Linde Plc · NASDAQ:LIN
Linde — Non-Deal Roadshow (March 2007)
35 slides from Linde's roadshow presentation, Mar 22, 2007
Slide 1: The Linde Group. Growing Together. Roadshow
The Linde Group. Growing Together. Roadshow Frankfurt, 22. März 2007 Georg Denoke, CFO
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements about Linde AG (“Linde”), The BOC Group plc (“BOC”) and their respective subsidiaries and businesses. These include, without limitation, those concerning the strategy of an integrated group, future growth potential of markets and produ
Slide 3: Agenda
Agenda 1. Highlights 2006 2. Update on Integration Process 3. Priorities and further outlook
Slide 4: Highlights 2006
Highlights 2006 A year of important strategic transformation Good progression on deleveraging and integration schedules Net debt down to € 9,933 million from € 12,815 at end of Q3/ 2006 Gearing down to 121% from 189% New operating model, effective since Jan 1st, will allow to take full advantage of
Slide 5: Key Financials 2006 Revenues
Key Financials 2006 Revenues € million 2005 2006 ∆% Gas 4,448 6,195 39.3 Linde 4,448 4,814 8.2 BOC 1,381 Engineering 1,623 1,863 14.8 Linde 1,623 1,822 12.3 BOC 41 Others – 187 55 – ∑ 5,884 8,113 37.9 Discontinued KION 3,627 4,020 10.8 Others – 306 – ∑ 3,627 4,326 19.3 Total Group 9,511 12,439 30.8
Slide 6: Key Financials 2006 EBITDA (pre-exceptionals)
Key Financials 2006 EBITDA (pre-exceptionals) € million 2005 2006 ∆% Gas 1,104 1,540 39.5 Linde 1,104 1,225 11.0 BOC 315 Engineering 117 153 30.8* Others – 89 – 107 – ∑ 1,132 1,586 40.1 Discontinued KION 573 611 6.6 Others 19 ∑ 573 630 9.9 Total Group 1,705 2,216 30.0 * Positive impact from Cryostar
Slide 7: Gases Division: Good revenue growth in all regions
Gases Division Good revenue growth in all regions € million +21.1% +53.3% +21.4% +29.8% 3,667 359 3,308 3,028 1,372 450 573 420 922 163 895 31 381 160 345 389 178 192 2 3 2005 2006 2005 2006 2005 2006 2005 2006 2005 2006 Europe North America South America Asia/Pacific Africa Linde BOC 7
Slide 8: Gases Division: All product segments with strong revenue increase
Gases Division All product segments with strong revenue increase € million (consolidated) +46.1% +47.2% +36.7% +19.3% 2,247 503 1,788 1,490 460 1,744 1,644 329 1,328 848 1,161 1,215 88 1,020 711 760 +13.8% +9.3% +6.1% +6.9% 2005 2006 2005 2006 2005 2006 2005 2006 On Site Bulk Cylinders Healthcare Li
Slide 9: Starting point beginning 2007 as pure play Gas & Engineering
Starting point* beginning 2007 as pure play Gas & Engineering € million Revenues EBITDA Margin Pro forma 2006 9,178 - Cryostar -138 9,040 2,329 25.8% - IFRIC 4 -129 -129 -1.1% 8,911 2,200 24.7% - Disposals/acquisitions -477 -165 -0.6% 8,434 2,035 24.1% + Share of net income of JVs +37 Gases Starting
Slide 10: New financial key figures
New financial key figures New Previous definition definition Operating Return EBITDA (incl. IFRIC 4 adjustment) adjusted not adjusted excl. finance costs for pensions Profit excl. special items incl. share of net income from associates and joint ventures 2,216 2,162 adjusted Return Operating profit
Slide 11: Agenda
Agenda 1. Highlights 2006 2. Update on Integration Process 3. Priorities and further outlook 11
Slide 12: A successful transformation into a pure play
A succesful transformation into a pure play Dec 20 Dec 28 Jan 31 Jan 24 May 3 July 11 July 18 Nov 5 Sale of Closing of Sale of March 7 Announce- Syndicated Rights FTC- Sale of Linde KION Group participation Sale of ment loan Issue Approval KION Group Australia disposal in Indura Linde UK March 6 Jun
Slide 13: Successful completion of disposal process
Successful completion of disposal process € million Proceeds (EV) Signing Closing KION Group 4,000 05/11/06 9 28/12/06 9 8 Linde US ASUs 386 22/11/06 9 09/03/07 9 Linde Australia 300 20/12/06 9 01/02/07 9 Stake in JAG 695 21/12/06 9 01/03/07 9 BOC Poland 370 08/01/07 9 Q1/07 Stake in Indura 150 31/0
Slide 14: Integration synergies: Well on track towards € 250 million
Integration synergies Well on track towards our set target of € 250 million Synergy ramp-up scheme Synergy Split (yearly run-rate, pre one-time cost) Procurement + R&D 25% Supply 250M 30% (Operations) 100M 45% G&A 2006 2007 2008 — Rapid implementation of new organisational structure by 1st January 2
Slide 15: Rapid identification and generation of synergy categories
The Linde Group is pursuing a rapid identification, generation of, and commitment to all synergy categories — Identification of best practices in production and distribution for all regions by global joint Linde/BOC expert teams — Initiation of pilot implementations, e.g., Supply — Plant maintenance
Slide 16: Agenda
Agenda 1. Highlights 2006 2. Update on Integration Process 3. Priorities and further outlook 16
Slide 17: Priorities and further outlook
Priorities and further outlook Group — Adjusted ROCE above 10% in 2008 — EBITDA will be above € 3 billion in 2010 — Dividend policy will adequately reflect profit growth — Further deleveraging — Pre-tax cost of debt 5.6-5.8% — Tax rate 30-32% — € 250 m cost savings (fully effective in 2009) — Cost s
Slide 18: Industrial Gases: Stable growth market - attractive opportunities
Industrial Gases Stable growth market - attractive opportunities Strong and stable growth Global Industrial Gases — Expected market growth of 7% p.a. Market Growth 1999-2009e — In line with historic performance €51.0 bn New applications across all end markets CAGR +7 % — For high innovation (electro
Slide 19: Gases Division - A truly global player
Gases Division - A truly global player # 1 or 2 position in 55 countries Market Leader #2 Player Others Present in >70 countries representing >95% of global GDP 19
Slide 20: Gases Division: Leading position in 3 out of 6 growth segments
Gases Division Leading position in 3 out of 6 growth segments Global market shares per growth segments Geographies Products #1 35-40% #2 #1 #2 #1 #4 15-20% 15-20% 15-20% 15-20% 15-20% (1) (2) Eastern South Asia Healthcare Speciality Gases Hydrogen Europe America CAGR 10-15% 5-10% ~15% 6-8% 5-10% ~10
Slide 21: Gases Division: Tonnage pipeline of upcoming and recent start-ups
Gases Division Tonnage – pipeline of upcoming and recent start-ups BP/Sunoco - USA Wacker/OMV Maksi Group - Germany - Russia Valero SeverCorr - USA Bayer - USA Corus - PR China TISCO - Netherlands - PR China Chevron / Holly - USA Total Elektrostal - Germany - Ukraine Ma Steel Shell – PR China - USA
Slide 22: Engineering Division: Leading market position in all segments
Engineering Division Leading market position in all segments Air Separation Plants Hydrogen and Synthesis Gas Plants Top 1 Top 2 Top 1 Products: Products: — H2/CO/Syngas — Oxygen — Ammonia — Nitrogen — Gas removal — Rare gases — Gas purification Main competitors: Main competitors: Air Liquide, Air P
Slide 23: Engineering Division: Strong financial track record
Engineering Division Strong financial track record € million 2000 1,863 8% 1800 1,623 7% 1,581 1600 6% 1400 1,270 5% 1200 1,117 1,047 1,036 1000 904 909 4% 800 3% 600 GEA 2% 400 1% 200 0 0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 Sales EBITA-Margin 23
Slide 24: Engineering Division: On profitable growth track
Engineering Division On profitable growth track — Ongoing strong environment in all four end markets drives order backlog to record levels — Linde Engineering on profitable growth track, EBITDA-margin up from 7.2 to 8.2% Order income +2.7% Order backlog +36.7% € million € million 4,518 3,305 2,913 2
Slide 25: Appendix
Appendix 1. Major Accounting & Reporting Implications 2. New Reporting of Key Financial Figures 3. Purchase Price Allocation & IFRIC 4 4. Development of Cash flow, Net debt, Equity
Slide 26: Major accounting implications & reporting changes in 2006
Major accounting implications & reporting changes in 2006 Purchase Price Allocation for the BOC Group Significant increase in depreciation without cash impact IFRIC 4 Embedded finance Lease for On-Site-Plants Reclassification of operating profit because of financial lease into interest result and am
Slide 27: Linde Group Reconciliation of EPS
Linde Group Reconciliation of EPS 31.12.2005 31.12.2006 € million Key Financial As reported Non-GAAP Key Financial Effects Figures adjustment Figures Revenues 9,511 12,439 12,439 Gross profit on sales 3,039 3,892 124 4,016 PPA Other income/expense –2,292 – 2,968 62 – 2,906 PPA Special items – 1,614
Slide 28: Major accounting implications: Purchase Price Allocation
Major accounting implications Purchase Price Allocation € million 12,400 3,000 200 9,600 Purchase Price Equity Pre-Existing Goodwill for BOC Goodwill of BOC 28
Slide 29: Major accounting implications: Purchase Price Allocation
Major accounting implications Purchase Price Allocation Results of Purchase Price Allocation meet our expectation Comparable to fair value adjustments (FVA) of other transactions € million 9,600 3,500 6,600 eg: 1,300 —Customer relations —Trade marks eg: 1,800 1,800 4,800 —Plants —Distribution equipm
Slide 30: Major accounting implications: Purchase Price Allocation
Major accounting implications Purchase Price Allocation Development of depreciation (€ million) Expected range 500 2007 > 400 – 450 400 2008 > 350 – 400 300 2009 > 250 – 300 200 2010 > 200 – 250 100 2011 < 200 … 0 07 09 11 15 21 2021 < 100 20 20 20 20 20 30
Slide 31: Impact of mandatory adoption of IFRIC 4
Impact of mandatory adoption of IFRIC 4 Financial Statements as of 31 December 2006 The Linde Group shows a significant amount of plants as embedded finance leases due to the adoption of IFRIC 4 Receivables from Financial Services: 31/12/2006 € 1,001 million Important considerations: 31/12/2006 — No
Slide 32: Development of operating cash flow
Development of operating cash flow (incl. minority interests) € million KION capital gain tax Pension funding UK impact (-€ 260 m in (-€ 220 m) 2006, +€ 260 m in 2007) 251 751 Transaction costs 117 1,501 109 1,227 31.12.2005 Division Division Corp./cons. Discontinued 31.12.2006 Gases Engineering Ope
Slide 33: Net debt
Net debt (Financial debt ./. cash ./. securities) First major step with KION disposal, closing of other disposals to follow in 2007 € million 13,677 3,275 1,816 939 1,227 130 9,933 1,505 2005 Acquisition Sale of Net Equity Net Operating Others 2006 of BOC KION Increase invest. Cash flow 33
Slide 34: Development of group equity
Development of group equity Strong increase due to capital increase and FY06 net income € million 55 1,858 8,225 171 1,836 168 4,473 01.01.2006 Gross Capital Net Exercise of Dividend Net Income Others 31.12.2006 adjusted Increase Convert. Bond Payment 34
Slide 35: Investor Relations Contacts
Investor Relations Contacts Thomas Eisenlohr, Head of Investor Relations Phone +49 89 357 57 1330 thomas.eisenlohr@linde.com Robert Schneider Phone +44 20 7647 9614 Robert.schneider@linde.com 35