15 May 2003
The BOC Group results for the 6 months to 31 March 2003
Highlights
* Turnover increased by 12 per cent for the six months and by 11 per cent for
the second quarter, while operating profit increased by 6 per cent and 4
per cent respectively.
* Process Gas Solutions - grew by successfully implementing new gas projects
and integrating recent acquisitions, with further benefits coming through
from ongoing cost saving initiatives and firm pricing. Segment return on
capital increased to 9.5 per cent (year ago 8.0 per cent).
* Industrial and Special Products - turnover increased sharply driven by
acquisitions and increased prices for liquefied petroleum gas (LPG).
Operating profit increased outside the US, but declined marginally overall
as a result of costs arising from the introduction of new business systems
in the US.
* BOC Edwards - turnover and operating profit were still depressed but better
than a year ago.
* Strong performances from both Afrox hospitals and Gist.
* Group return on capital employed increased to 12.5 per cent (year ago 12.0
per cent).
* A second interim dividend of 23.5p is declared. Together with the 15.5p
dividend paid in February, annual dividends for 2003 are increased by 2.6
per cent.
The above comments refer to business performance that excludes exceptional
items and comparisons are made with the same periods a year ago on the basis of
constant exchange rates.
Chief Executive, Tony Isaac said,
`Despite challenging external conditions the Group has achieved a good
operational performance. Firm pricing trends, ongoing cost savings together
with the successful implementation of new projects and the integration of
recent acquisitions all contributed to the sustained progress.'
Contact: Christopher Marsay, Director, Investor Relations
Tel. 07771 730530 before 12.30pm
Or 01276 477222 (International +44 1276 477222) thereafter.
Summary of The BOC Group results for the 6 months to 31 March 2003
2003 2002 change as at constant
reported exchange rates
2
Excl. exceptional items
1
6 months to 31 March
Turnover �2,084.5m �1,929.6m + 8% + 12%
Operating profit �237.3m �230.4m + 3% + 6%
Profit before tax �191.3m �196.2m - 2% - 1%
Earnings per share 24.0p 25.0p - 4% - 3%
2nd quarter to 31 March
Turnover �1,049.5m �969.6m + 8% + 11%
Operating profit �118.7m �115.9m + 2% + 4%
Profit before tax �95.9m �99.1m - 3% - 3%
Earnings per share 11.9p 12.7p - 6% - 6%
Statutory results
6 months to 31 March
Turnover �2,084.5m �1,929.6m + 8% + 11%
Operating profit �230.9m �207.4m + 11% + 14%
Profit before tax �184.9m �173.2m + 7% + 8%
Earnings per share 23.2p 21.6p + 7% + 8%
2nd quarter to 31 March
Turnover �1,049.5m �969.6m + 8% + 12%
Operating profit �115.4m �104.7m + 10% + 12%
Profit before tax �92.6m �87.9m + 5% + 5%
Earnings per share 11.5p 11.1p + 3% + 3%
Notes
* Results excluding exceptional items are used by management to measure
performance. They are shown in order to reveal business trends more clearly
than statutory results, which include such items.
* In order to show underlying business trends, results are also compared at
constant exchange rates to eliminate the effects of translating overseas
results into sterling at varying rates.
* Unless otherwise stated, all the commentaries that follow are made on the
basis of results that exclude exceptional items and comparisons are at
constant exchange rates. Segment results are shown on this basis below.
* Full statutory results are on pages 8 to 17.
GROUP RESULTS
A good business performance in every segment apart from Industrial and Special
Products enabled BOC to grow both turnover and operating profit. This improved
business performance was not reflected in profit before tax because of a lower
net pension credit, arising principally through lower equity valuations. The
performance of Industrial and Special Products was adversely affected by costs
arising from the now substantially completed implementation of new business
systems in the US but the operating profit outside the US increased. The SARS
outbreak has not had any significant impact on BOC's business in China or
elsewhere in Asia.
BUSINESS SEGMENT RESULTS
Unless stated otherwise,
* all comparisons that follow are on the basis of constant exchange rates;
* operating profits exclude exceptional items;
* comparisons are made with the same period a year ago;
* first quarter means the fiscal quarter to 31 December and the second
quarter means the fiscal quarter to 31 March.
6 months to 31 March 2003 Fiscal second quarter
Business segments Turnover Operating Turnover Operating
profit profit
� million ____________ ___________
_________ _________
Process Gas 603.0 +9% 88.8 + 8% 302.8 + 8% 45.3 + 5%
Solutions
Industrial and 833.7 +12% 116.3 - 1% 417.7 + 13% 54.3 - 5%
Special Products
BOC Edwards 341.8 +15% 8.6 + 12% 171.7 + 11% 4.5 + 15%
Afrox hospitals 156.4 +18% 18.6 + 42% 86.1 + 12% 11.8 + 37%
Gist 149.6 +14% 12.2 + 3% 71.2 + 13% 6.1 + 4%
Corporate (7.2) (3.3)
Group total 2,084.5 + 12% 237.3 + 6% 1,049.5 + 11% 118.7 + 4%
PROCESS GAS SOLUTIONS (PGS)
Profit growth in the second quarter was driven by a solid business performance
in north and south America, Africa and Asia as well as contributions from
recently acquired industrial gas facilities in Nanjing, China, and Clear Lake,
Texas.
The existing air separation units within the joint venture with YPC at Nanjing
began to contribute to turnover and profit from April 2002. A further large air
separation unit is under construction.
During January 2003 BOC acquired a HyCO (hydrogen and carbon monoxide) plant
from Celanese and successfully began to supply industrial gases to the Celanese
chemicals plants at Clear Lake, Texas.
As outlined in the previous quarter, business in the UK continued to be
affected by customer closures and relocations.
US liquefied gas sales volumes decreased in the second quarter, reflecting
generally weak industrial activity as well as some customer conversions to
alternative supplies.
Price trends remained positive in the merchant markets of Europe, the Americas,
Africa and Asia while cost savings continued to support improved operating
profit.
Return on capital in PGS increased to 9.5 per cent compared with 8.0 per cent a
year ago. This progress is in line with BOC's business targets.
INDUSTRIAL AND SPECIAL PRODUCTS (ISP)
The sharp increase in turnover for both the six months and the second quarter
arose principally because of acquisitions and increased prices for liquefied
petroleum gas (LPG). Underlying turnover increased by 5 per cent for the second
quarter.
Acquisitions affecting comparisons include Unique Gas, a distributor of LPG and
packaged ammonia in Thailand bought during May 2002 and Praxair's Polish gases
business bought at the end of January 2003. The acquisition of Air Products'
packaged gases business in Canada was completed after the end of the second
quarter in April 2003.
The increase in turnover was not reflected in operating profit, which declined
marginally. Profit outside the US increased by 4 per cent for both the second
quarter and the six months but there were costs associated with the
implementation of new business systems in the US. Implementation is now
substantially completed.
Turnover and operating profit increased for the six months and the second
quarter in the UK and in Poland but an economic slowdown curtailed growth in
Ireland. Results in the UK were helped by firm pricing and increases in rental
income and in Poland were supported by the acquisition of the business of
Praxair Polska.
Although the rate of export growth diminished somewhat during the second
quarter as the rand strengthened, the manufacturing economy of South Africa
remained strong. Turnover and operating profit in Africa increased strongly.
Higher LPG costs were recovered in selling prices, which therefore increased
sales revenues and maintained operating profit.
The growth of operating profit in the south Pacific region slowed in the second
quarter leading to a profit for the six months that was similar to a year ago.
BOC EDWARDS
Turnover and operating profit for both the six months and the second quarter
were better than a year ago despite continuing low levels of demand from
semiconductor manufacturers for equipment.
Improvements in both electronic gases and vacuum equipment sales and profits
during the second quarter, particularly in Korea but also in other parts of
Asia, were offset by weakness in the chemical management business following a
decline in order intake during the first quarter, which continued into the
second quarter.
Activity in the market for general industrial vacuum products also remained
flat, reflecting weak industrial production in key markets.
During the second quarter BOC Edwards successfully completed the implementation
of a new business system across all its European businesses.
Order intake for semiconductor vacuum and exhaust management equipment during
the second quarter varied sharply from month to month but was in aggregate
slightly better than in the previous quarter.
AFROX HOSPITALS
Turnover growth was boosted in the first quarter by acquisitions but organic
growth continued at a similar pace in the second quarter. This was based upon a
small improvement in underlying business volumes and the negotiation of
satisfactory tariff increases for the year ahead with the major health care
funds.
Together with improved efficiency and synergy benefits arising from
acquisitions, this turnover growth allowed substantial improvements in local
currency operating profit to be achieved in the second quarter.
These improvements were enhanced upon translation of the South African rand
into sterling at more favourable rates than a year ago.
GIST
Increases in turnover and operating profit for both the six months and the
second quarter reflected increased volumes of Marks & Spencer food business,
the continued roll-out of the Ocado operation and additional business in some
other sectors, including a new contract for Carlsberg Tetley during the second
quarter.
Gist now handles all Marks & Spencer's UK food distribution except for wines
and some frozen goods. During the fourth quarter Gist will cease to operate
general merchandise logistics for Marks & Spencer but any financial impact this
year and next is expected to be limited by settlement arrangements now being
negotiated.
IMPACT OF EXCHANGE RATES
The comparisons above are on a constant exchange rate basis but, in aggregate,
exchange rate movements affected the translation of overseas results for the
second quarter into sterling unfavourably. Translation adversely affected the
turnover comparison in sterling by �25.2 million and the operating profit
comparison by �1.5 million, relative to a year ago.
While the US dollar and some Asian currencies weakened, the South African rand
was significantly stronger in the second quarter, leading to substantially
increased contributions to turnover and operating profit by BOC's African gases
and hospitals businesses.
The Australian dollar and the Japanese yen rates in the second quarter were
relatively stable compared with a year ago.
PORTFOLIO CHANGE
During January 2003, BOC's gases business in Japan was merged with part of Air
Liquide Japan to form a joint venture company, Japan Air Gases, in which BOC
has a 45 per cent economic interest. With effect from the start of the second
quarter, BOC's gases business in Japan is therefore no longer consolidated as a
subsidiary and BOC will now account for its economic share of Japan Air Gases
on an equity basis. The main accounting impact is on cash flow where BOC will
consolidate dividends received rather than operating cash flow.
The integration of the two businesses is proceeding smoothly and has been well
received by customers.
CASH FLOW, BORROWINGS AND TAX
Operating cash flow before exceptional items was �187.9 million in the second
quarter, and was �264.3 million for the six months. This was lower than the
corresponding periods in the previous year mainly because of the lower
contribution from BOC Edwards (�27 million), the resumption of cash
contributions to the UK pension scheme (�18 million), and the impact of
currency (�12 million).
In addition, following the merger of BOC's gases business in Japan with part of
Air Liquide Japan, BOC will in future consolidate dividends received rather
than operating cash flow. In the second quarter, this had a negative impact of
some �20 million on the Group operating cash flow compared with a year ago.
In the second quarter, good progress was made in reversing the previous adverse
impact on working capital of business systems changes in the US. In some parts
of the US business, debtors to sales ratios are now at levels lower than those
typically previously achieved.
Financing costs and tax payments were lower than in the previous year.
Capital expenditure for the six months was some 20 per cent less than a year
ago, reflecting continued management focus on the level of maintenance capital
expenditure and lower plant construction activity. Some growth in production
capacity has also been achieved through acquisitions.
Expenditure on acquisitions in the six months amounted to �124.5 million, some
�30 million less than a year ago. The three main acquisitions in the six months
were the US water services company EMC, the business of Praxair Polska in
Poland and the Celanese HyCO operations at Clear Lake, Texas.
Net borrowings at 31 March 2003 were �1,521.3 million compared with �1,325.6
million at the end of September 2002. Currency movements and the impact of
portfolio changes accounted for some �65 million of this increase. For the six
months, the net interest charge on net debt was covered 4.7 times by operating
profit before exceptional items, an improvement on the 4.3 times a year ago.
Gearing ratios at 31 March 2003 were 39.1 per cent for net debt / capital
employed and 79.2 per cent for net debt / equity, compared with 36.9 per cent
and 73.6 per cent respectively at 30 September 2002. Comparisons with March
2002 are adversely affected by the decline in the value of pension fund assets
following the falls in world equity markets.
Return on capital employed at 31 March 2003 was 12.5 per cent, compared with
12.0 per cent a year ago and 12.3 per cent at 30 September 2002.
The effective rate of tax on profit before exceptional items was 30 per cent,
compared with 31 per cent a year ago. After exceptional items, the effective
rate of tax was also 30 per cent this year, compared with just less than 32 per
cent a year ago.
DIVIDENDS
Ordinary shareholders
A second interim dividend of 23.5p will be paid on 1 August 2003 to
shareholders on the register on 4 July and the shares will be quoted `ex
dividend' on 2 July. Taken together with the 15.5p first interim dividend paid
on 3 February 2003, this represents an increase of 2.6 per cent on the annual
dividend of the previous year.
The BOC Dividend Reinvestment Plan will be available to shareholders whose
applications have been received by Lloyds TSB Registrars by 11 July. Any
revocations must be received by the same date.
American Depositary Receipt (ADR) holders
The second interim dividend will be paid on 8 August 2003 to holders of
sponsored ADRs registered on 3 July. The ADRs will be quoted `ex dividend' on
the New York Stock Exchange on 2 July. The Global Invest Direct Plan will be
available to ADR holders.
OUTLOOK
The economic and financial environment continues to be uncertain and there are
not yet clear signs of a sustained upturn in capital investment by
semiconductor manufacturers. By continuing to focus on customer service and
pricing initiatives, cost savings, the successful implementation of new
projects and integration of acquisitions, the Board is confident that the Group
will continue to make progress.
Notes for editors
The BOC Group is one of the largest and most global of the world's leading
gases companies. Serving two million customers in more than 50 countries, BOC
employs some 46,000 people and had annual sales of over �4 billion in 2002.
BOC is organised into three global lines of business - aligning our
organisation directly to our customers.
Process Gas Solutions (PGS) provides tailored solutions to the process needs of
our largest customers, primarily in industries such as oil refining, chemicals
and steel. The result is the dedicated supply of gases by pipeline, from
on-site production units, or in liquid form by tanker. PGS works globally,
wherever the world's largest companies do business.
Industrial and Special Products (ISP) serves customers who need smaller volumes
of gas, mostly delivered in cylinders. It offers a range of gases, products and
services for cutting and welding metals, and for a host of customers in the
medical, hospitality and scientific markets. ISP also has a significant
liquefied petroleum gas business in certain countries.
BOC Edwards is synonymous with the semiconductor industry, supplying products
and services to one of the world's most challenging industries. The chemical,
metallurgical and scientific instrument markets are increasingly important to
BOC Edwards' general vacuum business.
In addition BOC has two specialised operations:
Gist, a logistics company specialising in a range of supply chain solutions,
which serves a number of major customers including Marks & Spencer.
Afrox hospitals, the largest supplier of private health care in southern
Africa.
Print quality images of Tony Isaac, chief executive of The BOC Group and Ren�
M�dori, finance director, may be downloaded directly from our photo library on
the NewsCast website at: http://www.newscast.co.uk To access the library,
simply register your details with that website.
More detailed presentation material will be made available on The BOC Group
investor relations website www.boc.com/ir under Annual and Quarterly Reports.
GROUP RESULTS
6 MONTHS TO 31 MARCH 2003
6 months to 31 Mar 2003 6 months to 31 Mar 2002 Year to 30 Sep 2002
Before Excep After Before Excep After Before Excep After
excep items excep excep items excep excep items excep
items items items items items items
�m �m �m �m �m �m �m �m �m
TURNOVER, 2,084.5 - 2,084.5 1,929.6 - 1,929.6 4,017.9 - 4,017.9
including share
of joint ventures
and associates
Less: Share of 223.4 - 223.4 149.6 - 149.6 324.1 - 324.1
joint ventures
Share of 27.5 - 27.5 17.7 - 17.7 36.1 - 36.1
associates
Turnover 1,833.6 - 1,833.6 1,762.3 - 1,762.3 3,657.7 - 3,657.7
Operating profit 197.5 (6.1) 191.4 196.6 (22.9) 173.7 425.6 (74.0) 351.6
of subsidiary
undertakings
Share of 35.2 (0.3) 34.9 28.7 (0.1) 28.6 63.8 (0.5) 63.3
operating profit
of joint ventures
Share of 4.6 - 4.6 5.1 - 5.1 10.7 - 10.7
operating profit
of associates
Total operating 237.3 (6.4) 230.9 230.4 (23.0) 207.4 500.1 (74.5) 425.6
profit including
share of joint
ventures and
associates
Loss on - - - - - - - (20.2) (20.2)
termination /
disposal of
businesses
Profit before 237.3 (6.4) 230.9 230.4 (23.0) 207.4 500.1 (94.7) 405.4
interest
Interest on net (50.7) - (50.7) (52.7) - (52.7) (103.1) - (103.1)
debt
Interest on (54.8) - (54.8) (51.5) - (51.5) (106.1) - (106.1)
pension scheme
liabilities
Expected return 59.5 - 59.5 70.0 - 70.0 139.1 - 139.1
on pension scheme
assets
Other net 4.7 - 4.7 18.5 - 18.5 33.0 - 33.0
financing income
PROFIT ON 191.3 (6.4) 184.9 196.2 (23.0) 173.2 430.0 (94.7) 335.3
ORDINARY
ACTIVITIES BEFORE
TAX
Tax (note 5) (57.3) 1.8 (55.5) (60.9) 6.3 (54.6) (129.0) 22.8 (106.2)
Profit on 134.0 (4.6) 129.4 135.3 (16.7) 118.6 301.0 (71.9) 229.1
ordinary
activities after
tax
Minority (15.6) 0.4 (15.2) (13.0) 0.2 (12.8) (26.7) 0.5 (26.2)
interests
PROFIT FOR THE 118.4 (4.2) 114.2 122.3 (16.5) 105.8 274.3 (71.4) 202.9
PERIOD
Dividends (76.4) - (76.4) (75.8) - (75.8) (186.6) - (186.6)
Surplus for the 42.0 (4.2) 37.8 46.5 (16.5) 30.0 87.7 (71.4) 16.3
period
Earnings per
share (note 6)
- basic 24.0p 23.2p 25.0p 21.6p 55.9p 41.4p
- diluted 24.0p 23.2p 24.9p 21.5p 55.7p 41.2p
GROUP RESULTS
3 MONTHS TO 31 MARCH 2003
3 months to 31 Mar 2003 3 months to 31 Mar 2002
Before Exceptional After Before Exceptional After
exceptional items exceptional exceptional items exceptional
items items items
items
�million �million �million �million �million �million
TURNOVER, including 1,049.5 - 1,049.5 969.6 - 969.6
share of joint ventures
and associates
Less: Share of joint 147.2 - 147.2 72.5 - 72.5
ventures
Share of associates 13.0 - 13.0 7.3 - 7.3
Turnover 889.3 - 889.3 889.8 - 889.8
Operating profit of 95.6 (3.0) 92.6 99.3 (11.2) 88.1
subsidiary undertakings
Share of operating 21.3 (0.3) 21.0 14.1 - 14.1
profit of joint ventures
Share of operating 1.8 - 1.8 2.5 - 2.5
profit of associates
Total operating profit 118.7 (3.3) 115.4 115.9 (11.2) 104.7
including share of joint
ventures and associates
Interest on net debt (25.1) - (25.1) (26.1) - (26.1)
Interest on pension (27.5) - (27.5) (25.7) - (25.7)
scheme liabilities
Expected return on 29.8 - 29.8 35.0 - 35.0
pension scheme assets
Other net financing 2.3 - 2.3 9.3 - 9.3
income
PROFIT ON ORDINARY 95.9 (3.3) 92.6 99.1 (11.2) 87.9
ACTIVITIES BEFORE TAX
Tax (note 5) (28.6) 0.7 (27.9) (30.8) 3.6 (27.2)
Profit on ordinary 67.3 (2.6) 64.7 68.3 (7.6) 60.7
activities after tax
Minority interests (8.6) 0.3 (8.3) (6.3) 0.1 (6.2)
PROFIT FOR THE PERIOD 58.7 (2.3) 56.4 62.0 (7.5) 54.5
Earnings per share (note
6)
- basic 11.9p 11.5p 12.7p 11.1p
- diluted 11.9p 11.5p 12.6p 11.1p
GROUP BALANCE SHEET
AT 31 MARCH 2003
At 31 Mar At 31 Mar At 30 Sep
2003 2002 2002
�million �million �million
Fixed Assets
- Intangible assets 202.5 116.8 150.7
- Tangible assets 2,951.4 3,247.2 3,027.4
- Joint ventures, associates and other 673.0 478.6 468.6
investments
3,826.9 3,842.6 3,646.7
Current assets 1,164.8 1,244.7 1,246.4
Creditors: amounts falling due within (1,219.6) (1,316.1) (1,247.9)
one year
Net current liabilities (54.8) (71.4) (1.5)
Total assets less current liabilities 3,772.1 3,771.2 3,645.2
Creditors: amounts falling due after (1,205.4) (1,073.4) (1,179.0)
more than one year
Provisions for liabilities and charges (391.6) (431.8) (407.5)
Total net assets excluding pension 2,175.1 2,266.0 2,058.7
assets and liabilities
Pension assets 56.1 110.4 54.3
Pension liabilities (309.9) (63.8) (311.0)
Total net assets including pension 1,921.3 2,312.6 1,802.0
assets and liabilities
Shareholders' capital and reserves 1,768.1 2,178.5 1,684.1
Minority shareholders' interests 153.2 134.1 117.9
Total capital and reserves 1,921.3 2,312.6 1,802.0
GROUP CASH FLOW STATEMENT
6 MONTHS TO 31 MARCH 2003
6 months 6 months Year to
to to 30 Sep
31 Mar 31 Mar 2002
2003 2002
�million �million �million
TOTAL OPERATING PROFIT before exceptional 237.3 230.4 500.1
items
Depreciation and amortisation 164.9 162.9 330.9
FRS17 retirement benefits charge 26.9 25.9 49.9
Operating profit before exceptional items (35.2) (28.7) (63.8)
of joint ventures
Operating profit before exceptional items (4.6) (5.1) (10.7)
of associates
Changes in working capital and other items (125.0) (54.9) 20.2
Exceptional cash flows (14.1) (21.6) (67.3)
NET CASH INFLOW FROM OPERATING ACTIVITIES 250.2 308.9 759.3
DIVIDENDS FROM JOINT VENTURES AND 4.2 5.2 33.9
ASSOCIATES
RETURNS ON INVESTMENTS AND SERVICING OF (53.2) (57.1) (90.7)
FINANCE
TAX PAID (37.9) (48.5) (96.2)
CAPITAL EXPENDITURE AND FINANCIAL (124.5) (154.8) (324.5)
INVESTMENT
ACQUISITIONS AND DISPOSALS (94.5) (128.2) (215.5)
EQUITY DIVIDENDS PAID (76.4) (75.8) (186.6)
NET CASH OUTFLOW BEFORE USE OF LIQUID (132.1) (150.3) (120.3)
RESOURCES AND FINANCING
GROUP CASH FLOW STATEMENT
3 MONTHS TO 31 MARCH 2003
3 months 3 months
to to
31 Mar 31 Mar
2003 2002
�million �million
TOTAL OPERATING PROFIT before exceptional items 118.7 115.9
Depreciation and amortisation 82.3 81.9
FRS17 retirement benefits charge 13.0 12.9
Operating profit before exceptional items of joint (21.3) (14.1)
ventures
Operating profit before exceptional items of (1.8) (2.5)
associates
Changes in working capital and other items (3.0) 22.6
Exceptional cash flows (7.3) (8.2)
NET CASH INFLOW FROM OPERATING ACTIVITIES 180.6 208.5
DIVIDENDS FROM JOINT VENTURES AND ASSOCIATES 3.4 3.5
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE (30.1) (32.5)
TAX PAID (23.7) (27.8)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (51.8) (67.6)
ACQUISITIONS AND DISPOSALS (29.2) (81.1)
EQUITY DIVIDENDS PAID (76.4) (75.8)
NET CASH OUTFLOW BEFORE USE OF LIQUID RESOURCES AND (27.2) (72.8)
FINANCING
TOTAL RECOGNISED GAINS AND LOSSES
6 MONTHS TO 31 MARCH 2003
6 months 6 months Year to
to to 30 Sep
31 Mar 31 Mar 2002
2003 2002
�million �million �million
Profit for the period 114.2 105.8 202.9
Actuarial loss recognised on the pension - - (431.2)
schemes
Movement on deferred tax relating to - - 134.0
actuarial loss on pensions
Unrealised loss on write-down of - - (11.5)
revaluation reserve
Unrealised profit on disposal of a 8.2 - -
subsidiary
Exchange translation effect on:
- results for the period 3.8 1.0 (8.1)
- foreign currency net investments 36.9 47.4 (128.2)
Total recognised gains and losses for the 163.1 154.2 (242.1)
period
There were no material differences between reported profits and losses and
historical cost profits and losses on ordinary activities before tax for any of
the above periods.
MOVEMENT IN SHAREHOLDERS' FUNDS
6 MONTHS TO 31 MARCH 2003
6 months 6 months Year to
to to 30 Sep
31 Mar 31 Mar 2002
2003 2002
�million �million �million
Profit for the period 114.2 105.8 202.9
Dividends (76.4) (75.8) (186.6)
37.8 30.0 16.3
Other recognised gains and losses 48.9 48.4 (445.0)
Reversal of goodwill credit in total (4.2) - -
recognised gains and losses on disposal
of a subsidiary
Shares issued 1.5 12.9 24.6
Credit in relation to share options - 1.0 2.0
Net increase/(decrease) in shareholders' 84.0 92.3 (402.1)
funds for the period
Shareholders' funds - at period start 1,684.1 2,086.2 2,086.2
Shareholders' funds - at period end 1,768.1 2,178.5 1,684.1
NOTES TO THE ACCOUNTS
1 Basis of preparation
The results for the 6 months to 31 March 2003 have been prepared on an
accounting basis consistent with that applied in the financial year to
30 September 2002.
Financial information for the year to 30 September 2002 has been based
on the full Group accounts for that period. The 2002 accounts received
an unqualified audit report and have been delivered to the Registrar of
Companies. The results for the 6 months to 31 March 2003 are unaudited.
2 Exchange rates
The majority of the Group's operations are located outside the UK and
operate in currencies other than sterling. Profit and loss and other
period statements of the Group's overseas operations are translated at
average rates of exchange for the period. Assets and liabilities
denominated in foreign currencies are translated at the rates of
exchange ruling at the period end.
The rates of exchange to sterling for the currencies which principally
affected the Group's results were as follows:
6 months 6 months Year to
to to 31 Mar 30 Sep
31 Mar 2002 2002
2003
Average rates:
- US dollar 1.59 1.43 1.47
- Australian dollar 2.76 2.79 2.77
- Japanese yen 191.56 183.59 184.34
- South African rand 14.28 15.56 15.64
Period end rates:
- US dollar 1.58 1.42 1.57
- Australian dollar 2.62 2.67 2.89
- Japanese yen 187.43 188.73 191.45
- South African rand 12.44 16.18 16.58
3 Segmental information
a) Turnover and operating profit before exceptional items, by business
and by region, were as follows:
6 months to 31 Mar 6 months to 31 Mar Year to 30 Sep
2003 2002 2002
Turnover Operating Turnover Operating Turnover Operating
profit profit profit
Business analysis: �million �million �million �million �million �million
Process Gas 603.0 88.8 591.3 87.0 1,200.6 185.2
Solutions
Industrial and 833.7 116.3 768.3 119.9 1,605.3 248.0
Special Products
BOC Edwards 341.8 8.6 317.0 8.0 688.2 26.1
Afrox hospitals 156.4 18.6 121.7 12.0 259.0 29.7
Gist 149.6 12.2 131.3 11.9 264.8 25.5
Corporate - (7.2) - (8.4) - (14.4)
Continuing 2,084.5 237.3 1,929.6 230.4 4,017.9 500.1
operations
Regional analysis:
Europe 571.9 73.3 517.8 73.3 1,069.6 155.2
Americas 605.6 41.5 639.7 55.3 1,291.8 121.3
Africa 262.9 38.2 209.9 27.3 441.0 56.7
Asia/Pacific 644.1 84.3 562.2 74.5 1,215.5 166.9
Continuing 2,084.5 237.3 1,929.6 230.4 4,017.9 500.1
operations
b) Turnover and operating profit before exceptional items, by business
and by region, for the 3 months to 31 March 2003 were as follows:
3 months to 31 Mar 3 months to 31 Mar
2003 2002
Turnover Operating Turnover Operating
profit profit
Business analysis: �million �million �million �million
Process Gas Solutions 302.8 45.3 298.4 45.7
Industrial and Special Products 417.7 54.3 379.9 57.5
BOC Edwards 171.7 4.5 163.9 4.1
Afrox hospitals 86.1 11.8 64.3 7.4
Gist 71.2 6.1 63.1 5.9
Corporate - (3.3) - (4.7)
Continuing operations 1,049.5 118.7 969.6 115.9
Regional analysis:
Europe 287.9 38.9 260.0 36.7
Americas 293.9 18.1 323.1 30.3
Africa 140.0 19.6 104.2 11.9
Asia/Pacific 327.7 42.1 282.3 37.0
Continuing operations 1,049.5 118.7 969.6 115.9
4 Exceptional items 6 months 6 months Year to
to to 31 Mar 30 Sep
31 Mar 2002 2002
2003
�million �million �million
Restructuring costs (6.4) (19.5) (47.2)
Write-down and impairment of assets - - (21.2)
Costs of proposed takeover - (3.5) (6.1)
Total operating exceptional items (6.4) (23.0) (74.5)
Closure of businesses - continuing - - (21.3)
operations
Profit on disposal of businesses - - - 1.1
continuing operations
Total non-operating exceptional items - - (20.2)
5 Tax 6 months 6 months Year to
to to 31 Mar 30 Sep
31 Mar 2002 2002
2003
�million �million �million
Subsidiary undertakings (50.2) (49.2) (100.3)
Share of joint ventures (4.0) (4.0) (3.6)
Share of associates (1.3) (1.4) (2.3)
Tax on profit on ordinary activities (55.5) (54.6) (106.2)
Overseas tax included in the tax on (42.8) (31.6) (73.9)
profit on ordinary activities above
was:
The tax charge includes the following
credit in respect of exceptional
items:
Operating exceptional items 1.8 6.3 15.3
Non-operating exceptional items - - 7.5
Tax on exceptional items 1.8 6.3 22.8
6 Earnings per share 6 months 6 months Year to
to to 31 Mar 30 Sep
31 Mar 2002 2002
2003
�million �million �million
Amounts used in computing the earnings
per share:
Earnings attributable to ordinary 114.2 105.8 202.9
shareholders for the period
Adjustment for exceptional items 4.2 16.5 71.4
Adjusted earnings before exceptional 118.4 122.3 274.3
items
6 months 6 months Year to
to to 30 Sep
31 Mar 31 Mar 2002
2003 2002
million million million
Average number of 25p ordinary shares:
Average issued share capital 497.4 495.2 496.0
Less: average own shares held in trust (4.7) (6.0) (5.6)
Basic 492.7 489.2 490.4
Add: dilutive share options 0.2 1.8 1.8
Diluted 492.9 491.0 492.2
7 Reconciliation of net cash flow to 6 months 6 months Year to
movement in net debt to to 31 Mar 30 Sep
31 Mar 2002 2002
2003
�million �million �million
Net borrowings and finance leases - at (1,325.6) (1,272.1) (1,272.1)
period start
Net cash outflow (132.1) (150.3) (120.3)
Issue of shares 1.5 12.9 25.0
Net borrowings assumed at acquisition (0.7) (13.3) (0.5)
Net cash eliminated on disposal (30.8) - -
Inception of finance leases - (0.4) (0.4)
Exchange adjustment (33.6) (20.2) 42.7
Net borrowings and finance leases - at (1,521.3) (1,443.4) (1,325.6)
period end
8 Contingent liabilities
a) In February 2003, the company was notified that a jury verdict in
the US District Court for the Western District of Texas was
obtained for US$132 million against Fluorogas Limited, The BOC
Group Inc and The BOC Group plc. The verdict arises primarily out
of an alleged breach of a memorandum of understanding by Fluorogas
Limited before it was acquired by The BOC Group plc in September
2001. In March 2003, the court also awarded interest and costs
against the defendants, making them jointly and severally liable
for a total of US$174 million.
BOC believes that the jury's verdict reflects a misunderstanding of
the law and does not reflect the facts of any loss that may have
been suffered by the plaintiffs. BOC is challenging the verdict
through the appropriate appeals process in the US.
b) An action has been filed in the US District Court for the Southern
District of Illinois against The BOC Group Cash Balance Retirement
Plan (the Plan). The plaintiffs brought this action on behalf of
themselves and all others similarly affected, alleging that the
Plan improperly calculated lump sum distributions from the Plan in
violation of the Employee Retirement Income Security Act.
The Plan is contesting the action. At this stage in the litigation,
it is not possible to reliably estimate the amount of loss, if any,
that might result from this action. If the action is successful,
any award would be paid out of Plan assets. Under UK accounting
principles, any such payment would be recognised as a charge in the
profit and loss account of the Group.
c) At 30 September 2002, BOC had guaranteed a portion of the
borrowings of its joint venture company in Mexico. The amount of
the guarantee was �116.7 million and it was shown as a contingent
liability in the Group's Report and Accounts at that date. In March
2003, as a result of certain conditions being met by the joint
venture company, BOC's guarantee has been released and no
contingent liability remains at 31 March 2003.
d) No other events have occurred that materially change the level of
other contingent liabilities since 30 September 2002.
END