The Group financial statements have been prepared under the historical cost convention, with the exception of derivative financial instruments and available-for-sale financial assets, which are stated at their fair values.

The financial statements of companies consolidated in The Linde Group have been prepared using uniform accounting policies in accordance with IAS 27 Consolidated and Separate Financial Statements.

Recently issued accounting standards

The IASB has revised numerous standards and issued many new ones in the course of its projects to develop IFRS and in its efforts to achieve convergence with US GAAP. These were applied in the Group financial statements from 1 January 2007 where they had been adopted by the European Commission. Of these, the following standards are mandatory in the Group financial statements for the year ended 31 December 2007:

• IFRS 7 “Financial Instruments: Disclosures“ and
• Amendment to IAS 1 “Presentation of Financial Statements: Capital Disclosures“.

These standards have no effect on the net assets, financial position and results of operations of The Linde Group, but lead to changes to the note disclosures given in the Group financial statements for the year ended 31 December 2007.

The following standards have been early adopted in the Group financial statements for the year ended 31 December 2007:

• IFRS 8 “Operating Segments”
• IFRIC 11 “IFRS 2 – Group and Treasury (Glossary) Share Transactions”.

In 2007, IFRS 8 “Operating Segments”, which relates to segment reporting, was applied for the first time. As a result of the requirements of this standard and the matrix organisation which was introduced during the financial year, the segment structure has changed. The prior year figures in the segment report have been adjusted accordingly. For the definition of the segments, see Note [33].

In addition, the following standards have been issued by the IASB or IFRIC in the course of the 2007 financial year, but have not been applied in the Group financial statements for the year ended 31 December 2007, as they are not yet effective or have not yet been adopted by the European Commission:

• IFRIC 12 “Service Concession Arrangements”
• IFRIC 13 “Customer Loyalty Programmes”
• IFRIC 14 “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”.

These standards will not be applied by Linde AG until the 2008 financial year or later. The application of IFRIC 14 “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction” is expected to result in an increase in the provision for pension obligations, not affecting profit or loss, as Linde is obliged to make contributions to plan assets as a result of legal requirements or contractual agreements. It will, however, not lead to the recognition of an asset because of the asset ceiling described in IAS 19.58.

The impact of the standards which have not been applied on the presentation of the net assets, financial position and results of operations in the 2008 financial year is not expected to be significant overall.