BOC Report and accounts 2005 - Alle jaarverslagen

40 The BOC Group plc Annual report and accounts 2005
Operating review
Introduction
The Group’s results are prepared under UK Generally Accepted Accounting Principles (GAAP) and comply with
UK Companies Act requirements.While the UK GAAP reporting basis provides the core information for users of
this report and accounts to understand the financial performance of the Group, management believes that users
will be assisted in understanding the performance relative to previous periods by presenting the results in an
alternative manner.This presentation isolates the impact of currency movements from year to year and eliminates
the impact of exceptional or non-recurring items.This is consistent with the basis used by management to measure
performance of the business and is a component of variable compensation plans.The elements of this alternative
presentation are described in more detail below.
Impact of currency movements
The Group has operations in some 50 countries around the world and the majority of its profit is generated
outside the UK. Results of overseas operations are translated at the average rates of exchange against sterling for
the year. Changes in such rates from year to year can significantly affect the Group’s results when these are
presented in pounds sterling. In some cases, such changes may make it difficult to understand underlying business
performance trends without providing additional information. For example, the average value of the US dollar to
pounds sterling changed by three per cent in 2005 compared with 2004. It is important to highlight such currency
movements to users of financial information to help them understand business and regional performance.
Consequently, management has for many years monitored business performance on a ‘constant currency’ basis.
This basis eliminates the impact of changes in the rates of exchange used to translate the results of overseas
businesses into sterling by retranslating the results of the comparative year at the rates of exchange used in the
current year.This is the basis for all internal management reporting throughout the year.
In this operating review, the comparison of financial performance between years may in places be referred to
as on this ‘constant currency’ basis. Comments on all segmental performance are on a constant currency basis.
The impact of changes in the rates of exchange used to translate the results of overseas businesses into
sterling is shown in the table below.
Impact of 2003 results Impact of 2004 results
2003 results movements (at 2004 rates 2004 results movements (at 2005 rates
(as reported) in currency of exchange) (as reported) in currency of exchange)
£ million £ million £ million £ million £ million £ million
Turnover (including share of
joint ventures and associates)
Process Gas Solutions 1,242.7 (71.1) 1,171.6 1,275.2 (9.4) 1,265.8
Industrial and Special Products 1,751.2 (19.6) 1,731.6 1,782.3 6.9 1,789.2
BOC Edwards 684.1 (39.4) 644.7 816.5 (5.5) 811.0
Afrox hospitals 353.4 41.4 394.8 432.1 11.6 443.7
Gist 291.8 (0.1) 291.7 293.2 0.2 293.4
Total 4,323.2 (88.8) 4,234.4 4,599.3 3.8 4,603.1
Operating profit
Process Gas Solutions 177.1 (10.3) 166.8 189.5 (0.6) 188.9
Industrial and Special Products 238.2 3.1 241.3 253.9 3.0 256.9
BOC Edwards 7.9 (1.1) 6.8 46.8 0.4 47.2
Afrox hospitals 46.1 5.4 51.5 59.8 1.6 61.4
Gist 29.2 0.1 29.3 25.1 – 25.1
Corporate (59.9) 6.1 (53.8) (15.6) 0.5 (15.1)
Total 438.6 3.3 441.9 559.5 4.9 564.4
Adjusted operating profit
Process Gas Solutions 184.0 (10.5) 173.5 190.3 (0.6) 189.7
Industrial and Special Products 242.7 2.8 245.5 269.5 2.6 272.1
BOC Edwards 18.5 (1.5) 17.0 47.8 0.4 48.2
Afrox hospitals 46.1 5.4 51.5 59.8 1.6 61.4
Gist 29.2 0.1 29.3 25.1 – 25.1
Corporate (14.9) 1.5 (13.4) (15.6) 0.5 (15.1)
Total 505.6 (2.2) 503.4 576.9 4.5 581.4
Exceptional or non-recurring items
Management believes that to present the results of the Group in the most meaningful way, items of an exceptional
nature should be separately identified and disclosed.This enables users of the information to have a better
understanding of underlying business performance. Examples of such items in 2005 include the profit on disposal of
the Afrox hospitals business in Africa and costs of restructuring in BOC Edwards. Included in 2004 were the loss on
disposal of the packaged gas business in the US, costs relating to the subsequent restructuring of the remaining US
business and charges relating to the integration process in Japan that began in 2003 following the merger of the
industrial and medical gases businesses there of BOC and Air Liquide to form Japan Air Gases.