Our performance for 2008
BG Group has identified the key performance indicators that it believes are useful in assessing how well the Group is performing against its strategic aims. They encompass both financial and non‑financial measures and are set out below.
Key performance indicators
Earnings per share (pence)
Description
Earnings per share (EPS) is the amount of earnings attributable to each individual share in issue and has been calculated by dividing the Business Performance* earnings for the financial year for the Group by the weighted average number of ordinary shares in issue and ranking for dividend during the year.
Commentary
In 2008, EPS grew by 74% compared with 2007. This performance reflected strong organic growth including outstanding results from the LNG business and the contribution of exceptionally high commodity prices during the year. At constant US$/UK£ exchange rates and E&P commodity prices, EPS grew by 28%.
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- * Business Performance excludes disposals, certain re-measurements and impairments as exclusion of these items provides readers with a clear and consistent presentation of the underlying operating performance of the Group’s ongoing business. See Presentation of Non-GAAP measures for further information. See also, Segmental analysis and results presentation, note 2, and Earnings per ordinary share, note 9, for a reconciliation of the differences between Business Performance and Total Results.
Total shareholder return (%)
Description
Total shareholder return (TSR) is defined as the return on investment obtained from holding BG Group shares over a period of time. It includes dividends paid, the change in capital value of the shares and any other payments to or by shareholders. The absolute level of TSR varies with stock market performance, commodity price changes and other extraneous factors. BG Group believes that measuring its TSR performance relative to that of its industry peers provides a more meaningful indicator of shareholder return. It is also used to determine vesting levels under the Group’s long-term incentive plans.
Commentary
The graph shows the annualised US Dollar TSR of BG Group shares over a three year performance period and the corresponding average TSR of its industry peer group over the same period. For the three year performance period ending 1 September 2008, BG Group was ranked first within its peer group, reflecting BG Group’s continuing delivery of its key strategic aims. For further information, see the Remuneration report. For details of BG Group’s TSR in pounds Sterling relative to the FSTE 100 index please see the Remuneration report.
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Total Recordable Case Frequency (per million work hours)
Description
Safety at work is critical to any business. Total Recordable Case Frequency (TRCF) measures the number of injuries per million hours worked and is the headline indicator of the success of the Group’s safety programmes, measuring the ratio of injuries to working hours.
Commentary
The Group was disappointed with the rise in TRCF during 2008 to 1.74. This was in contrast to the steady improvement experienced in recent years. Regrettably, there were three fatalities in 2008. These incidents have created an even stronger determination to ensure that safety is paramount, as set out in The way we work, and to strive towards the Group’s goal of zero injuries.
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Exploration & Production - production (mmboe)
Description
E&P production volumes are a key measure of operational performance for BG Group. This shows BG Group’s net production from all of its producing E&P assets and is measured in millions of barrels of oil equivalent (mmboe).
Commentary
2008 volumes rose 3% to 226.7 mmboe due to a full year contribution from Buzzard in the UK and new production in India and Trinidad and Tobago, partly offset by industrial action in the UK and planned shutdowns to tie in new facilities in Egypt, Kazakhstan and the UK. 2009 production is expected to be around 248 mmboe. The Group believes its portfolio of reserves and resources has the potential to support an average compound annual growth rate in production of 6-8% from 2008 to 2020.
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Reserves and resources (mmboe)
Description
BG Group’s gas and oil reserves and resources represent the Group’s total resource base. The size of reserves and resources is a key determinant of the Group’s ability to replace production and deliver production growth in the future. It is measured in millions of barrels of oil equivalent (mmboe).
Commentary
In 2008, the Group’s total reserves and resources increased 31% to 13 126 mmboe, equivalent to 58 years of reserves and resources life at 2008 production levels. In addition, the Group’s proved and probable reserves increased by 64% over this period. The increase in the total resource base is attributable to exploration success across the portfolio, particularly in Brazil, and the acquisition of Queensland Gas Company Limited.
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- (a) For an explanation of these terms, refer to Supplementary information
Liquefied Natural Gas managed volumes (mtpa)
Description
This is a measure of the volumes of LNG that BG Group manages in its global shipping and marketing business. BG Group has a portfolio of flexible, long‑term LNG supply sourced from its own liquefaction plants in Egypt and Trinidad and Tobago and from third-party suppliers in Nigeria and Equatorial Guinea. It is measured in millions of tonnes per annum (mtpa).
Commentary
In 2008, volumes increased by 1% to 13.1 mtpa. During the year, the Group delivered LNG to 13 countries, with first‑time supplies to Argentina, Brazil, China, Greece and Turkey. 2009 volumes are expected to be similar to those in 2008. The Group is targeting 20 mtpa by 2015.
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