
        8.6
        
        
        
        4.011.7
        
        
        
        6.4


98  The BOC Group plcReport and accounts 2002





---



##### 



9. Fixed assets  investments

a)  Group

Group
        
        Group
        
        Group
        
        
        
        
        
        Provisionsshare of
        
        share of
        
        loans to
        
        Other
        
        Own
        
        againstGoodwill
        
        net assets of
        
        net assets of
        
        joint ventures
        
        investments
        
        shares
        
        otherof associates
        
        joint ventures
        
        associates
        
        and associates
        
        at cost
        
        at cost
        
        investments
        
        Total£ million
        
        £ million
        
        £ million
        
        £ million
        
        £ million
        
        £ million
        
        £ million
        
        £ millionAt 1 October 2001 previously reported
        
        
        
        
        
        
        212.2
        
        
        
        47.1
        
        
        
        106.7
        
        
        
        33.5
        
        
        
        59.5
        
        
        
        (1.8
        )
        
        
        457.2Prior year adjustment
        
        
        
        
        
        
        (7.4
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (7.4
        )At 1 October 2001  restated
        
        
        
        
        
        
        204.8
        
        
        
        47.1
        
        
        
        106.7
        
        
        
        33.5
        
        
        
        59.5
        
        
        
        (1.8
        )
        
        
        449.8Exchange adjustment
        
        
        (0.6
        )
        
        
        (12.7
        )
        
        
        (4.1
        )
        
        
        (7.8
        )
        
        
        (2.8
        )
        
        
        0.1
        
        
        
        0.4
        
        
        
        (27.5
        )Acquisitions/additions
        
        
        8.7
        
        
        
        10.1
        
        
        
        6.0
        
        
        
        20.9
        
        
        
        21.6
        
        
        
        
        
        
        
        
        
        
        
        67.3Associates becoming subsidiaries
        
        
        
        
        
        
        
        
        
        
        (3.2
        )
        
        
        (1.1
        )
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        (4.3
        )Disposals/repayments
        
        
        
        
        
        
        
        
        
        
        (0.3
        )
        
        
        (0.7
        )
        
        
        (6.9
        )
        
        
        (17.1
        )
        
        
        (0.2
        )
        
        
        (25.2
        )Increase in net assets
        
        
        
        
        
        
        3.3
        
        
        
        3.8
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        7.1Other
        
        
        
        
        
        
        
        
        
        
        0.1
        
        
        
        
        
        
        
        1.8
        
        
        
        
        
        
        
        (0.5
        )
        
        
        1.4At 30 September 2002
        
        
        8.1
        
        
        
        205.5
        
        
        
        49.4
        
        
        
        118.0
        
        
        
        47.2
        
        
        
        42.5
        
        
        
        (2.1
        )
        
        
        468.6


i) Joint ventures
The cost of investment in joint ventures was £116.9 million
(2001: £107.6
million) and the attributable profit before tax was
£40.1 million (2001: £34.2
million, 2000: £40.2 million). There were no significant fair value adjustments on
acquisitions.

ii) Associates
The cost of investment in associates was £15.1 million
(2001: £8.3 million) and
the attributable profit before tax was £9.4 million (2001: £10.5
million, 2000: £5.6 million).     Goodwill
of associates arose on the combination of the BOC Process Plants
business with Linde Engineering. This represents the difference between the
fair value of the consideration paid and the provisional fair value of the net
assets acquired. This goodwill will be amortised over a period of 15
years. There were no significant fair value adjustments on acquisitions.

iii) Own shares
For share-based incentive schemes which do not use new issue shares, options
are satisfied by the transfer of shares held in trust for the purpose. At 30
September 2002, options over 5.4 million shares were outstanding under these
schemes, for which 4.6 million shares in the company were held pending
exercise.     Loans
and advances for the purchase of shares in trust have been made
either by the company or its subsidiaries. If the value of shares in trust is
insufficient to cover the loans, the company and its subsidiaries will bear any
loss. The company also bears administrative costs on an accruals basis.     Based
on the companys share price at 30 September 2002 of
867.0p, the
market value of own shares held in trust was £39.5 million. This compares with
the acquisition cost shown above.     Own
shares are shown as fixed asset investments for accounting purposes, in
accordance with FRS5 and UITF Abstract 13. Information on share option schemes
appears in the report on remuneration and in notes 6 and 12.     Dividends
waived on the shares held in trust amounted to £1.8 million
(2001: £1.2 million, 2000: £1.5 million).

iv) Related parties
During the year, interest income of £8.3 million (2001:
£6.9 million, 2000: £6.5
million) was received from the Cantarell joint venture, a related party.

99  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

9.  Fixed assets  investmentscontinued

b) Valuation

|                                                 |                                  |  |           |       |           |  |       |       | 
|------------------------------------------------ | -------------------------------- |  | --------- | ----- | --------- |  | ----- | ----- | 
|                                                 |                                  |  | 2002      |       | 2001     
|                                                 |                                  |  | £ million |       | £ million
|                                                 |                                  |  |           |       |          
|Listed on stock exchanges in the UK and overseas |                                  |  | 91.1      |       |           |  | 112.5 |      
|Unlisted                                         |  equity at directors valuation |  |           | 244.9 |           |  |       | 237.1 | 
|                                                 |  other at directors valuation  |  |           | 132.6 |           |  |       | 107.6 | 
|                                                 |                                  |  |           |       |           |  |       |      
|Total book value                                 |                                  |  | 468.6     |       |           |  | 457.2 |      
|                                                 |                                  |  |           |       |           |  |       |      
|Market value of listed investments               |                                  |  | 123.1     |       |           |  | 152.7 |      
|                                                 |                                  |  |           |       |           |  |       |      

c) Income

|                                          |                                          |  |           |      |           |  |           |      |  |  |      |      | 
|----------------------------------------- | ---------------------------------------- |  | --------- | ---- | --------- |  | --------- | ---- |  |  | ---- | ---- | 
|                                          |                                          |  | 2002      |      | 2001      |  | 2000     
|                                          |                                          |  | £ million |      | £ million |  | £ million
|                                          |                                          |  |           |      |           |  |          
|Listed securities                         |                                          |  | 7.5       |      |           |  | 6.0       |      |  |  | 2.2  |     
|Unlisted securities                       |                                          |  | 30.6      |      |           |  | 19.5      |      |  |  | 20.5 |     
|                                          |                                          |  |           |      |           |  |           |      |  |  |      |     
|                                          |                                          |  | 38.1      |      |           |  | 25.5      |      |  |  | 22.7 |     
|Less:                                     | Dividends receivable from joint ventures |  |           | 30.5 |           |  |           | 19.4 |  |  |      | 20.0 | 
|                                          | Dividends receivable from associates     |  |           | 3.4  |           |  |           | 4.1  |  |  |      | 2.1  | 
|                                          |                                          |  |           |      |           |  |           |      |  |  |      |     
|Income from other fixed asset investments |                                          |  | 4.2       |      |           |  | 2.0       |      |  |  | 0.6  |     
|                                          |                                          |  |           |      |           |  |           |      |  |  |      |     

d) Parent

|                     |  |               |         |              |  |              |        |           |  |             |         |            |  |           |      |   |  |  |      |  |  |  |       |   |  |  |         |  
|-------------------- |  | ------------- | ------- | ------------ |  | ------------ | ------ | --------- |  | ----------- | ------- | ---------- |  | --------- | ---- | - |  |  | ---- |  |  |  | ----- | - |  |  | ------- | -
|                     |  |               |         |              |  |              |        |           |  | Amounts     |         |            |  |           |      |   |  |  |      |  |  |  |       |   |  | 
|                     |  | Investments   |         | Investments  |  | due from     |        | Own       |  |             |         |            |  |           |      |   |  |  |      | 
|                     |  | in subsidiary |         | in related   |  | subsidiary   |        | shares    |  | Other       |         |            |  |           |      |   |  | 
|                     |  | undertakings  |         | undertakings |  | undertakings |        | at cost   |  | investments |         | Provisions |  | Total    
|                     |  | £ million     |         | £ million    |  | £ million    |        | £ million |  | £ million   |         | £ million  |  | £ million
|                     |  |               |         |              |  |              |        |           |  |             |         |            |  |          
|At 1 October 2001    |  |               | 1,142.8 |              |  |              | 250.1  |           |  |             | 1,278.8 |            |  |           | 44.9 |   |  |  |     |  |  |  | (14.6 | ) |  |  | 2,702.0 |  
|Additions            |  |               | 345.3   |              |  |              | 8.7    |           |  |             | 396.3   |            |  |           |     |   |  |  | 13.9 |  |  |  | (1.9  | ) |  |  | 762.3   |  
|Disposals/repayments |  |               | (18.0   | )            |  |              | (250.1 | )         |  |             | (343.2  | )          |  |           | (8.6 | ) |  |  |     |  |  |  |      |   |  |  | (619.9  | )
|                     |  |               |         |              |  |              |        |           |  |             |         |            |  |           |      |   |  |  |      |  |  |  |       |   |  |  |         |  
|At 30 September 2002 |  |               | 1,470.1 |              |  |              | 8.7    |           |  |             | 1,331.9 |            |  |           | 36.3 |   |  |  | 13.9 |  |  |  | (16.5 | ) |  |  | 2,844.4 |  
|                     |  |               |         |              |  |              |        |           |  |             |         |            |  |           |      |   |  |  |      |  |  |  |       |   |  |  |         |  

10.  Net current assets/(liabilities)

a) Stocks

|                               |  |           |       |           |  |  |       |  
|------------------------------ |  | --------- | ----- | --------- |  |  | ----- | -
|                               |  | Group    
|                               |  |          
|                               |  | 2002      |       | 2001     
|                               |  | £ million |       | £ million
|                               |  |           |       |          
|Raw materials                  |  |           | 67.8  |           |  |  | 81.2  |  
|Work in progress               |  |           | 47.8  |           |  |  | 59.5  |  
|Gases and other finished goods |  |           | 159.0 |           |  |  | 164.7 |  
|Payments on account            |  |           | (14.6 | )         |  |  | (30.2 | )
|                               |  |           |       |           |  |  |       |  
|                               |  |           | 260.0 |           |  |  | 275.2 |  
|                               |  |           |       |           |  |  |       |  

Amounts relating to long-term contracts included in work in progress were £0.2
million (2001: £1.3 million). There were no stocks held on the balance sheet of
The BOC Group plc at either 30 September 2002 or 30 September 2001.

100  The BOC Group plcReport and accounts 2002





---



##### 



10. Net current assets/(liabilities)continued

b) Debtors falling due within one year

|                                               |  |           |       |            |  |           |       |            |  |  |       |      |  |  |       | 
|---------------------------------------------- |  | --------- | ----- | ---------- |  | --------- | ----- | ---------- |  |  | ----- | ---- |  |  | ----- | 
|                                               |  | Group     |       | Parent    
|                                               |  |           |       |           
|                                               |  |           |       |            |  | 2001      |       |            |  |  |       | 2001
|                                               |  | 2002      |       | (restated) |  | 2002      |       | (restated)
|                                               |  | £ million |       | £ million  |  | £ million |       | £ million 
|                                               |  |           |       |            |  |           |       |           
|Trade debtors                                  |  |           | 601.2 |            |  |           | 589.5 |            |  |  |      |      |  |  |      | 
|Amounts due from subsidiary undertakings       |  |           |      |            |  |           |      |            |  |  | 485.8 |      |  |  | 382.1 | 
|Amounts due from joint ventures and associates |  |           | 1.4   |            |  |           | 4.3   |            |  |  | 1.4   |      |  |  | 3.2   | 
|Other debtors                                  |  |           | 100.0 |            |  |           | 92.1  |            |  |  | 21.7  |      |  |  | 13.5  | 
|Prepayments and accrued income                 |  |           | 31.2  |            |  |           | 27.4  |            |  |  | 6.7   |      |  |  | 9.8   | 
|                                               |  |           |       |            |  |           |       |            |  |  |       |      |  |  |       | 
|                                               |  |           | 733.8 |            |  |           | 713.3 |            |  |  | 515.6 |      |  |  | 408.6 | 
|                                               |  |           |       |            |  |           |       |            |  |  |       |      |  |  |       | 

At 30 September 2002, trade debtors of
£23.8 million (2001: £25.7 million) in
subsidiary undertakings had been factored to third parties with limited
recourse.

c) Debtors falling due after more than one year

|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       |  | 
|------------------------------------------------------------------------- |  |  | --------- |  | ---------- |  | --------- |  | ---------- |  | ----- |  | ---- |  | ----- |  | 
|                                                                          |  |  | Group     |  | Parent    
|                                                                          |  |  |           |  |           
|                                                                          |  |  |           |  |            |  | 2001      |  |            |  |       |  | 2001
|                                                                          |  |  | 2002      |  | (restated) |  | 2002      |  | (restated)
|                                                                          |  |  | £ million |  | £ million  |  | £ million |  | £ million 
|                                                                          |  |  |           |  |            |  |           |  |           
|Deposits                                                                  |  |  |          |  |            |  | 0.7       |  |            |  |      |  |      |  |      | 
|Deferred tax                                                              |  |  | 7.9       |  |            |  | 8.4       |  |            |  |      |  |      |  |      | 
|Other debtors                                                             |  |  | 20.4      |  |            |  | 12.2      |  |            |  |      |  |      |  |      | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  | 28.3      |  |            |  | 21.3      |  |            |  |      |  |      |  |      | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|d) Cash at bank and in hand                                               |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|Deposits                                                                  |  |  | 20.5      |  |            |  | 70.6      |  |            |  |      |  |      |  | 51.7  | 
|Cash at bank and in hand                                                  |  |  | 165.0     |  |            |  | 162.9     |  |            |  |      |  |      |  |      | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  | 185.5     |  |            |  | 233.5     |  |            |  |      |  |      |  | 51.7  | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|e) Borrowings and finance leases1                                         |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|Bank loans and overdrafts                                                 |  |  | 196.7     |  |            |  | 187.9     |  |            |  | 178.9 |  |      |  | 119.1 | 
|Loans other than from banks                                               |  |  | 182.3     |  |            |  | 288.1     |  |            |  |      |  |      |  | 196.5 | 
|Finance leases                                                            |  |  | 11.1      |  |            |  | 10.4      |  |            |  |      |  |      |  |      | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  | 390.1     |  |            |  | 486.4     |  |            |  | 178.9 |  |      |  | 315.6 | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                         
|1.          Details of borrowings and finance
leases are given in note 3. |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|f) Other creditors                                                        |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|Deposits and advance payments by customers                                |  |  | 41.5      |  |            |  | 46.0      |  |            |  |      |  |      |  |      | 
|Trade creditors                                                           |  |  | 367.3     |  |            |  | 318.4     |  |            |  |      |  |      |  |      | 
|Amounts due to subsidiary undertakings                                    |  |  |          |  |            |  |          |  |            |  | 906.6 |  |      |  | 639.9 | 
|Taxation  UK                                                             |  |  | 69.0      |  |            |  | 63.9      |  |            |  |      |  |      |  |      | 
| Overseas                                                                |  |  | 78.5      |  |            |  | 75.0      |  |            |  |      |  |      |  |      | 
|Other taxes and social security payable                                   |  |  | 27.3      |  |            |  | 25.5      |  |            |  |      |  |      |  |      | 
|Other creditors                                                           |  |  | 130.0     |  |            |  | 128.4     |  |            |  | 2.0   |  |      |  | 38.6  | 
|Accruals and deferred income                                              |  |  | 144.2     |  |            |  | 138.1     |  |            |  | 45.2  |  |      |  | 38.8  | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 
|                                                                          |  |  | 857.8     |  |            |  | 795.3     |  |            |  | 953.8 |  |      |  | 717.3 | 
|                                                                          |  |  |           |  |            |  |           |  |            |  |       |  |      |  |       | 

101  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

11. Long-term liabilities

a) Borrowings and finance leases1

|                            |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|--------------------------- |  | --------- | ------- | --------- |  | --------- | ------- | --------- |  |  | ----- |  |  |  | ----- | 
|                            |  | Group     |         | Parent   
|                            |  |           |         |          
|                            |  | 2002      |         | 2001      |  | 2002      |         | 2001     
|                            |  | £ million |         | £ million |  | £ million |         | £ million
|                            |  |           |         |           |  |           |         |          
|Loans other than from banks |  |           | 1,008.1 |           |  |           | 879.2   |           |  |  | 801.0 |  |  |  | 570.4 | 
|Bank loans                  |  |           | 90.2    |           |  |           | 105.5   |           |  |  |      |  |  |  |      | 
|Finance leases              |  |           | 22.7    |           |  |           | 35.2    |           |  |  |      |  |  |  |      | 
|                            |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 
|                            |  |           | 1,121.0 |           |  |           | 1,019.9 |           |  |  | 801.0 |  |  |  | 570.4 | 
|                            |  |           |         |           |  |           |         |           |  |  |       |  |  |  |       | 



---

|1. |  | Details of borrowings and finance
leases are given in note 3.
|-- |  | -------------------------------------------------------------

b) Provisions for liabilities and charges

|                                        |  |           |       |            |  |           |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |       |  
|--------------------------------------- |  | --------- | ----- | ---------- |  | --------- | ----- | ------------- |  | ------------- | ---- | --------- |  | --------- | ---- | - |  |  | ---- | - |  |  | ---- | - |  |  | ----- | -
|                                        |  |           |       |            |  | Incentive |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  | 
|                                        |  |           |       |            |  | and other |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  | 
|                                        |  | Deferred  |       | employee   |  | Uninsured |       | Restructuring |  |               |      |           |  |           |      |   |  |  |      |  
|                                        |  | tax       |       | provisions |  | losses    |       | provisions    |  | Environmental |      | Other     |  | Total    
|                                        |  | £ million |       | £ million  |  | £ million |       | £ million     |  | £ million     |      | £ million |  | £ million
|                                        |  |           |       |            |  |           |       |               |  |               |      |           |  |          
|At 1 October 2001  previously reported |  |           | 37.0  |            |  |           | 84.2  |               |  |               | 23.9 |           |  |           | 11.6 |   |  |  | 26.9 |   |  |  | 21.7 |   |  |  | 205.3 |  
|Prior year adjustment                   |  |           | 257.3 |            |  |           | (43.4 | )             |  |               |     |           |  |           |     |   |  |  |     |   |  |  |     |   |  |  | 213.9 |  
|                                        |  |           |       |            |  |           |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |       |  
|At 1 October 2001  restated            |  |           | 294.3 |            |  |           | 40.8  |               |  |               | 23.9 |           |  |           | 11.6 |   |  |  | 26.9 |   |  |  | 21.7 |   |  |  | 419.2 |  
|Exchange adjustment                     |  |           | (8.6  | )          |  |           | (2.7  | )             |  |               | (0.1 | )         |  |           | (0.2 | ) |  |  | (1.7 | ) |  |  | (0.5 | ) |  |  | (13.8 | )
|Provided in the year                    |  |           | 9.5   |            |  |           | 4.6   |               |  |               |     |           |  |           | 5.0  |   |  |  | 0.9  |   |  |  | 12.6 |   |  |  | 32.6  |  
|Released in the year                    |  |           |      |            |  |           | (1.1  | )             |  |               | (3.9 | )         |  |           |     |   |  |  |     |   |  |  | (2.4 | ) |  |  | (7.4  | )
|Utilised in the year                    |  |           |      |            |  |           | (4.8  | )             |  |               | (0.5 | )         |  |           | (7.9 | ) |  |  | (3.3 | ) |  |  | (2.8 | ) |  |  | (19.3 | )
|Other movements                         |  |           | (3.4  | )          |  |           | 0.3   |               |  |               |     |           |  |           | (0.8 | ) |  |  |     |   |  |  | 0.1  |   |  |  | (3.8  | )
|                                        |  |           |       |            |  |           |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |       |  
|At 30 September 2002                    |  |           | 291.8 |            |  |           | 37.1  |               |  |               | 19.4 |           |  |           | 7.7  |   |  |  | 22.8 |   |  |  | 28.7 |   |  |  | 407.5 |  
|                                        |  |           |       |            |  |           |       |               |  |               |      |           |  |           |      |   |  |  |      |   |  |  |      |   |  |  |       |  

Provision for uninsured losses covers third party liabilities or claims. Due to
the time frame that is often involved in such claims, a significant part of
this provision is subject to actuarial valuation. Where this is not
appropriate, other external assessments are used.     The
restructuring provision represents expenditure to be incurred on major
reorganisations. This year £48.0 million was spent of which £4.2 million was
provided for at 30 September 2001 and £3.7 million was provided for at 30
September 2000. The provisions remaining at 30 September 2002 consist mainly of
redundancy costs and will be spent during 2003.     Incentive
and other employee provisions include long-term share incentive
units and deferred compensation plans. Note 6 d) contains further details of
the long-term share incentive units.     Environmental
provisions have been set aside to cover the costs of
remediation for a number of hazardous waste sites. The costs are expected to be
incurred between 2002 and 2030. Due to the period over which this expenditure is
likely to be incurred, the provision has been discounted at a rate of four per
cent. The effect of discounting is £6.7 million.     Other
provisions are principally for warranty
and legal costs.     Further
information on
deferred tax is disclosed in note 4.

12. Dividends and equity

a) Dividends

|               |  |           |      |       |  |       |      |           |  |           |      |           |  |  |       |  |  |  |       |  |  |  |       | 
|-------------- |  | --------- | ---- | ----- |  | ----- | ---- | --------- |  | --------- | ---- | --------- |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|               |  | Per share |      |       |  |       |      |           |  |           |      |           |  | 
|               |  |           |      |       |  |       |      |           |  |           |      |           |  | 
|               |  | 2002      |      | 2001  |  | 2000  |      | 2002      |  | 2001      |      | 2000     
|               |  | pence     |      | pence |  | pence |      | £ million |  | £ million |      | £ million
|               |  |           |      |       |  |       |      |           |  |           |      |          
|Ordinary       |  |           |      |       |  |       |      |           |  |           |      |           |  |  |       |  |  |  |       |  |  |  |       | 
|First interim  |  |           | 15.5 |       |  |       | 15.5 |           |  |           | 15.5 |           |  |  | 75.8  |  |  |  | 75.5  |  |  |  | 75.6  | 
|Second interim |  |           | 22.5 |       |  |       | 21.5 |           |  |           | 19.5 |           |  |  | 110.8 |  |  |  | 104.8 |  |  |  | 94.6  | 
|               |  |           |      |       |  |       |      |           |  |           |      |           |  |  |       |  |  |  |       |  |  |  |       | 
|               |  |           | 38.0 |       |  |       | 37.0 |           |  |           | 35.0 |           |  |  | 186.6 |  |  |  | 180.3 |  |  |  | 170.2 | 
|               |  |           |      |       |  |       |      |           |  |           |      |           |  |  |       |  |  |  |       |  |  |  |       | 

102  The BOC Group plcReport and accounts 2002





---



##### 



12.  Dividends and equitycontinued

b) Share capital

|                                                                       |  |                  |       |         |  |           |       |           |  |  |       |  |  |  |       | 
|---------------------------------------------------------------------- |  | ---------------- | ----- | ------- |  | --------- | ----- | --------- |  |  | ----- |  |  |  | ----- | 
|                                                                       |  | Number of shares |       |         |  |           |       |           |  | 
|                                                                       |  |                  |       |         |  |           |       |           |  | 
|                                                                       |  | 2002             |       | 2001    |  | 2002      |       | 2001     
|i) Analysis at 30 September                                            |  | million          |       | million |  | £ million |       | £ million
|                                                                       |  |                  |       |         |  |           |       |          
|Equity capital:                                                        |  |                  |       |         |  |           |       |           |  |  |       |  |  |  |       | 
|Issued capital  Ordinary shares of 25p each, called up and fully paid |  |                  | 497.3 |         |  |           | 494.4 |           |  |  | 124.3 |  |  |  | 123.6 | 
|Unissued capital  unclassified shares of 25p each                     |  |                  | 92.7  |         |  |           | 95.6  |           |  |  | 23.2  |  |  |  | 23.9  | 
|                                                                       |  |                  |       |         |  |           |       |           |  |  |       |  |  |  |       | 
|Authorised                                                             |  |                  |       |         |  |           |       |           |  |  | 147.5 |  |  |  | 147.5 | 
|                                                                       |  |                  |       |         |  |           |       |           |  |  |       |  |  |  |       | 

|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |         |     | 
|----------------------------------------------------------- |  |  |  |  |  |  |  |  |  |  |  |  |  | ------- | --- | 
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  | Number 
|ii) Share issues                                            |  |  |  |  |  |  |  |  |  |  |  |  |  | million
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |        
|Issues of Ordinary shares of 25p each during the year were: |  |  |  |  |  |  |  |  |  |  |  |  |  |         |     | 
|Under the savings related share option scheme               |  |  |  |  |  |  |  |  |  |  |  |  |  |         | 1.0 | 
|Under the senior executives share option scheme             |  |  |  |  |  |  |  |  |  |  |  |  |  |         | 1.9 | 
|                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |         |     | 

c) Group reserves

|                                               |  |           |       |             |  |              |       |           |  |           |         |             |  |           |        |       |  |  |       |   |  |  |      |  |  |  |         |  
|---------------------------------------------- |  | --------- | ----- | ----------- |  | ------------ | ----- | --------- |  | --------- | ------- | ----------- |  | --------- | ------ | ----- |  |  | ----- | - |  |  | ---- |  |  |  | ------- | -
|                                               |  | Share     |       |             |  |              |       |           |  |           |         |             |  |           |        | Joint |  |  |       |   |  |  |      | 
|                                               |  | premium   |       | Revaluation |  | Profit and   |       | Pensions' |  | ventures' |         | Associates' |  |           |        |      
|                                               |  | account   |       | reserves    |  | loss account |       | reserves  |  | reserves  |         | reserves    |  | Total    
|                                               |  | £ million |       | £ million   |  | £ million    |       | £ million |  | £ million |         | £ million   |  | £ million
|                                               |  |           |       |             |  |              |       |           |  |           |         |             |  |          
|At 1 October 2001  previously reported        |  |           | 335.8 |             |  |              | 47.9  |           |  |           | 1,660.1 |             |  |           |       |       |  |  | 105.5 |   |  |  | 33.4 |  |  |  | 2,182.7 |  
|Prior year adjustment                          |  |           |      |             |  |              |      |           |  |           | (259.8  | )           |  |           | 47.1   |       |  |  | (7.4  | ) |  |  |     |  |  |  | (220.1  | )
|                                               |  |           |       |             |  |              |       |           |  |           |         |             |  |           |        |       |  |  |       |   |  |  |      |  |  |  |         |  
|At
1 October 2001  restated                   |  |           | 335.8 |             |  |              | 47.9  |           |  |           | 1,400.3 |             |  |           | 47.1   |       |  |  | 98.1  |   |  |  | 33.4 |  |  |  | 1,962.6 |  
|Total recognised gains and losses for the year |  |           |      |             |  |              | (20.1 | )         |  |           | 91.5    |             |  |           | (303.6 | )     |  |  | (10.0 | ) |  |  | 0.1  |  |  |  | (242.1  | )
|Share options                                  |  |           |      |             |  |              |      |           |  |           | 2.0     |             |  |           |       |       |  |  |      |   |  |  |     |  |  |  | 2.0     |  
|Dividends                                      |  |           |      |             |  |              |      |           |  |           | (186.6  | )           |  |           |       |       |  |  |      |   |  |  |     |  |  |  | (186.6  | )
|Premium on share issues (net)                  |  |           | 26.3  |             |  |              |      |           |  |           | (2.4    | )           |  |           |       |       |  |  |      |   |  |  |     |  |  |  | 23.9    |  
|                                               |  |           |       |             |  |              |       |           |  |           |         |             |  |           |        |       |  |  |       |   |  |  |      |  |  |  |         |  
|At 30 September 2002                           |  |           | 362.1 |             |  |              | 27.8  |           |  |           | 1,304.8 |             |  |           | (256.5 | )     |  |  | 88.1  |   |  |  | 33.5 |  |  |  | 1,559.8 |  
|                                               |  |           |       |             |  |              |       |           |  |           |         |             |  |           |        |       |  |  |       |   |  |  |      |  |  |  |         |  

The undistributed profits of Group undertakings may be liable to overseas
and/or UK tax (after allowing for double tax relief) if distributed as
dividends.     There
are no material exchange control restrictions on the remittance of funds
to the UK.     Goodwill
written off against reserves in respect of continuing businesses
acquired prior to 30 September 1998 amounts to £166.2 million (2001:£173.6
million). The movement in the year reflects exchange.     At
30 September 2002, in accordance with the Groups accounting policy,
unrealised exchange gains (net of losses) on net borrowings at 30 September
2002 included in reserves amounted to £10.2 million (2001:£18.0 million).     There
are no non-equity shareholders interests in the share
capital and reserves of the Group.

d) Parent reserves

|                                        |  |           |       |           |  |           |       |           |  |  |         |   |  |  |         |  
|--------------------------------------- |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  |  | ------- | - |  |  | ------- | -
|                                        |  | Share     |       |           |  |           |       | Profit    |  |  |         |  
|                                        |  | premium   |       | Other     |  | and loss  |       |           |  | 
|                                        |  | account   |       | reserves  |  | account   |       | Total    
|                                        |  | £ million |       | £ million |  | £ million |       | £ million
|                                        |  |           |       |           |  |           |       |          
|At 1 October 2001  previously reported |  |           | 335.8 |           |  |           | 111.7 |           |  |  | 1,042.2 |   |  |  | 1,489.7 |  
|Prior year adjustment                   |  |           |      |           |  |           |      |           |  |  | (52.0   | ) |  |  | (52.0   | )
|                                        |  |           |       |           |  |           |       |           |  |  |         |   |  |  |         |  
|At 1 October 2001  restated            |  |           | 335.8 |           |  |           | 111.7 |           |  |  | 990.2   |   |  |  | 1,437.7 |  
|Profit for the financial year           |  |           |      |           |  |           |      |           |  |  | 26.2    |   |  |  | 26.2    |  
|Share options                           |  |           |      |           |  |           | 2.0   |           |  |  |        |   |  |  | 2.0     |  
|Dividends                               |  |           |      |           |  |           |      |           |  |  | (186.8  | ) |  |  | (186.8  | )
|Premium on share issues (net)           |  |           | 26.3  |           |  |           |      |           |  |  | (2.4    | ) |  |  | 23.9    |  
|                                        |  |           |       |           |  |           |       |           |  |  |         |   |  |  |         |  
|At 30 September 2002                    |  |           | 362.1 |           |  |           | 113.7 |           |  |  | 827.2   |   |  |  | 1,303.0 |  
|                                        |  |           |       |           |  |           |       |           |  |  |         |   |  |  |         |  

The premium on share issues represents amounts paid to The BOC Group plc for
the issue of shares under the Groups share option schemes. Employees paid
£23.9 million. The Group paid the balance of £2.4 million to a qualifying
employee share ownership trust (Quest).

103  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

13.  Commitments and contingent liabilities

a) Annual operating lease commitments

|                           |  |           |      |           |  |           |      |           |  |  |      |       |  |  |      | 
|-------------------------- |  | --------- | ---- | --------- |  | --------- | ---- | --------- |  |  | ---- | ----- |  |  | ---- | 
|                           |  | 2002      |      | 2001     
|                           |  |           |      |          
|                           |  |           |      |           |  | Other     |      |           |  |  |      | Other
|                           |  | Property  |      | operating |  | Property  |      | operating
|                           |  | leases    |      | leases    |  | leases    |      | leases   
|                           |  | £ million |      | £ million |  | £ million |      | £ million
|                           |  |           |      |           |  |           |      |          
|On leases expiring:        |  |           |      |           |  |           |      |           |  |  |      |       |  |  |      | 
|Within one year            |  |           | 2.9  |           |  |           | 1.3  |           |  |  | 2.4  |       |  |  | 1.3  | 
|Between one and two years  |  |           | 1.8  |           |  |           | 6.5  |           |  |  | 3.9  |       |  |  | 1.5  | 
|Between two and five years |  |           | 5.7  |           |  |           | 8.5  |           |  |  | 7.8  |       |  |  | 13.2 | 
|Over five years            |  |           | 7.0  |           |  |           | 1.9  |           |  |  | 7.1  |       |  |  | 3.5  | 
|                           |  |           |      |           |  |           |      |           |  |  |      |       |  |  |      | 
|                           |  |           | 17.4 |           |  |           | 18.2 |           |  |  | 21.2 |       |  |  | 19.5 | 
|                           |  |           |      |           |  |           |      |           |  |  |      |       |  |  |      | 

|                                                                                     |  |           |       | 
|------------------------------------------------------------------------------------ |  | --------- | ----- | 
|                                                                                     |  | Operating
|                                                                                     |  | leases   
|                                                                                     |  | £ million
|                                                                                     |  |          
|Rentals are due under operating leases from
1 October 2002 to completion as follows: |  |           |       | 
|Year to 30 September 2003                                                            |  |           | 35.6  | 
|Year to 30 September 2004                                                            |  |           | 29.8  | 
|Year to 30 September 2005                                                            |  |           | 23.7  | 
|Year to 30 September 2006                                                            |  |           | 19.4  | 
|Year to 30 September 2007                                                            |  |           | 16.5  | 
|Thereafter                                                                           |  |           | 96.1  | 
|                                                                                     |  |           |       | 
|                                                                                     |  |           | 221.1 | 
|                                                                                     |  |           |       | 

b) Contingent liabilities, legal proceedings and bank guarantees

|                                            |  |           |       |           |  |           |       |           |  |  |       |  |  |  |       | 
|------------------------------------------- |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  |  | ----- |  |  |  | ----- | 
|                                            |  | Group     |       | Parent   
|                                            |  |           |       |          
|                                            |  | 2002      |       | 2001      |  | 2002      |       | 2001     
|                                            |  | £ million |       | £ million |  | £ million |       | £ million
|                                            |  |           |       |           |  |           |       |          
|Guarantees of joint ventures borrowings    |  |           | 119.3 |           |  |           | 152.1 |           |  |  | 119.3 |  |  |  | 152.1 | 
|Guarantees of subsidiaries borrowings      |  |           |      |           |  |           |      |           |  |  | 558.1 |  |  |  | 607.3 | 
|Other guarantees and contingent liabilities |  |           | 38.7  |           |  |           | 37.9  |           |  |  | 22.3  |  |  |  | 20.4  | 
|                                            |  |           |       |           |  |           |       |           |  |  |       |  |  |  |       | 
|                                            |  |           | 158.0 |           |  |           | 190.0 |           |  |  | 699.7 |  |  |  | 779.8 | 
|                                            |  |           |       |           |  |           |       |           |  |  |       |  |  |  |       | 

The guarantees of joint ventures borrowings predominately represents
guarantees of the borrowings of BOCs joint venture company which supplies
nitrogen to the Mexican oil company, Pemex. These borrowings are scheduled to
be repaid over the next eight years.     Various
Group undertakings are parties to legal actions and claims, some
of which are for substantial amounts. While the outcome of some of these
matters cannot readily be foreseen, the directors believe that they will be
disposed of without material effect on the net asset position as shown in these
financial statements.     The
Group is committed to make future purchases under take-or-pay
contracts. Obligations under such contracts in effect at 30 September 2002 are
as follows:

|                         |  |           |       | 
|------------------------ |  | --------- | ----- | 
|Year ending 30 September |  | £ million
|                         |  |          
|2003                     |  |           | 67.8  | 
|2004                     |  |           | 66.6  | 
|2005                     |  |           | 64.9  | 
|2006                     |  |           | 62.9  | 
|2007                     |  |           | 63.9  | 
|Thereafter               |  |           | 195.4 | 
|                         |  |           |       | 
|                         |  |           | 521.5 | 
|                         |  |           |       | 

For the years ended 30 September 2002,2001 and 2000 total purchases made
relating to these contracts amounted to £58.2 million,£53.5 million and £51.5
million respectively.

104  The BOC Group plcReport and accounts 2002





---



##### 



14.  Cash flow

a) Net cash inflow from operating activities

|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|----------------------------------------------------------- |  | ----- | -- | --------- |  | --------- | ------- | ---------- |  | ---------- | ------- | ---- |  |  | ------- | -
|                                                            |  |       |    |           |  |           |         |            |  | 2001       |         | 2000
|                                                            |  |       |    |           |  | 2002      |         | (restated) |  | (restated)
|                                                            |  | Notes |    | £ million |  | £ million |         | £ million 
|                                                            |  |       |    |           |  |           |         |           
|Total operating profit before exceptional items             |  |       |    |           |  |           | 500.1   |            |  |            | 530.6   |      |  |  | 496.4   |  
|Depreciation and amortisation                               |  |       |    |           |  |           | 330.9   |            |  |            | 329.5   |      |  |  | 313.3   |  
|FRS17 retirement benefits charge                            |  |       |    |           |  |           | 49.9    |            |  |            | 53.0    |      |  |  | 48.9    |  
|Operating profit before exceptional items of joint ventures |  |       |    |           |  |           | (63.8   | )          |  |            | (59.0   | )    |  |  | (48.1   | )
|Operating profit before exceptional items of associates     |  |       |    |           |  |           | (10.7   | )          |  |            | (13.2   | )    |  |  | (8.5    | )
|Change in stocks                                            |  |       |    |           |  |           | 13.7    |            |  |            | 8.8     |      |  |  | (40.9   | )
|Change in debtors                                           |  |       |    |           |  |           | (38.4   | )          |  |            | 39.5    |      |  |  | (24.5   | )
|Change in creditors                                         |  |       |    |           |  |           | 57.3    |            |  |            | (20.9   | )    |  |  | (10.3   | )
|Exceptional cash flows                                      |  |       |    |           |  |           | (67.3   | )          |  |            | (51.8   | )    |  |  | 0.5     |  
|Other                                                       |  |       |    |           |  |           | (12.4   | )          |  |            | (28.7   | )    |  |  | (21.8   | )
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|Net cash inflow from operating activities                   |  |       |    |           |  |           | 759.3   |            |  |            | 787.8   |      |  |  | 705.0   |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|b) Reconciliation of net cash flow to movement in net debt  |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|Increase in cash                                            |  |       |    |           |  |           | (21.4   | )          |  |            | (66.1   | )    |  |  | (3.2    | )
|Increase/(decrease) in debt                                 |  |       | 14 | (d)       |  |           | 64.1    |            |  |            | (51.3   | )    |  |  | 64.9    |  
|Decrease in liquid resources                                |  |       |    |           |  |           | 52.6    |            |  |            | 102.8   |      |  |  | 9.6     |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|Change in net debt resulting from cash flows                |  |       |    |           |  |           | 95.3    |            |  |            | (14.6   | )    |  |  | 71.3    |  
|Net borrowings assumed at acquisition                       |  |       |    |           |  |           | 0.5     |            |  |            |        |      |  |  | 21.8    |  
|Inception of finance leases                                 |  |       |    |           |  |           | 0.4     |            |  |            | 0.5     |      |  |  | 0.1     |  
|Exchange adjustment                                         |  |       |    |           |  |           | (42.7   | )          |  |            | (22.2   | )    |  |  | 76.7    |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|Movement in net debt in the year                            |  |       |    |           |  |           | 53.5    |            |  |            | (36.3   | )    |  |  | 169.9   |  
|Net debt at 1 October                                       |  |       |    |           |  |           | 1,272.1 |            |  |            | 1,308.4 |      |  |  | 1,138.5 |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  
|Net debt at 30 September                                    |  |       |    |           |  |           | 1,325.6 |            |  |            | 1,272.1 |      |  |  | 1,308.4 |  
|                                                            |  |       |    |           |  |           |         |            |  |            |         |      |  |  |         |  

c) Analysis of net debt

|                                                  |  |           |          |           |  |             |        |            |  |               |       |           |  |              |        |    |  |  |       |   |  |  |          |  
|------------------------------------------------- |  | --------- | -------- | --------- |  | ----------- | ------ | ---------- |  | ------------- | ----- | --------- |  | ------------ | ------ | -- |  |  | ----- | - |  |  | -------- | -
|                                                  |  |           |          |           |  |             |        |            |  | Acquisitions/ |       |           |  |              |        |    |  |  |       |   |  | 
|                                                  |  |           |          |           |  |             |        |            |  | disposals     |       |           |  |              |        |    |  |  |       |   |  | 
|                                                  |  | At        |          |           |  |             |        | (excluding |  | Other         |       |           |  |              |        | At
|                                                  |  | 1 October |          |           |  |             |        | cash and   |  | non-cash      |       | Exchange  |  | 30
September
|                                                  |  | 2001      |          | Cash flow |  | overdrafts) |        | changes    |  | adjustment    |       | 2002     
|                                                  |  | £ million |          | £ million |  | £ million   |        | £ million  |  | £ million     |       | £ million
|                                                  |  |           |          |           |  |             |        |            |  |               |       |          
|Deposits and cash due within one year             |  |           | 233.5    |           |  |             | (43.5  | )          |  |               |      |           |  |              | 14.3   |    |  |  | (18.8 | ) |  |  | 185.5    |  
|Deposits due beyond one year                      |  |           | 0.7      |           |  |             | 0.5    |            |  |               | 13.1  |           |  |              | (14.3  | )  |  |  |      |   |  |  |         |  
|                                                  |  |           |          |           |  |             |        |            |  |               |       |           |  |              |        |    |  |  |       |   |  |  |          |  
|                                                  |  |           | 234.2    |           |  |             | (43.0  | )          |  |               | 13.1  |           |  |              |       |    |  |  | (18.8 | ) |  |  | 185.5    |  
|Borrowings and finance leases due within one year |  |           | (486.4   | )         |  |             | 208.8  |            |  |               | (0.1  | )         |  |              | (141.4 | )  |  |  | 29.0  |   |  |  | (390.1   | )
|Borrowings and finance leases due beyond one year |  |           | (1,019.9 | )         |  |             | (261.1 | )          |  |               | (13.5 | )         |  |              | 141.0  |    |  |  | 32.5  |   |  |  | (1,121.0 | )
|                                                  |  |           |          |           |  |             |        |            |  |               |       |           |  |              |        |    |  |  |       |   |  |  |          |  
|Net borrowings and finance leases                 |  |           | (1,272.1 | )         |  |             | (95.3  | )          |  |               | (0.5  | )         |  |              | (0.4   | )  |  |  | 42.7  |   |  |  | (1,325.6 | )
|                                                  |  |           |          |           |  |             |        |            |  |               |       |           |  |              |        |    |  |  |       |   |  |  |          |  

d) Increase/(decrease) in debt

|                                           |  |           |        |           |  |           |        |   |  |  |      |  
|------------------------------------------ |  | --------- | ------ | --------- |  | --------- | ------ | - |  |  | ---- | -
|                                           |  | 2002      |        | 2001      |  | 2000     
|                                           |  | £ million |        | £ million |  | £ million
|                                           |  |           |        |           |  |          
|5 7/8% Bonds 2009                          |  |           | 200.0  |           |  |           |       |   |  |  |     |  
|7 1/4% Notes 2002                          |  |           | (150.0 | )         |  |           |       |   |  |  |     |  
|Medium term notes                          |  |           | 59.7   |           |  |           |       |   |  |  |     |  
|6.50% Bonds 2016                           |  |           |       |           |  |           | 200.0  |   |  |  |     |  
|1.00% Euroyen Bond 2006                    |  |           |       |           |  |           | 147.0  |   |  |  |     |  
|5 7/8% Notes 2001                          |  |           |       |           |  |           | (138.9 | ) |  |  |     |  
|European Investment Bank loans             |  |           | (5.0   | )         |  |           | 10.3   |   |  |  | (5.7 | )
|Pollution Control and Industrial Bonds     |  |           | (18.5  | )         |  |           | (2.4   | ) |  |  | (5.3 | )
|Net issues/(repayment) of commercial paper |  |           | 59.5   |           |  |           | (212.5 | ) |  |  | 68.6 |  
|Other (net)                                |  |           | (81.6  | )         |  |           | (54.8  | ) |  |  | 7.3  |  
|                                           |  |           |        |           |  |           |        |   |  |  |      |  
|Increase/(decrease) in debt                |  |           | 64.1   |           |  |           | (51.3  | ) |  |  | 64.9 |  
|                                           |  |           |        |           |  |           |        |   |  |  |      |  

105  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

14.  Cash flowcontinuede) Consolidated cash flow statement:US format

|                                                     |  |           |        |           |  |           |        |   |  |  |        |  
|---------------------------------------------------- |  | --------- | ------ | --------- |  | --------- | ------ | - |  |  | ------ | -
|                                                     |  | 2002      |        | 2001      |  | 2000     
|                                                     |  | £ million |        | £ million |  | £ million
|                                                     |  |           |        |           |  |          
|Net cash provided by operating activities            |  |           | 620.2  |           |  |           | 631.2  |   |  |  | 565.2  |  
|Net cash used by investing activities                |  |           | (540.0 | )         |  |           | (445.5 | ) |  |  | (470.3 | )
|Net cash used by financing activities                |  |           | (122.7 | )         |  |           | (225.6 | ) |  |  | (71.9  | )
|                                                     |  |           |        |           |  |           |        |   |  |  |        |  
|Net (decrease)/increase in cash and cash equivalents |  |           | (42.5  | )         |  |           | (39.9  | ) |  |  | 23.0   |  
|Cash and cash equivalents at 1 October               |  |           | 259.0  |           |  |           | 305.6  |   |  |  | 277.4  |  
|Exchange and other movements                         |  |           | (34.6  | )         |  |           | (6.7   | ) |  |  | 5.2    |  
|                                                     |  |           |        |           |  |           |        |   |  |  |        |  
|Cash and cash equivalents at 30 September            |  |           | 181.9  |           |  |           | 259.0  |   |  |  | 305.6  |  
|                                                     |  |           |        |           |  |           |        |   |  |  |        |  

The Group cash flow statement on page 68 has been prepared in accordance with
UK accounting standard FRS1, the objectives and principles of which are similar
to those set out in US accounting principle SFAS95, Statement of Cash Flows. The
principal differences between the standards relate to classification of items
within the cash flow statement and with regard to the definition of cash and
cash equivalents.     Under
FRS1, cash flows are presented separately for: a) operating
activities; b) dividends from joint ventures and associates; c) returns on
investments and servicing of finance; d) tax paid; e) capital expenditure and
financial investment; f) acquisitions and disposals; g) equity dividends paid;
h) management of liquid resources; and i) financing. Under SFAS95, however, only
three categories of cash flow activity are reported: a) operating activities;
b) investing activities; and c) financing activities. Dividends from joint
ventures and associates, cash flows from returns on investments and servicing
of finance (excluding dividends paid to minorities) and tax paid under FRS1
would be included in operating activities under SFAS95; capital expenditure and
acquisitions and disposals would be included in investing activities under
SFAS95; equity dividends would be included as a financing activity under SFAS95.     Under
FRS1, cash is defined as cash in hand and deposits repayable on
demand with any qualifying financial institution, less overdrafts from any
qualifying financial institution repayable on demand. Under SFAS95, cash is
defined as cash in hand and deposits but also includes cash equivalents which
are short-term, highly liquid investments. Generally only investments with
original maturities of three months or less come within this definition.     Set
out above, for illustrative purposes, is a summary consolidated statement
of cash flows under SFAS95.

15.  Acquisitions and disposalsa) Cash flow

|                                                                |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  
|--------------------------------------------------------------- |  | ------------ | ------ | --------- |  | ------------ | ---- | --------- |  | ------------ | ------ | --------- |  |  | ---- | - |  |  | ----- | - |  |  | ---- | -
|                                                                |  | 2002         |        | 2001      |  | 2000        
|                                                                |  |              |        |           |  |             
|                                                                |  | Acquisitions |        | Disposals |  | Acquisitions |      | Disposals |  | Acquisitions |        | Disposals
|                                                                |  | £ million    |        | £ million |  | £ million    |      | £ million |  | £ million    |        | £ million
|                                                                |  |              |        |           |  |              |      |           |  |              |        |          
|Cash flow arising on the acquisition and disposal of businesses |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  
|Intangible fixed assets                                         |  |              | (0.5   | )         |  |              | 0.2  |           |  |              |       |           |  |  |     |   |  |  |      |   |  |  |     |  
|Tangible fixed assets                                           |  |              | (85.7  | )         |  |              | 1.3  |           |  |              | (34.8  | )         |  |  | 1.1  |   |  |  | (37.9 | ) |  |  |     |  
|Joint ventures, associates and other fixed asset investments    |  |              | (12.4  | )         |  |              | 0.2  |           |  |              | 20.7   |           |  |  | 0.4  |   |  |  | 7.3   |   |  |  |     |  
|Stocks                                                          |  |              | (20.9  | )         |  |              | 2.4  |           |  |              | (2.4   | )         |  |  | 0.5  |   |  |  | (3.7  | ) |  |  | 0.6  |  
|Debtors                                                         |  |              | (37.5  | )         |  |              | 0.7  |           |  |              | (16.7  | )         |  |  | 1.1  |   |  |  | (14.4 | ) |  |  | 0.9  |  
|Cash at bank and in hand                                        |  |              | (13.5  | )         |  |              |     |           |  |              |       |           |  |  |     |   |  |  | (2.2  | ) |  |  |     |  
|Creditors including taxation                                    |  |              | 55.7   |           |  |              | (1.2 | )         |  |              | 4.7    |           |  |  | (0.4 | ) |  |  | 13.6  |   |  |  | (1.1 | )
|Borrowings                                                      |  |              | 21.4   |           |  |              |     |           |  |              |       |           |  |  |     |   |  |  | 24.0  |   |  |  |     |  
|Minorities                                                      |  |              | (8.6   | )         |  |              | 7.8  |           |  |              | (117.5 | )         |  |  |     |   |  |  | (6.5  | ) |  |  |     |  
|                                                                |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  
|Net assets (acquired)/disposed of                               |  |              | (102.0 | )         |  |              | 11.4 |           |  |              | (146.0 | )         |  |  | 2.7  |   |  |  | (19.8 | ) |  |  | 0.4  |  
|Goodwill on acquisitions                                        |  |              | (112.3 | )         |  |              |     |           |  |              | (3.3   | )         |  |  |     |   |  |  | (14.0 | ) |  |  |     |  
|Surplus over book value on disposals                            |  |              |       |           |  |              | 2.5  |           |  |              |       |           |  |  |     |   |  |  |      |   |  |  |     |  
|                                                                |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  
|(Acquisition)/disposal price                                    |  |              | (214.3 | )         |  |              | 13.9 |           |  |              | (149.3 | )         |  |  | 2.7  |   |  |  | (33.8 | ) |  |  | 0.4  |  
|Deferred payments                                               |  |              | 7.0    |           |  |              | (3.3 | )         |  |              | 3.4    |           |  |  |     |   |  |  | 1.7   |   |  |  |     |  
|                                                                |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  
|                                                                |  |              | (207.3 | )         |  |              | 10.6 |           |  |              | (145.9 | )         |  |  | 2.7  |   |  |  | (32.1 | ) |  |  | 0.4  |  
|                                                                |  |              |        |           |  |              |      |           |  |              |        |           |  |  |      |   |  |  |       |   |  |  |      |  

The Group purchased the vacuum and pressure business of the Smiths Group in
December 2001. It also purchased Hydromatix Inc in January 2002 and the Semco
business in April 2002. In March 2002 the Group acquired the turbomolecular
pumps business of Seiko Instruments Inc. Purchases of products from Seiko
Instruments Inc in the period from 1 October 2001 to the date of acquisition
were approximately £3.0 million.     In
May 2002 the Group purchased 79 per cent of Unique Gas and
Petrochemicals Public Company Limited and acquired a further 20 per cent before
the end of the year. In July 2002 the Group purchased the industrial assets of
Enron Teesside Operations Limited.     During
2002 the Group acquired an additional three per cent of the minority
interests in Osaka Sanso Kogyo KK.     The
acquisitions in the BOC Edwards line of business contributed £55.5
million to turnover and £(0.8) million to operating profit before exceptional
items. Acquisitions in the other lines of business did not have a material
impact on turnover or operating profit before exceptional items.     Of
the total acquisition expenditure, £48.1 million was in the Process Gas
Solutions business, £57.3 million was in the Industrial and Special Products
business, £86.2 million was in the BOC Edwards business and £15.7 million was in
the Afrox hospitals business.     Businesses
disposed of are detailed in note 2 b).

106  The BOC Group plcReport and accounts 2002





---



##### 



15.  Acquisitions and disposalscontinuedb) Fair value of acquisitions

|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  
|------------------------------------------------ |  | ---------- | ----- | ----------- |  | -------------- | ----- | ---------- |  | ---------- | ----- | ----------- |  | ---------- | ----- | - |  | -------- | ------ | ---------- |  |  | ---- | - |  |  | ------ | -
|                                                 |  |            |       |             |  | Unique         |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  | 
|                                                 |  |            |       |             |  | Gas and        |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  | 
|                                                 |  |            |       |             |  | Petrochemicals |       | Seiko      |  |            |       |             |  | Total book |       |   |  |          |        | Total fair
|                                                 |  | Smiths     |       | Public      |  | Instruments    |       |            |  |            |       | value of    |  |            |       |   |  | value of
|                                                 |  | Group      |       | Company Ltd |  | Inc            |       | Other      |  | businesses |       | Total       |  | businesses
|                                                 |  | book value |       | book value  |  | book value     |       | book value |  | acquired   |       | adjustments |  | acquired  
|                                                 |  | £ million  |       | £ million   |  | £ million      |       | £ million  |  | £ million  |       | £ million   |  | £ million 
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |           
|Intangible assets                                |  |            |      |             |  |                |      |            |  |            | (0.5  | )           |  |            |      |   |  |          | (0.5   | )          |  |  |     |   |  |  | (0.5   | )
|Tangible fixed assets                            |  |            | (9.0  | )           |  |                | (25.3 | )          |  |            | (2.9  | )           |  |            | (44.9 | ) |  |          | (82.1  | )          |  |  | (3.6 | ) |  |  | (85.7  | )
|Joint ventures, associates and other investments |  |            |      |             |  |                | (0.6  | )          |  |            | (0.1  | )           |  |            | (12.3 | ) |  |          | (13.0  | )          |  |  | 0.6  |   |  |  | (12.4  | )
|Stocks                                           |  |            | (11.5 | )           |  |                | (1.5  | )          |  |            | (9.2  | )           |  |            | (3.8  | ) |  |          | (26.0  | )          |  |  | 5.1  |   |  |  | (20.9  | )
|Debtors                                          |  |            | (12.6 | )           |  |                | (9.7  | )          |  |            | (4.6  | )           |  |            | (11.1 | ) |  |          | (38.0  | )          |  |  | 0.5  |   |  |  | (37.5  | )
|Cash at bank and in hand                         |  |            |      |             |  |                | (11.7 | )          |  |            | (1.3  | )           |  |            | (0.5  | ) |  |          | (13.5  | )          |  |  |     |   |  |  | (13.5  | )
|Creditors including taxation                     |  |            | 12.4  |             |  |                | 35.8  |            |  |            | 3.8   |             |  |            | 9.2   |   |  |          | 61.2   |            |  |  | (5.5 | ) |  |  | 55.7   |  
|Borrowings                                       |  |            | 7.7   |             |  |                | 0.3   |            |  |            | 0.1   |             |  |            | 13.3  |   |  |          | 21.4   |            |  |  |     |   |  |  | 21.4   |  
|Minorities                                       |  |            |      |             |  |                | 0.2   |            |  |            |      |             |  |            | (8.8  | ) |  |          | (8.6   | )          |  |  |     |   |  |  | (8.6   | )
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  
|Net (assets)/liabilities acquired                |  |            | (13.0 | )           |  |                | (12.5 | )          |  |            | (14.7 | )           |  |            | (58.9 | ) |  |          | (99.1  | )          |  |  | (2.9 | ) |  |  | (102.0 | )
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  
|Consideration                                    |  |            | 6.6   |             |  |                | 39.7  |            |  |            | 72.1  |             |  |            | 88.9  |   |  |          | 207.3  |            |  |  |     |   |  |  | 207.3  |  
|Deferred consideration                           |  |            |      |             |  |                |      |            |  |            | 2.4   |             |  |            | 4.6   |   |  |          | 7.0    |            |  |  |     |   |  |  | 7.0    |  
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  
|                                                 |  |            | 6.6   |             |  |                | 39.7  |            |  |            | 74.5  |             |  |            | 93.5  |   |  |          | 214.3  |            |  |  |     |   |  |  | 214.3  |  
|Goodwill on acquisitions                         |  |            |      |             |  |                | (17.5 | )          |  |            | (60.2 | )           |  |            | (34.6 | ) |  |          | (112.3 | )          |  |  |     |   |  |  | (112.3 | )
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  
|                                                 |  |            | 6.6   |             |  |                | 22.2  |            |  |            | 14.3  |             |  |            | 58.9  |   |  |          | 102.0  |            |  |  |     |   |  |  | 102.0  |  
|                                                 |  |            |       |             |  |                |       |            |  |            |       |             |  |            |       |   |  |          |        |            |  |  |      |   |  |  |        |  

The following fair value adjustments were made to the book value of the assets
and liabilities of the businesses acquired:

|                                                 |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  
|------------------------------------------------ |  | --------- | --- | ----------- |  | -------------- | ---- | ----------- |  |  | --- |  |  |  | ---- | -
|                                                 |  |           |     |             |  | Unique         |      |             |  |  |     |  |  | 
|                                                 |  |           |     |             |  | Gas and        |      |             |  |  |     |  |  | 
|                                                 |  |           |     |             |  | Petrochemicals |      | Seiko       |  |  |     | 
|                                                 |  | Smiths    |     | Public      |  | Instruments    |      | Total      
|                                                 |  | Group     |     | Company Ltd |  | Inc            |      | adjustments
|                                                 |  | £ million |     | £ million   |  | £ million      |      | £ million  
|                                                 |  |           |     |             |  |                |      |            
|Valuations                                       |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  
|Tangible fixed assets                            |  |           |    |             |  |                | (0.6 | )           |  |  |    |  |  |  | (0.6 | )
|Joint ventures, associates and other investments |  |           |    |             |  |                | 0.6  |             |  |  |    |  |  |  | 0.6  |  
|Alignment of accounting policies                 |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  
|Tangible fixed assets                            |  |           | 1.5 |             |  |                | (4.5 | )           |  |  |    |  |  |  | (3.0 | )
|Stocks                                           |  |           | 4.8 |             |  |                |     |             |  |  | 0.3 |  |  |  | 5.1  |  
|Debtors                                          |  |           | 0.1 |             |  |                | 0.4  |             |  |  |    |  |  |  | 0.5  |  
|Taxation                                         |  |           |    |             |  |                | 2.2  |             |  |  |    |  |  |  | 2.2  |  
|Other                                            |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  
|Creditors                                        |  |           |    |             |  |                | (7.8 | )           |  |  | 0.1 |  |  |  | (7.7 | )
|                                                 |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  
|                                                 |  |           | 6.4 |             |  |                | (9.7 | )           |  |  | 0.4 |  |  |  | (2.9 | )
|                                                 |  |           |     |             |  |                |      |             |  |  |     |  |  |  |      |  

Fair value adjustments include some amounts which are provisional. No
significant fair value adjustments were required in 2001 or 2000.

107  The BOC Group plcReport and accounts 2002





---



##### 



Notes to the financial statements

16.  US accounting information

a) Summary of differences between UK and US
generally accepted accounting principles and other US accounting information
The financial statements of The BOC Group plc are prepared in accordance with
accounting principles generally accepted in the UK (UK GAAP), which differ in
certain significant respects from accounting principles generally accepted in
the US (US GAAP).     Set
out below is a summary of the more significant adjustments which would
be required if US GAAP had been applied, together with the reconciliation of
profit before tax and shareholders funds from UK GAAP to US GAAP, presentation
of net income, earnings per share and comprehensive income on a US GAAP basis,
and a statement of movement in shareholders funds under US GAAP.

Goodwill
Under UK GAAP, goodwill arising on acquisitions before 1998 accounted for under
the purchase method has been eliminated against shareholders funds.
Additionally, UK GAAP requires that on subsequent disposal or closure of a
business, any goodwill previously taken directly to shareholders funds is then
charged against income. The Group adopted FRS10 in 1999, which requires goodwill
on subsequent acquisitions to be capitalised and amortised over a period not
exceeding 20 years.     Under
US GAAP, goodwill arising on acquisitions prior to 30 June 2001 was
capitalised and then amortised over the expected useful life, not exceeding 40
years, as a charge against income. Goodwill arising on acquisitions since 1
July 2001 is capitalised but no amortisation is charged, in accordance with the
transitional provisions of SFAS142. Specific provision is made if there is a
permanent impairment to the carrying value of capitalised goodwill.

Deferred tax
The Group adopted FRS19 (Deferred tax) in 2002 for UK GAAP purposes. This
requires that full provision for deferred tax is recognised in the financial
statements. The adoption of FRS19 has eliminated most of the differences that
previously existed between UK GAAP and US GAAP. As a result, the adjustment now
primarily relates to the deferred tax effect of other US GAAP adjustments.

Revaluation of fixed assets
UK GAAP allowed for the periodic revaluation of land and buildings with
depreciation then being calculated on the revalued amount. Any surplus or
deficit (to the extent that the revaluation reserve was in surplus) on the
revaluation was then taken directly to shareholders funds. With the Groups
adoption of FRS15 in 2000, the Group no longer revalues fixed assets. Under US
GAAP, revaluations of fixed assets are generally not permitted and, as a
result, the reconciliation restates fixed assets to historical cost and the
depreciation charge and any write downs of previously revalued assets are
adjusted accordingly.

Restructuring costs
Under UK GAAP, when a decision has been taken to restructure, the necessary
provisions are made for impairment of asset values together with severance and
other costs. Under US GAAP, the requirements for charging restructuring costs
to income are more prescriptive and all significant actions arising from the
restructuring plan and their completion dates must be identified by the balance
sheet date. Accordingly, the charge for restructuring costs has been adjusted
to meet US GAAP requirements.

Pensions
For UK GAAP reporting (FRS17  Retirement benefits), the pension asset or
liability in the balance sheet represents the difference between the market
value of pension scheme assets at the balance sheet date and the present value
of pension scheme liabilities at that date, net of deferred tax.     Under
US GAAP (SFAS87), plan assets are valued by reference to
market-related value at the date of the financial statements. Liabilities are
assessed using the rate of return obtainable on fixed or inflation-linked
bonds.     There
is a significant difference in the treatment of actuarial gains and
losses arising during the accounting period. UK GAAP recognises the actuarial
gains and losses in full in the year in which they arise in the statement of
total recognised gains and losses. Under US GAAP, the actuarial gains and
losses which exceed ten per cent of the value of the assets or liabilities at
the start of the accounting period are amortised over the remaining service
lives of scheme members.     FRS17
requires that past service costs are recognised in full in the
period in which they become vested. SFAS87 requires past service costs to be
amortised over the remaining service lives of the employees to whom the
amendments relate.     Where
an additional minimum liability exists under US GAAP, (ie where the
amount provided for any scheme does not cover the unfunded accumulated benefit
obligation for that scheme), this must be recognised under SFAS87.

Securities investments
Under UK GAAP, current asset investments (of all types) are stated at the lower
of cost and net realisable value. Fixed asset investments are stated at cost,
or alternatively, at market value or at directors valuation.     Under
US GAAP, securities which are determined to be available-for-sale
are stated at fair value and any unrealised gains or losses included as a
separate component of shareholders funds. The deferred tax consequences of
unrealised gains or losses are also charged or credited to shareholders funds.

Employee share option plans (ESOPs)
Under UK GAAP, shares held by the ESOPs are recorded as fixed asset investments
at cost. Realised and unrealised gains or losses on subsequent issues of shares
are charged or credited to the profit and loss account in the year to which
they relate. Under US GAAP, these shares and other shares held in trust are
recorded at cost in the balance sheet as a deduction from shareholders funds.
Gains or losses on subsequent issues of shares are recorded as adjustments to
the share premium account.

108  The BOC Group plcReport and accounts 2002





---



##### 



16. US accounting informationcontinued

Financial instruments
The Group enters into a number of currency swaps, interest rate swaps and
forward foreign exchange contracts to hedge its exposure to currency and
interest rate risks. Under UK GAAP, such instruments are shown at their
carrying value. Under US GAAP, these instruments are marked to market and any
change in value is recognised in either the income statement or through
comprehensive income in accordance with SFAS133 depending on whether a
derivative is designated as part of a hedge transaction, and if it is, the type
of hedge transaction.

Accounting for swaps
Under UK GAAP, gains or losses on closing out interest rate swap contracts
taken to hedge the Groups fixed/floating interest rate position can be taken
to profit immediately. US GAAP requires any gain or loss to be deferred over
the remaining hedge period.

Share of results and net assets of joint ventures and associates
The Groups share of the results and net assets of its joint ventures and
associates (as calculated under UK GAAP) is shown within fixed asset
investments. For the purposes of the reconciliations set out below, the Groups
share of the results and net assets of its joint ventures and associates has
been adjusted to recognise a difference in the method of reporting profits
under US GAAP.

Other
Other adjustments principally comprise sale and leaseback transactions,
depreciation and certain executive incentive schemes.     Under
UK GAAP, any profit or loss on the sale and operating leaseback of
fixed assets can generally be taken to profit immediately. US GAAP requires any
gain or loss to be deferred over the contract lease period.     Prior
to 2001, under UK GAAP, it was acceptable for depreciation to be
charged on an annuity basis. The Group no longer charges depreciation on an
annuity basis. Under US GAAP, annuity depreciation is not allowed.
Under US GAAP, executive incentive schemes are accounted for under APB Opinion
25.

Comprehensive income
In June 1997, the US Financial Accounting Standards Board issued
SFAS130. This
establishes requirements for the reporting of comprehensive income and its
components (revenue, expenses, gains and losses) in a full set of general
purpose financial statements. Components of comprehensive income for the Group
determined on a UK GAAP basis include profit for the financial year, pension
actuarial gains and losses, and foreign currency translation gains and losses.
Information regarding the Groups foreign currency translation gains and losses
is included in the statement of total recognised gains and losses under UK GAAP
on page 69.

b) Reconciliation of profit before tax

|                                                                     |                                                       |           |        |           |            |           |            |   |      |  |        |   | 
|-------------------------------------------------------------------- | ----------------------------------------------------- | --------- | ------ | --------- | ---------- | --------- | ---------- | - | ---- |  | ------ | - | 
|                                                                     |                                                       |           |        |           |            |           | 2001       |   | 2000
|                                                                     |                                                       |           | 2002   |           | (restated) |           | (restated)
|Years ended 30 September                                             |                                                       | £ million |        | £ million |            | £ million
|                                                                     |                                                       |           |        |           |            |          
|Profit before tax in the Group profit and loss account under UK GAAP |                                                       |           | 335.3  |           |            |           | 362.2      |   |      |  | 441.8  |  
|Pensions                                                             |                                                       |           | 35.4   |           |            |           | 24.9       |   |      |  | (0.7   | )
|Post retirement medical costs                                        |                                                       |           | 0.3    |           |            |           | (2.7       | ) |      |  | (0.7   | )
|Revaluations realised on asset disposals                             |                                                       |           | 6.0    |           |            |           | 1.1        |   |      |  |       |  
|Write-down of previously revalued assets                             |                                                       |           | 21.2   |           |            |           |           |   |      |  |       |  
|Depreciation of revalued fixed assets                                |                                                       |           | 1.2    |           |            |           | 4.1        |   |      |  | 0.2    |  
|Amortisation of goodwill  previously charged to reserves            |                                                       |           | (7.2   | )         |            |           | (7.9       | ) |      |  | (7.9   | )
|                                                                     |  non-amortisation on acquisitions since 30 June 2001 |           |        | 3.5       |            |           |            |  |      |  |        |  | 
|Share of results of joint ventures and associates                    |                                                       |           |       |           |            |           | (4.8       | ) |      |  |       |  
|Interest rate swaps                                                  |                                                       |           | 1.9    |           |            |           | 1.9        |   |      |  | 1.8    |  
|Financial instruments                                                |                                                       |           | 19.5   |           |            |           | 8.5        |   |      |  | (10.7  | )
|Restructuring costs                                                  |                                                       |           |       |           |            |           | (6.5       | ) |      |  | (7.9   | )
|ESOPs and other shares held in trust                                 |                                                       |           | 0.2    |           |            |           | (3.8       | ) |      |  | 0.1    |  
|Other                                                                |                                                       |           | (3.4   | )         |            |           | 0.1        |   |      |  | 1.7    |  
|                                                                     |                                                       |           |        |           |            |           |            |   |      |  |        |  
|Profit before tax under US GAAP                                      |                                                       |           | 413.9  |           |            |           | 377.1      |   |      |  | 417.7  |  
|UK tax charge                                                        |                                                       |           | (106.2 | )         |            |           | (104.6     | ) |      |  | (135.2 | )
|Deferred income tax                                                  |                                                       |           | (25.6  | )         |            |           | (11.3      | ) |      |  | 16.8   |  
|Share of taxation in joint ventures and associates                   |                                                       |           |       |           |            |           | 0.6        |   |      |  | (4.6   | )
|Minority interests                                                   |                                                       |           | (26.7  | )         |            |           | (27.6      | ) |      |  | (25.9  | )
|                                                                     |                                                       |           |        |           |            |           |            |   |      |  |        |  
|Profit for the financial year under US GAAP                          |                                                       |           | 255.4  |           |            |           | 234.2      |   |      |  | 268.8  |  
|                                                                     |                                                       |           |        |           |            |           |            |   |      |  |        |  
|Represented by:                                                      |                                                       |           |        |           |            |           |            |   |      |  |        |  
|Profit from continuing operations                                    |                                                       |           | 255.4  |           |            |           | 234.2      |   |      |  | 256.3  |  
|Profit from discontinued operations                                  |                                                       |           |       |           |            |           |           |   |      |  | 12.5   |  
|                                                                     |                                                       |           |        |           |            |           |            |   |      |  |        |  







---



##### 



Notes to the financial statements

16.  US accounting informationcontinued

|                                      |  |         |       |         |  |         |       |  |  |  |       | 
|------------------------------------- |  | ------- | ----- | ------- |  | ------- | ----- |  |  |  | ----- | 
|                                      |  | 2002    |       | 2001    |  | 2000   
|Average number of 25p Ordinary shares |  | million |       | million |  | million
|                                      |  |         |       |         |  |        
|Basic                                 |  |         | 490.4 |         |  |         | 486.9 |  |  |  | 487.1 | 
|Diluted                               |  |         | 492.2 |         |  |         | 488.6 |  |  |  | 489.6 | 
|                                      |  |         |       |         |  |         |       |  |  |  |       | 

|                                  |  |       |       |       |  |       |       |  |  |  |       | 
|--------------------------------- |  | ----- | ----- | ----- |  | ----- | ----- |  |  |  | ----- | 
|                                  |  | 2002  |       | 2001  |  | 2000 
|                                  |  | pence |       | pence |  | pence
|                                  |  |       |       |       |  |      
|Earnings per share                |  |       |       |       |  |       |       |  |  |  |       | 
|Basic                             |  |       |       |       |  |       |       |  |  |  |       | 
|Profit from continuing operations |  |       | 52.08 |       |  |       | 48.10 |  |  |  | 52.62 | 
|Profit for the financial year     |  |       | 52.08 |       |  |       | 48.10 |  |  |  | 55.18 | 
|                                  |  |       |       |       |  |       |       |  |  |  |       | 
|Diluted                           |  |       |       |       |  |       |       |  |  |  |       | 
|Profit from continuing operations |  |       | 51.89 |       |  |       | 47.93 |  |  |  | 52.35 | 
|Profit for the financial year     |  |       | 51.89 |       |  |       | 47.93 |  |  |  | 54.90 | 
|                                  |  |       |       |       |  |       |       |  |  |  |       | 

c) Reconciliation of shareholders funds

|                                                                      |  |           |         |            |  |      |         |  
|--------------------------------------------------------------------- |  | --------- | ------- | ---------- |  | ---- | ------- | -
|                                                                      |  |           |         |            |  | 2001
|                                                                      |  | 2002      |         | (restated)
|At 30 September                                                       |  | £ million |         | £ million 
|                                                                      |  |           |         |           
|Shareholders funds reported in the Group balance sheet under UK GAAP |  |           | 1,684.1 |            |  |      | 2,086.2 |  
|UK minority interests                                                 |  |           | 117.9   |            |  |      | 137.6   |  
|                                                                      |  |           |         |            |  |      |         |  
|                                                                      |  |           | 1,802.0 |            |  |      | 2,223.8 |  
|Pensions                                                              |  |           | 408.6   |            |  |      | 112.5   |  
|Post retirement medical costs                                         |  |           | (13.9   | )          |  |      | (14.5   | )
|Revaluations of fixed assets                                          |  |           | (33.1   | )          |  |      | (72.6   | )
|Goodwill  previously charged to reserves                             |  |           | 80.4    |            |  |      | 90.6    |  
| non-amortisation on acquisitions since 30 June 2001                 |  |           | 3.5     |            |  |      |        |  
|Write-down of previously revalued assets                              |  |           | 21.2    |            |  |      |        |  
|Interest rate swaps                                                   |  |           | (6.6    | )          |  |      | (9.0    | )
|Share of net assets of joint ventures and associates                  |  |           | (14.4   | )          |  |      | (4.1    | )
|Securities investments  gross unrealised gains                       |  |           | 36.7    |            |  |      | 39.8    |  
|Securities investments  gross unrealised losses                      |  |           | (1.7    | )          |  |      |        |  
|Financial instruments                                                 |  |           | 16.5    |            |  |      | (3.0    | )
|ESOPs and other shares held in trust                                  |  |           | (42.5   | )          |  |      | (59.5   | )
|Other                                                                 |  |           | (6.1    | )          |  |      | (2.8    | )
|Deferred tax                                                          |  |           | (72.7   | )          |  |      | (47.9   | )
|Minority interests                                                    |  |           | (116.9  | )          |  |      | (114.4  | )
|                                                                      |  |           |         |            |  |      |         |  
|Shareholders funds under US GAAP                                     |  |           | 2,061.0 |            |  |      | 2,138.9 |  
|                                                                      |  |           |         |            |  |      |         |  
|                                                                      |  |           |         |            |  |      |         |  
|d) Movements in shareholders funds on a US GAAP basis                |  |           |         |            |  |      |         |  
|                                                                      |  |           |         |            |  |      |         |  
|Shareholders funds at 1 October                                      |  |           | 2,138.9 |            |  |      | 2,139.9 |  
|Net income for the year                                               |  |           | 255.4   |            |  |      | 234.2   |  
|Dividends                                                             |  |           | (186.6  | )          |  |      | (180.3  | )
|Shares issued                                                         |  |           | 24.6    |            |  |      | 16.9    |  
|Other recognised gains and losses                                     |  |           | (171.3  | )          |  |      | (71.8   | )
|                                                                      |  |           |         |            |  |      |         |  
|Shareholders funds at 30 September                                   |  |           | 2,061.0 |            |  |      | 2,138.9 |  
|                                                                      |  |           |         |            |  |      |         |  

110  The BOC Group plcReport and accounts 2002





---



##### 



16.  US accounting informationcontinued

e) Recently issued accounting pronouncements (US
GAAP)
The effects on the Group of recently issued accounting pronouncements are
summarised below.

SFAS141  Business combinations
In June 2001, the US Financial Accounting Standards Board issued
SFAS141. The
standard prohibits the use of pooling-of-interest accounting for all
acquisitions made subsequent to 30 June 2001. The Group did not previously use
the pooling-of-interest method of accounting and as a result management do not
believe there will be any impact on Group results in this respect. The standard
also addresses the initial recognition and measurement of goodwill and
intangible assets in business combinations, accounted for using the purchase
method, that are completed after 30 June 2001.

SFAS142  Goodwill and other intangible assets
In June 2001, the US Financial Accounting Standards Board issued
SFAS142. The
standard removes the requirement to amortise goodwill, and certain other
intangible fixed assets, on all acquisitions subsequent to 30 June
2001. Annual
impairment reviews will need to be carried out to assess the recoverability of
such assets. For fiscal years commencing after 15 December 2001, all existing
goodwill, and certain intangible assets, will no longer be amortised. This will
require a thorough initial impairment review, followed by annual impairment
reviews thereafter. At this time, management is still assessing the impact of
adopting the standard.

SFAS143  Accounting for asset retirement obligations
In June 2001, the US Financial Accounting Standards Board issued
SFAS143. This
statement requires that the fair value of a liability for an asset retirement
obligation be recognised in the period in which it is incurred if a reasonable
estimate of fair value can be made. The associated asset retirement costs are
capitalised as part of the carrying amount of the long-lived asset. This
statement is effective for fiscal years beginning after 15 June 2002. At this
time, management is still assessing the impact of adopting the standard.

SFAS144  Accounting for the impairment or disposal of long-lived assets
In June 2001, the US Financial Accounting Standards Board issued
SFAS144. This
statement addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. The statement establishes a single accounting
model for long-lived assets to be disposed of and addresses implementation
issues related to SFAS121. This statement is effective for fiscal years
beginning after 15 December 2001. At this time, management is still assessing
the impact of adopting the standard.

SFAS145  Recession of FAS8
Statements No.4, 44 and 64, Amendment of FAS8
Statement No.13 and Technical Corrections
In April 2002, the US Financial Accounting Standards Board issued
SFAS145. This
statement amends several existing authoritative pronouncements to make various
technical corrections, clarify meanings, or describe their applicability under
changed conditions. The statement is applicable for fiscal years beginning
after 15 May 2002, although certain sections are effective for transactions
occurring after 15 May 2002.

SFAS146  Accounting for costs associated with exit or disposal activities
In June 2002, the US Financial Accounting Standards Board issued
SFAS146. This
statement addresses financial reporting and accounting for costs associated
with exit or disposal activities. The statement requires that a liability for a
cost associated with an exit or disposal activity be recognised when the
liability is incurred, at the fair value of the liability. This statement is
effective for exit or disposal activities that are initiated after 31 December
2002. At this time, management is assessing the likely impact of adopting the
standard.

f) Other information

Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make significant estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

17.  Comparative informationThe adoption of FRS17 (Retirement benefits) has resulted in
a)     an increase
in the pension charge, within employee costs, of £73.1 million in 2001
(2000: £64.2 million) 
b)     an increase in exceptional employee costs of £16.7
million in 2001 (2000: £nil) 
c)     a decrease in the net interest charge of
£59.7 million in 2001 (2000: £48.8 million) 
d)     a decrease in the tax charge
of £2.4 million in 2001 (2000: increase of £1.4 million) 
e)     a decrease in the profit for the year
of £29.2 million in 2001 (2000: £18.0 million) f)     a
decrease in the recognised gains and losses of £312.3 million in 2001
(2000: increase of £95.8 million)

The adoption of FRS19 (Deferred tax) has resulted in a decrease in the tax
charge of £2.6 million in 2001 (2000: increase of £30.1 million) and an increase
in the profit for the year of £1.0 million in 2001 (2000: decrease of £29.8
million).     The
impact of adopting FRS17 and FRS19 on the balance sheet of the Group
has been to reduce capital employed at 30 September 2001 by £12.2 million.     The
impact of adopting FRS17 and FRS19 on the parent company has been to
reduce profit after tax for the year ended 30 September 2001 by £4.1 million
(2000: £9.5 million).     As
FRS17 and FRS19 use different measurement bases than the previously
adopted standards, the impact on the current year has not been quantified as it
is impractical to do so.

111  The BOC Group plcReport and accounts 2002