15th Feb 2005 07:00
BG GROUP plc15 February 2005 BG GROUP PLC2004 FOURTH QUARTER AND FULL YEAR RESULTS HIGHLIGHTS-------------------------------------------------------------------------------- Fourth Quarter Full Year 2004 2003 Results excluding 2004 2003 £m £m exceptional items(i) £m £m 1,165 887 +31% Turnover 4,082 3,587 +14% 451 327 +38% Total operating 1,522 1,251 +22% profit 249 183 +36% Earnings 842 683 +23% 7.0p 5.2p +35% Earnings per share 23.8p 19.4p +23% 2.08p 1.86p +12% Dividend per share 3.81p 3.46p +10%-------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Results including exceptional items 249 215 +16% Earnings 904 768 +18% 7.0p 6.1p +15% Earnings per share 25.6p 21.8p +17%-------------------------------------------------------------------------------- •Earnings(i) up by £66 million (36%) in the fourth quarter and by 23% for the full year. •At constant US$/UK£ exchange rates and upstream prices(ii), operating profit increased by approximately 8% for the full year. •Full year dividend increased by 10% to 3.81 pence. •Simian Sienna fields and Egyptian LNG start up accelerated. •Comgas operating profit for the year up 38% in Sterling terms. •Three year average unit finding and development cost(iii) was $4.84/boe. •Unit operating cost for the year was $3.66/boe. •The three year average proved reserve replacement rate was 248%(iv). The one year proved reserve replacement rate was 126% at year end prices and 149% at constant prices. BG Group's Chief Executive Frank Chapman said: "2004 was another year of strong earnings progression, underpinned by continuingunderlying growth. We have made excellent progress in accelerating some keyprojects, which will enhance our 2006 growth programme. We remain confident ofthe Group's outstanding long-term growth prospects." (i) and (ii) See Non-GAAP measures, page 10, for an explanation of results excluding exceptional items and results at constant US$/UK£ exchange rates and upstream prices.(iii) and (iv) See page 10, for an explanation of how these ratios are calculated BUSINESS REVIEW The results discussed in this Business Review (pages 2 to 9) relate to BGGroup's performance excluding exceptional items. For the impact and adescription of exceptional items, see the consolidated profit and loss accounts(pages 13 and 14) and note 2 of the accounts (page 19). Results at constant US$/UK£ exchange rates and upstream prices are also quoted. See Non-GAAP section(page 10) for an explanation of these measures. GROUP RESULTS Fourth Quarter Results excluding exceptional Full Year items 2004 2003 2004 2003 £m £m £m £m 1,165 887 +31% Turnover 4,082 3,587 +14% Total operating profit 364 251 +45% Exploration and Production 1,204 959 +26% 22 17 +29% Liquefied Natural Gas 94 77 +22% 41 34 +21% Transmission and Distribution 134 116 +16% 35 35 - Power Generation 121 129 -6% (11) (10) +10% Other activities (31) (30) +3% 451 327 +38% 1,522 1,251 +22% (20) (13) +54% Net interest (70) (78) -10% (174) (126) +38% Tax (582) (470) +24% 249 183 +36% Earnings 842 683 +23% 7.0p 5.2p +35% Earnings per share 23.8p 19.4p +23% 509 311 +64% Capital investment 1,894 1,054 +80% 389 311 +25% Capital investment excluding 1,373 1,054 +30% acquisitions Fourth quarter The Group continued to deliver strong earnings growth (up 36% to £249 million),despite the effect of the weaker US Dollar. Total operating profit increased by 38% to £451 million reflecting higher E&Pvolumes and prices together with a strong performance from the LNG and T&Dsegments. E&P volumes increased due to liquid exports from the Karachaganakfield in Kazakhstan and increased gas production from the Rosetta and ScarabSaffron fields in Egypt and production from the acquired Canadian properties. The net interest charge was £7 million higher. The effective tax rate wasunchanged at 40%. Earnings per share increased by 1.8 pence (35%). Capital investment in the quarter was £509 million, including £120 million forthe purchase of an additional 40% stake in the Rosetta field. Full year Earnings for the full year are up £159 million (23%). Earnings per share rose to23.8 pence (23%). Total operating profit increased by 22% to £1,522 million reflecting E&P volumegrowth, higher prices and a strong performance from the LNG and T&D segments,partially offset by the impact of the weaker US Dollar. At constant US$/UK£exchange rates and upstream prices, total operating profit increased byapproximately 8%. The net interest charge was down by £8 million primarily due to lower intereston US Dollar borrowings in joint ventures and associated companies. Theeffective tax rate was unchanged at 40%. Cash inflow from operating activities increased by £138 million to £1,582million for the year ended December 2004, principally due to the increase inoperating profit, partially offset by an increase in working capital. As at 31December 2004, net borrowings were £999 million, including £202 millionnon-recourse net borrowings attributable to MetroGAS and Gas Argentino. Gearingat 31 December 2004 was 17.9% (1 January 2004 15.5%). Capital investment was £1,894 million which included acquisitions of £521million and investment in the North Caspian Sea PSA of £150 million. Theremaining £1,223 million arose primarily in the Mediterranean Basin and Africa(£385 million), North America and the Caribbean (£383 million), North WestEurope (£247 million) and Asia and the Middle East (£152 million). BG Group's post-tax ROACE for the year was 17.6% (2003 16.3%). In considering the dividend level, the Board takes account of the outlook forearnings growth, cash flow generation and the Group's financial position. Theaim is to provide sustainable, long-term growth in the dividend. The Directorsrecommend a final dividend of 2.08 pence per share bringing the full yeardividend to 3.81 pence per share, an increase of 10% compared with last year. EXPLORATION AND PRODUCTION Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 45.0 41.3 +9% Production volumes (mmboe) 166.8 156.0 +7% 651 475 +37% Turnover 2,153 1,794 +20% 364 251 +45% Total operating profit 1,204 959 +26% £24.70 £17.22 +43% Average realised oil price £21.53 £17.89 +20% per($45.58) ($29.13) +56% barrel ($39.24) ($29.18) +34% £16.95 £8.92 +90% Average realised liquids price £14.21 £8.86 +60%($31.28) ($15.09) +107% per barrel ($25.90) ($14.45) +79% 17.55p 15.30p +15% Average realised gas price per 16.18p 15.16p +7% produced therm £0.99 £0.81 +22% Lifting costs per boe £1.03 £0.91 +13%($1.83) ($1.37) +34% ($1.88) ($1.48) +27% £1.95 £1.75 +11% Operating expenditure per £2.01 £1.85 +9%($3.60) ($2.95) +22% boe ($3.66) ($3.02) +21% 420 168 +150% Capital investment 1,380 654 +111% Lifting costs are defined as operating expenditure excluding royalties, tariffs and insurance.Additional Operating and Financial Data is given on page 24. Fourth quarter E&P operating profit increased by 45% to £364 million due to higher volumes andprices, partially offset by a higher exploration charge and the effect of theweaker US Dollar. Production volumes increased by 9%, primarily driven by the export of liquidsfrom the Karachaganak field in Kazakhstan and increased gas production from theRosetta and Scarab Saffron fields in Egypt and production from the acquiredCanadian properties. The average realised gas price per produced therm was up15% due to higher UK and Canadian gas prices. The exploration charge of £59 million is £32 million higher mainly due to a stepincrease in the Geological and Geophysical (G&G) programme. This includes G&Gwork on new exploration areas in the UKCS, Norway, Canada, Mauritania andTrinidad. Well write-offs rose by £8 million, including a £12 million charge forthe write-off of the Panda discovery. Unit operating expenditure was 20 pence per boe higher during the quarter,reflecting high lifting costs and royalties on the acquired Canadian propertiesand the impact of a planned shutdown at the Miskar field in Tunisia. Capital investment of £420 million includes £120 million for the purchase of theadditional stake in the Rosetta field together with continuing investment inEgypt (£76 million), Kazakhstan(£60 million) and North West Europe (£75 million). Full year E&P operating profit increased by 26% to £1,204 million primarily due toproduction volume growth and higher upstream prices, partially offset by ahigher exploration charge and the effect of the weaker US Dollar. At constantUS$/UK£ exchange rates and upstream prices underlying E&P operating profitincreased by approximately 6%. Production volumes increased by 7% to 166.8 mmboe mainly due to the new highvalue liquids exports from Karachaganak and the full year contribution from theScarab Saffron fields. The exploration charge increased by £44 million to £126 million, largelyreflecting the step up in exploration activity across the Group. Well-write offsincreased by £6 million to £52 million for the year. Unit operating expenditure increased by 16 pence per boe due to the itemsreferred to in the quarter above and the impact of the Karachaganak start-up andmaintenance activities earlier in the year. Total capital investment of £1,380 million includes £488 million foracquisitions completed during the year in Canada, Mauritania, Trinidad, Braziland Egypt together with continuing investment in Egypt (£243 million), NorthWest Europe (£215 million) and £150 million in the North Caspian Sea PSA, whichis reimbursable upon the sale of BG Group's interest. Fourth quarter business highlights From 28 October, the Tapti field in India increased production from 180 mmscfdto 250 mmscfd with the installation of new compression. In November, BG Indiawon the Energy Institute award for upstream safety. In the nearly 3 millionhours worked since 2002, the business has not lost any time through injury. On 24 November, BG Group completed its purchase of a further 40% stake in theRosetta field offshore Egypt, taking its stake to 80%. On 22 December first production from the Margarita Early Production Facilitiescommenced and has started to deliver gas to the Brazilian market. In early December, the North West Seymour well on the BG Group-operated Seymourfield (BG Group 57%) made an oil discovery. The well tested at c 5,000 bopd anddevelopment options are currently being evaluated. It is envisaged that the wellwill be tied back to the Armada platform. On 15 November, BG Group announced its agreement to acquire stakes in threelicences in the Norwegian North Sea. The blocks lie adjacent to the UK-Norwegianmedian line immediately north of three BG Group 100% owned and operated blocks.On 6 December, BG Group was offered operatorship in one block and aparticipating interest in another block under the 2004 Norwegian Pre-definedAreas Licensing Round. In the fourth quarter 2004, BG Group had exploration successes in Trinidad, UKand Canada. Five appraisal wells in Mauritania, Kazakhstan and the UK were alsosuccessful. Overall 18 out of 28 exploration and appraisal wells were completedsuccessfully during the year (64%). LIQUEFIED NATURAL GAS Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 296 186 +59% Turnover 1,098 945 +16% Total operating profit 16 4 +300% Shipping and marketing 51 44 +16% 16 21 -24% Atlantic LNG 65 56 +16% Other including (10) (8) +25% business development (22) (23) -4% 22 17 +29% 94 77 +22% 56 108 -48% Capital investment 417 301 +39% Fourth quarter Turnover was up 59% to £296 million reflecting increased activity and higherprices in the LNG shipping and marketing business, partially offset by theimpact of the weaker US Dollar. In shipping and marketing total volumes rose by 21% reflecting the delivery of19 cargoes to the USA (2003 21 cargoes) and a further 7 cargoes directed toother markets to take advantage of higher prices (2003 2 cargoes). Operatingprofit was up £12 million to £16 million. Atlantic LNG (ALNG) reported an operating profit of £16 million (2003 £21million). The results reflect the impact of the weaker US Dollar, and a paymentto upstream suppliers (including BG Group) arising out of the first annualtariff reconciliation at Trains 2 and 3. Full year The £153 million increase in turnover reflects higher volumes in the LNGshipping and marketing business (up 11%) including 18 cargoes (2003 9 cargoes)directed to markets outside of the US. Total operating profit was up 22% to £94 million reflecting the increasedactivity in the LNG shipping and marketing business and a full year contributionfrom ALNG Trains 2 and 3, partially offset by the weaker US Dollar. Capital investment includes £183 million reflecting the delivery of two LNGvessels in the year, £25 million relating to three additional LNG vessels inconstruction due for delivery in 2006 and continuing investment on Egyptian LNGTrain 2 and ALNG Train 4. Fourth quarter business highlights In Egypt, construction of the upstream and liquefaction facilities for EgyptianLNG Trains 1 and 2 are expected to be completed ahead of schedule. As a result,the production start for both trains has been accelerated. Train 1 will start inthe second quarter of 2005 rather than the third quarter of 2005 and Train 2 inthe fourth quarter of 2005 rather than mid-2006. On 1 December, BG Group and partners announced the signing of shareholders andother agreements confirming their commitment to develop the £250 million DragonLNG import terminal at Milford Haven in Wales, which is scheduled to beoperational in the fourth quarter of 2007. The agreements also triggered theaward of the EPC contract. On 20 December, Brindisi LNG (BG Group 50%) awarded the EPC contract for the LNGterminal in the port of Brindisi, Italy. On 24 January 2005, BG Group announcedthe signing of an SPA for2.4 mtpa of LNG to Enel, beginning in 2008 when the Brindisi LNG terminal isexpected to become operational. The supply will be sourced from Egyptian LNGTrain 2, the output of which was sold in its entirety to a BG Group subsidiary. TRANSMISSION AND DISTRIBUTION -----------------------------------------------------------------------------Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m Turnover------- ------- ------- ------- 107 104 +3% Comgas 397 390 +2% 34 29 +17% MetroGAS 150 135 +11% 24 39 -38% Other 97 153 -37%------- ------- ------- ------- 165 172 -4% 644 678 -5% Total operating------- ------- profit ------- ------- 35 20 +75% Comgas 80 58 +38% - 1 -100% MetroGAS 20 18 +11% 6 13 -54% Other 34 40 -15%------- ------- ------- ------- 41 34 +21% 134 116 +16% 23 23 - Capital 66 76 -13% investment----------------------------------------------------------------------------- Fourth quarter Turnover was broadly in line with 2003 after adjusting for the disposal ofPhoenix Natural Gas in Northern Ireland. At Comgas in Brazil the business posted an operating profit of £35 millionincluding credits relating to regulatory cost approvals which largely arose inprevious quarters offset by the impact of the weaker Brazilian Real. Volumegrowth in the quarter was 12%. Capital investment mainly represents the further development of the Comgaspipeline network. Full year Total operating profit increased by 16% to £134 million. This reflected a profitof £80 million at Comgas driven by 11% volume growth and improved marginspartially offset by the weaker Brazilian Real. MetroGAS in Argentina continues to operate in a difficult environment andreported full year operating profit of £20 million. BG Group expects thatMetroGAS will complete a capital restructuring in due course. This may lead tothe deconsolidation of this subsidiary which would reduce the contribution itmakes to Group operating profit. Fourth quarter business highlights On 3 December, Gujarat Gas (BG Group 65.12%) in India announced it had a "Rightof Use" agreement with Gujarat Development Corporation to set up a gasdistribution network in areas of the city of Vapi, in Gujarat state. This is anew city of operation for Gujarat Gas. In the quarter, 14 new compressed natural gas stations (CNG) were opened,bringing the total stations in Brazil and India operated by BG Groupsubsidiaries to 138. POWER GENERATION Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 58 58 - Turnover 201 184 +9% 35 35 - Total operating profit 121 129 -6% 2 1 +100% Capital investment 3 3 - Fourth quarter Turnover and total operating profit were in line with last year. Full year Turnover primarily reflects pass through of gas costs. Total operating profitwas adversely affected by the impact of the weaker US Dollar on the Philippinespower businesses. PRESENTATION OF NON-GAAP MEASURES AND DEFINITIONS Presentation of Non-GAAP measures (i) Results excluding exceptional items (Business Performance) are presented as management believes that exclusion of these items facilitates understanding of the underlying performance and aids comparability of results for the periods concerned. The items excluded from Business Performance are exceptional items as defined by Financial Reporting Standard 3 - i.e. items which derive from events or transactions that fall within the ordinary activities of BG Group but which require separate disclosure in order to present a true and fair view of the performance during a period. For a reconciliation between results including and excluding exceptional items and for further details of exceptional items, see the consolidated profit and loss accounts, pages 13 and 14 and note 2 to the accounts, page 19. (ii) BG Group also discloses certain information, as indicated, at constant US$/UK£ exchange rates and upstream prices. The presentation of results in this manner is intended to provide additional information to explain further the underlying trends in the business. Finding and Development Cost & Proved Reserve Replacement Rate (iii) Finding & Development Cost (F&D): The three year average unit finding & development cost is calculated by dividing the total exploration, development and unproved acquisition costs incurred over the period by the total changes in net proved reserves (excluding purchases, sales and production) for that period. (iv) Proved Reserve Replacement Rate (RRR): The three year average proved reserve replacement rate is the total net proved reserves changes over the three year period including purchases and sales (excluding production) divided by the total net production for that period. Definitions In these results: bcf billion cubic feetbcfd billion cubic feet per daybcmpa billion cubic metres per annumboe barrels of oil equivalentboepd barrels of oil equivalent per daybopd barrels of oil per dayCCGT combined cycle gas turbineCNG Compressed Natural GasDCQ daily contracted quantityDTI Department of Trade and IndustryE&P Exploration and ProductionFEED front end engineering designGW gigawattLNG Liquefied Natural Gasm millionmmboe million barrels of oil equivalentmmcfd million cubic feet per daymmcmd million cubic metres per daymmscfd million standard cubic feet per daymmscm million standard cubic metresmmscmd million standard cubic metres per daymtpa million tonnes per annumMW megawattNGV Natural Gas VehiclesROACE return on average capital employedT&D Transmission and Distributiontcf trillion cubic feetPSA production sharing agreementPSC production sharing contractSPA sale and purchase agreementUKCS United Kingdom Continental Shelf LEGAL NOTICE These results include "forward-looking information" within the meaning ofSection 27A of the US Securities Act of 1933, as amended and Section 21E of theUS Securities Exchange Act of 1934, as amended. Certain statements included inthese results, including without limitation, those concerning (i) strategies,outlook and growth opportunities, (ii) positioning to deliver future plans andto realise potential for growth, (iii) delivery of the performance required toachieve the 2006 targets, (iv) development of new markets, (v) the developmentand commencement of commercial operations of new projects, (vi) liquidity andcapital resources, (vii) plans for capital and investment expenditure and (viii)statements preceded by "expected", "scheduled", "targeted", "planned","proposed", "intended" or similar statements, contain certain forward-lookingstatements concerning operations, economic performance and financial condition.Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that suchexpectations will prove to have been correct. Accordingly, results could differmaterially from those set out in the forward-looking statements as a result of,among other factors, (i) changes in economic, market and competitive conditions,including oil and gas prices, (ii) success in implementing business andoperating initiatives, (iii) changes in the regulatory environment and othergovernment actions, including UK and international corporation tax rates, (iv) amajor recession or significant upheaval in the major markets in which BG Groupoperates, (v) the failure to ensure the safe operation of assets worldwide, (vi)implementation risk, being the challenges associated with delivering capitalintensive projects on time and on budget, including the need to retain andmotivate staff, (vii) commodity risk, being the risk of a significantfluctuation in oil and/or gas prices from those assumed, (viii) fluctuations inexchange rates, in particular the US$/UK£ exchange rate being significantlydifferent to that assumed, (ix) risks encountered in the gas and oil explorationand production sector in general, (x) business risk management and (xi) the RiskFactors included in BG Group's Annual Report and Accounts 2003. BG Groupundertakes no obligation to update any forward-looking statements. No part of these results constitutes or shall be taken to constitute aninvitation or inducement to invest in BG Group plc or any other entity and mustnot be relied upon in any way in connection with any investment decision. Cautionary note to US investors - The United States Securities and ExchangeCommission permits oil and gas companies, in their filings with the SEC, todisclose only proved reserves that a company has demonstrated by actualproduction or conclusive information tests to be economically and legallyproducible under existing economic and operating conditions. We use certainterms in this press release in relation to our oil and gas reserves, such as"probable reserves", "unbooked resources", "risked exploration" and "totalreserve/resource base", that the SEC's guidelines strictly prohibit us fromincluding in filings with the SEC. US investors are urged to consider closelythe disclosure in our Form 20-F, File No. 1-09337, available from us at BGGroup, 100 Thames Valley Park Drive, Reading RG6 1PT. You may read and copy thisinformation at the SEC's public reference room, located at 450 Fifth Street NW,Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for furtherinformation on the public reference room. This filing is also available at theinternet website maintained by the SEC at http://www.sec.gov. CONSOLIDATED PROFIT AND LOSS ACCOUNT FOURTH QUARTER ----------------------------- ---------------------------------- 2004 2003 Total Excep- Busi- Total Excep- Busi- tional ness tional ness items perfor- items perfor- mance mance Notes £m £m £m £m £m £m Turnover 3 1,165 - 1,165 887 - 887Operatingcosts (761) - (761) (616) - (616) ----------------------------- ----------------------------------Groupoperatingprofit 3 404 - 404 271 - 271Share ofoperatingprofits lesslosses in joint ventures andassociatedundertakings 47 - 47 56 - 56 ----------------------------- ---------------------------------- Totaloperatingprofit 3 451 - 451 327 - 327Profit ondisposal offixed assets - - - 32 32 - ----------------------------- ---------------------------------- Profit onordinaryactivities 451 - 451 359 32 327Net interest 4 (20) - (20) (13) - (13) ----------------------------- ----------------------------------Profit onordinaryactivitiesbeforetaxation 431 - 431 346 32 314Tax on profiton ordinaryactivities (174) - (174) (126) - (126) ----------------------------- ---------------------------------- Profit onordinaryactivitiesafter taxation 257 - 257 220 32 188Minorityshareholders'interest (8) - (8) (5) - (5) ----------------------------- ----------------------------------Earnings 249 - 249 215 32 183 ---------------- ----------------------Dividends (74) (66) ------- -------- Transfer toreserves 175 149 ------- -------- Earnings perordinaryshare(i) 6 7.0p - 7.0p 6.1p 0.9p 5.2pDividend perordinary share 2.08p 1.86p ----------------------------- ---------------------------------- (i) There is no difference between basic and diluted earnings per ordinaryshare. CONSOLIDATED PROFIT AND LOSS ACCOUNT FULL YEAR ----------------------------- ---------------------------------- 2004 2003 Total Excep- Busi- Total Excep- Busi- tional ness tional ness items perfor- items perfor- mance mance Notes £m £m £m £m £m £m Turnover 3 4,082 - 4,082 3,587 - 3,587Operatingcosts (2,753) - (2,753) (2,530) - (2,530) ----------------------------- ----------------------------------Groupoperatingprofit 3 1,329 - 1,329 1,057 - 1,057Share ofoperatingprofits lesslosses in joint ventures andassociated undertakings 193 - 193 194 - 194 ----------------------------- ----------------------------------Totaloperatingprofit 3 1,522 - 1,522 1,251 - 1,251Profit ondisposal offixed assets 92 92 - 117 117 - ----------------------------- ---------------------------------- Profit onordinaryactivities 1,614 92 1,522 1,368 117 1,251Net interest 4 (70) - (70) (78) - (78) ----------------------------- ----------------------------------Profit onordinaryactivitiesbeforetaxation 1,544 92 1,452 1,290 117 1,173Tax on profiton ordinaryactivities 5 (612) (30) (582) (502) (32) (470) ----------------------------- ----------------------------------Profit onordinaryactivitiesafter taxation 932 62 870 788 85 703Minorityshareholders'interest (28) - (28) (20) - (20) ----------------------------- ----------------------------------Earnings 904 62 842 768 85 683 ---------------- ----------------------Dividends (135) (122) ------- --------Transfer toreserves 769 646 ------- -------- Earnings perordinaryshare(i) 6 25.6p 1.8p 23.8p 21.8p 2.4p 19.4pDividend perordinary share 3.81p 3.46p ----------------------------- ---------------------------------- (i) There is no difference between basic and diluted earnings per ordinary share. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES - FULL YEAR 2004 2003 £m £m Earnings 904 768 Currency translation adjustments (146) (37)--------------------------------------------------------------------------------Total recognised gains and losses 758 731-------------------------------------------------------------------------------- CONSOLIDATED BALANCE SHEET As at 31 Dec 31 Dec 2004 2003 £m £mFixed assets: ------- -------Intangible assets 1,215 840Tangible assets 4,567 4,020Investments 1,063 1,038 ------- ------- 6,845 5,898 Current assets: ------- ------- Stocks 99 119Debtors: amounts falling due within one year 1,212 749Debtors: amounts falling due after one year 96 88Investments 208 201Cash at bank and in hand 132 112 ------- ------- 1,747 1,269Creditors: amounts falling due within one year: ------- -------Borrowings (577) (495)Other creditors (1,394) (988) ------- ------- (1,971) (1,483)-----------------------------------------------------------------------------Net current liabilities (224) (214)-----------------------------------------------------------------------------Total assets less current liabilities 6,621 5,684 Creditors: amounts falling due after more than one year: ------- -------Borrowings (762) (539)Other creditors (156) (154) ------- ------- (918) (693) Provisions for liabilities and charges (1,113) (1,075)----------------------------------------------------------------------------- 4,590 3,916----------------------------------------------------------------------------- CAPITAL AND RESERVESBG Group shareholders' funds 4,570 3,925Minority shareholders' interest 20 (9)----------------------------------------------------------------------------- 4,590 3,916----------------------------------------------------------------------------- MOVEMENT IN BG GROUP SHAREHOLDERS' FUNDS Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 249 215 Profit for the financial period 904 768 5 - Issue of shares 13 2 Adjustment in respect of employee share 2 - schemes 10 - (1) (10) Own shares(i) (1) (10) (74) (66) Dividend (135) (122) (116) (94) Currency translation adjustments (146) (37)-------------------------------------------------------------------------------- Net movement in BG Group shareholders' 65 45 funds for the financial period 645 601 BG Group shareholders' funds at the 4,505 3,880 beginning of the period 3,925 3,324-------------------------------------------------------------------------------- BG Group shareholders' funds as at 31 4,570 3,925 December 4,570 3,925-------------------------------------------------------------------------------- (i) 2004 comprises own shares purchased and 2003 comprises £10 million reclassified from debtors falling due within one year. CONSOLIDATED CASH FLOW STATEMENT Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 451 327 Total operating profit 1,522 1,251 Less: share of operating profit in joint ventures and associated (47) (56) undertakings (193) (194)-------------------------------------------------------------------------------------- 404 271 Group operating profit 1,329 1,057 123 125 Depreciation and amortisation 468 444 Unsuccessful exploration expenditure 29 21 written off 52 46 22 (6) Provisions 14 (8) (143) (2) Working capital (281) (95)-------------------------------------------------------------------------------------- Net cash flow from operating 435 409 activities 1,582 1,444 Dividends from joint ventures and 43 47 associated undertakings 81 88 Returns on investments and servicing of 9 (5) finance(i) (15) (30) (124) (51) Tax paid (387) (332) Capital expenditure and investment (432) (335) (ii) (1,531) (1,101) 1 121 Proceeds from sales of assets(iii) 315 202 (1) (2) Equity dividends paid (124) (112) 7 (111) Management of liquid resources (15) (76)-------------------------------------------------------------------------------------- (62) 73 Net cash flow before financing (94) 83------- ------- ------- ------- 5 - Changes in share capital 13 2 Shares issued to minority - 2 interests - 5 50 (171) Net movement in gross borrowings 99 (120)------- ------- ------- ------- Net cash flow from financing 55 (169) activities 112 (113)-------------------------------------------------------------------------------------- (7) (96) NET MOVEMENT IN CASH 18 (30) 129 205 Opening cash 112 141 10 3 Changing values of currency 2 1-------------------------------------------------------------------------------------- 132 112 CLOSING CASH 132 112-------------------------------------------------------------------------------------- (i) Includes capitalised interest for the fourth quarter of £5 million (2003 £5 million) and for the year of £13 million(2003 £22 million).(ii) Includes loans to joint ventures and associated undertakings and cash acquired of £12 million on the purchase of subsidiary undertakings in 2004.(iii) Includes repayment of loans by joint ventures and associated undertakings of £2 million (2003 £2 million) for the fourth quarter and £141 million (2003 £11 million) for the full year. RECONCILIATION OF NET BORROWINGS - FULL YEAR £m Net borrowings as at 1 January 2004 (721)Net increase in cash in the period 18Cash outflow from the management of liquid resources 15Cash inflow from change in gross borrowings (99)Inception of finance leases (283)Foreign exchange 71-------------------------------------------------------------------------------Net borrowings as at 31 December 2004 (999)------------------------------------------------------------------------------- Net borrowings (non-recourse) attributable to MetroGAS (including Gas Argentino)and Comgas were £300 million (1 January 2004 £345 million). The gearing ratio (net borrowings as a percentage of net borrowings plus equity)was 17.9% (1 January 2004 15.5%). As at 31 December 2004, BG Group's share of the net borrowings in joint venturesand associated undertakings amounted to approximately £1.1 billion, including BGGroup shareholder loans of £605 million. These net borrowings which form part of BG Group's share of the net assets in joint ventures and associated undertakings are included in BG Group's accounts. LIQUIDITY AND CAPITAL RESOURCES All the information below is as at 31 December 2004, unless otherwise stated. The Group's principal borrowing entities are BG Energy Holdings Limited,including wholly-owned subsidiary undertakings whose borrowings are guaranteedby BG Energy Holdings Limited (collectively BGEH), and MetroGAS, Gas Argentino,Comgas and Gujarat Gas, which conduct their borrowing activities on astand-alone basis. BGEH had a $1.0 billion US Commercial Paper Programme, which was unutilised, anda $1.0 billion Eurocommercial Paper Programme, of which $519 million wasunutilised. BGEH also had a $2.0 billion Euro Medium Term Note Programme, ofwhich $1.365 billion was unutilised. BGEH had aggregate committed multicurrency revolving borrowing facilities of$1.105 billion, of which $552.5 million matures in 2005 and $552.5 millionmatures in 2007. These facilities were undrawn. In addition, BGEH had uncommitted multicurrency borrowing facilities of £633million all of which was unutilised. MetroGAS announced in 2002 that it had suspended payments of principal andinterest on its financial indebtedness of approximately $450 million. GasArgentino also suspended debt service on borrowings of $70 million. All theborrowings of MetroGAS and Gas Argentino are non-recourse to other members ofthe Group. On 7 November, 2003 MetroGAS announced an offer to restructure itsfinancial obligations pursuant to an out-of-court agreement. As of January 5,2005 MetroGAS obtained the support of creditors representing $85 million. Comgas had committed borrowing facilities of Brazilian Reais (BRL) 735 million,of which BRL 223 million was unutilised, and uncommitted borrowing facilities of BRL 669 million, of which BRL 485 million was unutilised. The principal source of liquidity at Gujurat Gas, which had no borrowings, wascash and current asset investments of Indian Rupees (INR) 1.81 billion. Notes 1. Basis of preparation The financial information contained in this quarterly report is unaudited anddoes not comprise statutory accounts within the meaning of Section 240 of theCompanies Act 1985. BG Group's statutory accounts for the year ended 31 December2003, which include the unqualified report of the auditors, have been filed withthe Registrar of Companies. This results statement has been prepared on thebasis of the accounting policies set out in those statutory accounts. 2. Exceptional items Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m - 32 Profit on disposal of fixed assets 92 117 ----------------------------------------------------------------------------- - - Tax impact (30) (32) ----------------------------------------------------------------------------- - 32 Impact on earnings 62 85 ----------------------------------------------------------------------------- 2004 second quarter: Disposal of investment Profits on disposal of fixed assets during the second quarter of 2004 includedthe disposal of BG Group's interest in the Muturi Production Sharing Contract inIndonesia for £142 million realising a £71 million pre-tax and £43 million post-tax profit on the sale. 2004 first quarter: Disposal of investment BG Group disposed of its 1.21% holding of shares in a listed company, GasAuthority of India Limited, for £32 million. Tax of £2 million arose on theprofit on disposal, based on the effective rate of capital gains tax applicablein India for long-term investments. 2003 fourth quarter: Disposal of investment BG Group disposed of its remaining 51% investment in Phoenix Natural GasLimited, realising a £32 million profit. Proceeds of £120 million arose on the sale. 2003 third quarter: Disposal of investment BG Group disposed of a number of North Sea gas production assets for a profit of£79 million. The resulting tax impact was a £32 million charge, leading to a net£47 million increase in earnings. Proceeds of £72 million arose on the sale. 2003 second quarter: Disposal of investment BG Group disposed of 50% of its 100% investment in BG Brindisi LNG S.p.A,realising a £6 million pre- and post-tax profit. 3. Segmental analysis Fourth Quarter Turnover excluding share of joint ventures Full Year 2004 2003 2004 2003 £m £m £m £m 651 475 Exploration and Production 2,153 1,794 296 186 Liquefied Natural Gas 1,098 945 165 172 Transmission and Distribution 644 678 58 58 Power Generation 201 184 2 1 Other activities 8 3 (7) (5) Less: intra-group sales (22) (17) ------------------------------------------------------------------------------ 1,165 887 4,082 3,587 ------------------------------------------------------------------------------ Group Share of operating profit Total operating profit/ in joint ventures and operating (loss) associated undertakings profit/(loss) Fourth Quarter 2004 2003 2004 2003 2004 2003 £m £m £m £m £m £m Explorationand Production 364 251 - - 364 251LiquefiedNatural Gas 6 (4) 16 21 22 17TransmissionandDistribution 32 22 9 12 41 34PowerGeneration 13 12 22 23 35 35Otheractivities (11) (10) - - (11) (10)------------------------------------------------------------------------------------- 404 271 47 56 451 327------------------------------------------------------------------------------------- Full Year Explorationand Production 1,204 959 - - 1,204 959LiquefiedNatural Gas 29 21 65 56 94 77TransmissionandDistribution 94 74 40 42 134 116PowerGeneration 33 33 88 96 121 129Otheractivities (31) (30) - - (31) (30)------------------------------------------------------------------------------------- 1,329 1,057 193 194 1,522 1,251------------------------------------------------------------------------------------- BG Group's share of turnover and operating profit in joint ventures for thefourth quarter was £57 million (2003 £66 million) and £21 million (2003 £22million) respectively; and for the full year was £238 million (2003 £247million) and £82 million (2003 £91 million) respectively. 4. Net interest Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m (19) (20) Net interest payable (57) (77) (2) - Finance lease interest (10) - 5 5 Interest capitalised 13 22------------------------------------------------------------------------------ (16) (15) (54) (55) (2) (3) Unwinding of discount on provisions(i) (10) (12) (1) (1) Unwinding of discount on deferred income (5) (7) 7 18 Other net interest(ii) 33 37------------------------------------------------------------------------------ (12) (1) Net interest: Group (36) (37) (6) (8) Joint ventures (23) (28) (2) (4) Associated undertakings (11) (13)------------------------------------------------------------------------------ (20) (13) Total net interest (70) (78)------------------------------------------------------------------------------ (i) Relates to the unwinding of the discount on provisions in respect of decommissioning, included in the profit and loss account as a financial item within the net interest charge.(ii) Includes £4 million (2003 £4 million) receivable from joint ventures and associated undertakings in the quarter, and £16 million (2003 £17 million) for the full year. 5. Taxation - full year The taxation charge for the period before exceptional items was £582 million(2003 £470 million), representing an effective tax rate of 40% and the taxationcharge including exceptional items was £612 million (2003 £502 million),representing an effective tax rate of 40%. 6. Earnings per ordinary share Reconciliation of earnings and earnings per share including and excludingexceptional items Fourth Quarter Full Year 2004 2003 2004 2003------------------------------------------------------------------------------------ £m Pence £m Pence £m Pence £m Pence per per per per share share share share 249 7.0 215 6.1 Earnings 904 25.6 768 21.8 - - (32) (0.9) Profit on disposals (62) (1.8) (85) (2.4)------------------------------------------------------------------------------------ Earnings - excluding 249 7.0 183 5.2 exceptional items 842 23.8 683 19.4------------------------------------------------------------------------------------ Earnings and earnings per share before interest, tax, depreciation and amortisation- including and excluding exceptional items Fourth Quarter Full Year 2004 2003 2004 2003------------------------------------------------------------------------------------ £m Pence £m Pence £m Pence £m Pence per per per per share share share share 249 7.0 215 6.1 Earnings 904 25.6 768 21.8 8 0.2 5 0.2 Minority interest 28 0.8 20 0.6 174 4.9 126 3.5 Tax 612 17.3 502 14.2 20 0.6 13 0.3 Interest 70 2.0 78 2.2 Depreciation and 123 3.5 125 3.6 amortisation 468 13.3 444 12.6------------------------------------------------------------------------------------ EBITDA - including 574 16.2 484 13.7 exceptional items 2,082 59.0 1,812 51.4 - - (32) (0.9) Profit on disposals (92) (2.6) (117) (3.3)------------------------------------------------------------------------------------ EBITDA - excluding 574 16.2 452 12.8 exceptional items 1,990 56.4 1,695 48.1------------------------------------------------------------------------------------ Earnings per share calculations in 2004 are based on shares in issue of 3,533million for the quarter and 3,531 million for the full year. There is no difference between the figures presented above and diluted earningsper share. 7. Capital investment by region Fourth Quarter Full Year 2004 2003 2004 2003 £m £m £m £m 104 36 North West Europe 247 150 30 28 South America 102 76 77 71 Asia and Middle East 302 313 58 76 North America and the Caribbean 664 174 240 100 Mediterranean Basin and Africa 579 341------------------------------------------------------------------------------- 509 311 1,894 1,054Related Shares:
BG..L