BP 2015 Annual Report Download - page 144

21. Trade and other payables
$ million
2015 2014
Current Non-current Current Non-current
Financial liabilities
Trade payables 16,838 – 23,074 –
Amounts payable to joint ventures and associates 2,130 – 2,436 –
Other payables 10,775 2,351 11,832 2,985
29,743 2,351 37,342 2,985
Non-financial liabilities
Other payables 2,206 559 2,776 602
31,949 2,910 40,118 3,587
Trade and other payables are predominantly interest free. See Note 28 for further information.
22. Provisions
$ million
Decommissioning Environmental
Litigation and
claims
Clean Water
Act penalties Other Total
At 1 January 2015 18,720 2,847 4,739 3,510 3,082 32,898
Exchange adjustments (356) (18) (9) – (119) (502)
New or increased provisions 972 5,697 6,058 661 1,506 14,894
Write-back of unused provisions – (75) (24) – (274) (373)
Unwinding of discount 167 106 62 68 13 416
Change in discount ratea– (149) (74) (110) – (333)
Utilization (37) (392) (3,494) – (598) (4,521)
Reclassified to other payables (500) (459) (124) – (204) (1,287)
Deletions (20) – – – (58) (78)
At 31 December 2015 18,946 7,557 7,134 4,129 3,348 41,114
Of which – current 703 587 3,023 – 841 5,154
– non-current 18,243 6,970 4,111 4,129 2,507 35,960
Of which – Gulf of Mexico oil spillb– 5,919 6,459 4,129 – 16,507
aProvisions for the agreements to settle all federal and state claims in relation to the Gulf of Mexico oil spill are discounted using a discount rate equal to a current interest rate that the group could
obtain for a borrowing on similar terms.
bFurther information on the financial impacts of the Gulf of Mexico oil spill is provided in Note 2.
The decommissioning provision comprises the future cost of decommissioning oil and natural gas wells, facilities and related pipelines. The
environmental provision includes provisions for costs related to the control, abatement, clean-up or elimination of environmental pollution relating to
soil, groundwater, surface water and sediment contamination. The litigation and claims category includes provisions for matters related to, for example,
commercial disputes, product liability, and allegations of exposures of third parties to toxic substances. Included within the other category at
31 December 2015 are provisions for deferred employee compensation of $484 million (2014 $553 million).
For information on significant estimates and judgements made in relation to provisions, including those for the Gulf of Mexico oil spill, see Provisions,
contingencies and reimbursement assets within Note 1.
23. Pensions and other post-retirement benefits
Most group companies have pension plans, the forms and benefits of which vary with conditions and practices in the countries concerned. Pension
benefits may be provided through defined contribution plans (money purchase schemes) or defined benefit plans (final salary and other types of
schemes with committed pension benefit payments). For defined contribution plans, retirement benefits are determined by the value of funds arising
from contributions paid in respect of each employee. For defined benefit plans, retirement benefits are based on such factors as an employee’s
pensionable salary and length of service. Defined benefit plans may be funded or unfunded. The assets of funded plans are generally held in separately
administered trusts.
For information on significant estimates and judgements made in relation to accounting for these plans see Pensions and other post-retirement
benefits within Note 1.
The primary pension arrangement in the UK is a funded final salary pension plan under which retired employees draw the majority of their benefit as an
annuity. This pension plan is governed by a corporate trustee whose board is composed of four member-nominated directors, four company-nominated
directors, including an independent director and an independent chairman nominated by the company. The trustee board is required by law to act in the
best interests of the plan participants and is responsible for setting certain policies, such as investment policies of the plan. The UK plan is closed to new
joiners but remains open to ongoing accrual for current members. New joiners in the UK are eligible for membership of a defined contribution plan.
In the US, all employees who previously accrued pension benefits under a final salary plan now accrue benefits from 2015 onwards under a cash
balance formula instead. Benefits previously accrued under final salary formulas are legally protected. Retired US employees typically take their
pension benefit in the form of a lump sum payment upon retirement. The plan is funded and its assets are overseen by a fiduciary investment
committee composed of six BP employees appointed by the president of BP Corporation North America Inc. (the appointing officer). The investment
committee is required by law to act in the best interests of the plan participants and is responsible for setting certain policies, such as the investment
policies of the plan. US employees are also eligible to participate in a defined contribution (401k) plan in which employee contributions are matched
with company contributions. In the US, group companies also provide post-retirement healthcare to retired employees and their dependants (and, in
certain cases, life insurance coverage); the entitlement to these benefits is usually based on the employee remaining in service until a specified age
and completion of a minimum period of service.
140 BP Annual Report and Form 20-F 2015