BOC Report and accounts 2005 - Alle jaarverslagen

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102 The BOC Group plc Annual report and accounts 2005 Notes to the financial statements 7. Options and incentive schemes a) Policy Executive options that are granted at the market price of the company’s shares at the time of the grant do not attract a compensation expense under UK GAAP. For those executive options, including the Long-Term Incentive Plan, that are granted at a discount to the market price of the company’s shares at the time of the grant, the compensation expense is charged to the profit and loss account over the life of the option.The Group takes advantage of the exemption granted under UITF17 (revised 2003), Employee Share Schemes, whereby no compensation expense need be recorded for employee schemes that are granted at a discount. b) Summary of movements BOC operates share option schemes for both executives and employees.The features of these are given in the report on remuneration on pages 73 to 75 and in the employees report on page 25. Long-term incentive Employee options Executive options plan 1 Number of Weighted Number of Weighted Number of shares Range of average shares Range of average shares million option prices option price million option prices option price million Outstanding at 1 October 2002 5.4 650p-914p 855p 23.5 677p-1119p 943p – Granted 2.3 698p 698p 4.9 776p-873p 837p 1.2 Exercised (0.3) 650p-914p 826p (0.4) 677p-851p 751p – Lapsed (1.1) 650p-914p 868p (1.6) 677p-1016p 937p – Outstanding at 30 September 2003 6.3 698p-914p 801p 26.4 677p-1119p 926p 1.2 Granted 1.2 795p 795p 2.9 820p-896p 820p 1.4 Exercised (0.7) 698p-914p 811p (0.7) 677p-919p 749p – Lapsed (1.2) 698p-914p 821p (2.0) 677p-1119p 940p (0.1) Outstanding at 30 September 2004 5.6 698p-914p 794p 26.6 722p-1079p 919p 2.5 Granted 1.1 787p 787p 1.7 905p-1074p 905p 1.5 Exercised (0.8) 698p-914p 857p (3.5) 722p-1016p 887p – Lapsed (0.6) 698p-914p 824p (1.7) 776p-1034p 921p (0.6) Outstanding at 30 September 2005 5.3 698p-914p 780p 23.1 776p-1079p 922p 3.4 Number of participants at 30 September 2005 5,361 1,284 129 Options exercisable: At 30 September 2005 0.1 823p-914p 873p 14.8 848p-1079p 965p 0.5 At 30 September 2004 0.2 766p-894p 875p 6.3 722p-980p 892p – Fair value of options granted during: Year ended 30 September 2005 254p 175p 737p Year ended 30 September 2004 205p 175p 705p 1. The long-term incentive plan was granted at an option price of £nil. The weighted average fair value of options granted during the year was calculated using the Black-Scholes option pricing model. Details of the assumptions used are given in note 30 h). c) Analysis of options outstanding Employee options Executive options Long-term incentive plan 1 Number of Weighted Normal Number of Weighted Normal Number Normal options average exercisable options average exercisable of awards exercisable thousand option price date thousand option price date thousand date Outstanding at 30 September 2005 Date of grant 1996 – – – 410 916p 1999-2006 – – 1997 – – – 669 980p 2000-2007 – – 1998 20 823p 2005-2006 1,060 916p 2001-2008 – – 1999 231 766p 2004-2007 1,281 859p 2002-2009 – – 2000 257 870p 2005-2008 3,997 937p 2003-2010 – – 2001 461 894p 2004-2009 3,184 994p 2004-2011 – – 2002 446 914p 2005-2010 4,189 1016p 2005-2012 – – 2003 1,872 698p 2006-2011 4,076 839p 2006-2013 982 2006-2013 2004 1,009 795p 2007-2012 2,564 820p 2007-2014 1,159 2007-2014 2005 1,024 787p 2008-2013 1,669 905p 2008-2015 1,273 2008-2015 5,320 23,099 3,414 1. The long-term incentive plan was granted at an option price of £nil.
Notes to the financial statements 103 8. Pensions and other retirement benefits a) UK GAAP Group The Group operates a number of pension schemes throughout the world.The larger schemes are self-administered and the schemes’ assets are held independently of the Group’s finances. Pension costs are assessed in accordance with the advice of independent, professionally qualified actuaries. Contributions to funded defined benefit schemes are based on advice from independent actuaries using actuarial methods, the objective of which is to provide adequate funds to meet pension obligations as they fall due. For the two largest schemes, in the UK and US, the dates of the latest actuarial reviews are 31 March 2002 and 1 January 2004 respectively. In South Africa, under the Pension Funds Second Amendment Act 2001, surpluses in pension funds have to be used in a manner specified in Regulations to the Act to improve current and former members’ benefits before the employer can obtain any benefit from the surpluses. Consequently, it is considered unlikely that the company will obtain any benefit from the surpluses in the South African schemes.Therefore, in accordance with FRS17, the surpluses at 30 September 2005 have been written off in the statement of total recognised gains and losses. In Europe, company contributions to the main scheme in respect of current service are currently payable at a rate of 13.8 per cent of payroll. In the year ended 30 September 2005 the company made additional contributions of £36 million to this scheme in order to reduce the funding valuation deficit. The level of additional contributions for the year to 30 September 2006 is expected to be up to 20 per cent higher than in 2005. In the Americas, company contributions to the main pension plan remain suspended as the plan continues to be in surplus. In Africa, company contributions were payable at rates ranging from 11 per cent to 21 per cent of payroll and are expected to remain at that level for the year to 30 September 2006. In Asia/Pacific, company contributions to the main scheme were payable at rates ranging from 9 per cent to 20 per cent of payroll and are expected to remain at that level for the year to 30 September 2006. Some of the defined benefit schemes, including the UK scheme, are closed to new members. It is therefore expected that under the projected unit method prescribed by FRS17 the contribution rate in respect of current service will increase as the members of the schemes approach retirement. The most recent actuarial funding valuations have been updated by independent qualified actuaries, in order to assess the liabilities of the schemes at 30 September 2005 for the purposes of FRS17. Scheme assets are stated at their market value at 30 September 2005. Main assumptions for FRS17 purposes Europe Americas Africa Asia/Pacific 2005 Rate of increase in salaries 4.4% 3.8% 5.5% 3.5% Rate of increase in pensions in payment 2.9% – 4.5% 2.4% Discount rate 5.0% 5.4% 8.5% 5.4% Inflation 2.9% 2.6% 4.5% 2.5% 2004 Rate of increase in salaries 4.4% 3.8% 7.5% 3.6% Rate of increase in pensions in payment 2.9% – 5.3% 2.4% Discount rate 5.5% 5.7% 10.0% 6.1% Inflation 2.9% 2.5% 5.5% 2.5% 2003 Rate of increase in salaries 4.1% 3.75% 7.5% 3.5% Rate of increase in pensions in payment 2.6% – 4.8% 2.5% Discount rate 5.3% 5.9% 10.0% 6.2% Inflation 2.6% 2.5% 5.0% 2.5% Date of latest actuarial funding valuation 31 Mar 02 01 Jan 04 30 Jun 04 31 Dec 03 The assumptions used for the US health care benefits for FRS17 purposes are a discount rate of 5.4 per cent (2004: 5.7 per cent, 2003: 5.9 per cent) and an ultimate health care cost trend rate of 4.5 per cent (2004: 4.5 per cent, 2003: 4.5 per cent). Contributions to non defined benefit schemes in the year were £15.9 million (2004: £15.6 million, 2003: £12.0 million) and are included in note 6 c).
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BOC Report and accounts 2005
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01 The BOC Group plc is a public li
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Financial highlights 03 Dividends p
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Chairman’s statement 05 Conduct a
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Chief executive’s review 07 Indus
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Board of directors 09 08 09 10 11 1
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Executive management board 11 09 10
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Group five year record 13 Capital e
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Group profile 15 Analysis of result
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Group profile 17 Principal industri
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Group profile 19 In China, signific
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Group profile 21 Sales opportunitie
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Employees 23 At 30 September 2005 t
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Employees 25 Retirement benefit pla
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Social, environmental and ethical p
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Research, development and informati
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Risk factors 39 BOC relies on devel
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Operating review 41 Exceptional ite
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Operating review (comparing 2005 wi
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Page 53 and 54: Operating review (comparing 2004 wi
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Page 57 and 58: Financial review 55 Net debt/equity
Page 59 and 60: Financial review 57 The balance she
Page 61 and 62: Financial review 59 Manganese litig
Page 63 and 64: Financial review 61 Current asset p
Page 65 and 66: Financial review 63 Average exchang
Page 67 and 68: Corporate governance 65 During the
Page 69 and 70: Corporate governance 67 Performance
Page 71 and 72: Corporate governance 69 During the
Page 73 and 74: Corporate governance 71 There is a
Page 75 and 76: Report on remuneration 73 Variable
Page 77 and 78: Report on remuneration 75 Current m
Page 79 and 80: Report on remuneration 77 Individua
Page 81 and 82: Report on remuneration 79 Executive
Page 83 and 84: Report on remuneration 81 Opening m
Page 85 and 86: Report on remuneration 83 Mr Médor
Page 87 and 88: Report by the independent auditors
Page 89 and 90: Group balance sheet At 30 September
Page 91 and 92: Total recognised gains and losses Y
Page 93 and 94: Accounting policies 91 General •
Page 95 and 96: Notes to the financial statements 9
Page 103: Notes to the financial statements 1
Page 141 and 142: Group undertakings 139 Principal Gr
Page 143 and 144: Shareholder information 141 The tab
Page 145 and 146: Shareholder information 143 Taxatio
Page 147 and 148: Shareholder information 145 Payment
Page 149 and 150: Glossary of terms 147 Terms used in
Page 151 and 152: ©The BOC Group plc 2005. Designed
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