REG-BG Group 3rd Quarter Results - Part 2
Released: 28/10/2009
Released: 28/10/2009
Part 2 : For preceding part double-click [nRn1b4759B]
30 Sept 31 Dec 30 Sept
2009 2008 2008
£m £m £m
Assets
Non-current assets
Goodwill 490 417 419
Other intangible assets 5 256 3 713 1 233
Property, plant and equipment 12 401 11 288 8 739
Investments 1 825 1 631 1 533
Deferred tax assets 79 77 86
Trade and other receivables 86 95 70
Commodity contracts and other derivative financial instruments 371 935 320
20 508 18 156 12 400
Current assets
Inventories 424 562 428
Trade and other receivables 2 527 3 616 2 833
Current tax receivable 154 91 132
Commodity contracts and other derivative financial instruments 1 227 1 538 917
Cash and cash equivalents 664 1 033 2 198
4 996 6 840 6 508
Total assets 25 504 24 996 18 908
Liabilities
Current liabilities
Borrowings (698) (281) (137)
Trade and other payables (2 187) (3 632) (2 262)
Current tax liabilities (1 142) (1 122) (1 054)
Commodity contracts and other derivative financial instruments (982) (1 453) (1 280)
(5 009) (6 488) (4 733)
Non-current liabilities
Borrowings (3 096) (1 897) (1 652)
Trade and other payables (38) (38) (32)
Commodity contracts and other derivative financial instruments (460) (528) (467)
Deferred income tax liabilities (1 911) (2 056) (1 458)
Retirement benefit obligations (170) (178) (174)
Provisions for other liabilities and charges (902) (927) (722)
(6 577) (5 624) (4 505)
Total liabilities (11 586) (12 112) (9 238)
Net assets 13 918 12 884 9 670
Equity
Total shareholders' equity 13 735 12 758 9 535
Minority interest in equity 183 126 135
Total equity 13 918 12 884 9 670
Consolidated Cash Flow Statement
Third Quarter Nine Months
2009 2008 2009 2008
£m £m £m £m
Cash flows from operating activities
838 1 528 Profit before tax 3 005 4 198
(45) (38) Share of post-tax results from joint ventures and associates (161) (118)
269 207 Depreciation and impairments of property, plant and equipment 849 629
and amortisation of intangible assets
(8) (178) Fair value movements in commodity based contracts (74) (58)
- (4) (Profits) and losses on disposal of non-current assets and - 18
impairments
70 54 Unsuccessful exploration expenditure written off 251 150
(35) 1 (Decrease)/increase in provisions (37) (9)
(63) (76) Finance income (90) (169)
83 46 Finance costs 176 128
10 9 Share-based payments 29 23
67 (351) Decrease/(increase) in working capital (382) (440)
1 186 1 198 Cash generated by operations 3 566 4 352
(288) (592) Income taxes paid (1 030) (1 228)
898 606 Net cash inflow from operating activities 2 536 3 124
Cash flows from investing activities
30 34 Dividends received from joint ventures and associates 105 77
- 14 Proceeds from disposal of subsidiary undertakings and - 15
investments
- - Proceeds from disposal of property, plant and equipment and 2 2
intangible assets
(1 273) (623) Purchase of property, plant and equipment and intangible (3 266) (1 934)
assets
(25) (43) Loans to joint ventures and associates (58) (84)
(193) (2) Business combinations and investments (735) (176)
(1 461) (620) Net cash outflow from investing activities (3 952) (2 100)
Cash flows from financing activities
(24) 3 Net interest (paid)/received(a) (72) (5)
(186) (155) Dividends paid (404) (346)
(7) (9) Dividends paid to minority (20) (28)
1 399 10 Net proceeds from issue of new borrowings 2 273 164
(608) (10) Repayment of borrowings (735) (337)
17 8 Issue of shares 35 15
- - Purchase of own shares (3) (197)
591 (153) Net cash inflow/(outflow) from financing activities 1 074 (734)
28 (167) Net increase/(decrease) in cash and cash equivalents (342) 290
624 2 350 Cash and cash equivalents at beginning of period 1 033 1 881
12 15 Effect of foreign exchange rate changes (27) 27
664 2 198 Cash and cash equivalents at end of period(b) 664 2 198
a) Includes capitalised interest for the third quarter of £10 million (2008
£4 million) and for the nine months of £20 million (2008 £17 million).
b) Cash and cash equivalents comprise cash and short-term liquid investments
that are readily convertible to cash.
Notes
1. Basis of preparation
These primary statements are the unaudited interim consolidated financial
statements ('the financial statements') of BG Group plc for the quarter ended 30
September 2009. 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 2008 which have been prepared in accordance with IFRSs 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 2008 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 237(2) or 237(3) of the UK Companies Act 1985.
These financial statements are Interim Management Statements and have been
prepared in accordance with the requirements of the Disclosure and Transparency
Rules issued by the Financial Services Authority and the accounting policies set
out in the 2008 Annual Report and Accounts (except as disclosed below).
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.
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 16,
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
IAS 1 (revised) 'Presentation of Financial Statements' is applicable to BG Group
for the period beginning 1 January 2009. In accordance with this standard, the
Group has continued to report a separate 'Consolidated Income Statement' and has
reported a separate 'Consolidated Statement of Comprehensive Income' in place of
a 'Consolidated Statement of Recognised Income and Expense'.
A number of other amendments to accounting standards and new interpretations
issued by the IASB are applicable from 1 January 2009. They have not had a
material impact on the accounting policies, methods of computation and
presentation applied by the Group. 2. Disposals, re-measurements and
impairments
Third Quarter Nine Months
2009 2008 2009 2008
£m £m £m £m
28 132 Revenue and other operating income - re-measurements of 74 19
commodity based contracts
- 4 Profits and losses on disposal of non-current assets and - (18)
impairments
(10) 8 Net finance costs - re-measurements of financial instruments (11) 4
(8) (64) Taxation (31) (9)
- - Minority interest - 2
10 80 Impact on earnings 32 (2)
Third quarter and nine months: Revenue and other operating income
Re-measurements included within revenue and other operating income amount to a
credit of £28 million for the quarter (2008 £132 million credit), of which a
credit of £16 million (2008 £122 million credit) represents non-cash
mark-to-market movements on certain long-term UK gas contracts. For the nine
months, a credit of £74 million in respect of re-measurements is included within
revenue and other operating income (2008 £19 million credit), of which a credit
of £62 million represents non-cash mark-to-market movements on certain long-term
UK gas contracts (2008 £17 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.
Third quarter and nine months: Net finance costs
Re-measurements presented in net finance costs relate primarily to certain
derivatives used to hedge foreign exchange and interest rate risk, partly offset
by foreign exchange movements on certain borrowings.
2008 nine months: Disposals of non-current assets
During the third quarter of 2008, BG Group disposed of certain non-core
businesses. This resulted in a pre- and
post-tax credit to the income statement of £5 million. During the first quarter,
BG Group committed to a plan to dispose of these businesses and as a result
these businesses were revalued to the lower of their carrying amount and fair
value less costs to sell. This resulted in a pre- and post-tax charge to the
income statement of £21 million.
Also during the third quarter of 2008, other disposals resulted in a pre-tax
charge to the income statement of £1 million. A tax credit of £1 million arose
on these disposals.
During the first quarter of 2008, other disposals resulted in a pre- and
post-tax charge to the income statement of £1 million.
3. Segmental analysis
Profit for the period
Analysed by operating segment Business Performance Disposals, Total Result
re-
measurements
and
impairments
Third Quarter 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m
Group revenue
Exploration and Production 1 048 1 494 - - 1 048 1 494
Liquefied Natural Gas 806 1 365 - - 806 1 365
Transmission and Distribution 356 406 - - 356 406
Power Generation 111 158 - - 111 158
Other activities - 1 - - - 1
Less: intra-group sales (74) (125) - - (74) (125)
Group revenue 2 247 3 299 - - 2 247 3 299
Other operating income(a) 2 (8) 28 132 30 124
Group revenue and other operating income 2 249 3 291 28 132 2 277 3 423
Operating profit/(loss) before share of results from
joint ventures and associates
Exploration and Production 434 917 28 132 462 1 049
Liquefied Natural Gas 260 333 - - 260 333
Transmission and Distribution 96 72 - (1) 96 71
Power Generation 10 2 - - 10 2
Other activities (15) - - 5 (15) 5
785 1 324 28 136 813 1 460
Pre-tax share of operating results of joint
ventures and associates
Exploration and Production 1 - - - 1 -
Liquefied Natural Gas 44 34 - - 44 34
Transmission and Distribution 7 8 - - 7 8
Power Generation 19 17 - - 19 17
71 59 - - 71 59
Total operating profit/(loss)
Exploration and Production 435 917 28 132 463 1 049
Liquefied Natural Gas 304 367 - - 304 367
Transmission and Distribution 103 80 - (1) 103 79
Power Generation 29 19 - - 29 19
Other activities (15) - - 5 (15) 5
856 1 383 28 136 884 1 519
Net finance (costs)/income
Finance income 30 58 33 18 63 76
Finance costs (40) (36) (43) (10) (83) (46)
Share of joint ventures and associates (10) (11) - - (10) (11)
(20) 11 (10) 8 (30) 19
Taxation
Taxation (324) (590) (8) (64) (332) (654)
Share of joint ventures and associates (16) (10) - - (16) (10)
(340) (600) (8) (64) (348) (664)
Profit for the period 496 794 10 80 506 874
a) Business Performance Other operating income is attributable to segments as
follows: E&P £7 million (2008 £(32) million), LNG £(9) million (2008 £25
million) and Power £4 million (2008 £(1) million).
3. Segmental analysis continued
Business Performance Disposals, Total Result
re-
measurements
and
impairments
Nine Months 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m
Group revenue
Exploration and Production 3 481 4 421 - - 3 481 4 421
Liquefied Natural Gas 2 909 4 096 - - 2 909 4 096
Transmission and Distribution 1 040 1 022 - - 1 040 1 022
Power Generation 362 451 - - 362 451
Other activities - 4 - - - 4
Less: intra-group sales (225) (383) - - (225) (383)
Group revenue 7 567 9 611 - - 7 567 9 611
Other operating income(a) 94 2 74 19 168 21
Group revenue and other operating income 7 661 9 613 74 19 7 735 9 632
Operating profit/(loss) before share of results from
joint ventures and associates
Exploration and Production 1 507 2 835 75 19 1 582 2 854
Liquefied Natural Gas 1 036 1 034 - - 1 036 1 034
Transmission and Distribution 290 145 (1) (2) 289 143
Power Generation 34 35 - - 34 35
Other activities (11) (11) - (16) (11) (27)
2 856 4 038 74 1 2 930 4 039
Pre-tax share of operating results of joint
ventures and associates
Exploration and Production 1 - - - 1 -
Liquefied Natural Gas 157 95 - - 157 95
Transmission and Distribution 20 21 - - 20 21
Power Generation 69 62 - - 69 62
247 178 - - 247 178
Total operating profit/(loss)
Exploration and Production 1 508 2 835 75 19 1 583 2 854
Liquefied Natural Gas 1 193 1 129 - - 1 193 1 129
Transmission and Distribution 310 166 (1) (2) 309 164
Power Generation 103 97 - - 103 97
Other activities (11) (11) - (16) (11) (27)
3 103 4 216 74 1 3 177 4 217
Net finance (costs)/income
Finance income 48 150 42 19 90 169
Finance costs (123) (113) (53) (15) (176) (128)
Share of joint ventures and associates (33) (33) - - (33) (33)
(108) 4 (11) 4 (119) 8
Taxation
Taxation (1 204) (1 788) (31) (9) (1 235) (1 797)
Share of joint ventures and associates (53) (27) - - (53) (27)
(1 257) (1 815) (31) (9) (1 288) (1 824)
Profit for the period 1 738 2 405 32 (4) 1 770 2 401
a) Business Performance Other operating income is attributable to segments as
follows: E&P £11 million (2008 £(28) million), LNG £68 million (2008 £25
million) and Power £15 million (2008 £5 million).
3. Segmental analysis continued
Total Result Business Performance Disposals, Total Result
re-
measurements
and
impairments
Third Quarter 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m
Exploration and Production 435 917 28 132 463 1 049
Liquefied Natural Gas 304 367 - - 304 367
Transmission and Distribution 103 80 - (1) 103 79
Power Generation 29 19 - - 29 19
Other activities (15) - - 5 (15) 5
856 1 383 28 136 884 1 519
Less: Pre-tax share of operating results of joint ventures (71) (59)
and associates
Add: Share of post-tax results from joint ventures and 45 38
associates
Net finance (costs)/income (20) 30
Profit before tax 838 1 528
Taxation (332) (654)
Profit for the period 506 874
Total Result Business Performance Disposals, Total Result
re-
measurements
and
impairments
Nine Months 2009 2008 2009 2008 2009 2008
£m £m £m £m £m £m
Exploration and Production 1 508 2 835 75 19 1 583 2 854
Liquefied Natural Gas 1 193 1 129 - - 1 193 1 129
Transmission and Distribution 310 166 (1) (2) 309 164
Power Generation 103 97 - - 103 97
Other activities (11) (11) - (16) (11) (27)
3 103 4 216 74 1 3 177 4 217
Less: Pre-tax share of operating results of joint ventures (247) (178)
and associates
Add: Share of post-tax results from joint ventures and 161 118
associates
Net finance (costs)/income (86) 41
Profit before tax 3 005 4 198
Taxation (1 235) (1 797)
Profit for the period 1 770 2 401
4. Net finance (costs)/income
Third Quarter Nine Months
2009 2008 2009 2008
£m £m £m £m
(25) (20) Interest payable (67) (66)
(13) (13) Interest on obligations under finance leases (40) (41)
10 4 Interest capitalised 20 17
(12) (7) Unwinding of discount on provisions(a) (36) (23)
(43) (10) Disposals, re-measurements and impairments (Note 2) (53) (15)
(83) (46) Finance costs (176) (128)
30 58 Interest receivable 48 150
33 18 Disposals, re-measurements and impairments (Note 2) 42 19
63 76 Finance income 90 169
(20) 30 Net finance (costs)/income(b) (86) 41
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 £10 million (2008 £11 million) and for the nine
months of £33 million (2008 £33 million).
5. Taxation
The taxation charge for the third quarter before disposals, re-measurements and
impairments was £324 million (2008 £590 million) and the taxation charge
including disposals, re-measurements and impairments was £332 million (2008 £654
million).
For the nine months, the taxation charge before disposals, re-measurements and
impairments was £1 204 million (2008 £1 788 million) and the taxation charge
including disposals, re-measurements and impairments was £1 235 million (2008 £1
797 million).
The Group share of taxation from joint ventures and associates for the third
quarter was £16 million (2008 £10 million) and for the nine months was £53
million (2008 £27 million).
6. Earnings per ordinary share
Third Quarter Nine Months
2009 2008 2009 2008
£m Pence per share £m Pence per share £m Pence per share £m Pence per share
484 14.4 857 25.6 Earnings 1 703 50.7 2 371 70.9
(10) (0.3) (80) (2.4) Disposals, re-measurements (32) (1.0) 2 -
and impairments (after tax and minority interest)
474 14.1 777 23.2 Earnings - excluding disposals, re-measurements and 1 671 49.7 2 373 70.9
impairments
Basic earnings per share calculations in 2009 are based on the weighted average
number of shares in issue of 3 363 million for the quarter and 3 360 million for
the nine months.
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 3 390 million for the quarter and 3 388 million for the nine months, being
the weighted average number of ordinary shares in issue during the period as
adjusted for dilutive equity instruments.
7. Reconciliation of net borrowings/funds(a) - Nine Months
£m
Net borrowings as at 31 December 2008 (972)
Net decrease in cash and cash equivalents (342)
Cash inflow from changes in borrowings (1 538)
Inception of finance leases (62)
Foreign exchange and other re-measurements (36)
Net borrowings as at 30 September 2009(a) (b) (2 950)
Net borrowings attributable to Comgsss were £551 million (31 December 2008 £443
million).
As at 30 September 2009, BG Group's share of the net borrowings in joint
ventures and associates amounted to approximately £1.3 billion, including BG
Group shareholder loans of approximately £0.9 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 25.
b) Net borrowings/funds comprise:
As at As at
30 Sept 31 Dec
2009 2008
£m £m
Amounts receivable/(due) within one year
Cash and cash equivalents 664 1 033
Overdrafts, loans and finance leases (698) (281)
Derivative financial instruments(c) 57 (49)
23 703
Amounts receivable/(due) after more than one year
Loans and finance leases (3 096) (1 897)
Derivative financial instruments(c) 123 222
(2 973) (1 675)
Net borrowings (2 950) (972)
c) These items are included within commodity contracts and other derivative
financial instrument balances on the balance sheet.
8. Capital investment: geographical analysis
Third Quarter Nine Months
2009 2008 2009 2008
£m £m £m £m
274 211 Europe and Central Asia 592 607
1 042 184 Americas and Global LNG 1 702 504
212 329 Africa, Middle East and Asia 1 126 890
91 6 Australia 692 326
1 619 730 4 112 2 327
9. Quarterly information: earnings and earnings per share
2009 2008 2009 2008
£m £m pence pence
First quarter
including disposals, re-measurements and impairments 706 767 21.0 22.9
excluding disposals, re-measurements and impairments 690 789 20.5 23.6
Second quarter
including disposals, re-measurements and impairments 513 747 15.3 22.3
excluding disposals, re-measurements and impairments 507 807 15.1 24.1
Third quarter
including disposals, re-measurements and impairments 484 857 14.4 25.6
excluding disposals, re-measurements and impairments 474 777 14.1 23.2
Fourth quarter
including disposals, re-measurements and impairments 756 22.5
excluding disposals, re-measurements and impairments 695 20.7
Full year
including disposals, re-measurements and impairments 3 127 93.4
excluding disposals, re-measurements and impairments 3 068 91.6
Supplementary information: Operating and financial data
Third Quarter Second Quarter Nine Months
More to follow, for following part double-click [nRn3b4759B]