Below are the addresses given by Richard V. Giordano, Chairman and Frank Chapman, Chief Executive at the BG Group plc AGM held today (Thursday 19th April, 2001)

Chairman

Now let me come to the core of our meeting, the review of our performance for the year 2000. I'm pleased to report that the story last year was one of exceptional business performance both in terms of growth and of profitability.

Moreover, behind the strong financial performance lies a host of other significant achievements. Frank Chapman will shortly be outlining the main business highlights.

First let me say a word about the demerger which took place six months ago following the decision taken at your EGM on 16th October. This latest demerger, along with the first demerger which took place in 1997, which created Centrica plc, brings to a close the successful restructuring of the old British Gas. In this latest demerger we launched the Lattice Group, which includes the Transco Gas Distribution Network, as well as a new and promising telecoms business. Lattice has made a strong start to its independent life and we wish it every success.

The restructuring of British Gas has created three new successful FTSE 100 companies, each possessing the skills and expertise to focus on their very different business opportunities. This restructuring over the past five years has been very rewarding in financial terms for our shareholders.

I know that many of you will still have holdings in all three companies and will be interested in the chart on the screen, which shows the cumulative increase in the share price of the three companies.

You can see that in 1996, before the first demerger, the British Gas share price stood at around 170 pence. Last week, the combined share prices of the three companies which used to make up British Gas, that is BG Group, Centrica and Lattice, had a combined share price of around 650 pence. This represents an increase in the combined share price of 282 per cent.

Furthermore, since the Centrica demerger some £11 billion in shareholder value has been created.

All this means that over the last four years, total returns for shareholders holding British Gas shares have been amongst the best in the FTSE 100 share index.

But, as the saying goes…. that was yesterday, now what are you going to do for me tomorrow? So let's look to the future.

The core skills of the new BG Group lie in the development, management and supply of natural gas markets around the globe. Expertise and capacity to innovate, as well as our sharp management focus, has allowed us to grow our business significantly this year and we continue to develop opportunities that will enable us to sustain growth into the future.

Over the past year our industry has operated in a favourable economic environment. 2000 was characterised by stability and growth in most of the economies in which we do business. Oil and gas prices, worldwide, have remained strong. History has shown however, that this position may change rapidly and we are seeing the first signs of a slowdown of the US economy. However, we believe that even in a more difficult climate we can prosper. There are many emerging economies around the world suffering significant shortages of energy supplies for power generation and industrial growth. Abundant energy supplies are the bedrock of economic development.

The economic and environmental benefits of gas are clear. It is abundant, affordable and the most environmentally friendly of all the fossil fuels and hence it is the fuel of choice, not only in the developed markets of Europe and North America, but in those developing economies struggling to catch up with the first world.

BG, as an integrated gas major, is very well placed to exploit these many opportunities around the globe.

In the report and accounts we announced the dividend payment for this year. The total dividend will be 9.9p per share for 2000, which compares to 9.2p per share in 1999. This performance is a reflection of our continued success in turning exploration and business development activity into revenue and profit. For 2000 the split between the companies will be 7p for Lattice shares and 2.9p for BG Group shares. The Board's intention is that the annual dividend will at least be maintained in real terms. This will allow the appropriate level of earnings to be retained to ensure that attractive investment opportunities can be taken.

The achievements that your company has made this year are testaments to our progress in developing a strong performance culture throughout the company. Indeed the same commitment and management discipline that delivered last year's business performance also delivered a number of other significant achievements, including our commitment to meeting the highest standards of health, safety and care for the environment.

In April last year, at a special event in London, I presented the Chairman's Awards for occupational health, safety and environmental performance. At that ceremony we celebrated leading examples of innovation and professionalism of which the best companies in the world would be proud. In fact this year the company again reduced loss time incidents by 50%. Our exploration and production sector was highlighted by the International Association of Oil and Gas Producers for exemplary improvement in safety performance. And our businesses in Trinidad and Tunisia both gained the international standard ISO 14001 for environmental management.

I am very pleased with the progress made by the new team. They have made a good start on delivering the ambitious plans that we outlined for you when we announced the creation of the new company.

Frank Chapman will now review the business highlights and strong results that your company achieved last year.

Chief Executive's Review

Firstly, I would like to say that we had a tremendous time last year as we started out with our new company and I would like to spend a few minutes today talking about some of the highlights.

The BG Group has four key business segments: exploration and production, liquefied natural gas, power generation and transmission and distribution.

Last year you heard about the performance culture that we were instilling in the organisation. That work is now bearing fruit. BG has shown its readiness to take on and successfully deliver against the most demanding targets.

2000 was a tremendous year for the company. Not only did we successfully complete our demerger, but also we grew the business significantly. Our total turnover increased by forty per cent year on year. Total operating profit for the year increased by one hundred and eight per cent, which is clearly a remarkable growth story. And our underlying growth, the increase when you take out the effects of higher oil and gas prices, rose by some 59%. This is an exceptional performance and was not matched by any other company in our sector. These achievements could only have been realised through the expertise and commitment of employees throughout the company.

With this, earnings have increased by one hundred and fifty three per cent and earnings per share have risen by a huge one hundred and eighty four per cent to twelve point two pence per share for the year.

So what delivered these exceptional results?

If we look at exploration activity, we delivered a phenomenal one hundred per cent exploration and appraisal success rate in 2000. Every single time we drilled we found hydrocarbons. We found in Egypt, in fact we had a five out of five hit rate here. We found offshore Gaza. We found in Bolivia. We continued to add to our core UK reserves base and we added resources with Kashagan, probably the most talked about discovery in the industry. This is a top of the league performance by our exploration team.

It meant that our proved and probable reserves base increased by some seventeen per cent in 2000 and has a compound average growth rate of over 25% for the last five years. This means that we have enough reserves today to produce for the next 30 years at our current production rate.

And, we have made great strides in turning our growing reserve base into a revenue stream.

Let me give you a few examples of our successes. In Trinidad we gained consent for a two train expansion of Atlantic LNG, which builds on the successful train 1 project, the lowest unit cost LNG facility anywhere in the world. This will allow us to open up a new gas province in Trinidad.

In the UK, construction began on the Blake and Jade projects and both are scheduled to commence production later this year. Last year we also concluded the financing of the Ballylumford power project in Northern Ireland.

In the Philippines the financing of the San Lorenzo power plant was concluded and construction is underway. We brought our liquefied natural gas expertise to the Tangguh project in Indonesia where the project has the potential to supply the Chinese and far eastern markets.

And BG is also bringing its knowledge to bear in Egypt where we have just signed an agreement with the Egyptian Government. This is a major step forward for the development of an integrated LNG export project in Egypt and will be supplied by our very substantial West Delta Deep gas reserves.

Project delivery is core to the performance of the company and you will see that we have had a successful year in delivering projects around the World. In 2000 we invested eight hundred and eighty three million pounds around the world. Over eighty per cent of this investment was spent in our five core geographic areas of the UK, South America, Egypt, Kazakhstan and Trinidad.
We have seen the successful completion of a number of projects in the UK. These include the first phase of Easington Catchment Area in the North Sea, which was finished at the end 1999. The Seabank power station at Bristol is now in full commercial operation and the Elgin Franklin development started first production on 30th March this year.

And further afield, the Rosetta project in Egypt came on stream earlier this year, the Santa Rita power plant in the Philippines commenced full operations and in South America, the Bolivia to Brazil pipeline extension, from Sao Paulo to Porto Alegre, was completed. All these projects will add to the company's future performance.

So what about our current performance?

We increased production levels in 2000 by seventeen per cent. This came primarily from the UK, Bolivia and Kazakhstan. We continued with the investment to enhance production levels of the giant Karachaganak field in Kazakhstan, where production increased substantially this year, breaking previous monthly production records in March, October, November and December.

At last year's AGM we told you about the purchase of a controlling interest in Comgas, Brazil's largest gas distribution business, serving the city of Sao Paulo. Together with MetroGAS, which serves Buenos Aires, BG now controls the region's two main gas distribution hubs. This is a core aspect of our Southern Cone growth strategy and gives us the ability to connect our equity gas reserves to the end of the chain - the customer.

Our transmission and distribution sector continues to show strong growth, with profits up by two hundred and seventy one per cent and an increase in volume of some fifty three per cent on the year.

Our other business segments, Power and Liquefied Natural Gas both showed high volume growth rates year-on-year and strong profit growth.

It is clear that the four key businesses now comprising the new BG are showing real growth and excellent profit performance. But these are not the only business achievements for the year. The Chairman has already mentioned a number of safety and environmental achievements. Informed by external benchmarking and best practices, robust health, safety and environment policies, management systems and standards have been implemented throughout the group. The way a company manages this area is an excellent barometer of overall company performance.

We at BG are well aware of our corporate responsibility. The BG Foundation, which was created in 1998, focuses on making a socially responsible contribution to the societies in which we work. Since its launch the Foundation has invested over three million pounds, in cash and in kind, to local communities. We seek to make a real and positive difference to community activities in the countries where we do business. We try to link with local partners to make full use of what we have to offer to address the community's most pressing problems.

The Foundation has been busy this year supporting projects around the world which enhance the lives of local people. In the Philippines we are working with the British Embassy and Save the Children to fund a programme for abused and exploited children.

In Trinidad, the BG science bus tours secondary schools to bring science to eleven to fifteen year old children, providing them with the opportunity to undertake practical experiments. Whilst in Kazakhstan the BG Chair of Environmental Technology trains engineers, scientists and managers to apply multi disciplinary approaches to the management of the environment. In addition BG, through the Karachaganak social fund, has constructed a school in Uralsk, providing education for over one thousand children.

As for the rest of the business, each BG Foundation initiative is evaluated by clearly measurable results and the success of these programmes will be monitored to ensure that the projects are fully effective.

We also place emphasis on providing employees with opportunities to grow their own skills and experience and place great store in aligning employees' motivation with our business objectives and the creation of shareholder value.

The major achievements that your company has reported this year could only have been realised through the efforts of BG employees in the UK and abroad. On your behalf I would like to thank the employees of BG Group around the world for their hard work and commitment in making 2000 a highly successful year for the company.

Thank you.