2Q04 Results Part 2 of 2

BP PLC 27 July 2004 Part 2 of 2 BP p.l.c. and Subsidiaries Summarized Group Results Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 3,434 4,242 4,302 Exploration and Production 8,544 8,152 888 720 1,344 Refining and Marketing 2,064 1,516 306 (25) 208 Petrochemicals 183 443 141 198 216 Gas, Power and Renewables 414 357 (153) 1,129 (164) Other businesses and corporate 965 (319) ----------------------- -------------- Replacement cost profit before 4,616 6,264 5,906 interest and tax 12,170 10,149 (951) 648 462 Stock holding gains (losses)(Note 5) 1,110 (152) ----------------------- -------------- Historical cost profit before 3,665 6,912 6,368 interest and tax 13,280 9,997 149 152 145 Interest expense (Note 6) 297 325 127 76 76 Other finance expense (Note 7) 152 256 ----------------------- -------------- 3,389 6,684 6,147 Profit before taxation 12,831 9,416 1,744 1,822 2,199 Taxation (Note 8) 4,021 3,526 ----------------------- -------------- 1,645 4,862 3,948 Profit after taxation 8,810 5,890 60 44 52 Minority shareholders' interest 96 86 ----------------------- -------------- 1,585 4,818 3,896 Profit for the period 8,714 5,804 ----------------------- -------------- 1,434 1,483 1,536 Distribution to shareholders 3,019 2,820 ----------------------- -------------- Earnings per ordinary share - cents 7.19 21.81 17.80 Basic 39.61 26.09 7.16 21.34 17.43 Diluted 38.77 26.00 ======================= ============== Replacement Cost Results Historical cost profit 1,585 4,818 3,896 for the period 8,714 5,804 Stock holding (gains) losses net of minority shareholders' 951 (648) (462) interest (1,110) 152 ----------------------- -------------- Replacement cost profit 2,536 4,170 3,434 for the period 7,604 5,956 ----------------------- -------------- Earnings per ordinary share - cents On replacement cost profit 11.45 18.88 15.68 for the period 34.56 26.77 ======================= ============= Summarized Group Balance Sheet 30 June 31 December 2004 2003 ===================== $ million Fixed assets Intangible assets 13,113 13,642 Tangible assets 91,275 91,911 Investments 19,034 17,458 --------------------- 123,422 123,011 --------------------- Current assets Stocks 12,470 11,617 Debtors 36,347 33,902 Investments 172 185 Cash at bank and in hand 1,531 1,947 --------------------- 50,520 47,651 Creditors - amounts falling due within one year Finance debt 7,393 9,456 Other creditors 44,859 41,128 --------------------- Net current assets (liabilities) (1,732) (2,933) --------------------- Total assets less current liabilities 121,690 120,078 Creditors - amounts falling due after more than one year Finance debt 12,465 12,869 Other creditors 5,728 6,090 Provisions for liabilities and charges Deferred taxation 14,539 14,371 Other provisions 8,610 8,815 --------------------- Net assets excluding pensions and other post-retirement benefit balances 80,348 77,933 Defined benefit pension plan surplus 1,258 1,021 Defined benefit pension plan and other post-retirement benefit plan deficits (7,556) (7,510) --------------------- Net assets 74,050 71,444 Minority shareholders' interest - equity 1,232 1,125 --------------------- BP shareholders' interest 72,818 70,319 ===================== Movement in BP shareholders' interest: $ million At 31 December 2003 75,938 Prior year adjustment - change in accounting policy (see Note 1) (5,619) ------ As restated 70,319 Profit for the period 8,714 Distribution to shareholders (3,019) Currency translation differences (net of tax) (202) Issue of ordinary share capital for employee share schemes 222 Net release of shares by ESOP trusts 33 Repurchase of ordinary share capital (3,249) ------ At 30 June 2004 72,818 ====== Summarized Group Cash Flow Statement Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Net cash inflow from 7,346 7,674 6,917 operating activities (a) 14,591 13,307 ----------------------- --------------- 28 178 7 Dividends from joint ventures 185 41 ----------------------- --------------- Dividends from 177 31 97 associated undertakings 128 232 ----------------------- --------------- Servicing of finance and returns on investments 52 41 45 Interest received 86 83 (446) (165) (154) Interest paid (319) (653) 42 12 18 Dividends received 30 48 Dividends paid to (11) (2) (8) minority shareholders (10) (13) ----------------------- --------------- Net cash outflow from servicing of (363) (114) (99) finance and returns on investments (213) (535) ----------------------- --------------- Taxation (280) (322) (388) UK corporation tax (710) (592) (1,573) (258) (1,231) Overseas tax (1,489) (1,893) ----------------------- --------------- (1,853) (580) (1,619) Tax paid (2,199) (2,485) ----------------------- --------------- Capital expenditure and financial investment (2,760) (2,941) (2,764) Payments for fixed assets (5,705) (5,631) Proceeds from the sale 1,652 2,839 352 of fixed assets 3,191 3,969 ----------------------- --------------- Net cash outflow for capital expenditure and (1,108) (102) (2,412) financial investment (2,514) (1,662) ----------------------- -------------- Acquisitions and disposals (150) - (14) Acquisitions, net of cash acquired (14) (150) Proceeds from the sale 19 - 305 of businesses 305 179 Net investment in - (1,273) - TNK-BP joint venture (1,273) - Net investment in (2) (92) (21) other joint ventures (113) (16) Investments in associated (331) (433) (148) undertakings (581) (517) ----------------------- --------------- Net cash (outflow) inflow for (464) (1,798) 122 acquisitions and disposals (1,676) (504) ----------------------- --------------- (1,386) (1,492) (1,478) Equity dividends paid (2,970) (2,783) ----------------------- --------------- 2,377 3,797 1,535 Net cash inflow (outflow) 5,332 5,611 ======================= =============== 1,355 3,598 2,155 Financing (b) 5,753 4,954 93 138 (153) Management of liquid resources (15) 106 929 61 (467) (Decrease) increase in cash (406) 551 ----------------------- --------------- 2,377 3,797 1,535 5,332 5,611 ======================= =============== Analysis of Cash Flow Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million (a) Reconciliation of historical cost profit before interest and tax to net cash inflow from operating activities Historical cost profit before 3,665 6,912 6,368 interest and tax 13,280 9,997 2,653 2,814 2,738 Depreciation and amounts provided 5,552 5,362 Exploration expenditure 43 67 22 written off 89 93 Net operating charge for pensions and other post-retirement 45 (23) (34) benefits, less contributions (57) (198) Share of profits of joint ventures (207) (641) (868) and associated undertakings (1,509) (511) (100) (64) (74) Interest and other income (138) (148) (Profit) loss on sale of fixed (280) (1,230) 127 assets and businesses (1,103) (674) 29 67 50 Charge for provisions 117 58 (209) (155) (95) Utilization of provisions (250) (325) 193 247 (1,412) (Increase) decrease in stocks (1,165) 569 3,263 (1,586) (1,400) (Increase) decrease in debtors (2,986) (3,382) (1,749) 1,266 1,495 Increase (decrease) in creditors 2,761 2,466 ----------------------- --------------- Net cash inflow from 7,346 7,674 6,917 operating activities 14,591 13,307 ======================= =============== (b) Financing (208) (628) (430) Long-term borrowing (1,058) (1,223) 607 836 434 Repayments of long-term borrowing 1,270 1,010 (418) (156) (111) Short-term borrowing (267) (1,044) Repayments of short-term 388 2,408 314 borrowing 2,722 4,287 ----------------------- --------------- 369 2,460 207 2,667 3,030 Issue of ordinary share capital (14) (126) (96) for employee share schemes (222) (81) - 15 44 Purchase of shares by ESOP trusts 59 6 Repurchase of ordinary 1,000 1,249 2,000 share capital 3,249 1,999 ----------------------- --------------- Net cash outflow 1,355 3,598 2,155 (inflow) from financing 5,753 4,954 ======================= =============== Adjusted Operating Cash Flow Net cash inflow from operating 7,346 7,674 6,917 activities (a) 14,591 13,307 Dividends received from 28 178 7 joint ventures 185 41 Dividends received from 177 31 97 associated undertakings 128 232 Net cash outflow from servicing of finance and returns on (363) (114) (99) investments (213) (535) ----------------------- --------------- Adjusted operating cash 7,188 7,769 6,922 flow (pre-tax) 14,691 13,045 (1,704) (650) (1,647) Tax paid on operations (2,297) (2,282) ----------------------- --------------- Adjusted operating cash 5,484 7,119 5,275 flow (post-tax) 12,394 10,763 ----------------------- --------------- * Components of tax payments (1,704) (650) (1,647) Tax paid on operations (2,297) (2,282) Tax refunded/(paid) on (149) 70 28 exceptional items (b) 98 (203) ----------------------- --------------- (1,853) (580) (1,619) Total tax paid (2,199) (2,485) ======================= =============== (a) Includes pre-tax discretionary pension funding of $81 million in 2Q 2004 ($56 million post-tax), $166 million in first half 2004 ($116 million post- tax), $27 million in 2Q 2003 ($17 million post-tax) and $335 million in first half 2003 ($214 million post-tax). (b) Approximated as the tax credit/(charge) on exceptional items in the income statement. Capital Expenditure and Acquisitions Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 220 153 211 UK 364 416 73 48 45 Rest of Europe 93 124 1,005 932 1,027 USA 1,959 1,968 1,136 2,690 1,022 Rest of World (a) 3,712 2,044 ----------------------- ------------- 2,434 3,823 2,305 6,128 4,552 ----------------------- ------------- Refining and Marketing 66 77 82 UK 159 139 64 92 173 Rest of Europe 265 168 228 258 330 USA 588 564 27 37 55 Rest of World 92 51 ----------------------- ------------- 385 464 640 1,104 922 ----------------------- ------------- Petrochemicals 30 20 22 UK 42 30 21 38 53 Rest of Europe 91 52 62 47 68 USA 115 106 85 61 38 Rest of World 99 106 ----------------------- ------------- 198 166 181 347 294 ----------------------- ------------- Gas, Power and Renewables 24 1 5 UK 6 32 9 2 3 Rest of Europe 5 24 52 11 14 USA 25 93 41 47 60 Rest of World 107 64 ----------------------- ------------- 126 61 82 143 213 ----------------------- ------------- Other businesses and corporate 21 2 13 UK 15 39 - - - Rest of Europe - 1 162 9 13 USA 22 172 - - - Rest of World - 1 ----------------------- ------------- 183 11 26 37 213 ----------------------- ------------- 3,326 4,525 3,234 7,759 6,194 ======================= ============= By geographical area 361 253 333 UK 586 656 167 180 274 Rest of Europe 454 369 1,509 1,257 1,452 USA 2,709 2,903 1,289 2,835 1,175 Rest of World (a) 4,010 2,266 ----------------------- ------------- 3,326 4,525 3,234 7,759 6,194 ----------------------- ------------- (a) First quarter and first half 2004 included $1,354 million investment in TNK's interest in Slavneft within TNK-BP. Exchange rates US dollar/sterling average rate 1.62 1.84 1.81 for the period 1.82 1.61 1.65 1.83 1.81 US dollar/sterling period-end rate 1.81 1.65 US dollar/euro average rate 1.14 1.25 1.20 for the period 1.23 1.10 1.14 1.22 1.21 US dollar/euro period-end rate 1.21 1.14 ======================= ============= Analysis of Replacement Cost Profit Before Interest and Tax Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 993 823 835 UK 1,658 2,071 143 163 206 Rest of Europe 369 338 1,374 1,494 1,503 USA 2,997 3,032 924 1,762 1,758 Rest of World 3,520 2,711 ----------------------- ------------- 3,434 4,242 4,302 8,544 8,152 ----------------------- ------------- Refining and Marketing (117) (189) (195) UK (384) (160) 499 289 444 Rest of Europe 733 860 337 409 872 USA 1,281 482 169 211 223 Rest of World 434 334 ----------------------- ------------- 888 720 1,344 2,064 1,516 ----------------------- ------------- Petrochemicals (38) (156) (62) UK (218) (128) 232 154 183 Rest of Europe 337 349 82 (109) 3 USA (106) 136 30 86 84 Rest of World 170 86 ----------------------- ------------- 306 (25) 208 183 443 ----------------------- ------------- Gas, Power and Renewables 17 12 (2) UK 10 21 (5) (11) (3) Rest of Europe (14) (14) 126 79 114 USA 193 183 3 118 107 Rest of World 225 167 ----------------------- ------------- 141 198 216 414 357 ----------------------- ------------- Other businesses and corporate (149) (163) (50) UK (213) (242) (2) (6) (1) Rest of Europe (7) (10) (43) (30) (109) USA (139) (124) 41 1,328 (4) Rest of World 1,324 57 ----------------------- ------------- (153) 1,129 (164) 965 (319) ----------------------- ------------- 4,616 6,264 5,906 12,170 10,149 ======================= ============= By geographical area 706 327 526 UK 853 1,562 867 589 829 Rest of Europe 1,418 1,523 1,876 1,843 2,383 USA 4,226 3,709 1,167 3,505 2,168 Rest of World 5,673 3,355 ----------------------- ------------- 4,616 6,264 5,906 12,170 10,149 ======================= ============= Included above: Share of profits of joint 101 485 734 ventures 1,219 218 110 141 130 Share of profits of associated undertakings 271 290 ----------------------- ------------- 211 626 864 1,490 508 ======================= ============= Pro Forma Result: Replacement Cost Profit Before Interest and Tax Adjusted for Acquisition Amortization Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 1,027 858 867 UK 1,725 2,138 143 163 206 Rest of Europe 369 338 1,631 1,708 1,713 USA 3,421 3,548 1,057 1,839 1,772 Rest of World 3,611 2,975 ----------------------- ------------- 3,858 4,568 4,558 9,126 8,999 ----------------------- ------------- Refining and Marketing (7) (63) (72) UK (135) 60 499 289 444 Rest of Europe 733 860 432 504 967 USA 1,471 672 169 211 223 Rest of World 434 334 ----------------------- ------------- 1,093 941 1,562 2,503 1,926 ----------------------- ------------- Petrochemicals (38) (156) (62) UK (218) (128) 232 154 183 Rest of Europe 337 349 82 (109) 3 USA (106) 136 30 86 84 Rest of World 170 86 ----------------------- ------------- 306 (25) 208 183 443 ----------------------- ------------- Gas, Power and Renewables 17 12 (2) UK 10 21 (5) (11) (3) Rest of Europe (14) (14) 126 79 114 USA 193 183 3 118 107 Rest of World 225 167 ----------------------- ------------- 141 198 216 414 357 ----------------------- ------------- Other businesses and corporate (149) (163) (50) UK (213) (242) (2) (6) (1) Rest of Europe (7) (10) (43) (30) (109) USA (139) (124) 41 1,328 (4) Rest of World 1,324 57 ----------------------- ------------- (153) 1,129 (164) 965 (319) ----------------------- ------------- 5,245 6,811 6,380 13,191 11,406 ----------------------- ------------- By geographical area 850 488 681 UK 1,169 1,849 867 589 829 Rest of Europe 1,418 1,523 2,228 2,152 2,688 USA 4,840 4,415 1,300 3,582 2,182 Rest of World 5,764 3,619 ----------------------- ------------- 5,245 6,811 6,380 13,191 11,406 ======================= ============= Analysis of Exceptional Items Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 576 (1) (2) UK (3) 577 - - - Rest of Europe - - (69) (19) 43 USA 24 (229) (174) 231 (155) Rest of World 76 418 ----------------------- ------------- 333 211 (114) 97 766 ----------------------- ------------- Refining and Marketing (31) (36) (58) UK (94) (46) 12 (17) - Rest of Europe (17) (28) (30) (5) 7 USA 2 (26) - (82) 33 Rest of World (49) (1) ----------------------- ------------- (49) (140) (18) (158) (101) ----------------------- ------------- Petrochemicals - (7) 3 UK (4) 3 - (19) 73 Rest of Europe 54 (1) - (126) (70) USA (196) 4 2 (2) - Rest of World (2) 3 ----------------------- ------------- 2 (154) 6 (148) 9 ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - 9 - - USA - 9 (3) - - Rest of World - (3) ----------------------- ------------- 6 - - - 6 ----------------------- ------------- Other businesses and corporate (10) (1) 1 UK - (10) - - (1) Rest of Europe (1) (1) (2) - - USA - 5 - 1,314 (1) Rest of World 1,313 - ----------------------- ------------- (12) 1,313 (1) 1,312 (6) ----------------------- ------------- Profit (loss) on sale of fixed assets and businesses or termination 280 1,230 (127) of operations 1,103 674 (149) 70 28 Taxation credit (charge) 98 (203) ----------------------- ------------- 131 1,300 (99) Exceptional items after taxation 1,201 471 ======================= ============= Identified Non-operating Items and UPIS Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production (12) - - UK - (65) - - - Rest of Europe - - 106 (66) (247) USA (a) (313) (100) - (123) - Rest of World (123) (5) ----------------------- ------------- 94 (189) (247) (436) (170) ----------------------- ------------- Refining and Marketing - - - UK - - (41) - - Rest of Europe - (59) - - - USA - - - - - Rest of World - - ----------------------- ------------- (41) - - - (59) ----------------------- ------------- Petrochemicals - - - UK - - - - - Rest of Europe - - 5 - - USA - 5 - - - Rest of World - - ----------------------- ------------- 5 - - - 5 ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- Other businesses and corporate - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- 58 (189) (247) Total before taxation (436) (224) (21) 66 88 Taxation credit (charge) 154 206 ----------------------- ------------- 37 (123) (159) Total after taxation (282) (18) ======================= ============= (a) Includes charges for Unrealized Profit in Stock (UPIS) of $87 million in 2Q 2004 and $153 million in the first half 2004 and a credit of $106 million in 2Q 2003 and a charge of $19 million in the first half of 2003, which removes the upstream margin from downstream inventories. Acquisition Amortization by Business Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 34 35 32 UK 67 67 257 214 210 USA 424 516 133 77 14 Rest of World 91 264 ----------------------- ------------- 424 326 256 582 847 ----------------------- ------------- Refining and Marketing 110 126 123 UK 249 220 95 95 95 USA 190 190 ----------------------- ------------- 205 221 218 439 410 ----------------------- ------------- 629 547 474 Total acquisition amortization 1,021 1,257 ======================= ============= Production and Realizations Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Production Crude oil (mb/d) (net of royalties) 325 344 321 UK 333 383 80 73 80 Rest of Europe 76 85 569 564 541 USA 552 588 738 1,361 1,379 Rest of World 1,370 715 ----------------------- ------------- 1,712 2,342 2,321 Total crude oil production 2,331 1,771 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 18 20 21 UK 20 24 5 5 5 Rest of Europe 5 5 144 137 140 USA 139 155 32 29 31 Rest of World 30 32 ----------------------- ------------- Total natural gas 199 191 197 liquids production 194 216 ======================= ============= Liquids (a)(mb/d) (net of royalties) 343 364 342 UK 353 407 85 78 85 Rest of Europe 81 90 713 701 681 USA 691 743 770 1,390 1,410 Rest of World 1,400 747 ----------------------- ------------- 1,911 2,533 2,518 Total liquids production 2,525 1,987 ======================= ============= Natural gas (b) (mmcf/d) (net of royalties) 1,407 1,355 1,213 UK 1,284 1,602 103 142 136 Rest of Europe 139 117 3,145 2,869 2,790 USA 2,829 3,290 3,784 4,234 4,286 Rest of World 4,260 3,718 ----------------------- ------------- 8,439 8,600 8,425 Total natural gas production 8,512 8,727 ======================= ============= Average realizations Crude oil ($/bbl) 25.16 29.36 33.99 UK 31.60 28.60 27.09 32.69 35.82 USA 34.22 29.48 24.16 30.80 32.64 Rest of World 31.69 26.90 25.73 31.30 34.47 BP Average 32.85 28.50 ======================= ============= Natural gas liquids ($/bbl) 11.97 25.70 28.30 UK 27.04 18.86 17.80 22.25 23.13 USA 22.71 18.05 20.16 24.61 22.17 Rest of World 23.36 21.63 17.49 23.14 23.71 BP Average 23.43 18.76 ======================= ============= Liquids (a) ($/bbl) 24.45 29.16 33.64 UK 31.33 28.04 25.61 31.08 33.67 USA 32.36 27.55 23.93 30.42 31.90 Rest of World 31.14 26.58 24.90 30.48 33.27 BP Average 31.85 27.47 ======================= ============= Natural gas ($/mcf) 2.84 4.70 3.59 UK 4.18 3.11 4.52 4.72 5.11 USA 4.91 4.91 2.53 2.67 2.54 Rest of World 2.60 2.63 3.39 3.79 3.68 BP Average 3.74 3.64 ======================= ============= (a) Crude oil and natural gas liquids. (b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. Reconciliation of Historical Cost Profit (Loss) to Pro Forma Result Reported Acquisition Pro forma $ million earnings amortization result ====================================== 1Q 2004 Exploration and Production 4,242 326 4,568 Refining and Marketing 720 221 941 Petrochemicals (25) - (25) Gas, Power and Renewables 198 - 198 Other businesses and corporate 1,129 - 1,129 -------------------------------------- RC profit before interest and tax 6,264 547 6,811 Interest and other finance expense (228) - (228) Taxation (1,822) - (1,822) MSI (44) - (44) -------------------------------------- RC profit 4,170 547 4,717 ================= Stock holding gains (losses) 648 ----- HC profit 4,818 ===== 2Q 2003 Exploration and Production 3,434 424 3,858 Refining and Marketing 888 205 1,093 Petrochemicals 306 - 306 Gas, Power and Renewables 141 - 141 Other businesses and corporate (153) - (153) -------------------------------------- RC profit before interest and tax 4,616 629 5,245 Interest and other finance expense (276) - (276) Taxation (1,744) - (1,744) MSI (60) - (60) -------------------------------------- RC profit 2,536 629 3,165 ================= Stock holding gains (losses) (951) ----- HC profit 1,585 ===== Reconciliation of Historical Cost Profit (Loss) to Pro Forma Result Reported Acquisition Pro forma $ million earnings amortization result ====================================== 1H 2004 Exploration and Production 8,544 582 9,126 Refining and Marketing 2,064 439 2,503 Petrochemicals 183 - 183 Gas, Power and Renewables 414 - 414 Other businesses and corporate 965 - 965 -------------------------------------- RC profit before interest and tax 12,170 1,021 13,191 Interest and other finance expense 449 - 449 Taxation 4,021 - 4,021 MSI 96 - 96 -------------------------------------- RC profit 7,604 1,021 8,625 ================= Stock holding gains (losses) 1,110 ----- HC profit 8,714 ===== 1H 2003 Exploration and Production 8,152 847 8,999 Refining and Marketing 1,516 410 1,926 Petrochemicals 443 - 443 Gas, Power and Renewables 357 - 357 Other businesses and corporate (319) - (319) -------------------------------------- RC profit before interest and tax 10,149 1,257 11,406 Interest and other finance expense (581) - (581) Taxation (3,526) - (3,526) MSI (86) - (86) -------------------------------------- RC profit 5,956 1,257 7,213 ================= Stock holding gains (losses) (152) ----- HC profit 5,804 ===== Return on Average Capital Employed Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost basis 2,536 4,170 3,434 RC profit for the period (a) 7,604 5,956 78 64 62 Interest (b) 126 177 60 44 52 Minority shareholders' interest 96 86 ----------------------- -------------- 2,674 4,278 3,548 Adjusted RC profit 7,826 6,219 ======================= ============== 85,472 93,858 93,965 Average capital employed 93,876 85,980 12.5% 18.2% 15.1% ROACE - replacement cost basis 16.7% 14.5% ----------------------- -------------- Pro forma basis 2,674 4,278 3,548 Adjusted RC profit (a) 7,826 6,219 629 547 474 Acquisition amortization 1,021 1,257 ----------------------- -------------- Adjusted RC profit - 3,303 4,825 4,022 pro forma basis 8,847 7,476 ======================= ============== 85,472 93,858 93,965 Average capital employed 93,876 85,980 Average capital employed 14,839 13,146 12,689 acquisition adjustment 12,905 15,571 ----------------------- -------------- Average capital employed 70,633 80,712 81,276 (pro forma basis) 80,971 70,409 18.7% 23.9% 19.8% ROACE - Pro forma basis 21.9% 21.2% ----------------------- ------------- Historical cost basis 1,585 4,818 3,896 Profit for the period (a) 8,714 5,804 78 64 62 Interest (b) 126 177 60 44 52 Minority shareholders' interest 96 86 ----------------------- -------------- 1,723 4,926 4,010 Adjusted historical cost profit 8,936 6,067 ======================= ============== 85,472 93,858 93,965 Average capital employed 93,876 85,980 8.1% 21.0% 17.1% ROACE - historical cost basis 19.0% 14.1% (a) 2Q 2004 includes ($99) million in respect of exceptional items and ($159) million in respect of non-operating items and UPIS. First half 2004 includes $1,201 million in respect of exceptional items and ($282) million in respect of non-operating items and UPIS. 2Q 2003 includes $131 million in respect of exceptional items and $37 million in respect of non-operating items and UPIS. First half 2003 includes $471 million in respect of exceptional items and ($18) million in respect of non- operating items and UPIS. (b) Excludes interest on joint venture and associated undertakings' debt and is on a post-tax basis using a deemed tax rate equal to the US statutory tax rate. Pre-Tax Cash Returns Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost profit before 4,616 6,264 5,906 interest and tax 12,170 10,149 (280) (1,230) 127 Exceptional items (1,103) (674) ----------------------- -------------- 4,336 5,034 6,033 Replacement cost operating profit 11,067 9,475 629 547 474 Acquisition amortization 1,021 1,257 ----------------------- -------------- Pro forma replacement cost 4,965 5,581 6,507 operating profit 12,088 10,732 - 123 160 Non-cash non-operating items 283 49 Pro forma DD&A, adjusted for non- 2,024 2,144 2,104 cash non-operating items 4,248 4,056 ----------------------- -------------- 6,989 7,848 8,771 Cash returns numerator 16,619 14,837 ======================= ============== 85,666 93,947 93,982 Capital employed 93,982 85,666 Liabilities for current and 15,550 17,207 17,461 deferred taxation 17,461 15,550 ----------------------- -------------- 101,216 111,154 111,443 Operating capital employed 111,443 101,216 (14,469)(12,930)(12,447) Acquisition adjustment (12,447)(14,469) ----------------------- -------------- 86,747 98,224 98,996 Cash returns denominator 98,996 86,747 ======================= ============== 86,066 97,350 98,610 Average cash returns denominator 97,736 85,291 ======================= ============== 32% 32% 36% Cash return 34% 35% Net Debt Ratio - Net Debt: Net Debt + Equity Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 18,594 19,937 19,858 Gross debt 19,858 18,594 2,444 2,334 1,703 Cash and current asset investments 1,703 2,444 ----------------------- -------------- 16,150 17,603 18,155 Net debt 18,155 16,150 ======================= ============== 67,072 74,010 74,124 Equity 74,124 67,072 19% 19% 20% Net debt ratio 20% 19% ----------------------- -------------- 14,469 12,930 12,447 Acquisition adjustment 12,447 14,469 ----------------------- -------------- 23% 22% 23% Net debt ratio - pro forma basis 23% 23% ======================= ============== Notes 1. Restatement of comparative information Comparative information for 2003 has been restated to reflect the changes described below. (a) Transfer of natural gas liquids activities With effect from 1 January 2004 natural gas liquids (NGLs) activities have been transferred from the Exploration and Production segment to Gas, Power and Renewables. (b) New accounting standard for pensions and other post-retirement benefits With effect from 1 January 2004 BP has adopted Financial Reporting Standard No. 17 'Retirement Benefits' (FRS 17). 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. This contrasts with Statement of Standard Accounting Practice No. 24 'Accounting for Pension Costs', which requires the cost of providing pensions to be recognized on a systematic and rational basis over the period during which the employer benefits from the employee's services. The difference between the amount charged in the income statement and the amount paid as contributions into the pension fund is shown as a prepayment or provision on the balance sheet. (c) Accounting for Employee Share Ownership Plans With effect from 1 January 2004 BP has adopted Urgent Issues Task Force Abstract No. 38 'Accounting for ESOP Trusts'. This abstract requires that BP shares held by the group for the purposes of Employee Share Ownership Plans (ESOPs) are deducted from equity on the balance sheet. Such shares were previously classified as fixed asset investments. Balance sheet at 31 December 2003 Restated Reported ==================== $ million Fixed assets Intangible assets 13,642 13,642 Tangible assets 91,911 91,911 Investments 17,458 17,554 -------------------- 123,011 123,107 -------------------- Current assets 47,651 54,465 Creditors - amounts falling due within one year 50,584 50,584 ------------------- Net current assets (liabilities) (2,933) 3,881 ------------------- Total assets less current liabilities 120,078 126,988 Creditors - amounts falling due after more than one year 18,959 18,959 Provisions for liabilities and charges Deferred taxation 14,371 15,273 Other provisions 8,815 15,693 ------------------- Net assets excluding pension and other post-retirement benefit balances 77,933 77,063 Defined benefit pension plan surplus 1,021 - Defined benefit pension plan and other post-retirement benefit plan deficits (7,510) - ------------------- Net assets 71,444 77,063 Minority shareholders' interest 1,125 1,125 ------------------- BP shareholders' interest 70,319 75,938 =================== Notes Income statements Restated Reported Second First Second First Quarter Half Quarter Half 2003 2003 2003 2003 ================ ================ $ million Exploration and Production 3,434 8,152 3,486 8,245 Refining and Marketing 888 1,516 840 1,419 Petrochemicals 306 443 315 461 Gas, Power and Renewables 141 357 109 303 Other businesses and corporate (153) (319) (146) (305) ----------------------------------- Replacement cost profit before interest and tax 4,616 10,149 4,604 10,123 Stock holding gains (losses) (951) (152) (951) (152) ----------------------------------- Historical cost profit before interest and tax 3,665 9,997 3,653 9,971 Interest expense 149 325 191 411 Other finance expense 127 256 - - ----------------------------------- Profit before taxation 3,389 9,416 3,462 9,560 Taxation 1,744 3,526 1,768 3,573 ----------------------------------- Profit after taxation 1,645 5,890 1,694 5,987 Minority shareholders' interest 60 86 60 86 ----------------------------------- Profit for the period 1,585 5,804 1,634 5,901 =================================== Distribution to shareholders 1,434 2,820 1,434 2,820 ----------------------------------- Earnings per ordinary share - cents Basic 7.19 26.09 7.41 26.52 Diluted 7.16 26.00 7.39 26.44 =================================== Notes 2. Turnover Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business 7,272 8,166 8,213 Exploration and Production 16,379 16,150 34,874 41,694 45,467 Refining and Marketing 87,161 74,369 4,197 4,510 4,805 Petrochemicals 9,315 8,318 14,910 20,975 18,434 Gas, Power and Renewables 39,409 32,990 Other businesses 129 121 132 and corporate 253 240 ----------------------- --------------- 61,382 75,466 77,051 152,517 132,067 Less: sales between 6,956 7,864 7,960 businesses 15,824 15,610 ----------------------- --------------- 54,426 67,602 69,091 Group excluding JVs 136,693 116,457 Share of sales by 364 1,878 2,063 joint ventures 3,941 762 ----------------------- --------------- 54,790 69,480 71,154 140,634 117,219 ======================= =============== By geographical area Group excluding JVs 13,161 17,296 17,355 UK 34,651 28,293 12,501 12,041 13,332 Rest of Europe 25,373 25,818 24,103 31,803 33,541 USA 65,344 53,444 12,102 15,817 15,787 Rest of World 31,604 25,838 ----------------------- --------------- 61,867 76,957 80,015 156,972 133,393 7,441 9,355 10,924 Less: sales between areas 20,279 16,936 ----------------------- --------------- 54,426 67,602 69,091 136,693 116,457 ======================= =============== 3. Replacement cost profit Replacement cost profits reflect the current cost of supplies. The replacement cost profit for the period is arrived at by excluding from the historical cost profit stock holding gains and losses. Notes 4. Operating profits are after charging: Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration expense 2 2 3 UK 5 5 5 2 6 Rest of Europe 8 9 47 97 63 USA 160 84 47 35 36 Rest of World 71 115 ----------------------- -------------- 101 136 108 244 213 ======================= ============== Production taxes (a) 58 126 46 UK petroleum revenue tax 172 191 324 399 378 Overseas production taxes 777 695 ----------------------- -------------- 382 525 424 949 886 ======================= ============== (a) Production taxes are charged against Exploration and Production's operating profit and are not included in the charge for taxation in Note 8. 5. Stock holding gains (losses) (3) 8 - Exploration and Production 8 3 (773) 529 428 Refining and Marketing 957 (153) (103) 121 40 Petrochemicals 161 43 (72) (10) (6) Gas, Power and Renewables (16) (45) ---------------------- -------------- (951) 648 462 1,110 (152) ====================== ============== Notes 6. Interest expense Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 163 149 147 Group interest payable 296 350 (43) (50) (52) Capitalized (102) (77) ----------------------- -------------- 120 99 95 194 273 17 41 39 Joint ventures 80 30 12 12 11 Associated undertakings 23 22 ----------------------- -------------- 149 152 145 297 325 ======================= ============== 7. Other finance expense Interest on pension and other post-retirement benefit 460 500 491 plan liabilities 991 920 Expected return on pension and other post-retirement (375) (498) (491) benefit plan assets (989) (750) ----------------------- -------------- Interest net of expected return 85 2 - on plan assets 2 170 Unwinding of discount 42 48 50 on provisions 98 86 Unwinding of discount on deferred consideration for acquisition of investment - 26 26 in TNK-BP 52 - ----------------------- -------------- 127 76 76 152 256 ======================= ============== 8. Charge for taxation 1,406 1,706 2,165 Current 3,871 2,987 338 116 34 Deferred 150 539 ----------------------- -------------- 1,744 1,822 2,199 4,021 3,526 ======================= ============== 379 345 366 UK 711 830 1,365 1,477 1,833 Overseas 3,310 2,696 ----------------------- -------------- 1,744 1,822 2,199 4,021 3,526 ======================= ============== Notes 9. Analysis of changes in net debt Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Opening balance 19,042 22,325 19,937 Finance debt 22,325 22,008 1,151 1,947 2,006 Less: Cash 1,947 1,520 228 185 328 Current asset investments 185 215 ----------------------- --------------- 17,663 20,193 17,603 Opening net debt 20,193 20,273 ----------------------- --------------- Closing balance 18,594 19,937 19,858 Finance debt 19,858 18,594 2,115 2,006 1,531 Less: Cash 1,531 2,115 329 328 172 Current asset investments 172 329 ----------------------- --------------- 16,150 17,603 18,155 Closing net debt 18,155 16,150 ----------------------- --------------- Decrease (increase) 1,513 2,590 (552) in net debt 2,038 4,123 ======================= =============== Movement in cash/ 929 61 (467) bank overdrafts (406) 551 (Decrease) increase in 93 138 (153) current asset investments (15) 106 Net cash outflow (inflow) from financing(excluding 369 2,460 207 share capital) 2,667 3,030 Exchange of Exchangeable Bonds for Lukoil American - - - Depositary Shares - 420 106 14 7 Other movements 21 170 ----------------------- -------------- Movement in net debt before 1,497 2,673 (406) exchange effects 2,267 4,277 16 (83) (146) Exchange adjustments (229) (154) ----------------------- -------------- Decrease (increase) 1,513 2,590 (552) in net debt 2,038 4,123 ======================= ============== Notes 10. TNK-BP Operational and Financial Information Second First Second Quarter Quarter Quarter First Half 2003 2004 2004 2004 2003 ======================= ============== Production (Net of royalties) (BP share) - 766 814 Crude oil (mb/d) 790 - - 382 450 Natural gas (mmcf/d) 416 - - 832 891 Total hydrocarbons (mboe/d)(a) 862 - ======================= ============== Average oil marker prices ($/bbl) 24.10 29.01 32.32 Urals (NWE - cif) 30.67 26.85 24.18 28.98 32.60 Urals (Med - cif) 30.79 26.97 7.44 17.08 19.71 Domestic Oil 18.40 6.47 ======================= ============== $ million $ million Income statement (BP share) Replacement cost profit - 374 581 before interest and tax 955 - - - - Stock holding gains (losses) - - - (30) (26) Interest expense ... (56) - - (115) (171) Taxation (286) - - (10) (10) Minority shareholders' interest (20) - ----------------------- -------------- - 219 374 Net Income 593 - ======================= ============== ... Excludes unwinding of discount - 26 26 on deferred consideration 52 - ======================= ============== Cash Flow Additional investment in - (1,416) - TNK-BP joint venture (1,416) - Dividends related to period - 143 - prior to acquisition 143 - ----------------------- -------------- Net investment in TNK-BP - (1,273) - joint venture (1,273) - ======================= ============== - 119 - Dividends received 119 - ======================= ============== Balance Sheet 30 June 31 December 2004 2003 ======== ============ $ million Fixed assets - investments Gross assets 12,239 10,339 Gross liabilities (3,361) (3,290) -------- -------- 8,878 7,049 ======== ======== Deferred consideration Due within one year 1,244 1,227 Due after more than one year 2,387 2,352 -------- -------- 3,631 3,579 ======== ======== (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. BP's share of the result of the TNK-BP joint venture has been included within Exploration and Production with effect from 29 August 2003. TNK-BP operational and financial information has been estimated and includes adjustments to net income in respect of prior periods amounting to charges of $7 million in 2Q 2004 and $36 million in first half 2004. Notes 11. Statutory accounts The financial information shown in this publication is unaudited and does not constitute statutory accounts. The 2003 Annual Report and Accounts have been delivered to the UK Registrar of Companies; the report of the auditors on those accounts was unqualified. Contacts London New York ------------------- ---------------- Press Office Roddy Kennedy Ian Stewart +44 (0)20 7496 4624 +1 212 451 8026 Investor Relations Fergus McLeod Terry LaMore +44 (0)20 7496 4717 +1 212 451 8034 http://www.bp.com/investors This information is provided by RNS The company news service from the London Stock Exchange

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