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Company BG GROUP plc
TIDM BG.
Headline

1st Quarter Results

Released 07:00 01-May-2014
Number 0075G07

RNS Number : 0075G
BG GROUP plc
01 May 2014
 



BG Group plc
2014 FIRST QUARTER RESULTS

 

First Quarter Key Points

 

· Business Performance EPS down 3% to 33.8 cents; Total EPS down 9% to 32.4 cents

· Net cash flow from operating activities up 6% to $2.4 billion

· E&P production volumes down 4% at 633 kboed

· LNG segment total operating profit down 7%; no BG Group cargoes from Egyptian LNG

· Egyptian domestic offtake exceeded contractual commitments; deteriorating reservoir performance

· Good progress in Australia and Brazil with key milestones delivered

· Group's exposure to commodity prices and foreign exchange rates 50 - 70% hedged in 2014

 

BG Group's interim Executive Chairman, Andrew Gould said:

"In the first quarter, we continued to make good progress with our key growth projects in Australia and Brazil. Group production volumes for the first quarter were consistent with our anticipated seasonal phasing, although production entitlement from Egypt was lower than expected as domestic offtake remains well above contractual commitments and reservoir performance deteriorates. As a result of the challenges in Egypt, the Group's 2014 production is now expected to be at the lower end of the guidance range."  

 

 

First Quarter

 

Business Performance(a)

2014
$m

2013
 $m 

 

Total operating profit including share of pre-tax operating results

from joint ventures and associates

2 009

2 147

-6%

Earnings for the period

1 152

1 183

-3%

Earnings per share

33.8c

34.8c

-3%

 

 

 

 

Total results for the period (including disposals, re-measurements and impairments)

 

 

 

Operating profit before share of pre-tax operating results from joint ventures and associates

1 865

2 121

-12%

Total operating profit including share of pre-tax operating results

from joint ventures and associates

1 968

2 250

-13%

Earnings for the period continuing operations

1 102

1 208

-9%

Earnings per share continuing operations

32.4c

35.5c

-9%

a) 'Business Performance' excludes disposals, certain re-measurements and impairments and certain other exceptional items as exclusion of these items provides a clear and consistent presentation of the underlying operating performance of the Group's ongoing business. For further information see Presentation of Non-GAAP measures (page 12) and notes 1 to 3 (pages 19 to 21). Unless otherwise stated, the results discussed in this release relate to BG Group's Business Performance.

 

Business Review - Group

 

First Quarter


 

Business Performance

2014

$m

 

2013    

   $m      

 

 

Revenue and other operating income

5 061

 

4 917

 

+3%

 

 

 


 

 

 

 

 


 

 

Upstream 

1 325

 

1 431

 

-7%

LNG Shipping & Marketing

692

 

742

 

-7%

Other activities

(8)

 

(26)

 

-69%

Total operating profit including share of pre-tax results from

joint ventures and associates

2 009

 

2 147

 

-6%

 

 

 


 

 

Net finance costs

(56)

 

(35)

 

+60%

Taxation for the period

(801)

 

(929)

 

-14%

Earnings for the period

1 152

 

1 183

 

-3%

 

 

 


 

 

Earnings per share (cents)

33.8c

 

34.8c

 

-3%

 

 

 


 

 

Cash flow and balance sheet

 

 


 

 

Net cash flow from operating activities

2 360

 

2 225

 

+6%

 

 

 


 

 

Capital investment on a cash basis(a)

(2 283)

 

(2 636)

 

-13%

 

 

 


 

 

Free cash flow(b)

153

 

(341)

 

-

 

 

 


 

 

Net debt(c)

10 410

 

10 609

 

-2%

 

 

 


 

 

Gearing %(c)

23.6%

 

23.5%

 

-

a) Includes capital investment relating to discontinued operations for the quarter of $nil (2013 $5 million).

b) Reflects net cash flow from operating activities, less net interest paid and capital investment on a cash basis, plus dividends from joint ventures and associates

and loan repayments.

c) For a definition see the Glossary on page 29.

 

Business Performance

First quarter

Revenue and other operating income increased 3% to $5 061 million. While E&P production volumes and LNG cargo deliveries were lower, revenues benefited from a significant increase in oil volumes, particularly from Brazil.

Total operating profit decreased 6% to $2 009 million, reflecting reductions in both the Upstream and LNG Shipping & Marketing segments. In Upstream, higher revenues were more than offset by higher operating costs. In LNG Shipping & Marketing, while average LNG margins were favourable, this was more than offset by the lower number of deliveries, with no BG Group cargoes from Egyptian LNG.     

Net finance costs of $56 million included foreign exchange losses of $13 million (2013 net finance costs of $35 million included foreign exchange gains of $5 million).

The Group's effective tax rate (including BG Group's share of joint venture and associates' tax) was 41% for the quarter, lower than the rate of 44% for the first quarter of 2013 but in line with the full year rate for 2013.

Group earnings of $1 152 million and EPS of 33.8 cents both decreased 3% as the reduction in total operating profit and higher net finance costs were partially offset by the lower tax charge.

Free cash flow increased by $494 million from $(341) million to $153 million as a result of a working capital cash inflow due to lower LNG cargo receivables, and reduced capital investment, offset by higher taxes paid. Net debt was 2% lower at $10 410 million and gearing, at 23.6%, was broadly in line with last year.

Capital investment on a cash basis of $2 283 million was almost entirely in the Upstream segment ($2 271 million).
This investment was concentrated primarily on the Group's key growth projects in Australia and Brazil. Further details are provided in the first quarter business highlights section and the Supplementary information: Operating and financial data section.

Total Results (including disposals, re-measurements and impairments)

First quarter

Total earnings for the first quarter of 2014 were $1 102 million (32.4 cents per share) and included a post-tax loss of $50 million in respect of disposals, re-measurements and impairments, primarily related to exceptional restructuring costs of $62 million. Total earnings in the first quarter of 2013 were $1 208 million (35.5 cents per share) and included a post-tax gain of $25 million in respect of disposals, re-measurements and impairments. For further information see Presentation of Non-GAAP measures (page 12) and notes 1 to 3 (pages 19 to 21).

 

First quarter business highlights

Australia 

In the Ruby Jo upstream development area, three of the six planned field compression stations (FCSs) started operating in the quarter, a fourth started up in April, with the two remaining FCSs expected to commence operations by the end of the second quarter. Importantly, operations at the central processing plant (CPP) started up in April. Drilling again exceeded expectations with 170 wells in the quarter.

At the LNG export facility, the first storage tank was successfully hydro tested and the plant remains on track to start commissioning the gas turbine generators in the second quarter. The QCLNG project is on schedule for first LNG in the fourth quarter of 2014, and within the project's Phase 1 $20.4 billion budget.

 

Brazil

Gross production from the three installed floating production, storage and offloading (FPSO) vessels in the Santos Basin exceeded 220 thousand barrels of oil equivalent per day (kboed) by the end of the quarter, following the February installation of a second well on FPSO 2 (Sapinhoá South), the first using a buoyancy supported riser (BSR) system. This well is currently producing around 35 thousand barrels of oil per day (kbopd). A third well was connected in April and is currently producing around 30 kbopd. In addition, a second BSR was installed in April. Plateau on
FPSO 2 is expected mid-year from only four producing wells.

On FPSO 3 (Lula North East), a first BSR has been fully installed. The connection of new producing wells is imminent, with a second permanent well due in May. The second BSR is in position, with permanent tethering underway, in advance of additional well connections in the second half of 2014. Plateau on FPSO 3 is expected by the end of the year.

The operator expects to install FPSO 4 (Sapinhoá North) in the third quarter and FPSO 5 (Iracema South) by year end. Both vessels are in Brazil for the completion of topsides facilities, which include hydrocarbon processing capabilities. Both are on budget and around 90% complete. FPSO 6 (Iracema North), which is due onstream in the fourth quarter of 2015, is also on budget and around 60% complete.

In March, the installation licence for the deep water scope of the Cabiúnas gas pipeline was received. It is expected that the shallow water licence will be received in the second quarter of 2014.The pipeline represents the next major phase of gas export infrastructure.

The Iara ADR-1 appraisal well is currently undergoing drill stem testing. BG Group and its partners expect to start an extended well test (EWT) on Iara-4 in June ahead of Declaration of Commerciality (DoC) by the end of 2014.

 

Canada

In March, BG Group's pipeline partner, Spectra Energy Corp, submitted an Environmental Assessment Certificate Application to the British Columbia Environmental Assessment Office for the Westcoast Connector Gas Transmission Project. Further, BG Group received the final licence it requires from the National Energy Board to allow exports of up to 25 million tonnes per annum (mtpa) of LNG for 25 years from the date of first export.

In April, BG Group signed a non-binding Memorandum of Understanding (MoU) with China National Offshore Oil Corporation (CNOOC) in relation to the Prince Rupert LNG project.

 

Egypt

Production volumes in the first quarter of 66 kboed were 35% lower than in the fourth quarter of 2013 (102 kboed) as a result of deteriorating reservoir performance and the continuing high level of diversions to the domestic market, where the Group is entitled to a lower share of production. Consequently, volumes from Egyptian LNG were severely restricted, with no cargoes lifted by BG Group in the first quarter. One cargo is expected to be lifted by BG Group in the second quarter.

Looking forward, the strong likelihood of continued diversions to the domestic market, combined with further reservoir deterioration, means that the Group currently expects very limited cargoes to be lifted from Egyptian LNG for the foreseeable future. In the absence of concerted action from the Egyptian government, the future commercial operation of Egyptian LNG is increasingly at risk.

Due to a reduction in LNG exports and lower than expected direct payments from EGPC, the domestic receivables balance increased to $1.4 billion as at 31 March 2014, $0.7 billion of which is overdue. 

In the first quarter of 2014, Upstream and LNG activities in Egypt accounted for 10% of BG Group's production and around 5% of earnings from continuing operations. The book value of BG Group's investment in Egypt as at 31 March 2014, including receivables, was $2.7 billion, of which $0.2 billion relates to Egyptian LNG.  

Phase 9a is on track to commence production in the third quarter of 2014. On plateau, Phase 9a will only temporarily offset reservoir decline. Release of funds for any further development is contingent upon an improvement in the investment climate including a significant improvement in the outstanding receivable position. Discussions with the Egyptian government are ongoing.

Results from the Notus high-pressure high-temperature discovery well proved gas in all targeted zones. These results are being assessed ahead of discussions with the government regarding possible development plans.

 

Kenya

In March, the Sunbird-1 exploration well intersected a gross hydrocarbon column of 44 metres in the Miocene reef, at
1 584 metres subsea, in a water depth of 723 metres, offshore Kenya. Oil and gas samples have been recovered to surface and are being analysed.

 

Myanmar

In March, BG Group was awarded exploration acreage in the Rakhine Basin, offshore western Myanmar as part of the government's 2013 offshore bid round. The Group will operate two blocks, A4 and AD2 (45% and 55% equity respectively) and also secured non-operated acreage in blocks A7 and AD5 (45% equity in each).

BG Group and its partners have committed to a 3D seismic acquisition programme in each block, which is expected to begin in 2015, following an Environmental and Social Impact Assessment, with options beyond that for drilling. This award is in line with the Group's strategy to focus on securing prospective frontier acreage and enter, on average, one new basin each year.

 

Tanzania 

In April, BG Group and its partners in offshore blocks 1, 3 & 4 and the partners in block 2 signed a Heads of Agreement setting out how the companies will collaborate on development of a potential joint LNG project. Under the agreement, BG Group will be the lead developer during the pre-FEED phase. Joint project offices will be established in
Dar es Salaam and London.

Good progress has been made with the Tanzania Petroleum Development Corporation (TPDC) and the Tanzanian Ministry of Energy and Minerals on the preparatory work needed to progress the selection and acquisition of a site for the potential LNG project. The site announcement is expected in the second quarter of 2014.

 

Thailand 

In February, the Group achieved its first quarter milestone of gas from the Bongkot South Phase 4b project. This involved the installation and hook-up of four wellhead platforms, with gas from the project being exported via a new build spur line connected to existing infrastructure and condensate exported to the floating, storage and offloading vessel at Bongkot North.

 

USA

In March, subsidiaries of Energy Transfer Equity, L.P. and Energy Transfer Partners, L.P. (collectively Energy Transfer) filed an application with the Federal Energy Regulatory Commission (FERC) seeking authorisation for the siting, construction, ownership and operation of the proposed Lake Charles LNG export project. Pending receipt of all necessary approvals and a final investment decision, expected in 2015, construction is expected to start shortly afterwards, with first LNG exports anticipated in 2019. Energy Transfer will own and finance the proposed facility and BG Group will manage construction and operate the proposed facility, while being the largest customer of the project.

 

Portfolio management

In March, BG Group agreed to acquire an additional 25% interest in Block 5(c), offshore Trinidad and Tobago, taking its interest in the block to 100%. The transaction is subject to government approval.

In April, BG Group farmed down 25% of its interests in the BAR-M-215, 217, 252 and 254 blocks in the Barreirinhas Basin, offshore Brazil, to PTT Exploration and Production Public Company Limited (PTTEP). The transaction is subject to approval by the Agência Nacional do Petróleo, Gás Natural e Biocombustíveis (ANP).

 

Organisational restructuring

BG Group continues to drive productivity improvements in the business, including simplifying the organisation, as a key part of delivering the Group's long term strategy. During the quarter, the Group recognised an exceptional post-tax charge for restructuring costs of $62 million in relation to staff redundancies in the UK, Australia and Egypt.

 

Business outlook

The Group's 2014 production guidance remains unchanged at 590 - 630 kboed (at reference conditions), although production is now expected to be at the lower end of the range, given the issues in Egypt. The deterioration in Egypt will similarly impact 2015 production.

Group production will follow a marked seasonal profile in 2014. There is a significant amount of maintenance activity including planned shutdowns scheduled for the second and third quarters, particularly in the UK, which will lead to substantially lower production in those quarters. Production will rise in the fourth quarter as maintenance is completed and new developments are expected onstream.

In the LNG Shipping & Marketing segment, beyond one export cargo expected in the second quarter, the Group currently expects very limited cargoes from Egyptian LNG for the foreseeable future. In 2015, as previously reported, the planned gas development programme in Equatorial Guinea will result in fewer cargoes than in 2014. The majority of the contribution from QCLNG will be reported in the Upstream segment of the business.

The Group is reviewing its operational, investment and portfolio management plans and will not provide 2015 guidance until its full year results in February 2015.

 

Risk management for commodity prices and foreign exchange rates

Commodity prices

In 2014, the Group continues to execute a significant investment programme and expects to be cash flow negative for the year.

In order to reduce volatility of operating cash flow while this investment programme is being executed, BG Group has entered into Brent oil swaps at an average price of $106/bbl for the period of April through December 2014. After the effect of UK tax, these positions are expected to hedge more than 70% of the Group's 2014 earnings sensitivity to oil price movements for this period.

Commodity price hedges are accounted for in accordance with IAS 39, and will be recognised in the income statement. The hedges will be treated on a mark-to-market basis, so that for the intermediate quarters within 2014 the disposals, re-measurements and impairments section of the accounts will track the unrealised fair value of the hedges, before the final settlement is recognised in Business Performance.

BG Group will allocate the hedge impact across both Upstream and LNG Shipping & Marketing segments in accordance with the Group's expected Brent exposures.    

BG Group's policy is not to hedge commodity prices as a matter of course. However, from time to time it may elect to hedge certain revenue or cost streams.

 

Foreign exchange rates

The Group enters into currency exchange rate transactions to hedge certain currency cash flows and to adjust the currency composition of its assets and liabilities.

In 2014, BG Group entered into foreign exchange hedging instruments that are intended to reduce the Group's exposure to the Australian dollar and the Brazilian real for the period of April through December 2014 related to its capital investment for the year.

The Group has purchased forward Australian dollars covering approximately 50% of the expected sensitivity of the Group's underlying cash flow to the Australian dollar/US dollar exchange rate for the period of April through December 2014. The Group has also put in place costless collars to offset movements in the Brazilian real/US dollar exchange rate outside of cap and floor levels. These positions are expected to cover approximately 60% of the expected sensitivity of the Group's underlying cash flow to the Brazilian real/US dollar exchange rate for the period of April through December 2014.

Currency hedges are accounted for in accordance with IAS 39. To the extent that hedge accounting is achievable, the fair value of the currency instruments will be recorded in other comprehensive income, rather than the income statement, and the final settlement value of the hedges will be recognised as part of the underlying capital investment. Where hedge accounting rules cannot be applied, the mark-to-market value of the hedges will be treated similar to commodity hedges; the unrealised fair value movements will be tracked in the disposals, re-measurements and impairments section with the final settlement of the hedges recognised in Business Performance. It is expected that all of the Brazilian real costless collars and around one fifth of the Australian dollar forwards will achieve cash flow hedge accounting, with the remainder of the Australian dollar forwards being recorded with mark-to-market accounting through the income statement.



Upstream

 

First Quarter

 

 

Business Performance

2014

$m

 

2013

$m

 

 

E&P production volumes (mmboe)

57.01


59.30

 

-4%

 

 

 


 

 

E&P

3 117

 

2 963

 

+5%

Liquefaction

135

 

109

 

+24%

Upstream revenue and other operating income

3 252

 

3 072

 

+6%

 

 

 


 

 

Lifting costs

(449)

 

(374)

 

+20%

Royalties and other operating costs

(390)

 

(283)

 

+38%

E&P operating costs

(839)

 

(657)

 

+28%

Other E&P costs

(257)

 

(213)

 

+21%

DD&A

(657)

 

(657)

 

-

E&P operating profit before exploration charge

1 364

 

1 436

 

-5%

Exploration charge

(161)

 

(106)

 

+52%

E&P operating profit

1 203

 

1 330

 

-10%

Liquefaction operating profit

94

 

106

 

-11%

Business development

28

 

(5)

 

-

Upstream operating profit

1 325

 

1 431

 

-7%

 

 

 


 

 

Capital investment on a cash basis

2 271

 

2 628

 

-14%

 

 

 


 

 

 

            First Quarter

 

Fourth Quarter

E&P unit costs and margins

2014

$/boe

 

2013

$/boe

 

2013

$/boe

 


 


 

 

Lifting costs

7.88

 

6.31

 

7.47

Royalties and other operating costs

6.84

 

4.77

 

5.55

E&P operating costs

14.72

 

11.08

 

13.02

Other E&P costs

4.51

 

3.59

 

6.65

DD&A

11.52

 

11.08

 

11.95

E&P unit costs

30.75

 

25.75

 

31.62

 

 

 


 

 

E&P operating profit margin(a)

23.93

 

24.22

 

25.42

E&P EBITDA margin(a)

35.45

 

35.30

 

37.36

a) Margins calculated on the basis of E&P operating profit before exploration charge.

Additional operating and financial data is given on page 26.

 

 

 

First Quarter

 

Fourth Quarter

 

2014

 

2013

 

2013

 

E&P production volumes (mmboe)






Oil

11.57

 

8.02

 

10.19

Liquids

8.80

 

8.69

 

8.73

Gas

36.64

 

42.59

 

39.43

Total

57.01

 

59.30

 

58.35

 

E&P production volumes (boed in thousands)

 

 


 

 

Oil

129

 

89

 

111

Liquids

98

 

97

 

95

Gas

406

 

473

 

429

Total

633

 

659

 

635

 

E&P production volumes by country (boed in thousands)

 

 


 

 

Australia

26

 

26

 

24

Bolivia

47

 

33

 

39

Brazil

57

 

34

 

44

Egypt

66

 

114

 

102

India

18

 

20

 

20

Kazakhstan

98

 

99

 

98

Norway

1

 

3

 

2

Thailand

42

 

43

 

41

Trinidad and Tobago

73

 

76

 

77

Tunisia

36

 

38

 

35

UK

125

 

101

 

105

USA

44

 

72

 

48

Total

633

 

659

 

635

 

 

 


 

 

E&P average realised prices

 



 

Oil price per barrel

$108.95

$110.47

$109.60

 

 



Liquids price per barrel

$88.60

$95.10

$95.28

 

 



UK gas price per produced therm

50.37p

58.40p

53.05p

(83.47c)

(91.75c)

(86.21c)

 

 



International gas price per produced therm

45.04c

41.23c

42.99c

 

 



Average realised gas price per produced therm

50.00c

46.10c

47.14c

First quarter

Revenue and other operating income increased 6% to $3 252 million. While total production was 4% lower at 633 kboed, revenues benefited from a significant increase in oil volumes, particularly from Brazil. Production volumes were lower primarily as a result of Egypt (see Business Highlights section on page 4) with both reservoir deterioration and lower entitlement, due to the continuing high level of diversions to the domestic market. In addition, production from the USA was down, reflecting continued low levels of drilling activity and underlying decline. Lower volumes were partly offset by the ramp up of production at new developments, principally in Brazil, the UK and Bolivia.

The Group's 2014 production guidance remains unchanged at 590 - 630 kboed (at reference conditions), although production is now expected to be at the lower end of the range, given the issues in Egypt. Group production will follow a marked seasonal profile in 2014, with substantially lower volumes expected in the second and third quarters as a result of planned maintenance activity at certain key assets. Production is expected to rise in the fourth quarter as maintenance is completed and new developments are expected onstream.

The Group's average realised oil price decreased 1% to $108.95 per barrel, and the liquids price decreased 7% to $88.60 per barrel. The Group's average realised gas price increased 8% to 50.00 cents per therm. International gas price realisations were 9% higher than 2013 at 45.04 cents per therm reflecting a favourable change in the mix of fields, whilst the average realised UK gas price decreased 14% to 50.37 pence per therm reflecting lower spot prices.

E&P operating profit, before exploration, of $1 364 million was 5% lower, as the increase in revenue and other operating income was more than offset by higher operating costs. Unit operating expenditure increased to $14.72 per barrel of oil equivalent (boe), principally as a result of higher royalty and lifting costs from new developments in Brazil, higher royalties in Bolivia and higher lifting costs in the UK which included the impact of increased asset integrity activity.

The unit DD&A charge increased to $11.52 per boe as a result of new developments in the UK, partly offset by a reduced depreciation charge in Egypt and the USA following the recognition of impairments in the fourth quarter of 2013.

The E&P EBITDA unit margin was 15 cents higher at $35.45, reflecting an increase in revenue per boe primarily due to a significant rise in the share of oil in the portfolio and higher realised gas prices, offset by the higher unit operating costs. The E&P EBIT unit margin was 1% lower at $23.93 with the improvement in EBITDA margin being more than offset by the increase in unit DD&A charges.

The exploration charge of $161 million increased 52% as a result of higher well write-offs. Gross exploration expenditure of $285 million included Kenya ($51 million), Australia ($50 million), Brazil ($46 million), Uruguay ($30 million), Egypt ($29 million) and Tanzania ($28 million).

BG Group's share of operating profit from liquefaction activities decreased 11% to $94 million, primarily as a result of lower throughput at Egyptian LNG.

Business development costs of $22 million were incurred as the Group progressed potential integrated LNG projects in western Canada and Tanzania. These costs were more than offset by the reimbursement of previous business development expenditure from a partner.

Capital investment on a cash basis of $2 271 million included investment in Australia ($1 074 million), Brazil ($434 million), the UK ($150 million) and Egypt ($124 million).



LNG Shipping & Marketing

 

First Quarter

 

 

Business Performance

2014

$m

 

2013

$m

 

 

LNG delivered volumes (thousand tonnes)

2 447

 

2 980

 

-18%

 

 

 


 

 

Revenue and other operating income

1 972

 

2 046

 

-4%

 

 

 


 

 

Shipping and marketing

725

 

785

 

-8%

Business development and other

(33)

 

(43)

 

-23%

Total operating profit

692

 

742

 

-7%

 

 

 


 

 

Capital investment on a cash basis

7

 

2

 

+250%

 

 

 

 


 

 

 

          First Quarter

 

Fourth Quarter

LNG cargo supply by source

2014

 

2013

 

2013

Atlantic LNG

15

 

16

 

12

Egyptian LNG

-

 

10

 

6

Nigeria

8

 

7

 

9

Equatorial Guinea

14

 

14

 

15

Spot purchases

3

 

2

 

4

Total

40

 

49

 

46

 

 

 


 

 

LNG cargo deliveries by geographical region

 

 


 

 

Asia

26

 

33

 

37

Europe & Other

2

 

2

 

-

North America

1

 

4

 

-

South America

11

 

10

 

9

Total

40

 

49

 

46

 

Additional operating and financial data is given on page 26.

First quarter

Revenue and other operating income was 4% lower, as an 18% reduction in delivered volumes was partly offset by favourable pricing and lower losses from the Group's historical LNG hedging programme which completed in the quarter. The new 2014 Brent oil hedges have not impacted the first quarter results.

Total operating profit decreased 7% to $692 million primarily as a result of lower delivered volumes, with no cargoes delivered from Egypt (2013: 10 cargoes). The impact of reduced volumes was partly offset by lower hedging losses and improved margins.

Average cargo margins improved as BG Group continued to benefit from strong global LNG demand and high Asian spot prices.

Business development costs and other costs include expenditure on the Lake Charles liquefaction project.

 



Presentation of Non-GAAP measures

Business Performance

'Business Performance' excludes discontinued operations and disposals, certain re-measurements and impairments and certain other exceptional items (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. 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 impairments

BG Group's commercial arrangements for marketing gas include the use of gas sales contracts. Whilst
the activity surrounding these contracts involves the physical delivery of gas, certain 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 represent economic hedges but cannot be designated as hedges under IAS 39, unrealised movements in fair value, together with foreign exchange movements associated with the associated borrowings and certain intercompany balances, 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, impairments of non-current assets and certain other exceptional items, 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 statement (page 14), note 2 (page 20) and note 3 (page 21).

Joint ventures and associates

Under IFRS, the results from 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 21).

Net borrowings

BG Group provides a reconciliation of net borrowings and an analysis of the amounts included within net borrowings as this is an important liquidity measure for the Group.

 



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 and opinions reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations and opinions will prove to have been correct. Actual results and market conditions 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 'Principal risks and uncertainties' included in BG Group plc's Annual Report and Accounts 2013. 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.

 

Reference Conditions 2014 and 2015

•       Brent Oil price real (1/1/2014): 2014 and 2015: $100/bbl

•       US Henry Hub real (1/1/2014): 2014: $4.0/mmbtu; 2015 $4.25/mmbtu

•       US/UK exchange rates of $1.55:£1

•       US/AUD exchange rates of $1:$A1.05

•       US/BRL exchange rates of $1:BRL2.10

•       Prepared under International Financial Reporting Standards

•       All production includes fuel gas

 

 



Consolidated Income Statement

First Quarter

 

 

 

2014

 

2013

 

 

 

Notes

Business    Perform-  
ance(a)
$m   

Disposals,
re-measure-
ments and impairments
(Note 2)(a)
$m   

Total
Result
$m


Business    Perform-  
ance(a)
$m   

Disposals,
re-measure-
ments and impairments
(Note 2)(a)
$m    

Total
Result
$m

 

 

Group revenue

 

4 979

-

4 979

 

4 910

-

4 910

 

 

Other operating income

2

82

79

161

 

 7

93

100

 

 

Group revenue and other operating income

3

5 061

79

5 140

 

4 917

93

5 010

 

 

Operating costs

 

(3 155)

(75)

(3 230)

 

(2 899)

-

(2 899)

 

 

Profits and losses on disposal of non-current assets and impairments

2

-

(45)

(45)

 

-

10

10

 

 

Operating profit/(loss)(b)

3

1 906

(41)

1 865

 

2 018

103

2 121

 

 

Finance income

2, 4

24

14

38

 

29

132

161

 

 

Finance costs

2, 4

(75)

-

(75)

 

(57)

(200)

(257)

 

 

Share of post-tax results from joint ventures
and associates

3

64

-

64

 

80

-

80

 

 

Profit/(loss) before tax

 

1 919

(27)

1 892

 

2 070

35

2 105

 

 

Taxation

2, 5

(767)

(23)

(790)

 

(887)

(10)

(897)

 

 

Profit/(loss) for the period from continuing operations

3

1 152

(50)

1 102

 

1 183

25

1 208

 

 

Profit/(loss) for the period from discontinued operations

 

-

8

8

 

-

3

3

 

 

Profit/(loss) for the period

 

1 152

(42)

1 110

 

1 183

28

1 211

 

 

Profit attributable to:

 

 

 

 

 




 

 

Shareholders (earnings)

 

1 152

(42)

1 110(c)

 

1 183

24

1 207(c)

 

 

Non-controlling interest

 

-

-

-

 

-

4

4

 

 

 

 

1 152

(42)

1 110

 

1 183

28

1 211

 

 

Earnings per share continuing operations - basic

7

33.8c

(1.4c)

32.4c

 

34.8c

0.7c

35.5c

 

 

Earnings per share discontinued operations - basic

 

-

0.2c

0.2c

 

-

-

-

 

 

Earnings per share continuing operations - diluted

7

33.7c

(1.5c)

32.2c

 

34.6c

0.7c

35.3c

 

 

Earnings per share discontinued operations - diluted

 

-

0.2c

0.2c

 

-

-

-

 

 

Total operating profit/(loss) including share of pre-tax operating results from joint ventures and associates(d)

3

2 009

(41)

1 968

 

2 147

103

2 250

 

a) See Presentation of Non-GAAP measures (page 12) for an explanation of results excluding disposals, certain re-measurements and impairments and presentation of

the results of joint ventures and associates.

b) Operating profit/(loss) is before share of results from joint ventures and associates.

c) Comprises earnings from continuing operations of $1 102 million (2013 $1 208 million) and from discontinued operations of $8 million (2013 $(1) million).

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 19 to 25 form an integral part of these condensed financial statements.



Consolidated Statement of Comprehensive Income

 

First Quarter

 

 

2014

$m

2013

 $m

 

Profit for the period

1 110

1 211

 

 

 


 

Other comprehensive income:

 


 

Items that may be reclassified to the income statement:

 


 

Hedge adjustments net of tax(a)

104

(568)

 

Fair value movements on 'available-for-sale' assets net of tax

11

(11)

 

Currency translation adjustments

462

810

 

 

 


 

Other items:

 


 

Re-measurement of defined benefit pension obligations net of tax(b)

(24)

(41)

 

Other comprehensive income, net of tax

553

190

 

 

 


 

Total comprehensive income for the period

1 663

1 401

 

 

 


 


Attributable to:

 


 

BG Group shareholders

1 663

1 397

 

Non-controlling interest

-

4

 

 

1 663

1 401

 

a) Income tax relating to hedge adjustments is a $22 million charge for the quarter (2013 $170 million credit).

b) Income tax relating to the re-measurement of defined benefit pension obligations is a $7 million credit for the quarter (2013 $12 million credit).

 

The notes on pages 19 to 25 form an integral part of these condensed financial statements.



Consolidated Balance Sheet

 

As at

  31 Mar 2014

$m

As at

  31 Dec 2013

$m

As at

31  Mar 2013

 $m

Assets

 

 

 

Non-current assets

 

 

 

Goodwill and other intangible assets

4 083

3 889

4 633

Property, plant and equipment

43 854

42 225

45 386

Investments

3 138

2 933

2 565

Deferred tax assets

1 303

1 397

987

Trade and other receivables

757

777

861

Commodity contracts and other derivative financial instruments

692

623

330

 

53 827

51 844

54 762

Current assets

 



Inventories

961

838

754

Trade and other receivables

6 674

6 900

6 578

Current tax receivable

79

77

18

Commodity contracts and other derivative financial instruments

94

107

54

Cash and cash equivalents

6 344

6 208

4 300

 

14 152

14 130

11 704

Assets classified as held for sale

-

-

304

Total assets

67 979

65 974

66 770

 

Liabilities

 



Current liabilities

 



Borrowings

(478)

(475)

(1 033)

Trade and other payables

(5 774)

(5 631)

(5 461)

Current tax liabilities

(1 739)

(1 831)

(1 682)

Commodity contracts and other derivative financial instruments

(190)

(297)

(394)

 

(8 181)

(8 234)

(8 570)

Non-current liabilities

 



Borrowings

(17 082)

(17 054)

(14 073)

Trade and other payables

(135)

(150)

(126)

Commodity contracts and other derivative financial instruments

(131)

(173)

(347)

Deferred income tax liabilities

(4 221)

(4 120)

(4 651)

Retirement benefit obligations

(187)

(168)

(327)

Provisions for other liabilities and charges

(4 388)

(4 115)

(4 138)

 

(26 144)

(25 780)

(23 662)

Liabilities associated with assets classified as held for sale

-

-

(157)

Total liabilities

(34 325)

(34 014)

(32 389)

Net assets

33 654

31 960

34 381

Equity

 



Total shareholders' equity

33 654

31 960

34 320

Non-controlling interest in equity

-

-

61

Total equity

33 654

31 960

34 381

 

The notes on pages 19 to 25 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 2013

579

663

22

(786)

2 710

28 772

31 960

-

31 960

 

Total comprehensive income for the period

-

-

22

544

-

1 097

1 663

-

1 663

 

Issue of shares

-

3

-

-

-

-

3

-

3

 

Adjustment in respect of employee share schemes

-

-

-

-

-

28

28

-

28

 

Equity as at 31 March 2014

579

666

44

(242)

2 710

29 897

33 654

-

33 654

 

 

 

 

 

 

 

 

 

 

 

 

 

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 2012

578

619

(191)

1 927

2 710

27 248

32 891

57

32 948

 

Total comprehensive income for the period

-

-

35

207

-

1 155

1 397

4

1 401

 

Issue of shares

-

8

-

-

-

-

8

-

8

 

Purchase of own shares

-

-

-

-

-

(13)

(13)

-

(13)

 

Adjustment in respect of employee share schemes

-

-

-

-

-

37

37

-

37

 

Equity as at 31 March 2013

578

627

(156)

2 134

2 710

28 427

34 320

61

34 381

 

The notes on pages 19 to 25 form an integral part of these condensed financial statements.

 



Consolidated Cash Flow Statement

 

First Quarter

 

         2014 

$m  

        2013

           $m

Cash flows from operating activities

 

 

Profit before tax(a)

1 901

2 110

Share of post-tax results from joint ventures and associates

(64)

(80)

Depreciation of property, plant and equipment and amortisation of intangible assets

749

744

Fair value movements in commodity based contracts

(117)

(75)

(Profits) and losses on disposal of non-current assets and impairments(b)

120

(6)

Unsuccessful exploration expenditure written off

57

5

Increase in provisions for liabilities and retirement benefit obligations

-

10

Finance income

(38)

(163)

Finance costs

75

258

Share-based payments

21

20

Decrease/(increase) in working capital

381

(89)

Cash generated by operations

3 085

2 734

Income taxes paid

(725)

(509)

Net cash inflow from operating activities

2 360

2 225

Cash flows from investing activities

 


Dividends received from joint ventures and associates

31

17

Proceeds from disposal of property, plant and equipment, intangible assets and investments

1

221

Purchase of property, plant and equipment and intangible assets

(2 101)

(2 542)

Loans to joint ventures and associates

-

-

Repayments from joint ventures and associates

30

46

Interests in subsidiaries, joint ventures and associates and other investments

(182)

(94)

Other loan repayments

27

27

Net cash outflow from investing activities

(2 194)

(2 325)

Cash flows from financing activities

 


Net interest paid

(12)

(20)

Dividends paid

(1)

(1)

Net proceeds from issue and repayment of borrowings

(27)

(16)

Issue of shares

3

8

Movements in own shares

-

(13)

Net cash outflow from financing activities

(37)

(42)

Net increase/(decrease) in cash and cash equivalents(c)

129

(142)

Cash and cash equivalents at beginning of period(d)

6 208

4 520

Effect of foreign exchange rate changes

7

9

Cash and cash equivalents at end of period(d)

6 344

4 387

The cash flows above are inclusive of discontinued operations (see note 6, page 23)

a) Includes profit before tax from discontinued operations for the quarter of $9 million (2013 $5 million).

b) Includes profit on disposal of non-current assets and impairments of discontinued operations for the quarter of $nil (2013 $4m loss).

c) Cash and cash equivalents comprise cash and short-term liquid investments that are readily convertible to cash.

d) The balance at 31 March 2014 includes cash and cash equivalents of $6 344 million (31 March 2013 $4 300 million) and cash included within assets held for sale of     
$nil (31 March 2013 $87 million).

The notes on pages 19 to 25 form an integral part of these condensed financial statements.

 

 

Notes

1. Basis of preparation

These results, approved by the Board on 30 April 2014, are the condensed financial statements ('the financial statements') of BG Group plc for the quarter ended 31 March 2014 and are unaudited. 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 2013 which have been prepared in accordance with IFRS as adopted by the EU. The latest statutory accounts delivered to the registrar were for the year ended 31 December 2013 which were audited by Ernst & Young LLP and on which the Auditors' Report was unqualified and did not contain statements under Sections 498(2) or 498(3) of the Companies Act 2006. These financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU and the accounting policies, methods of computation and presentation as set out in the Annual Report and Accounts 2013, except as stated 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 period in which the circumstances change.

A single amount is presented on the income statement for discontinued operations, comprising the post-tax results of these businesses and the post-tax profit or loss recognised on re-measurement to fair value less costs to sell and on disposal of the businesses.

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 and certain other exceptional items.

These items, which are detailed in note 2 to the financial statements (page 20), 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

The IASB issued IFRS 11 'Joint Arrangements' in May 2011. The standard aims to provide a more substance-based reflection of joint arrangements in the financial statements by focusing on the rights and obligations of the arrangement rather than the legal form. The standard has been adopted by the Group for the year ended 31 December 2014 and has not had a material impact on the Group's financial statements.

A number of amendments to accounting standards issued by the IASB are applicable from 1 January 2014. They have not had a material impact on the Group's financial statements for the quarter ended 31 March 2014.

Changes in functional currency

Following a period of sustained growth and increased production performance, the cash flows and economic returns of the Group's Brazil upstream operations are now principally denominated in US dollars. From 1 January 2014, the functional currency of these operations changed from Brazilian real to US dollar in accordance with IAS 21.



2. Disposals, re-measurements and impairments

 

First Quarter

 

 

2014

$m

2013

$m

 

Revenue and other operating income - re-measurements of commodity based contracts

79

93

 

Operating costs

(75)

-

 

Profits and (losses) on disposal of non-current assets and impairments:

 


 

Disposals of non-current assets

-

10

 

Other

(45)

-

 

 

(45)

10

 

Net finance income/(costs) - re-measurements of financial instruments

14

(68)

 

Taxation

(23)

(10)

 

Impact on earnings - continuing operations

(50)

25

 

Revenue and other operating income

Re-measurements included within revenue and other operating income amount to a credit of $79 million for the quarter (2013 $93 million credit), of which a credit of $77 million (2013 $6 million credit) represents non-cash mark-to-market movements on certain gas contracts. 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 net $2 million credit for the quarter (2013 $87 million credit) representing unrealised mark-to-market movements associated with economic hedges, including a charge of $8 million associated with Brent oil swaps partially hedging the Group's exposure to commodity prices in 2014.

Operating costs

Operating costs includes a $75 million pre-tax charge (post-tax $62 million) relating to exceptional restructuring costs in the UK, Egypt and Australia.  

Disposals of non-current assets and impairments

During the first quarter, disposals and impairments resulted in a pre-tax charge to the income statement of $45 million (post-tax $37 million). In the first quarter of 2013, disposals and impairments resulted in a pre and post-tax credit to the income statement of $10 million.

Net finance income

Re-measurements presented in net finance income include mark-to-market movements on certain derivatives used to hedge foreign exchange and interest rate risk, offset by foreign exchange movements on the associated borrowings and certain intercompany balances. In addition, re-measurements include a $13 million credit primarily associated with derivatives partially hedging the Group's Australian dollar foreign exchange exposure in its 2014 capex programme that do not qualify for hedge accounting under IAS 39.



3. Segmental analysis

Profit for the period

Business Performance

Disposals,
re-measurements and impairments

Total Result

Analysed by operating segment

2014

$m

2013

$m

2014

$m

2013

$m

2014

$m

2013

$m

Group revenue(a) 

 

 

 

 

 

 

Upstream

3 245

3 070

-

-

3 245

3 070

LNG Shipping & Marketing

1 897

2 041

-

-

1 897

2 041

Other activities

2

1

-

-

2

1

(165)

(202)

-

-

(165)

(202)

Group revenue

4 979

4 910

-

-

4 979

4 910

82

7

79

93

161

100

5 061

4 917

79

93

5 140

5 010

Operating profit/(loss) before share of results from joint ventures and associates

 

 

 


 


Upstream

1 233

1 316

(39)

16

1 194

1 332

LNG Shipping & Marketing

686

736

4

87

690

823

(13)

(34)

(6)

-

(19)

(34)

1 906

2 018

(41)

103

1 865

2 121

Share of pre-tax operating results from joint ventures and associates

 

 

 

 

 

 

Upstream

92

115

-

-

92

115

LNG Shipping & Marketing

6

6

-

-

6

6

Other activities

5

8

-

-

5

8

 

103

129

-

-

103

129

Total operating profit/(loss)

 


 


 


Upstream

1 325

1 431

(39)

16

1 286

1 447

LNG Shipping & Marketing

692

742

4

87

696

829

(8)

(26)

(6)

-

(14)

(26)

2 009

2 147

(41)

103

1 968

2 250

Net finance (costs)/income

 


 


 


Finance income

24

29

14

132

38

161

Finance costs

(75)

(57)

-

(200)

(75)

(257)

(5)

(7)

-

-

(5)

(7)

(56)

(35)

14

(68)

(42)

(103)

Taxation

 


 


 


Taxation

(767)

(887)

(23)

(10)

(790)

(897)

(34)

(42)

-

-

(34)

(42)

(801)

(929)

(23)

(10)

(824)

(939)

1 152

1 183

(50)

25

1 102

1 208

a) External sales are attributable to segments as follows: Upstream $3 081 million (2013 $2 877 million), LNG Shipping & Marketing $1 896 million (2013 $2 032 million) and Other $2 million (2013 $1 million). Intra-group sales are attributable to segments as follows: Upstream $164 million (2013 $193 million) and LNG Shipping & Marketing
$1 million (2013 $9 million).

b) Business Performance Other operating income is attributable to segments as follows: Upstream $7 million (2013 $2 million) and LNG Shipping & Marketing $75 million (2013 $5 million).


 

 

Business Performance

Disposals,
re-measurements and impairments

Total Result

 

First Quarter

2014

$m

2013

$m

2014

$m

2013

$m

2014

$m

2013

$m

 

Total operating profit/(loss)

 

 

 

 

 

 

 

Upstream

1 325

1 431

(39)

16

1 286

1 447

 

LNG Shipping & Marketing

692

742

4

87

696

829

 

Other activities

(8)

(26)

(6)

-

(14)

(26)

 

 

2 009

2 147

(41)

103

1 968

2 250

 

Less: Share of pre-tax operating results
from joint ventures and associates

 

 

 

 

(103)

(129)

 

Add: Share of post-tax results from
joint ventures and associates

 

 

 

 

64

80

 

Net finance costs

 

 

 

 

(37)

(96)

 

Profit before tax

 

 

 

 

1 892

2 105

 

Taxation

 

 

 

 

(790)

(897)

 

Profit for the period from continuing operations attributable to Shareholders (earnings)

1 102

1 208

 

 

 

 

 

4. Net finance costs

 

First Quarter

 

2014

$m

2013

$m

Interest payable(a)

(142)

(133)

Interest on obligations under finance leases

(25)

(25)

Interest capitalised

128

133

Unwinding of discount on provisions(b)

(36)

(32)

Disposals, re-measurements and impairments(c)

-

(200)

Finance costs

(75)

(257)

Interest receivable(a)

24

29

Disposals, re-measurements and impairments(c)

14

132

Finance income

38

161

Net finance costs(d)

(37)

(96)

a) In 2014, interest payable includes foreign exchange losses of $13 million (2013 interest receivable includes gains of $5 million).

b) 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' net deficit.

c) Net finance income/(costs) on disposals, re-measurements and impairments for the quarter of $14 million (2013 $(68) million) is included in note 2 (page 20) and principally reflects mark-to-market movements on certain derivatives used to hedge foreign exchange and interest rate risk, partly offset by foreign exchange movements on certain borrowings.

d) Excludes the Group's share of net finance costs from joint ventures and associates for the quarter of $5 million (2013 $7 million).

  

5. Taxation

The tax charge for the quarter was as follows:

Business Performance

Disposals,
re-measurements and impairments

Total Result

 

2014

$m

2013

$m

2014

$m

2013

$m

2014

$m

2013

$m

Tax charge/(credit) for the quarter excluding share of taxation from joint ventures and associates

767

887

23

10

790

897

34

42

-

-

34

42

801

929

23

10

824

939

 

Business Performance taxation for the first quarter, including share of taxation from joint ventures and associates, is
$801 million (2013 $929 million). The effective tax rate of 41% for the first quarter is based on the best estimate of the weighted average annual income tax rate expected for the full year (first quarter 2013 44%).

6. Discontinued operations

The post-tax profit of the businesses comprising discontinued operations for the quarter, including profits and losses on disposals and impairments, was $8 million (2013 $3 million).

 

7. Earnings per ordinary share - continuing operations

 

First Quarter

 

2014

2013

 


$m

cents per share

$m

cents per share

Earnings - continuing operations excluding disposals, re-measurements and impairments

1 152

33.8

1 183

34.8

Disposals, re-measurements and impairments (after tax)

(50)

(1.4)

25

0.7

Earnings - continuing operations

1 102

32.4

1 208

35.5

 

Basic earnings per share calculations in 2014 are based on the weighted average number of shares in issue of
3 406 million for the quarter.

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 3 423 million for the quarter, being the weighted average number of ordinary shares in issue during the period as adjusted for dilutive equity instruments.

8. Reconciliation of net borrowings(a) - First Quarter

 

$m

Net borrowings as at 31 December 2013

(10 610)

Net increase in cash and cash equivalents

129

Cash outflow from changes in borrowings

27

Foreign exchange and other re-measurements

44

Net borrowings as at 31 March 2014

(10 410)

As at 31 March 2014, BG Group's share of the net borrowings in joint ventures and associates amounted to approximately $0.7 billion, including BG Group shareholder loans of approximately $0.7 billion. These net borrowings are included in BG Group's share of the net assets in joint ventures and associates which are included in
BG Group's accounts.

a) Net borrowings are defined on page 29.

Net borrowings comprise:

 

As at
31 Mar
2014
$m

As at
31 Dec
2013
$m

Amounts receivable/(due) within one year

 

 

Cash and cash equivalents

6 344

6 208

Trade and other receivables(a)

39

38

Borrowings

(478)

(475)

Commodity contracts and other derivative financial instruments

12

(11)

 

5 917

5 760

Amounts receivable/(due) after more than one year

 

 

Borrowings

(17 082)

(17 054)

Trade and other receivables(a)

133

134

Commodity contracts and other derivative financial instruments

622

550

 

(16 327)

(16 370)

Net borrowings

(10 410)

(10 610)

a) Finance lease receivable of $172 million (2013 $172 million) included within current and non-current trade and other receivables on the balance sheet.

 

Liquidity and Capital Resources - as at 31 March 2014

The Group's principal borrowing entities are BG Energy Holdings Limited and certain wholly owned subsidiary undertakings, the majority of whose borrowings are guaranteed by BG Energy Holdings Limited (collectively BGEH).

BGEH had a $4.0 billion US Commercial Paper Programme and a $2.0 billion Euro Commercial Paper Programme, both of which were unutilised. BGEH also had a $15.0 billion Euro Medium Term Note Programme, of which            $9.0 billion was unutilised.

BGEH had aggregate undrawn committed revolving bank borrowing facilities of $5.22 billion, of which $2.18 billion expires in 2016 and $3.04 billion expires in 2017. Furthermore BGEH had $1.8 billion of undrawn credit facilities provided by an export credit agency, subject to the execution of agreed documentation.

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.

 

9. Quarterly information: earnings and earnings per share

 

2014

2013

2014

2013

 

$m

$m

cents per share

cents per share

First quarter

 

 

 

 

   Total Result - continuing operations

1 102

1 208

32.4

35.5

   Total Result - discontinued operations

8

(1)

0.2

-

   Business Performance

1 152

1 183

33.8

34.8

Second quarter

 


 


   Total Result - continuing operations

 

833

 

24.5

   Total Result - discontinued operations

 

261

 

7.7

   Business Performance

 

986

 

29.0

Third quarter

 


 


   Total Result - continuing operations

 

1 230

 

36.2

   Total Result - discontinued operations

 

(11)

 

(0.3)

   Business Performance

 

1 070

 

31.5

Fourth quarter

 


 


   Total Result - continuing operations

 

(1 066)

 

(31.3)

   Total Result - discontinued operations

 

(13)

 

(0.4)

   Business Performance

 

1 135

 

33.3

Full year

 


 


   Total Result - continuing operations

 

2 205

 

64.8

   Total Result - discontinued operations

 

236

 

6.9

   Business Performance

 

4 374

 

128.6

 

10. Commitments and contingencies

Details of the Group's commitments and contingent liabilities as at 31 December 2013 can be found in note 22,
page 125 of the Annual Report and Accounts 2013. The Group's capital expenditure commitments have decreased by approximately $0.9 billion in the three month period to 31 March 2014, primarily due to progress on the Group's major growth projects. There have been no material changes to the Group's other commitments or contingent liabilities in the period.

11. 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 2013 can be found in note 23, page 127 of the Annual Report and Accounts 2013. There have been no material changes in these relationships in the three month period to 31 March 2014. No related party transactions have taken place in the first three 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

 

First Quarter

Fourth
 Quarter

 

2014

2013

2013

Gross exploration expenditure ($m)

 



Capitalised expenditure (including acquisitions)

181

234

326

Other expenditure

104

101

77

Total

285

335

403

 

 



Gross exploration expenditure by country ($m)

 



Australia

50

37

102

Brazil

46

54

65

Egypt

29

45

70

Kenya

51

6

11

Tanzania

28

100

68

Uruguay

30

25

43

Other

51

68

44

Total

285

335

403

 

Exploration expenditure charge ($m)

 



Capitalised expenditure written off

57

5

292

Other expenditure

104

101

77

Total

161

106

369

 


 

 

First Quarter

Fourth
 Quarter

 

2014

2013

2013

Capital investment ($m)

 

 


Australia

1 074

1 490

1 789

Brazil

434

455

541

Egypt

124

117

186

Kazakhstan

52

31

47

Norway

108

32

134

Tanzania

51

77

96

Thailand

40

27

30

Trinidad and Tobago

55

27

52

UK

150

208

214

USA

31

40

14

Other

152

124

72

Upstream

2 271

2 628

3 175

LNG Shipping & Marketing

7

2

7

Other

5

1

1

Discontinued operations

-

5

-

Capital investment on a cash basis ($m)

2 283

2 636

3 183

Other items(a)

(126)

180

(116)

Total capital investment ($m)

2 157

2 816

3 067

 

Upstream(b)

2 148

2 808

3 061

LNG Shipping & Marketing

5

2

8

Other

4

1

(2)

Discontinued operations

-

5

-

Total capital investment ($m)

2 157

2 816

3 067

a) Other items include movements in accruals and prepayments, capitalised financing costs and movements in finance leases.

b) Includes E&P development expenditure of $1 500 million (Q1 2013 $1 912 million; Q4 2013 $1 995 million).

 

 

 

 





 

 

First Quarter

Fourth
 Quarter

 

2014

2013

2013

Depreciation and amortisation by segment ($m)

 



Upstream

708

704

746

LNG Shipping & Marketing

40

39

40

Other

1

1

1

Total

749

744

787

 

 



LNG cargo deliveries by country

 



China

3

2

5

India

-

1

-

Japan

7

18

15

Singapore

7

-

5

South Korea

8

12

7

Taiwan

1

-

3

Thailand

-

-

2

Asia

26

33

37

Mexico

1

-

-

Portugal

-

1

-

UK

1

1

-

Europe & Other

2

2

-

USA

1

4

-

North America

1

4

-

Brazil

2

-

-

Chile

9

10

9

South America

11

10

9

 

 



Total

40

49

46

 

 



LNG delivered volumes (thousand tonnes)

2 447

2 980

2 816

 

 



 

 



Historical supplementary information is available on the BG Group plc website: www.bg-group.com



 

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

BSR

Buoyancy supported riser

Capital investment

Comprises expenditure on property, plant and equipment, other intangible assets and investments, including business combinations

Capital investment on a cash basis

Comprises cash flows on purchase of property, plant and equipment and intangible assets, loans to joint ventures and associates and investments in subsidiaries, joint ventures and associates

Delivered volumes

Comprise all LNG volumes discharged in a given period, excluding LNG utilised by the ships

EBITDA

Earnings before interest, tax, depreciation and amortisation

E&P

Exploration and Production

E&P EBITDA margin

E&P EBITDA before exploration charge divided by production volumes for the period

E&P operating profit margin

E&P operating profit before exploration charge divided by production volumes for the period

DD&A

depreciation, depletion and amortisation

FPSO

Floating Production Storage and Offloading system

Free cash flow

net cash flow from operating activities, less net interest paid and capital investment on a cash basis, plus dividends from joint ventures and associates and loan repayments

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

IFRS

International Financial Reporting Standard

kboed

thousand barrels of oil equivalent per day

LNG

Liquefied Natural Gas

LNG Shipping & Marketing

LNG shipping, marketing and interests in regasification businesses

m

Million

mmboe

million barrels of oil equivalent

mmbtu

million british thermal units

mmcfd

million cubic feet per day

mmscfd

million standard cubic feet per day

mtpa

million tonnes per annum

Net debt / Net borrowings

 

Comprise cash, current asset investments, finance lease liabilities/assets, currency and interest rate derivative financial instruments and short and long-term borrowings. Excludes net borrowings in respect of assets classified as held for sale

PSC

production sharing contract

tcf

trillion cubic feet

Total operating profit

Operating profit plus share of pre-tax operating results of joint ventures and associates

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

Upstream

Exploration & Production and LNG liquefaction businesses

 

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
email: invrel@bg-group.com

Tel: 0871 384 2064

Online: via https://help.shareview.co.uk

 

 

(From here, you will be able to email your query securely)

 

Media Enquiries:

Neil Burrows

Tel: 0118 929 2462

Mark Todd

Tel: 0118 929 3110

Kim Blomley

Tel: 0118 938 6568

 

 

High resolution images are available at www.flickr.com/bggroup

 

 

BG Group is listed on the US over-the-counter market known
as the International OTCQX. Enquiries should be made to:

 

 

OTC Markets Group Inc.
304 Hudson Street
3rd Floor
New York, NY 10013
USA

 

 

email: info@otcmarkets.com

 

 

 

 

 

Financial Calendar

 

 

Annual General Meeting

15 May 2014

 

Payment of 2013 final dividend

30 May 2014

 

Announcement of 2014 second quarter and half year results

31 July 2014

 

 

 

 

BG Group plc website: www.bg-group.com

 

 

 

Registered office

100 Thames Valley Park Drive, Reading RG6 1PT

Registered in England No. 3690065

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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1st Quarter Results - RNS