BP 2005 Annual Report Download - page 2

The Annual Report and Accounts for the year ended 31 December 2005,
which includes comparative financial information for the years ended
31 December 2004 and 2003, comprises BP’s first consolidated financial
statements prepared under International Financial Reporting Standards
(IFRSs) as adopted by the European Union (EU).
In preparing these financial statements, the group has complied with
all IFRSs applicable for periods beginning on or after 1 January 2005. In
addition, BP adopted early IFRS 6 ‘Exploration for and Evaluation of Mineral
Resources’, the amendment to 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 Intragroup Transactions’ and IFRIC 4 ‘Determining
whether an Arrangement contains a Lease’. The EU has adopted all
standards and interpretations adopted by BP for its 2005 reporting.
The financial information for 2004 and 2003 has been restated to
reflect the following, all with effect from 1 January 2005: (a) adoption
by the group of IFRSs; (b) change in accounting policy for sales and
purchases (see Note 2 on financial statements); (c) transfer of the Mardi
Gras pipeline system from Exploration and Production to Refining and
Marketing; (d) transfer of the aromatics and acetyls operations and the
petrochemicals assets that are integrated with our Gelsenkirchen refinery
in Germany from the former Petrochemicals segment to Refining and
Marketing; (e) transfer of the olefins and derivatives operations from the
former Petrochemicals segment to the Olefins and Derivatives (O&D)
business and the inclusion of the legacy historical results of other
petrochemicals assets that had been divested during 2004 and 2003
within Other businesses and corporate; (f) transfer of the Grangemouth
and Lavéra refineries from Refining and Marketing to the O&D business;
and (g) transfer of the Hobbs fractionator from Gas, Power and Renewables
to the O&D business. The O&D business is reported within Other businesses
and corporate. This reorganization was a precursor to seeking to divest the
O&D business. During 2005, we divested Innovene and show its activities
as discontinued operations in these accounts. Innovene represented the
majority of the O&D business.
Outside the financial statements, references within BP Annual Report
and Accounts 2005 to ‘profits’, ‘result’ and ‘return on capital employed’ are
to those measures on a replacement cost basis unless otherwise indicated.
The table below reconciles profit for the period to replacement cost profit.
The Annual Report and Accounts for the year ended 31 December 2005 contains the
Directors’ Report on pages 2-26, 158-163 and 174-176, and the Directors’ Remuneration
Report on pages 164-173. The consolidated financial statements are on pages 27-157. The
reports of the auditor are on page 29 for the group and page 143 for the parent company.
BP p.l.c. is the parent company of the BP group of companies. Unless otherwise stated,
the text does not distinguish between the activities and operations of the parent company
and those of its subsidiaries.
The term ‘shareholders’ in the Report means, unless the context otherwise requires,
investors in the equity capital of BP p.l.c., both direct and/or indirect.
BP Annual Report and Accounts 2005 and BP Annual Review 2005 may be downloaded
from www.bp.com/annualreview. No material on the BP website, other than the items
identified as BP Annual Report and Accounts 2005 and BP Annual Review 2005, forms
any part of those documents.
As BP shares, in the form of ADSs, are listed on the New York Stock Exchange (NYSE),
an Annual Report on Form 20-F will be filed with the US Securities and Exchange
Commission in accordance with the US Securities Exchange Act of 1934. When filed,
copies may be obtained, free of charge (see page 177). BP discloses on its website at
www.bp.com significant ways (if any) in which its corporate governance practices differ
from those mandated for US companies under NYSE listing standards.
Cautionary statement
BP Annual Report and Accounts 2005 contains certain forward-looking statements,
particularly those regarding BP’s asset portfolio and changes in it, capital expenditure,
community investment, costs, development of business strategy, discovery, development
and management of oil and gas resources, dividends, share repurchases and other
distributions to shareholders, earnings, availability of free cash flow, future performance,
gearing, growth, investments, new markets, production, the progress and timing of projects,
renewal of borrowing facilities, tax rates and the application of and spending on technology.
By their nature, forward-looking statements involve risks and uncertainties because they
relate to events and depend on circumstances that will or may occur in the future. Actual
results may differ from those expressed in such statements, depending on a variety of
factors, including the timing of bringing new fields on stream; future levels of industry
product supply; demand and pricing; operational problems; general economic conditions;
political stability and economic growth in relevant areas of the world; changes in laws
and governmental regulations; exchange rate fluctuations; development and use of new
technology; changes in public expectations and other changes in business conditions;
the actions of competitors; natural disasters and adverse weather conditions; wars and
acts of terrorism or sabotage; and other factors discussed elsewhere in this document.
The registered office of BP p.l.c. is 1 St James’s Square, London SW1Y 4PD, UK.
Telephone: [phone].
Registered in England and Wales No. 102498. Stock exchange symbol ‘BP’.
RECONCILIATION OF PROFIT FOR THE PERIOD TO REPLACEMENT COST PROFIT $ million
2005 2004 2003
Profit before interest and tax for continuing operations 32,682 25,746 18,776
Finance costs and other finance expense (761) (780) (1,045)
Taxation (9,473) (7,082) (5,050)
Minority interest (291) (187) (170)
Profit for the period for continuing operations attributable to BP shareholders 22,157 17,697 12,511
Profit (loss) for the period from Innovene operations 184 (622) (63)
Profit for the period attributable to BP shareholders 22,341 17,075 12,448
Inventory holding (gains) losses (3,027) (1,643) (16)
Replacement cost profita19,314 15,432 12,432
Replacement cost profit for continuing operations attributable to BP shareholders 19,513 16,336 12,460
Replacement cost profit for Innovene operations (199) (904) (28)
Replacement cost profit 19,314 15,432 12,432
Per ordinary share – cents
Profit for the period attributable to BP shareholders 105.74 78.24 56.14
Replacement cost profit 91.41 70.71 56.06
Dividends paid per ordinary share – cents 34.85 27.70 25.50
– pence 19.152 15.251 15.658
Dividends paid per American Depositary Share (ADS) – dollars 2.091 1.662 1.530
aReplacement cost profit reflects the current cost of supplies. The replacement cost profit for the period is determined by excluding from profit inventory holding gains and losses.
BP uses this measure to assist investors to assess BP’s performance from period to period.