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.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 Stephen Fry ‘criticises Operation Yewtree in dinner party rant’ calling for tougher laws to deter false sex abuse allegations
- 2 Why I'm on the brink of burning my Israeli passport
- 3 Israel-Gaza conflict: ‘Sderot cinema’ image shows Israelis with popcorn and chairs 'cheering as missiles strike Palestinian targets'
- 4 War is war: Why I stand with Israel
- 5 Blackest is the new black: Scientists have developed a material so dark that you can't see it...
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
Emergency data law: David Cameron plots to bring back snoopers’ charter
NUT strike: David Cameron announces crackdown on strike action ahead of mass industrial action
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...