BusinessCorporate FinanceBG Group gives IAS39 the cold shoulder

BG Group gives IAS39 the cold shoulder

Energy provider BG Group has followed banks and insurers in issuing two sets of figures: one with fair value and one without

It said that it was issuing figures without fair value calculations in its
business performance numbers in order to provide readers ‘with a clear and
consistent presentation of the underlying operating performance of the group’s
ongoing businesses’.

The group’s long-term gas sales contracts, commodity instruments relating to
its gas holdings and other derivatives contracts were ‘significantly affected’
by the demands of IAS39.

BG disclosed that it had suffered a £576m swing in the value of its
commodity-based contracts under IFRS. ‘For the full year, a charge of £172m in
respect of re-measurements is included within revenue and other operating income
(2006: £404m credit).

‘The difference between current market price and the settled sales price of
the contracts, BG’s price exposures in respect of gas sales commitments and some
of its financial instruments – all required by IAS39 – were stripped out of BG’s
business performance figures and recognised separately as ‘disposals
re-measurements and impairments.’

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