2nd Quarter Results Pt 3 of 3

BP PLC 29 July 2003 BP p.l.c. Group Results Second Quarter and Half Year 2003 London 29 July 2003 INVESTOR RELATIONS SUPPLEMENT REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR SPECIAL ITEMS(a) AND ACQUISITION AMORTIZATION(b) Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million Exploration and Production 768 1,220 519 UK 1,739 1,577 172 193 141 Rest of Europe 334 324 1,047 2,145 1,698 USA 3,843 1,712 902 1,330 1,231 Rest of World 2,561 1,676 ----------------------- -------------- 2,889 4,888 3,589 8,477 5,289 ----------------------- -------------- Gas, Power and Renewables 1 3 18 UK 21 3 35 (9) (5) Rest of Europe (14) 82 13 36 85 USA 121 (12) 65 164 5 Rest of World 169 152 ----------------------- -------------- 114 194 103 297 225 ----------------------- -------------- Refining and Marketing 39 136 79 UK 215 12 272 355 464 Rest of Europe 819 437 238 192 418 USA 610 255 136 171 174 Rest of World 345 268 ----------------------- -------------- 685 854 1,135 1,989 972 ----------------------- -------------- Petrochemicals 12 (34) 25 UK (9) (19) 80 88 199 Rest of Europe 287 129 89 42 60 USA 102 142 65 43 24 Rest of World 67 102 ----------------------- -------------- 246 139 308 447 354 ----------------------- -------------- Other businesses and corporate (75) (76) (122) UK (198) (119) 6 (7) (2) Rest of Europe (9) 7 (44) (98) (51) USA (149) (127) (15) 16 41 Rest of World 57 (14) ----------------------- -------------- (128) (165) (134) (299) (253) ----------------------- -------------- 3,806 5,910 5,001 10,911 6,587 ======================= ============== (a) The special items refer to non-recurring charges and credits. The special items for the second quarter are restructuring costs in Exploration and Production, Veba integration costs in Refining and Marketing, and a reduction in the provision for costs associated with closure of polypropylene capacity in Petrochemicals. (b) Acquisition amortization is depreciation and amortization relating to the fixed asset revaluation adjustments and goodwill consequent upon the ARCO and Burmah Castrol acquisitions. PER SHARE AMOUNTS Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 =================================== ====================== Shares in issue at period 22,463,182 22,241,895 22,101,622 end (thousand) 22,101,622 22,463,182 - ADS equivalent 3,743,864 3,706,983 3,683,604 (thousand) 3,683,604 3,743,864 Average number of shares outstanding 22,426,830 22,326,486 22,164,026 (thousand)* 22,244,797 22,414,904 - ADS equivalent 3,737,805 3,721,081 3,694,004 (thousand) 3,707,466 3,735,817 ----------------------------------- ---------------------- Replacement cost profit after exceptional 1,527 3,468 2,585 items ($m) 6,053 2,381 cents/ordinary 6.81 15.53 11.68 share 27.21 10.62 0.41 0.93 0.70 dollars/ADS 1.63 0.64 ----------------------------------- ---------------------- Replacement cost profit before exceptional 1,311 3,128 2,454 items ($m) 5,582 2,235 cents/ordinary 5.85 14.01 11.08 share 25.09 9.97 0.35 0.84 0.67 dollars/ADS 1.51 0.60 ----------------------------------- ---------------------- Pro forma result adjusted for special 2,199 3,729 3,115 items ($m) 6,844 3,781 9.80 16.70 14.06 cents/ordinary share 30.76 16.86 0.59 1.00 0.85 dollars/ADS 1.85 1.01 ----------------------------------- ---------------------- * Excludes shares held by the Employee Share Ownership Plans. ACQUISITION AMORTIZATION BY BUSINESS Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million Exploration and Production 37 33 34 UK 67 69 268 259 257 USA 516 549 36 131 133 Rest of World 264 68 ----------------------- ------------- 341 423 424 847 686 ----------------------- ------------- Refining and Marketing 100 110 110 UK 220 197 96 95 95 USA 190 192 ----------------------- ------------- 196 205 205 410 389 ----------------------- ------------- 537 628 629 Total acquisition amortization 1,257 1,075 ======================= ============= SPECIAL ITEMS BY BUSINESS (PRE-TAX) Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million Exploration and Production 82 53 12 UK 65 132 - - - Rest of Europe - - 8 81 - USA 81 70 - 5 - Rest of World 5 15 ----------------------- ------------- 90 139 12 151 217 ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- Refining and Marketing - - - UK - - 23 18 41 Rest of Europe 59 49 (137) - - USA - (137) - - - Rest of World - - ----------------------- ------------- (114) 18 41 59 (88) ----------------------- ------------- Petrochemicals 22 - - UK - 22 16 - - Rest of Europe - 18 5 - (5) USA (5) 35 - - - Rest of World - - ----------------------- ------------- 43 - (5) (5) 75 ----------------------- ------------- Other businesses and corporate - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- 19 157 48 Total 205 204 ======================= ============= PRODUCTION AND REALIZATIONS Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= Production Crude oil (mb/d) (net of royalties) 457 442 325 UK 383 457 102 90 80 Rest of Europe 85 100 605 606 569 USA 588 594 644 692 738 Rest of World 715 630 ----------------------- ------------- 1,808 1,830 1,712 Total crude oil production 1,771 1,781 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 24 29 18 UK 24 24 6 5 5 Rest of Europe 5 6 186 167 144 USA 155 181 28 32 32 Rest of World 32 28 ----------------------- ------------- Total natural gas 244 233 199 liquids production 216 239 ======================= ============= Liquids (b)(mb/d) (net of royalties) 481 471 343 UK 407 481 108 95 85 Rest of Europe 90 106 791 773 713 USA 743 775 672 724 770 Rest of World 747 658 ----------------------- ------------- 2,052 2,063 1,911 Total liquids production 1,987 2,020 ======================= ============= Natural gas (a) (mmcf/d) (net of royalties) 1,602 1,798 1,407 UK 1,602 1,615 157 131 103 Rest of Europe 117 159 3,565 3,437 3,145 USA 3,290 3,563 3,343 3,651 3,784 Rest of World 3,718 3,369 ----------------------- ------------- 8,667 9,017 8,439 Total natural gas production 8,727 8,706 ======================= ============= Average realizations Crude oil ($/bbl) 25.15 31.16 25.16 UK 28.60 23.09 24.53 31.74 27.09 USA 29.48 21.86 22.75 29.91 24.16 Rest of World 26.90 20.92 24.27 31.07 25.73 BP Average 28.50 22.07 ======================= ============= Natural gas liquids ($/bbl) 13.95 23.28 11.97 UK 18.86 14.08 11.91 18.26 17.80 USA 18.05 11.12 13.63 23.05 20.16 Rest of World 21.63 12.73 12.40 19.82 17.49 BP Average 18.76 11.77 ======================= ============= Liquids (b) ($/bbl) 24.59 30.67 24.45 UK 28.04 22.59 21.81 29.36 25.61 USA 27.55 19.61 22.20 29.48 23.93 Rest of World 26.58 20.43 22.81 29.82 24.90 BP Average 27.47 20.81 ======================= ============= Natural gas ($/mcf) 2.50 3.32 2.84 UK 3.11 2.81 2.76 5.27 4.52 USA 4.91 2.44 2.04 2.70 2.53 Rest of World 2.63 1.98 2.45 3.87 3.39 BP Average 3.64 2.36 ======================= ============= (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. (b) Crude oil and natural gas liquids. RECONCILIATION OF HISTORICAL COST PROFIT (LOSS) TO PRO FORMA RESULT ADJUSTED FOR SPECIAL ITEMS pro forma result adjusted for Reported Acquisition Special special $ million Earnings Amortization Items(a) items ============================================== 1Q 2003 Exploration and Production 4,326 423 139 4,888 Gas, Power and Renewables 194 - - 194 Refining and Marketing 631 205 18 854 Petrochemicals 139 - - 139 Other businesses & corporate (165) - - (165) ---------------------------------------------- RC operating profit 5,125 628 157 5,910 ---------------------------------------------- Interest expense (220) - - (220) Taxation (1,751) - (184) (1,935) MSI (26) - - (26) ---------------------------------------------- RC profit before exceptional items 3,128 628 (27) 3,729 ================================ Exceptional items before tax 394 Taxation on exceptional items (54) ----- RC profit after exceptional items 3,468 Stock holding gains (losses) 799 ----- HC profit 4,267 ===== 2Q 2002 Exploration and Production 2,458 341 90 2,889 Gas, Power and Renewables 114 - - 114 Refining and Marketing 603 196 (114) 685 Petrochemicals 203 - 43 246 Other businesses & corporate (128) - - (128) ---------------------------------------------- RC operating profit 3,250 537 19 3,806 ---------------------------------------------- Interest expense (314) - - (314) Taxation (1,591) - 348 (1,243) MSI (34) - (16) (50) ---------------------------------------------- RC profit before exceptional items 1,311 537 351 2,199 ================================ Exceptional items before tax 376 Taxation on exceptional items (160) ----- RC profit after exceptional items 1,527 Stock holding gains (losses) 531 ----- HC profit 2,058 ===== (a) The special items for the first quarter 2003 are restructuring and impairment charges in Exploration and Production, Veba integration costs in Refining and Marketing and tax restructuring benefits. The special items in the second quarter 2002 comprise restructuring charges for Exploration and Production and Petrochemicals, business interruption insurance proceeds and costs related to a pipeline incident in Refining and Marketing, Veba, Solvay and Erdolchemie integration costs and an adjustment to the North Sea deferred tax balance for the supplementary UK corporation tax rate. RECONCILIATION OF HISTORICAL COST PROFIT (LOSS) TO PRO FORMA RESULT ADJUSTED FOR SPECIAL ITEMS pro forma result adjusted for Reported Acquisition Special special $ million Earnings Amortization Items(a) items ============================================== 1H 2003 Exploration and Production 7,479 847 151 8,477 Gas, Power and Renewables 297 - - 297 Refining and Marketing 1,520 410 59 1,989 Petrochemicals 452 - (5) 447 Other businesses & corporate (299) - - (299) ---------------------------------------------- RC operating profit 9,449 1,257 205 10,911 ---------------------------------------------- Interest expense (411) - - (411) Taxation (3,370) - (200) (3,570) MSI (86) - - (86) ---------------------------------------------- RC profit before exceptional items 5,582 1,257 5 6,844 ================================ Exceptional items before tax 674 Taxation on exceptional items (203) ----- RC profit after exceptional items 6,053 Stock holding gains (losses) (152) ----- HC profit 5,901 ===== 1H 2002 Exploration and Production 4,386 686 217 5,289 Gas, Power and Renewables 225 - - 225 Refining and Marketing 671 389 (88) 972 Petrochemicals 279 - 75 354 Other businesses & corporate (253) - - (253) ---------------------------------------------- RC operating profit 5,308 1,075 204 6,587 ---------------------------------------------- Interest expense (647) - - (647) Taxation (2,383) - 283 (2,100) MSI (43) - (16) (59) ---------------------------------------------- RC profit before exceptional items 2,235 1,075 471 3,781 ================================ Exceptional items before tax 267 Taxation on exceptional items (121) ----- RC profit after exceptional items 2,381 Stock holding gains (losses) 973 ----- HC profit 3,354 ===== (a) The special items for the first half 2003 comprise restructuring and impairment charges in Exploration and Production, Veba integration costs in Refining and Marketing, a reduction in the provision for costs associated with closure of polypropylene capacity in Petrochemicals and tax restructuring benefits. The special items for the first half 2002 comprise restructuring charges for Exploration and Production and Petrochemicals, business interruption insurance proceeds and costs related to a pipeline incident in Refining and Marketing, Veba, Solvay and Erdolchemie integration costs and an adjustment to the North Sea deferred tax balance for the supplementary UK corporation tax rate. REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR NON-CASH CHARGES AND CERTAIN OTHER ITEMS Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million Replacement cost operating profit 3,250 5,125 4,324 (reported) (a) 9,449 5,308 2,227 2,709 2,653 Depreciation and amounts provided (b) 5,362 4,380 147 50 43 Exploration expenditure written off 93 206 Dividends from JVs and associates (115) (229) (6) less share of RCOP (235) (237) (3) (2) (11) Dividends paid to minority shareholders (13) (16) (48) (26) (112) Adjust provisions to cash basis (c) (138) (117) Adjust interest and other income (3) (11) (6) to cash basis (d) (17) (16) ----------------------- ------------- 5,455 7,616 6,885 14,501 9,508 (887) (650) (1,861) Tax paid adjusted for certain items* (2,511) (1,479) ----------------------- ------------- 4,568 6,966 5,024 Adjusted RCOP after tax paid 11,990 8,029 ----------------------- ------------- * Calculation of tax paid adjusted for certain items (927) (632) (1,853) Cash tax paid (2,485) (1,372) 160 54 149 Tax charge on exceptional items 203 121 (120) (72) (157) Tax shield assumption + (229) (228) ----------------------- ------------- (887) (650) (1,861) (2,511) (1,479) ----------------------- ------------- + Calculation of tax shield assumption (342) (207) (446) Interest paid (653) (651) 35% 35% 35% Tax rate assumption (e) 35% 35% ----------------------- ------------- (120) (72) (157) (229) (228) ----------------------- ------------- (a) Total replacement cost operating profit is before exceptional items, stock holding gains and losses and interest expense. (b) Includes depreciation and amortization relating to the fixed asset revaluation adjustment and goodwill consequent upon the ARCO and Burmah Castrol acquisitions. (c) Calculated as the net of charge for provisions and utilization of provisions. (d) Calculated as interest and other income, less interest received and dividends received from the group cash flow statement. (e) Deemed tax rate for tax shield adjustment is equal to the US statutory tax rate. RETURN ON AVERAGE CAPITAL EMPLOYED Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million Replacement cost basis 1,311 3,128 2,454 RC profit before exceptional items 5,582 2,235 153 99 78 Interest + 177 317 34 26 60 Minority shareholders' interest 86 43 ----------------------- -------------- 1,498 3,253 2,592 Adjusted RC profit 5,845 2,595 ======================= ============== 90,774 91,610 91,420 Average capital employed 91,865 88,356 6.6% 14.2% 11.3% ROACE - replacement cost basis 12.7% 5.9% ----------------------- ------------- Pro forma basis 1,498 3,253 2,592 Adjusted RC profit 5,845 2,595 537 628 629 Acquisition amortization 1,257 1,075 367 (27) 32 Special items (post-tax) 5 487 90,774 91,610 91,420 Average capital employed 91,865 88,356 Average capital employed 18,163 15,940 14,839 acquisition adjustment 15,571 18,455 ----------------------- ------------- Average capital employed 72,611 75,670 76,581 (pro forma basis) 76,294 69,901 ROACE - Pro forma basis 13.2% 20.4% 17.0% adjusted for special items 18.6% 11.9% ----------------------- ------------ Historical cost basis Historical cost profit (loss) 2,058 4,267 1,634 after exceptional items 5,901 3,354 153 99 78 Interest + 177 317 28 26 60 Minority shareholders' interest 86 68 ----------------------- -------------- 2,239 4,392 1,772 Adjusted historical cost profit 6,164 3,739 ======================= ============== 90,774 91,610 91,420 Average capital employed 91,865 88,356 9.9% 19.2% 7.8% ROACE - historical cost basis 13.4% 8.5% + 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. NET DEBT RATIO - NET DEBT: NET DEBT + EQUITY Second First Second Quarter Quarter Quarter First Half 2002 2003 2003 2003 2002 ======================= ============= $ million 21,409 19,042 18,594 Gross debt 18,594 21,409 1,569 1,379 2,444 Cash and current asset investments 2,444 1,569 ----------------------- -------------- 19,840 17,663 16,150 Net debt 16,150 19,840 ======================= ============= 68,126 72,123 73,081 Equity 73,081 68,126 23% 20% 18% Net debt ratio 18% 23% ----------------------- -------------- 18,028 15,208 14,469 Acquisition adjustment 14,469 18,028 ----------------------- -------------- 28% 24% 22% Net debt ratio - pro forma basis 22% 28% ======================= ============== This information is provided by RNS The company news service from the London Stock Exchange

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