28th Jul 2010 07:00
BG Group plc
2010 SECOND QUARTER & HALF YEAR RESULTS
Second Quarter Business Performance Highlights
·; Earnings per share of 26.6 cents, up 19% year-on-year
·; Cash generated by operations of $2 323 million, up 57% year-on-year
·; Interim dividend of 9.82 cents per share (6.35 pence per share)
·; Tupi Alto, seventh consecutive successful well on the Tupi accumulation
·; QCLNG received state environmental approval, federal approval expected later this year
·; Total US shale gas net reserves and resources increased to over 1.3 billion boe
BG Group's Chief Executive, Frank Chapman said:
"These are good results, accompanied by continued progress with the delivery of our growth plans. We had further appraisal success in the Santos Basin, offshore Brazil, and production from our first permanent production facility on Tupi is expected later this year. In Australia, our total reserves and resources are now 2.9 billion boe, and we remain on track to sanction the QCLNG project later this year. We have substantially increased our total US shale gas reserves and resources to over 1.3 billion boe."
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Second Quarter |
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Half Year |
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2010 $m |
2009(b) $m |
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Business Performance(a) |
2010 $m |
2009(b) $m |
|
|
1 532 |
1 448 |
+6% |
|
Total operating profit including share of pre-tax operating results from joint ventures and associates |
3 527 |
3 272 |
+8% |
|
899 |
754 |
+19% |
|
Earnings for the period |
2 019 |
1 742 |
+16% |
|
26.6c |
22.4c |
+19% |
|
Earnings per share |
59.8c |
51.9c |
+15% |
|
9.82c |
9.20c |
+7% |
|
Interim dividend per share |
9.82c |
9.20c |
+7% |
|
|
|
|
|
|
|
|
|
|
|
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Total results for the period (including disposals, re-measurements and impairments) |
|
|
|
|
914 |
1 341 |
-32% |
|
Operating profit before share of results from joint ventures and associates |
2 541 |
3 080 |
-18% |
|
1 048 |
1 468 |
-29% |
|
Total operating profit including share of pre-tax operating results from joint ventures and associates |
2 806 |
3 336 |
-16% |
|
602 |
761 |
-21% |
|
Earnings for the period |
1 562 |
1 769 |
-12% |
|
17.8c |
22.7c |
-22% |
|
Earnings per share |
46.2c |
52.7c |
-12% |
a) 'Business Performance' excludes disposals, certain re-measurements and impairments as exclusion of these items provides a clear and consistent presentation of the underlying operating performance of the Group's ongoing business. During the second quarter, total results included a net pre-tax charge of $41 million on the disposal/impairment of certain assets (pre-tax charge of $418 million for the half year). Total results for the second quarter also included a pre-tax charge of $443 million in relation to mark-to-market movements on long-term commodity contracts and economic hedges (pre-tax charge of $303 million for the half year). For further information see Presentation of Non-GAAP measures (page 13) and notes 1 to 3 (pages 21 to 25). Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance.
b) 2009 results have been restated from Pounds Sterling to US Dollars (see note 1, page 21).
Business Review - Group
|
Second Quarter |
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Half Year |
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|
2010 $m |
|
2009 $m |
|
|
Business Performance |
2010 $m |
|
2009 $m |
|
|
|
4 127 |
|
3 489 |
|
+18% |
Revenue and other operating income(a) |
8 774 |
|
7 939 |
|
+11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Total operating profit including share of pre-tax results from joint ventures and associates |
|
|
|
|
|
|
746 |
|
728 |
|
+2% |
Exploration and Production |
1 938 |
|
1 562 |
|
+24% |
|
540 |
|
465 |
|
+16% |
Liquefied Natural Gas |
1 173 |
|
1 292 |
|
-9% |
|
174 |
|
189 |
|
-8% |
Transmission and Distribution |
299 |
|
304 |
|
-2% |
|
42 |
|
74 |
|
-43% |
Power Generation |
97 |
|
109 |
|
-11% |
|
30 |
|
(8) |
|
- |
Other activities |
20 |
|
5 |
|
+300% |
|
1 532 |
|
1 448 |
|
+6% |
|
3 527 |
|
3 272 |
|
+8% |
|
|
|
|
|
|
|
|
|
|
|
|
|
19 |
|
(60) |
|
- |
Net finance income/(costs) |
1 |
|
(127) |
|
- |
|
(616) |
|
(591) |
|
+4% |
Taxation for the period |
(1 447) |
|
(1 337) |
|
+8% |
|
899 |
|
754 |
|
+19% |
Earnings for the period |
2 019 |
|
1 742 |
|
+16% |
|
|
|
|
|
|
|
|
|
|
|
|
|
26.6c |
|
22.4c |
|
+19% |
Earnings per share (cents) |
59.8c |
|
51.9c |
|
+15% |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 770 |
|
1 761 |
|
+57% |
Capital investment |
4 671 |
|
3 633 |
|
+29% |
a) 2009 comparatives have been restated on the application of IFRIC 12. See note 1 (page 21).
Second quarter
Revenue and other operating income increased by 18% to $4 127 million, principally reflecting higher commodity prices in the E&P and LNG segments.
Total operating profit increased by 6% to $1 532 million, reflecting the growth in revenue and other operating income, partially offset by a higher exploration charge in the quarter.
Cash generated by operations increased by 57% to $2 323 million reflecting the increase in operating profit and lower levels of working capital.
Net finance income of $19 million for the quarter (2009 $60 million costs) included foreign exchange gains of $71 million (2009 $8 million gain). As at 30 June 2010, net debt was $5 047 million and the gearing ratio of the Group was 17%.
Capital investment (including acquisitions of $1 233 million) in the quarter was $2 770 million and comprised investment in E&P ($2 433 million), LNG ($254 million), T&D ($57 million) and Power ($26 million).
Half year
Revenue and other operating income of $8 774 million was 11% higher, reflecting generally higher commodity prices.
Total operating profit of $3 527 million was 8% higher as a result of the increase in revenue and other operating income, partially offset by lower realisations in the LNG segment.
Cash generated by operations increased by 39% to $4 831 million.
Net finance income of $1 million (2009 $127 million costs) included foreign exchange gains of $122 million (2009 $2 million loss).
The Group's effective tax rate (including BG Group's share of joint venture and associates' tax) for the full year is expected to be 41%. The current quarter's tax charge includes an adjustment to reflect this tax rate for the first six months of the year.
Capital investment in the half year (including acquisitions of $1 233 million) was $4 671 million and comprised investment in E&P ($3 463 million), LNG ($1 053 million), T&D ($109 million) and Power ($46 million).
The Board has approved the payment of an interim dividend of 9.82 cents per share. This is half of the 2009 total dividend, in accordance with the Board's usual policy. Following the change of reporting currency with effect from the first quarter of this year, this interim dividend for 2010 has been based on 19.63 cents as the US Dollar equivalent of the 2009 total Sterling dividend. The interim dividend has been converted to Sterling at the average of the closing exchange rate for the three business days preceding this announcement and will be paid on 10 September 2010 as 6.35 pence per share to shareholders on the register as at 6 August 2010.
Disposals, re-measurements and impairments
A post-tax charge of $297 million was recorded in the quarter in respect of disposals, re-measurements and impairments. For further information, see note 2 (page 22).
Exploration and Production (E&P)
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Second Quarter |
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Half Year |
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2010 $m |
|
2009 $m |
|
|
Business Performance |
2010 $m |
|
2009 $m |
|
|
|
57.3 |
|
58.5 |
|
-2% |
Production volumes (mmboe) |
118.6 |
|
116.4 |
|
+2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 059 |
|
1 732 |
|
+19% |
Revenue and other operating income |
4 353 |
|
3 562 |
|
+22% |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 112 |
|
928 |
|
+20% |
Total operating profit before exploration charge |
2 408 |
|
2 014 |
|
+20% |
|
(366) |
|
(200) |
|
+83% |
Exploration charge |
(470) |
|
(452) |
|
+4% |
|
746 |
|
728 |
|
+2% |
Total operating profit |
1 938 |
|
1 562 |
|
+24% |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 433 |
|
1 347 |
|
+81% |
Capital investment |
3 463 |
|
3 023 |
|
+15% |
Additional operating and financial data is given on page 30.
Second quarter
Revenue and other operating income of $2 059 million was 19% higher, reflecting higher realised oil, liquids and international gas prices, partially offset by lower realised gas prices in the UK and a 2% fall in production volumes.
Total operating profit increased by 2% to $746 million as a result of the increase in revenue and other operating income, partially offset by a higher exploration charge, including the write-off of the Mandarin well in Norway ($255 million).
Lower production volumes in the quarter reflect the extent and phasing of planned work-over and maintenance activity, partially offset by higher production from the USA and from Hasdrubal in Tunisia. BG Group continues to expect slight production growth for the full year.
International gas realisations were 35% higher at 33.35 cents per produced therm, reflecting gas prices linked to higher oil and Henry Hub market prices. The average realised gas price in the UK fell by 17% to 29.97 pence per produced therm as a result of lower contract prices.
The exploration charge of $366 million is $166 million higher as a result of higher well write-off costs.
Unit operating expenditure increased to $7.77 per barrel of oil equivalent, reflecting the impact of higher commodity prices and the phasing of maintenance activity.
Capital investment of $2 433 million in the quarter comprised investment in the Americas ($1 669 million, including $1 233 million on acquisitions in the USA as part of our alliance with EXCO Resources, Inc.), Africa, Middle East and Asia ($297 million), Europe and Central Asia ($293 million) and Australia ($174 million).
Half year
Revenue and other operating income increased by 22% to $4 353 million as a result of a 2% increase in production volumes and higher oil, liquids and international gas prices, partially offset by lower realised UK gas prices. Total operating profit increased by 24% to $1 938 million, reflecting the increase in revenue and other operating income.
The average realised international gas price increased by 9% to 32.99 cents per produced therm as a result of gas prices linked to higher oil and Henry Hub market prices. The average realised gas price in the UK fell by 28% to 36.15 pence per produced therm as a result of lower contract prices.
Unit operating expenditure increased to $7.35 per barrel of oil equivalent, reflecting the phasing of maintenance activity, the impact of higher commodity prices and changes in the production mix.
Capital investment of $3 463 million in the half year comprised investment in the Americas ($2 070 million, including $1 233 million on acquisitions in the USA as part of our alliance with EXCO Resources, Inc.), Europe and Central Asia ($564 million), Africa, Middle East and Asia ($540 million) and Australia ($289 million).
Second quarter business highlights
Brazil
In June, BG Group confirmed the success of a new well known as Tupi Alto in BM-S-11 (BG Group 25%) in the Santos Basin, offshore Brazil. This is the seventh consecutive successful well on the Tupi accumulation and confirms the extended presence of light oil.
Oman
In June, BG Group informed the government of the Sultanate of Oman of its decision to relinquish its 100% interest in Block 60, onshore Oman. Although BG Group maintained a highly collaborative relationship with the Omani government and delivered a successful appraisal programme on Abu Butabul, the decision to end its activity in Oman was based upon the desire to focus on other commercial priorities within the Group's global portfolio.
Tanzania
In June, BG Group completed a farm-in to blocks 1, 3 and 4, offshore southern Tanzania, a prospective new hydrocarbon play with significant resource potential. BG Group acquired 60% of Ophir Energy plc's interests in each of the offshore blocks. The three blocks cover more than 27 000 square kilometres of the Mafia Deep Offshore Basin and the northern portion of the Ruvuma Basin. Exploration drilling is planned to commence before the end of 2010.
UK/Norway
In June, the Plan for Development and Operation for the Gaupe field (formerly Pi) was approved. Gaupe is an oil and gas field situated south of the Varg field and close to the Norway and UK median line in the North Sea. Gaupe will be a two-well subsea tie-back to the Armada field on the UK Continental Shelf. Gross recoverable reserves on Gaupe are estimated at around 30 mmboe. Gaupe will be the first BG Group field to come onstream in the Norwegian Continental Shelf and is due onstream by 2012.
USA
In May, BG Group announced that it had entered into further joint venture agreements with EXCO Resources, Inc. (EXCO) focused on assets in the Appalachian Basin, located primarily in Pennsylvania and West Virginia. In June, BG Group closed this transaction acquiring a 50% interest in a total of 654 000 net acres in the Appalachian Basin, including approximately 5 900 producing wells and 2 100 miles of supporting infrastructure. BG Group paid a total consideration of $835 million, plus $150 million drilling carry, equating to an estimated unit resource cost of $0.40 per thousand cubic feet. The new joint venture extends the Group's successful alliance with EXCO and further strengthens BG Group's unconventional gas portfolio, adding substantial resources adjacent to the premium gas markets of the US eastern seaboard.
In June, BG Group acquired additional properties prospective for the Haynesville and Bossier shales via its alliance with EXCO for a consideration of approximately $178 million. The properties include producing assets, gathering lines and acreage in Shelby, San Augustine and Nacogdoches Counties, Texas. Much of the interest acquired is incremental to the producing assets, gathering lines and acreage acquired by BG Group and EXCO through the acquisition of Common Resources, L.L.C., which closed in May.
These transactions provide critical mass to BG Group's US upstream gas business, with total reserves and resources presently estimated at over 1.3 billion boe.
Liquefied Natural Gas (LNG)
|
Second Quarter |
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|
|
Half Year |
|
|
||||
|
2010 $m |
|
2009 $m |
|
|
Business Performance |
2010 $m |
|
2009 $m |
|
|
|
1 472 |
|
1 130 |
|
+30% |
Revenue and other operating income |
3 155 |
|
3 173 |
|
-1% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
|
|
|
|
478 |
|
412 |
|
+16% |
Shipping and marketing |
1 063 |
|
1 187 |
|
-10% |
|
81 |
|
80 |
|
+1% |
Liquefaction |
164 |
|
168 |
|
-2% |
|
(19) |
|
(27) |
|
-30% |
Business development and other |
(54) |
|
(63) |
|
-14% |
|
540 |
|
465 |
|
+16% |
|
1 173 |
|
1 292 |
|
-9% |
|
|
|
|
|
|
|
|
|
|
|
|
|
254 |
|
349 |
|
-27% |
Capital investment |
1 053 |
|
498 |
|
+111% |
Additional operating and financial data is given on page 30.
Second quarter
LNG total operating profit for the quarter increased by 16% to $540 million.
Shipping and marketing total operating profit of $478 million was 16% higher, reflecting higher realised prices.
BG Group's share of operating profit from liquefaction activities of $81 million was in line with 2009.
Capital investment of $254 million in the quarter included $143 million in Australia and $90 million relating to LNG ships.
Half year
LNG total operating profit was 9% lower at $1 173 million. Shipping and marketing total operating profit was 10% lower at $1 063 million, reflecting lower realisations.
The Group's share of total operating profit from liquefaction activities of $164 million was in line with 2009.
Capital investment of $1 053 million in the half year included $492 million arising on recognition of a finance lease under IAS 17, following the commissioning of a natural gas liquids-stripping facility at Lake Charles in the USA, $276 million relating to LNG ships and $257 million in Australia.
Second quarter business highlights
Australia
In June, BG Group received environmental approval from the Queensland state government for the Queensland Curtis LNG project. The approval follows review of the project's Environmental Impact Statement by the Queensland Coordinator-General. The Federal environmental approval process is ongoing. The project is making good progress and remains on track for sanction later this year.
Transmission and Distribution (T&D)
|
Second Quarter |
|
|
|
Half Year |
|
|
||||
|
2010 $m |
|
2009 $m |
|
|
Business Performance |
2010 $m |
|
2009 $m |
|
|
|
|
|
|
|
|
Revenue and other operating income(a) |
|
|
|
|
|
|
561 |
|
482 |
|
+16% |
Comgás |
1 080 |
|
905 |
|
+19% |
|
97 |
|
74 |
|
+31% |
Other |
192 |
|
140 |
|
+37% |
|
658 |
|
556 |
|
+18% |
|
1 272 |
|
1 045 |
|
+22% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
|
|
|
|
144 |
|
171 |
|
-16% |
Comgás |
244 |
|
271 |
|
-10% |
|
30 |
|
18 |
|
+67% |
Other |
55 |
|
33 |
|
+67% |
|
174 |
|
189 |
|
-8% |
|
299 |
|
304 |
|
-2% |
|
|
|
|
|
|
|
|
|
|
|
|
|
57 |
|
53 |
|
+8% |
Capital investment |
109 |
|
95 |
|
+15% |
a) 2009 comparatives have been restated on the application of IFRIC 12. See note 1 (page 21).
Second quarter
Revenue and other operating income increased by 18% to $658 million as a result of higher volumes at Comgás in Brazil, following a recovery in demand within the industrial and power segments, and at Gujarat Gas in India.
T&D total operating profit for the quarter of $174 million was 8% lower, reflecting the timing effect of gas cost recovery at Comgás, partially offset by higher volumes.
The net recovery of gas costs at Comgás in the quarter was $28 million compared with $89 million in 2009. At the end of the quarter, $19 million of net benefit is due to be passed back to customers in future periods. Excluding the timing effect of gas cost recovery, operating profit at Comgás increased by 41%, reflecting higher volumes and favourable Brazilian Real foreign exchange movements.
Half year
Revenue and other operating income increased by 22% to $1 272 million, reflecting higher volumes at Comgás and Gujarat Gas.
T&D total operating profit was $299 million for the half year.
The net recovery of gas costs at Comgás in the half year was $39 million compared with $122 million in 2009. Excluding the timing effect of gas cost recovery, operating profit at Comgás increased by 38% as a result of higher volumes and favourable Brazilian Real foreign exchange movements, partially offset by lower unit margins.
Other T&D activities operating profit increased by $22 million to $55 million, reflecting higher volumes and prices at Gujarat Gas.
Capital investment mainly represents the development of the Comgás pipeline network.
Power Generation
|
Second Quarter |
|
|
|
Half Year |
|
|
||||
|
2010 $m |
|
2009 $m |
|
|
Business Performance |
2010 $m |
|
2009 $m |
|
|
|
156 |
|
179 |
|
-13% |
Revenue and other operating income |
396 |
|
383 |
|
+3% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating profit |
|
|
|
|
|
|
45 |
|
76 |
|
-41% |
Power Generation |
106 |
|
115 |
|
-8% |
|
(3) |
|
(2) |
|
+50% |
Business development and other |
(9) |
|
(6) |
|
+50% |
|
42 |
|
74 |
|
-43% |
|
97 |
|
109 |
|
-11% |
|
|
|
|
|
|
|
|
|
|
|
|
|
26 |
|
12 |
|
+117% |
Capital investment |
46 |
|
17 |
|
+171% |
Second quarter and half year
Total operating profit fell by $32 million to $42 million in the quarter and by $12 million to $97 million in the half year. This reflected the disposal during the quarter of the Group's interest in Seabank Power Limited in the UK and the Group's power plants in the USA, together with the phasing of gas costs at BG Italia Power.
Second quarter business highlights
UK
In July, BG Group signed a Share Sale Agreement for the sale of Premier Power Limited, a wholly owned subsidiary of BG Group, for a total consideration of £99 million (approximately $150 million). Closing of the transaction is subject to receiving the customary regulatory approvals and is expected in second half 2010.
Principal Risks and Uncertainties
|
BG Group's business, results and financial condition could be affected by a broad range of risks and uncertainties. The principal risks and uncertainties for the remaining six months of the financial year are unchanged from those stated on pages 31 to 33 of the BG Group 2009 Annual Report and Accounts (ARA), a summary description of which is provided below. This summary description is not intended, and should not be used, as a substitute for reading the appropriate pages of the ARA. This section forms part of the interim management review for the purposes of the Disclosure and Transparency Rules made by the UK Financial Services Authority. Commodity pricesBG Group's cash flows and profitability are sensitive to natural gas, crude oil and LNG prices (and related price spreads) which are dependent on a number of factors that impact world supply and demand. Group exposure to commodity prices also varies according to a number of other factors, including the mix of production and sales. Operational performance BG Group's production volumes (and therefore revenues) are dependent on the continued operational performance of its producing assets which are subject to a number of operational risks including: reduced availability of those assets; asset integrity and health, safety, security and environment (HSSE) incidents; adverse reserves recovery from the field; the performance of our contractors or JV partners; and exposure to natural hazards, such as extreme weather events. Reserves development and project delivery Delivery of production growth from the portfolio will depend to a significant extent upon successful discovery, appraisal and development of reserves and successful planning and execution of various development and expansion projects. The Group's move into unconventional gas (such as shale and coal seam gas) presents further challenges to successful project delivery. The Group's ability to deliver production growth could be affected by a number of factors, including reservoir quality, unexpected drilling conditions or costs, rig availability or by inadequate human or technical resources. Principal risks prior to sanction include failure to fully appreciate sub-surface, project schedule and cost uncertainties, possibly leading to poor investment decisions. Subsequent delivery of projects may be subject to cost and time overruns; HSSE risks; technical, commercial, legal or regulatory compliance failures; equipment shortages; the availability, competence and capability of human resources and contractors; unscheduled outages; mechanical and technical difficulties; gas pipeline system constraints; and political factors. Political context and stakeholder relationships BG Group needs to work together with governments and national oil companies in order to secure access to new resources and ensure successful monetisation of both new and existing resources. The Group faces a range of political risks, including governments altering fiscal terms or taking decisions which have a negative impact on project schedules or costs. The Group will also be exposed to risk if it does not recognise, and take account of, the interests of the communities in the areas where it operates. Interest rate and liquidity risk Financing costs may be affected by interest rate volatility. The Group is also exposed to liquidity risks, including risks associated with refinancing borrowings as they mature, the availability of borrowing facilities to meet cash requirements and the risk that financial assets cannot readily be converted to cash without loss of value. Financing risks could have a material impact on the Group's cash flow, balance sheet and financial position. Fluctuations in exchange rates Group financial results will be affected by exchange rate fluctuations. The Group's presentation currency, US Dollars, is the currency in which a significant majority of the Group's business activity is conducted and in which a substantial proportion of assets and liabilities are held. The Group also conducts business and holds asset and liability positions in a number of other currencies. Credit BG Group's exposure to credit risk takes the form of a loss that would be recognised if counterparties (including sovereign entities) failed, or were unable, to meet their payment or performance obligations. These risks may arise in all forms of commercial agreements and in relation to amounts owed for physical product sales, the use of derivative instruments, and the investment of surplus cash balances. The Group is also exposed to political and economic risk events that exacerbate country risk, which may cause non-payment of foreign currency obligations by government or government-owned entities or otherwise impact successful project delivery. Health, Safety, Security and Environment (HSSE) The Group often operates in harsh, remote, environmentally sensitive areas. Producing and managing hydrocarbons presents an inherent potential for major accidents or incidents and a number of other HSSE risks, including asset integrity failure, leading to a loss of containment of hydrocarbons and other hazardous materials; natural disasters and pandemics; and breaches of security. Risks could result in injury or loss of life, damage to the environment or loss of certain facilities, with an associated loss or deferment of production and revenues. Climate change Policies and initiatives at national and international level to address climate change are likely to affect business conditions and demand for various types of energy in the medium to long term. Worldwide policy and regulatory actions are driving targeted reductions in greenhouse gas emissions which will in turn influence the future of the energy industry. Policy approaches which promote the usage of alternative energy sources (such as renewables, biofuels, hydroelectric power and nuclear power) may have an impact on the Group's ability to maintain its position in key markets. |
First Quarter Business Highlights
This results announcement also represents BG Group's half-yearly financial report for the purposes of the Disclosure and Transparency Rules (DTR) made by the UK Financial Services Authority. In order to comply with the requirements of the DTR, included in this section (which forms part of the interim management report for the purpose of the DTR) are the first half business highlights which are not included earlier in this results announcement.
Exploration and Production - first quarter business highlights
Brazil
In March, BG Group announced the completion of a drill stem test on the Tupi North-East well in BM-S-11 (BG Group 25%) in the Santos Basin, offshore Brazil. Potential production from the well is estimated at around 30 000 bopd. BG Group and partners also completed a further successful Tupi appraisal well, situated 12.5 kilometres north of the Tupi discovery well. Further evaluation of the well data is ongoing and work on optimising field development options continues to advance.
UK/Norway
In the North Sea, BG Group and its partner approved submission of the Field Development Plan for the Gaupe (formerly Pi) project to the Norwegian Ministry. The Gaupe project will be developed via a tie-back to BG Group's existing Armada infrastructure in the UK. Production is due to begin by 2012.
BG Group and partners continue to progress towards first production from the Jasmine field in 2012. In the first four months of 2010, five of the nine major contracts related to this significant development were awarded, including the drilling rig and fabrication of the jacket and topsides.
USA
In April, BG Group signed an agreement to purchase Common Resources, L.L.C. (Common) jointly with EXCO Resources, Inc. (EXCO) for approximately $446 million ($223 million net to BG Group). Common owns producing assets, gathering lines and acreage in potentially highly productive areas in Shelby, San Augustine and Nacogdoches Counties, Texas. The assets acquired include seven producing wells and approximately 29 200 net acres prospective for the Haynesville and Bossier shales. BG Group and EXCO will each acquire 50% of Common, and development of these assets will be governed by the existing joint venture. The acquisition completed in May. On completion of the acquisition, BG Group's total estimated net reserves and resources in the USA amounted to around 5 tcf.
Liquefied Natural Gas - first quarter business highlights
Australia
In February, BG Group announced it had signed the plant Engineering, Procurement and Construction contracts with Bechtel companies for the Queensland Curtis LNG (QCLNG) liquefaction plant in Queensland. Under the contracts, Bechtel has been issued interim notices to proceed with engineering works and the procurement of plant long-lead items, including compressors and storage tanks. QGC has begun to commit to contracts under plans to procure long-lead items during first half 2010, valued at more than US$3 billion.
In February, BG Group and Australia Pacific LNG (APLNG) agreed a framework for the development of jointly owned coal seam gas tenements ATP 648P and ATP 620P. BG Group also entered into conditional gas purchase agreements with APLNG under which BG Group expects to buy around 190 petajoules (PJ) of gas over an initial period of around two years from APLNG, reducing thereafter to an average of 25 PJ per annum.
In March, BG Group signed a LNG sales contract with the China National Offshore Oil Corporation (CNOOC) concluding negotiations announced in May 2009 for the supply of 3.6 mtpa of LNG over a 20-year period. CNOOC will be supplied with LNG manufactured at the QCLNG facility which is planned to come onstream by 2014. BG Group may also supply CNOOC from the Group's global LNG portfolio. Additionally, CNOOC will acquire a 5% equity interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland. CNOOC will also become a 10% equity investor in the first of two liquefaction trains which will form the first phase of the QCLNG development. In addition, BG Group and CNOOC have agreed to participate jointly in a consortium to construct two LNG ships in China that will be owned by the consortium.
All of these agreements are conditional on relevant approvals and on BG Group making a final investment decision on QCLNG, expected later this year.
In March, BG Group announced it had signed Heads of Agreement with Tokyo Gas Co., Ltd. (Tokyo Gas), for the supply of LNG from the Group's QCLNG project. Tokyo Gas will buy 1.2 mtpa from 2015 which will be supplied from the QCLNG facility and also from the Group's global LNG portfolio. Additionally, Tokyo Gas will acquire a 1.25% interest in the reserves and resources of certain BG Group tenements in the Walloons Fairway of the Surat Basin in Queensland. Tokyo Gas will also become a 2.5% equity investor in the second of the two liquefaction trains. BG Group and Tokyo Gas intend to execute fully termed agreements by the end of 2010. These agreements will represent the first purchase by a Japanese company of LNG from coal seam gas.
Singapore
In March, the Group announced it had agreed long-term contracts for the sale of a total of 1.5 mtpa of regasified LNG to six power generating companies in Singapore. This is the first tranche of contracts to be confirmed under the LNG aggregator agreement entered into by BG Group and the Energy Market Authority of Singapore in June 2009. BG Group has the sole right to supply up to 3 mtpa to the Singaporean market under gas sales agreements with a term of up to 20 years.
In total, BG Group has now secured up to 9.5 mtpa of long-term LNG sales in Chile, China, Japan and Singapore.
Power Generation - first quarter business highlights
In March, BG Group signed a sale and purchase agreement for the sale of its power plants in the USA for a total consideration of $450 million. The transaction completed in second quarter 2010.
In April, BG Group signed a sale and purchase agreement for the sale of its 50% interest in Seabank Power Limited in the UK for a total consideration of £211.7 million (approximately $320 million). The transaction completed in second quarter 2010.
Statement of Directors' responsibilities
|
The Directors confirm that this condensed set of financial statements for the six months ended 30 June 2010 has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the European Union, and that the interim management report herein includes a fair review of the information required by the Disclosure and Transparency Rules 4.2.7 and 4.2.8. The Directors of BG Group plc are listed in the 2009 Annual Report and Accounts.
By order of the Board _________________ Frank ChapmanChief Executive _________________ Ashley Almanza Chief Financial Officer
|
Legal Notice
|
Certain statements included in these results contain forward-looking information concerning BG Group's strategy, operations, financial performance or condition, outlook, growth opportunities or circumstances in the countries, sectors or markets in which BG Group operates. By their nature, forward-looking statements involve uncertainty because they depend on future circumstances, and relate to events, not all of which are within BG Group's control or can be predicted by BG Group. Although BG Group believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-looking statements. For a detailed analysis of the factors that may affect our business, financial performance or results of operations, we urge you to look at the 'Risk Factors' included in BG Group plc's Annual Report and Accounts 2009. No part of these results constitutes, or shall be taken to constitute, an invitation or inducement to invest in BG Group plc or any other entity, and must not be relied upon in any way in connection with any investment decision. BG Group undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required. |
Presentation of Non-GAAP measures
Business Performance'Business Performance' excludes disposals, certain re-measurements and impairments (see below) as exclusion of these items provides a clear and consistent presentation of the underlying operating performance of the Group's ongoing business. BG Group uses commodity instruments to manage price exposures associated with its marketing and optimisation activity in the UK and USA. This activity enables the Group to take advantage of commodity price movements. It is considered more appropriate to include both unrealised and realised gains and losses arising from the mark-to-market of derivatives associated with this activity in 'Business Performance'. Disposals, certain re-measurements and impairmentsBG Group's commercial arrangements for marketing gas include the use of long-term gas sales contracts. Whilst the activity surrounding these contracts involves the physical delivery of gas, certain UK gas sales contracts are classified as derivatives under the rules of IAS 39 and are required to be measured at fair value at the balance sheet date. Unrealised gains and losses on these contracts reflect the comparison between current market gas prices and the actual prices to be realised under the gas sales contract and are disclosed separately as 'disposals, re-measurements and impairments'. BG Group also uses commodity instruments to manage certain price exposures in respect of optimising the timing and location of its physical gas and LNG sales commitments. These instruments are also required to be measured at fair value at the balance sheet date under IAS 39 and where practical have been designated as formal hedges. However, IAS 39 does not always allow the matching of fair values to the economically hedged value of the related commodity, resulting in unrealised movements in fair value being recorded in the income statement. These movements in fair value, together with any unrealised gains and losses associated with discontinued hedge accounting relationships that continue to represent economic hedges, are disclosed separately as 'disposals, re-measurements and impairments'. BG Group also uses financial instruments, including derivatives, to manage foreign exchange and interest rate exposure. These instruments are required to be recognised at fair value or amortised cost on the balance sheet in accordance with IAS 39. Most of these instruments have been designated either as hedges of foreign exchange movements associated with the Group's net investments in foreign operations, or as hedges of interest rate risk. Where these instruments cannot be designated as hedges under IAS 39, unrealised movements in fair value are recorded in the income statement and disclosed separately as 'disposals, re-measurements and impairments'. Realised gains and losses relating to the instruments referred to above are included in Business Performance. This presentation best reflects the underlying performance of the business since it distinguishes between the temporary timing differences associated with re-measurements under IAS 39 rules and actual realised gains and losses. BG Group has also separately identified profits and losses associated with the disposal of non-current assets, and impairments of non-current assets as they require separate disclosure in order to provide a clearer understanding of the results for the period. For a reconciliation between the overall results and Business Performance and details of disposals, re-measurements and impairments, see the consolidated income statements (pages 15 and 16), note 2 (page 22) and note 3 (page 23). Joint ventures and associatesUnder IFRS the results from jointly controlled entities (joint ventures) and associates, accounted for under the equity method, are required to be presented net of finance costs and tax on the face of the income statement. Given the relevance of these businesses within BG Group, the results of joint ventures and associates are presented before interest and tax, and after tax. This approach provides additional information on the source of BG Group's operating profits. For a reconciliation between operating profit and earnings including and excluding the results of joint ventures and associates, see note 3 (page 23). Net borrowings/fundsBG Group provides a reconciliation of net borrowings/funds and an analysis of the amounts included within net borrowings/funds as this is an important liquidity measure for the Group.
|
Independent review report to BG Group plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated cash flow statement and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRS as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants 28 July 2010 London
Consolidated Income Statement
Second Quarter
|
|
|
|
2010 |
|
2009 Restated(a) |
|
||||
|
|
|
Notes |
Business Perform-ance(b) $m |
Disposals, re-measure- ments and impairments (Note 2)(b) $m |
Total Result $m |
|
Business Perform- ance(b) $m |
Disposals, re-measure- ments and impairments (Note 2)(b) $m |
Total Result $m |
|
|
|
Group revenue |
|
4 160 |
- |
4 160 |
|
3 478 |
- |
3 478 |
|
|
|
Other operating income |
2 |
(33) |
(443) |
(476) |
|
11 |
20 |
31 |
|
|
|
Group revenue and other operating income |
3 |
4 127 |
(443) |
3 684 |
|
3 489 |
20 |
3 509 |
|
|
|
Operating costs |
|
(2 729) |
- |
(2 729) |
|
(2 168) |
- |
(2 168) |
|
|
|
Profits and losses on disposal of non-current assets and impairments |
2 |
- |
(41) |
(41) |
|
- |
- |
- |
|
|
|
Operating profit/(loss)(c) |
3 |
1 398 |
(484) |
914 |
|
1 321 |
20 |
1 341 |
|
|
|
Finance income |
2, 4 |
94 |
84 |
178 |
|
19 |
(5) |
14 |
|
|
|
Finance costs |
2, 4 |
(62) |
(94) |
(156) |
|
(62) |
(1) |
(63) |
|
|
|
Share of post-tax results from joint ventures and associates |
3 |
92 |
- |
92 |
|
77 |
- |
77 |
|
|
|
Profit/(loss) before tax |
|
1 522 |
(494) |
1 028 |
|
1 355 |
14 |
1 369 |
|
|
|
Taxation |
2, 5 |
(587) |
197 |
(390) |
|
(558) |
(7) |
(565) |
|
|
|
Profit/(loss) for the period |
3 |
935 |
(297) |
638 |
|
797 |
7 |
804 |
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
BG Group shareholders (earnings) |
|
899 |
(297) |
602 |
|
754 |
7 |
761 |
|
|
|
Non-controlling interest |
|
36 |
- |
36 |
|
43 |
- |
43 |
|
|
|
|
|
935 |
(297) |
638 |
|
797 |
7 |
804 |
|
|
|
Earnings per share - basic |
6 |
26.6c |
(8.8c) |
17.8c |
|
22.4c |
0.3c |
22.7c |
|
|
|
Earnings per share - diluted |
6 |
26.4c |
(8.7c) |
17.7c |
|
22.3c |
0.2c |
22.5c |
|
|
|
Total operating profit/(loss) including share of pre-tax operating results from joint ventures and associates(d) |
3 |
1 532 |
(484) |
1 048 |
|
1 448 |
20 |
1 468 |
|
a) See note 1 (page 21).
b) See Presentation of Non-GAAP measures (page 13) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of the results of joint ventures and associates.
c) Operating profit/(loss) is before share of results from joint ventures and associates.
d) This measurement is shown by BG Group as it is used as a means of measuring the underlying performance of the business.
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
Consolidated Income Statement
Half Year
|
|
|
|
2010 |
|
2009 Restated(a) |
|
||||
|
|
|
Notes |
Business Perform-ance(b) $m |
Disposals, re-measure- ments and impairments (Note 2)(b) $m |
Total Result $m |
|
Business Perform- ance(b) $m |
Disposals, re-measure- ments and impairments (Note 2)(b) $m |
Total Result $m |
|
|
|
Group revenue |
|
8 662 |
- |
8 662 |
|
7 810 |
- |
7 810 |
|
|
|
Other operating income |
2 |
112 |
(303) |
(191) |
|
129 |
64 |
193 |
|
|
|
Group revenue and other operating income |
3 |
8 774 |
(303) |
8 471 |
|
7 939 |
64 |
8 003 |
|
|
|
Operating costs |
|
(5 512) |
- |
(5 512) |
|
(4 923) |
- |
(4 923) |
|
|
|
Profits and losses on disposal of non-current assets and impairments |
2 |
- |
(418) |
(418) |
|
- |
- |
- |
|
|
|
Operating profit/(loss)(c) |
3 |
3 262 |
(721) |
2 541 |
|
3 016 |
64 |
3 080 |
|
|
|
Finance income |
2, 4 |
159 |
103 |
262 |
|
28 |
13 |
41 |
|
|
|
Finance costs |
2, 4 |
(125) |
(94) |
(219) |
|
(122) |
(17) |
(139) |
|
|
|
Share of post-tax results from joint ventures and associates |
3 |
171 |
- |
171 |
|
169 |
- |
169 |
|
|
|
Profit/(loss) before tax |
|
3 467 |
(712) |
2 755 |
|
3 091 |
60 |
3 151 |
|
|
|
Taxation |
2, 5 |
(1 386) |
255 |
(1 131) |
|
(1 283) |
(33) |
(1 316) |
|
|
|
Profit/(loss) for the period |
|
2 081 |
(457) |
1 624 |
|
1 808 |
27 |
1 835 |
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
BG Group shareholders (earnings) |
|
2 019 |
(457) |
1 562 |
|
1 742 |
27 |
1 769 |
|
|
|
Non-controlling interest |
|
62 |
- |
62 |
|
66 |
- |
66 |
|
|
|
|
|
2 081 |
(457) |
1 624 |
|
1 808 |
27 |
1 835 |
|
|
|
Earnings per share - basic |
6 |
59.8c |
(13.6c) |
46.2c |
|
51.9c |
0.8c |
52.7c |
|
|
|
Earnings per share - diluted |
6 |
59.4c |
(13.5c) |
45.9c |
|
51.5c |
0.7c |
52.2c |
|
|
|
Total operating profit/(loss) including share of pre-tax operating results from joint ventures and associates(d) |
3 |
3 527 |
(721) |
2 806 |
|
3 272 |
64 |
3 336 |
|
a) See note 1 (page 21).
b) See Presentation of Non-GAAP measures (page 13) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of the results of joint ventures and associates.
c) Operating profit/(loss) is before share of results from joint ventures and associates.
d) This measurement is shown by BG Group as it is used as a means of measuring the underlying performance of the business.
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
For information on dividends paid in the period, see note 8 (page 28).
Consolidated Statement of Comprehensive Income
|
Second Quarter |
|
|
Half Year |
||
|
2010 $m |
2009 Restated(a) $m |
|
|
2010 $m |
2009 Restated(a) $m |
|
638 |
804 |
|
Profit for the period |
1 624 |
1 835 |
|
|
|
|
|
|
|
|
5 |
(236) |
|
Hedge adjustments net of tax(b) |
(160) |
(505) |
|
1 |
2 |
|
Fair value movements on 'available-for-sale' assets net of tax(c) |
1 |
9 |
|
(331) |
1 382 |
|
Currency translation adjustments |
(401) |
1 512 |
|
(325) |
1 148 |
|
Other comprehensive (expense)/income, net of tax |
(560) |
1 016 |
|
|
|
|
|
|
|
|
313 |
1 952 |
|
Total comprehensive income for the period |
1 064 |
2 851 |
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
284 |
1 882 |
|
BG Group shareholders |
1 008 |
2 756 |
|
29 |
70 |
|
Non-controlling interest |
56 |
95 |
|
313 |
1 952 |
|
|
1 064 |
2 851 |
a) See note 1 (page 21).
b) Income tax relating to hedge adjustments is a $23 million charge for the quarter (2009 $84 million credit) and a $50 million credit for the half year (2009 $193 million credit).
c) Income tax relating to fair value movements on 'available-for-sale' assets is a $1 million credit for the quarter (2009 $1 million charge) and a $1 million credit for the half year (2009 $1 million charge).
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
Consolidated Balance Sheet
|
|
As at 30 Jun 2010 $m |
As at 31 Dec 2009 Restated(a) $m |
As at 30 Jun 2009 Restated(a) $m |
As at 31 Dec 2008 Restated(a) $m |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Goodwill |
739 |
781 |
724 |
600 |
|
Other intangible assets |
8 578 |
9 290 |
8 740 |
6 422 |
|
Property, plant and equipment |
21 947 |
20 131 |
17 146 |
15 146 |
|
Investments |
3 086 |
2 953 |
2 567 |
2 345 |
|
Deferred tax assets |
204 |
137 |
136 |
110 |
|
Trade and other receivables |
203 |
125 |
136 |
136 |
|
Commodity contracts and other derivative financial instruments |
388 |
608 |
656 |
1 345 |
|
|
35 145 |
34 025 |
30 105 |
26 104 |
|
Current assets |
|
|
|
|
|
Inventories |
712 |
769 |
667 |
808 |
|
Trade and other receivables |
4 335 |
4 721 |
4 470 |
5 199 |
|
Current tax receivable |
371 |
173 |
228 |
131 |
|
Commodity contracts and other derivative financial instruments |
997 |
1 635 |
2 027 |
2 211 |
|
Cash and cash equivalents |
1 779 |
1 119 |
1 028 |
1 485 |
|
|
8 194 |
8 417 |
8 420 |
9 834 |
|
Assets classified as held for sale |
228 |
- |
- |
- |
|
Total assets |
43 567 |
42 442 |
38 525 |
35 938 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Borrowings |
(1 907) |
(1 158) |
(841) |
(404) |
|
Trade and other payables |
(3 607) |
(4 186) |
(3 410) |
(5 222) |
|
Current tax liabilities |
(1 837) |
(1 579) |
(1 722) |
(1 614) |
|
Commodity contracts and other derivative financial instruments |
(1 303) |
(1 390) |
(1 779) |
(2 088) |
|
|
(8 654) |
(8 313) |
(7 752) |
(9 328) |
|
Non-current liabilities |
|
|
|
|
|
Borrowings |
(5 308) |
(5 024) |
(3 845) |
(2 727) |
|
Trade and other payables |
(66) |
(63) |
(59) |
(55) |
|
Commodity contracts and other derivative financial instruments |
(571) |
(849) |
(896) |
(760) |
|
Deferred income tax liabilities |
(3 118) |
(3 147) |
(3 105) |
(2 955) |
|
Retirement benefit obligations |
(282) |
(279) |
(312) |
(256) |
|
Provisions for other liabilities and charges |
(1 523) |
(1 537) |
(1 458) |
(1 333) |
|
|
(10 868) |
(10 899) |
(9 675) |
(8 086) |
|
Liabilities associated with assets classified as held for sale |
(105) |
- |
- |
- |
|
Total liabilities |
(19 627) |
(19 212) |
(17 427) |
(17 414) |
|
Net assets |
23 940 |
23 230 |
21 098 |
18 524 |
|
Equity |
|
|
|
|
|
Total shareholders' equity |
23 653 |
22 909 |
20 843 |
18 343 |
|
Non-controlling interest in equity |
287 |
321 |
255 |
181 |
|
Total equity |
23 940 |
23 230 |
21 098 |
18 524 |
a) See note 1 (page 21).
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
Consolidated Statement of Changes in Equity
|
|
|
Called up share capital $m |
Share premium account $m |
Hedging reserve $m |
Translation reserve $m |
Other reserves $m |
Retained earnings $m |
Total $m |
Non-con-trolling interest $m |
Total $m |
|
|
Equity as at 31 December 2009 (restated(a)) |
574 |
444 |
150 |
1 697 |
2 710 |
17 334 |
22 909 |
321 |
23 230 |
|
|
Total comprehensive income for the period |
- |
- |
(115) |
(440) |
- |
1 563 |
1 008 |
56 |
1 064 |
|
|
Issue of shares |
1 |
52 |
- |
- |
- |
- |
53 |
- |
53 |
|
|
Purchase of own shares |
- |
- |
- |
- |
- |
(2) |
(2) |
- |
(2) |
|
|
Adjustment in respect of employee share schemes |
- |
- |
- |
- |
- |
37 |
37 |
- |
37 |
|
|
Dividends on ordinary shares |
- |
- |
- |
- |
- |
(352) |
(352) |
- |
(352) |
|
|
Dividends to non-controlling interest |
- |
- |
- |
- |
- |
- |
- |
(90) |
(90) |
|
|
Equity as at 30 June 2010 |
575 |
496 |
35 |
1 257 |
2 710 |
18 580 |
23 653 |
287 |
23 940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Called up share capital $m |
Share premium account $m |
Hedging reserve $m |
Translation reserve $m |
Other reserves $m |
Retained earnings $m |
Total $m |
Non-con-trolling interest $m |
Total $m |
|
|
Equity as at 31 December 2008 (restated(a)) |
571 |
348 |
889 |
(725) |
2 710 |
14 550 |
18 343 |
181 |
18 524 |
|
|
Total comprehensive income for the period |
- |
- |
(544) |
1 522 |
- |
1 778 |
2 756 |
95 |
2 851 |
|
|
Issue of shares |
1 |
25 |
- |
- |
- |
- |
26 |
- |
26 |
|
|
Purchase of own shares |
- |
- |
- |
- |
- |
(4) |
(4) |
- |
(4) |
|
|
Adjustment in respect of employee share schemes |
- |
- |
- |
- |
- |
45 |
45 |
- |
45 |
|
|
Dividends on ordinary shares |
- |
- |
- |
- |
- |
(323) |
(323) |
- |
(323) |
|
|
Dividends to non-controlling interest |
- |
- |
- |
- |
- |
- |
- |
(21) |
(21) |
|
|
Equity as at 30 June 2009 (restated(a)) |
572 |
373 |
345 |
797 |
2 710 |
16 046 |
20 843 |
255 |
21 098 |
a) See note 1 (page 21).
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
Consolidated Cash Flow Statement
|
Second Quarter |
|
|
Half Year |
||
|
2010 $m |
2009 Restated(a) $m |
|
|
2010 $m |
2009 Restated(a) $m |
|
|
|
|
Cash flows from operating activities |
|
|
|
1 028 |
1 369 |
|
Profit before tax |
2 755 |
3 151 |
|
(92) |
(77) |
|
Share of post-tax results from joint ventures and associates |
(171) |
(169) |
|
513 |
443 |
|
Depreciation of property, plant and equipment and amortisation of intangible assets |
1 039 |
849 |
|
496 |
(39) |
|
Fair value movements in commodity based contracts |
375 |
(95) |
|
41 |
- |
|
Profits and losses on disposal of non-current assets and impairments |
418 |
- |
|
274 |
107 |
|
Unsuccessful exploration expenditure written off |
284 |
268 |
|
(23) |
(7) |
|
Decrease in provisions |
(19) |
(3) |
|
(178) |
(14) |
|
Finance income |
(262) |
(41) |
|
156 |
63 |
|
Finance costs |
219 |
139 |
|
9 |
19 |
|
Share-based payments |
25 |
29 |
|
99 |
(386) |
|
Decrease/(increase) in working capital |
168 |
(658) |
|
2 323 |
1 478 |
|
Cash generated by operations |
4 831 |
3 470 |
|
(459) |
(449) |
|
Income taxes paid |
(1 009) |
(1 079) |
|
1 864 |
1 029 |
|
Net cash inflow from operating activities |
3 822 |
2 391 |
|
|
|
|
Cash flows from investing activities |
|
|
|
26 |
85 |
|
Dividends received from joint ventures and associates |
37 |
112 |
|
486 |
3 |
|
Proceeds from disposal of property, plant and equipment and intangible assets |
486 |
3 |
|
327 |
- |
|
Proceeds from the sale of investments |
327 |
- |
|
(2 726) |
(1 772) |
|
Purchase of property, plant and equipment and intangible assets |
(4 103) |
(2 943) |
|
(6) |
(36) |
|
Loans to joint ventures and associates |
(4) |
(49) |
|
(247) |
(75) |
|
Business combinations and investments |
(294) |
(775) |
|
(2 140) |
(1 795) |
|
Net cash outflow from investing activities |
(3 551) |
(3 652) |
|
|
|
|
Cash flows from financing activities |
|
|
|
(42) |
(43) |
|
Net interest paid(b) |
(89) |
(71) |
|
(344) |
(323) |
|
Dividends paid |
(345) |
(323) |
|
(31) |
(19) |
|
Dividends paid to non-controlling interest |
(32) |
(19) |
|
1 675 |
1 118 |
|
Net proceeds from issue and repayment of borrowings |
838 |
1 152 |
|
11 |
12 |
|
Issue of shares |
53 |
26 |
|
- |
- |
|
Purchase of own shares |
(2) |
(4) |
|
1 269 |
745 |
|
Net cash inflow from financing activities |
423 |
761 |
|
993 |
(21) |
|
Net increase/(decrease) in cash and cash equivalents |
694 |
(500) |
|
811 |
1 004 |
|
Cash and cash equivalents at beginning of period |
1 119 |
1 485 |
|
(25) |
45 |
|
Effect of foreign exchange rate changes |
(34) |
43 |
|
1 779 |
1 028 |
|
Cash and cash equivalents at end of period(c) |
1 779 |
1 028 |
a) See note 1 (page 21).
b) Includes capitalised interest for the second quarter of $13 million (2009 $9 million) and for the half year of $27 million (2009 $15 million).
c) Cash and cash equivalents comprise cash and short-term liquid investments that are readily convertible to cash.
The notes on pages 21 to 29 form an integral part of these condensed financial statements.
Notes
1. Basis of preparation
These primary statements are the condensed financial statements ('the financial statements') of BG Group plc for the quarter ended and the half year ended 30 June 2010. The financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006, and should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2009 which have been prepared in accordance with IFRS as adopted by the EU, as they provide an update of previously reported information. The latest statutory accounts delivered to the registrar were for the year ended 31 December 2009 which were audited by BG Group's statutory auditors PricewaterhouseCoopers LLP and on which the Auditors' Report was unqualified and did not contain statements under Sections 498(2) or 498(3) of the UK Companies Act 2006. These financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU, the requirements of the Disclosure and Transparency Rules issued by the Financial Services Authority and the accounting policies, methods of computation and presentation as set out in the 2009 Annual Report and Accounts (except as disclosed below). These financial statements have been reviewed, not audited, by PricewaterhouseCoopers LLP.
The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities at the date of the financial statements. If in the future such estimates and assumptions, which are based on management's best judgement at the date of the financial statements, deviate from the actual circumstances, the original estimates and assumptions will be modified as appropriate in the year in which the circumstances change.
With effect from 1 January 2010, BG Group has presented its results in US Dollars. Accordingly, 2009 results have been translated from Pounds Sterling to US Dollars using monthly average rates of exchange. Comparative assets and liabilities have been translated from Pounds Sterling to US Dollars at closing rates of exchange. Further information on the procedures used to restate comparative information into US Dollars can be found on page 114 of the 2009 Annual Report and Accounts.
Presentation of results
The presentation of BG Group's results separately identifies the effect of:
·; The re-measurement of certain financial instruments; and
·; Profits and losses on the disposal and impairment of non-current assets and businesses.
These items, which are detailed in note 2 to the financial statements (page 22) are excluded from Business Performance in order to provide readers with a clear and consistent presentation of the underlying operating performance of the Group's ongoing businesses.
New accounting standards and interpretations
IFRIC 12 'Service Concession Arrangements' is applicable to BG Group for the period beginning 1 January 2010. This interpretation provides guidance on the accounting by operators for public-to-private service concession arrangements and requires infrastructure considered to be under the control of a regulator rather than an operator to be recognised as an intangible concession asset and amortised over the concession period. Prior to the adoption of IFRIC 12 such infrastructure was recognised as property, plant and equipment of the operator and depreciated over its useful economic life. The interpretation also requires additions to the infrastructure incurred by the operator to be accounted for as a construction contract with the regulator, with revenues and associated costs recognised in the income statement on a percentage of completion basis.
BG Group has concluded that the Comgás concession in Brazil falls within the scope of IFRIC 12 and has applied the interpretation from 1 January 2010, restating comparative information as necessary. On 1 January 2010, infrastructure associated with the transmission and distribution network operated by Comgás of approximately $1.6 billion (30 June 2009 $1.4 billion; 1 January 2009 $1.1 billion) was recognised as intangible assets resulting in a corresponding decrease to property, plant and equipment. The application of IFRIC 12 has resulted in an increase to revenue and operating costs of $61 million in the 6 months to 30 June 2010 (2009 $43 million). There has been no change to total operating profit or earnings for the Group.
A number of other amendments to accounting standards issued by the IASB are applicable from 1 January 2010. They have not had a material impact on the Group's financial statements for the half year ended 30 June 2010.
2. Disposals, re-measurements and impairments
|
Second Quarter |
|
|
Half Year |
||
|
2010 $m |
2009 $m |
|
|
2010 $m |
2009 $m |
|
(443) |
20 |
|
Revenue and other operating income - re-measurements of commodity based contracts |
(303) |
64 |
|
(41) |
- |
|
Profits and losses on disposal of non-current assets and impairments |
(418) |
- |
|
(10) |
(6) |
|
Net finance (costs)/income - re-measurements of financial instruments |
9 |
(4) |
|
197 |
(7) |
|
Taxation |
255 |
(33) |
|
(297) |
7 |
|
Impact on earnings |
(457) |
27 |
Second quarter and half year: Revenue and other operating income
Re-measurements included within revenue and other operating income amount to a charge of $443 million for the quarter (2009 $20 million credit), of which a charge of $65 million (2009 $7 million credit) represents non-cash mark-to-market movements on certain long-term UK gas contracts. For the half year, a charge of $303 million in respect of re-measurements is included within revenue and other operating income (2009 $64 million credit), of which a charge of $23 million represents non-cash mark-to-market movements on certain long-term UK gas contracts (2009 $63 million credit). Whilst the activity surrounding these contracts involves the physical delivery of gas, the contracts fall within the scope of IAS 39 and meet the definition of a derivative instrument. In addition, re-measurements include a $378 million charge for the quarter (2009 $13 million credit) and a $280 million charge for the half year (2009 $1 million credit) representing unrealised mark-to-market movements associated with economic hedges.
Second quarter and half year: Disposals and impairments of non-current assets
During the second quarter, BG Group completed the disposal of its power plants in the USA and its Canadian E&P assets. This resulted in a pre-tax profit on disposal of $16 million (post-tax $11 million) in the quarter. The Group also completed the sale of its investment in the Seabank power plant in the UK, which resulted in a pre and post-tax credit to the income statement of $142 million. Also during the second quarter, a pre-tax impairment charge of $191 million (post-tax charge $138 million) was recognised against certain assets in the E&P segment. Other disposals and impairments resulted in a pre-tax charge to the income statement of $8 million (post-tax $4 million) in the quarter.
In July 2010, BG Group signed a Share Sale Agreement for the sale of Premier Power Limited. Accordingly, as at 30 June 2010, this asset was classified as held for sale at its carrying value.
During the first quarter, BG Group signed a Sale and Purchase Agreement for the sale of its power plants in the USA and also committed to sell its Canadian E&P assets and its investment in the Seabank power plant in the UK. Accordingly, these assets were reclassified as held for sale and revalued to the lower of their carrying amount and fair value less costs to sell. This resulted in a pre-tax impairment charge of $377 million (post-tax charge $263 million) against the Group's US power and Canadian E&P assets in the quarter.
Second quarter and half year: Net finance costs
Re-measurements presented in net finance costs include certain derivatives used to hedge foreign exchange and interest rate risk, partly offset by foreign exchange movements on certain borrowings.
3. Segmental analysis
|
Profit for the period |
Business Performance |
Disposals, re-measurements and impairments |
Total Result |
|||
|
Analysed by operating segment |
||||||
|
Second Quarter |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
|
Group revenue |
|
|
|
|
|
|
|
Exploration and Production |
2 072 |
1 748 |
- |
- |
2 072 |
1 748 |
|
Liquefied Natural Gas |
1 492 |
1 111 |
- |
- |
1 492 |
1 111 |
|
Transmission and Distribution |
658 |
556 |
- |
- |
658 |
556 |
|
Power Generation |
156 |
171 |
- |
- |
156 |
171 |
|
Less: intra-group sales |
(218) |
(108) |
- |
- |
(218) |
(108) |
|
Group revenue |
4 160 |
3 478 |
- |
- |
4 160 |
3 478 |
|
Other operating income(a) |
(33) |
11 |
(443) |
20 |
(476) |
31 |
|
Group revenue and other operating income |
4 127 |
3 489 |
(443) |
20 |
3 684 |
3 509 |
|
Operating profit/(loss) before share of results from joint ventures and associates |
||||||
|
Exploration and Production |
738 |
728 |
(247) |
20 |
491 |
748 |
|
Liquefied Natural Gas |
454 |
386 |
(383) |
- |
71 |
386 |
|
Transmission and Distribution |
160 |
180 |
- |
- |
160 |
180 |
|
Power Generation |
16 |
35 |
146 |
- |
162 |
35 |
|
Other activities |
30 |
(8) |
- |
- |
30 |
(8) |
|
|
1 398 |
1 321 |
(484) |
20 |
914 |
1 341 |
|
Pre-tax share of operating results of joint ventures and associates |
||||||
|
Exploration and Production |
8 |
- |
- |
- |
8 |
- |
|
Liquefied Natural Gas |
86 |
79 |
- |
- |
86 |
79 |
|
Transmission and Distribution |
14 |
9 |
- |
- |
14 |
9 |
|
Power Generation |
26 |
39 |
- |
- |
26 |
39 |
|
|
134 |
127 |
- |
- |
134 |
127 |
|
Total operating profit/(loss) |
|
|
|
|
|
|
|
Exploration and Production |
746 |
728 |
(247) |
20 |
499 |
748 |
|
Liquefied Natural Gas |
540 |
465 |
(383) |
- |
157 |
465 |
|
Transmission and Distribution |
174 |
189 |
- |
- |
174 |
189 |
|
Power Generation |
42 |
74 |
146 |
- |
188 |
74 |
|
Other activities |
30 |
(8) |
- |
- |
30 |
(8) |
|
|
1 532 |
1 448 |
(484) |
20 |
1 048 |
1 468 |
|
Net finance income/(costs) |
|
|
|
|
|
|
|
Finance income |
94 |
19 |
84 |
(5) |
178 |
14 |
|
Finance costs |
(62) |
(62) |
(94) |
(1) |
(156) |
(63) |
|
Share of joint ventures and associates |
(13) |
(17) |
- |
- |
(13) |
(17) |
|
|
19 |
(60) |
(10) |
(6) |
9 |
(66) |
|
Taxation |
|
|
|
|
|
|
|
Taxation |
(587) |
(558) |
197 |
(7) |
(390) |
(565) |
|
Share of joint ventures and associates |
(29) |
(33) |
- |
- |
(29) |
(33) |
|
|
(616) |
(591) |
197 |
(7) |
(419) |
(598) |
|
Profit for the period |
935 |
797 |
(297) |
7 |
638 |
804 |
a) Business Performance Other operating income is attributable to segments as follows: E&P $(13) million (2009 $(16) million), LNG $(20) million (2009 $19 million) and Power $nil (2009 $8 million).
|
|
Business Performance |
Disposals, re-measurements and impairments |
Total Result |
|||
|
Half Year |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
|
Group revenue(a) |
|
|
|
|
|
|
|
Exploration and Production |
4 325 |
3 557 |
- |
- |
4 325 |
3 557 |
|
Liquefied Natural Gas |
3 071 |
3 064 |
- |
- |
3 071 |
3 064 |
|
Transmission and Distribution |
1 272 |
1 045 |
- |
- |
1 272 |
1 045 |
|
Power Generation |
396 |
368 |
- |
- |
396 |
368 |
|
Less: intra-group sales |
(402) |
(224) |
- |
- |
(402) |
(224) |
|
Group revenue |
8 662 |
7 810 |
- |
- |
8 662 |
7 810 |
|
Other operating income(b) |
112 |
129 |
(303) |
64 |
(191) |
193 |
|
Group revenue and other operating income |
8 774 |
7 939 |
(303) |
64 |
8 471 |
8 003 |
|
Operating profit/(loss) before share of results from joint ventures and associates |
||||||
|
Exploration and Production |
1 931 |
1 562 |
(277) |
65 |
1 654 |
1 627 |
|
Liquefied Natural Gas |
998 |
1 127 |
(265) |
- |
733 |
1 127 |
|
Transmission and Distribution |
272 |
286 |
- |
(1) |
272 |
285 |
|
Power Generation |
41 |
36 |
(179) |
- |
(138) |
36 |
|
Other activities |
20 |
5 |
- |
- |
20 |
5 |
|
|
3 262 |
3 016 |
(721) |
64 |
2 541 |
3 080 |
|
Pre-tax share of operating results of joint ventures and associates |
||||||
|
Exploration and Production |
7 |
- |
- |
- |
7 |
- |
|
Liquefied Natural Gas |
175 |
165 |
- |
- |
175 |
165 |
|
Transmission and Distribution |
27 |
18 |
- |
- |
27 |
18 |
|
Power Generation |
56 |
73 |
- |
- |
56 |
73 |
|
|
265 |
256 |
- |
- |
265 |
256 |
|
Total operating profit/(loss) |
|
|
|
|
|
|
|
Exploration and Production |
1 938 |
1 562 |
(277) |
65 |
1 661 |
1 627 |
|
Liquefied Natural Gas |
1 173 |
1 292 |
(265) |
- |
908 |
1 292 |
|
Transmission and Distribution |
299 |
304 |
- |
(1) |
299 |
303 |
|
Power Generation |
97 |
109 |
(179) |
- |
(82) |
109 |
|
Other activities |
20 |
5 |
- |
- |
20 |
5 |
|
|
3 527 |
3 272 |
(721) |
64 |
2 806 |
3 336 |
|
Net finance income/(costs) |
|
|
|
|
|
|
|
Finance income |
159 |
28 |
103 |
13 |
262 |
41 |
|
Finance costs |
(125) |
(122) |
(94) |
(17) |
(219) |
(139) |
|
Share of joint ventures and associates |
(33) |
(33) |
- |
- |
(33) |
(33) |
|
|
1 |
(127) |
9 |
(4) |
10 |
(131) |
|
Taxation |
|
|
|
|
|
|
|
Taxation |
(1 386) |
(1 283) |
255 |
(33) |
(1 131) |
(1 316) |
|
Share of joint ventures and associates |
(61) |
(54) |
- |
- |
(61) |
(54) |
|
|
(1 447) |
(1 337) |
255 |
(33) |
(1 192) |
(1 370) |
|
Profit for the period |
2 081 |
1 808 |
(457) |
27 |
1 624 |
1 835 |
a) External sales are attributable to segments as follows: E&P $3 968 million (2009 $3 367 million), LNG $3 026 million (2009 $3 030 million), T&D $1 272 million (2009 $1 045 million) and Power $396 million (2009 $368 million). Intra-group sales are attributable to segments as follows: E&P $357 million (2009 $190 million) and LNG $45 million (2009 $34 million).
b) Business Performance Other operating income is attributable to segments as follows: E&P $28 million (2009 $5 million), LNG $84 million (2009 $109 million) and Power $nil (2009 $15 million).
|
|
Business Performance |
Disposals, re-measurements and impairments |
Total Result |
|||
|
Second Quarter |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
|
Total operating profit/(loss) |
|
|
|
|
|
|
|
Exploration and Production |
746 |
728 |
(247) |
20 |
499 |
748 |
|
Liquefied Natural Gas |
540 |
465 |
(383) |
- |
157 |
465 |
|
Transmission and Distribution |
174 |
189 |
- |
- |
174 |
189 |
|
Power Generation |
42 |
74 |
146 |
- |
188 |
74 |
|
|
1 502 |
1 456 |
(484) |
20 |
1 018 |
1 476 |
|
Other activities |
30 |
(8) |
- |
- |
30 |
(8) |
|
|
1 532 |
1 448 |
(484) |
20 |
1 048 |
1 468 |
|
Less: Pre-tax share of operating results of joint ventures and associates |
|
|
|
|
(134) |
(127) |
|
Add: Share of post-tax results from joint ventures and associates |
|
|
|
|
92 |
77 |
|
Net finance income/(costs) |
|
|
|
|
22 |
(49) |
|
Profit before tax |
|
|
|
|
1 028 |
1 369 |
|
Taxation |
|
|
|
|
(390) |
(565) |
|
Profit for the period |
|
|
|
|
638 |
804 |
|
|
Business Performance |
Disposals, re-measurements and impairments |
Total Result |
|||
|
Half Year |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
2010 $m |
2009 $m |
|
Total operating profit/(loss) |
|
|
|
|
|
|
|
Exploration and Production |
1 938 |
1 562 |
(277) |
65 |
1 661 |
1 627 |
|
Liquefied Natural Gas |
1 173 |
1 292 |
(265) |
- |
908 |
1 292 |
|
Transmission and Distribution |
299 |
304 |
- |
(1) |
299 |
303 |
|
Power Generation |
97 |
109 |
(179) |
- |
(82) |
109 |
|
|
3 507 |
3 267 |
(721) |
64 |
2 786 |
3 331 |
|
Other activities |
20 |
5 |
- |
- |
20 |
5 |
|
|
3 527 |
3 272 |
(721) |
64 |
2 806 |
3 336 |
|
Less: Pre-tax share of operating results of joint ventures and associates |
|
|
|
|
(265) |
(256) |
|
Add: Share of post-tax results from joint ventures and associates |
|
|
|
|
171 |
169 |
|
Net finance income/(costs) |
|
|
|
|
43 |
(98) |
|
Profit before tax |
|
|
|
|
2 755 |
3 151 |
|
Taxation |
|
|
|
|
(1 131) |
(1 316) |
|
Profit for the period |
|
|
|
|
1 624 |
1 835 |
4. Net finance income
|
Second Quarter |
|
|
Half Year |
||
|
2010 $m |
2009 $m |
|
|
2010 $m |
2009 $m |
|
(31) |
(33) |
|
Interest payable |
(65) |
(63) |
|
(27) |
(20) |
|
Interest on obligations under finance leases |
(53) |
(39) |
|
13 |
9 |
|
Interest capitalised |
27 |
15 |
|
(17) |
(18) |
|
Unwinding of discount on provisions(a) |
(34) |
(35) |
|
(94) |
(1) |
|
Disposals, re-measurements and impairments (Note 2) |
(94) |
(17) |
|
(156) |
(63) |
|
Finance costs |
(219) |
(139) |
|
94 |
19 |
|
Interest receivable |
159 |
28 |
|
84 |
(5) |
|
Disposals, re-measurements and impairments (Note 2) |
103 |
13 |
|
178 |
14 |
|
Finance income |
262 |
41 |
|
22 |
(49) |
|
Net finance income/(costs)(b) |
43 |
(98) |
a) Relates to the unwinding of the discount on provisions and amounts in respect of pension obligations which represent the unwinding of discount on the plans' liabilities offset by the expected return on the plans' assets.
b) Excludes Group share of net finance costs from joint ventures and associates for the quarter of $13 million (2009 $17 million), and for the half year of $33 million (2009 $33 million).
5. Taxation
The taxation charge for the second quarter before disposals, re-measurements and impairments was $587 million (2009 $558 million) and the taxation charge including disposals, re-measurements and impairments was $390 million (2009 $565 million).
For the half year, the taxation charge before disposals, re-measurements and impairments was $1 386 million (2009 $1 283 million) and the taxation charge including disposals, re-measurements and impairments was $1 131 million (2009 $1 316 million).
The Group share of taxation from joint ventures and associates for the second quarter was $29 million (2009 $33 million) and for the half year was $61 million (2009 $54 million).
The effective tax rate for the half year is based on the best estimate of the weighted average annual income tax rate expected for the full year.
6. Earnings per ordinary share
|
Second Quarter |
|
|
Half Year |
||||||
|
2010 |
2009 |
|
|
2010 |
2009 |
||||
|
$m |
cents per share |
$m |
cents per share |
|
|
$m |
cents per share |
$m |
cents per share |
|
602 |
17.8 |
761 |
22.7 |
|
Earnings |
1 562 |
46.2 |
1 769 |
52.7 |
|
297 |
8.8 |
(7) |
(0.3) |
|
Disposals, re-measurements and impairments (after tax and non-controlling interest) |
457 |
13.6 |
(27) |
(0.8) |
|
899 |
26.6 |
754 |
22.4 |
|
Earnings - excluding disposals, re-measurements and impairments |
2 019 |
59.8 |
1 742 |
51.9 |
Basic earnings per share calculations in 2010 are based on the weighted average number of shares in issue of 3 380 million for the quarter and 3 378 million for the half year.
The earnings figure used to calculate diluted earnings per ordinary share is the same as that used to calculate earnings per ordinary share given above, divided by 3 400 million for the quarter and 3 400 million for the half year, being the weighted average number of ordinary shares in issue during the period as adjusted for dilutive equity instruments.
7. Reconciliation of net borrowings(a) - Half Year
|
|
$m |
|
Net borrowings as at 31 December 2009 |
(4 775) |
|
Net increase in cash and cash equivalents |
694 |
|
Cash inflow from changes in borrowings |
(838) |
|
Inception of finance lease liabilities/assets |
(362) |
|
Foreign exchange and other re-measurements |
227 |
|
Current borrowings classified as held for sale |
7 |
|
Net borrowings as at 30 June 2010(a)(b) |
(5 047) |
Net borrowings attributable to Comgás were $726 million (31 December 2009 $829 million).
As at 30 June 2010, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately $1.7 billion, including BG Group shareholder loans of approximately $1.4 billion. These net borrowings are included in BG Group's share of the net assets in joint ventures and associates which are consolidated in BG Group's accounts.
a) Net borrowings/funds are defined on page 32.
b) Net borrowings comprise:
|
|
As at 30 Jun 2010 $m |
As at 31 Dec 2009 $m |
|
Amounts receivable/(due) within one year |
|
|
|
Cash and cash equivalents |
1 779 |
1 119 |
|
Overdrafts, loans and finance leases |
(1 907) |
(1 158) |
|
Derivative financial instruments(c) |
124 |
48 |
|
|
(4) |
9 |
|
Amounts receivable/(due) after more than one year |
|
|
|
Loans and finance leases(d) |
(5 178) |
(5 024) |
|
Derivative financial instruments(c) |
135 |
240 |
|
|
(5 043) |
(4 784) |
|
Net borrowings |
(5 047) |
(4 775) |
c) These items are included within commodity contracts and other derivative financial instrument balances on the balance sheet.
d) Includes finance lease receivable of $130 million included within non-current assets on the balance sheet.
Liquidity and Capital Resources
All the information below is as at 30 June 2010
The Group's principal borrowing entities are: BG Energy Holdings Limited (BGEH), including wholly owned subsidiary undertakings, the majority of whose borrowings are guaranteed by BG Energy Holdings Limited (collectively BGEH), and Comgás and Gujarat Gas which conduct their borrowing activities on a stand-alone basis.
BGEH had a $2.0 billion US Commercial Paper Programme, of which $570 million was unutilised, and a $2.0 billion Eurocommercial Paper Programme, of which $1 749 million was unutilised. BGEH also had a $7.5 billion Euro Medium Term Note Programme, of which $5.2 billion was unutilised. In July 2010, BG Group issued a €500 million bond due in 2019 under its Euro Medium Term Note Programme.
BGEH had aggregate committed multicurrency revolving borrowing facilities of $0.375 billion which expire in 2010, $1.090 billion which expire in 2011 and $1.040 billion which expire in 2012. There are no restrictions on the application of funds under these facilities, which were undrawn.
In addition, BGEH had uncommitted borrowing facilities including multicurrency lines, overdraft facilities of £45 million and credit facilities of $20 million, all of which were unutilised.
Comgás had committed borrowing facilities of Brazilian Real (BRL) 1 857.9 million, of which BRL 438.7 million was unutilised, and uncommitted borrowing facilities of BRL 140.8 million, of which BRL 70 million was unutilised.
8. Dividends
|
|
Half Year |
|||
|
|
2010 |
2009 |
||
|
|
$m |
cents per share |
$m |
cents per share |
|
Prior year final dividend, paid in the period |
352 |
10.43 |
323 |
9.61 |
The final dividend of 10.43c ($352 million) in respect of the year ended 31 December 2009 was paid on 21 May 2010 to shareholders (28 May 2010 to ADR holders) on the register at the close of business on 16 April 2010. The interim dividend of 9.82c ($332 million) in respect of the year ended 31 December 2010 is payable on 10 September 2010 to shareholders on the register as at 6 August 2010.
9. Capital investment: geographical analysis
|
Second Quarter |
|
|
Half Year |
||
|
2010 $m |
2009 $m |
|
|
2010 $m |
2009 $m |
|
318 |
260 |
|
Europe and Central Asia |
596 |
467 |
|
1 830 |
570 |
|
Americas and Global LNG |
2 961 |
972 |
|
304 |
814 |
|
Africa, Middle East and Asia |
554 |
1 332 |
|
318 |
117 |
|
Australia |
560 |
862 |
|
2 770 |
1 761 |
|
|
4 671 |
3 633 |
10. Quarterly information: earnings and earnings per share
|
|
2010 $m |
2009 $m |
2010 cents |
2009 cents |
|
First quarter |
|
|
|
|
|
Total Result |
960 |
1 008 |
28.4 |
30.0 |
|
Business Performance |
1 120 |
988 |
33.2 |
29.4 |
|
Second quarter |
|
|
|
|
|
Total Result |
602 |
761 |
17.8 |
22.7 |
|
Business Performance |
899 |
754 |
26.6 |
22.4 |
|
Third quarter |
|
|
|
|
|
Total Result |
|
796 |
|
23.7 |
|
Business Performance |
|
782 |
|
23.3 |
|
Fourth quarter |
|
|
|
|
|
Total Result |
|
754 |
|
22.4 |
|
Business Performance |
|
965 |
|
28.6 |
|
Full year |
|
|
|
|
|
Total Result |
|
3 319 |
|
98.7 |
|
Business Performance |
|
3 489 |
|
103.8 |
11. Commitments and contingencies
Details of the Group's commitments and contingent liabilities as at 31 December 2009 can be found in note 23, page 104 of the 2009 Annual Report and Accounts.
The Group's capital commitments have increased by $6.0 billion in the six month period to 30 June 2010 reflecting the ongoing development of the Group's major growth projects. There have been no material changes to the Group's other commitments and contingent liabilities in the six month period to 30 June 2010.
12. Related party transactions
The Group provides goods and services to, and receives goods and services from, its joint ventures and associates. In addition, the Group provides financing to some of these parties by way of loans. Details of related party transactions for the year ended 31 December 2009 can be found in note 24, page 106 of the 2009 Annual Report and Accounts. There have been no material changes in these relationships in the period ending 30 June 2010. No related party transactions have taken place in the first six months of the current financial year that have materially affected the financial position or the performance of the Group during that period.
Supplementary information: Operating and financial data
|
Second Quarter |
First Quarter |
|
|
Half Year |
||
|
2010 |
2009 |
2010 |
|
|
2010 |
2009 |
|
|
|
|
|
Production volumes (mmboe) |
|
|
|
7.1 |
8.0 |
7.9 |
|
- oil |
15.0 |
16.1 |
|
8.8 |
9.4 |
9.0 |
|
- liquids |
17.8 |
18.0 |
|
41.4 |
41.1 |
44.4 |
|
- gas |
85.8 |
82.3 |
|
57.3 |
58.5 |
61.3 |
|
- total |
118.6 |
116.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production volumes (boed in thousands) |
|
|
|
78 |
88 |
88 |
|
- oil |
83 |
89 |
|
97 |
103 |
100 |
|
- liquids |
98 |
99 |
|
455 |
452 |
493 |
|
- gas |
474 |
455 |
|
630 |
643 |
681 |
|
- total |
655 |
643 |
|
|
|
|
|
|
|
|
|
$75.86 |
$59.27 |
$76.45 |
|
Average realised oil price per barrel |
$76.17 |
$51.19 |
|
|
|
|
|
|
|
|
|
$66.43 |
$47.82 |
$62.81 |
|
Average realised liquids price per barrel |
$64.52 |
$40.53 |
|
|
|
|
|
|
|
|
|
45.16c |
54.04c |
65.22c |
|
Average realised UK gas price per produced therm |
56.38c |
73.02c |
|
(29.97p) |
(36.23p) |
(41.00p) |
|
(36.15p) |
(50.28p) |
|
|
|
|
|
|
|
|
|
|
33.35c |
24.72c |
32.64c |
|
Average realised International gas price per produced therm |
32.99c |
30.37c |
|
|
|
|
|
|
|
|
|
34.80c |
29.88c |
37.37c |
|
Average realised gas price per produced therm |
36.13c |
37.39c |
|
|
|
|
|
|
|
|
|
$4.91 |
$3.34 |
$4.48 |
|
Lifting costs per boe |
$4.69 |
$3.27 |
|
|
|
|
|
|
|
|
|
$7.77 |
$5.42 |
$6.95 |
|
Operating expenditure per boe |
$7.35 |
$5.44 |
|
|
|
|
|
|
|
|
|
1 006 |
933 |
607 |
|
Development expenditure (including acquisitions)($m) |
1 613 |
1 507 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross exploration expenditure ($m) |
|
|
|
1 126 |
356 |
341 |
|
- capitalised expenditure (including acquisitions) |
1 467 |
1 426 |
|
92 |
93 |
94 |
|
- other expenditure |
186 |
184 |
|
1 218 |
449 |
435 |
|
- gross expenditure |
1 653 |
1 610 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration expenditure charge ($m) |
|
|
|
274 |
107 |
10 |
|
- capitalised expenditure written off |
284 |
268 |
|
92 |
93 |
94 |
|
- other expenditure |
186 |
184 |
|
366 |
200 |
104 |
|
- exploration charge |
470 |
452 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LNG cargoes |
|
|
|
21 |
26 |
14 |
|
- delivered to US |
35 |
35 |
|
32 |
30 |
41 |
|
- delivered to global markets |
73 |
76 |
|
53 |
56 |
55 |
|
- total |
108 |
111 |
|
|
|
|
|
|
|
|
|
159.0 |
164.4 |
173.6 |
|
LNG managed volumes (Tbtu) |
332.6 |
344.6 |
BG Group's exposure to the oil price varies according to a number of factors including the mix of production and sales. Management estimates that, other factors being constant and assuming a constant relationship between commodity prices, a $1.00 rise (or fall) in the Brent price would increase (or decrease) E&P business operating profit in 2010 by approximately $90 million to $110 million.
Management estimates that in 2010, other factors being constant, a 10 cent strengthening (or weakening) in the US Dollar would increase (or decrease) operating profit by approximately $10 million to $30 million.
Glossary
|
|
In BG Group's results some or all of the following definitions are used: |
|
|
|
|
bcf |
billion cubic feet |
|
|
|
bcfd |
billion cubic feet per day |
|
|
|
boe |
barrels of oil equivalent |
|
|
|
boed |
barrels of oil equivalent per day |
|
|
|
bopd |
barrels of oil per day |
|
|
|
CAGR |
compound annual growth rate |
|
|
|
Capital investment |
Comprises expenditure on property, plant and equipment, other intangible assets and investments, including business combinations |
|
|
|
E&P |
Exploration and Production |
|
|
|
FPSO |
Floating Production Storage and Offloading system |
|
|
|
Gearing ratio |
net borrowings as a percentage of total shareholders' funds (excluding the re-measurement of commodity financial instruments and associated deferred tax) plus net borrowings |
|
|
|
IAS |
International Accounting Standard issued by the IASB |
|
|
|
IASB |
International Accounting Standards Board |
|
|
|
IFRIC |
International Financial Reporting Interpretations Committee |
|
|
|
IFRS |
International Financial Reporting Standards |
|
|
|
kboed |
thousand barrels of oil equivalent per day |
|
|
|
LNG |
Liquefied Natural Gas |
|
|
|
Managed volumes |
Comprises all LNG volumes contracted for purchase and having related revenue and other operating income recognised in the applicable period |
|
|
|
m |
million |
|
|
|
mmboe |
million barrels of oil equivalent |
|
|
|
mmbtu |
million british thermal units |
|
|
|
mmcfd |
million cubic feet per day |
|
|
|
mmcmd |
million cubic metres per day |
|
|
|
mmscfd |
million standard cubic feet per day |
|
|
|
mmscm |
million standard cubic metres |
|
|
|
mmscmd |
million standard cubic metres per day |
|
|
|
mtpa |
million tonnes per annum |
|
|
|
Net borrowings/ funds |
Comprise cash, current asset investments, finance lease liabilities/assets, currency and interest rate derivative financial instruments and short and long-term borrowings |
|
|
|
PJ |
Petajoule (1 petajoule = 0.943 bcf) |
|
|
|
PSC |
production sharing contract |
|
|
|
SEC |
US Securities and Exchange Commission |
|
|
|
T&D |
Transmission and Distribution |
|
|
|
Tbtu |
trillion british thermal units |
|
|
|
tcf |
trillion cubic feet |
|
|
|
Total operating profit |
Group operating profit plus share of pre-tax operating results of joint ventures and associates |
|
|
|
UKCS |
United Kingdom Continental Shelf |
|
|
|
Unit operating expenditure per boe |
Production costs and royalties incurred over the period divided by the net production for the period. This measure does not include the impact of depreciation and amortisation costs and exploration costs as they are not considered to be costs associated with the operation of producing assets. |
|
|
|
Unit lifting costs per boe |
'Unit operating expenditure' as defined above, excluding royalty, tariff and insurance costs incurred over the period divided by the net production for the period. |
|
|
|
Enquiries |
|
|
|
Enquiries relating to BG Group's results, business and financial position should be made to: |
General enquiries about shareholder matters should be made to: |
|
|
Investor Relations Department BG Group plc Thames Valley Park Drive Reading Berkshire RG6 1PT |
Equiniti Limited Aspect House Spencer Road Lancing West Sussex BN99 6DA |
|
|
Tel: 0118 929 3025 e-mail: [email protected] |
Tel: 0871 384 2064 e-mail: [email protected] |
|
|
|
|
|
|
Media Enquiries: Jo Thethi: 0118 929 3110 |
|
|
|
High resolution images are available at www.vismedia.co.uk |
|
|
|
|
|
|
|
BG Group is listed on the US over-the-counter market known as the International OTCQX. Enquiries should be made to: |
|
|
|
Pink OTC Markets Inc. 304 Hudson Street 2nd Floor New York, NY 10013 USA |
|
|
|
e-mail: [email protected] |
|
|
|
|
|
|
|
Financial Calendar |
|
|
|
Ex-dividend for 2010 interim dividend |
4 August 2010 |
|
|
Record date for 2010 interim dividend |
6 August 2010 |
|
|
Payment of 2010 interim dividend |
10 September 2010 |
|
|
Announcement of 2010 third quarter results |
2 November 2010 |
|
|
|
|
|
|
BG Group plc website: www.bg-group.com |
|
|
|
|
|
|
|
Registered office 100 Thames Valley Park Drive, Reading RG6 1PT Registered in England No. 3690065 |
|
Related Shares:
BG..L