1 'Adjusted' means excluding exceptional items.
² Comparisons are made with the same period a year ago at constant exchange rates.
³ This preliminary announcement is unaudited.

Chief Executive, Tony Isaac said,
'Our strong financial performance continued throughout the year into the fourth quarter, during which every business segment contributed to growth. Our profit performance was mirrored in particularly strong cash flow and in the return on capital, which also improved steadily throughout the year. The successful disposal of our US packaged gas business completed in July will enable BOC further to improve returns in the Industrial and Special Products business. Substantial new project wins will add to the growth of our Process Gas Solutions business in future years.'

BUSINESS SEGMENT RESULTS
All comparisons that follow are on the basis of constant exchange rates.
Adjusted operating profits exclude operating exceptional items (see also note 4 on page 18).
Comparisons are made with the same period a year ago unless stated otherwise.
The fourth quarter means the fiscal quarter to 30 September.

Turnover was up 9 per cent for the quarter and for the year. The acquisition of an increased share of the Cantarell nitrogen project in Mexico and revenues from new production plants accounted for about 2 per cent of the growth in the quarter. Adjusted operating profit increased faster than turnover in the fourth quarter helped by growth in Asia and improved operational efficiency.

Adjusted return on capital increased a further 1.3 per cent to reach 10.8 per cent for the 12 months to 30 September. The key factors behind this improvement were profit improvements arising from a combination of business efficiency cost savings and firm pricing, as well as the addition of new projects delivering an above average rate of return.

In the UK, both turnover and adjusted operating profit were higher than a year ago for the fourth quarter and for the year as a whole. Better tonnage volumes drove increased turnover while cost savings and more efficient plant operation further boosted adjusted operating profit.

Price increases offset higher input costs in 2004. Further increases are being implemented in 2005 to cover sharply higher electricity prices in the UK following the expiry of a fixed price supply contract.

Turnover in Ireland was similar to a year ago but adjusted operating profit for the year was slightly better. Turnover increased in Poland for the year as a result of improved demand and the acquisition of Praxair Polska's business with effect from February 2003. Integration synergies also helped towards increased adjusted operating profit for both the year and the fourth quarter.

North American turnover was up in the fourth quarter and for the year, reflecting revenues from the new plant supplying hydrogen for the production of clean fuels at Citgo's refinery at Lemont, Illinois that began production at the end of October 2003, as well as improved demand from the metals sector. Compared with a year ago, adjusted operating profit was similar for the quarter and up for the year on an underlying basis after excluding some non-recurrent items.

During September 2004, BOC completed the acquisition of Duke Energy's 30 per cent interest in the company supplying nitrogen to pressurise Pemex oilfields in the Gulf of Mexico. This purchase has raised BOC's interest to 65 per cent.

South Pacific region turnover improved for the year and the fourth quarter. BOC's major plants in Australia achieved significant cost savings as a result of improved operating efficiency. Adjusted operating profit was up for the year but slightly down in the fourth quarter as a result of some temporary plant shutdowns.

A hydrogen purification plant and bus re-fuelling facility to support BP in the Government of Western Australia's environmentally friendly fuel cell bus trial in Perth came into operation during September. Three hydrogen-fuelled buses will be operating in the city of Perth. The trial is to continue for at least the next two years.

South and south east Asia benefited throughout the year from both strong economic growth and the full impact of a new HyCO plant in Thailand that began production in 2003. Turnover growth led to improved adjusted operating profit for the year as did the inclusion of a non-recurrent charge for a customer closure in the Philippines during the fourth quarter of 2003.

In north Asia, turnover increased in 2004 and in the fourth quarter albeit at a more modest pace than in 2003. Production plants across the region were almost fully utilized and relatively few new plants came on stream in 2004. However, volume increases led to significantly better adjusted operating profits for the year and the fourth quarter. Growth was driven by strong demand from the electronics packaging sector, petrochemical and steel customers in Taiwan, and industrial gas demand from Chinese steel customers.

Economic conditions were stable in Korea but increased turnover and adjusted operating profit came from some additional argon and hydrogen capacity to supply customers near Pohang.

A number of new facilities will add significantly to BOC's production in China within the next 12 months. Four large air separation plants are under construction to supply petrochemical and steel customers and a further five nitrogen generators will supply a variety of customers in the electronics and metals markets.

BOC won several significant new supply scheme contracts in 2004. BOC's hydrogen business with refiners will be substantially increased with a new plant to supply both a Sunoco refinery at Toledo, Ohio, and a nearby BP refinery. The hydrogen will be used by both BP and Sunoco in the production of ultra-low sulphur gasoline and diesel fuels. The complex will be capable of supplying over 120 million standard cubic feet a day of hydrogen. BOC is investing more than US$100 million in the facility, which is currently scheduled to be completed early in fiscal 2006.

In China in addition to the expansions at Taiyuan (TISCO) and Nanjing currently being constructed, BOC has more recently announced a new joint venture with Sinopec Shanghai Petrochemical Company Ltd. (SPC), a subsidiary of Sinopec Corporation to meet the industrial gases needs of SPC in the Jinshan District of Shanghai. The joint venture expects to invest in the production of nearly 3,000 tonnes a day of air separation capacity initially through the acquisition of SPC's existing industrial gases assets followed by the construction of a new world-scale air separation unit (ASU). This will support SPC's fast growing petrochemical business and those of additional customers in the area. The Jinshan District is one of the major areas of petrochemical investment in China and, aside from the SPC complex, includes the nearby Shanghai Chemical Industries Park, where a number of global and local chemical companies are located.

In September 2004 MIG Production Co. Ltd (MIGP), a joint venture between Thai Industrial Gases PCL, BOC's Thai subsidiary, and Bangkok Industrial Gas Company Ltd was awarded a long-term contract to supply 800 tonnes a day of oxygen to a new mono ethylene glycol project operated by TOC Glycol Co. Ltd. (TOCGC) in Map Ta Phut, Thailand.

MIGP will invest US$50 million to build an ASU on an adjacent site to the TOCGC new mono ethylene glycol plant. Scheduled to come on stream in the second quarter of 2006, the facility will produce 1,300 tonnes of oxygen a day, making it the largest ASU in Thailand. The excess capacity from the new facility will serve the parent companies' tonnage and merchant markets.

Turnover was up for the year but slightly down in the fourth quarter following the disposal of the US packaged gas business at the end of July. Turnover was up by 4 per cent in the fourth quarter excluding the effect of the disposal. Adjusted operating profit was up for both the fourth quarter and for the year, helped by a non-recurrent profit in India during the fourth quarter. Excluding this, adjusted operating profit was up 11 per cent in the fourth quarter. Adjusted return on capital increased to 22.8 per cent for the 12 months to 30 September.

For Europe as a whole, turnover and adjusted operating profit increased for the year and for the fourth quarter despite the disposal of BOC's joint venture in Turkey with effect from the end of December 2003. UK turnover and profit growth were driven by increased sales to the medical sector that were supported by improved rental income and better prices. Turnover increased and adjusted operating profit held firm in Ireland while turnover and adjusted operating profit in Poland continued to benefit from the acquisition of the Praxair Polska business, which was effective from February 2003.

2004 was a year of transition in north America. The US packaged gas business, which had an annual turnover of some US$240 million a year, was sold at the end of July. A provisional book loss on disposal and a further charge for restructuring the remaining business were included as exceptional items in the third quarter. These charges are detailed in Note 4 on page 18. BOC retains the global helium business, bulk medical gases and bulk supplies to distributors in the US, as well as the Canadian packaged gas business. In total these retained elements currently generate turnover of some US$450 million a year.

Turnover and adjusted operating profit increased in east Asia in 2004. The most favourable profit trends were in Thailand and Taiwan, while intensified competition impacted profitability in Malaysia and Hong Kong.

Turnover in the south Pacific region was up in the fourth quarter and for the year, driven by increased gas and cylinder rental income and strongly growing sales of safety equipment. Adjusted operating profit also improved for the quarter and for the year, reflecting not only volume growth but also firm selling price trends across every part of the business, including liquefied petroleum gas.

Turnover and adjusted operating profit in South Africa were up in the fourth quarter and for the year. There was an improvement in manufacturing activity in the fourth quarter despite continued weak export activity as the stronger rand had a negative impact on export-oriented manufacturing for much of the year. This was exemplified by weak sales of ResQpak emergency oxygen equipment to the gold mining industry.

Turnover and adjusted operating profit in the fourth quarter were significantly ahead of a year ago and at a similar level to the previous quarter, principally reflecting strong sales of semiconductor and flat panel display equipment. For the same reason, turnover and adjusted operating profit for the year 2004 were well up on 2003. The better profit performance led to a sharp increase in the return on capital from 2.9 to 7.8 per cent.

Sales of bulk gases and electronic materials were also higher during the fourth quarter as a result of increased semiconductor and flat panel manufacturing.

During September, evidence of a slow down in the semiconductor and flat panel markets was apparent and equipment order intake fell below the high levels of the previous few months. Some semiconductor manufacturers have reported high stock levels at customers leading to a reduction in wafer starts and some planned expansions into 'Generation 7' flat panel manufacturing have been delayed.

Despite this, many projects are proceeding to schedule. BOC Edwards is expanding in Taiwan through its long-term joint venture company, BOC Lienhwa Industrial Gases, which is investing over US$75 million for seven gas plant facilities to ensure bulk gas supply to nine new semiconductor and flat panel display manufacturing fabs currently under construction.

The weakness of the US dollar had an adverse impact on BOC Edwards' margins in 2004 as manufacturing costs are principally in sterling while sales revenues are related principally to the US dollar. BOC Edwards routinely takes forward cover for a portion of its expected future foreign currency revenues. The sustained weakness of the dollar will mean that the effective rate, including some forward cover, for conversion of dollar revenues into sterling will be worse in 2005 than it was in 2004. If the current rate persists, the adverse impact to adjusted operating profit is expected to be approximately £2.5 million a quarter compared with 2004.

During August 2004, the US 5th Circuit Court of Appeals reversed in its entirety the judgement against the BOC entities relating to Fluorogas. In addition, the Appellate Court reversed virtually all of the judgement against Fluorogas itself.

On 17 November 2003, Afrox announced that it had agreed to sell its entire holding in Afrox Healthcare Limited to a consortium led by two major black economic empowerment investors. On 20 April 2004 the South African Competition Commission advised that the transaction should be approved subject to certain conditions, which were acceptable to both the buyers and the seller. The sale now remains subject to the outcome of the South African Competition Tribunal, at which closing hearings are currently scheduled for March 2005. In addition, an application has been brought in the South African High Court by two shareholders in Afrox Healthcare to have the Scheme of Arrangement, by which the disposal would be implemented, declared to have lapsed. This application, which is being opposed, is currently due to be heard in the week commencing 29 November 2004.

Turnover and adjusted operating profit were up in the fourth quarter and for the year. Hospital occupancy rates were higher than a year ago in the fourth quarter while acquisitions were a minor factor in the turnover increase. Adjusted operating profit increased faster than turnover as a result of careful control of overhead costs and positive pricing trends. The Lifecare chronic care facilities and Afrox occupational health services both delivered a good performance in 2004.

The change to a new reimbursement system that began during 2003 was completed in 2004. The previous system of paying health care providers a fee for their services changed to a fixed payment for each kind of procedure.

Turnover and adjusted operating profit were up in the fourth quarter as a result of the expansion of Marks & Spencer's food business through new outlets and the growth of business with other customers including Ocado and Carlsberg UK. For the year, new business and organic growth were sufficient to offset the previously announced termination of the General Merchandise contract with Marks & Spencer with effect from the end of July 2003 so turnover was slightly higher. Adjusted operating profit was lower for the year. A non-recurrent credit of £4.1 million relating to the General Merchandise contract termination was included in 2003.

The comparisons above are on a constant exchange rate basis. The negative effect of exchange rate movements on the comparison of results increased further in the fourth quarter. The continued weakness of the US dollar was the principal factor while the benefits of the stronger South African rand diminished as the year progressed and the impact of the Australian dollar was marginally negative in the fourth quarter. If the results of the fourth quarter a year ago had been translated at the rates applied to this year, turnover would have been reduced by £58.2 million, adjusted operating profit by £4.3 million, adjusted profit before tax by £3.0 million and adjusted earnings per share by 0.5p.

Operating cash flow for the fourth quarter was again strong at £261.5 million. Whilst this was slightly lower than the fourth quarter last year, it reflects a more consistent cash generation over each quarter of 2004.

Improved adjusted operating profit and good working capital control during the year 2004 led to operating cash flow significantly greater than a year ago. This includes additional contributions to the main UK pension scheme, which were some £28 million more than in 2003.

In the fourth quarter, there was an increase in the level of dividends from joint ventures and associates including a second dividend for the year from Japan Air Gases. During 2004 dividends from joint ventures and associates were significantly greater than previously as a result of a strategy to make the financial structure of the joint ventures more efficient.

Capital expenditure in the fourth quarter was similar to a year ago, following the commencement of expenditure on major projects announced recently.

In the fourth quarter the main acquisition was to increase BOC's holding in the Cantarell joint venture in Mexico. Following the sale of the packaged gas business in the US, disposal proceeds of £98 million were received. These were offset by some £16 million of cash outflow relating to the disposal with approximately £22 million of cash outflow still to come. Net cash proceeds are therefore expected to be approximately £60 million. In addition, there was a capital reduction in Japan Air Gases, which resulted in a further cash inflow of £53 million that is shown as part of acquisitions and disposals.

Net borrowings at 30 September 2004 were £962.4 million. This was a reduction of £405.7 million compared with 30 September 2003. The main factor in the net borrowings movement was the net cash inflow of £339.2 million. This was driven by the increased profit and an improvement in the ratio of working capital to sales from 14 per cent at the end of 2003 to 13 per cent at the end of 2004, as well as the higher level of cash received from joint ventures and associates and the disposals in 2004. In addition there was a positive impact of £59 million from exchange rate movements over the year.

The financial ratios improved significantly. Net interest on net debt was covered 6.3 times by operating profit (6.5 times by adjusted operating profit). This is an improvement over the same measures last year (4.6 and 5.3 times respectively). Gearing ratios at 30 September 2004 were 29.9 per cent for net debt / capital employed and 51.2 per cent for net debt / equity compared with 37.4 per cent and 73.4 per cent respectively at 30 September 2003.

Adjusted return on capital employed for the year was 15.4 per cent compared with 12.6 per cent in 2003. Return on capital employed was 14.9 per cent compared with 10.9 per cent in 2003.

The effective rate of tax on adjusted profit was 29 per cent in 2004, the same as in 2003. The total rate of tax was 24.7 per cent in 2004 compared with 27.4 per cent in 2003.

Under the FRS17 accounting standard used by the Group, the increase in equity market valuations at the end of September will result in an increase in the expected return on pension scheme assets during 2005. This will be partly offset by an increase in the interest on pension scheme liabilities. In aggregate an increase of approximately £2.9 million in the net pension credit is expected at current exchange rates for 2005.

Ordinary shareholders
The dividends already paid in 2004 were covered 1.58 times by adjusted earnings. As BOC delivers earnings growth going forward, the intention is to rebuild dividend cover over the medium term towards a level of two times by progressively growing the dividend, albeit at a lower rate than earnings per share growth. Over recent years the first interim dividend has been held flat and all growth included with the second interim, with the overall aim of achieving a ratio of 40:60 for the two interim dividends. As this has been achieved, the Board has decided to raise the first interim dividend by 2.6 per cent to 15.9p.

A first interim dividend for 2005 of 15.9p will therefore be paid on 1 February 2005 to shareholders on the register on 7 January 2005 and the shares will be quoted 'ex dividend' on 5 January 2005. The BOC Dividend Reinvestment Plan will be available to shareholders whose applications have been received by Lloyds TSB Registrars by 11 January 2005. Any revocations must be received by the same date.

American Depositary Receipt (ADR) holders
The first interim dividend will be paid on 8 February 2005 to holders of sponsored ADRs registered on 7 January 2005. The ADRs will be quoted 'ex dividend' on the New York Stock Exchange on 5 January 2005. The Global Invest Direct plan will be available to ADR holders.

BOC Edwards has been successful in winning significant new electronic gases business during 2004, particularly in Taiwan and China, and maintaining strong market share in its semiconductor equipment business. This will contribute to the development of turnover and operating profit. However, a recent slow-down in semiconductor spending coupled with the delays in some new flat panel investments has been reflected in some reduction of order intake for semiconductor equipment. This, coupled with the adverse impact of the weaker US dollar, is expected to lead to operating profits in each of the first two quarters of 2005 slightly below the average quarterly rate of the year 2004.

BOC's gases businesses continue to make excellent progress and the outlook for 2005 and beyond is positive. In 2005 Industrial and Special Products will reap the full benefit of the US packaged gas disposal. The year on year benefit to operating profit is expected to be some £10 million a year. Process Gas Solutions will benefit from new production in 2005 and more new supply schemes are scheduled to be commissioned thereafter.

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 over 43,000 people and had annual sales of nearly £4.6 billion in 2004.

BOC is organised into three global lines of business – aligning the organisation directly to its 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 (tonnage), from on-site production units, or in liquid form by tanker (merchant market). 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 (LPG) business in certain countries.

BOC Edwards is synonymous with the semiconductor industry, supplying gases, equipment 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:
Afrox hospitals, the largest supplier of private health care in southern Africa.