3rd Quarter Results Part 3

BP PLC 29 October 2002 BP p.l.c. Group Results Third Quarter 2002 London 29 October 2002 INVESTOR RELATIONS SUPPLEMENT REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR SPECIAL ITEMS(a) AND ACQUISITION AMORTIZATION(b) Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million Exploration and Production 771 768 668 UK 2,245 2,963 188 172 213 Rest of Europe 537 604 1,203 1,047 1,059 USA 2,771 5,340 908 902 1,110 Rest of World 2,786 3,217 ----------------------- -------------- 3,070 2,889 3,050 8,339 12,124 ----------------------- -------------- Gas, Power and Renewables 34 1 (36) UK (33) 81 27 35 17 Rest of Europe 99 125 82 13 28 USA 16 193 (18) 65 78 Rest of World 230 (13) ----------------------- -------------- 125 114 87 312 386 ----------------------- -------------- Refining and Marketing 60 39 (36) UK (24) 78 255 272 274 Rest of Europe 711 658 788 238 180 USA 435 2,840 186 136 104 Rest of World 372 469 ----------------------- -------------- 1,289 685 522 1,494 4,045 ----------------------- -------------- Chemicals (58) 12 6 UK (13) (141) 95 80 161 Rest of Europe 290 194 59 89 54 USA 196 71 17 65 51 Rest of World 153 79 ----------------------- -------------- 113 246 272 626 203 ----------------------- -------------- Other businesses and corporate (102) (75) (63) UK (182) (222) (12) 6 (7) Rest of Europe - (24) (103) (44) (36) USA (163) (223) 100 (15) (10) Rest of World (24) 121 ----------------------- -------------- (117) (128) (116) (369) (348) ----------------------- -------------- 4,480 3,806 3,815 10,402 16,410 ======================= ============== (a) The special items refer to non-recurring charges and credits. The special items for the third quarter include impairment charges and restructuring costs in Exploration and Production, an impairment charge in Gas, Power and Renewables, integration and certain other costs in Refining and Marketing, an impairment charge in Chemicals, and a provision to cover future rental payments on surplus leasehold office accommodation in Other Businesses and Corporate. (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 Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 =================================== ====================== Shares in issue at period 22,442,480 22,463,182 22,374,747 end (thousand) 22,374,747 22,442,480 - ADS equivalent 3,740,413 3,743,864 3,729,125 (thousand) 3,729,125 3,740,413 Average number of shares outstanding 22,425,374 22,426,830 22,408,297 (thousand) 22,412,655 22,449,041 - ADS equivalent 3,737,562 3,737,805 3,734,716 (thousand) 3,735,443 3,741,507 ----------------------------------- ---------------------- Replacement cost profit after exceptional 1,993 1,509 2,530 items ($m) 4,893 7,762 cents/ordinary 8.89 6.73 11.29 share 21.83 34.57 0.53 0.40 0.68 dollars/ADS 1.31 2.07 ----------------------------------- ---------------------- Replacement cost profit before exceptional 1,936 1,293 761 items ($m) 2,978 7,585 cents/ordinary 8.63 5.77 3.39 share 13.28 33.78 0.52 0.34 0.21 dollars/ADS 0.80 2.03 ----------------------------------- ---------------------- Pro forma result adjusted for special 2,645 2,181 2,294 items ($m) 6,057 9,788 11.80 9.72 10.24 cents/ordinary share 27.02 43.60 0.71 0.59 0.61 dollars/ADS 1.62 2.62 ----------------------------------- ---------------------- * Excludes shares held by the Employee Share Ownership Plans. ACQUISITION AMORTIZATION BY BUSINESS Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million Exploration and Production 42 37 378 UK 447 110 367 268 283 USA 832 1,193 34 36 114 Rest of World 182 101 ----------------------- ------------- 443 341 775 1,461 1,404 ----------------------- ------------- Refining and Marketing 93 100 106 UK 303 295 94 96 96 USA 288 282 ----------------------- ------------- 187 196 202 591 577 ----------------------- ------------- 630 537 977 Total acquisition amortization 2,052 1,981 ======================= ============= SPECIAL ITEMS BY BUSINESS (PRE-TAX) Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million Exploration and Production - 82 105 UK 237 - - - - Rest of Europe - - - 8 115 USA 185 - - - 483 Rest of World 498 - ----------------------- ------------- - 90 703 920 - ----------------------- ------------- Gas, Power and Renewables - - 30 UK 30 - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - 30 30 - ----------------------- ------------- Refining and Marketing 18 - 16 UK 16 61 33 23 38 Rest of Europe 87 123 11 (137) 29 USA (108) 19 50 - - Rest of World - 71 ----------------------- ------------- 112 (114) 83 (5) 274 ----------------------- ------------- Chemicals - 22 - UK 22 - 8 16 - Rest of Europe 18 8 - 5 - USA 35 - - - 140 Rest of World 140 - ----------------------- ------------- 8 43 140 215 8 ----------------------- ------------- Other businesses and corporate - - 35 UK 35 - - - - Rest of Europe - - - - 90 USA 90 - - - - Rest of World - - ----------------------- ------------- - - 125 125 - ----------------------- ------------- 120 19 1,081 Total special items before interest 1,285 282 2 - - Interest - bond redemption charges - 62 ----------------------- ------------- 122 19 1,081 Total 1,285 344 ======================= ============= 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 ============================================== 2Q 2002 Exploration and Production 2,458 341 90 2,889 Gas, Power and Renewables 114 - - 114 Refining and Marketing 603 196 (114) 685 Chemicals 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 (52) - (16) (68) ---------------------------------------------- RC profit before exceptional items 1,293 537 351 2,181 ============================================== Exceptional items before tax 376 Taxation on exceptional items (160) ----- RC profit after exceptional items 1,509 Stock holding gains (losses) 531 ----- HC profit 2,040 ===== 3Q 2001 Exploration and Production 2,627 443 - 3,070 Gas, Power and Renewables 125 - - 125 Refining and Marketing 990 187 112 1,289 Chemicals 105 - 8 113 Other businesses & corporate (117) - - (117) ---------------------------------------------- RC operating profit 3,730 630 120 4,480 ---------------------------------------------- Interest expense (369) - 2 (367) Taxation (1,413) - (43) (1,456) MSI (12) - - (12) ---------------------------------------------- RC profit before exceptional items 1,936 630 79 2,645 ============================================== Exceptional items before tax 184 Taxation on exceptional items (127) ----- RC profit after exceptional items 1,993 Stock holding gains (losses) (405) ----- HC profit 1,588 ===== (a) The special items refer to non-recurring charges and credits. The special items for the second quarter 2002 comprise restructuring charges for Exploration and Production and Chemicals, 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. The special items for the third quarter 2001 comprise Castrol integration costs, Erdolchemie rationalization costs and a bond redemption charge. 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 ============================================== Nine months 2002 Exploration and Production 5,958 1,461 920 8,339 Gas, Power and Renewables 282 - 30 312 Refining and Marketing 908 591 (5) 1,494 Chemicals 411 - 215 626 Other businesses & corporate (494) - 125 (369) ---------------------------------------------- RC operating profit 7,065 2,052 1,285 10,402 ---------------------------------------------- Interest expense (947) - - (947) Taxation (3,071) - (242) (3,313) MSI (69) - (16) (85) ---------------------------------------------- RC profit before exceptional items 2,978 2,052 1,027 6,057 ============================================== Exceptional items before tax 2,061 Taxation on exceptional items (146) ----- RC profit after exceptional items 4,893 Stock holding gains (losses) 1,278 ----- HC profit 6,171 ===== Nine months 2001 Exploration and Production 10,720 1,404 - 12,124 Gas, Power and Renewables 386 - - 386 Refining and Marketing 3,194 577 274 4,045 Chemicals 195 - 8 203 Other businesses & corporate (348) - - (348) ---------------------------------------------- RC operating profit 14,147 1,981 282 16,410 ---------------------------------------------- Interest expense (1,256) - 62 (1,194) Taxation (5,268) - (122) (5,390) MSI (38) - - (38) ---------------------------------------------- RC profit before exceptional items 7,585 1,981 222 9,788 ============================================== Exceptional items before tax 573 Taxation on exceptional items (396) ----- RC profit after exceptional items 7,762 Stock holding gains (losses) (603) ----- HC profit 7,159 ===== (a) The special items refer to non-recurring charges and credits. The special items for the nine months 2002 comprise restructuring charges for Exploration and Production and Chemicals, Veba, Solvay and Erdolchemie integration costs, business interruption insurance proceeds and costs related to a pipeline incident in Refining and Marketing, an adjustment to the North Sea deferred tax balance for the supplementary UK corporation tax rate, impairment charges in Exploration and Production and Gas, Power and Renewables and provisions against the investment in Indonesia in Chemicals and for lease payments for vacant office space in Other Businesses and Corporate. The special items for the nine months 2001 comprise Castrol integration costs, Erdolchemie and downstream European commercial business rationalization costs and bond redemption charges. REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR NON-CASH CHARGES AND CERTAIN OTHER ITEMS Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million Replacement cost operating profit 3,730 3,250 1,757 (reported) (a) 7,065 14,147 2,104 2,227 3,506 Depreciation and amounts provided (b) 7,886 6,401 23 147 55 Exploration expenditure written off 261 153 Dividends from JVs and associates (99) (115) (49) less share of RCOP (286) (377) (11) (3) (13) Dividends paid to minority shareholders (29) (16) (148) (48) (60) Adjust provisions to cash basis (c) (177) (77) Adjust interest and other income (34) (3) 5 to cash basis (d) (11) (76) ----------------------- ------------- 5,565 5,455 5,201 14,709 20,155 (682) (869) (702) Tax paid adjusted for certain items* (2,148) (3,158) ----------------------- ------------- 4,883 4,586 4,499 Adjusted RCOP after tax paid 12,561 16,997 ----------------------- ------------- * Calculation of tax paid adjusted for certain items (717) (927) (661) Cash tax paid (2,033) (3,238) 127 160 25 Tax charge on exceptional items 146 396 (92) (102) (66) Tax shield assumption + (261) (316) ----------------------- ------------- (682) (869) (702) (2,148) (3,158) ----------------------- ------------- + Calculation of tax shield assumption (308) (342) (218) Interest paid (869) (1,053) 30% 30% 30% Tax rate assumption (e) 30% 30% ----------------------- ------------- (92) (102) (66) (261) (316) ----------------------- ------------- (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 UK statutory tax rate. RETURN ON AVERAGE CAPITAL EMPLOYED Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million Replacement cost basis 1,936 1,293 761 RC profit before exceptional items 2,978 7,585 369 314 300 Interest 947 1,256 12 52 8 Minority shareholders' interest 69 38 ----------------------- -------------- 2,317 1,659 1,069 Adjusted RC profit 3,994 8,879 ======================= ============== 87,892 90,774 90,507 Average capital employed 89,328 87,874 10.5% 7.3% 4.7% ROACE - replacement cost basis 6.0% 13.5% ----------------------- ------------- Pro forma basis 2,317 1,659 1,069 Adjusted RC profit 3,994 8,879 630 537 977 Acquisition amortization 2,052 1,981 77 367 556 Special items (post tax) 1,043 160 87,892 90,774 90,507 Average capital employed 89,328 87,874 Average capital employed 20,673 18,163 17,581 acquisition adjustment 18,008 21,504 ----------------------- ------------- Average capital employed 67,219 72,611 72,926 (pro forma basis) 71,320 66,370 ROACE - Pro forma basis 18.0% 14.1% 14.3% adjusted for special items 13.3% 22.1% ----------------------- ------------ Historical cost basis Historical cost profit (loss) 1,588 2,040 2,835 after exceptional items 6,171 7,159 369 314 300 Interest 947 1,256 12 46 8 Minority shareholders' interest 94 38 ----------------------- -------------- 1,969 2,400 3,143 Adjusted historical cost profit 7,212 8,453 ======================= ============== 87,892 90,774 90,507 Average capital employed 89,328 87,874 9.0% 10.6% 13.9% ROACE 10.8% 12.8% NET DEBT RATIO - NET DEBT: NET DEBT + EQUITY Third Second Third Quarter Quarter Quarter Nine Months 2001 2002 2002 2002 2001 ======================= ============= $ million 20,474 21,409 22,276 Gross debt 22,276 20,474 1,957 1,569 1,290 Cash and current asset investments 1,290 1,957 ----------------------- ------------- 18,517 19,840 20,986 Net debt 20,986 18,517 ======================= ============= 67,931 68,126 69,203 Equity 69,203 67,931 21% 23% 23% Net debt ratio 23% 21% ----------------------- -------------- 20,412 18,028 17,134 Acquisition adjustment 17,134 20,412 ----------------------- -------------- 28% 28% 29% Net debt ratio - pro forma basis 29% 28% ======================= ============== This information is provided by RNS The company news service from the London Stock Exchange

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