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