Final Results - Part 3 of 3
BP PLC
11 February 2003
BP p.l.c.
Group Results
Fourth Quarter and Full Year 2002
London 11 February 2003
INVESTOR RELATIONS SUPPLEMENT
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR SPECIAL ITEMS(a) AND ACQUISITION
AMORTIZATION(b)
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
Exploration and Production
682 668 1,011 UK 3,256 3,645
144 213 177 Rest of Europe 714 748
840 1,059 1,421 USA 4,192 6,180
708 1,110 1,057 Rest of World 3,843 3,925
----------------------- --------------
2,374 3,050 3,666 12,005 14,498
----------------------- --------------
Gas, Power and Renewables
(29) (36) (31) UK (64) 52
64 17 1 Rest of Europe 100 189
36 28 9 USA 25 229
31 78 93 Rest of World 323 18
----------------------- --------------
102 87 72 384 488
----------------------- --------------
Refining and Marketing
(28) (36) (21) UK (45) 50
271 274 225 Rest of Europe 936 929
203 180 235 USA 670 3,043
339 104 148 Rest of World 520 808
----------------------- --------------
785 522 587 2,081 4,830
----------------------- --------------
Chemicals
14 6 (26) UK (39) (127)
32 161 74 Rest of Europe 364 226
(25) 54 42 USA 238 46
18 51 49 Rest of World 202 97
----------------------- --------------
39 272 139 765 242
----------------------- --------------
Other businesses and corporate
105 (63) 81 UK (101) (117)
(46) (7) (18) Rest of Europe (18) (70)
(210) (36) (210) USA (373) (433)
49 (10) 1 Rest of World (23) 170
----------------------- --------------
(102) (116) (146) (515) (450)
----------------------- --------------
3,198 3,815 4,318 14,720 19,608
======================= ==============
(a) The special items refer to non-recurring charges and credits. The
special items for the fourth quarter include an asset write-down in
Exploration and Production, integration and restructuring costs and an
impairment charge in Refining and Marketing, integration and
restructuring costs in Chemicals, provisions to cover future rental
payments on surplus leasehold property and environmental charges in
Other businesses and corporate, and a bond redemption charge.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon the
ARCO and Burmah Castrol acquisitions. The third quarter 2002 includes
accelerated depreciation of the revaluation adjustment in respect of the
impairment of former ARCO assets.
PER SHARE AMOUNTS
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
=================================== ======================
Shares in issue
at period
22,432,077 22,374,747 22,378,651 end (thousand) 22,378,651 22,432,077
- ADS equivalent
3,738,680 3,729,125 3,729,775 (thousand) 3,729,775 3,738,680
Average number
of shares
outstanding
22,396,315 22,408,297 22,351,122 (thousand)* 22,397,126 22,435,737
- ADS equivalent
3,732,719 3,734,716 3,725,187 (thousand) 3,732,854 3,739,290
----------------------------------- ----------------------
Replacement cost
profit after
exceptional
694 2,535 825 items ($m) 5,741 8,456
cents/ordinary
3.11 11.31 3.69 share 25.62 37.68
0.19 0.68 0.22 dollars/ADS 1.54 2.26
----------------------------------- ----------------------
Replacement cost
profit before
exceptional
706 766 1,697 items ($m) 4,698 8,291
cents/ordinary
3.17 3.42 7.58 share 20.97 36.95
0.19 0.20 0.45 dollars/ADS 1.26 2.22
----------------------------------- ----------------------
Pro forma result
adjusted for special
1,771 2,299 2,635 items ($m) 8,715 11,559
7.91 10.26 11.78 cents/ordinary share 38.90 51.51
0.47 0.62 0.71 dollars/ADS 2.33 3.09
----------------------------------- ----------------------
* Excludes shares held by the Employee Share Ownership Plans.
ACQUISITION AMORTIZATION BY BUSINESS
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
Exploration and Production
41 378 41 UK 488 151
337 283 246 USA 1,078 1,530
33 114 32 Rest of World 214 134
----------------------- -------------
411 775 319 1,780 1,815
----------------------- -------------
Refining and Marketing
99 106 107 UK 410 394
94 96 96 USA 384 376
----------------------- -------------
193 202 203 794 770
----------------------- -------------
604 977 522 Total acquisition amortization 2,574 2,585
======================= =============
SPECIAL ITEMS BY BUSINESS (PRE-TAX)
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
Exploration and Production
70 105 5 UK 242 70
- - - Rest of Europe - -
77 115 94 USA 279 77
175 483 - Rest of World 498 175
----------------------- -------------
322 703 99 1,019 322
----------------------- -------------
Gas, Power and Renewables
- 30 - UK 30 -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- 30 - 30 -
----------------------- -------------
Refining and Marketing
70 16 27 UK 43 131
44 38 278 Rest of Europe 365 167
63 29 59 USA (49) 82
36 - 56 Rest of World 56 107
----------------------- -------------
213 83 420 415 487
----------------------- -------------
Chemicals
89 - 21 UK 43 89
33 - 9 Rest of Europe 27 41
(16) - 5 USA 40 (16)
- 140 - Rest of World 140 -
----------------------- -------------
106 140 35 250 114
----------------------- -------------
Other businesses and corporate
- 35 20 UK 55 -
- - 1 Rest of Europe 1 -
73 90 40 USA 130 73
- - - Rest of World - -
----------------------- -------------
73 125 61 186 73
----------------------- -------------
714 1,081 615 Total special items before interest 1,900 996
- - 15 Interest - bond redemption charges 15 62
----------------------- -------------
714 1,081 630 Total 1,915 1,058
======================= =============
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
==============================================
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
Chemicals 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
=====
4Q 2001
Exploration and Production 1,641 411 322 2,374
Gas, Power and Renewables 102 - - 102
Refining and Marketing 379 193 213 785
Chemicals (67) - 106 39
Other businesses & corporate (175) - 73 (102)
----------------------------------------------
RC operating profit 1,880 604 714 3,198
----------------------------------------------
Interest expense (414) - - (414)
Taxation (737) - (253) (990)
MSI (23) - - (23)
----------------------------------------------
RC profit before
exceptional items 706 604 461 1,771
==============================================
Exceptional items before tax (38)
Taxation on exceptional items 26
-----
RC profit after
exceptional items 694
Stock holding gains (losses) (1,297)
-----
HC profit (603)
=====
(a) The special items refer to non-recurring charges and credits. The
special items for the third quarter 2002 comprise impairment charges and
restructuring costs for 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 property
in Other businesses and corporate. The special items for the fourth
quarter 2001 comprise additional severance charges, mainly related to
former ARCO employees, an impairment charge for our partner operated
Venezuelan Lake Maracaibo operations, Castrol, Solvay and Erdolchemie
integration costs, Grangemouth restructuring, and litigation costs.
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
==============================================
Year 2002
Exploration and Production 9,206 1,780 1,019 12,005
Gas, Power and Renewables 354 - 30 384
Refining and Marketing 872 794 415 2,081
Chemicals 515 - 250 765
Other businesses & corporate (701) - 186 (515)
----------------------------------------------
RC operating profit 10,246 2,574 1,900 14,720
----------------------------------------------
Interest expense (1,279) - 15 (1,264)
Taxation (4,217) - (456) (4,673)
MSI (52) - (16) (68)
----------------------------------------------
RC profit before
exceptional items 4,698 2,574 1,443 8,715
==============================================
Exceptional items before tax 1,168
Taxation on exceptional items (125)
-----
RC profit after
exceptional items 5,741
Stock holding gains (losses) 1,104
-----
HC profit 6,845
=====
Year 2001
Exploration and Production 12,361 1,815 322 14,498
Gas, Power and Renewables 488 - - 488
Refining and Marketing 3,573 770 487 4,830
Chemicals 128 - 114 242
Other businesses & corporate (523) - 73 (450)
----------------------------------------------
RC operating profit 16,027 2,585 996 19,608
----------------------------------------------
Interest expense (1,670) - 62 (1,608)
Taxation (6,005) - (375) (6,380)
MSI (61) - - (61)
----------------------------------------------
RC profit before
exceptional items 8,291 2,585 683 11,559
==============================================
Exceptional items before tax 535
Taxation on exceptional items (370)
-----
RC profit after
exceptional items 8,456
Stock holding gains (losses) (1,900)
-----
HC profit 6,556
=====
(a) The special items refer to non-recurring charges and credits. The
special items for the year 2002 comprise impairment charges, an asset
writedown, restructuring and litigation costs for Exploration and
Production; an impairment charge in Gas, Power and Renewables;
integration and restructuring costs, business interruption insurance
proceeds and certain other costs in Refining and Marketing; integration
costs and an impairment charge in Chemicals; a provision to cover future
rental payments on surplus leasehold property and environmental charges
in Other businesses and corporate; and a bond redemption charge.
Taxation includes a special charge for an adjustment to the North Sea
deferred tax liability for the supplementary UK corporation tax as well
as tax relief expected on impairments and related restructuring. The
special items for the year 2001 comprise additional severance charges,
mainly related to former ARCO employees, an impairment charge for our
partner operated Venezuelan Lake Maracaibo operations, rationalization
costs in the European downstream commercial business, Castrol, Solvay
and Erdolchemie integration costs, Grangemouth restructuring, and
litigation costs.
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR
NON-CASH CHARGES AND CERTAIN OTHER ITEMS
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
Replacement cost operating profit
1,880 1,757 3,181 (reported) (a) 10,246 16,027
2,457 3,506 2,515 Depreciation and amounts provided (b)10,401 8,858
85 55 124 Exploration expenditure written off 385 238
Dividends from JVs and associates
(194) (49) (110) less share of RCOP (396) (571)
(38) (13) (11) Dividends paid to minority shareholders (40) (54)
(34) (60) 27 Adjust provisions to cash basis (c) (150) (111)
Adjust interest and other income
(14) 5 (14) to cash basis (d) (25) (90)
----------------------- -------------
4,142 5,201 5,712 20,421 24,297
(1,528) (712) (1,199) Tax paid adjusted for certain items* (3,390) (4,738)
----------------------- -------------
2,614 4,489 4,513 Adjusted RCOP after tax paid 17,031 19,559
----------------------- -------------
* Calculation of tax paid adjusted
for certain items
(1,422) (661) (1,061) Cash tax paid (3,094) (4,660)
(26) 25 (21) Tax charge on exceptional items 125 370
(80) (76) (117) Tax shield assumption + (421) (448)
----------------------- -------------
(1,528) (712) (1,199) (3,390) (4,738)
----------------------- -------------
+ Calculation of tax shield assumption
(229) (218) (335) Interest paid (1,204) (1,282)
35% 35% 35% Tax rate assumption (e) 35% 35%
----------------------- -------------
(80) (76) (117) (421) (448)
----------------------- -------------
(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 US statutory
tax rate.
RETURN ON AVERAGE CAPITAL EMPLOYED
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
Replacement cost basis
706 766 1,697 RC profit before exceptional items 4,698 8,291
181 145 140 Interest + 602 798
23 3 6 Minority shareholders' interest 52 61
----------------------- --------------
910 914 1,843 Adjusted RC profit 5,352 9,150
======================= ==============
87,791 90,507 91,767 Average capital employed 89,616 87,259
4.1% 4.0% 8.0% ROACE - replacement cost basis 6.0% 10.5%
----------------------- -------------
Pro forma basis
910 914 1,843 Adjusted RC profit 5,352 9,150
604 977 522 Acquisition amortization 2,574 2,585
461 556 406 Special items (post-tax) 1,449 643
87,791 90,507 91,767 Average capital employed 89,616 87,259
Average capital employed
19,647 17,581 16,903 acquisition adjustment 17,777 20,739
----------------------- -------------
Average capital employed
68,144 72,926 74,864 (pro forma basis) 71,839 66,520
ROACE - Pro forma basis
11.6% 13.4% 14.8% adjusted for special items 13.0% 18.6%
----------------------- ------------
Historical cost basis
Historical cost profit (loss)
(603) 2,840 651 after exceptional items 6,845 6,556
181 145 140 Interest + 602 798
23 3 6 Minority shareholders' interest 77 61
----------------------- --------------
(399) 2,988 797 Adjusted historical cost profit 7,524 7,415
======================= ==============
87,791 90,507 91,767 Average capital employed 89,616 87,259
(1.8)% 13.2% 3.5% ROACE 8.4% 8.5%
+ 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
Fourth Third Fourth
Quarter Quarter Quarter Year
2001 2002 2002 2002 2001
======================= =============
$ million
21,417 22,276 22,008 Gross debt 22,008 21,417
1,808 1,290 1,735 Cash and current asset investments 1,735 1,808
----------------------- -------------
19,609 20,986 20,273 Net debt 20,273 19,609
======================= =============
65,759 69,203 70,047 Equity 70,047 65,759
23% 23% 22% Net debt ratio 22% 23%
----------------------- --------------
18,882 17,134 16,672 Acquisition adjustment 16,672 18,882
----------------------- --------------
29% 29% 28% Net debt ratio - pro forma basis 28% 29%
======================= ==============
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