BOC Report and accounts 2005 - Alle jaarverslagen

Financial review
55
Net debt/equity
Percentage
80
60
40
20
0 03 04 05
Net debt/capital employed
Percentage
40
30
20
10
0 03 04 05
Corporate transactions and restructuring
In South Africa the disposal of Afrox Healthcare Limited to a consortium lead by two major black empowerment
investors was completed on 22 March 2005.African Oxygen Limited, BOC’s subsidiary in South Africa, retains a
significant interest in the hospitals business through a 20 per cent holding in the new company.The gain on disposal
of £84.9 million has been recognised as an exceptional item.African Oxygen Limited has distributed the proceeds
of the disposal to its shareholders through a buy back of shares and a special dividend.The amount of the special
dividend payable to minority shareholders was some £54 million, which is included in the total dividends paid to
minorities in subsidiaries within the Group cash flow statement.
The sale of BOC’s packaged gas business in the US to Airgas Inc was completed in July 2004. Part of the
consideration was payable subject to certain conditions and accordingly was not recognised in 2004.This remaining
consideration amounting to US$20 million was received in November 2005 and has been recognised in 2005 as
an exceptional item.The disposal of the business in 2004 resulted in a loss of £79.5 million plus associated
restructuring costs of £14.8 million.
In 2005 £20.7 million has been charged for restructuring in BOC Edwards.This comprises £13.9 million of
goodwill impairment and severance costs. Savings of approximately £5 million are targeted from this restructuring
during 2006. Further costs are anticipated from this programme in 2006 leading to additional benefits.
Group expenditure on acquisitions of businesses was £57.1 million (2004: £50.9 million).The main acquisitions
during 2005 were G Van Dongen Holding BV, to expand Gist’s primary business into Europe, and an additional
equity investment in Compania de Nitrogeno de Cantarell (CNC) in proportion to BOC’s existing 65 per cent
equity holding.The main acquisition in 2004 was to increase BOC’s holding in CNC.
Financial indicators
The trends of financial indicators which, taken together, are a measure of the performance and efficiency of the
Group’s finance and tax structures, are:
2005 2004 2003
Interest cover (times) 1 7.1 6.3 4.6
Adjusted interest cover (times) 2 7.4 6.5 5.3
Net debt/equity (%) 40.9 51.2 73.4
Net debt/capital employed (%) 25.6 29.9 37.4
Group tax rate (%) 26.9 24.7 27.4
Adjusted Group tax rate (%) 3 26.0 29.0 29.0
Adjusted means excluding exceptional items.
1. Interest on net debt covered by operating profit.
2. Interest on net debt covered by adjusted operating profit.
3. The adjusted tax charge expressed as a percentage of adjusted profit before tax.
The ratios are commented on below in the appropriate section.
Liquidity and capital resources
Cash flows The Group’s cash flows from operating, investing and financing activities, as reflected in the Group cash
flow statement on page 88, are summarised in the following table:
2005 2004 2003
£ million £ million £ million
Net cash inflow from operating activities 665.5 758.5 700.1
Dividends from joint ventures and associates 51.1 79.1 35.0
Returns on investment and servicing of finance (131.6) (91.2) (94.4)
Tax paid (118.4) (98.2) (90.7)
Total provided by operating activities 466.6 648.2 550.0
Capital expenditure and financial investment (299.7) (204.2) (227.0)
Acquisitions and disposals 128.8 92.5 (118.3)
Total used by investing activities (170.9) (111.7) (345.3)
Decreases in debt (165.7) (180.7) (128.7)
Shares issued 9.6 12.4 (2.6)
Equity dividends paid (204.1) (197.3) (192.1)
Net sales/(purchases) of short-term investments 14.3 (20.8) 16.2
Total used for financing activities (345.9) (386.4) (307.2)
(Decrease)/increase in cash (50.2) 150.1 (102.5)