3rd Quarter Results Pt 3 of 3
BP PLC
28 October 2003
BP p.l.c.
Group Results
Third Quarter 2003
London 28 October 2003
INVESTOR RELATIONS SUPPLEMENT
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR SPECIAL ITEMS(a) AND ACQUISITION
AMORTIZATION(b)
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
668 519 614 UK 2,353 2,245
213 141 124 Rest of Europe 458 537
1,059 1,698 1,608 USA 5,451 2,771
1,110 1,231 1,467 Rest of World 4,028 2,786
----------------------- --------------
3,050 3,589 3,813 12,290 8,339
----------------------- --------------
Gas, Power and Renewables
(36) 18 13 UK 34 (33)
17 (5) (12) Rest of Europe (26) 99
28 85 54 USA 175 16
78 5 43 Rest of World 212 230
----------------------- --------------
87 103 98 395 312
----------------------- --------------
Refining and Marketing
(36) 79 (9) UK 206 (24)
274 464 397 Rest of Europe 1,216 711
180 418 392 USA 1,002 435
104 174 198 Rest of World 543 372
----------------------- --------------
522 1,135 978 2,967 1,494
----------------------- --------------
Petrochemicals
6 25 (27) UK (36) (13)
161 199 54 Rest of Europe 341 290
54 60 54 USA 156 196
51 24 43 Rest of World 110 153
----------------------- --------------
272 308 124 571 626
----------------------- --------------
Other businesses and corporate
(63) (122) (99) UK (297) (182)
(7) (2) 3 Rest of Europe (6) -
(36) (51) (235) USA (384) (163)
(10) 41 11 Rest of World 68 (24)
----------------------- --------------
(116) (134) (320) (619) (369)
----------------------- --------------
3,815 5,001 4,693 15,604 10,402
======================= ==============
(a) The special items refer to non-recurring charges and credits. The
special items for the third quarter comprise net charges resulting from
the reassessment of environmental remediation provisions, Veba
integration costs in Refining and Marketing and a provision to cover
future rental payments on surplus property 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
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
=================================== ======================
Shares in issue
at period
22,374,747 22,101,622 22,107,715 end (thousand) 22,107,715 22,374,747
- ADS equivalent
3,729,125 3,683,604 3,684,619 (thousand) 3,684,619 3,729,125
Average number
of shares
outstanding
22,408,297 22,164,026 22,092,365 (thousand)* 22,193,403 22,412,655
- ADS equivalent
3,734,716 3,694,004 3,682,061 (thousand) 3,698,901 3,735,443
----------------------------------- ----------------------
Replacement cost
profit after
exceptional
2,535 2,585 2,310 items ($m) 8,363 4,916
cents/ordinary
11.31 11.68 10.47 share 37.68 21.93
0.68 0.70 0.63 dollars/ADS 2.26 1.32
----------------------------------- ----------------------
Replacement cost
profit before
exceptional
766 2,454 2,142 items ($m) 7,724 3,001
cents/ordinary
3.42 11.08 9.71 share 34.80 13.39
0.20 0.67 0.58 dollars/ADS 2.09 0.80
----------------------------------- ----------------------
Pro forma result
adjusted for special
2,299 3,115 2,868 items ($m) 9,712 6,080
10.26 14.06 13.00 cents/ordinary share 43.76 27.12
0.62 0.85 0.78 dollars/ADS 2.63 1.62
----------------------------------- ----------------------
* Excludes shares held by the Employee Share Ownership Plans.
ACQUISITION AMORTIZATION BY BUSINESS
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
378 34 32 UK 99 447
283 257 240 USA 756 832
114 133 21 Rest of World 285 182
----------------------- -------------
775 424 293 1,140 1,461
----------------------- -------------
Refining and Marketing
106 110 110 UK 330 303
96 95 95 USA 285 288
----------------------- -------------
202 205 205 615 591
----------------------- -------------
977 629 498 Total acquisition amortization 1,755 2,052
======================= =============
SPECIAL ITEMS BY BUSINESS (PRE-TAX)
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
105 12 - UK 65 237
- - - Rest of Europe - -
115 - - USA 81 185
483 - - Rest of World 5 498
----------------------- -------------
703 12 - 151 920
----------------------- -------------
Gas, Power and Renewables
30 - - UK - 30
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
30 - - - 30
----------------------- -------------
Refining and Marketing
16 - - UK - 16
38 41 72 Rest of Europe 131 87
29 - 246 USA 246 (108)
- - - Rest of World - -
----------------------- -------------
83 41 318 377 (5)
----------------------- -------------
Petrochemicals
- - 36 UK 36 22
- - - Rest of Europe - 18
- (5) 7 USA 2 35
140 - - Rest of World - 140
----------------------- -------------
140 (5) 43 38 215
----------------------- -------------
Other businesses and corporate
35 - - UK - 35
- - - Rest of Europe - -
90 - (10) USA (10) 90
- - - Rest of World - -
----------------------- -------------
125 - (10) (10) 125
----------------------- -------------
1,081 48 351 Total 556 1,285
======================= =============
PRODUCTION AND REALIZATIONS
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
Production
Crude oil (mb/d) (net of royalties)
395 325 312 UK 359 436
101 80 74 Rest of Europe 81 100
561 569 558 USA 578 584
679 738 908 Rest of World 780 646
----------------------- -------------
1,736 1,712 1,852 Total crude oil production 1,798 1,766
======================= =============
Natural gas liquids (mb/d) (net of royalties)
19 18 23 UK 24 23
6 5 5 Rest of Europe 5 6
193 144 141 USA 150 184
29 32 33 Rest of World 32 29
----------------------- -------------
Total natural gas
247 199 202 liquids production 211 242
======================= =============
Liquids (b)(mb/d) (net of royalties)
414 343 335 UK 383 459
107 85 79 Rest of Europe 86 106
754 713 699 USA 728 768
708 770 941 Rest of World 812 675
----------------------- -------------
1,983 1,911 2,054 Total liquids production 2,009 2,008
======================= =============
Natural gas (a) (mmcf/d) (net of royalties)
1,240 1,407 1,267 UK 1,489 1,488
131 103 98 Rest of Europe 111 150
3,450 3,145 3,005 USA 3,194 3,525
3,661 3,784 4,031 Rest of World 3,823 3,468
----------------------- -------------
8,482 8,439 8,401 Total natural gas production 8,617 8,631
======================= =============
Average realizations
Crude oil ($/bbl)
26.78 25.16 27.68 UK 28.33 24.22
25.86 27.09 28.61 USA 29.19 23.15
25.13 24.16 26.30 Rest of World 26.69 22.36
26.01 25.73 27.72 BP Average 28.25 23.35
======================= =============
Natural gas liquids ($/bbl)
15.30 11.97 22.62 UK 20.09 14.43
12.59 17.80 18.37 USA 18.15 11.62
13.75 20.16 21.76 Rest of World 21.65 13.07
13.15 17.49 19.39 BP Average 18.96 12.23
======================= =============
Liquids (b) ($/bbl)
26.26 24.45 27.34 UK 27.83 23.74
22.94 25.61 26.90 USA 27.34 20.71
24.43 23.93 25.98 Rest of World 26.35 21.81
24.40 24.90 26.79 BP Average 27.24 21.99
======================= =============
Natural gas ($/mcf)
2.58 2.84 2.69 UK 2.99 2.75
2.34 4.52 4.14 USA 4.66 2.41
1.99 2.53 2.31 Rest of World 2.51 1.99
2.25 3.39 3.08 BP Average 3.46 2.32
======================= =============
(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
==============================================
2Q 2003
Exploration and Production 3,153 424 12 3,589
Gas, Power and Renewables 103 - - 103
Refining and Marketing 889 205 41 1,135
Petrochemicals 313 - (5) 308
Other businesses & corporate (134) - - (134)
---------------------------------------------
RC operating profit 4,324 629 48 5,001
---------------------------------------------
Interest expense (191) - - (191)
Taxation (1,619) - (16) (1,635)
MSI (60) - - (60)
----------------------------------------------
RC profit before
exceptional items 2,454 629 32 3,115
================================
Exceptional items before tax 280
Taxation on exceptional items (149)
-----
RC profit after
exceptional items 2,585
Stock holding gains (losses) (951)
-----
HC profit 1,634
=====
3Q 2002
Exploration and Production 1,572 775 703 3,050
Gas, Power and Renewables 57 - 30 87
Refining and Marketing 237 202 83 522
Petrochemicals 132 - 140 272
Other businesses & corporate (241) - 125 (116)
---------------------------------------------
RC operating profit 1,757 977 1,081 3,815
---------------------------------------------
Interest expense (300) - - (300)
Taxation (688) - (525) (1,213)
MSI (3) - - (3)
----------------------------------------------
RC profit before
exceptional items 766 977 556 2,299
================================
Exceptional items before tax 1,794
Taxation on exceptional items (25)
-----
RC profit after
exceptional items 2,535
Stock holding gains (losses) 305
-----
HC profit 2,840
=====
(a) The special items for the second quarter 2003 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. The special items
in the third quarter 2002 include impairment charges and restructuring
costs in Exploration & Production, an impairment charge in Gas, Power &
Renewables, integration and certain other costs in Refining and
Marketing, an impairment charge in Petrochemicals and a provision to
cover future rental payments on surplus leasehold office accommodation
in Other businesses and corporate.
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 2003
Exploration and Production 10,999 1,140 151 12,290
Gas, Power and Renewables 395 - - 395
Refining and Marketing 1,975 615 377 2,967
Petrochemicals 533 - 38 571
Other businesses & corporate (609) - (10) (619)
----------------------------------------------
RC operating profit 13,293 1,755 556 15,604
----------------------------------------------
Interest expense (624) - - (624)
Taxation (4,816) - (323) (5,139)
MSI (129) - - (129)
----------------------------------------------
RC profit before
exceptional items 7,724 1,755 233 9,712
================================
Exceptional items before tax 846
Taxation on exceptional items (207)
-----
RC profit after
exceptional items 8,363
Stock holding gains (losses) (68)
-----
HC profit 8,295
=====
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
Petrochemicals 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 (46) - (16) (62)
----------------------------------------------
RC profit before
exceptional items 3,001 2,052 1,027 6,080
================================
Exceptional items before tax 2,061
Taxation on exceptional items (146)
-----
RC profit after
exceptional items 4,916
Stock holding gains (losses) 1,278
-----
HC profit 6,194
=====
(a) The special items for the nine months 2003 comprise restructuring and
impairment charges in Exploration and Production, Veba integration costs
and environmental charges in Refining and Marketing, restructuring
costs, environmental charges and a reduction in the provision for costs
associated with closure of polypropylene capacity in Petrochemicals, a
credit related to environmental remediation provisions in Other
Businesses and Corporate and tax restructuring benefits. The special
items for the nine months 2002 comprise restructuring charges for
Exploration and Production and Petrochemicals, 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
investments in Indonesia in Petrochemicals and for lease payments for
vacant office space in Other businesses and corporate.
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR
NON-CASH CHARGES AND CERTAIN OTHER ITEMS
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
Replacement cost operating profit
1,757 4,324 3,844 (reported) (a) 13,293 7,065
3,506 2,653 2,485 Depreciation and amounts provided (b) 7,847 7,886
55 43 75 Exploration expenditure written off 168 261
Dividends from JVs and associates
(49) (6) (327) less share of RCOP (562) (286)
(13) (11) (4) Dividends paid to minority shareholders (17) (29)
(60) (112) 487 Adjust provisions to cash basis (c) 349 (177)
Adjust interest and other income
5 (6) (5) to cash basis (d) (22) (11)
----------------------- -------------
5,201 6,885 6,555 21,056 14,709
(712) (1,861) (856) Tax paid adjusted for certain items* (3,367)(2,191)
----------------------- -------------
4,489 5,024 5,699 Adjusted RCOP after tax paid 17,689 12,518
----------------------- -------------
* Calculation of tax paid adjusted
for certain items
(661) (1,853) (803) Cash tax paid (3,288)(2,033)
25 149 4 Tax charge on exceptional items 207 146
(76) (157) (57) Tax shield assumption + (286) (304)
----------------------- -------------
(712) (1,861) (856) (3,367)(2,191)
----------------------- -------------
+ Calculation of tax shield assumption
(218) (446) (163) Interest paid (816) (869)
35% 35% 35% Tax rate assumption (e) 35% 35%
----------------------- -------------
(76) (157) (57) (286) (304)
----------------------- -------------
(a) Total replacement cost operating profit is before tax, 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) Add the amount by which the charge for provisions exceeds the
utilization of provisions.
(d) Deduct the amount by which interest and other income exceeds the total
of 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
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
Replacement cost basis
766 2,454 2,142 RC profit before exceptional items 7,724 3,001
145 78 82 Interest + 259 462
3 60 43 Minority shareholders' interest 129 46
----------------------- --------------
914 2,592 2,267 Adjusted RC profit 8,112 3,509
======================= ==============
90,507 91,420 93,001 Average capital employed 93,191 89,328
4.0% 11.3% 9.8% ROACE - replacement cost basis 11.6% 5.2%
----------------------- --------------
Pro forma basis
914 2,592 2,267 Adjusted RC profit 8,112 3,509
977 629 498 Acquisition amortization 1,755 2,052
556 32 228 Special items (post-tax) 233 1,043
90,507 91,420 93,001 Average capital employed 93,191 89,328
Average capital employed
17,581 14,839 14,110 acquisition adjustment 15,211 18,008
----------------------- --------------
Average capital employed
72,926 76,581 78,891 (pro forma basis) 77,980 71,320
ROACE - Pro forma basis
13.4% 17.0% 15.2% adjusted for special items 17.3% 12.3%
----------------------- -------------
Historical cost basis
Historical cost profit
2,840 1,634 2,394 after exceptional items 8,295 6,194
145 78 82 Interest + 259 462
3 60 43 Minority shareholders' interest 129 71
----------------------- --------------
2,988 1,772 2,519 Adjusted historical cost profit 8,683 6,727
======================= ==============
90,507 91,420 93,001 Average capital employed 93,191 89,328
13.2% 7.8% 10.8% ROACE - historical cost basis 12.4% 10.0%
+ 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
Third Second Third
Quarter Quarter Quarter Nine Months
2002 2003 2003 2003 2002
======================= =============
$ million
22,276 18,594 19,970 Gross debt 19,970 22,276
1,290 2,444 1,495 Cash and current asset investments 1,495 1,290
----------------------- --------------
20,986 16,150 18,475 Net debt 18,475 20,986
======================= =============
69,203 73,081 74,356 Equity 74,356 69,203
23% 18% 20% Net debt ratio 20% 23%
----------------------- --------------
17,134 14,469 13,751 Acquisition adjustment 13,751 17,134
----------------------- --------------
29% 22% 23% Net debt ratio - pro forma basis 23% 29%
======================= ==============
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