L i n d e F i n a n c i a l R e p o r t 2 014 Linde in the capital market R em u neration report < 5 8 Linde in the c ap i tal ma r k e t 75 B u siness model of >8 0 T h e L inde G ro u p 75 Increase in DAX in 2014 In 2014, most international stock exchanges were affected by continuing monetary stimuli and by the lack of investment alternatives in the low interest environment. Despite political unrest, such as that in Ukraine, share prices benefited from these factors. It was not until the second half of the year that growing economic concerns and the significant fall in the oil price led to a drop in share prices. The German share index DAX started the trading year at 9,590 points and this was followed by a rather volatile period for the index. In June 2014, it broke through the 10,000 points mark for the first time. As a result of worsening economic data from the United States, share prices went down, with the DAX falling to its lowest level for the year of 8,572 points on 16 October 2014. For the remaining part of the year, the trend was back up. On 5 December 2014, the DAX reached its highest level for the year of 10,093 points, ending the year at 9,806 points. This was 2.7 percent higher than at the end of the 2013 financial year. Most of the other major European stock market indices performed similarly. The MSCI Euro Index gained in value by 2.0 percent and the DJ EURO STOXX by 1.7 percent. The FTSEurofirst 300 Index in London increased by 4.0 percent. Only the CAC 40 Index in Paris fell, dropping by 0.5 percent. The US stock markets again saw more dynamic trends than in Europe. The S & P 500 Index was up 11.6 percent, while the NASDAQ technology index (NASDAQ composite) rose by 13.4 percent. In the emerging economies, however, the picture was different. The MSCI Emerging Markets Index lost 4.6 percent in the course of 2014. Slight upward trend for Linde shares In this environment, over the year there was a slight upward trend in the price of Linde shares. The closing price of the shares was EUR 154.20, 1.4 percent higher than the price at the end of 2013 of EUR 152.05. This meant that there was also a slight increase in the Group’s market capitalisation of 1.4 percent to EUR 28.625 bn (31 December 2013: EUR 28.219 bn). Linde shares had a modest start to 2014, with the lowest price for the year (EUR 139.15) being reached on 5 February 2014. The shares recovered strongly in the middle of the year in a favourable stock market environment, with the price reaching its highest level for the year of EUR 157.30 on 20 June 2014. This price was also a new all-time high for Linde shares. In the second half of the year, Linde shares performed in line with the DAX, although the Group was only able to report relatively low growth. In the first part of October, Linde shares were even outperforming the German share index. However, when the Group revised its targets at the end of the month, the shares saw a significant if temporary decline. However, they quickly recovered as the year came to an end, finishing 2014 almost back in line with the overall trend of the DAX. Despite the difficult operating environment, especially in the second half of the year, the relatively steady overall performance of L inde shares is evidence that the capital market appreciates the Group’s business model which is characterised by long-term contract structures, a broad customer base and stable cash flows. At the same time, Linde’s international gases and engineering business continues to offer attractive opportunities for development. The capital market also acknowledges that Linde has enhanced its robustness by focusing on the expansion of its Healthcare business, which is largely immune to cyclical economic trends. The Group’s very good position in growth markets is also viewed positively. Linde uses the term “growth markets” to describe the emerging economies (comprising the regions of Eastern Europe, Africa, South & East Asia and Greater C hina) plus the region of North America. The continuing implementation of Linde’s holistic HPO (High Performance Organisation) programme, which is designed to achieve lasting efficiency improvements, and the evolution of the Group as a learning organisation, also contribute to the positive assessment of Linde in the capital market. The announcement that Linde will continue to build on its strengths and focus even more on efficiency will also enhance the confidence of market participants. Linde also made progress during the financial year in terms of sustainability ratings in the capital market. In September 2014, the Group was again included in the global Dow Jones Sustainability Index (DJSI World). Analysts at RobecoSAM acknowledged the Group in particular for its activities in the fields of customer relationships, compliance, and risk and crisis management. The regional index of the CDP investor initiative nominated the Group for its good climate protection reporting. In 2014, Linde also qualified for inclusion in the FTSE4Good Index Series. The leading international rating agencies Moody’s and Standard & Poor’s award Linde a high credit rating. In December 2014, Standard & Poor’s confirmed its good credit rating of A+ with a stable outlook. Moody’s increased its rating of the Group in June 2014 by one notch from A3 to A2 with a stable outlook. In December 2014, Moody’s reconfirmed this credit rating. The agencies hereby recognise the Group’s conservative financial policy and its robust business model as well as its good liquidity situation. During the financial year, L inde was able to benefit repeatedly from these ratings and from the good conditions in the international capital markets for corporate bonds. In the second quarter of 2014, the Group issued a ten-year EUR 300 m bond with a 1.875 percent coupon. The bond L i n d e F i n a n c i a l R e p o r t 2 014 issue was used to provide additional external funding for the pension plans in Germany. In the third quarter of 2014, the Group also placed two USD 200 m bonds to refinance a USD 400 m bond maturing in November 2014. In 2014, the EUR 2.5 bn credit facility agreed in J uly 2013 was successfully extended by one year to 2019. The credit facility originally ran for five years, with two options to extend the facility, in each case by one year (subject to the agreement of the lenders). One option to extend the facility in 2015 by one year remains. With the syndicated credit facility supplementing its liquid funds, L inde had a solid general liquidity reserve at the end of 2014. 8 Capital market-based figures 2014 2013 No. 185,638,071 185,587,803 Year-end closing price € 154.20 152.05 Year high € 157.30 153.90 128.60 Number of shares with dividend entitlement for the financial year € 139.15 Total dividend of Linde AG for the financial year € million 585 557 Market capitalisation1 € million 28,625 28,219 No. 2,267,308 2,257,467 % 16.2 14.6 Cash dividend € 3.15 3.00 Dividend yield % 2.0 2.0 Operating cash flow € 16.17 16.94 Earnings (reported EPS) € 5.94 7.10 Year low Average weekly volume Volatility1 (200 days) 1 As at 31 December. 1 Linde Share Performance in 2010 – 2014 compared with indices 76 L i n d e i n t h e c a p i t a l m arket Information per share Index in % 220 190 160 130 100 70 06.2010 Linde AG 12.2010 Prime Chemical 06.2011 DAX 12.2011 06.2012 DJ Euro Stoxx Chemical 12.2012 06.2013 12.2013 06.2014 12.2014 L i n d e F i n a n c i a l R e p o r t 2 014 1 Institutional Investors h oldings by r egion in % 9 L inde performance in comparison with the most important indices1 2014 in percent Weighting Linde shares in percent Linde (including dividend) 3.4 – Linde (excluding dividend) 1.4 – DAX 2.7 3.31 Prime Chemical 4.0 13.01 DJ EURO STOXX 1.7 0.81 DJ EURO STOXX Chemical 1.4 7.94 FTSEurofirst 300 4.0 0.46 FTSE E300 Chemical 2.8 9.03 MSCI Euro 2.0 0.42 1 As at 31 December 2014. 77 Stable shareholder structure In the annual s hareholder identification survey, Linde identified the shareholders of around 79 percent (2013: around 77 percent) of the shares outstanding at 31 December 2014. These are solely institutional investors. In the case of the shareholders who have not been identified, it is assumed that 79 percent of these shares too can be allocated to institutional investors. On the basis of this approach to the calculation, the proportion of private investors who held Linde shares at 31 December 2014 was around 5 percent (2013: 5 percent). The proportion of institutional investors from the United States was around 38 percent at the end of 2014, compared with 35 percent at 31 December 2013. US investors continue to constitute the largest group of investors from a single country. The proportion of shares held by European institutional investors remained the same at 58 percent. However, the proportion of shares held by institutional investors in the Scandinavian countries (included in the figure for European institutional investors) increased again, from 9 percent to 13 percent. At 31 December 2014, German institutional investors held 14 percent of Linde’s shares (31 December 2013: 16 percent). The proportion of British institutional investors rose slightly from 13 percent at the end of 2013 to 15 percent at the end of 2014. The proportion of Asian investors remained constant at 4 percent at the end of both 2013 and 2014. The proportion of investors who are oriented towards sustainability increased during the reporting period to around 11 percent (2013: 7 percent). In the past year, L inde has again succeeded in broadening its investor base to include a number of investors who take a long-term view. The Group’s business model is geared towards sustainable, profitable growth. L inde also benefits from a stable financing structure which is geared towards the long term and therefore offers investors an attractive investment with the opportunity for long-term wealth creation. 5 4 4 7 38 13 14 USA Great Britain Germany Scandinavia 38 (2013: 35) 15 (2013: 13) 14 (2013: 16) 13 (2013: 9) 15 France Other Switzerland Asia 7 (2013: 8) 5 (2013: 7) 4 (2013: 8) 4 (2013: 4) L i n d e F i n a n c i a l R e p o r t 2 014 Dividend payment L inde has adopted an earnings-based dividend policy geared towards continuity. The Executive B oard and Supervisory Board will recommend the payment of a dividend of EUR 3.15 per share at the Annual General Meeting on 12 May 2015. This is an increase of 5.0 percent over the prior-year dividend of EUR 3.00. This gives a dividend payout ratio of 53.1 percent (2013: 42.3 percent) based on the net income for the year attributable to Linde AG shareholders. The dividend yield was around 2.0 percent (2013: 2.0 percent) based on the year-end closing price. Resolutions passed at the Annual General Meeting on 20 May 2014 At the Annual General Meeting held on 20 May 2014, no resolutions were passed to create or abolish conditionally authorised or authorised share capital or to authorise the purchase of own s hares. 78 L i n d e i n t h e c a p i t a l m arket High level of investor relations (IR) activities sustained In 2014, L inde continued its extensive efforts to communicate with participants in the capital markets, conducting over 800 conversations with investors. At more than 50 conferences and roadshows around the world, several events for private investors and in the course of plant visits on several continents, L inde has offered its shareholders and potential investors the opportunity to speak personally to representatives of the Group, including members of the Executive Board. At Linde’s second Capital Market Day, which was held in 2014, investors and analysts were given the chance to discuss in detail the future challenges and opportunities faced by L inde with all the members of the Executive Board and selected experts from the Group. The Group also held an event for sell-side analysts. This event, which has become a fixture in recent years, provides analysts with an opportunity for dialogue with members of the Executive Board of Linde AG about new trends and about the business performance and future of the Group. A key focus of L inde’s communications with the capital markets is the strategic development of the Group. The priority is to continue to build on L inde’s core competences, thereby enhancing the efficiency of the whole Group. Moreover, Linde provided a commentary on the current business performance of the whole Group and the impact of exchange rates and the global economic climate. It was able to convince German and international investors about the potential of its products, technologies and services in the promising areas of energy, the environment and healthcare. Transparency, continuity and reliability will remain the guiding principles for L inde’s investor relations work in 2015. The IR team will put forward the arguments which continue to make an investment in the Group an attractive proposition: its forward-looking and robust business model characterised by long contract periods, financing geared towards the long term and an excellent position in the fast-growing business sectors. All current information about Linde shares can be found at the Group’s website at W W W. L I N D E . CO M in the Investor Relations section. Information and answers to any questions you may have can be obtained by calling the IR team on +49.89.35757-1321. You are also welcome to send us your questions online at I N V E S TO R R E L AT I O N S @ L I N D E . CO M . 10 Linde share information Type of share Stock exchanges Security reference numbers Bearer shares All German stock exchanges ISIN DE0006483001 CUSIP 648300 Reuters (Xetra) Bloomberg LING.DE LIN GR L i n d e F i n a n c i a l R e p o r t 2 014 Financial calendar  P R E S S C ON F E R EN C E ON T H E ANNUA L R E S U L T S PU B L I C AT I ON O F T H E G R OUP F I NAN C I A L S TATE M ENT S 16 March 2015 Carl von Linde Haus, Munich, Germany  I NTE R I M R EPO R T J ANUA R Y TO M A R C H 2 0 1 5 30 April 2015  281 ANNUA L G ENE R A L M EET I N G 2015 12 May 2015, 10 a. m. International Congress Centre, Munich, Germany  D I V I DEND PAY M ENT 13 May 2015  I NTE R I M R EPO R T J ANUA R Y TO J UNE 2 0 1 5 29 July 2015  AUTU M N P R E S S C ON F E R EN C E 2015 28 October 2015 Carl von Linde Haus, Munich, Germany  I NTE R I M R EPO R T J ANUA R Y TO S EPTE M B E R 2 0 1 5 28 October 2015  ANNUA L G ENE R A L M EET I N G 2016 3 May 2016, 10 a. m. International Congress Centre, Munich, Germany Statements relating to the future This annual report contains statements relating to the future which are based on management’s current estimates about future developments. These statements are not to be understood as guarantees that these expectations will prove to be true. The future development and the results actually achieved by The Linde Group and its affiliated companies are dependent on a number of risks and uncertainties and may therefore deviate significantly from the statements relating to the future. Linde has no plans to update its statements relating to the future, nor does it accept any obligation to do so.
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