BG profits get pounds 600m pension fund boost
Wednesday 24 February 1999
News of the boost to profits came as BG indicated that shareholders are likely to see a payout of pounds 1bn-pounds 2bn this year as part of an overhaul of the group's balance sheet.
Profits were swollen by pounds 101m last year because of the pension surplus and will remain pounds 70m-pounds 80m a year higher over the next six years.
BG said that because its pounds 12bn pension fund was pounds 1bn in surplus, it was now able to release a pounds 600m provision built up over the years ago to protect against any deficit in the fund.
The company's 100,000 pensioners will not benefit directly from the release of the provision. But BG said that its pension scheme was already one of the most generous available.
Pension benefits are index-linked, members contribute only 4 per cent of pay and the scheme allows employees to retire on a full pension of two-thirds final salary from the age of 50 onwards.
David Varney, BG's chief executive, said the company's priority for this year was to improve its capital structure by loading the balance sheet up with debt.
This could allow BG to raise gearing from 40 per cent to between 50 and 60 per cent, giving it up to pounds 2bn in spare capital to play with.
Mr Varney ruled out a bid for either Enterprise Oil or Lasmo and indicated BG was not about to hit the mega-merger trail, saying asset prices were still too high. "My job is to look after my shareholders' interests, not somebody else's. Fifty per cent of these mergers end in misery and we are not paid to take evens bets," he added.
He was speaking as BG reported an 8 per cent rise in pre-tax profits last year to pounds 1.227bn and said it was merging its exploration and production and international downstream arms. However, Mr Varney said this was not a prelude to a demerger of the new division from its pipeline arm Transco.
Despite the bleak outlook for oil prices, BG is doubling its oil and gas exporation programme this year to pounds 400m. This will be coupled with an intensified drive to cut costs but job losses among Transco's 14,000 workforce would be modest compared with the 2,500 cutbacks last year.
- 1 I'm A Celebrity 2014: Jungle security stepped up after murder and 'suspicious death' near to camp
- 2 To help fuel their propaganda machine against the poor, our government has now decided to redefine the word 'welfare'
- 3 Jeremy Hunt: 'I took my children to A&E because I didn't want to wait for GP appointment'
- 4 Girl, 7, gets Tesco to remove 'stupid' sign suggesting superheroes are 'for boys'
- 5 This letter from a reader explains why women can’t play football
Sarah Vine criticises lesbian mother Jack Monroe: 'If she was unsure about her sexuality, she should have taken greater precautions'
Black Friday 2014: Opening times for Asda, John Lewis, PC World, GAME and Argos
Three-year-old boy accidentally shoots dead his mother in Tulsa, Oklahoma, as she changes her younger daughter's nappy
Michael Brown shooting: Driver smashes into crowd as protests erupt across the US during a second night of unrest
Jeremy Hunt: 'I took my children to A&E because I didn't want to wait for GP appointment'
Rochester by-election: Ukip gains second MP as Tory defector Mark Reckless holds seat
'Beast of Bolsover' Dennis Skinner takes Ukip MP Mark Reckless to task moments after he is sworn in
Ukip says babies born to immigrants in the UK should be classed as migrants – which would include Nigel Farage’s own children
The young are the new poor: Sharp increase in number of under-25s living in poverty, while over-65s are better off than ever
Tamir Rice: 12-year-old boy playing with fake gun dies after being shot by Ohio police
Exclusive: UK approved £7m Israeli arms sales in six months before Gaza conflict
iJobs Money & Business
£16000 - £18000 per annum: Langley James : IT Support; Helpdesk, VMware; Manch...
£35000 - £450000 per annum + £3k car, £70k ote: h2 Recruit Ltd: Do you want to...
£Attractive Package: Citifocus Ltd: Prestigious financial institution seeks to...
£Negotiable: Citifocus Ltd: Experienced operational risk professional with ban...