Final Results - Part 2 of 2

BP PLC 08 February 2005 BP p.l.c. and Subsidiaries Summarized Group Results Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 2,848 4,883 5,093 Exploration and Production 18,520 14,666 320 1,081 1,577 Refining and Marketing 4,722 2,318 41 188 (1,271) Petrochemicals (900) 568 86 130 399 Gas, Power and Renewables 943 570 465 (424) (227) Other businesses and corporate 314 (184) ----------------------- -------------- Replacement cost profit before 3,760 5,858 5,571 interest and tax 23,599 17,938 84 1,027 (494) Stock holding gains (losses)(Note 5) 1,643 16 ----------------------- -------------- Historical cost profit before 3,844 6,885 5,077 interest and tax 25,242 17,954 160 156 189 Interest expense (Note 6) 642 644 152 79 126 Other finance expense (Note 7) 357 547 ----------------------- -------------- 3,532 6,650 4,762 Profit before taxation 24,243 16,763 1,157 2,109 2,152 Taxation (Note 8) 8,282 6,111 ----------------------- -------------- 2,375 4,541 2,610 Profit after taxation 15,961 10,652 41 58 76 Minority shareholders' interest 230 170 ----------------------- -------------- 2,334 4,483 2,534 Profit for the period 15,731 10,482 ----------------------- -------------- 1,495 1,530 1,822 Distribution to shareholders 6,371 5,753 ======================= ============== Earnings per ordinary share - cents 10.56 20.67 11.80 Basic 72.08 47.27 10.32 20.41 11.61 Diluted 70.79 46.83 ======================= ============== Replacement Cost Results Historical cost profit 2,334 4,483 2,534 for the period 15,731 10,482 Stock holding (gains) losses net of minority shareholders' (84) (1,027) 494 interest (1,643) (16) ----------------------- -------------- Replacement cost profit 2,250 3,456 3,028 for the period 14,088 10,466 ----------------------- -------------- Earnings per ordinary share - cents On replacement cost profit 10.18 15.96 14.03 for the period 64.55 47.20 ======================= ============= Summarized Group Balance Sheet 31 December 31 December 2004 2003 ===================== $ million Fixed assets Intangible assets 12,076 13,642 Tangible assets 96,748 91,911 Investments 18,406 17,458 --------------------- 127,230 123,011 --------------------- Current assets Stocks 15,698 11,617 Debtors 46,696 33,902 Investments 328 185 Cash at bank and in hand 1,156 1,947 --------------------- 63,878 47,651 Creditors - amounts falling due within one year Finance debt 10,184 9,456 Other creditors 54,341 41,128 --------------------- Net current assets (liabilities) (647) (2,933) --------------------- Total assets less current liabilities 126,583 120,078 Creditors - amounts falling due after more than one year Finance debt 12,907 12,869 Other creditors 4,505 6,030 Provisions for liabilities and charges Deferred taxation 15,050 14,371 Other provisions 9,608 8,599 --------------------- Net assets excluding pensions and other post-retirement benefit balances 84,513 78,209 Defined benefit pension plan surplus 1,475 1,146 Defined benefit pension plan deficits (5,863) (5,005) Other post-retirement benefit plan deficits (2,126) (2,630) --------------------- Net assets 77,999 71,720 Minority shareholders' interest - equity 1,343 1,125 --------------------- BP shareholders' interest 76,656 70,595 ===================== Movement in BP shareholders' interest: $ million At 31 December 2003 75,938 Prior year adjustment - change in accounting policy (see Note 1) (5,343) ------ As restated 70,595 Profit for the period 15,731 Distribution to shareholders (6,371) Currency translation differences (net of tax) 2,136 Actuarial gain (loss) on pension and other post-retirement benefit plans (net of tax) 203 Unrealised gain on acquisition of further investment in equity-accounted investments 94 Issue of ordinary share capital for employee share schemes 487 Issue of ordinary share capital for TNK-BP 1,250 Net release of shares by ESOP trusts 21 Net movement in LTPP provision 58 Repurchase of ordinary share capital (7,548) ------ At 31 December 2004 76,656 ====== Summarized Group Cash Flow Statement Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Net cash inflow from 3,500 6,919 7,044 operating activities (a) 28,554 21,698 ----------------------- --------------- 51 1,061 662 Dividends from joint ventures 1,908 131 ----------------------- --------------- Dividends from 120 69 94 associated undertakings 291 417 ----------------------- --------------- Servicing of finance and returns on investments 51 50 196 Interest received 332 175 (190) (152) (223) Interest paid (694) (1,006) 66 6 17 Dividends received 53 140 Dividends paid to (3) (15) (8) minority shareholders (33) (20) ----------------------- --------------- Net cash outflow from servicing of (76) (111) (18) finance and returns on investments (342) (711) ----------------------- --------------- Taxation (329) (299) (438) UK corporation tax (1,447) (1,185) (1,187) (1,489) (1,953) Overseas tax (4,931) (3,619) ----------------------- --------------- (1,516) (1,788) (2,391) Tax paid (6,378) (4,804) ----------------------- --------------- Capital expenditure and financial investment (3,683) (3,251) (4,079) Payments for fixed assets (13,035)(12,377) Proceeds from the sale 1,410 537 595 of fixed assets 4,323 6,253 ----------------------- --------------- Net cash outflow for capital expenditure and (2,273) (2,714) (3,484) financial investment (8,712) (6,124) ----------------------- -------------- Acquisitions and disposals (33) - (1,489) Acquisitions, net of cash acquired (1,503) (211) Proceeds from the sale - 37 383 of businesses 725 179 Net investment in 274 23 - TNK-BP joint venture (1,250) (2,351) Net investment in (162) (75) (84) other joint ventures (272) (178) Investments in associated (227) (171) (190) undertakings (942) (987) ----------------------- --------------- Net cash (outflow) inflow for (148) (186) (1,380) acquisitions and disposals (3,242) (3,548) ----------------------- --------------- (1,438) (1,536) (1,535) Equity dividends paid (6,041) (5,654) ----------------------- --------------- (1,780) 1,714 (1,008) Net cash inflow (outflow) 6,038 1,405 ======================= =============== (2,354) 1,617 (593) Financing (b) 6,777 1,129 (223) 73 74 Management of liquid resources 132 (41) 797 24 (489)(Decrease) increase in cash (871) 317 ----------------------- --------------- (1,780) 1,714 (1,008) 6,038 1,405 ======================= =============== Analysis of Cash Flow Fourth Third Fourth Quarter Quarter Quarter Year 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 3,844 6,885 5,077 interest and tax 25,242 17,954 3,093 2,648 4,383 Depreciation and amounts provided 12,583 10,940 Exploration expenditure 129 34 151 written off 274 297 Net operating charge for pensions and other post-retirement (2,190) 39 (49) benefits, less contributions (67) (2,913) Share of profits of joint ventures (494) (1,117) (948) and associated undertakings (3,574) (1,438) (121) (49) (138) Interest and other income (325) (341) (Profit) loss on sale of fixed 15 15 273 assets and businesses (815) (831) 214 592 (1) Charge for provisions 671 782 (204) (168) (363) Utilization of provisions (781) (716) (362) (2,573) 143 (Increase) decrease in stocks (3,595) (841) 375 (3,395) (4,539) (Increase) decrease in debtors (10,920) (3,042) (799) 4,008 3,055 Increase (decrease) in creditors 9,861 1,847 ----------------------- --------------- Net cash inflow from 3,500 6,919 7,044 operating activities 28,554 21,698 ======================= =============== (b) Financing (1,666) (717) (900) Long-term borrowing (2,675) (4,322) 776 13 921 Repayments of long-term borrowing 2,204 3,560 (1,738) (338) (2,730) Short-term borrowing (3,335) (4,706) Repayments of short-term 278 479 174 borrowing 3,375 4,708 ----------------------- --------------- (2,350) (563) (2,535) (431) (760) Issue of ordinary share capital (61) (157) (108) for employee share schemes (487) (173) 57 87 1 Purchase of shares by ESOP trusts 147 63 Repurchase of ordinary - 2,250 2,049 share capital 7,548 1,999 ----------------------- --------------- Net cash outflow (2,354) 1,617 (593) (inflow) from financing 6,777 1,129 ======================= =============== Adjusted Operating Cash Flow Net cash inflow from operating 3,500 6,919 7,044 activities (a) 28,554 21,698 Dividends received from 51 1,061 662 joint ventures 1,908 131 Dividends received from 120 69 94 associated undertakings 291 417 Net cash outflow from servicing of finance and returns on (76) (111) (18) investments (342) (711) ----------------------- --------------- Adjusted operating cash 3,595 7,938 7,782 flow (pre-tax) 30,411 21,535 (1,600) (1,821) (2,521) Tax paid on operations* (6,639) (4,681) ----------------------- --------------- Adjusted operating cash 1,995 6,117 5,261 flow (post-tax) 23,772 16,854 ----------------------- --------------- * Components of tax payments (1,600) (1,821) (2,521) Tax paid on operations (6,639) (4,681) Tax refunded/(paid) on 84 33 130 exceptional items (b) 261 (123) ----------------------- --------------- (1,516) (1,788) (2,391) Total tax paid (6,378) (4,804) ======================= =============== (a) Includes pre-tax discretionary pension funding of $146 million in 4Q 2004 ($99 million post-tax), $395 million in the year 2004 ($270 million post- tax), $1,586 million in 4Q 2003 ($1,046 million post-tax) and $2,533 million in the year 2003 ($1,646 million post-tax). (b) Deemed to be the tax credit (charge) on exceptional items in the income statement. Capital Expenditure and Acquisitions Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 189 191 207 UK 762 786 75 68 94 Rest of Europe 255 279 1,140 1,035 1,102 USA 4,096 4,097 1,191 1,150 1,218 Rest of World (a) 6,080 10,208 ----------------------- ------------- 2,595 2,444 2,621 11,193 15,370 ----------------------- ------------- Refining and Marketing 249 100 222 UK 481 477 446 159 321 Rest of Europe 745 783 623 291 465 USA 1,344 1,509 181 59 293 Rest of World 444 311 ----------------------- ------------- 1,499 609 1,301 3,014 3,080 ----------------------- ------------- Petrochemicals 35 66 186 UK (b) 294 116 69 69 926 Rest of Europe (b) 1,086 137 130 72 508 USA (b) 695 291 65 25 90 Rest of World 214 231 ----------------------- ------------- 299 232 1,710 2,289 775 ----------------------- ------------- Gas, Power and Renewables 21 6 154 UK 166 69 46 2 12 Rest of Europe 19 76 49 14 42 USA 81 160 27 43 122 Rest of World 272 136 ----------------------- ------------- 143 65 330 538 441 ----------------------- ------------- Other businesses and corporate 29 51 63 UK 129 108 1 - - Rest of Europe - 2 43 11 52 USA 85 234 1 - 1 Rest of World 1 2 ----------------------- ------------- 74 62 116 215 346 ----------------------- ------------- 4,610 3,412 6,078 17,249 20,012 ======================= ============= By geographical area 523 414 832 UK (b) 1,832 1,556 637 298 1,353 Rest of Europe (b) 2,105 1,277 1,985 1,423 2,169 USA (b) 6,301 6,291 1,465 1,277 1,724 Rest of World (a) 7,011 10,888 ----------------------- ------------- 4,610 3,412 6,078 17,249 20,012 ----------------------- ------------- (a) Year 2004 included $1,354 million investment in TNK's interest in Slavneft within TNK-BP. Year 2003 included the investment in the TNK- BP joint venture. (b) Fourth quarter and year 2004 included $1,355 million for the acquisition of Solvay's interests in BP Solvay Polyethylene Europe and BP Solvay Polyethylene North America. Exchange rates US dollar/sterling average rate 1.70 1.82 1.86 for the period 1.83 1.63 1.78 1.80 1.92 US dollar/sterling period-end rate 1.92 1.78 US dollar/euro average rate 1.19 1.22 1.29 for the period 1.24 1.13 1.25 1.23 1.36 US dollar/euro period-end rate 1.36 1.25 ======================= ============= Analysis of Replacement Cost Profit Before Interest and Tax Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 654 745 981 UK 3,384 3,397 154 246 222 Rest of Europe 837 587 716 1,566 1,531 USA 6,094 5,100 1,324 2,326 2,359 Rest of World 8,205 5,582 ----------------------- ------------- 2,848 4,883 5,093 18,520 14,666 ----------------------- ------------- Refining and Marketing (152) (152) 101 UK (435) (472) 158 533 593 Rest of Europe 1,859 1,373 174 536 661 USA 2,478 748 140 164 222 Rest of World 820 669 ----------------------- ------------- 320 1,081 1,577 4,722 2,318 ----------------------- ------------- Petrochemicals (65) (107) (716) UK (1,041) (325) 34 130 (282) Rest of Europe 185 476 6 30 (215) USA (291) 205 66 135 (58) Rest of World 247 212 ----------------------- ------------- 41 188 (1,271) (900) 568 ----------------------- ------------- Gas, Power and Renewables 40 (46) 133 UK 97 76 (11) (9) (4) Rest of Europe (27) (37) 5 139 90 USA 422 266 52 46 180 Rest of World 451 265 ----------------------- ------------- 86 130 399 943 570 ----------------------- ------------- Other businesses and corporate 324 (147) 282 UK (78) (26) (42) 21 (177) Rest of Europe (163) (49) (23) (268) (251) USA (658) (384) 206 (30) (81) Rest of World 1,213 275 ----------------------- ------------- 465 (424) (227) 314 (184) ----------------------- ------------- 3,760 5,858 5,571 23,599 17,938 ======================= ============= By geographical area 801 293 781 UK 1,927 2,650 293 921 352 Rest of Europe 2,691 2,350 878 2,003 1,816 USA 8,045 5,935 1,788 2,641 2,622 Rest of World 10,936 7,003 ----------------------- ------------- 3,760 5,858 5,571 23,599 17,938 ======================= ============= Included above: Share of profits of joint 402 942 772 ventures 2,933 923 Share of profits of associated 93 165 169 undertakings 605 511 ----------------------- ------------- 495 1,107 941 3,538 1,434 ======================= ============= Pro Forma Result: Replacement Cost Profit Before Interest and Tax Adjusted for Acquisition Amortization Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business Exploration and Production 689 775 1,014 UK 3,514 3,531 154 246 222 Rest of Europe 837 587 1,091 1,785 1,883 USA 7,089 6,231 1,340 2,338 2,370 Rest of World 8,319 5,883 ----------------------- ------------- 3,274 5,144 5,489 19,759 16,232 ----------------------- ------------- Refining and Marketing (36) (27) 228 UK 66 (26) 158 533 593 Rest of Europe 1,859 1,373 269 631 756 USA 2,858 1,128 140 164 222 Rest of World 820 669 ----------------------- ------------- 531 1,301 1,799 5,603 3,144 ----------------------- ------------- Petrochemicals (65) (107) (716) UK (1,041) (325) 34 130 (282) Rest of Europe 185 476 6 30 (215) USA (291) 205 66 135 (58) Rest of World 247 212 ----------------------- ------------- 41 188 (1,271) (900) 568 ----------------------- ------------- Gas, Power and Renewables 40 (46) 133 UK 97 76 (11) (9) (4) Rest of Europe (27) (37) 5 139 90 USA 422 266 52 46 180 Rest of World 451 265 ----------------------- ------------- 86 130 399 943 570 ----------------------- ------------- Other businesses and corporate 324 (147) 282 UK (78) (26) (42) 21 (177) Rest of Europe (163) (49) (23) (268) (251) USA (658) (384) 206 (30) (81) Rest of World 1,213 275 ----------------------- ------------- 465 (424) (227) 314 (184) ----------------------- ------------- 4,397 6,339 6,189 25,719 20,330 ----------------------- ------------- By geographical area 952 448 941 UK 2,558 3,230 293 921 352 Rest of Europe 2,691 2,350 1,348 2,317 2,263 USA 9,420 7,446 1,804 2,653 2,633 Rest of World 11,050 7,304 ----------------------- ------------- 4,397 6,339 6,189 25,719 20,330 ======================= ============= Analysis of Exceptional Items Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 11 (3) (15) UK (21) 735 1 (1) - Rest of Europe (1) (30) 20 13 (6) USA 31 (230) (81) 14 53 Rest of World 143 438 ----------------------- ------------- (49) 23 32 152 913 ----------------------- ------------- Refining and Marketing (12) (16) 9 UK (101) (44) (47) (25) (28) Rest of Europe (70) (109) (32) 16 95 USA 113 (61) - 8 (18) Rest of World (59) 1 ----------------------- ------------- (91) (17) 58 (117) (213) ----------------------- ------------- Petrochemicals (1) 10 (201) UK (195) 2 (10) (56) (13) Rest of Europe (15) (11) (5) (3) (150) USA (349) 11 32 11 (13) Rest of World (4) 36 ----------------------- ------------- 16 (38) (377) (563) 38 ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - (1) Rest of Europe (1) - (10) - 1 USA 1 (6) - 16 40 Rest of World 56 - ----------------------- ------------- (10) 16 40 56 (6) ----------------------- ------------- Other businesses and corporate 27 1 (27) UK (26) 24 - 1 - Rest of Europe - (1) (45) (1) - USA (1) (61) 137 - 1 Rest of World 1,314 137 ----------------------- ------------- 119 1 (26) 1,287 99 ----------------------- ------------- Profit (loss) on sale of fixed assets and businesses or termination (15) (15) (273) of operations 815 831 84 33 130 Taxation credit (charge) 261 (123) ----------------------- ------------- 69 18 (143) Exceptional items after taxation 1,076 708 ======================= ============= Identified Non-operating Items and UPIS Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production (144) - - UK - (209) - - - Rest of Europe - - (236) (77) (54) USA (a) (444) (321) - (60) 2 Rest of World (181) (5) ----------------------- ------------- (380) (137) (52) (625) (535) ----------------------- ------------- Refining and Marketing - (9) - UK (9) - (146) (20) - Rest of Europe (20) (277) - (159) - USA (159) (369) - (18) - Rest of World (18) - ----------------------- ------------- (146) (206) - (206) (646) ----------------------- ------------- Petrochemicals - (34) (438) UK (472) (36) - - (420) Rest of Europe (420) - - (24) (177) USA (201) (15) - - (114) Rest of World (114) - ----------------------- ------------- - (58) (1,149) (1,207) (51) ----------------------- ------------- Gas, Power and Renewables - - - UK - - - - - Rest of Europe - - - - - USA - - - - - Rest of World - - ----------------------- ------------- - - - - - ----------------------- ------------- Other businesses and corporate (74) (21) (59) UK (80) (74) - - - Rest of Europe - - 578 (223) 30 USA (193) 466 - - - Rest of World - - ----------------------- ------------- 504 (244) (29) (273) 392 ----------------------- ------------- (22) (645) (1,230) Total before taxation (2,311) (840) 157 226 246 Taxation credit (charge) 626 572 ----------------------- ------------- 135 (419) (984) Total after taxation (1,685) (268) ======================= ============= (a) Includes a credit for Unrealized Profit in Stock (UPIS) of $57 million in 4Q 2004 and a charge of $191 million for the year 2004 and charges of $57 million in 4Q 2003 and $61 million in the year 2003, which removes the upstream margin from downstream inventories. Acquisition Amortization by Business Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration and Production 35 30 33 UK 130 134 375 219 352 USA 995 1,131 16 12 11 Rest of World 114 301 ----------------------- ------------- 426 261 396 1,239 1,566 ----------------------- ------------- Refining and Marketing 116 125 127 UK 501 446 95 95 95 USA 380 380 ----------------------- ------------- 211 220 222 881 826 ----------------------- ------------- 637 481 618 Total acquisition amortization 2,120 2,392 ======================= ============= Production and Realizations Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== Production Crude oil (mb/d) (net of royalties) 339 281 301 UK 312 354 74 68 70 Rest of Europe 73 79 570 495 519 USA 530 576 1,265 1,454 1,506 Rest of World 1,425 902 ----------------------- ------------- 2,248 2,298 2,396 Total crude oil production 2,340 1,911 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 21 13 19 UK 18 23 5 3 4 Rest of Europe 4 5 147 134 142 USA 138 150 33 31 32 Rest of World 31 32 ----------------------- ------------- Total natural gas 206 181 197 liquids production 191 210 ======================= ============= Liquids (a)(mb/d) (net of royalties) 360 294 320 UK 330 377 79 71 74 Rest of Europe 77 84 717 629 661 USA 668 726 1,298 1,485 1,538 Rest of World 1,456 934 ----------------------- ------------- 2,454 2,479 2,593 Total liquids production 2,531 2,121 ======================= ============= Natural gas (b) (mmcf/d) (net of royalties) 1,318 903 1,227 UK 1,174 1,446 143 110 113 Rest of Europe 125 119 2,933 2,685 2,651 USA 2,748 3,128 4,206 4,577 4,723 Rest of World 4,456 3,920 ----------------------- ------------- 8,600 8,275 8,714 Total natural gas production 8,503 8,613 ======================= ============= Average realizations Crude oil ($/bbl) 28.18 40.33 42.01 UK 36.11 28.30 28.49 39.52 42.07 USA 37.40 29.02 27.56 38.01 38.29 Rest of World 34.99 26.91 28.18 39.43 41.01 BP Average 36.45 28.23 ======================= ============= Natural gas liquids ($/bbl) 20.06 34.29 40.23 UK 31.79 20.08 19.11 27.59 29.31 USA 25.67 18.39 24.23 30.63 33.10 Rest of World 27.76 22.31 20.15 28.77 31.20 BP Average 26.75 19.26 ======================= ============= Liquids (a) ($/bbl) 27.71 40.06 41.91 UK 35.87 27.80 26.92 37.46 39.73 USA 35.41 27.23 27.33 37.53 37.94 Rest of World 34.51 26.60 27.30 38.29 39.88 BP Average 35.39 27.25 ======================= ============= Natural gas ($/mcf) 3.87 3.60 5.16 UK 4.32 3.19 3.85 4.94 5.72 USA 5.11 4.47 2.35 2.71 3.00 Rest of World 2.74 2.47 3.18 3.66 4.28 BP Average 3.86 3.39 ======================= ============= (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 ====================================== 3Q 2004 Exploration and Production 4,883 261 5,144 Refining and Marketing 1,081 220 1,301 Petrochemicals 188 - 188 Gas, Power and Renewables 130 - 130 Other businesses and corporate (424) - (424) -------------------------------------- RC profit before interest and tax 5,858 481 6,339 Interest and other finance expense (235) - (235) Taxation (2,109) - (2,109) MSI (58) - (58) -------------------------------------- RC profit 3,456 481 3,937 ================= Stock holding gains (losses) 1,027 ----- HC profit 4,483 ===== 4Q 2003 Exploration and Production 2,848 426 3,274 Refining and Marketing 320 211 531 Petrochemicals 41 - 41 Gas, Power and Renewables 86 - 86 Other businesses and corporate 465 - 465 -------------------------------------- RC profit before interest and tax 3,760 637 4,397 Interest and other finance expense (312) - (312) Taxation (1,157) - (1,157) MSI (41) - (41) -------------------------------------- RC profit 2,250 637 2,887 ================= Stock holding gains (losses) 84 ----- HC profit 2,334 ===== Reconciliation of Historical Cost Profit (Loss) to Pro Forma Result Reported Acquisition Pro forma $ million earnings amortization result ====================================== Year 2004 Exploration and Production 18,520 1,239 19,759 Refining and Marketing 4,722 881 5,603 Petrochemicals (900) - (900) Gas, Power and Renewables 943 - 943 Other businesses and corporate 314 - 314 -------------------------------------- RC profit before interest and tax 23,599 2,120 25,719 Interest and other finance expense (999) - (999) Taxation (8,282) - (8,282) MSI (230) - (230) -------------------------------------- RC profit 14,088 2,120 16,208 ================= Stock holding gains (losses) 1,643 ------ HC profit 15,731 ====== Year 2003 Exploration and Production 14,666 1,566 16,232 Refining and Marketing 2,318 826 3,144 Petrochemicals 568 - 568 Gas, Power and Renewables 570 - 570 Other businesses and corporate (184) - (184) -------------------------------------- RC profit before interest and tax 17,938 2,392 20,330 Interest and other finance expense (1,191) - (1,191) Taxation (6,111) - (6,111) MSI (170) - (170) -------------------------------------- RC profit 10,466 2,392 12,858 ================= Stock holding gains (losses) 16 ------ HC profit 10,482 ====== Return on Average Capital Employed Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost basis 2,250 3,456 3,028 RC profit for the period (a) 14,088 10,466 73 67 90 Interest (b) 283 332 41 58 76 Minority shareholders' interest 230 170 ----------------------- -------------- 2,364 3,581 3,194 Adjusted RC profit 14,601 10,968 ======================= ============== 91,203 95,568 99,031 Average capital employed 97,568 90,263 10.4% 15.0% 12.9% ROACE - replacement cost basis 15.0% 12.2% ----------------------- -------------- Pro forma basis 2,364 3,581 3,194 Adjusted RC profit (a) 14,601 10,968 637 481 618 Acquisition amortization 2,120 2,392 ----------------------- -------------- Adjusted RC profit - 3,001 4,062 3,812 pro forma basis 16,721 13,360 ======================= ============== 91,203 95,568 99,031 Average capital employed 97,568 90,263 Average capital employed 13,556 12,156 11,628 acquisition adjustment 12,376 15,017 ----------------------- -------------- Average capital employed 77,647 83,412 87,403 (pro forma basis) 85,192 75,246 15.5% 19.5% 17.4% ROACE - pro forma basis 19.6% 17.8% ----------------------- ------------- Historical cost basis 2,334 4,483 2,534 Profit for the period (a) 15,731 10,482 73 67 90 Interest (b) 283 332 41 58 76 Minority shareholders' interest 230 170 ----------------------- -------------- 2,448 4,608 2,700 Adjusted historical cost profit 16,244 10,984 ======================= ============== 91,203 95,568 99,031 Average capital employed 97,568 90,263 10.7% 19.3% 10.9% ROACE - historical cost basis 16.6% 12.2% (a) 4Q 2004 includes $(143) million in respect of exceptional items and $(984) million in respect of non-operating items and UPIS. Year 2004 includes $1,076 million in respect of exceptional items and $(1,685) million in respect of non-operating items and UPIS. 4Q 2003 includes $69 million in respect of exceptional items and $135 million in respect of non-operating items and UPIS. Year 2003 includes $708 million in respect of exceptional items and $(268) 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 Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Replacement cost profit before 3,760 5,858 5,571 interest and tax 23,599 17,938 15 15 273 Exceptional items (815) (831) ----------------------- -------------- 3,775 5,873 5,844 Replacement cost operating profit 22,784 17,107 637 481 618 Acquisition amortization 2,120 2,392 ----------------------- -------------- Pro forma replacement cost 4,412 6,354 6,462 operating profit 24,904 19,499 (35) 550 1,287 Non-operating items 2,120 779 Pro forma DD&A, adjusted for non- 2,148 2,160 2,526 cash non-operating items 8,934 8,191 ----------------------- -------------- 6,525 9,064 10,275 Cash returns numerator 35,958 28,469 ======================= ============== 94,045 96,971 101,090 Capital employed 101,090 94,045 Liabilities for current and 16,068 17,531 17,302 deferred taxation 17,302 16,068 ----------------------- -------------- 110,113 114,502 118,392 Operating capital employed 118,392 110,113 (13,362)(11,865)(11,390) Acquisition adjustment (11,390)(13,362) ----------------------- -------------- 96,751 102,637 107,002 Cash returns denominator 107,002 96,751 ======================= ============== 93,755 100,908 104,820 Average cash returns denominator 101,877 90,385 ======================= ============== 28% 36% 39% Cash return 35% 31% Net Debt Ratio - Net Debt: Net Debt + Equity Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 22,325 20,445 23,091 Gross debt 23,091 22,325 2,132 1,821 1,484 Cash and current asset investments 1,484 2,132 ----------------------- -------------- 20,193 18,624 21,607 Net debt 21,607 20,193 ======================= ============== 71,720 76,526 77,999 Equity 77,999 71,720 22% 20% 22% Net debt ratio 22% 22% ----------------------- -------------- 13,362 11,865 11,390 Acquisition adjustment 11,390 13,362 ----------------------- -------------- 26% 22% 24% Net debt ratio - pro forma basis 24% 26% ======================= ============== 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 required the cost of providing pensions to be recognized on a systematic and rational basis over the period during which the employer benefited 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 was 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. In addition, accruals for awards under the Long Term Performance Plan have also been included in reserves. 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 18,899 18,959 Provisions for liabilities and charges Deferred taxation 14,371 15,273 Other provisions 8,599 15,693 ------------------- Net assets excluding pension and other post-retirement benefit balances 78,209 77,063 Defined benefit pension plan surplus 1,146 - Defined benefit pension plan deficits (5,005) - Other post-retirement benefit plan deficits (2,630) - ------------------- Net assets 71,720 77,063 Minority shareholders' interest 1,125 1,125 ------------------- BP shareholders' interest 70,595 75,938 =================== Notes Income statements Restated Reported Fourth Fourth Quarter Year Quarter Year 2003 2003 2003 2003 ================ ================ $ million Exploration and Production 2,848 14,666 2,889 14,850 Refining and Marketing 320 2,318 274 2,127 Petrochemicals 41 568 51 606 Gas, Power and Renewables 86 570 67 466 Other businesses and corporate 465 (184) (176) (805) ----------------------------------- Replacement cost profit before interest and tax 3,760 17,938 3,105 17,244 Stock holding gains (losses) 84 16 84 16 ----------------------------------- Historical cost profit before interest and tax 3,844 17,954 3,189 17,260 Interest expense 160 644 227 851 Other finance expense 152 547 - - ----------------------------------- Profit before taxation 3,532 16,763 2,962 16,409 Taxation 1,157 6,111 949 5,972 ----------------------------------- Profit after taxation 2,375 10,652 2,013 10,437 Minority shareholders' interest 41 170 41 170 ----------------------------------- Profit for the period 2,334 10,482 1,972 10,267 =================================== Distribution to shareholders 1,495 5,753 1,495 5,753 ----------------------------------- Earnings per ordinary share - cents Basic 10.56 47.27 8.93 46.30 Diluted 10.32 46.83 8.69 45.87 =================================== Notes 2. Turnover Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million By business 7,450 8,660 9,875 Exploration and Production 34,914 30,753 36,903 42,989 47,196 Refining and Marketing 179,587 149,477 3,811 5,412 6,482 Petrochemicals 21,209 16,075 16,701 20,443 23,468 Gas, Power and Renewables 83,320 65,639 Other businesses 137 137 156 and corporate 546 515 ----------------------- --------------- 65,002 77,641 87,177 319,576 262,459 Less: sales between 7,138 9,126 9,567 businesses 34,517 29,888 ----------------------- --------------- 57,864 68,515 77,610 Group excluding JVs 285,059 232,571 Share of sales by 1,798 2,967 3,054 joint ventures 9,790 3,474 ----------------------- --------------- 59,662 71,482 80,664 294,849 236,045 ======================= =============== By geographical area Group excluding JVs 14,117 21,848 24,656 UK 81,155 54,971 12,288 13,876 15,173 Rest of Europe 54,422 50,582 26,347 29,065 34,002 USA 130,652 108,910 13,894 16,731 19,717 Rest of World 68,052 52,498 ----------------------- --------------- 66,646 81,520 93,548 334,281 266,961 8,782 13,005 15,938 Less: sales between areas 49,222 34,390 ----------------------- --------------- 57,864 68,515 77,610 285,059 232,571 ======================= =============== 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: Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Exploration expense 1 4 17 UK 26 17 5 7 10 Rest of Europe 25 37 60 58 143 USA 361 204 127 66 88 Rest of World 225 284 ----------------------- -------------- 193 135 258 637 542 ======================= ============== Production taxes (a) 44 51 112 UK petroleum revenue tax 335 300 377 502 535 Overseas production taxes 1,814 1,423 ----------------------- -------------- 421 553 647 2,149 1,723 ======================= ============== (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) - 5 (3) Exploration and Production 10 3 16 866 (578) Refining and Marketing 1,245 (48) 10 129 59 Petrochemicals 349 55 58 27 28 Gas, Power and Renewables 39 6 ---------------------- -------------- 84 1,027 (494) 1,643 16 ====================== ============== Notes 6. Interest expense Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million 172 160 188 Group interest payable 644 700 (60) (57) (49) Capitalized (208) (190) ----------------------- -------------- 112 103 139 436 510 36 41 37 Joint ventures 158 89 12 12 13 Associated undertakings 48 45 ----------------------- -------------- 160 156 189 642 644 ======================= ============== 7. Other finance expense Interest on pension and other post-retirement benefit 460 502 519 plan liabilities 2,012 1,840 Expected return on pension and other post-retirement (375) (493) (501) benefit plan assets (1,983) (1,500) ----------------------- -------------- Interest net of expected return 85 9 18 on plan assets 29 340 Unwinding of discount 42 48 50 on provisions 196 173 Unwinding of discount on deferred consideration for acquisition of investment 25 22 17 in TNK-BP 91 34 Change in discount rate - - 41 for provisions 41 - ----------------------- -------------- 152 79 126 357 547 ======================= ============== 8. Charge for taxation 404 1,672 2,365 Current 7,908 4,919 753 437 (213) Deferred 374 1,192 ----------------------- -------------- 1,157 2,109 2,152 8,282 6,111 ======================= ============== 356 601 387 UK 1,699 1,431 801 1,508 1,765 Overseas 6,583 4,680 ----------------------- -------------- 1,157 2,109 2,152 8,282 6,111 ======================= ============== Notes 9. Analysis of changes in net debt Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== $ million $ million Opening balance 19,970 19,858 20,445 Finance debt 22,325 22,008 1,091 1,531 1,576 Less: Cash 1,947 1,520 404 172 245 Current asset investments 185 215 ----------------------- --------------- 18,475 18,155 18,624 Opening net debt 20,193 20,273 ----------------------- --------------- Closing balance 22,325 20,445 23,091 Finance debt 23,091 22,325 1,947 1,576 1,156 Less: Cash 1,156 1,947 185 245 328 Current asset investments 328 185 ----------------------- --------------- 20,193 18,624 21,607 Closing net debt 21,607 20,193 ----------------------- --------------- (Increase) decrease (1,718) (469) (2,983) in net debt (1,414) 80 ======================= =============== Movement in cash/ 797 24 (489) bank overdrafts (871) 317 Increase (decrease) in (223) 73 74 current asset investments 132 (41) Net cash (inflow) outflow from financing(excluding (2,350) (563) (2,535) share capital) (431) (760) - - - Debt transferred to TNK-BP - 93 Exchange of Exchangeable Bonds for Lukoil American - - - Depositary Shares - 420 5 10 37 Other movements 68 144 (3) - - Debt acquired - (15) ----------------------- -------------- Movement in net debt before (1,774) (456) (2,913) exchange effects (1,102) 158 56 (13) (70) Exchange adjustments (312) (78) ----------------------- -------------- (Increase) decrease (1,718) (469) (2,983) in net debt (1,414) 80 ======================= ============== Notes 10. TNK-BP Operational and Financial Information Fourth Third Fourth 29 Aug Quarter Quarter Quarter Year 31 Dec 2003 2004 2004 2004 2003 ======================= ============== Production (Net of royalties) (BP share) 669 858 884 Crude oil (mb/d) 830 665 296 505 515 Natural gas (mmcf/d) 463 281 720 945 972 Total hydrocarbons (mboe/d)(a) 910 713 ======================= ============== $ million $ million Income statement (BP share) Replacement cost profit 354 807 659 before interest and tax 2,421 512 - - - Stock holding gains (losses) - - (24) (23) (22) Interest expense * (101) (37) (53) (257) (209) Taxation (752) (83) 1 (6) (17) Minority shareholders' interest (43) - ----------------------- -------------- 278 521 411 Net Income 1,525 392 ======================= ============== * Excludes unwinding of discount 25 22 17 on deferred consideration 91 34 ======================= ============== Cash Flow Additional investment in (23) - - TNK-BP joint venture (1,416) (2,648) Dividends related to period 297 23 - prior to acquisition 166 297 ----------------------- -------------- Net investment in TNK-BP 274 23 - joint venture (1,250) (2,351) ======================= ============== - 1,031 610 Dividends received 1,760 - ======================= ============== Fourth Third Fourth Quarter Quarter Quarter Year 2003 2004 2004 2004 2003 ======================= ============== Average oil marker prices ($/bbl) 27.90 37.23 37.75 Urals (NWE - cif) 34.08 27.20 28.00 37.41 38.82 Urals (Med - cif) 34.45 27.28 16.65 23.33 22.30 Domestic Oil 20.61 16.65 ======================= ============== Balance Sheet 31 December 31 December 2004 2003 ======== ============ $ million Fixed assets - investments Gross assets 12,520 10,339 Gross liabilities (4,352) (3,290) -------- -------- 8,168 7,049 ======== ======== Deferred consideration Due within one year 1,227 1,227 Due after more than one year 1,194 2,352 -------- -------- 2,421 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 a credit of $23 million in 4Q 2004 and charges of $36 million in the year 2004. Notes 11. Statutory accounts The above financial information does not constitute statutory accounts. The summarised group results, summarised group balance sheet, summarised group cash flow statement and the Notes thereon (except Note 10) for the years ended 31 December 2004 and 2003 are an extract from the BP Annual Report and Accounts 2004, approved by a duly appointed and authorized committee of the Board of Directors at the Results Committee meeting held on 7 February 2005, but not yet delivered to the UK Registrar of Companies; the report of the auditors on those accounts was unqualified. Contacts London United States ------------------- ---------------- Press Office Roddy Kennedy Ronnie Chappell +44 (0)20 7496 4624 +1 281 366 5174 Investor Relations Fergus McLeod Rachael MacLean +44 (0)20 7496 4717 +1 212 451 8072 http://www.bp.com/investors This information is provided by RNS The company news service from the London Stock Exchange

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