BOC Report and accounts 2005 - Alle jaarverslagen

58 The BOC Group plc Annual report and accounts 2005 Financial review
At 30 September 2005, the Group had US$450 million (£254 million) of committed multi-currency facilities with a
group of relationship banks maturing in 2008. In October 2005 these facilities were replaced with US$600 million
(£339 million) of committed multi-currency facilities maturing in 2010.These facilities provide back-up for the issue
of commercial paper as well as general liquidity for the Group.Additional committed facilities are maintained by the
principal operating units in the Group.
Additional information on the Group’s gross borrowings can be found in note 20. Details of the Group’s share
of net debt of joint ventures and associates, the majority of which is non-recourse, are given in note 13 a).
Other contractual obligations
The maturity of other contractual obligations of the Group is as follows:
Other creditors
Total other
(excluding Unconditional contractual
deferred Operating purchase cash
income) leases obligations obligations
£ million £ million £ million £ million
More than five years 3.0 59.9 371.2 434.1
Three to five years 10.7 25.9 116.9 153.5
One to three years 5.2 49.1 137.0 191.3
Within one year 872.3 40.6 71.4 984.3
Total 891.2 175.5 696.5 1,763.2
See also note 25 to the financial statements for further information on operating leases and unconditional purchase
obligations.
Off-balance sheet arrangements
The Group has provided guarantees of £49.3 million to third parties at 30 September 2005 as shown in note
26 a) to the financial statements.The guarantees include performance bonds in the Cantarell joint venture, a
guarantee of the borrowings of a joint venture in China and other guarantees provided in the ordinary course of
business. Other than disclosed, there are no off-balance sheet arrangements that have or are reasonably likely to
have a current or future material effect on the Group’s financial condition, changes in financial condition, revenues
or expenses, results of operations, liquidity, capital expenditures or capital resources.
Total group tax rate
Percentage
40
30
20
10
0 03 04 05
Taxation
The tax charge on profit before exceptional items for 2005 of £131.5 million is calculated in accordance with UK
accounting standards, including FRS19 (deferred tax), under which full provision is made for deferred taxes.
The effective tax rate on adjusted profit in 2005 was 26 per cent (2004: 29 per cent, 2003: 29 per cent).
The main reason for the reduction in the tax rate was the resolution of various matters with the US tax authorities,
including the utilisation of tax losses.The total tax rate in 2005 was 26.9 per cent (2004: 24.7 per cent, 2003:
27.4 per cent).The Group pays corporation tax in the UK at a rate of 30 per cent.Additional information on tax
rates is shown in note 4 to the financial statements.
The Group is currently liable to pay federal tax at the rate of 35 per cent in the US.This is reduced by the
existence of tax credits. In the other principal subsidiaries, the tax rate is typically between 29 per cent and
42 per cent.
Contingencies
The Group monitors all contingent liabilities including matters relating to litigation and the environment via a
process of consultation and evaluation which includes senior management, internal and external legal advisers and
internal and external technical advisers.This process results in conclusions with respect to potential exposure and
provisions are made or adjusted accordingly. Management believes that the Group has adequately provided for
contingencies which are likely to become payable in the future.
Legal proceedings
BOC Group companies are parties to various legal proceedings in the ordinary course of business, including some
in which claims for damages in large amounts have been asserted.
The outcome of litigation to which BOC Group companies are party cannot be readily foreseen, but the
directors believe that such litigation should be disposed of without material adverse effect on the Group’s financial
condition or profitability.
Welding fumes litigation A US subsidiary of BOC,The BOC Group, Inc., currently is party to a number of lawsuits
in the US for alleged injuries resulting from exposure to manganese, asbestos and/or toxic fumes in connection
with the welding process. The BOC Group, Inc. has not manufactured welding rods in the US since 1986 when the
welding electrodes business was sold.The BOC Group, Inc. ceased selling welding rods in the US manufactured by
others when the sale of the US packaged gas business, including the operations that distributed packaged gases and
welding equipment, was completed in July 2004.