BOC Report and accounts 2005 - Alle jaarverslagen

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62 The BOC Group plc Annual report and accounts 2005 Financial review e) Foreign exchange.There are certain differences in the requirements of IAS 21 compared to UK GAAP in respect of functional currencies and in relation to the accounting for foreign exchange on loans between Group companies.This is an area where there may be increased volatility in the Group’s ongoing results on an IFRS basis compared to UK GAAP arising from exchange gains and losses. f) Financial instruments.The Group will adopt IAS 39 on 1 October 2005 in line with the exemption under IFRS 1. This standard impacts the accounting for a range of financial instruments and embedded derivatives.The Group has few financial instruments and they are predominantly related to managing currency and interest rate risk.The Group has reviewed its financial instruments and has concluded that at present they meet the requirements to enable it to apply hedge accounting. Embedded derivatives typically arise from escalation clauses in contracts with customers to recover cost increases.Whilst the impact is not material at 1 October 2005,embedded derivatives may give rise to greater volatility in the Group’s earnings arising from marking to market the underlying derivative. The adoption of IFRS will also result in a number of changes to the presentation of the financial statements including disclosures. For example, the Group’s share of the post-tax profit arising in joint ventures and associates will be shown as one line in the income statement rather than as part of Group turnover, operating profit and interest.There will be a number of other presentational changes including reclassifications within the balance sheet and a change to the layout of the cash flow statement. Overall, management believes that the impact of IFRS on earnings and net assets will be broadly neutral subject to the effects of IAS 21 and IAS 39 as noted above. Cashflows and the underlying economics of the business will not change. US GAAP The financial statements of the Group have been prepared in accordance with UK GAAP, which differs in certain respects from US GAAP. The US accounting information in note 30 to the financial statements gives a summary of the principal differences between the amounts determined in accordance with the Group’s accounting policies (based on UK GAAP) and amounts determined in accordance with US GAAP, together with the reconciliation of net profit and shareholders’ funds from a UK GAAP basis to a US GAAP basis and a movement in shareholders’ funds on a US GAAP basis. The net income for the year ended 30 September 2005 under US GAAP was £326.7 million (2004: £297.7 million, 2003: £264.3 million), compared with the net profit of £367.0 million in 2005 (2004: £264.0 million, 2003: £219.1 million) under UK GAAP. Shareholders’ funds at 30 September 2005 under US GAAP were £2,122.2 million (2004: £1,920.1 million), compared with £1,942.0 million (2004: £1,675.3 million) under UK GAAP. The difference primarily results from the differing accounting treatment of pensions, goodwill, financial instruments, investments, fixed asset revaluations, deferred tax and variable interest entities. Related party transactions During the year, interest income of £13.8 million (2004: £7.3 million, 2003: £7.6 million) was received from the Cantarell joint venture in Mexico. During the year, the Group was invoiced £45.9 million in respect of purchases of production plants from Linde BOC Process Plants in the US.At 30 September 2005, £1.9 million was payable in respect of these invoices. No material purchases were made in 2004 or 2003. The Group had no other material related party transactions that might reasonably be expected to influence decisions made by the users of these accounts. Exchange rates The majority of the Group’s operations are located outside the UK and operate in currencies other than sterling. The effects of fluctuations in the relationship between the various currencies are extremely complex and variations in any particular direction may not have a consistent impact on the reported results. In terms of average rates for the year, in 2005 sterling strengthened against two of the four principal currencies affecting the Group: by three per cent against the US dollar and by two per cent against the Japanese yen. Sterling weakened by two per cent against the Australian dollar and by three per cent against the South African rand. In 2004, sterling strengthened against the US dollar and the Japanese yen. Sterling weakened against the Australian dollar and the South African rand. In 2003, sterling strengthened against the US dollar and the Japanese yen. Sterling weakened against the Australian dollar and the South African rand.
Financial review 63 Average exchange rates: US dollar 2.0 1.5 1.0 0.5 0 01 02 03 04 05 Australian dollar 3.0 2.0 1.0 0 01 02 03 04 05 Japanese yen 250 200 150 100 50 0 01 02 03 04 05 South African rand 16 12 8 4 0 01 02 03 04 05 The rates of exchange to sterling for the currencies which have principally affected the Group’s results over the last five years were: 2005 2004 2003 2002 2001 US dollar At 30 September 1.77 1.81 1.66 1.57 1.47 Average for the year 1.85 1.79 1.60 1.47 1.44 Highest rate during year 1.95 1.90 1.69 1.58 1.50 Lowest rate during year 1.73 1.66 1.54 1.41 1.37 Australian dollar At 30 September 2.32 2.50 2.45 2.89 2.98 Average for the year 2.41 2.47 2.62 2.77 2.76 Highest rate during year 2.56 2.68 2.89 3.00 3.03 Lowest rate during year 2.27 2.33 2.40 2.54 2.62 Japanese yen At 30 September 200.51 199.44 185.60 191.45 175.09 Average for the year 198.20 195.17 191.01 184.34 170.04 Highest rate during year 205.25 206.90 199.49 193.05 181.26 Lowest rate during year 189.75 180.80 182.17 173.82 153.13 South African rand At 30 September 11.25 11.72 11.57 16.58 13.24 Average for the year 11.54 11.85 13.24 15.64 11.47 Highest rate during year 12.46 13.33 16.41 19.49 13.26 Lowest rate during year 10.77 10.75 11.40 13.00 10.54 The average for the year is an average of daily rates. On 12 November 2005, the latest practicable date for inclusion in this report and accounts, the rates of exchange to sterling for the principal currencies were as follows: US dollar 1.74;Australian dollar 2.38; Japanese yen 206.55; South African rand 11.75. The highest and lowest rates of exchange for sterling against the US dollar for the last six months were: May June July August September October High 1.90 1.84 1.77 1.81 1.84 1.79 Low 1.82 1.79 1.73 1.77 1.76 1.75 Principal operating companies The following operating companies principally affect the amount of profit or assets of the Group: • The BOC Group Inc., a wholly-owned Delaware corporation and a subsidiary of The BOC Group Inc., a wholly-owned Nevada corporation; • BOC Limited, a wholly-owned English company; • BOC Limited, a wholly-owned Australian company; • Gist Limited, a wholly-owned English company; • Japan Air Gases Ltd, a Japanese company, in which the Group’s Japanese 99 per cent owned subsidiary holds 45 per cent; • African Oxygen Limited, a South African company, in which the Group’s shareholding is 56 per cent. Supplier payment policy The Group applies a policy of agreeing and clearly communicating the terms of payment as part of the commercial arrangements negotiated with suppliers and then paying according to those terms. In addition the UK-based businesses have committed to the ‘Better Payment Practice Code’. A copy of the code can be obtained from the Department of Trade and Industry, DTI Publications Orderline,Admail 528, London SW1W 8YT. For UK businesses, of amounts owing to suppliers, trade creditors represents 58 days at 30 September 2005. Going concern The directors are confident, after having made appropriate enquiries, that both the company and the Group have adequate resources to continue in operation for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts. Management believes that its current credit facilities provide sufficient working capital to meet the present requirements of its existing businesses and that the gearing ratio is appropriate given the nature of the Group’s activities. Substantial holdings Details of substantial holdings of Ordinary shares at 12 November 2005 are shown on page 141.
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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
Page 13 and 14: Executive management board 11 09 10
Page 15 and 16: Group five year record 13 Capital e
Page 17 and 18: Group profile 15 Analysis of result
Page 19 and 20: Group profile 17 Principal industri
Page 21 and 22: Group profile 19 In China, signific
Page 23 and 24: Group profile 21 Sales opportunitie
Page 25 and 26: Employees 23 At 30 September 2005 t
Page 27 and 28: Employees 25 Retirement benefit pla
Page 29 and 30: Social, environmental and ethical p
Page 39 and 40: Research, development and informati
Page 41 and 42: Risk factors 39 BOC relies on devel
Page 43 and 44: Operating review 41 Exceptional ite
Page 45 and 46: Operating review (comparing 2005 wi
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: Financial review 61 Current asset p
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
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Page 75 and 76: Report on remuneration 73 Variable
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Page 79 and 80: Report on remuneration 77 Individua
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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
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Notes to the financial statements 1
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Group undertakings 139 Principal Gr
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Shareholder information 141 The tab
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Shareholder information 143 Taxatio
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Shareholder information 145 Payment
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Glossary of terms 147 Terms used in
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©The BOC Group plc 2005. Designed
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BOC Report and accounts 2005 - Alle jaarverslagen

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