Interim Results Part 2 of 2

BP PLC 26 July 2005 BP p.l.c. and Subsidiaries Group Results Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Sales and other operating 70,314 78,998 86,817 revenues (Note 3) 165,815 138,775 Earnings from jointly controlled 496 486 742 Entities - after interest and tax 1,228 808 Earnings from associates - after 97 114 104 interest and tax 218 204 161 212 141 Interest and other revenues 353 250 ----------------------- -------------- 71,068 79,810 87,804 Total revenues 167,614 140,037 Gain on sale of businesses and 66 1,198 202 fixed assets 1,400 1,615 ----------------------- -------------- 71,134 81,008 88,006 Total revenues and other income 169,014 141,652 54,135 59,205 66,367 Purchases 125,572 106,622 Production and manufacturing 4,611 5,430 6,335 expenses 11,765 9,466 424 649 697 Production and similar taxes (Note 4)1,346 949 Depreciation, depletion and 2,124 2,288 2,375 amortization 4,663 4,287 Impairment and losses on sale of 353 246 76 businesses and fixed assets 322 779 108 160 139 Exploration expense (Note 4) 299 244 Distribution and administration 3,084 3,432 3,252 expenses 6,684 5,971 Fair value (gain) loss on embedded - 122 621 derivatives 743 - ----------------------- -------------- 6,295 9,476 8,144 Profit before interest and taxation 17,620 13,334 (95) (172) (128) Interest payable (Note 5) (300) (193) (76) (29) (34) Other finance expense (Note 6) (63) (152) ----------------------- -------------- 6,124 9,275 7,982 Profit before taxation 17,257 12,989 (1,747) (2,612) (2,322) Taxation (4,934) (3,666) ----------------------- -------------- 4,377 6,663 5,660 Profit for the period 12,323 9,323 ======================= ============== Attributable to: 4,335 6,602 5,591 BP shareholders 12,193 9,247 42 61 69 Minority interest 130 76 ----------------------- -------------- 4,377 6,663 5,660 12,323 9,323 ======================= ============== Earnings per share - cents Profit attributable to BP shareholders 19.79 30.79 26.30 Basic 57.09 42.03 19.39 30.36 25.94 Diluted 56.30 41.16 ======================= ============== Summarized Group Balance Sheet 30 June 31 December 2005 2004 ===================== $ million Non-current assets Property, plant and equipment 90,947 93,092 Goodwill 10,555 10,857 Other intangible assets 4,518 4,205 Investments in jointly controlled entities 14,499 14,556 Investments in associates 5,713 5,486 Other investments 748 467 --------------------- Fixed assets 126,980 128,663 Loans and other receivables 5,716 2,419 Defined benefit pension plan surplus 2,106 2,105 --------------------- 134,802 133,187 --------------------- Current assets Inventories 18,066 15,645 Trade and other receivables 46,339 44,282 Current tax receivable 155 157 Cash and cash equivalents 1,360 1,359 --------------------- 65,920 61,443 --------------------- 200,722 194,630 ===================== Total assets Current liabilities Trade and other payables 51,770 48,096 Finance debt 6,506 10,184 Current tax payable 5,269 4,131 Provisions 1,423 715 --------------------- 64,968 63,126 --------------------- Non-current liabilities Other payables 8,156 4,438 Finance debt 12,796 12,907 Deferred tax liabilities 16,437 16,701 Provisions 8,511 8,884 Defined benefit pension plan and other Post-retirement benefit plan deficits 9,757 10,339 --------------------- 55,657 53,269 --------------------- Total liabilities 120,625 116,395 --------------------- Net assets 80,097 78,235 ===================== Equity BP shareholders' equity 78,925 76,892 Minority interest 1,172 1,343 --------------------- 80,097 78,235 ===================== Movement in BP shareholders' equity : $ million At 31 December 2004 76,892 Adoption of IAS 39 (243) ------ As restated at 1 January 2005 76,649 Profit for the period 12,193 Distribution to shareholders (3,632) Currency translation differences (net of tax) (2,337) Issue of ordinary share capital for employee share schemes 271 Purchase of shares by ESOP trusts (140) Share based payment accrual (net of tax) 213 Available-for-sale investments (net of tax) (34) Cash flow hedges (net of tax) (160) Repurchase of ordinary share capital (4,098) ------ At 30 June 2005 78,925 ====== Summarized Group Cash Flow Statement Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Operating activities 6,124 9,275 7,982 Profit before taxation 17,257 12,989 Adjustments to reconcile profits before tax to net cash provided by operating activities 22 84 47 Exploration expenditure written off 131 89 Depreciation, depletion and 2,124 2,288 2,375 amortization 4,663 4,287 Impairment and (gain) loss on sale 287 (952) (126) of businesses and fixed assets (1,078) (836) Earnings from jointly controlled (593) (600) (846) entities and associates (1,446) (1,012) Dividends received from jointly 104 355 742 controlled entities and associates 1,097 313 (59) (65) (105) Interest receivable (170) (114) 48 35 79 Interest received 114 92 95 172 128 Interest payable 300 193 (154) (332) (119) Interest paid (451) (319) 76 29 34 Other finance expense 63 152 57 77 79 Share-based payments 156 115 Net operating charge for pensions and other post-retirement benefits, (34) (10) (6) less contributions (16) (57) Net charge for provisions, (60) (65) 504 less payments 439 (170) (1,391) (960) (2,101) (Increase) decrease in inventories (3,061) (1,137) (Increase) decrease in trade and (1,361) (1,573) (4,384) other receivables (5,957) (2,842) Increase (decrease) in trade and 1,492 2,749 4,956 other payables 7,705 2,622 (1,619) (1,133) (2,502) Income taxes paid (3,635) (2,199) ----------------------- --------------- Net cash provided by operating 5,158 9,374 6,737 activities 16,111 12,166 ----------------------- --------------- Investing activities (2,603) (2,825) (2,911) Capital expenditure (5,736) (5,398) (14) - - Acquisitions, net of cash acquired - (14) Net investment in jointly controlled (47) (15) (36) entities (51) (1,426) (148) (99) (186) Net investment in associates (285) (581) Proceeds from disposal of businesses 657 1,327 425 and fixed assets 1,752 3,493 - 32 48 Proceeds from loan repayments 80 3 ----------------------- --------------- Net cash used in investing (2,155) (1,580) (2,660) activities (4,240) (3,923) ----------------------- --------------- Financing activities (1,948) (1,933) (2,034) Net issue (repurchase) of shares (3,967) (3,086) 430 811 482 Proceeds from long-term financing 1,293 1,058 (434) (2,192) (1,011) Repayments of long-term financing (3,203) (1,270) Net (decrease) increase in short- (195) (2,166) 149 term debt (2,017) (2,423) (1,478) (1,823) (1,809) Dividends paid - BP shareholders (3,632) (2,970) (8) (320) (15) - Minority interest (335) (10) ----------------------- --------------- Net cash used in financing (3,633) (7,623) (4,238) activities (11,861) (8,701) ----------------------- --------------- Currency translation differences relating to cash and cash (11) (9) - equivalents (9) (8) ----------------------- --------------- (Decrease) increase in cash and (641) 162 (161) cash equivalents 1 (466) Cash and cash equivalents at 2,231 1,359 1,521 beginning of period 1,359 2,056 ----------------------- --------------- Cash and cash equivalents at 1,590 1,521 1,360 end of period 1,360 1,590 ======================= =============== Capital Expenditure and Acquisitions Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 211 176 213 UK 389 364 45 31 37 Rest of Europe 68 93 981 997 942 USA 1,939 1,870 1,015 1,097 1,289 Rest of World (a) 2,386 3,689 ----------------------- ------------- 2,252 2,301 2,481 4,782 6,016 ----------------------- ------------- Refining and Marketing 81 43 97 UK 140 143 133 67 111 Rest of Europe 178 203 313 190 219 USA 409 531 59 31 88 Rest of World 119 90 ----------------------- ------------- 586 331 515 846 967 ----------------------- ------------- Gas, Power and Renewables 5 1 16 UK 17 6 3 1 6 Rest of Europe 7 5 13 13 19 USA 32 24 56 6 10 Rest of World 16 102 ----------------------- ------------- 77 21 51 72 137 ----------------------- ------------- Other businesses and corporate 15 75 82 UK 157 46 37 20 58 Rest of Europe 78 71 64 64 53 USA 117 111 32 16 34 Rest of World 50 86 ----------------------- ------------- 148 175 227 402 314 ----------------------- ------------- 3,063 2,828 3,274 6,102 7,434 ======================= ============= By geographical area 312 295 408 UK 703 559 218 119 212 Rest of Europe 331 372 1,371 1,264 1,233 USA 2,497 2,536 1,162 1,150 1,421 Rest of World (a) 2,571 3,967 ----------------------- ------------- 3,063 2,828 3,274 6,102 7,434 ======================= ============= Included above: 14 85 66 Acquisitions and asset exchanges 151 1,373 ======================= ============= (a) First half 2004 included $1,354 million investment in TNK's interest in Slavneft within TNK-BP. Exchange rates US dollar/sterling average rate 1.81 1.89 1.86 for the period 1.87 1.82 1.81 1.88 1.80 US dollar/sterling period-end rate 1.80 1.81 US dollar/euro average rate 1.20 1.31 1.26 for the period 1.28 1.23 1.21 1.30 1.21 US dollar/euro period-end rate 1.21 1.21 ======================= ============= Analysis of Profit Before Interest and Tax Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 852 911 574 UK 1,485 1,692 206 1,328 294 Rest of Europe 1,622 369 1,714 2,008 2,441 USA 4,449 3,406 1,491 2,244 2,597 Rest of World 4,841 3,046 ----------------------- ------------- 4,263 6,491 5,906 12,397 8,513 ----------------------- ------------- Refining and Marketing (110) (249) (73) UK (322) (214) 658 835 982 Rest of Europe 1,817 1,081 1,152 1,429 691 USA 2,120 1,979 370 348 350 Rest of World 698 697 ----------------------- ------------- 2,070 2,363 1,950 4,313 3,543 ----------------------- ------------- Gas, Power and Renewables (7) 116 124 UK 240 16 (4) 6 (8) Rest of Europe (2) (17) 98 172 39 USA 211 172 96 124 5 Rest of World 129 203 ----------------------- ------------- 183 418 160 578 374 ----------------------- ------------- Other businesses and corporate (77) (121) (45) UK (166) (344) 104 370 159 Rest of Europe 529 250 (175) 103 (29) USA 74 (279) 14 5 47 Rest of World 52 1,430 ----------------------- ------------- (134) 357 132 489 1,057 ----------------------- ------------- 6,382 9,629 8,148 17,777 13,487 (87) (153) (4) Consolidation adjustment (157) (153) ----------------------- ------------- 6,295 9,476 8,144 17,620 13,334 ======================= ============= By geographical area 658 640 576 UK 1,216 1,150 964 2,539 1,427 Rest of Europe 3,966 1,683 2,702 3,576 3,142 USA 6,718 5,125 1,971 2,721 2,999 Rest of World 5,720 5,376 ----------------------- ------------- 6,295 9,476 8,144 17,620 13,334 ======================= ============= Analysis of Replacement Cost Profit Before Interest and Tax Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production 852 911 574 UK 1,485 1,692 206 1,328 294 Rest of Europe 1,622 369 1,714 2,003 2,438 USA 4,441 3,398 1,491 2,244 2,597 Rest of World 4,841 3,046 ----------------------- ------------- 4,263 6,486 5,903 12,389 8,505 ----------------------- ------------- Refining and Marketing (128) (270) (59) UK (329) (246) 550 423 658 Rest of Europe 1,081 869 973 1,003 373 USA 1,376 1,416 270 265 314 Rest of World 579 546 ----------------------- ------------- 1,665 1,421 1,286 2,707 2,585 ----------------------- ------------- Gas, Power and Renewables (7) 116 124 UK 240 16 (4) 6 (1) Rest of Europe 5 (17) 113 163 43 USA 206 192 87 119 8 Rest of World 127 199 ----------------------- ------------- 189 404 174 578 390 ----------------------- ------------- Other businesses and corporate (97) (191) (57) UK (248) (378) 68 309 150 Rest of Europe 459 189 (182) 86 29 USA 115 (342) 14 3 53 Rest of World 56 1,428 ----------------------- ------------- (197) 207 175 382 897 ----------------------- ------------- 5,920 8,518 7,538 16,056 12,377 (87) (153) (4) Consolidation adjustment (157) (153) ----------------------- ------------- 5,833 8,365 7,534 15,899 12,224 ======================= ============= By geographical area 620 549 578 UK 1,127 1,084 820 2,066 1,101 Rest of Europe 3,167 1,410 2,531 3,119 2,883 USA 6,002 4,511 1,862 2,631 2,972 Rest of World 5,603 5,219 ----------------------- ------------- 5,833 8,365 7,534 15,899 12,224 ======================= ============= Analysis of Non-operating Items Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business Exploration and Production (2) (290) (678) UK (968) (3) - 1,027 3 Rest of Europe 1,030 - (117) (1) (3) USA (4) (136) (155) 44 26 Rest of World 70 (110) ----------------------- ------------- (274) 780 (652) 128 (249) ----------------------- ------------- Refining and Marketing (58) 8 (23) UK (15) (94) 73 1 (12) Rest of Europe (11) 36 7 5 (634) USA (629) 2 33 (41) 11 Rest of World (30) (49) ----------------------- ------------- 55 (27) (658) (685) (105) ----------------------- ------------- Gas, Power and Renewables - 105 66 UK 171 - - - - Rest of Europe - - - - 21 USA 21 - - - - Rest of World - - ----------------------- ------------- - 105 87 192 - ----------------------- ------------- Other businesses and corporate 4 (66) (6) UK (72) (4) (1) (1) 12 Rest of Europe 11 - (70) (4) 11 USA 7 (196) (1) - - Rest of World - 1,389 ----------------------- ------------- (68) (71) 17 (54) 1,189 ----------------------- ------------- (287) 787 (1,206) Total before taxation (419) 835 89 (252) 380 Taxation credit (charge) 128 (257) ----------------------- ------------- (198) 535 (826) Total after taxation (291) 578 ======================= ============= Depreciation of Fixed Asset Revaluation Adjustment Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Exploration and Production 8 7 12 UK 19 19 90 77 70 USA 147 183 6 4 3 Rest of World 7 12 ----------------------- ------------- 104 88 85 173 214 ----------------------- ------------- Refining and Marketing 31 31 31 USA 62 62 ----------------------- ------------- 31 31 31 62 62 ----------------------- ------------- Total depreciation of revaluation 135 119 116 adjustment (a)(b) 235 276 ======================= ============= (a) Relates to the revaluation adjustment consequent upon the ARCO acquisition. (b) Excludes impairment of the revaluation adjustment which is included in non-operating items. Net Debt Ratio - Net Debt: Net Debt + Equity Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million 19,858 19,564 19,302 Gross debt 19,302 19,858 1,590 1,521 1,360 Cash and cash equivalents 1,360 1,590 ----------------------- -------------- 18,268 18,043 17,942 Net debt 17,942 18,268 ======================= ============== 73,088 79,911 80,097 Equity 80,097 73,088 20% 18% 18% Net debt ratio 18% 20% ======================= ============== Production and Realizations Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== Production Crude oil (mb/d) (net of royalties) 321 288 290 UK 289 333 80 76 73 Rest of Europe 74 76 541 560 546 USA 553 552 1,379 1,481 1,528 Rest of World 1,505 1,370 ----------------------- ------------- 2,321 2,405 2,437 Total crude oil production 2,421 2,331 ======================= ============= Natural gas liquids (mb/d) (net of royalties) 21 17 20 UK 18 20 5 5 4 Rest of Europe 5 5 140 135 127 USA 131 139 31 31 31 Rest of World 31 30 ----------------------- ------------- Total natural gas 197 188 182 liquids production 185 194 ======================= ============= Liquids (a)(mb/d) (net of royalties) 342 305 310 UK 307 353 85 81 77 Rest of Europe 79 81 681 695 673 USA 684 691 1,410 1,512 1,559 Rest of World 1,536 1,400 ----------------------- ------------- 2,518 2,593 2,619 Total liquids production 2,606 2,525 ======================= ============= Natural gas (mmcf/d) (net of royalties) 1,213 1,242 1,136 UK 1,189 1,284 136 121 106 Rest of Europe 114 139 2,790 2,648 2,727 USA 2,688 2,829 4,286 4,734 4,692 Rest of World 4,712 4,260 ----------------------- ------------- 8,425 8,745 8,661 Total natural gas production 8,703 8,512 ======================= ============= Average realizations Crude oil ($/bbl) 33.99 45.54 48.76 UK 47.16 31.60 35.82 43.20 49.27 USA 46.21 34.22 32.64 41.49 44.57 Rest of World 43.08 31.69 34.47 43.37 47.79 BP Average 45.60 32.85 ======================= ============= Natural gas liquids ($/bbl) 28.30 29.82 34.34 UK 32.30 27.04 23.13 26.98 28.04 USA 27.50 22.71 22.17 31.24 33.77 Rest of World 32.47 23.36 23.71 28.14 29.86 BP Average 28.99 23.43 ======================= ============= Liquids (a) ($/bbl) 33.64 44.68 47.83 UK 46.27 31.33 33.67 40.56 45.92 USA 43.21 32.36 31.90 40.83 43.94 Rest of World 42.43 31.14 33.27 41.74 45.95 BP Average 43.85 31.85 ======================= ============= Natural gas ($/mcf) 3.59 5.58 4.82 UK 5.21 4.18 5.11 5.31 5.83 USA 5.57 4.91 2.54 3.10 3.20 Rest of World 3.15 2.60 3.68 4.26 4.38 BP Average 4.32 3.74 ======================= ============= (a) Crude oil and natural gas liquids. Notes 1. Transition to International Financial Reporting Standards For all periods up to and including the year ended 31 December 2004, BP prepared its financial statements in accordance with UK generally accepted accounting practice (UK GAAP). From 1 January 2005 BP is required to prepare consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as endorsed by the European Commission ('EC'). Consequently, financial information for interim quarters of 2005 must be prepared on the basis of IFRS. The general principle that should be applied on first-time adoption of IFRS is that standards in force at the first reporting date (that is, for BP, 31 December 2005) should be applied retrospectively. However, IFRS 1 'First-time Adoption of International Financial Reporting Standards' contains a number of exemptions which companies are permitted to apply. BP has elected: - not to present comparative information in accordance with IAS 32 'Financial Instruments: Disclosure and Presentation' and IAS 39 'Financial Instruments: Recognition and Measurement'. - not to restate its financial information for acquisitions occurring before 1 January 2003. - to deem cumulative translation differences to be zero at 1 January 2003. - to recognize all actuarial gains and losses on pensions and other post-retirement benefits directly in shareholders' equity at 1 January 2003. This is consistent with the group's adoption of FRS 17 'Retirement Benefits' in 2004. - to apply IFRS 2 'Share-based Payment' retrospectively to all share- based payments. As a result of the above exemptions certain changes apply from 1 January 2003 (BP's Date of Transition) followed by further changes (due to IAS 32 and IAS 39) to apply from 1 January 2005. The quarterly information for 2005 and the restatement of financial information for the year ended 31 December 2004 and the interim quarters of 2004 have been prepared on the basis of all International Financial Reporting Standards (IFRSs) (with the exception of IAS 32 and IAS 39 (as amended) for the 2004 information) and Standing Interpretations Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) interpretations issued by the International Accounting Standards Board (IASB) expected to be in effect for the year ending 31 December 2005. It is possible that there will be changes to these standards and interpretations before the end of 2005, which might require further adjustments to this information before it is included in the 2005 Annual Report and Accounts. In addition, BP has decided to early adopt IFRS 5 'Non-current Assets Held for Sale and Discontinued Operations', IFRS 6 'Exploration for and Evaluation of Mineral Resources', the amendment to IAS 19 'Amendment to international accounting standard IAS 19 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures', the amendment to IAS 39 'Financial Instruments: Recognition and Measurement - Cash Flow Hedge Accounting of Forecast Intra-group Transactions' and IFRIC 4 'Determining whether an Arrangement contains a Lease'. In the restatement information for the year ended 31 December 2004 and the interim quarters of 2004 financial assets and financial liabilities are accounted for on the basis of UK GAAP. Under UK GAAP, all derivatives used for trading purposes are recognized on the balance sheet at fair value. However, derivative financial instruments used for hedging purposes are recognized by applying either the accrual method or the deferral method. Under the accrual method, amounts payable or receivable in respect of derivatives are recognized rateably in earnings over the period of the contracts. Changes in the derivative's fair value are not recognized. On the deferral method, gains and losses from derivatives are deferred and recognized in earnings or as adjustments to carrying amounts as the underlying hedged transaction matures or occurs. From 1 January 2005 for IFRS all financial assets and financial liabilities have to be recognized initially at fair value. In subsequent periods the measurement of these financial instruments depends on their classification into one of the following measurement categories: i) financial assets or financial liabilities at-fair-value- through-profit-and-loss (such as those used for trading purposes, and all derivatives which do not qualify for hedge accounting); ii) loans and receivables; iii) available-for-sale financial assets (including certain investments held for the long term) and iv) other liabilities. The effect of adopting IAS 39 at 1 January 2005 is shown as a movement in BP shareholders' equity for 2005. Notes 1. Transition to International Financial Reporting Standards (continued) The principal differences for the group between reporting on the basis of UK GAAP and IFRS are as follows: - ceasing to amortize goodwill. - setting up deferred taxation on: - acquisitions; - inventory valuation differences; - unremitted earnings of subsidiaries, associates and jointly controlled entities. - expensing a greater proportion of major maintenance costs. - no longer recognizing dividends proposed but not declared as a liability at the balance sheet date. - recognizing an expense for the fair value of employee share option schemes rather than the intrinsic value. - recording asset swaps on the basis of fair value. - embedded derivatives measured at fair value. BP has produced an explanatory note setting out its accounting policies under IFRS, the major differences between UK GAAP and IFRS for BP, and reconciliations of UK GAAP to IFRS for its 2003 and 2004 Income and Cash Flow Statements, its Balance Sheets at 1 January 2003, 31 December 2003, 31 December 2004 and 1 January 2005. This information can be found at the Investor Centre www.bp.com. In addition, the reconciliations for 2004 interim periods included in this report are shown below. Second First Quarter Half 2004 2004 ===================== $ million Profit for the period under UK GAAP 3,948 8,810 Adjustments Goodwill amortization 357 716 Major maintenance expenditure (56) (88) Share-based payments (19) (35) Asset swaps - 2 Recycling forex on disposal - 78 Deferred tax 159 (154) Other (12) (6) --------------------- Profit for the period under IFRS 4,377 9,323 ===================== 30 June 2004 ======= $ million BP shareholders' equity under UK GAAP 72,818 Adjustments Goodwill amortization 2,139 Major maintenance expenditure (630) Share-based payments 254 Asset swaps (139) Deferred tax (4,077) Dividend accrual 1,542 Other (51) ------- BP shareholders' equity under IFRS 71,856 ======= Notes 2. Resegmentation With effect from 1 January 2005 there have been the following changes to the business segments reported by the group. (a) Our petrochemicals operations have been divided between the Refining and Marketing segment and Other businesses and corporate. The Aromatics and Acetyls businesses and the petrochemicals assets that are integrated with our Gelsenkirchen refinery in Germany are now part of Refining and Marketing. The Olefins and Derivatives business is now reported within Other businesses and corporate. This segment has also been restated to include the legacy historical results of other petrochemicals assets that have been divested during 2004. We have also combined our Grangemouth and Lavera refineries into the Olefins and Derivatives business to maintain current operating synergies. These changes have been made in connection with the establishment of our Olefins and Derivatives business as a stand-alone entity within BP, with a view towards its divestment at a later date. (b) A small US operation, the Hobbs fractionator, which supplies petrochemicals feedstock, has been transferred from Gas, Power and Renewables to Olefins and Derivatives. (c) The Mardi Gras pipeline system in the Gulf of Mexico has been transferred from Exploration and Production to Refining and Marketing. Comparative financial and operating information is shown after resegmentation and the adoption of International Financial Reporting Standards. Further information regarding these adjustments can be found at the BP investor centre www.bp.com. 3. Sales and other operating revenues Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million By business 8,083 10,186 10,934 Exploration and Production 21,120 16,269 48,514 49,869 61,022 Refining and Marketing 110,891 92,610 18,434 23,667 23,110 Gas, Power and Renewables 46,777 39,409 Other businesses 3,911 5,515 6,125 and corporate 11,640 7,730 ----------------------- --------------- 78,942 89,237 101,191 190,428 156,018 Less: sales between 8,628 10,239 14,374 businesses 24,613 17,243 ----------------------- --------------- 70,314 78,998 86,817 165,815 138,775 ======================= =============== By geographical area 18,008 26,911 30,791 UK 57,702 35,870 13,545 17,009 17,870 Rest of Europe 34,879 25,973 33,333 34,282 38,841 USA 73,123 64,929 15,638 18,706 20,208 Rest of World 38,914 31,460 ----------------------- --------------- 80,524 96,908 107,710 204,618 158,232 10,210 17,910 20,893 Less: sales between areas 38,803 19,457 ----------------------- --------------- 70,314 78,998 86,817 165,815 138,775 ======================= =============== Notes 4. Operating profits are after charging: Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Exploration expense 3 5 13 UK 18 5 6 1 - Rest of Europe 1 8 63 103 85 USA 188 160 36 51 41 Rest of World 92 71 ----------------------- -------------- 108 160 139 299 244 ======================= ============== Production and similar taxes (a) 46 114 153 UK 267 172 378 535 544 Overseas 1,079 777 ----------------------- -------------- 424 649 697 1,346 949 ======================= ============== (a) Production taxes are charged against Exploration and Production's operating profit. 5. Interest payable 147 191 204 Group interest payable 395 295 (52) (76) (76) Capitalized (152) (102) ----------------------- -------------- 95 115 128 243 193 Early redemption of finance - 57 - leases 57 - ----------------------- -------------- 95 172 128 300 193 ======================= ============== 6. Other finance expense Interest on pension and other post-retirement benefit 491 514 509 plan liabilities 1,023 991 Expected return on pension and other post-retirement (491) (547) (542) benefit plan assets (1,089) (989) ----------------------- -------------- Interest net of expected return - (33) (33) on plan assets (66) 2 Unwinding of discount 50 45 50 on provisions 95 98 Unwinding of discount on deferred consideration for acquisition of investment 26 17 17 in TNK-BP 34 52 ----------------------- -------------- 76 29 34 63 152 ======================= ============== Notes 7. Dividends paid Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== Dividends per ordinary share 6.75 8.50 8.50 cents 17.0 13.5 3.807 4.522 4.450 pence 8.972 7.481 40.5 51.0 51.0 Dividends per ADS (cents) 102.0 81.0 ======================= ============== 8. Analysis of changes in net debt Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== $ million $ million Opening balance 19,937 23,091 19,564 Finance debt 23,091 22,325 Less: Cash and cash 2,231 1,359 1,521 equivalents 1,359 2,056 ----------------------- --------------- 17,706 21,732 18,043 Opening net debt 21,732 20,269 ----------------------- --------------- Closing balance 19,858 19,564 19,302 Finance debt 19,302 19,858 Less: Cash and cash 1,590 1,521 1,360 equivalents 1,360 1,590 ----------------------- --------------- 18,268 18,043 17,942 Closing net debt 17,942 18,268 ----------------------- --------------- Decrease (increase) (562) 3,689 101 in net debt 3,790 2,001 ======================= =============== Movement in cash and cash equivalents (excluding (630) 171 (161) exchange adjustments) 10 (458) Net cash outflow (inflow) from financing(excluding 199 3,547 380 share capital) 3,927 2,635 - (147) - Adoption of IAS 39 (147) - - 98 17 Fair value hedge adjustment 115 - 15 49 53 Other movements 102 53 ----------------------- -------------- Movement in net debt before (416) 3,718 289 exchange effects 4,007 2,230 (146) (29) (188) Exchange adjustments (217) (229) ----------------------- -------------- Decrease (increase) (562) 3,689 101 in net debt 3,790 2,001 ======================= ============== Notes 9. TNK-BP Operational and Financial Information Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== Production (Net of royalties) (BP share) 814 875 903 Crude oil (mb/d) 889 790 450 527 429 Natural gas (mmcf/d) 477 416 891 966 977 Total hydrocarbons (mboe/d)(a) 971 862 ======================= ============== $ million $ million Income statement (BP share) 581 615 920 Profit before interest and tax 1,535 955 (26) (29) (32) Interest expense * (61) (56) (161) (167) (227) Taxation (394) (269) (10) (8) (20) Minority interest (28) (20) ----------------------- -------------- 384 411 641 Net Income 1,052 610 ======================= ============== * Excludes unwinding of discount 26 17 17 on deferred consideration 34 52 ======================= ============== Cash Flow Additional investment in - - - TNK-BP joint venture - (1,416) Dividends related to period - - - prior to acquisition - 143 ----------------------- -------------- Net investment in TNK-BP - - - joint venture - (1,273) ======================= ============== - 250 425 Dividends received 675 119 ======================= ============== Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== Average oil marker prices ($/bbl) 32.32 42.54 48.08 Urals (NWE - cif) 45.31 30.67 32.60 43.21 48.49 Urals (Med - cif) 45.85 30.79 19.71 19.14 27.39 Domestic Oil 23.27 18.40 ======================= ============== Balance Sheet 30 June 31 December 2005 2004 ========================== Investments in jointly controlled entities 8,671 8,294 ========================== Deferred consideration Due within one year 1,244 1,227 Due after more than one year 1,211 1,194 -------------------------- 2,455 2,421 ========================== (a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet = 1 million barrels. 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 $14 million in 2Q 2005 and a charge of $14 million in first half 2005. As reported at first quarter 2005, various TNK-BP group companies have received tax notifications totalling approximately $1 billion in respect of 2001. Discussions between TNK-BP and the Russian Federal Tax Service (FTS) regarding these notifications are still ongoing. In addition, the FTS is currently conducting routine tax audits for 2002 and 2003, although it has not communicated any preliminary findings and any such findings are likely to be dependent on the resolution of the 2001 tax issues. In the agreements executed at the formation of TNK-BP, BP has extensive indemnities from its co-venturers in respect of pre-acquisition tax liabilities. Notes 10. Olefins and Derivatives Second First Second Quarter Quarter Quarter First Half 2004 2005 2005 2005 2004 ======================= ============== Refinery throughputs (mb/d) 198 193 165 UK 179 198 142 199 186 Rest of Europe 192 158 ----------------------- -------------- 340 392 351 Total throughput 371 356 ----------------------- -------------- Petrochemicals production (kte) 530 461 583 UK 1,044 1,067 1,912 2,132 2,126 Rest of Europe 4,258 3,843 1,370 1,301 1,340 USA 2,641 2,730 93 104 552 Rest of World 656 185 ----------------------- -------------- 3,905 3,998 4,601 Total production 8,599 7,825 ----------------------- -------------- $ million $ million Income Statement 52 506 247 Profit before interest and tax 753 44 (63) (150) 43 Inventory holding (gains) losses(107) (160) ----------------------- -------------- Replacement cost profit before (11) 356 290 interest and tax 646 (116) ======================= ============== By geographical area: (21) (30) 125 UK 95 (126) 69 302 124 Rest of Europe 426 196 (77) 89 24 USA 113 (212) 18 (5) 17 Rest of World 12 26 ----------------------- -------------- (11) 356 290 646 (116) ======================= ============== Replacement cost result includes: Impairment and gain (loss) on sale (67) (24) - of businesses and fixed assets (24) (201) ----------------------- -------------- (67) (24) - Total non-operating items (24) (201) ======================= ============== Other Financial Information Capital expenditure and 122 144 155 acquisitions 299 277 ======================= ============== Olefins and Derivatives includes the Olefins and Derivatives businesses previously reported in the former Petrochemicals segment, the Grangemouth and Lavera refineries previously reported within the Refining and Marketing segment, the Hobbs fractionator previously included in Gas, Power and Renewables and costs associated with the former Petrochemicals segment. Notes 11. Equity-accounted entities The group's profit for the period includes the following in respect of equity-accounted entities. RC Profit Inventory Profit before holding before interest gains interest and tax (losses) and tax --------------------------------------- $ million Second Quarter 2005 Exploration and Production 1,163 - 1,163 Refining and Marketing 72 (10) 62 Gas, Power and Renewables 9 - 9 Other businesses and corporate 5 (5) - --------------------------------------- 1,249 (15) 1,234 ======================================= First Quarter 2005 Exploration and Production 841 - 841 Refining and Marketing 76 (4) 72 Gas, Power and Renewables 5 - 5 Other businesses and corporate (1) - (1) --------------------------------------- 921 (4) 917 ======================================= Second Quarter 2004 Exploration and Production 814 - 814 Refining and Marketing 72 (1) 71 Gas, Power and Renewables 2 - 2 Other businesses and corporate 9 (2) 7 --------------------------------------- 897 (3) 894 ======================================= Half Year 2005 Exploration and Production 2,004 - 2,004 Refining and Marketing 148 (14) 134 Gas, Power and Renewables 14 - 14 Other businesses and corporate 4 (5) (1) --------------------------------------- 2,170 (19) 2,151 ======================================= Half Year 2004 Exploration and Production 1,377 - 1,377 Refining and Marketing 170 (7) 163 Gas, Power and Renewables 2 - 2 Other businesses and corporate 26 (11) 15 --------------------------------------- 1,575 (18) 1,557 ======================================= Notes 11. Equity-accounted entities (continued) Profit Minority for the Interest Tax interest period ---------------------------------------- $ million Second Quarter 2005 Exploration and Production (56) (289) (20) 798 Refining and Marketing (5) (13) - 44 Gas, Power and Renewables (3) (1) - 5 Other businesses and corporate (1) - - (1) --------------------------------------- (65) (303) (20) 846 ======================================= First Quarter 2005 Exploration and Production (52) (227) (8) 554 Refining and Marketing (5) (18) - 49 Gas, Power and Renewables (2) (2) - 1 Other businesses and corporate (3) - - (4) --------------------------------------- (62) (247) (8) 600 ======================================= Second Quarter 2004 Exploration and Production (46) (222) (10) 536 Refining and Marketing (4) (17) - 50 Gas, Power and Renewables (1) - - 1 Other businesses and corporate (1) - - 6 --------------------------------------- (52) (239) (10) 593 ======================================= Half Year 2005 Exploration and Production (108) (516) (28) 1,352 Refining and Marketing (10) (31) - 93 Gas, Power and Renewables (5) (3) - 6 Other businesses and corporate (4) - - (5) --------------------------------------- (127) (550) (28) 1,446 ======================================= Half Year 2004 Exploration and Production (96) (380) (20) 881 Refining and Marketing (8) (36) - 119 Gas, Power and Renewables (3) - - (1) Other businesses and corporate (2) - - 13 --------------------------------------- (109) (416) (20) 1,012 ======================================= Notes 12. Third quarter results BP's third quarter results will be announced on 25 October 2005. 13. Statutory accounts The financial information shown in this publication is unaudited and does not constitute statutory accounts. The 2004 Annual Report and Accounts have been 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 MacLeod 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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