At 31 December 2007, IFRS 8 Operating Segments was applied for the first time. As a result of the requirements of this standard, which defines segments primarily on the basis of the internal management of an entity, and the introduction of the matrix organisation in the 2007 financial year, the presentation of the segments has changed when compared with previous years. In the Gases Division, the organisational structure is based on management at a regional level. In contrast, the Engineering Division, and Other activities (Gist and FRED BUTLER^®) are managed at a global level. Included in the adjustments column are not only corporate activities and adjustments to arrive at the consolidated figure, but also the discontinued operations of the Group.

In accordance with IFRS 8, The Linde Group comprises a total of 6 operating segments, which are briefly described below:

Gases Division: Production, sale and distribution of gases for applications in industry, medicine, environmental protection and in research and development. In addition, this division offers technical application know-how, specialised services and the necessary hardware to use the various gases. The Gases Division comprises 4 operating segments based on the regional structure of The Linde Group:

Engineering Division: Conception and realisation of turnkey industrial plants for the petrochemical industry, for the production of hydrogen and synthesis gases and the treatment of natural gas, as well as the construction of air separation and pharmaceutical plants. This division also develops and manufactures plant components and offers specialised services. From the 2006 financial year, the Engineering Division has included the company Cryostar, which became part of The Linde Group as a result of the acquisition of BOC.

Other activities: Other activities includes Group activities which cannot be allocated to any other segment. In particular, they include Gist, a leading supplier of logistics and supply chain solutions with substantial business operations in the UK, and FRED BUTLER^®, a provider of environmentally friendly cleaning services for the end consumer. As none of these activities have ever exceeded the quantitative thresholds which apply for separate disclosure, they are disclosed together under other activities.

Segment accounting policies

For the operating segments, the same accounting policies apply as those set out in Note [7]. Exceptions relate in particular to Group financing, which is allocated to Corporate and included in the following reconciliation as Liabilities in Corporate activities. Pension obligations are generally allocated to the segment in which the relevant employees work. The entire provision for pension obligations outstanding in the UK has been allocated to Corporate in the reconciliation, with only the service cost charged to Western Europe, Other activities and Corporate segments. Transactions between the operating segments are generally conducted under the same conditions as for non-related third parties.

To arrive at the figure for the Gases Division as a whole from the figures for the operating segments in the Gases Division, consolidation adjustments of EUR 67m (2006: EUR 30m) have been applied to sales and consolidation adjustments of EUR 110m (2006: EUR 67m) have been applied to segment assets and segment liabilities. Therefore, it is not possible to arrive at the figures for the Gases Division as a whole by merely adding together the operating segments in the Gases Division.

Segment profit is calculated on the basis of operating profit, which is defined as earnings before tax, interest, depreciation and amortisation (EBITDA (Glossary)), including the share of net profit from joint ventures and associates.

The reconciliations of segment sales to Group sales, segment operating profit to Group earnings before taxes on income, segment assets to Group assets and segment liabilities to Group liabilities are shown below: