3rd Quarter Rslts Part 2 of 2
BP PLC
25 October 2005
BP p.l.c. and Subsidiaries
Summarized Group Income Statement
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Sales and other operating
65,764 83,471 96,520 revenues (Note 4) 255,180 199,584
Earnings from jointly controlled
636 739 1,020 entities - after interest and tax 2,245 1,460
Earnings from associates - after
127 104 112 interest and tax 330 331
189 141 26 Interest and other revenues 379 438
----------------------- --------------
66,716 84,455 97,678 Total revenues 258,134 201,813
Gain on sale of businesses and
15 201 47 fixed assets 1,448 1,629
----------------------- --------------
66,731 84,656 97,725 Total revenues and other income 259,582 203,442
49,877 64,030 76,237 Purchases 197,581 153,424
Production and manufacturing
3,914 5,827 4,821 expenses 14,969 12,287
553 697 834 Production and similar taxes (Note 5)2,180 1,502
Depreciation, depletion and
2,056 2,232 2,041 amortization 6,420 6,099
Impairment and losses on sale of
37 75 165 businesses and fixed assets 464 811
135 139 177 Exploration expense (Note 5) 476 379
Distribution and administration
3,532 3,025 3,444 expenses 9,693 9,127
Fair value (gain) loss on embedded
- 621 (46) derivatives 697 -
----------------------- --------------
Profit before interest and
taxation from continuing
6,627 8,010 10,052 operations 27,102 19,813
104 128 144 Interest payable (Note 6) 444 297
79 34 37 Other finance expense (Note 7) 100 231
----------------------- --------------
Profit before taxation
6,444 7,848 9,871 from continuing operations 26,558 19,285
1,657 2,291 2,674 Taxation 7,444 5,263
----------------------- --------------
4,787 5,557 7,197 Profit from continuing operations 19,114 14,022
Profit (loss) from Innovene
83 103 (666) operations (Note 3) (260) 171
----------------------- --------------
4,870 5,660 6,531 Profit for the period 18,854 14,193
======================= ==============
Attributable to:
4,818 5,591 6,463 BP shareholders 18,656 14,065
52 69 68 Minority interest 198 128
----------------------- --------------
4,870 5,660 6,531 18,854 14,193
======================= ==============
Earnings per share - cents
Profit for the period
attributable to BP shareholders
22.21 26.30 30.75 Basic 87.84 64.24
21.96 25.94 30.54 Diluted 86.84 63.12
======================= ==============
Profit from continuing operations
Attributable to BP shareholders
21.83 25.81 33.87 Basic 89.06 63.46
21.58 25.46 33.62 Diluted 88.05 62.35
======================= ==============
Summarized Group Balance Sheet
30 September 31 December
2005 2004
=========================
$ million
Non-current assets
Property, plant and equipment 84,489 93,092
Goodwill 10,440 10,857
Other intangible assets 4,762 4,205
Investments in jointly controlled entities 14,110 14,556
Investments in associates 6,140 5,486
Other investments 785 467
---------------------
Fixed assets 120,726 128,663
Loans and other receivables 6,367 2,419
Defined benefit pension plan surplus 2,132 2,105
---------------------
129,225 133,187
---------------------
Current assets
Inventories 19,507 15,645
Trade and other receivables 51,921 44,282
Current tax receivable 112 157
Cash and cash equivalents 2,182 1,359
---------------------
73,722 61,443
Innovene assets classified as held for sale 11,379 -
---------------------
85,101 61,443
---------------------
Total assets 214,326 194,630
=====================
Current liabilities
Trade and other payables 58,414 48,096
Finance debt 10,480 10,184
Current tax payable 4,383 4,131
Provisions 1,020 715
---------------------
74,297 63,126
---------------------
Non-current liabilities
Other payables 7,290 4,438
Finance debt 11,679 12,907
Deferred tax liabilities 16,404 16,701
Provisions 9,579 8,884
Defined benefit pension plan and other
post-retirement benefit plan deficits 9,426 10,339
---------------------
54,378 53,269
Liabilities directly associated with the
Innovene assets classified as held for sale 2,925 -
---------------------
57,303 53,269
---------------------
Total liabilities 131,600 116,395
---------------------
Net assets 82,726 78,235
=====================
Equity
BP shareholders' equity 81,580 76,892
Minority interest 1,146 1,343
---------------------
82,726 78,235
=====================
Movement in BP Shareholders' Equity
Movement in BP shareholders' equity: $ million
At 31 December 2004 76,892
Adoption of IAS 39 (243)
------
As restated at 1 January 2005 76,649
Profit for the period 18,656
Distribution to shareholders (5,503)
Currency translation differences (net of tax) (2,152)
Issue of ordinary share capital for employee share schemes 504
Issue of ordinary share capital for TNK-BP 1,250
Purchase of shares by ESOP trusts (254)
Share based payment accrual (net of tax) 452
Available-for-sale investments (net of tax) 25
Cash flow hedges (net of tax) (169)
Repurchase of ordinary share capital (7,878)
------
At 30 September 2005 81,580
======
Summarized Group Cash Flow Statement
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Operating activities
6,444 7,848 9,871 Profit before taxation from
continuing operations 26,558 19,285
Adjustments to reconcile profits
before tax to net cash provided by
operating activities
34 47 93 Exploration expenditure written off 224 123
Depreciation, depletion and
2,056 2,232 2,041 amortization 6,420 6,099
Impairment and (gain) loss on sale
22 (126) 118 of businesses and fixed assets (984) (818)
Earnings from jointly controlled
(763) (843) (1,132) entities and associates (2,575) (1,791)
Dividends received from jointly
1,130 741 893 controlled entities and associates 1,989 1,443
(3,186) (2,692) (5,718) Working capital and other movements (9,297) (6,074)
----------------------- ---------------
Net cash provided by operating
activities of continuing
5,737 7,207 6,166 operations 22,335 18,267
Net cash provided by (used in)
operating activities of
318 (470) 205 Innovene operations 147 (46)
----------------------- ---------------
Net cash provided by
6,055 6,737 6,371 operating activities 22,482 18,221
----------------------- ---------------
Investing activities
(3,083) (2,911) (3,069) Capital expenditure (8,805) (8,481)
- - - Acquisitions, net of cash acquired - (14)
Net investment in jointly controlled
(88) (36) (2) entities (53) (1,514)
(171) (186) (82) Net investment in associates (367) (752)
Proceeds from disposal of businesses
574 425 226 and fixed assets 1,978 4,067
- 48 11 Proceeds from loan repayments 91 3
----------------------- ---------------
Net cash used in investing
(2,768) (2,660) (2,916) activities (7,156) (6,691)
----------------------- ---------------
Financing activities
(2,180) (2,034) (3,661) Net repurchase of shares (7,628) (5,266)
717 482 497 Proceeds from long-term financing 1,790 1,775
(13) (1,011) (420) Repayments of long-term financing (3,623) (1,283)
Net increase (decrease) in short-
(130) 149 2,983 term debt 966 (2,553)
(1,536) (1,809) (1,871) Dividends paid - BP shareholders (5,503) (4,506)
(15) (15) (87) - Minority interest (422) (25)
----------------------- ---------------
Net cash used in financing
(3,157) (4,238) (2,559) activities (14,420)(11,858)
----------------------- ---------------
Currency translation differences
relating to cash and cash
21 - (74) equivalents (83) 13
----------------------- ---------------
Increase (decrease) in cash and
151 (161) 822 cash equivalents 823 (315)
Cash and cash equivalents at
1,590 1,521 1,360 beginning of period 1,359 2,056
----------------------- ---------------
Cash and cash equivalents at
1,741 1,360 2,182 end of period 2,182 1,741
======================= ===============
Summarized Group Cash Flow Statement
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Working capital and other movements
(46) (102) (86) Interest receivable (251) (155)
56 78 81 Interest received 193 138
104 128 144 Interest payable 444 297
(152) (119) (384) Interest paid (835) (471)
79 34 37 Other finance expense 100 231
41 79 66 Share-based payments 222 156
Net operating charge for pensions and
other post-retirement benefits,
39 (6) (21) less contributions (37) (18)
Net charge for provisions,
416 507 440 less payments 884 416
(2,305) (1,786) (3,737) (Increase) decrease in inventories (6,320) (3,309)
(Increase) decrease in trade and
(3,413) (4,608)(10,116) other receivables (16,041) (6,065)
Increase (decrease) in trade and
3,787 5,536 10,425 other payables 18,328 6,698
(1,792) (2,433) (2,567) Income taxes paid (5,984) (3,992)
----------------------- ---------------
(3,186) (2,692) (5,718) (9,297) (6,074)
======================= ===============
Capital Expenditure and Acquisitions
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
By business
Exploration and Production
191 213 221 UK 610 555
68 37 50 Rest of Europe 118 161
983 942 930 USA 2,869 2,853
1,152 1,289 1,292 Rest of World (a) 3,678 4,841
----------------------- -------------
2,394 2,481 2,493 7,275 8,410
----------------------- -------------
Refining and Marketing
82 97 65 UK 205 225
148 111 99 Rest of Europe 277 351
298 219 282 USA 691 829
104 88 115 Rest of World 234 194
----------------------- -------------
632 515 561 1,407 1,599
----------------------- -------------
Gas, Power and Renewables
6 16 3 UK 20 12
2 6 4 Rest of Europe 11 7
14 19 22 USA 54 38
40 10 10 Rest of World 26 142
----------------------- -------------
62 51 39 111 199
----------------------- -------------
Other businesses and corporate
113 82 92 UK 249 159
73 58 40 Rest of Europe 118 144
60 53 29 USA 146 171
15 34 3 Rest of World 53 101
----------------------- -------------
261 227 164 566 575
----------------------- -------------
3,349 3,274 3,257 9,359 10,783
======================= =============
By geographical area
392 408 381 UK 1,084 951
291 212 193 Rest of Europe 524 663
1,355 1,233 1,263 USA 3,760 3,891
1,311 1,421 1,420 Rest of World (a) 3,991 5,278
----------------------- -------------
3,349 3,274 3,257 9,359 10,783
======================= =============
Included above:
- 66 - Acquisitions and asset exchanges 151 14
184 125 103 Innovene operations 357 376
======================= =============
(a) Nine months 2004 included $1,354 million investment in TNK's interest
in Slavneft within TNK-BP.
Exchange rates
US dollar/sterling average rate
1.82 1.86 1.78 for the period 1.84 1.82
1.80 1.80 1.76 US dollar/sterling period-end rate 1.76 1.80
US dollar/euro average rate
1.22 1.26 1.22 for the period 1.26 1.23
1.23 1.21 1.20 US dollar/euro period-end rate 1.20 1.23
======================= =============
Analysis of Profit Before Interest and Tax
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
By business
Exploration and Production
763 574 939 UK 2,424 2,455
246 294 301 Rest of Europe 1,923 615
1,804 2,441 2,071 USA 6,520 5,210
2,014 2,597 3,225 Rest of World 8,066 5,060
----------------------- -------------
4,827 5,906 6,536 18,933 13,340
----------------------- -------------
Refining and Marketing
(18) (73) 316 UK (6) (232)
866 982 1,122 Rest of Europe 2,939 1,947
1,018 691 1,701 USA 3,821 2,997
324 350 558 Rest of World 1,256 1,021
----------------------- -------------
2,190 1,950 3,697 8,010 5,733
----------------------- -------------
Gas, Power and Renewables
(90) 124 (17) UK 223 (74)
(11) (8) 4 Rest of Europe 2 (28)
144 39 403 USA 614 316
14 5 22 Rest of World 151 217
----------------------- -------------
57 160 412 990 431
----------------------- -------------
Other businesses and corporate
(170) (209) (144) UK (532) (424)
4 30 11 Rest of Europe 45 (3)
(265) (13) (361) USA (383) (585)
(10) 31 42 Rest of World 82 1,412
----------------------- -------------
(441) (161) (452) (788) 400
----------------------- -------------
6,633 7,855 10,193 27,145 19,904
(95) (4) (285) Unrealized profit in inventory (442) (248)
Net profit on transactions between
89 159 144 continuing and Innovene operations 399 157
----------------------- -------------
6,627 8,010 10,052 Total for continuing operations 27,102 19,813
----------------------- -------------
Innovene operations
(9) 164 (289) UK (67) (99)
226 129 (88) Rest of Europe 407 483
11 (16) (220) USA (124) 52
3 16 (28) Rest of World (16) 11
----------------------- -------------
231 293 (625) 200 447
Net profit on transactions between
(89) (159) (144) continuing and Innovene operations (399) (157)
----------------------- -------------
142 134 (769) Total for Innovene operations (199) 290
----------------------- -------------
6,769 8,144 9,283 Total for period 26,903 20,103
======================= ==============
By geographical area
513 463 1,138 UK 2,206 1,793
1,166 1,406 1,523 Rest of Europe 5,175 2,620
2,606 3,158 3,543 USA 10,165 7,690
2,342 2,983 3,848 Rest of World 9,556 7,710
----------------------- -------------
6,627 8,010 10,052 Total for continuing operations 27,102 19,813
======================= =============
Analysis of Replacement Cost Profit
Before Interest and Tax
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
By business
Exploration and Production
763 574 939 UK 2,424 2,455
246 294 301 Rest of Europe 1,923 615
1,799 2,438 2,070 USA 6,511 5,197
2,014 2,597 3,225 Rest of World 8,066 5,060
----------------------- --------------
4,822 5,903 6,535 18,924 13,327
----------------------- --------------
Refining and Marketing
(69) (59) 268 UK (61) (315)
534 658 657 Rest of Europe 1,738 1,403
611 373 563 USA 1,939 2,027
242 314 370 Rest of World 949 788
----------------------- --------------
1,318 1,286 1,858 4,565 3,903
----------------------- --------------
Gas, Power and Renewables
(90) 124 (17) UK 223 (74)
(12) (1) (4) Rest of Europe 1 (29)
138 43 378 USA 584 330
(6) 8 (43) Rest of World 84 193
----------------------- --------------
30 174 314 892 420
----------------------- --------------
Other businesses and corporate
(170) (209) (144) UK (532) (424)
4 30 10 Rest of Europe 45 (3)
(265) (13) (366) USA (383) (585)
(10) 36 48 Rest of World 87 1,412
----------------------- --------------
(441) (156) (452) (783) 400
----------------------- --------------
5,729 7,207 8,255 23,598 18,050
(95) (4) (285) Unrealized profit in inventory (442) (248)
Net profit on transactions
between continuing and
89 159 144 Innovene operations 399 157
----------------------- --------------
5,723 7,362 8,114 Total for continuing operations 23,555 17,959
----------------------- --------------
Innovene operations
(49) 152 (276) UK (137) (173)
174 120 (169) Rest of Europe 256 370
(14) 42 (258) USA (126) (36)
(3) 17 (37) Rest of World (20) 3
----------------------- --------------
108 331 (740) (27) 164
Net profit on transactions
between continuing and
(89) (159) (144) Innovene operations (399) (157)
----------------------- --------------
19 172 (884) Total for Innovene operations (426) 7
----------------------- --------------
5,742 7,534 7,230 Total for period 23,129 17,966
======================= ==============
By geographical area
462 477 1,089 UK 2,151 1,710
833 1,089 1,049 Rest of Europe 3,972 2,075
2,188 2,841 2,376 USA 8,245 6,721
2,240 2,955 3,600 Rest of World 9,187 17,453
----------------------- --------------
5,723 7,362 8,114 Total for continuing operations 23,555 17,959
======================= ==============
Analysis of Non-operating Items
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
By business
Exploration and Production
(3) (678) (53) UK (1,021) (6)
(1) 3 - Rest of Europe 1,030 (1)
31 (3) (106) USA (110) (105)
(46) 26 12 Rest of World 82 (156)
----------------------- -------------
(19) (652) (147) (19) (268)
----------------------- -------------
Refining and Marketing
(25) (23) (3) UK (18) (119)
(46) (12) (53) Rest of Europe (64) (10)
(143) (634) (96) USA (725) (141)
(10) 11 (2) Rest of World (32) (59)
----------------------- -------------
(224) (658) (154) (839) (329)
----------------------- -------------
Gas, Power and Renewables
- 66 90 UK 261 -
- - - Rest of Europe - -
- 21 5 USA 26 -
16 - - Rest of World - 16
----------------------- -------------
16 87 95 287 16
----------------------- -------------
Other businesses and corporate
(44) (6) (6) UK (54) (43)
(54) 12 - Rest of Europe 11 (54)
(251) 11 (284) USA (277) (447)
11 - - Rest of World - 1,400
----------------------- -------------
(338) 17 (290) (320) 856
----------------------- -------------
Total before taxation
(565) (1,206) (496) for continuing operations (891) 275
171 384 167 Taxation credit (charge) 296 (83)
----------------------- -------------
Total after taxation for
(394) (822) (329) continuing operations (595) 192
----------------------- -------------
Innovene operations
- - (301) UK (325) (5)
- - (224) Rest of Europe (224) -
- - (208) USA (208) -
- - (26) Rest of World (26) -
----------------------- -------------
Total before taxation for
- - (759)(a) Innovene operations (783)(a) (5)
- - 167 Taxation credit (charge) 177 2
----------------------- -------------
Total after taxation for
- - (592) Innovene operations (606) (3)
----------------------- -------------
(394) (822) (921) Total after taxation for period (1,201) 189
======================= =============
(a) Includes the loss on re-measurement to fair value of $724 million in
the third quarter and impairment charges of $24 million and $35 million
in the first and third quarters of 2005, respectively.
Depreciation of Fixed Asset Revaluation Adjustment
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Exploration and Production
6 12 6 UK 25 25
98 70 64 USA 211 281
4 3 5 Rest of World 12 16
----------------------- -------------
108 85 75 248 322
----------------------- -------------
Refining and Marketing
31 31 31 USA 93 93
----------------------- -------------
31 31 31 93 93
----------------------- -------------
Total depreciation of revaluation
139 116 106 adjustment (a)(b) 341 415
======================= =============
(a) Relates to the revaluation adjustment consequent upon the ARCO
acquisition.
(b) Excludes impairment of the revaluation adjustment which is included in
non-operating items.
Net Debt Ratio - Net Debt: Net Debt + Equity
Third Second Third
Quarter Quarter Quarter 30 September
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
20,445 19,302 22,159 Gross debt 22,159 20,445
1,741 1,360 2,182 Cash and cash equivalents 2,182 1,741
----------------------- --------------
18,704 17,942 19,977 Net debt 19,977 18,704
======================= ==============
75,114 80,097 82,726 Equity 82,726 75,114
20% 18% 19% Net debt ratio 19% 20%
======================= ==============
Production and Realizations
Third Second Third
Quarter Quarter Quarter Nine months
2004 2005 2005 2005 2004
======================= ==============
Production (a)
Crude oil (mb/d) (net of royalties)
281 290 224 UK 267 315
68 73 64 Rest of Europe 71 74
495 546 427 USA 511 533
1,454 1,528 1,598 Rest of World 1,536 1,398
----------------------- -------------
2,298 2,437 2,313 Total crude oil production 2,385 2,320
======================= =============
Natural gas liquids (mb/d) (net of royalties)
13 20 12 UK 16 18
3 4 4 Rest of Europe 4 4
134 127 113 USA 125 138
31 31 30 Rest of World 31 30
----------------------- -------------
Total natural gas
181 182 159 liquids production 176 190
======================= =============
Liquids (b)(mb/d) (net of royalties)
294 310 236 UK 283 333
71 77 68 Rest of Europe 75 78
629 673 540 USA 636 671
1,485 1,559 1,628 Rest of World 1,567 1,428
----------------------- -------------
2,479 2,619 2,472 Total liquids production 2,561 2,510
======================= =============
Natural gas (mmcf/d) (net of royalties)
903 1,136 831 UK 1,068 1,156
110 106 99 Rest of Europe 109 129
2,685 2,727 2,456 USA 2,610 2,781
4,577 4,692 4,455 Rest of World 4,625 4,367
----------------------- -------------
8,275 8,661 7,841 Total natural gas production 8,412 8,433
======================= =============
Average realizations (c)
Crude oil ($/bbl)
40.33 48.76 57.77 UK 50.15 34.21
39.52 49.27 56.64 USA 49.15 35.87
38.01 44.57 55.89 Rest of World 47.68 33.83
39.43 47.79 56.83 BP Average 49.07 34.93
======================= =============
Natural gas liquids ($/bbl)
34.29 34.34 47.49 UK 36.03 28.84
27.59 28.04 36.39 USA 30.15 24.31
30.63 33.77 32.97 Rest of World 32.63 25.81
28.77 29.86 36.70 BP Average 31.30 25.13
======================= =============
Liquids (a) ($/bbl)
40.06 47.83 57.26 UK 49.35 33.92
37.46 45.92 53.17 USA 46.05 33.96
37.53 43.94 54.63 Rest of World 46.79 33.30
38.29 45.95 54.80 BP Average 47.22 33.89
======================= =============
Natural gas ($/mcf)
3.60 4.82 4.45 UK 5.01 4.03
4.94 5.83 6.77 USA 5.95 4.92
2.71 3.20 3.43 Rest of World 3.24 2.64
3.66 4.38 4.75 BP Average 4.45 3.71
======================= =============
(a) Includes BP's share of production of equity-accounted entities.
(b) Crude oil and natural gas liquids.
(c) Based on turnover of consolidated subsidiaries only - this excludes
equity-accounted entities.
Notes
1. Transition to International Financial Reporting Standards
For all periods up to and including the year ended 31 December 2004, BP
prepared its financial statements in accordance with UK generally
accepted accounting practice (UK GAAP). From 1 January 2005 BP is
required to prepare consolidated financial statements in accordance with
International Financial Reporting Standards (IFRS) as endorsed by the
European Commission ('EC'). Consequently, financial information for
interim quarters of 2005 must be prepared on the basis of IFRS.
The general principle that should be applied on first-time adoption of
IFRS is that standards in force at the first reporting date (that is,
for BP, 31 December 2005) should be applied retrospectively. However,
IFRS 1 'First-time Adoption of International Financial Reporting
Standards' contains a number of exemptions which companies are permitted
to apply. BP has elected:
- not to present comparative information in accordance with IAS 32
'Financial Instruments: Disclosure and Presentation' and IAS 39
'Financial Instruments: Recognition and Measurement'.
- not to restate its financial information for acquisitions occurring
before 1 January 2003.
- to deem cumulative translation differences to be zero at 1 January
2003.
- to recognize all actuarial gains and losses on pensions and other
post-retirement benefits directly in shareholders' equity at 1
January 2003. This is consistent with the group's adoption of FRS 17
'Retirement Benefits' in 2004.
- to apply IFRS 2 'Share-based Payment' retrospectively to all share-
based payments.
As a result of the above exemptions certain changes apply from 1 January
2003 (BP's Date of Transition) followed by further changes (due to IAS
32 and IAS 39) to apply from 1 January 2005.
The quarterly information for 2005 and the restatement of financial
information for the year ended 31 December 2004 and the interim quarters
of 2004 have been prepared on the basis of all International Financial
Reporting Standards (IFRSs) (with the exception of IAS 32 and IAS 39 (as
amended) for the 2004 information) and Standing Interpretations
Committee (SIC) and International Financial Reporting Interpretations
Committee (IFRIC) interpretations issued by the International Accounting
Standards Board (IASB) expected to be in effect for the year ending 31
December 2005. It is possible that there will be changes to these
standards and interpretations before the end of 2005, which might
require further adjustments to this information before it is included in
the 2005 Annual Report and Accounts. In addition, BP has decided to
early adopt IFRS 6 'Exploration for and Evaluation of Mineral
Resources', the amendment to IAS 19 'Amendment to international
accounting standard IAS 19 Employee Benefits: Actuarial Gains and
Losses, Group Plans and Disclosures', the amendment to IAS 39 'Financial
Instruments: Recognition and Measurement - Cash Flow Hedge Accounting of
Forecast Intra-group Transactions' and IFRIC 4 'Determining whether an
Arrangement contains a Lease'.
In the restatement information for the year ended 31 December 2004 and
the interim quarters of 2004 financial assets and financial liabilities
are accounted for on the basis of UK GAAP.
Under UK GAAP, all derivatives used for trading purposes are recognized
on the balance sheet at fair value. However, derivative financial
instruments used for hedging purposes are recognized by applying either
the accrual method or the deferral method. Under the accrual method,
amounts payable or receivable in respect of derivatives are recognized
rateably in earnings over the period of the contracts. Changes in the
derivative's fair value are not recognized. On the deferral method,
gains and losses from derivatives are deferred and recognized in
earnings or as adjustments to carrying amounts as the underlying hedged
transaction matures or occurs.
From 1 January 2005 for IFRS all financial assets and financial
liabilities have to be recognized initially at fair value. In
subsequent periods the measurement of these financial instruments
depends on their classification into one of the following measurement
categories: i) financial assets or financial liabilities at-fair-value-
through-profit-and-loss (such as those used for trading purposes, and
all derivatives which do not qualify for hedge accounting); ii) loans
and receivables; iii) available-for-sale financial assets (including
certain investments held for the long term) and iv) other liabilities.
The effect of adopting IAS 39 at 1 January 2005 is shown as a movement
in BP shareholders' equity for 2005.
Notes
1. Transition to International Financial Reporting Standards (continued)
The principal differences for the group between reporting on the basis
of UK GAAP and IFRS are as follows:
- ceasing to amortize goodwill.
- setting up deferred taxation on:
- acquisitions;
- inventory valuation differences;
- unremitted earnings of subsidiaries, associates and jointly
controlled entities.
- expensing a greater proportion of major maintenance costs.
- no longer recognizing dividends proposed but not declared as a
liability at the balance sheet date.
- recognizing an expense for the fair value of employee share option
schemes rather than the intrinsic value.
- recording asset swaps on the basis of fair value.
- embedded derivatives measured at fair value.
BP has produced an explanatory note setting out its accounting policies
under IFRS, the major differences between UK GAAP and IFRS for BP, and
reconciliations of UK GAAP to IFRS for its 2003 and 2004 Income and Cash
Flow Statements, its Balance Sheets at 1 January 2003, 31 December 2003,
31 December 2004 and 1 January 2005. This information can be found at
the Investor Centre www.bp.com. In addition, the reconciliations for
2004 interim periods included in this report are shown below.
Third Nine
Quarter Months
2004 2004
=====================
$ million
Profit for the period under UK GAAP 4,541 13,351
Adjustments
Goodwill amortization 361 1,077
Major maintenance expenditure (35) (123)
Share-based payments (74) (109)
Asset swaps 1 3
Recycling foreign exchange on disposal - 78
Deferred tax 104 (50)
Other (28) (34)
---------------------
Profit for the period under IFRS 4,870 14,193
=====================
30 September
2004
=======
$ million
BP shareholders' equity under UK GAAP 74,941
Adjustments
Goodwill amortization 2,499
Major maintenance expenditure (667)
Share-based payments (299)
Asset swaps (139)
Deferred tax (3,971)
Dividend accrual 1,536
Other (69)
-------
BP shareholders' equity under IFRS 73,831
=======
Notes
2. Resegmentation
With effect from 1 January 2005 there have been the following changes to
the business segments reported by the group.
(a) Our petrochemicals operations were divided between the Refining and
Marketing segment and Other businesses and corporate. The
Aromatics and Acetyls businesses and the petrochemicals assets that
are integrated with our Gelsenkirchen refinery in Germany became
part of Refining and Marketing. The Olefins and Derivatives
business was reported within Other businesses and corporate. This
segment was also restated to include the legacy historical
results of other petrochemicals assets that had been divested
during 2004. In addition we also combined our Grangemouth and
Lavera refineries into the Olefins and Derivatives business to
maintain current operating synergies. As indicated below we have
agreed to sell our Olefins and Derivatives business and have
categorized the majority of this business as discontinued
operations.
(b) A small US operation, the Hobbs fractionator, which supplies
petrochemicals feedstock, has been transferred from Gas, Power and
Renewables to Olefins and Derivatives.
(c) The Mardi Gras pipeline system in the Gulf of Mexico has been
transferred from Exploration and Production to Refining and
Marketing.
Comparative financial and operating information is shown after
resegmentation and the adoption of International Financial Reporting
Standards. Further information regarding these adjustments can be found
at the BP investor centre www.bp.com.
3. Sale of Olefins and Derivatives business
BP announced on 7 October 2005, its intention to sell Innovene, its
olefins, derivatives and refining group to UK-based INEOS for $9 billion
in cash. The transaction, which is subject to regulatory approvals,
includes all Innovene's manufacturing sites, markets and technologies.
The equity-accounted investments in China and Malaysia which were part
of the Olefins and Derivatives business will remain with BP and are
included within Other businesses and corporate.
The proposed sale was sufficiently well advanced at the end of September
for the Innovene operations to be classified as a 'disposal group' and
for the assets and related liabilities to be shown as held for sale at
30 September. In these circumstances the Innovene operations should be
carried on the group's balance sheet at the lower of cost and fair value
less costs to sell. The re-measurement to fair value resulted in a loss
of $724 million before tax.
The Innovene operations represent a separate major line of business for
BP. As a result of the proposed sale, these operations have been treated
as discontinued operations at 30 September 2005. A single amount is
shown on the face of the income statement comprising the post-tax result
of discontinued operations and the post-tax loss recognized on the re-
measurement to fair value less costs to sell of the discontinued
operation. That is, the income and expenses of Innovene are reported
separately from the continuing operations of the BP group. The table
below provides further detail of the amount shown on the income
statement. The income statements for prior periods have been restated to
conform this style of presentation.
In the cash flow statement the cash provided by the operating activities
of Innovene has been separated from that of the rest of the group and
reported as a single line item.
Notes
3. Sale of Olefins and Derivatives business (continued)
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Profit before tax from
231 293 99 Innovene operations 924 447
Net profit on transactions
between continuing and
(89) (159) (144) Innovene operations (399) (157)
----------------------- ---------------
142 134 (45) Profit before taxation 525 290
Loss recognized on the
re-measurement to
- - (724) fair value (724) -
----------------------- ---------------
142 134 (769) (199) 290
Taxation
Related to profit
(59) (31) (56) before tax (220) (119)
Related to re-measurement
- - 159 to fair value 159 -
----------------------- ---------------
Profit (loss) from
83 103 (666) Innovene operations (260) 171
======================= ===============
Notes
4. Sales and other operating revenues
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
By business
8,601 10,934 11,321 Exploration and Production 32,441 24,870
46,639 61,022 68,790 Refining and Marketing 181,458 141,795
20,443 23,110 28,917 Gas, Power and Renewables 75,694 59,852
Other businesses
137 174 161 and corporate 507 390
----------------------- ---------------
Sales by continuing
75,820 95,240 109,189 operations 290,100 226,907
Less: sales between
7,873 7,843 8,511 businesses 24,723 21,367
sales to Innovene
2,183 3,926 4,158 operations 10,197 5,956
----------------------- ---------------
Third party sales of
65,764 83,471 96,520 continuing operations 255,180 199,584
======================= ===============
By geographical area
20,355 29,998 37,406 UK 92,233 52,075
11,499 16,916 16,904 Rest of Europe 49,644 32,309
30,476 38,115 45,759 USA 116,818 94,037
16,552 20,028 19,595 Rest of World 58,237 47,806
----------------------- ---------------
Sales by continuing
78,882 105,057 119,664 operations 316,932 226,227
10,935 17,660 18,986 Less: sales between areas 51,555 20,687
sales to Innovene
2,183 3,926 4,158 operations 10,197 5,956
----------------------- ---------------
65,764 83,471 96,520 255,180 199,584
======================= ===============
Notes
5. Operating profits are after charging:
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Exploration expense
4 13 3 UK 21 9
7 - 1 Rest of Europe 2 15
58 85 120 USA 308 218
66 41 53 Rest of World 145 137
----------------------- --------------
135 139 177 476 379
======================= ==============
Production and similar taxes (a)
51 153 95 UK 362 223
502 544 739 Overseas 1,818 1,279
----------------------- --------------
553 697 834 2,180 1,502
======================= ==============
(a) Production taxes are charged against Exploration and Production's
operating profit.
6. Interest payable
161 204 237 Group interest payable 632 456
(57) (76) (93) Capitalized (245) (159)
----------------------- --------------
104 128 144 387 297
Early redemption of finance
- - - leases 57 -
----------------------- --------------
104 128 144 444 297
======================= ==============
7. Other finance expense
Interest on pension and other
post-retirement benefit
502 509 502 plan liabilities 1,525 1,493
Expected return on pension
and other post-retirement
(493) (542) (528) benefit plan assets (1,617) (1,482)
----------------------- --------------
Interest net of expected return
9 (33) (26) on plan assets (92) 11
Unwinding of discount
48 50 49 on provisions 144 146
Unwinding of discount on
deferred consideration for
acquisition of investment
22 17 14 in TNK-BP 48 74
----------------------- --------------
79 34 37 100 231
======================= ==============
Notes
8. Dividends paid
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
Dividends per ordinary share
7.10 8.50 8.925 cents 25.925 20.6
3.860 4.450 5.119 pence 14.091 11.341
42.6 51.0 53.55 Dividends per ADS (cents) 155.55 123.6
======================= ==============
9. Analysis of changes in net debt
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
$ million $ million
Opening balance
19,858 19,564 19,302 Finance debt 23,091 22,325
Less: Cash and cash
1,590 1,521 1,360 equivalents 1,359 2,056
----------------------- ---------------
18,268 18,043 17,942 Opening net debt 21,732 20,269
----------------------- ---------------
Closing balance
20,445 19,302 22,159 Finance debt 22,159 20,445
Less: Cash and cash
1,741 1,360 2,182 equivalents 2,182 1,741
----------------------- ---------------
18,704 17,942 19,977 Closing net debt 19,977 18,704
----------------------- ---------------
Decrease (increase)
(436) 101 (2,035) in net debt 1,755 1,565
======================= ===============
Movement in cash and cash
equivalents (excluding
130 (161) 896 exchange adjustments) 906 (328)
Net cash outflow (inflow)
from financing(excluding
(563) 380 (3,060) share capital) 867 2,104
- - - Adoption of IAS 39 (147) -
- 17 8 Fair value hedge adjustment 123 -
10 53 33 Other movements 135 31
----------------------- --------------
Movement in net debt before
(423) 289 (2,123) exchange effects 1,884 1,807
(13) (188) 88 Exchange adjustments (129) (242)
----------------------- --------------
Decrease (increase)
(436) 101 (2,035) in net debt 1,755 1,565
======================= ==============
Notes
10. TNK-BP Operational and Financial Information
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
Production (Net of royalties)
(BP share)
858 903 930 Crude oil (mb/d) 903 813
505 429 449 Natural gas (mmcf/d) 468 446
945 977 1,007 Total hydrocarbons (mboe/d)(a) 983 889
======================= ==============
$ million $ million
Income statement (BP share)
807 920 1,253 Profit before interest and tax 2,788 1,762
(23) (32) (37) Interest expense * (98) (79)
(222) (227) (347) Taxation (741) (491)
(6) (20) (46) Minority interest (74) (26)
----------------------- --------------
556 641 823 Net Income 1,875 1,166
======================= ==============
* Excludes unwinding of discount
22 17 14 on deferred consideration 48 74
======================= ==============
Cash Flow
Additional investment in
- - - TNK-BP joint venture - (1,416)
Dividends related to period
23 - - prior to acquisition - 166
----------------------- --------------
Net investment in TNK-BP
23 - - joint venture - (1,250)
======================= ==============
1,031 425 750 Dividends received (b) 1,425 1,150
======================= ==============
Third Second Third
Quarter Quarter Quarter Nine Months
2004 2005 2005 2005 2004
======================= ==============
Average oil marker prices ($/bbl)
37.23 48.08 57.13 Urals (NWE - cif) 49.30 32.85
37.41 48.49 57.39 Urals (Med - cif) 49.75 33.00
23.33 27.39 36.60 Domestic Oil 27.77 20.04
======================= ==============
Balance Sheet 30 September 31 December
2005 2004
==========================
Investments in jointly controlled entities 8,744 8,294
==========================
Deferred consideration
Due within one year 1,219 1,227
Due after more than one year - 1,194
--------------------------
1,219 2,421
==========================
(a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
million barrels.
(b) Dividends received since the inception of the TNK-BP joint venture are
$3,649 million (including $464 million relating to the period prior to
completion of the acquisition).
TNK-BP operational and financial information has been estimated and includes
adjustments to net income in respect of prior periods amounting to a charge of
$8 million in 3Q 2005 and a charge of $14 million in nine months 2005.
As reported at previous quarters, various TNK-BP group companies had received
tax notifications totalling approximately $1 billion in respect of 2001.
Significant progress was made during this quarter towards resolving these
matters. Claims totalling approximately $870 million have been settled by TNK-BP
for approximately $250 million, with the lower courts also finding in favour of
TNK-BP in early October in respect of a claim totalling $143 million. BP's share
of these settlements is covered by indemnities that BP had received from its
co-venturers on entering into the joint venture arrangement. Audits of tax
years 2002 and 2003 are currently ongoing, and no tax notifications in respect
of these periods have as yet been issued.
Notes
11. Equity-accounted entities
The group's profit for the period includes the following in respect of
equity-accounted entities.
RC profit Profit
(loss) Inventory (loss)
before holding before
interest gains interest
and tax (losses) and tax
---------------------------------------
$ million
Third Quarter 2005
Exploration and Production 1,523 - 1,523
Refining and Marketing 126 4 130
Gas, Power and Renewables (2) - (2)
Other businesses and corporate 62 - 62
---------------------------------------
Continuing operations 1,709 4 1,713
Innovene operations - - -
---------------------------------------
1,709 4 1,713
=======================================
Second Quarter 2005
Exploration and Production 1,163 - 1,163
Refining and Marketing 72 (10) 62
Gas, Power and Renewables 9 - 9
Other businesses and corporate 2 (5) (3)
---------------------------------------
Continuing operations 1,246 (15) 1,231
Innovene operations 3 - 3
---------------------------------------
1,249 (15) 1,234
=======================================
Third Quarter 2004
Exploration and Production 980 - 980
Refining and Marketing 123 (7) 116
Gas, Power and Renewables 6 - 6
Other businesses and corporate 21 (6) 15
---------------------------------------
Continuing operations 1,130 (13) 1,117
Innovene operations 6 2 8
---------------------------------------
1,136 (11) 1,125
=======================================
Notes
11. Equity-accounted entities (continued)
Profit
(loss)
Minority for the
Interest Tax interest period
----------------------------------------
$ million
Third Quarter 2005
Exploration and Production (63) (421) (46) 993
Refining and Marketing (6) (23) - 101
Gas, Power and Renewables (1) (4) - (7)
Other businesses and corporate (17) - - 45
---------------------------------------
Continuing operations (87) (448) (46) 1,132
Innovene operations - - - -
---------------------------------------
(87) (448) (46) 1,132
=======================================
Second Quarter 2005
Exploration and Production (56) (289) (20) 798
Refining and Marketing (5) (13) - 44
Gas, Power and Renewables (3) (1) - 5
Other businesses and corporate (1) - - (4)
---------------------------------------
Continuing operations (65) (303) (20) 843
Innovene operations - - - 3
---------------------------------------
(65) (303) (20) 846
=======================================
Third Quarter 2004
Exploration and Production (45) (273) (6) 656
Refining and Marketing (4) (22) - 90
Gas, Power and Renewables (2) (1) - 3
Other businesses and corporate (1) - - 14
---------------------------------------
Continuing operations (52) (296) (6) 763
Innovene operations (3) - - 5
---------------------------------------
(55) (296) (6) 768
=======================================
11. Equity-accounted entities (continued)
RC profit Profit
(loss) Inventory (loss)
before holding before
interest gains interest
and tax (losses) and tax
---------------------------------------
$ million
Nine Months 2005
Exploration and Production 3,527 - 3,527
Refining and Marketing 274 (10) 264
Gas, Power and Renewables 12 - 12
Other businesses and corporate 63 (5) 58
---------------------------------------
Continuing operations 3,876 (15) 3,861
Innovene operations 3 - 3
---------------------------------------
3,879 (15) 3,864
=======================================
Nine Months 2004
Exploration and Production 2,357 - 2,357
Refining and Marketing 293 (14) 279
Gas, Power and Renewables 8 - 8
Other businesses and corporate 69 (23) 46
---------------------------------------
Continuing operations 2,727 (37) 2,690
Innovene operations (16) 8 (8)
---------------------------------------
2,711 (29) 2,682
=======================================
Profit
(loss)
Minority for the
Interest Tax interest period
----------------------------------------
$ million
Nine Months 2005
Exploration and Production (171) (937) (74) 2,345
Refining and Marketing (16) (54) - 194
Gas, Power and Renewables (6) (7) - (1)
Other businesses and corporate (21) - - 37
---------------------------------------
Continuing operations (214) (998) (74) 2,575
Innovene operations - - - 3
---------------------------------------
(214) (998) (74) 2,578
=======================================
Nine Months 2004
Exploration and Production (141) (653) (26) 1,537
Refining and Marketing (12) (58) - 209
Gas, Power and Renewables (5) (1) - 2
Other businesses and corporate (3) - - 43
---------------------------------------
Continuing operations (161) (712) (26) 1,791
Innovene operations (3) - - (11)
---------------------------------------
(164) (712) (26) 1,780
=======================================
Notes
12. Fourth quarter results
BP's fourth quarter results will be announced on 7 February 2006.
13. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 2004 Annual Report and
Accounts have been delivered to the UK Registrar of Companies; the
report of the auditors on those accounts was unqualified.
Contacts
London United States
-------------- --------------
Press Office Roddy Kennedy Ronnie Chappell
+44 (0)20 7496 4624 +1 281 366 5174
Investor Relations Fergus MacLeod Rachael MacLean
+44 (0)20 7496 4717 +1 212 451 8072
http://www.bp.com/investors
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