BP 2007 Annual Report Download - page 6

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Chairman’s letter
Dear Shareholder 2007 was a year of change for BP, as
the group responded to the powerful global forces shaping
the world economy and took decisive action to rebuild the
group’s reputation.
For many years, we were recognized as a leader in our
industry. The tragic events of Texas City, the incidents in
Alaska and the conduct of a small number of our traders
showed that we have failed in recent years to live up to
our own high standards and comply with the law. We have
acknowledged this in the settlements we have reached
with the US Department of Justice on these issues. I am
determined that we will recover our leadership position.
John Browne stood down as group chief executive and
as a director on 1 May 2007. The circumstances of John’s
resignation do not reflect the huge contribution he made
to the group during his 41-year career at BP. His vision helped
to transform BP and give it the scope and scale it has
today. We are indebted to him and I again wish to thank
John on behalf of the board for his great achievements
for the company.
I am very pleased to welcome Tony Hayward as group
chief executive. Tony was chosen unanimously by the board
after a thorough internal and external search. He has already
set about making his own mark on the group through his
dynamic leadership and his desire to reduce complexity. His
clear focus has been on safety, people and performance.
The significant contribution to the group of other executive
and non-executive directors is described on page 59 of this
Annual Report and Accounts. We have also reviewed in depth
the way we, as a board, work and this is described here on
pages 74-80.
While change was a feature of 2007, there is evidently
work still to do. In particular, during much of the year our
operational and financial performance has been below
par, as a direct result of a number of our key assets both
upstream and downstream not being available when they
were needed and when they could have made a significant
financial contribution. I am glad to say that our upstream
projects are now coming onstream and our downstream
assets are returning to service.
While we do now have a strong list of projects coming
onstream, the challenge is to ensure that this progress is
maintained and strengthened. In doing so, we will continue
to work closely with governments and national oil companies
to our mutual benefit.
The new delineation of the business of the group between
upstream, downstream and alternative energy brings a welcome
emphasis on the key drivers of the business. I believe, too,
that our alternative energy business will provide the focus that
we need to have on technology, both for our existing business
and for the supply of low-carbon energy in the future.
Whatever the importance of short-term challenges, the
rise in the oil price and trends in the world economy require
the group to make big strategic choices for the medium and
long term. This involves identifying the right opportunities
in a challenging marketplace for the group to grow in both
upstream and downstream. I regard this as a key part of
the board’s work.
We are maintaining our policy of returning cash to
shareholders through dividends and buybacks although we
are changing the relative proportion of each. Your board has
confidence in greater cash flows from our strong asset base,
which has allowed the company to increase both investment
in its future growth and the dividend component of our
distribution to shareholders.
I am therefore pleased to confirm that we have increased
the quarterly dividend, to be paid in March, to 13.525 cents
per share, compared with 10.325 cents per share last year.
For the year, the dividend showed an increase of 16%.
In sterling terms, the quarterly dividend is 6.813 pence per
share, compared with 5.258 pence per share a year ago; for
the year, the increase was 7%. During the year, $7.5 billion
of shares were repurchased for cancellation.
I am grateful to and wish to thank the executive team, the
board and indeed all our employees for everything they have
done during an eventful year. On behalf of the board, I would
also like to thank our shareholders for their support. We have
all learned some tough lessons in recent years and I am
confident that investors’ long-term faith in the company
will be rewarded.
Peter Sutherland
Chairman
22 February 2008