SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended March 31, 2003
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
----------------- -----------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
----------------- -----------------
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO.
333-9790) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM F-3 (FILE NO. 333-65996) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 333-83180) OF BP AUSTRALIA CAPITAL
MARKETS LIMITED, BP CANADA FINANCE COMPANY, BP CAPITAL MARKETS p.l.c., BP
CAPITAL MARKETS AMERICA INC. AND BP p.l.c., THE REGISTRATION STATEMENT ON FORM
S-8 (FILE NO. 33-21868) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8
(FILE NO. 333-9020) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE
NO. 333-9798) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-79399) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-34968) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-67206) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-74414) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-103924) OF BP p.l.c., THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-102583) OF BP p.l.c. AND THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-103923) OF BP p.l.c., AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS
REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS
SUBSEQUENTLY FILED OR FURNISHED.
Page 1
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GROUP RESULTS JANUARY - MARCH 2003
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Turnover 63,788 36,290
====== ======
Profit for the period 4,267 1,296
Exceptional items, net of tax (340) 70
------ ------
Profit before exceptional items 3,927 1,366
====== ======
Per Ordinary Share - cents
Profit for the period 19.11 5.78
====== ======
Dividends per Ordinary Share - cents 6.25 5.75
====== ======
The following discussion should be read in conjunction with the consolidated
financial statements and the related notes provided elsewhere in this Form 6-K
and with the information, including the consolidated financial statements and
related notes, for the year ended December 31, 2002 in BP p.l.c.'s Annual Report
on Form 20-F for the year ended December 31, 2002.
The first quarter trading environment was significantly more favourable than a
year ago for both Exploration and Production and Refining and Marketing. The
Brent oil price increased more than $10.00 per barrel; the Henry Hub gas price
and the refining Global Indicator Margin were more than double the level of a
year ago.
Turnover for the three months ended March 31, 2003 was $63,788 million compared
with $36,290 million for 2002. The increase in turnover for the first quarter
reflects higher oil, natural gas and product prices, higher production, higher
sales volumes and a stronger Euro.
Profit for the three months ended March 31, 2003 was $4,267 million, compared
with $1,296 million in the same period of 2002.
Exceptional items are gains and losses on the sale of fixed assets and
businesses or terminations of operations. Net exceptional gains in the first
quarter of 2003 were $394 million ($340 million after tax) and principally
relate to net gains from the sale of certain upstream interests. Net exceptional
losses in the first quarter of 2002 were $109 million ($70 million after tax)
and included the loss on closure of certain polypropylene facilities in Texas.
Profit before exceptional items was $3,927 million for the three months ended
March 31, 2003, compared with $1,366 million for the equivalent period of 2002.
BP average liquids and natural gas realizations were up by more than half
compared with a year ago, with significant improvement in refining margins and
US retail margins. Improved volumes and cost efficiencies were also reflected in
the first quarter results.
For the three months ended March 31, 2003 and 2002, inventory holding gains were
$799 million and $473 million, respectively. Inventory holding gains or losses
represent the difference between the replacement cost of sales and the
historical cost of sales calculated using the first-in first-out method.
Profit before exceptional items for the three months ended March 31, 2003 is
after charging impairment of $103 million related to the Yacheng field in China,
costs of $90 million in respect of our restructuring activities in North America
and the UK and a $49 million write-down of the Viscount asset in the North Sea
in Exploration and Production; $18 million Veba integration costs in Refining
and Marketing and includes a $130 million credit related to tax restructuring
benefits. Profit before exceptional items for the three months ended March 31,
2002 is after charging severance costs of $72 million resulting from
restructuring in North America and the North Sea and litigation costs of $55
million in Exploration and Production; Veba integration costs of $26 million in
Refining and Marketing, and costs of $32 million related to major site
restructuring and Solvay and Erdolchemie integration in Chemicals.
Page 2
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Interest expense for the three months ended March 31, 2003 was $220 million
compared with $333 million in the same period of 2002, reflecting lower average
debt and lower interest rates.
Net taxation, other than production taxes, charged for the three months ended
March 31, 2003 was $1,805 million compared with $753 million in the equivalent
period last year. The tax on exceptional items was $54 million compared with a
credit of $39 million for the first quarter of 2002. The effective tax rate was
30% for the three months ended March 31, 2003, compared with 36% for the
equivalent period of 2002. The reduction in the rate reflects increased tax
restructuring benefits, higher inventory holding gains (which are not taxable in
certain jurisdictions), a rateably lower impact of goodwill amortization and the
depreciation charge on uplifted asset values (for which no tax deduction is
available), and nil tax charge on certain upstream disposals in the first
quarter of 2003.
Capital expenditure in the first quarter of 2003 was $2.9 billion; there were no
acquisitions during the quarter. Capital expenditure and acquisitions for the
first quarter of 2002 was $5.7 billion, including $2.6 billion for the
acquisition of 51% of Veba Oil; excluding acquisitions capital expenditure was
$3.1 billion. Disposal proceeds in the first quarter of 2003 were $2.5 billion
compared with $0.3 billion for the equivalent period in 2002.
Net cash inflow for the three months ended March 31, 2003 was $3.2 billion,
compared with an outflow of $2.4 billion for the equivalent period of 2002,
reflecting higher operating cash flow, higher disposal proceeds and lower
acquisition spending. Net cash inflow from operating activities was $6.0 billion
for the three months ended March 31, 2003, compared with $3.6 billion in the
equivalent period in 2002, reflecting higher profit and depreciation partly
offset by a higher requirement for working capital.
Net debt at March 31, 2003 was $17.7 billion compared with $20.3 billion at
December 31, 2002. The ratio of net debt to net debt plus equity was 20% at
March 31, 2003 compared with 22% at December 31, 2002. This ratio shows the
proportion of debt and equity used to finance our operations, and can also be
used to measure borrowing capacity. In addition to reported debt, BP uses
conventional off balance sheet sources of finance such as operating leases and
joint venture and associated undertaking borrowings.
The Group has access to other sources of liquidity in the form of committed
facilities and other funding through the capital markets. BP believes that,
taking into account the substantial amounts of undrawn borrowing facilities
available, the Group has sufficient working capital for foreseeable
requirements.
In the normal course of business the Group has entered into certain long term
purchase commitments principally relating to take or pay contracts for the
purchase of natural gas, crude oil and chemicals feedstocks and throughput
arrangements for pipelines. The Group expects to fulfil its obligations under
these arrangements with no adverse consequences to the Group's results of
operations or financial condition.
The return on average capital employed was 19% for the first quarter of 2003
compared with 7% for the same period in 2002. Return on average capital employed
is the ratio of profit including minority shareholders' interest and excluding
post-tax interest on finance debt to average capital employed for the period.
Capital employed is the total of BP shareholders' interest, minority
shareholders' interest and finance debt. This performance measure is useful for
shareholders and management as an indication of capital productivity over the
long term. For further information on the return on average capital employed
calculation see page 51 of this report.
BP announced a first quarterly dividend for 2003 of 6.25 cents per ordinary
share. Holders of ordinary shares will receive 3.947 pence per share and holders
of American Depositary Receipts (ADRs) $0.375 per ADS. The dividend is payable
on June 9, 2003 to shareholders on the register on May 16, 2003. Participants in
the Dividend Reinvestment Plan or the dividend reinvestment facility in the US
Direct Access Plan will receive the dividend in the form of shares, also on June
9, 2003. The company repurchased for cancellation 155 million of its own shares
during the quarter, at a cost of $999 million.
Page 3
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
DETAILED REVIEW OF BUSINESSES (EXCLUDING EXCEPTIONAL ITEMS)
EXPLORATION AND PRODUCTION
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Turnover - $m 9,068 5,638
Total operating profit - $m 4,332 1,931
Results include:
Exploration expense - $m 112 124
Of which: Exploration expenditure written off - $m 50 59
Key Statistics:
Liquids(a) Average prices realized by BP - $/bbl 29.82 18.77
Production - mb/d 2,063 1,989
Natural gas Average prices realized by BP - $/mcf 3.87 2.27
Production - mmcf/d 9,017 8,746
Brent oil price - $/bbl 31.47 21.13
West Texas Intermediate oil price - $/bbl 34.00 21.54
Alaska North Slope US West Coast - $/bbl 33.16 19.76
Henry Hub gas price (b) - $/mmBtu 6.53 2.35
UK Gas - National Balancing Point - p/therm 21.28 19.22
---------------
(a) Crude oil and natural gas liquids
(b) Henry Hub First of the Month Index
(c) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1
million barrels.
Turnover for the three months ended March 31, 2003 was $9,068 million compared
with $5,638 million in the corresponding period in 2002, reflecting higher
liquids and natural gas realizations as well as increased production.
Operating profit for the three months ended March 31, 2003 was $4,332 million
compared with $1,931 million for the equivalent period in 2002. The result for
the first quarter 2003 is after charging impairment of $103 million related to
the Yacheng field in China, costs of $90 million in respect of restructuring
activities in North America and the UK and a $49 million write-down of the
Viscount asset in the North Sea. The result for the first quarter of 2002 is
after charging severance costs of $72 million resulting from restructuring in
North America and the North Sea and litigation costs of $55 million.
The result for the quarter benefited from strong realizations, with liquids up
$11.05/bbl and natural gas up $1.60/mcf on a year ago. North American natural
gas realizations lagged the increase in the Henry Hub marker price, as the
effects of cold weather and low inventories were partly offset by an increase in
regional differentials caused by pipeline constraints. The improved realizations
were partly offset by a charge of $125 million for Unrealized Profit in Stock
(UPIS) to remove the additional upstream margin from downstream inventories
following an increase in the Alaska North Slope oil price. This compares to a
charge of $56 million in the equivalent quarter last year.
First quarter production was a record, increasing by over 3% to 3,618 mboe/d
compared with a year ago as a result of the ramp up of production in the
Deepwater Gulf of Mexico and Trinidad as new projects continue to be added, and
the impact of our increased interest in Sidanco, partly offset by declines in
mature areas. The impact of acquisition and divestment activity over the past
year has had a broadly neutral effect on the quarter on quarter comparison.
On April 1, 2003 two new discoveries were announced in Angola's deep offshore
Block 17: Acacia-1 and Hortensia-1. During the quarter we approved the
development of the Shah Deniz project in Azerbaijan, Greater Plutonio and Dalia
in Angola and Rhum in the North Sea.
Page 4
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
EXPLORATION AND PRODUCTION (concluded)
We completed in the quarter the divestment of shallow water Gulf of Mexico
assets to Apache and the exchange of our interest in Block A-18 in the Malaysia
Thailand Joint Development Area for Amerada Hess's interests in Colombia. In
addition, we completed the sale of other US assets. On April 2, 2003 we
completed the sale of the Forties oil field in the North Sea to Apache. In
February, we announced agreements with Perenco to sell a package of North Sea
gas production assets and interests in Boqueron and Desarrollo Zuli Occidental
(DZO) in Venezuela.
In February, we called for redemption our $420 million Exchangeable Bonds, which
were exchangeable for Lukoil ADSs. Bondholders converted to ADSs before the
redemption date. This transaction completed the monetization of our stake in the
Russian oil company Lukoil. The stake in Lukoil was obtained through the
acquisition of ARCO.
Repsol exercised their option in January to acquire a further 20% of our
upstream interests in Trinidad. Our interest in BP Trinidad and Tobago LLC is
now 70% and the transaction provides further leverage to access the gas markets
and growth opportunities in Spain. We also sold 12.5% of the Tangguh liquefied
natural gas project to China National Offshore Oil Corporation as part of our
strategy to serve gas markets in Southern China.
Page 5
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
GAS, POWER AND RENEWABLES
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Turnover - $m 17,998 7,768
Total operating profit - $m 221 115
Turnover for the three months ended March 31, 2003 was $17,998 million, compared
with $7,768 million for the same period in 2002. The increase for the quarter
reflects higher natural gas prices and sales volumes.
Operating profit for the three months ended March 31, 2003 was $221 million
compared with $115 million for the same period in 2002. The result reflects
improved marketing and trading and natural gas liquids performance, partly
offset by the absence of a contribution from Ruhrgas.
Marketing margins were up significantly in North America as a result of
prolonged cold weather in the northeast and midwest markets and an unusually
large draw-down of gas in storage. In addition, North American gas volumes were
35% above the same period last year. The global LNG business continued to grow
profitably as supply and shipping flexibility allowed the capture of additional
business in Asia and the USA. In Spain, the Bilbao electricity generation plant
(BP 25%) was commissioned as part of our gas to power strategy. The LNG ship
British Innovator was delivered on March 29, 2003.
The first quarter natural gas liquids result was up due to higher liquids prices
and improved margins on winter propane sales, partly offset by the negative
processing margins that resulted from gas prices increasing more than liquids
prices.
In Renewables, our solar business launched a new branded offer in California in
the USA.
Page 6
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
REFINING AND MARKETING
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Turnover - $m 41,435 24,889
Total operating profit - $m 1,251 563
Total refined product sales - mb/d 6,804 6,500
Refinery throughputs - mb/d 3,024 2,994
Global Indicator Refining Margin (a) - $/bbl 4.52 1.64
---------------
(a) The Global Indicator Refining Margin (GIM) is the average of seven regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude
with product yields characteristic of the typical level of upgrading
complexity.
Turnover for the three months ended March 31, 2003 was $41,435 million compared
with $24,889 million for the same period in the prior year. The increase in
turnover for the first quarter is principally due to a stronger Euro, higher
product prices and an additional month of contribution from Veba.
Operating profit for the three months ended March 31, 2003 was $1,251 million
compared with $563 million for the corresponding period of 2002. The result for
the first quarter of 2003 includes inventory holding gains of $620 million and
is after charging Veba integration costs of $18 million. The result for the
first quarter of 2002 includes inventory holding gains of $495 million and was
after charging Veba integration costs of $26 million.
The increase in the result reflects improved worldwide refining margins, with
some offset from higher utility costs. Refining throughputs increased by 1%.
During the quarter, BP commissioned three new clean fuels units.
The marketing environment reflected margins at normal levels, with US retail
margins significantly up from the depressed levels of a year ago. Marketing
volumes were flat compared with a year ago.
During the quarter, an additional 600 sites were reimaged, bringing the total
number of sites with the BP Helios to some 11,000 worldwide.
Page 7
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
CHEMICALS
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Turnover - $m 3,938 2,642
Total operating profit - $m 285 47
Production (a) - kte 6,980 6,611
Chemicals Indicator Margin (b) - $/te 90(c) 80
--------------
(a) Includes BP share of joint ventures, associated undertakings and other
interests in production.
(b) The Chemicals Indicator Margin (CIM) is a weighted average of externally
based product margins. It is based on market data collected by Nexant
(formerly Chem Systems) in their quarterly market analyses, then weighted
based on BP's product portfolio. While it does not cover our entire
portfolio, it includes a broad range of products. Among the products and
businesses covered in the CIM are the olefins and derivatives, the
aromatics and derivatives, linear alpha-olefins (LAOs), acetic acid, vinyl
acetate monomers and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha-olefins (PAOs), anhydrides, speciality
intermediates, and the remaining parts of the solvents and acetyls
businesses.
(c) Provisional. The data for the fourth quarter is based on two months' actual
and one month of provisional data.
Turnover for the three months ended March 31, 2003 was $3,938 million compared
with $2,642 million for the equivalent period in 2002. The increase in turnover
for the first quarter primarily reflects increased prices and higher production
as a result of improved plant utilization and organic growth.
Operating profit for the three months ended March 31, 2003, was $285 million,
compared with $47 million for the equivalent period in 2002. The result for the
first quarter of 2003 includes inventory holding gains of $146 million; the
result for the first quarter of 2002 is after charging inventory holding losses
of $29 million and costs of $32 million related to major site restructuring and
Solvay and Erdolchemie integration. In the first quarter of 2003 there were
better margins, increased production and improved unit costs compared with the
corresponding period in 2002.
Chemicals production of 6,980 thousand tonnes in the first quarter was a record
and 369 thousand tonnes above a year ago. Higher production was due to improved
plant utilization and organic growth, including one of our new Asian PTA plants
coming on stream.
During the quarter, we continued to reduce cash fixed costs per tonne of
capacity through planned cost reductions.
As part of the ongoing restructuring of our portfolio, we completed the
divestment of the two remaining Burmah Castrol chemicals businesses, Fosroc
Mining and Sericol. We also announced our intention to divest our speciality
intermediates business (trimellitic anhydride, purified isophthalic acid (PIA)
and maleic anhydride) based in Joliet, Illinois in the USA, plus the economic
interest in our European PIA business. PT Petrokimia Nusantara Interindo (BP
75%), which operates a stand-alone polyethylene manufacturing plant in
Indonesia, was sold to Indika Group on April 25, 2003.
Page 8
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OTHER BUSINESSES AND CORPORATE
Three months ended
March 31
(Unaudited)
2003 2002
----- -----
($ million)
Turnover - $m 111 135
Operating (loss) - $m (165) (125)
Other businesses and corporate comprises Finance, the Group's coal asset and
aluminium asset, its investments in PetroChina and Sinopec, interest income and
costs relating to corporate activities.
EXCEPTIONAL ITEMS
Three months ended
March 31
(Unaudited)
2003 2002
----- -----
($ million)
Profit (loss) on sale of fixed assets and
businesses or termination of operations - $m 394 (109)
Taxation credit (charge) - $m (54) 39
----- -----
Exceptional items after taxation - $m 340 (70)
----- -----
Exceptional items for the first quarter principally relate to net gains from the
sale of certain upstream interests.
OUTLOOK
World economic activity has remained weak during the first quarter with few
signs of an imminent recovery. Confidence has declined in the USA, Europe and
more recently in parts of Asia. OECD industrial production has remained
essentially flat.
Oil markets have been driven by the impact of war in Iraq, together with the
loss of Venezuelan and Nigerian exports and a cold winter in the northern
hemisphere. Dated Brent averaged $31.47/bbl in the first quarter. OECD
commercial oil inventories declined to record lows in February in terms of
forward days' cover, but appear to have stabilized recently. Rising OPEC
production from the middle of the first quarter compensated for the loss of
Iraqi exports. Crude prices have since fallen back to around $25/bbl. Oil
supplies have proven adequate even without the release of strategic stocks. The
prospect for prices depends upon a particularly wide range of uncertainties
which include the timing and level of the return of Iraqi oil exports and the
extent to which OPEC's earlier production increases are reversed.
US natural gas prices have fallen back from the high levels of the first quarter
(Henry Hub first of month index average of $6.53/mmbtu) after the end of the
winter heating season. Prices remain above fuel oil parity in face of the
challenge to refill gas in storage while production continues to fall. The
opening of new pipeline infrastructure later in the second quarter has the
potential to narrow differentials in the Rockies.
Refining margins have begun the second quarter somewhat below the average for
the first quarter (BP GIM $4.52/bbl) but remain firm in most regions. OECD
commercial product inventories are at five year lows and may continue to
underpin refining fundamentals in the short term. Retail margins strengthened
towards the end of the first quarter, although prices to the consumer are now
falling in line with product prices.
Chemicals margins have been sharply lower than in the fourth quarter of last
year, due to feedstock costs rising more rapidly than prices for the majority of
petrochemical products. Recent declines in oil prices have begun to restore
margins although weak demand conditions persist.
Consistent with our financial framework and plan for the year, we expect capital
investment to be in the range of $14 to 14.5 billion, excluding acquisitions.
This excludes the initial cash payment due on completion of the TNK-BP
transaction, expected to complete in the summer. We expect gearing to return to
the lower half of our 21 to 30% target range following this transaction.
Page 9
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - concluded
FORWARD-LOOKING STATEMENTS
In order to utilize the 'Safe Harbor' provisions of the United States Private
Securities Litigation Reform Act of 1995, BP is providing the following
cautionary statement. The foregoing discussion, in particular, although not
limited to, the statements under `Group Results' and the statements under
`Outlook', with regard to hydrocarbon production growth, the economic outlook,
trends in the trading environment, the timing of acquisitions and divestments,
the timing of new projects, oil and gas prices and margins, refining margins,
retail margins, realizations on gas sales, inventory and product stock levels,
capacity utilization, capital expenditure trends, gearing, working capital,
profitability, results of operation, dividend payments, long term purchase
commitments and liquidity or financial position are all forward-looking in
nature. Forward-looking statements are also identified by such phrases as
`will', `expects', `is expected to', `should', `may', `is likely to', `intends'
and `believes'. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future and are outside the control of BP. Actual results may differ
materially from those expressed in such statements, depending on a variety of
factors, including the specific factors identified in the discussions
accompanying such forward-looking statements, future levels of industry product
supply, the timing of bringing new fields onstream, demand and pricing,
operational problems, political stability and economic growth in relevant areas
of the world, development and use of new technology, successful partnering, the
actions of competitors, the actions of third party suppliers of facilities and
services, natural disasters and other changes to business conditions, prolonged
adverse weather conditions, wars and acts of terrorism or sabotage, and other
factors discussed elsewhere in this report. These and other factors may cause
actual results and developments to differ materially from those expressed or
implied by these forward-looking statements. Additional information, including
information on factors which may affect BP's business, is contained in BP's
Annual Report and Annual Accounts for 2002 and the Annual Report on Form 20-F
for 2002 filed with the US Securities and Exchange Commission.
2003 DIVIDENDS
On April 29, 2003, BP p.l.c. announced a first quarterly dividend for 2003 of
6.25 cents per ordinary share of 25 cents (ordinary shares), representing $0.375
per American Depositary Share (ADS) amounting to $1,386 million in total. The
record date for qualifying US resident holders of American Depositary Shares as
well as holders of ordinary shares is May 16, 2003, with payment to be made on
June 9, 2003.
Under the former US-UK Income Tax Treaty, dividends paid to qualifying ADS
holders entitled them to a refund of a deemed UK tax credit equal to 1/9th of
the announced dividend. This credit was exactly offset by an amount deemed by
the former US-UK Income Tax Treaty to be a UK withholding tax. The net effect
for ADS holders was a cash payment equal to the amount of the announced
dividend, a potential foreign tax credit equal to 1/9th of the announced
dividend, and a gross dividend equal to the sum of those two amounts. Under the
new US-UK Tax Treaty, this deemed tax credit is no longer available on dividends
paid to qualifying ADS shareholders, beginning with the first quarterly dividend
for 2003.
A dividend reinvestment facility is available for holders of ADSs through
JPMorgan Chase Bank (formerly known as Morgan Guaranty Trust Company).
Participants in the dividend reinvestment facility included in the US Direct
Access Plan will receive the dividend in the form of shares on June 9, 2003.
Page 10
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Three months ended
March 31
(Unaudited)
2003 2002
------- -------
($ million)
Turnover - Note 2 64,186 36,569
Less: joint ventures 398 279
------- -------
Group turnover 63,788 36,290
Cost of sales 54,439 31,078
Production taxes - Note 3 504 247
------- -------
Gross profit 8,845 4,965
Distribution and administration expenses 3,244 2,691
Exploration expense - Note 4 112 124
------- -------
5,489 2,150
Other income 131 125
------- -------
Group operating profit 5,620 2,275
Share of profits of joint ventures 118 70
Share of profits of associated undertakings 186 186
------- -------
Total operating profit 5,924 2,531
Profit (loss) on sale of fixed assets and businesses
or termination of operations - Note 5 394 (109)
------- -------
Profit before interest and tax 6,318 2,422
Interest expense - Note 6 220 333
------- -------
Profit before taxation 6,098 2,089
Taxation - Note 7 1,805 753
------- -------
Profit after taxation 4,293 1,336
Minority shareholders' interest 26 40
------- -------
Profit for the period (a) 4,267 1,296
======= =======
Earnings per ordinary share - cents (a)
Basic 19.11 5.78
Diluted 19.05 5.75
------- -------
Earnings per American depositary share - cents (a)
Basic 114.66 34.68
Diluted 114.30 34.50
---------- ----------
Average number of outstanding ordinary shares (thousands) 22,326,486 22,402,868
========== ==========
---------------
(a) A summary of the material adjustments to profit for the period which would
be required if generally accepted accounting principles in the United
States had been applied instead of those generally accepted in the United
Kingdom is given in Note 13.
Page 11
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, 2003 December 31, 2002
(Unaudited)
----------------------- -----------------------
($ million)
Fixed assets
Intangible assets 14,190 15,566
Tangible assets 88,223 87,682
Investments 10,248 10,811
-------- --------
112,661 114,059
Current assets
Inventories 9,874 10,181
Receivables 39,058 33,150
Investments 228 215
Cash at bank and in hand 1,151 1,520
-------- ---------
50,311 45,066
-------- ---------
Current liabilities - falling due within one year
Finance debt 6,400 10,086
Accounts payable and accrued liabilities 40,614 36,215
-------- ---------
47,014 46,301
-------- ---------
Net current liabilities 3,297 (1,235)
-------- --------
Total assets less current liabilities 115,958 112,824
Noncurrent liabilities
Finance debt 12,642 11,922
Accounts payable and accrued liabilities 3,411 3,455
Provisions for liabilities and charges
Deferred tax 13,686 13,514
Other 14,096 13,886
-------- ---------
43,835 42,777
-------- --------
Net assets 72,123 70,047
Minority shareholders' interest - equity 1,047 638
-------- --------
BP shareholders' interest (a) - Note 10 71,076 69,409
======== ========
Represented by:
Capital shares
Preference 21 21
Ordinary 5,560 5,595
Paid-in surplus 4,345 4,243
Merger reserve 27,050 27,033
Retained earnings 33,944 32,344
Other reserves 156 173
-------- --------
71,076 69,409
======== ========
---------------
(a) A summary of the material adjustments to BP shareholders' interest which
would be required if generally accepted accounting principles in the United
States had been applied instead of those generally accepted in the United
Kingdom is given in Note 13.
Page 12
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Net cash inflow from operating activities 5,961 3,636
------ ------
Dividends from joint ventures 13 83
------ ------
Dividends from associated undertakings 55 53
------ ------
Servicing of finance and returns on investments
Interest received 31 48
Interest paid (207) (309)
Dividends received 6 2
Dividends paid to minority shareholders (2) (13)
------ ------
Net cash outflow from servicing of finance
and returns on investments (172) (272)
------ ------
Taxation
UK corporation tax (312) (187)
Overseas tax (320) (258)
------ ------
Tax paid (632) (445)
------ ------
Capital expenditure and financial investment
Payments for fixed assets (2,877) (2,799)
Proceeds from the sale of fixed assets 2,317 317
------ ------
Net cash outflow for capital expenditure and financial investment (560) (2,482)
------ ------
Acquisitions and disposals
Investments in associated undertakings (186) (143)
Acquisitions, net of cash acquired - (1,550)
Net investment in joint ventures (14) (46)
Proceeds from the sale of businesses 160 31
------ ------
Net cash outflow for acquisitions and disposals (40) (1,708)
------ ------
Equity dividends paid (1,397) (1,288)
------ ------
Net cash inflow (outflow) 3,228 (2,423)
====== ======
Financing 3,593 (2,283)
Management of liquid resources 13 (165)
(Decrease) increase in cash (378) 25
------ ------
3,228 (2,423)
====== ======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement presented on a SFAS 95 format is included in Note 13.
Page 13
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - concluded
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Reconciliation of profit before interest
and tax to net cash inflow from operating activities
Profit before interest and tax 6,318 2,422
Depreciation and amounts provided 2,709 2,153
Exploration expenditure written off 50 59
Share of profits of joint ventures and associated undertakings (304) (256)
Interest and other income (48) (63)
(Profit) loss on sale of fixed assets and businesses (394) 109
Charge for provisions 202 169
Utilization of provisions (228) (238)
Decrease (increase) in inventories 376 (496)
Increase in debtors (6,935) (410)
Increase in creditors 4,215 187
------ ------
Net cash inflow from operating activities 5,961 3,636
====== ======
Financing
Long-term borrowing (1,015) (1,746)
Repayments of long-term borrowing 403 234
Short-term borrowing (626) (3,499)
Repayments of short-term borrowing 3,899 2,819
------ ------
2,661 (2,192)
Issue of ordinary share capital for employee share schemes (67) (91)
Repurchase of ordinary share capital 999 -
------ ------
Net cash inflow (outflow) from financing 3,593 (2,283)
====== ======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement presented on a SFAS 95 format is included in Note 13.
Page 14
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results for the interim periods are unaudited and in the opinion of
management include all adjustments necessary for a fair presentation of the
results for the periods presented. The interim financial statements and
notes included in this Report should be read in conjunction with the
consolidated financial statements and related notes for the year ended
December 31, 2002 included in BP's Annual Report on Form 20-F filed with
the Securities and Exchange Commission.
Three months ended
March 31
(Unaudited)
2003 2002
------- -------
($ million)
2. Turnover
By business
Exploration and Production 9,068 5,638
Gas, Power and Renewables 17,998 7,768
Refining and Marketing 41,435 24,889
Chemicals 3,938 2,642
Other businesses and corporate 111 135
------- -------
72,550 41,072
Less: sales between businesses 8,762 4,782
------- -------
Group excluding joint ventures 63,788 36,290
Share of sales by joint ventures 398 279
------- -------
64,186 36,569
======= =======
By geographical area
Group excluding joint ventures
UK 15,427 10,995
Rest of Europe 13,022 9,119
USA 31,098 15,265
Rest of World 13,736 6,984
------- -------
73,283 42,363
Less: sales between areas 9,495 6,073
------- -------
63,788 36,290
======= =======
3. Production taxes
UK petroleum revenue tax 133 63
Overseas production taxes 371 184
------- -------
504 247
======= =======
4. Exploration expense
Exploration and Production
UK 3 6
Rest of Europe 4 23
USA 37 42
Rest of World 68 53
------- -------
112 124
======= =======
Page 15
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended
March 31
(Unaudited)
2003 2002
------- -------
($ million)
5. Analysis of exceptional items Profit (loss) on sale of
fixed assets and businesses or termination of operations
Exploration and Production 433 5
Gas, Power and Renewables - -
Refining and Marketing (52) (45)
Chemicals 7 (60)
Other businesses and corporate 6 (9)
------- -------
Exceptional items before taxation 394 (109)
Taxation (charge) credit (54) 39
------- -------
Exceptional items after taxation 340 (70)
======= =======
6. Interest expense
Group interest payable 187 267
Capitalized (34) (15)
------- -------
153 252
Joint ventures 13 14
Associated undertakings 10 24
Unwinding of discount on provisions 44 43
------- -------
220 333
======= =======
7. Charge for taxation
Current 1,581 533
Deferred 224 220
------- -------
1,805 753
======= =======
United Kingdom 485 189
Overseas 1,320 564
------- -------
1,805 753
======= =======
Page 16
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Business and geographical analysis
Gas, Other
Exploration Power Refining businesses
By business and and and and
Production Renewables Marketing Chemicals corporate Eliminations Total
----------- ---------- --------- --------- ---------- ------------ ------
($ million)
Three months
ended March 31, 2003
Group turnover
- third parties 2,031 17,449 40,380 3,817 111 - 63,788
- sales between businesses 7,037 549 1,055 121 - (8,762) -
------------------------------------------------------------------------------------
9,068 17,998 41,435 3,938 111 (8,762) 63,788
------------------------------------------------------------------------------------
Share of sales by joint ventures 181 - 100 117 - - 398
------------------------------------------------------------------------------------
Equity accounted income 234 (1) 37 25 9 - 304
------------------------------------------------------------------------------------
Total operating profit (loss) 4,332 221 1,251 285 (165) - 5,924
Exceptional items 433 - (52) 7 6 - 394
------------------------------------------------------------------------------------
Profit (loss) before interest and tax 4,765 221 1,199 292 (159) - 6,318
------------------------------------------------------------------------------------
Capital expenditure and acquisitions 2,137 68 537 96 36 - 2,874
Three months
ended March 31, 2002
Group turnover
- third parties 2,091 7,313 24,221 2,530 135 - 36,290
- sales between businesses 3,547 455 668 112 - (4,782) -
------------------------------------------------------------------------------------
5,638 7,768 24,889 2,642 135 (4,782) 36,290
------------------------------------------------------------------------------------
Share of sales by joint ventures 95 - 77 107 - - 279
------------------------------------------------------------------------------------
Equity accounted income 125 54 51 9 17 - 256
------------------------------------------------------------------------------------
Total operating profit (loss) 1,931 115 563 47 (125) - 2,531
Exceptional items 5 - (45) (60) (9) - (109)
------------------------------------------------------------------------------------
Profit (loss) before interest and tax 1,936 115 518 (13) (134) - 2,422
------------------------------------------------------------------------------------
Capital expenditure and acquisitions 2,313 46 3,137 188 52 - 5,736
Page 17
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
8. Business and geographical analysis - continued
Rest of Rest of
By geographical area UK Europe USA World Eliminations Total
------- -------- ------- ------- ------------ -------
($ million)
Three months ended March 31, 2003
Group turnover - third parties 11,214 10,762 30,612 11,200 - 63,788
- sales between areas 4,213 2,260 486 2,536 (9,495) -
------------------------------------------------------------------
15,427 13,022 31,098 13,736 (9,495) 63,788
------------------------------------------------------------------
Share of sales by joint ventures 28 89 42 239 - 398
------------------------------------------------------------------
Equity accounted income (1) (3) 35 273 - 304
------------------------------------------------------------------
Total operating profit 1,118 690 2,489 1,627 - 5,924
Exceptional items (12) (41) (146) 593 - 394
------------------------------------------------------------------
Profit before interest and tax 1,106 649 2,343 2,220 - 6,318
------------------------------------------------------------------
Capital expenditure and acquisitions 301 202 1,396 975 - 2,874
Three months ended March 31, 2002
Group turnover - third parties 8,412 7,318 14,998 5,562 - 36,290
- sales between areas 2,583 1,801 267 1,422 (6,073) -
------------------------------------------------------------------
10,995 9,119 15,265 6,984 (6,073) 36,290
------------------------------------------------------------------
Share of sales by joint ventures 32 56 43 148 - 279
------------------------------------------------------------------
Equity accounted income (2) 61 55 142 - 256
------------------------------------------------------------------
Total operating profit 576 498 442 1,015 - 2,531
Exceptional items (9) 10 (109) (1) - (109)
------------------------------------------------------------------
Profit before interest and tax 567 508 333 1,014 - 2,422
------------------------------------------------------------------
Capital expenditure and acquisitions 409 2,852 1,531 944 - 5,736
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
9. Analysis of changes in net debt
Opening balance
Finance debt 22,008 21,417
Less: Cash 1,520 1,358
Current asset investments 215 450
------ ------
Opening net debt 20,273 19,609
------ ------
Closing balance
Finance debt 19,042 24,531
Less: Cash 1,151 1,379
Current asset investments 228 286
------ ------
Closing net debt 17,663 22,866
------ ------
Decrease (increase) in net debt 2,610 (3,257)
====== ======
Movement in cash/bank overdrafts (378) 25
Increase (decrease) in current asset investments 13 (165)
Net cash outflow (inflow) from financing
(excluding share capital) 2,661 (2,192)
Exchange of Exchangeable Bonds for Lukoil
Amercian Depositary Shares 420 -
Other movements 64 25
Debt acquired - (999)
------ ------
Movements in net debt before exchange effects 2,780 (3,306)
Exchange adjustments (170) 49
------ ------
Decrease (increase) in net debt 2,610 (3,257)
====== ======
10.Movement in BP shareholders' interest $ million
Balance at December 31, 2002 69,409
Profit for the period 4,267
Distribution to shareholders (1,386)
Currency translation differences (net of tax) (282)
Issue of ordinary share capital for employee share schemes 67
Repurchase of ordinary share capital (999)
-------
Balance at March 31, 2003 71,076
=======
Page 19
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
11. Earnings per share
Basic earnings per share excludes the dilutive effects of options, warrants
and convertible securities. Diluted earnings per share reflects the
potential dilution that could occur if options, warrants or convertible
securities were exercised or converted into ordinary shares that shared in
the earnings of the Group. The dilutive effect of outstanding share options
is as follows:
Three months ended
March 31
(Unaudited)
2003 2002
----------------------
(shares thousands)
Weighted average number of ordinary shares 22,326,486 22,402,868
Ordinary shares issuable under employee
share schemes 68,313 117,560
---------- ----------
22,394,799 22,520,428
========== ==========
12. Share-based compensation
BP accounts for share options granted to employees using the
intrinsic-value method. If the fair value of options granted in any
particular year is estimated and this value amortized over the vesting
period of the options, an indication of the cost of granting options to
employees can be made. The fair value of each share option granted has been
estimated using a Black-Scholes option pricing model.
The following table illustrates the effect on net income and earnings per
share if the Company had applied the fair value recognition provisions of
FASB Statement No. 123, `Accounting for Stock-Based Compensation', to share
based employee compensation.
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Profit for the period applicable to ordinary shares,
as reported 4,267 1,296
Deduct: Total stock-based employee compensation
expense determined under fair value based method
for all awards, net of related tax effects (24) (26)
------- -------
Pro forma net income 4,243 1,270
======= =======
(cents)
Earnings per share
Basic - as reported 19.11 5.78
Basic - pro forma 19.00 5.67
Diluted - as reported 19.05 5.75
Diluted - pro forma 18.95 5.64
Page 20
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles
The consolidated financial statements of the BP Group are prepared in
accordance with UK GAAP which differs in certain respects from US GAAP. The
principal differences between US GAAP and UK GAAP for BP Group reporting
relate to the following:
(i) Group consolidation
Where the Group conducts activities through a joint arrangement that
is not carrying on a trade or business in its own right, the Group
accounts for its own assets, liabilities and cash flows of the
activity measured according to the terms of the arrangement. For the
Group this method of accounting applies to certain oil and natural gas
activities and undivided interests in pipelines. US GAAP permits these
activities to be accounted for by proportional consolidation, which is
equivalent to UK GAAP.
Joint ventures and associated undertakings are accounted for by the
equity method. UK GAAP requires the consolidated financial statements
to show separately the Group proportion of operating profit or loss,
exceptional items, inventory holding gains or losses, interest expense
and taxation of joint ventures and associated undertakings. In
addition the Group's share of turnover of joint ventures should be
disclosed. For US GAAP the after tax profits or losses (i.e. operating
results after exceptional items, inventory holding gains or losses,
interest expense and taxation) are included in the income statement as
a single line item.
UK GAAP requires the Group's share of the gross assets and gross
liabilities of joint ventures to be shown on the face of the balance
sheet whereas under US GAAP the net investment is included as a single
line item.
The following summarizes the reclassifications for joint ventures and
associated undertakings necessary to accord with US GAAP.
Three months ended March 31, 2003
(Unaudited)
------------------------------------------------
As US GAAP
Increase (decrease) in caption heading Reported Reclassification Presentation
------------------------------------------------
($ million)
Consolidated statement of income
Other income 131 216 347
Share of profits of JVs and 304 (304) -
associated undertakings
Exceptional items before taxation 394 - 394
Interest expense 220 (23) 197
Taxation 1,805 (65) 1,740
Profit for the period 4,267 - 4,267
Three months ended March 31, 2002
(Unaudited)
------------------------------------------------
As US GAAP
Increase (decrease) in caption heading Reported Reclassification Presentation
------------------------------------------------
($ million)
Consolidated statement of income
Other income 125 153 278
Share of profits of JVs and 256 (256) -
associated undertakings
Exceptional items before taxation (109) - (109)
Interest expense 333 (38) 295
Taxation 753 (65) 688
Profit for the period 1,296 - 1,296
Page 21
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(ii) Exceptional items
Under UK GAAP certain exceptional items are shown separately on the
face of the income statement after operating profit. These items are
profits or losses on the sale of fixed assets and businesses or
termination of operations and fundamental restructuring charges. Under
US GAAP these items are classified as operating income or expenses.
(iii)Deferred taxation/business combinations
US GAAP requires the recognition of a deferred tax asset or liability
for the tax effects of differences between the assigned values and the
tax bases of assets acquired and liabilities assumed in a purchase
business combination, whereas under UK GAAP no such deferred tax asset
or liability is recognized. Under US GAAP the deferred tax asset or
liability is amortized over the same period as the assets and
liabilities to which it relates.
The adjustments to profit for the period and to BP shareholders'
interest to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales 692 151
Taxation (728) (94)
Profit for the period 36 (57)
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Tangible assets 6,749 7,408
Deferred taxation 6,794 7,486
BP shareholders' interest (45) (78)
======= =======
Page 22
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(iv) Provisions
UK GAAP requires provisions for decommissioning, environmental
liabilities and onerous contracts to be determined on a discounted
basis if the effect of the time value of money is material. The
provisions for decommissioning and environmental liabilities are
estimated using costs based on current prices and discounted using
real discount rates. Unwinding of the discount and the effect of a
change in the discount rate is included in interest expense in the
period. When a decommissioning provision is set up, a tangible fixed
asset of the same amount is also recognized and is subsequently
depreciated as part of the capital costs of the facilities.
On January 1, 2003 the Group adopted Statement of Financial Accounting
Standards No. 143 'Accounting for Asset Retirement Obligations' (SFAS
143). SFAS 143 requires companies to record liabilities equal to the
fair value of their asset retirement obligations when they are
incurred (typically when the asset is installed at the production
location). When the liability is initially recorded, companies
capitalize an equivalent amount as part of the cost of the asset. Over
time the liability is accreted for the change in its present value
each period, and the initial capitalized cost is depreciated over the
useful life of the related asset.
The provisions for decommissioning under SFAS 143 are set up on a
similar basis to UK GAAP except that estimated future cash outflows
are discounted using a credit-adjusted risk-free rate rather than a
real discount rate.
The cumulative effect of adopting SFAS 143 at January 1, 2003 resulted
in an after tax credit to income, as adjusted to accord with US GAAP,
of $1,002 million. The effect of adoption also included an increase in
total assets, as adjusted to accord with US GAAP, of $687 million and
a reduction in total liabilities, as adjusted to accord with US GAAP,
of $315 million. The effect of adoption on the three months ended
March 31, 2003 was to decrease profit for the period before cumulative
effect of accounting changes as adjusted to accord with US GAAP by
$23 million.
Under US GAAP environmental liabilities are discounted only where the
timing and amounts of payments are fixed and reliably determinable.
The adjustments to profit for the period and to BP shareholders'
interest to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales (34) 77
Interest expense 6 (43)
Taxation 2 (8)
Profit for the period before cumulative effect
of accounting changes 26 (26)
Cumulative effect of accounting changes 1,002 -
Profit for the period 1,028 (26)
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Tangible assets (601) (1,297)
Provisions (533) 412
Deferred taxation (5) (621)
BP shareholders' interest (63) (1,088)
======= =======
Page 23
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(iv) Provisions (concluded)
The following pro forma data summarize the results of operations for
the three months ended March 31, 2003 and 2002 assuming SFAS 143 was
applied retroactively with effect from January 1, 2002.
Three months ended
March 31
(Unaudited)
2003 2002
------- -------
($ million)
Profit for the period applicable to ordinary shares
as adjusted to accord with US GAAP, as reported
As reported 4,734 2,051
Pro forma 4,734 2,072
Per ordinary share - cents
Basic - as reported 21.20 9.16
Basic - pro forma 21.20 9.25
Diluted - as reported 21.14 9.11
Diluted - pro forma 21.14 9.20
Per American Depositary Share - cents
Basic - as reported 127.20 54.96
Basic - pro forma 127.20 55.50
Diluted - as reported 126.84 54.66
Diluted - pro forma 126.84 55.20
The pro forma asset retirement obligation at January 1, 2002 and
December 31, 2002, assuming SFAS 143 was applied retroactively with
effect from January 1, 2002, amounts to $3,268 million and $3,469
million, respectively.
(v) Sale and leaseback
The sale and leaseback of an office building in Chicago, Illinois in
1998 was treated as a sale for UK GAAP whereas for US GAAP it was
treated as a financing transaction under US GAAP. The remaining
interest in this building was sold in January 2003.
Provisions were recognized under UK GAAP in 1999 and 2002 to cover the
likely shortfall on rental income from subletting the Chicago office
building. As the original sale and leaseback was not treated as a sale
for US GAAP the provision was reversed for US GAAP. Following the
disposal of the building a provision has now been recognized for US
GAAP.
Under UK GAAP the profit arising on the sale and operating leaseback
of certain railcars in 1999 was taken to income in the period in which
the transaction occurred. Under US GAAP this profit was not recognized
immediately but amortized over the term of the operating lease.
Page 24
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(v) Sale and leaseback (concluded)
The adjustments to profit for the period and BP shareholders' interest
to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales (108) 5
Taxation 37 (1)
Profit for the period 71 (4)
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Tangible assets - 161
Other accounts payable and accrued liabilities 26 27
Provisions 29 (117)
Finance debt - 413
Deferred taxation (19) (56)
BP shareholders' interest (36) (106)
======= =======
(vi) Goodwill and intangible assets
Various differences in the basis for determining goodwill between UK
and US GAAP result in goodwill for US GAAP reporting differing from
the amount recognized under UK GAAP.
On January 1, 2002 the Group adopted Statement of Financial Accounting
Standards No. 142 `Goodwill and Other Intangible Assets' (SFAS 142)
for US GAAP reporting. This standard eliminates the requirement to
amortize goodwill and indefinite lived intangible assets. Rather, such
assets are subject to periodic impairment testing. Intangible assets
that are not deemed to have an indefinite life continue to be
amortized over their estimated useful lives. Amortization of goodwill
charged to income under UK GAAP has been reversed for US GAAP.
The adjustments to profit for the period and to BP shareholders'
interest to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales (342) (321)
Profit for the period 342 321
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Intangible assets 245 (84)
BP shareholders' interest 245 (84)
======= =======
Page 25
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(vi) Goodwill and intangible assets (concluded)
Changes to exploration expenditure, goodwill and other intangible
assets, as adjusted to accord with US GAAP, during the three months
ended March 31, 2003 are shown below.
Exploration Other
expenditure Goodwill intangibles Total
---------------------------------------------
($ million)
Net book amount
At January 1, 2003 4,944 10,354 488 15,786
Amortization expense (50) - (13) (63)
Acquisitions - - - -
Other movements (639) (263) 9 (893)
---------------------------------------------
At March 31, 2003 4,255 10,091 484 14,830
=============================================
Amortization expense relating to other intangibles is expected to be
in the range $100-$200 million in each of the succeeding five years.
During the second quarter of 2002 the Group completed a goodwill
impairment review using the two-step process prescribed in SFAS 142.
The first step includes a comparison of the fair value of a reporting
unit to its carrying value, including goodwill. Where the carrying
value exceeds the fair value, the goodwill of the reporting unit is
potentially impaired and the second step is then completed in order to
measure the impairment loss, if any. No impairment charge resulted
from this review.
(vii) Derivative financial instruments and hedging activities
SFAS 133 `Accounting for Derivative Instruments and Hedging
Activities' requires that all derivative instruments be recorded on
the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other
comprehensive income, depending on whether a derivative is designated
as part of a hedge transaction and, if it is, the type of hedge
transaction. To the extent that certain criteria are met, SFAS 133
permits, but does not require, hedge accounting.
In the normal course of business the Group is a party to derivative
financial instruments with off-balance sheet risk, primarily to manage
its exposure to fluctuations in foreign currency exchange rates and
interest rates, including management of the balance between floating
rate and fixed rate debt. The Group also manages certain of its
exposures to movements in oil and natural gas prices. In addition, the
Group trades derivatives in conjunction with these risk management
activities.
All oil price derivatives and all derivatives held for trading are
carried on the Group's balance sheet at fair value with changes in
that value recognized in earnings of the period for both UK and US
GAAP. Certain financial derivatives used to manage foreign currency
and interest rate risk that qualify for hedge accounting under UK GAAP
are marked to market under SFAS 133. Under US GAAP the fair values of
derivative financial instruments are shown as current assets and
liabilities as appropriate.
The Group has a number of long-term natural gas contracts which have
been in place for many years. The pricing structure for those
contracts is not directly related to the market price of natural gas
but to the price of other commodities or indices, such as fuel oil or
consumer price indices. On the basis of SFAS 133 Implementation Issue
C11, these contracts have been marked to market with effect from July
1, 2001.
Page 26
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(vii) Derivative financial instruments and hedging activities (concluded)
In October 2002, the FASB Emerging Issues Task Force (EITF) reached a
consensus which rescinded EITF Issue No. 98-10, 'Accounting for
Contracts Involved in Energy Trading and Risk Management Activities'
(EITF 98-10). As a result of this consensus, all energy-related,
non-derivative contracts (such as transportation, storage, tolling,
and requirements contracts that do not meet the definition of a
derivative) and trading inventories that are accounted for at fair
value pursuant to EITF 98-10 will no longer be accounted for at fair
value upon application of the consensus. Rather, such contracts will
be accounted for as executory contracts on an accruals basis.
The consensus is applicable for all contracts executed after October
25, 2002. Application of the consensus to contracts existing prior to
October 26, 2002 is required to be accounted for as a cumulative
effect of a change in accounting principle effective for periods
beginning after December 15, 2002.
For BP's reporting under UK GAAP, energy-related non-derivative
contracts associated with trading activities are marked to market with
gains and losses recognized in the income statement.
The cumulative effect of adopting the consensus at January 1, 2003
resulted in an after tax credit to income, as adjusted to accord with
US GAAP, of $50 million.
Also in October 2002, the FASB Emerging Issues Task Force (EITF)
reached a consensus with regards to EITF Issue No. 02-3, `Issues
Involved in Accounting for Contracts Under EITF Issue No. 98-10
"Accounting for Contracts Involved in Energy Trading and Risk
Management Activities"' (EITF 02-3). Under this consensus trading
inventories should be recorded on the balance sheet at historical
cost. The Group marks trading inventories to market at the balance
sheet date. Thus a UK/US GAAP difference arises which impacts both
profit for the year and BP shareholders' interest due to the
difference in inventory valuations.
The adjustments to profit for the period and to BP shareholders'
interest to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales 12 (804)
Taxation (4) 281
Profit for the period before cumulative
effect of accounting changes (8) 523
Cumulative effect of accounting changes 50 -
Profit for the period 42 523
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Inventories (148) (209)
Accounts payable and accrued liabilities (17) (13)
Deferred taxation (39) (61)
BP shareholders' interest (92) (135)
======= =======
Page 27
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(viii)Gain arising on asset exchange
For UK GAAP the transaction with Solvay in the fourth quarter of 2001,
which led to the exchange of businesses for an interest in a joint
venture and an associated undertaking, has been treated as an asset
swap which does not give rise to a gain or loss. Under US GAAP the
transaction has been treated as a disposal and acquisition at fair
value which gives rise to a pre-tax gain on disposal of $242 million
($157 million after tax).
The adjustments to profit for the period and to BP shareholders'
interest to accord with US GAAP are summarized below.
Three months ended
March 31
Increase (decrease) in caption heading (Unaudited)
2003 2002
------- -------
($ million)
Cost of sales 5 9
Taxation (2) (4)
Profit for the period (3) (5)
======= =======
At At
March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Intangible assets 163 167
Accounts payable and accrued liabilities (50) (52)
Deferred taxation 75 77
BP shareholders' interest 138 142
======= =======
(ix) Ordinary shares held for future awards to employees
Under UK GAAP, Company shares held by an Employee Share Ownership Plan
to meet future requirements of employee share schemes are recorded in
the balance sheet as Fixed assets -- investments. Under US GAAP, such
shares are recorded in the balance sheet as a reduction of
shareholders' interest.
The adjustment to BP shareholders' interest to accord with US GAAP is
shown below.
At At
Increase (decrease) in caption heading March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Fixed assets - Investments (117) (159)
BP shareholders' interest (117) (159)
======= =======
Page 28
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(x) Dividends
Under UK GAAP, dividends are recorded in the period in respect of
which they are announced or declared by the board of directors to the
shareholders. Under US GAAP, dividends are recorded in the period in
which dividends are declared.
The adjustment to BP shareholders' interest to accord with US GAAP is
shown below.
At At
Increase (decrease) in caption heading March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Other accounts payable and accrued liabilities (1,386) (1,398)
BP shareholders' interest (1,386) (1,398)
======= =======
(xi)Investments
Under UK GAAP certain of the Group's equity investments are reported
as either fixed asset or current asset investments and carried on the
balance sheet at cost subject to review for impairment. For US GAAP
these investments are classified as available-for-sale securities.
Consequently they are reported at fair value, with unrealized holding
gains and losses, net of tax, reported in accumulated other
comprehensive income. If a decline in fair value below cost is 'other
than temporary' the unrealized loss is accounted for as a realized
loss and charged against income.
The adjustment to BP shareholders' interest to accord with US GAAP is
shown below.
At At
Increase (decrease) in caption heading March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Fixed assets - Investments 11 52
Deferred taxation 4 18
BP shareholders' interest 7 34
======= =======
(xii) Additional minimum pension liability
Where a pension plan has an unfunded accumulated benefit obligation,
US GAAP requires such amount to be recognized as a liability in the
balance sheet. The adjustment resulting from the recognition of any
such minimum liability, including the elimination of amounts
previously recognized as a prepaid benefit cost, is reported as an
intangible asset to the extent of unrecognized prior service cost with
the remaining amount reported in comprehensive income.
The adjustments to BP shareholders' interest to accord with US GAAP
are summarized below.
At At
Increase (decrease) in caption heading March 31, 2003 December 31,
(Unaudited) 2002
-------------- ------------
($ million)
Intangible assets 137 137
Other receivables falling due after more
than one year (1,211) (1,211)
Noncurrent liabilities - accounts payable
accrued liabilities 2,459 2,459
Deferred taxation (1,247) (1,247)
BP shareholders' interest (2,286) (2,286)
======= =======
The following is a summary of the adjustments to profit for the period
and to BP shareholders' interest which would be required if generally
accepted accounting principles in the USA (US GAAP) had been applied
instead of those generally accepted in the United Kingdom (UK GAAP).
Page 29
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
(xii) Additional minimum pension liability (concluded)
These results are stated using the first-in first-out method of
inventory valuation.
Profit for the period Three months ended
March 31
(Unaudited)
2003 2002 (a)
-------------------
($ million)
Profit as reported in the consolidated
statement of income 4,267 1,296
Adjustments:
Deferred taxation/business combinations (iii) 36 (57)
Provisions (iv) 26 (26)
Sale and leaseback (v) 71 (4)
Goodwill (vi) 342 321
Derivative financial instruments (vii) (8) 523
Gain arising on asset exchange (viii) (3) (5)
Other 3 3
------- -------
467 755
------- -------
Profit (loss) for the period as adjusted to
accord with US GAAP before cumulative effect
of accounting changes 4,734 2,051
Cumulative effect of accounting changes:
Provisions 1,002 -
Derivative financial instruments 50 -
------- -------
Profit for the period as adjusted to accord with US GAAP 5,786 2,051
======= =======
Profit for the period as adjusted:
Per ordinary share - cents
Basic - before cumulative effect of accounting changes 21.20 9.16
Cumulative effect of accounting changes
Provisions 4.49 -
Derivative financial instruments 0.23 -
------- -------
25.92 9.16
======= =======
Diluted - before cumulative effect of accounting changes 21.14 9.11
Cumulative effect of accounting changes
Provisions 4.49 -
Derivative financial instruments 0.22 -
------- -------
25.84 9.11
======= =======
Per American Depositary Share - cents (b)
Basic - before cumulative effect of accounting changes 127.20 54.96
Cumulative effect of accounting changes
Provisions 26.94 -
Derivative financial instruments 1.38 -
------- -------
155.52 54.96
======= =======
Diluted - before cumulative effect of accounting changes 126.84 54.66
Cumulative effect of accounting changes
Provisions 26.88 -
Derivative financial instruments 1.32 -
------- -------
155.04 54.66
======= =======
Page 30
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
BP shareholders' interest March 31, 2003
(Unaudited) December 31, 2002
-----------------------------------
($ million)
BP shareholders' interest as reported
in the consolidated balance sheet 71,076 69,409
Adjustments:
-------- --------
Deferred taxation/business combinations (45) (78)
Provisions (iv) (63) (1,088)
Sale and leaseback (v) (36) (106)
Goodwill (vi) 245 (84)
Derivative financial instruments (vii) (92) (135)
Gain arising on asset exchange (viii) 138 142
Ordinary shares held for future
awards to employees (ix) (117) (159)
Dividends (x) 1,386 1,398
Investments (xi) 7 34
Additional minimum pension liability (xii) (2,286) (2,286)
Other (47) (48)
-------- --------
(910) (2,410)
-------- --------
BP shareholders' interest as adjusted
to accord with US GAAP 70,166 66,999
======== ========
---------------
(a)One American Depositary Share is equivalent to six ordinary shares.
Comprehensive income
The components of comprehensive income, net of related tax are as follows:
Three months ended
March 31
(Unaudited)
2003 2002
-------- --------
($ million)
Profit for the period as adjusted to accord
with US GAAP 5,786 2,051
Currency translation differences (282) (356)
Derivative financial instruments 43 -
Net unrealized gain (loss) on investments (27) 161
Additional minimum pension liability - -
-------- --------
Comprehensive income 5,520 1,856
======== ========
Accumulated other comprehensive income at March 31, 2003 and December 31,
2002 comprised losses of $3,975 million and $3,709 million, respectively.
Page 31
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
Consolidated statement of cash flows
The Group's financial statements include a consolidated statement of cash
flows in accordance with the revised UK Financial Reporting Standard No. 1
(FRS 1). The statement prepared under FRS 1 presents substantially the same
information as that required under FASB Statement of Financial Accounting
Standards No. 95 'Statement of Cash Flows' (SFAS 95).
Under FRS 1 cash flows are presented for (i) operating activities; (ii)
dividends from joint ventures; (iii) dividends from associated
undertakings; (iv) servicing of finance and returns on investments; (v)
taxation; (vi) capital expenditure and financial investment; (vii)
acquisitions and disposals; (viii) dividends; (ix) financing; and (x)
management of liquid resources. SFAS 95 only requires presentation of cash
flows from operating, investing and financing activities.
Cash flows under FRS 1 in respect of dividends from joint ventures and
associated undertakings, taxation and servicing of finance and returns on
investments are included within operating activities under SFAS 95.
Interest paid includes payments in respect of capitalized interest, which
under SFAS 95 are included in capital expenditure under investing
activities. Cash flows under FRS 1 in respect of capital expenditure and
acquisitions and disposals are included in investing activities under SFAS
95. Dividends paid are included within financing activities. All short-term
investments are regarded as liquid resources for FRS 1. Under SFAS 95
short-term investments with original maturities of three months or less are
classified as cash equivalents and aggregated with cash in the cash flow
statement. Cash flows in respect of short-term investments with original
maturities exceeding three months are included in operating activities.
Page 32
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
The consolidated statement of cash flows presented in accordance with SFAS 95
is as follows:
Three months ended
March 31
(Unaudited)
2003 2002
-------- --------
($ million)
Operating activities
Profit after taxation 4,293 1,336
Adjustments to reconcile profits after tax to
net cash provided by operating activities
Depreciation and amounts provided 2,709 2,153
Exploration expenditure written off 50 59
Share of profits of joint ventures and associated
undertakings less dividends received (148) (17)
(Profit) loss on sale of businesses and fixed assets (394) 109
Working capital movement (a) (1,475) (669)
Deferred taxation 224 220
Other 2 (108)
-------- --------
Net cash provided by operating activities 5,261 3,083
======== ========
Investing activities
Capital expenditures (2,911) (2,814)
Acquisitions, net of cash acquired - (1,550)
Investment in associated undertakings (186) (143)
Net investment in joint ventures (14) (46)
Proceeds from disposal of assets 2,477 348
-------- --------
Net cash used in investing activities (634) (4,205)
-------- --------
Financing activities
Proceeds from shares issued (repurchased) (932) 91
Proceeds from long-term financing 1,015 1,746
Repayments of long-term financing (403) (234)
Net decrease (increase) in short-term debt (3,273) 680
Dividends paid - BP Shareholders (1,397) (1,288)
- Minority shareholders (2) (13)
-------- --------
Net cash used in financing activities (4,992) 982
-------- --------
Currency translation differences relating to cash
and cash equivalents 9 (3)
-------- --------
Increase (decrease) in cash and cash equivalents (356) (143)
Cash and cash equivalents at beginning of period 1,735 1,808
-------- --------
Cash and cash equivalents at end of period 1,379 1,665
======== ========
(a) Working capital:
Inventories (increase) decrease 376 (496)
Receivables (increase) decrease (6,946) (443)
Current liabilities - excluding finance debt
increase (decrease) 5,095 270
-------- --------
(1,475) (669)
======== ========
Page 33
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - continued
Impact of new US accounting standards
Costs associated with exit or disposal activities: In June 2002, the FASB
issued Statement of Financial Accounting Standards No. 146 'Accounting for
Costs Associated with Exit or Disposal Activities' (SFAS 146). SFAS 146
requires that a liability for costs associated with an exit or disposal
activity be recognized only when the liability is incurred, rather than at
the date of an entity's commitment to an exit plan. SFAS 146 requires that
the liability be initially measured at fair value. SFAS 146 is effective
for exit or disposal activities that are initiated after December 31, 2002.
Stock-based compensation: In December 2002, the FASB issued Statement of
Financial Accounting Standards No. 148 "Accounting for Stock-Based
Compensation - Transition and Disclosure" (SFAS 148). SFAS 148 amends SFAS
123 to permit alternative methods of transition for adopting a fair value
based method of accounting for stock-based employee compensation. As
required by UK GAAP, the Group uses the intrinsic value method to account
for stock-based employee compensation.
Guarantees: In November 2002, the FASB issued FASB Interpretation No. 45
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" (Interpretation
45). Interpretation 45 elaborates on existing disclosure requirements for
guarantees and clarifies that a guarantor is required to recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and
measurement provisions of Interpretation 45 apply on a prospective basis to
guarantees issued or modified after December 31, 2002.
Consolidation: In January 2003, the FASB issued FASB Interpretation No. 46
"Consolidation of Variable Interest Entities" (Interpretation 46).
Interpretation 46 clarifies the application of existing consolidation
requirements to entities where a controlling financial interest is achieved
through arrangements that do not involve voting interests. Under
Interpretation 46, a variable interest entity is consolidated if a company
is subject to a majority of the risk of loss from the variable interest
entity's activities or entitled to receive a majority of the entity's
residual returns. Interpretation 46 applies to variable interest entities
created or acquired after January 31, 2003. For variable interest entities
existing at January 31, 2003, Interpretation 46 is effective for accounting
periods beginning after June 15, 2003.
The Company is currently carrying out the analysis necessary to adopt
Interpretation 46 in the third quarter of 2003 for existing entities. The
Company does not expect that the adoption of Interpretation 46 will have a
significant effect on profit, as adjusted to accord with US GAAP, or BP
shareholders' interest, as adjusted to accord with US GAAP.
Page 34
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
13. US generally accepted accounting principles - concluded
Impact of new UK accounting standards
Retirement benefits: In December 2000, the UK Accounting Standards Board
issued Financial Reporting Standard No. 17 `Retirement Benefits' (FRS 17).
This standard was to be fully effective for accounting periods ending on or
after June 22, 2003 with certain of the disclosure requirements effective
for periods prior to 2003. FRS 17 requires that financial statements
reflect at fair value the assets and liabilities arising from an employer's
retirement benefit obligations and any related funding. The operating costs
of providing retirement benefits are recognized in the period in which they
are earned together with any related finance costs and changes in the value
of related assets and liabilities.
In November 2002, the UK Accounting Standards Board issued an amendment to
FRS 17, which defers full adoption until January 1, 2005.
Impact of International accounting standards
In June 2002, the European Union Council of Ministers adopted a Regulation
which would require the Group to prepare its primary consolidated financial
statements in accordance with International Accounting Standards (IAS)
beginning January 1, 2005, with restatement of prior periods presented. IAS
differ in several respects from UK and US GAAP. In addition, significant
revisions to IAS are currently being contemplated and other revisions may
be adopted prior to January 1, 2005. The Group has not determined the
effects of adopting IAS.
14. Condensed consolidating information
The following information is presented in accordance with the financial
reporting rules of the Securities and Exchange Commission regarding issuers
and guarantors of guaranteed securities.
BP p.l.c. fully and unconditionally guarantees the payment obligations of
its 100% owned subsidiary BP Exploration (Alaska) Inc. under the Prudhoe
Bay Royalty Trust.
BP p.l.c. also fully and unconditionally guarantees securities issued by BP
Australia Capital Markets Limited, BP Canada Finance Company, BP Capital
Markets p.l.c. and BP Capital Markets America Inc. These companies are
100%-owned finance subsidiaries of BP p.l.c.
Page 35
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Income statement Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2003
Turnover 880 - 64,186 (880) 64,186
Less: Joint ventures - - 398 - 398
-----------------------------------------------------------------------------
Group turnover 880 - 63,788 (880) 63,788
Cost of sales 400 - 54,995 (956) 54,439
Production taxes 68 - 436 - 504
-----------------------------------------------------------------------------
Gross profit 412 - 8,357 76 8,845
Distribution and administration expenses - 64 3,180 - 3,244
Exploration expense 1 - 111 - 112
-----------------------------------------------------------------------------
411 (64) 5,066 76 5,489
Other income 6 147 129 (151) 131
-----------------------------------------------------------------------------
Group operating profit 417 83 5,195 (75) 5,620
Share of profits of joint ventures - - 118 - 118
Share of profits of associated undertakings - - 186 - 186
Equity accounted income of subsidiaries 125 5,890 - (6,015) -
-----------------------------------------------------------------------------
Total operating profit 542 5,973 5,499 (6,090) 5,924
Profit (loss) on sale of fixed assets
and businesses or termination of operations (1) 394 395 (394) 394
-----------------------------------------------------------------------------
Profit before interest and tax 541 6,367 5,894 (6,484) 6,318
Interest expense 68 295 238 (381) 220
-----------------------------------------------------------------------------
Profit before taxation 473 6,072 5,656 (6,103) 6,098
Taxation 211 1,805 1,640 (1,851) 1,805
-----------------------------------------------------------------------------
Profit after taxation 262 4,267 4,016 (4,252) 4,293
Minority shareholders' interest - - 26 - 26
-----------------------------------------------------------------------------
Profit for the period 262 4,267 3,990 (4,252) 4,267
=============================================================================
Page 36
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Income statement (continued)
The following is a summary of the adjustments to the profit for the period
which would be required if generally accepted accounting principles in the
United States (US GAAP) had been applied instead of those generally
accepted in the United Kingdom.
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2003
Profit as reported 262 4,267 3,990 (4,252) 4,267
Adjustments:
Deferred taxation/business combinations (3) 36 39 (36) 36
Provisions (4) 26 25 (21) 26
Sale and leaseback - 71 71 (71) 71
Goodwill - 342 342 (342) 342
Derivative financial instruments - (8) (8) 8 (8)
Gain arising on asset exchange - (3) (3) 3 (3)
Other 16 3 3 (19) 3
-----------------------------------------------------------------------------
Profit for the period before cumulative
effect of accounting change as adjusted
to accord with US GAAP 271 4,734 4,459 (4,730) 4,734
Cumulative effect of accounting change:
Provisions 214 1,002 788 (1,002) 1,002
Derivative financial instruments - 50 50 (50) 50
-----------------------------------------------------------------------------
Profit for the period as adjusted to
accord with US GAAP 485 5,786 5,297 (5,782) 5,786
=============================================================================
Page 37
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Income statement (continued) Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2002
Turnover 506 - 36,569 (506) 36,569
Less: Joint ventures - - 279 - 279
-----------------------------------------------------------------------------
Group turnover 506 - 36,290 (506) 36,290
Cost of sales 319 - 31,273 (514) 31,078
Production taxes 44 - 203 - 247
-----------------------------------------------------------------------------
Gross profit 143 - 4,814 8 4,965
Distribution and administration expenses - 54 2,637 - 2,691
Exploration expense 6 - 118 - 124
-----------------------------------------------------------------------------
137 (54) 2,059 8 2,150
Other income 15 153 56 (99) 125
-----------------------------------------------------------------------------
Group operating profit 152 99 2,115 (91) 2,275
Share of profits of joint ventures - - 70 - 70
Share of profits of associated undertakings - - 186 - 186
Equity accounted income of subsidiaries 49 2,483 - (2,532) -
-----------------------------------------------------------------------------
Total operating profit 201 2,582 2,371 (2,623) 2,531
Profit (loss) on sale of fixed assets
and businesses or termination of operations - (109) (109) 109 (109)
-----------------------------------------------------------------------------
Profit before interest and tax 201 2,473 2,262 (2,514) 2,422
Interest expense 13 424 393 (497) 333
-----------------------------------------------------------------------------
Profit before taxation 188 2,049 1,869 (2,017) 2,089
Taxation 82 753 686 (768) 753
-----------------------------------------------------------------------------
Profit after taxation 106 1,296 1,183 (1,249) 1,336
Minority shareholders' interest - - 40 - 40
-----------------------------------------------------------------------------
Profit for the period 106 1,296 1,143 (1,249) 1,296
=============================================================================
Page 38
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Income statement (concluded)
The following is a summary of the adjustments to the profit for the period
which would be required if generally accepted accounting principles in the
United States (US GAAP) had been applied instead of those generally
accepted in the United Kingdom.
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2002
Profit as reported 106 1,296 1,143 (1,249) 1,296
Adjustments:
Deferred taxation/business combinations (33) (57) (36) 69 (57)
Provisions - (26) (25) 25 (26)
Sale and leaseback - (4) (4) 4 (4)
Goodwill - 321 321 (321) 321
Derivative financial instruments - 523 523 (523) 523
Gain arising on asset exchange - (5) (5) 5 (5)
Other - 3 3 (3) 3
-----------------------------------------------------------------------------
Profit for the period as adjusted to
accord with US GAAP 73 2,051 1,920 (1,993) 2,051
=============================================================================
Page 39
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Balance sheet Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
At March 31, 2003
Fixed assets
Intangible assets 430 - 13,760 - 14,190
Tangible assets 6,386 - 81,837 - 88,223
Investments
Subsidiaries - equity accounted basis 2,629 95,864 - (98,493) -
Other - 120 10,128 - 10,248
-----------------------------------------------------------------------------
2,629 95,984 10,128 (98,493) 10,248
-----------------------------------------------------------------------------
Total fixed assets 9,445 95,984 105,725 (98,493) 112,661
-----------------------------------------------------------------------------
Current assets
Inventories 78 - 9,796 - 9,874
Receivables 18,411 12,770 59,419 (51,542) 39,058
Investments - - 228 - 228
Cash at bank and in hand (10) (11) 1,172 - 1,151
-----------------------------------------------------------------------------
18,479 12,759 70,615 (51,542) 50,311
-----------------------------------------------------------------------------
Current liabilities - falling due within one year
Finance debt 7,386 - 6,345 (7,331) 6,400
Accounts payable and accrued liabilities 621 11,366 40,030 (11,403) 40,614
-----------------------------------------------------------------------------
Net current assets (liabilities) 10,472 1,393 24,240 (32,808) 3,297
-----------------------------------------------------------------------------
Total assets less current liabilities 19,917 97,377 129,965 (131,301) 115,958
Noncurrent liabilities
Finance debt - - 12,642 - 12,642
Accounts payable and accrued liabilities 5,480 49 30,690 (32,808) 3,411
Provisions for liabilities and charges
Deferred taxation 1,698 - 11,988 - 13,686
Other provisions 495 125 13,476 - 14,096
-----------------------------------------------------------------------------
Net assets 12,244 97,203 61,169 (98,493) 72,123
Minority shareholders' interest - equity - - 1,047 - 1,047
-----------------------------------------------------------------------------
BP shareholders' interest 12,244 97,203 60,122 (98,493) 71,076
=============================================================================
Page 40
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Balance sheet (continued) Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
At March 31, 2003
Capital and reserves
Capital shares 1,903 5,581 - (1,903) 5,581
Paid-in surplus 3,145 4,345 - (3,145) 4,345
Merger reserve - 26,353 697 - 27,050
Other reserves - 156 - - 156
Retained earnings 7,196 60,768 59,425 (93,445) 33,944
-----------------------------------------------------------------------------
12,244 97,203 60,122 (98,493) 71,076
=============================================================================
The following is a summary of the adjustments to BP shareholders' interest
which would be required if generally accepted accounting principles in the
United States (US GAAP) had been applied instead of those generally
accepted in the United Kingdom.
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Shareholders' interest as reported 12,244 97,203 60,122 (98,493) 71,076
Adjustments:
Deferred taxation/business combinations 71 (45) (116) 45 (45)
Provisions 24 (63) (87) 63 (63)
Sale and leaseback - (36) (36) 36 (36)
Goodwill - 245 245 (245) 245
Derivative financial instruments - (92) (92) 92 (92)
Gain arising on asset exchange - 138 138 (138) 138
Ordinary shares held for future
awards to employees - (117) - - (117)
Quarterly dividend - 1,386 - - 1,386
Investments - 7 7 (7) 7
Additional minimum pension liability - (2,286) (2,286) 2,286 (2,286)
Other (34) (47) (47) 81 (47)
-----------------------------------------------------------------------------
Shareholders' interest as adjusted
to accord with US GAAP 12,305 96,293 57,848 (96,280) 70,166
=============================================================================
Page 41
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Balance sheet (continued) Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
At December 31, 2002
Fixed assets
Intangible assets 427 - 15,139 - 15,566
Tangible assets 6,405 - 81,277 - 87,682
Investments
Subsidiaries - equity accounted basis 2,561 91,939 - (94,500) -
Other - 162 10,649 - 10,811
-----------------------------------------------------------------------------
2,561 92,101 10,649 (94,500) 10,811
-----------------------------------------------------------------------------
Total fixed assets 9,393 92,101 107,065 (94,500) 114,059
-----------------------------------------------------------------------------
Current assets
Inventories 102 - 10,079 - 10,181
Receivables 18,169 13,581 51,022 (49,622) 33,150
Investments - - 215 - 215
Cash at bank and in hand (11) 1 1,530 - 1,520
-----------------------------------------------------------------------------
18,260 13,582 62,846 (49,622) 45,066
-----------------------------------------------------------------------------
Current liabilities - falling
due within one year
Finance debt 1,768 - 10,031 (1,713) 10,086
Accounts payable and accrued liabilities 1,129 9,906 35,369 (10,189) 36,215
-----------------------------------------------------------------------------
Net current assets (liabilities) 15,363 3,676 17,446 (37,720) (1,235)
-----------------------------------------------------------------------------
Total assets less current liabilities 24,756 95,777 124,511 (132,220) 112,824
Noncurrent liabilities
Finance debt - - 11,922 - 11,922
Accounts payable and accrued liabilities 10,586 98 30,491 (37,720) 3,455
Provisions for liabilities and charges
Deferred taxation 1,686 - 11,828 - 13,514
Other provisions 489 142 13,255 - 13,886
-----------------------------------------------------------------------------
Net assets 11,995 95,537 57,015 (94,500) 70,047
Minority shareholders' interest - equity - - 638 - 638
-----------------------------------------------------------------------------
BP shareholders' interest 11,995 95,537 56,377 (94,500) 69,409
=============================================================================
Page 42
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Balance sheet (concluded) Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
At December 31, 2002
Capital and reserves
Capital shares 1,903 5,616 - (1,903) 5,616
Paid-in surplus 3,145 4,243 - (3,145) 4,243
Merger reserve - 26,336 697 - 27,033
Other reserves - 173 - - 173
Retained earnings 6,947 59,169 55,680 (89,452) 32,344
-----------------------------------------------------------------------------
11,995 95,537 56,377 (94,500) 69,409
=============================================================================
The following is a summary of the adjustments to BP shareholders' interest
which would be required if generally accepted accounting principles in the
United States (US GAAP) had been applied instead of those generally
accepted in the United Kingdom.
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Shareholders' interest as reported 11,995 95,537 56,377 (94,500) 69,409
Adjustments:
Deferred taxation/business combinations 74 (78) (152) 78 (78)
Provisions (190) (1,088) (902) 1,092 (1,088)
Sale and leaseback - (106) (106) 106 (106)
Goodwill - (84) (84) 84 (84)
Derivative financial instruments 50 (135) (135) 85 (135)
Gain arising on asset exchange - 142 142 (142) 142
Ordinary shares held for future
awards to employees - (159) - - (159)
Quarterly dividend - 1,398 - - 1,398
Investments - 34 34 (34) 34
Additional minimum pension liability - (2,286) (2,286) 2,286 (2,286)
Other - (48) (48) 48 (48)
-----------------------------------------------------------------------------
Shareholders' interest as adjusted
to accord with US GAAP 11,929 93,127 52,840 (90,897) 66,999
=============================================================================
Page 43
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
14. Condensed consolidating information - continued
Issuer Guarantor
--------------------------
BP Eliminations
Cash flow statement Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2003
Net cash inflow (outflow) from
operating activities 518 2,253 3,163 27 5,961
Dividends from joint ventures - - 13 - 13
Dividends from associated undertakings - - 55 - 55
Dividends from subsidiaries 10 - - (10) -
Net cash inflow (outflow) from servicing
of finance and returns on investments (22) 27 (150) (27) (172)
Tax paid - - (632) - (632)
Net cash inflow (outflow) for capital
expenditure and financial investment (97) 36 (499) - (560)
Net cash inflow (outflow) for acquisitions
and disposals 6 - (46) - (40)
Equity dividends paid - (1,397) (10) 10 (1,397)
-----------------------------------------------------------------------------
Net cash inflow (outflow) 415 919 1,894 - 3,228
=============================================================================
Financing 414 931 2,248 - 3,593
Management of liquid resources - - 13 - 13
Increase (decrease) in cash 1 (12) (367) - (378)
-----------------------------------------------------------------------------
415 919 1,894 - 3,228
=============================================================================
The consolidated statement of cash flows presented in accordance with SFAS
95 is as follows:
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities 534 2,280 2,449 (2) 5,261
Net cash provided by (used in)
investing activities (97) 36 (545) (28) (634)
Net cash provided by (used in)
financing activities (436) (2,328) (2,258) 30 (4,992)
Currency translation differences
relating to cash and cash equivalents - - 9 - 9
-----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 1 (12) (345) - (356)
Cash and cash equivalents at
beginning of period (11) 1 1,745 - 1,735
-----------------------------------------------------------------------------
Cash and cash equivalents at
end of period (10) (11) 1,400 - 1,379
=============================================================================
Page 44
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - concluded
14. Condensed consolidating information - concluded
Issuer Guarantor
--------------------------
BP Eliminations
Cash flow statement (concluded) Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Three months ended March 31, 2002
Net cash inflow (outflow) from
operating activities 367 1,051 2,119 99 3,636
Dividends from joint ventures - - 83 - 83
Dividends from associated undertakings - - 53 - 53
Dividends from subsidiaries 15 - - (15) -
Net cash inflow (outflow) from servicing
of finance and returns on investments - 65 (337) - (272)
Tax paid - - (445) - (445)
Net cash inflow (outflow) for capital
expenditure and financial investments (150) (17) (2,315) - (2,482)
Net cash inflow (outflow) for acquisitions
and disposals - 99 (1,708) (99) (1,708)
Equity dividends paid - (1,288) (15) 15 (1,288)
-----------------------------------------------------------------------------
Net cash inflow (outflow) 232 (90) (2,565) - (2,423)
=============================================================================
Financing 214 (90) (2,407) - (2,283)
Management of liquid resources - - (165) - (165)
Increase (decrease) in cash 18 - 7 - 25
-----------------------------------------------------------------------------
232 (90) (2,565) - (2,423)
=============================================================================
The consolidated statement of cash flows presented in accordance with SFAS
95 is as follows:
Issuer Guarantor
--------------------------
BP Eliminations
Exploration Other and BP
(Alaska) Inc. BP p.l.c. subsidiaries reclassifications Group
-----------------------------------------------------------------------------
($ million)
Net cash provided by (used in)
operating activities 382 1,116 1,488 97 3,083
Net cash provided by (used in)
investing activities (150) 83 (4,038) (100) (4,205)
Net cash provided by (used in)
financing activities (214) (1,199) 2,392 3 982
Currency translation differences
relating to cash and cash equivalents - - (3) - (3)
-----------------------------------------------------------------------------
Increase (decrease) in cash
and cash equivalents 18 - (161) - (143)
Cash and cash equivalents at
beginning of period (29) 3 1,834 - 1,808
-----------------------------------------------------------------------------
Cash and cash equivalents at
end of period (11) 3 1,673 - 1,665
=============================================================================
Page 45
BP p.l.c. AND SUBSIDIARIES
ENVIRONMENTAL INDICATORS
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
Average oil realizations (a) - $/bbl
UK 30.67 20.67
USA 29.36 17.26
Rest of World 29.48 18.63
BP average 29.82 18.77
Brent oil price 31.47 21.13
West Texas Intermediate oil price 34.00 21.54
Alaska North Slope US West Coast 33.16 19.76
Average natural gas realizations - $/mcf
UK 3.32 3.12
USA 5.27 2.13
Rest of World 2.70 1.93
BP average 3.87 2.27
Henry Hub gas price (b) ($/mmBtu) 6.53 2.35
UK Gas - National Balancing point (p/therm) 21.28 19.22
Global Indicator Refining Margins (c) - $/bbl
Northwest Europe 3.70 0.09
US Gulf Coast 6.14 2.04
Midwest 4.14 2.06
US West Coast 6.77 5.43
Singapore 2.98 0.21
BP average 4.52 1.64
Chemicals Indicator Margin (d) - $/te 90(e) 80
---------------
(a) Crude oil and natural gas liquids.
(b) Henry Hub First of Month Index.
(c) The Global Indicator Refining Margin (GIM) is the average of seven regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude
with product yields characteristic of the typical level of upgrading
complexity.
(d) The Chemicals Indicator Margin (CIM) is a weighted average of externally
based product margins. It is based on market data collected by Nexant
(formerly Chem Systems) in their quarterly market analyses, then weighted
based on BP's product portfolio. While it does not cover our entire
portfolio, it includes a broad range of products. Among the products and
businesses covered in the CIM are the olefins and derivatives, the
aromatics and derivatives, linear alpha-olefins (LAOs), acetic acid, vinyl
acetate monomers and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha-olefins (PAOs), anhydrides, speciality
intermediates, and the remaining parts of the solvents and acetyls
businesses.
(e) Provisional. The data for the fourth quarter is based on two months' actual
and one month of provisional data.
Three months ended
March 31
(Unaudited)
US dollar/sterling exchange rates 2003 2002
------ ------
Average rate for the period 1.60 1.43
Period-end rate 1.57 1.42
Page 46
BP p.l.c. AND SUBSIDIARIES
OPERATING INFORMATION
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
Crude oil and natural gas liquids production
(thousand barrels per day) (net of royalties)
UK 471 482
Rest of Europe 95 104
USA 773 760
Rest of World 724 643
------ ------
Total crude oil and liquids production 2,063 1,989
====== ======
Natural gas production (million cubic feet per day)
(net of royalties)
UK 1,798 1,628
Rest of Europe 131 162
USA 3,437 3,561
Rest of World 3,651 3,395
------ ------
Total natural gas production 9,017 8,746
====== ======
Total production (a)
(thousand barrels of oil equivalent per day)
(net of royalties)
UK 781 763
Rest of Europe 118 132
USA 1,366 1,374
Rest of World 1,353 1,228
------ ------
Total production 3,618 3,497
====== ======
Natural gas sales volumes (million cubic feet per day)
UK 3,215 2,619
Rest of Europe 473 413
USA 11,734 8,733
Rest of World 11,553 9,289
------ ------
Total natural gas sales volumes (b) 26,975 21,054
====== ======
NGL sales volumes (thousand barrels per day)
UK - -
Rest of Europe - -
USA 126 153
Rest of World 232 231
------ ------
Total NGL sales volumes 358 384
====== ======
---------------
(a) Expressed in thousand barrels of oil equivalent per day (mboe/d). Natural
gas is converted to oil equivalent at 5.8 billion cubic feet: 1 million
barrels.
(b) Encompasses sales by Exploration and Production and Gas, Power and
Renewables, including marketing, trading and supply sales.
Page 47
BP p.l.c. AND SUBSIDIARIES
OPERATING INFORMATION - concluded
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
Oil sales volumes (thousand barrels per day)
Refined products
UK 279 256
Rest of Europe 1,318 1,275
USA 1,751 1,834
Rest of World 645 600
------ ------
Total marketing sales 3,993 3,965
Trading/supply sales 2,811 2,535
------ ------
Total refined product sales 6,804 6,500
Crude oil 4,529 4,809
------ ------
Total oil sales 11,333 11,309
====== ======
Refinery throughputs (thousand barrels per day)
UK 377 392
Rest of Europe 954 833
USA 1,302 1,394
Rest of World 391 375
------ ------
Total throughput 3,024 2,994
====== ======
Chemicals production (thousand tonnes)
UK 869 829
Rest of Europe 2,763 2,583
USA 2,536 2,489
Rest of World 812 710
------ ------
Total production 6,980 6,611
====== ======
Page 48
BP p.l.c. AND SUBSIDIARIES
TOTAL OPERATING PROFIT
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
By business
Exploration and Production
UK 1,134 727
Rest of Europe 193 152
USA 1,811 325
Rest of World 1,194 727
------ ------
4,332 1,931
------ ------
Gas, Power and Renewables
UK 3 2
Rest of Europe (8) 47
USA 41 (24)
Rest of World 185 90
------ ------
221 115
------ ------
Refining and Marketing
UK 68 (73)
Rest of Europe 407 270
USA 596 205
Rest of World 180 161
------ ------
1,251 563
------ ------
Chemicals
UK (11) (50)
Rest of Europe 105 41
USA 139 19
Rest of World 52 37
------ ------
285 47
------ ------
Other businesses and corporate (165) (125)
------ ------
5,924 2,531
====== ======
By geographical area
UK 1,118 576
Rest of Europe 690 498
USA 2,489 442
Rest of World 1,627 1,015
------ ------
5,924 2,531
====== ======
Page 49
BP p.l.c. AND SUBSIDIARIES
CAPITAL EXPENDITURE AND ACQUISITIONS
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
By business
Exploration and Production
UK 196 261
Rest of Europe 51 71
USA 966 1,167
Rest of World 924 814
------ ------
2,137 2,313
------ ------
Gas, Power and Renewables
UK 8 16
Rest of Europe 15 4
USA 38 16
Rest of World 7 10
------ ------
68 46
------ ------
Refining and Marketing
UK 73 76
Rest of Europe (a) 104 2,732
USA 336 303
Rest of World 24 26
------ ------
537 3,137
------ ------
Chemicals
UK - 8
Rest of Europe 31 45
USA 46 42
Rest of World 19 93
------ ------
96 188
------ ------
Other businesses and corporate 36 52
------ ------
2,874 5,736
====== ======
By geographical area
UK 301 409
Rest of Europe 202 2,852
USA 1,396 1,531
Rest of World 975 944
------ ------
2,874 5,736
====== ======
------------
(a) Three months ended March 31, 2003 included the acquisition of 51% of Veba.
Page 50
BP p.l.c. AND SUBSIDIARIES
RETURN ON AVERAGE CAPITAL EMPLOYED
Three months ended
March 31
(Unaudited)
2003 2002
------ ------
($ million)
Profit for the period 4,267 1,296
Interest (a) 99 164
Minority shareholders' interest 26 40
------ ------
Adjusted profit 4,392 1,500
====== ======
Capital employed at beginning of period:
BP shareholders' interest 69,409 65,161
Minority shareholders' interest 638 598
Finance debt 22,008 21,417
------ ------
Capital employed 92,055 87,176
====== ======
Capital employed at end of period:
BP shareholders' interest 71,076 64,902
Minority shareholders' interest 1,047 2,579
Finance debt 19,042 24,531
------ ------
Capital employed 91,165 92,012
====== ======
Average capital employed 91,610 92,012
====== ======
ROACE 19.2% 6.7%
------------
(a) Excludes interest on joint venture and associated undertakings debt as
well as unwinding of discount on provisions and effect of change in
discount rate on provisions, and is on a post-tax basis, using a deemed
tax rate equal to the US statutory tax rate.
Page 51
BP p.l.c. AND SUBSIDIARIES
NET DEBT RATIO
At March 31
(Unaudited)
2003 2002
------ ------
($ million)
Net debt ratio - net debt: net debt + equity
Gross finance debt 19,042 24,531
Cash and current asset investments 1,379 1,665
------ ------
Net debt 17,663 22,866
------ ------
Equity 72,123 67,481
Net debt ratio 20% 25%
------ ------
Acquisition adjustment (a) 15,208 18,297
------ ------
Net debt ratio - pro forma basis (b) 24% 32%
====== ======
---------------
(a) Acquisition adjustment refers to the fixed asset revaluation adjustments
and goodwill consequent upon the ARCO and Burmah Castrol acquisitions.
(b) Based on equity excluding the fixed asset revaluation adjustment and
goodwill resulting from the ARCO and Burmah Castrol acquisitions.
Page 52
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: May 1, 2003 /s/ D. J. Pearl
.........................................
D. J. PEARL
Deputy Company Secretary
Page 53