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%
======================= ==============
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