Notes 1. Basis of preparation The interim financial information
included in this report has been prepared in accordance with IAS 34
'Interim Financial Reporting'. The results for the interim periods
are unaudited and in the opinion of management include all
adjustments necessary for a fair presentation of the results for
the periods presented. All such adjustments are of a normal
recurring nature. The interim financial statements and notes
included in this report should be read in conjunction with the
consolidated financial statements and related notes for the year
ended 31 December 2007 included in BP Annual Report and Accounts
2007. BP prepares its consolidated financial statements included
within its Annual Report and Accounts in accordance with
International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), IFRS as adopted by
the European Union (EU) and in accordance with the provisions of
the Companies Act 1985. IFRS as adopted by the EU differs in
certain respects from IFRS as issued by the IASB, however, the
differences have no impact on the group's consolidated financial
statements for the periods presented. The financial information
presented herein has been prepared in accordance with the
accounting policies expected to be used in preparing the Annual
Report and Accounts 2008, which do not differ significantly from
those used in BP Annual Report and Accounts 2007. 2. Resegmentation
and other changes to comparatives (a) Resegmentation On 11 October
2007, we announced our intention to simplify the organizational
structure of BP. From 1 January 2008, there are only two business
segments - Exploration and Production and Refining and Marketing. A
separate business, Alternative Energy, handles BP's low-carbon
businesses and future growth options outside oil and gas. This
includes solar, wind, gas-fired power, hydrogen, biofuels and coal
conversion. As a result, and with effect from 1 January 2008: --
The Gas, Power and Renewables segment ceased to report separately.
-- The natural gas liquids (NGLs), liquefied natural gas and gas
and power marketing and trading businesses were transferred from
the Gas, Power and Renewables segment to the Exploration and
Production segment. -- The Alternative Energy business was
transferred from the Gas, Power and Renewables segment to Other
businesses and corporate. -- The Emerging Consumers Marketing Unit
was transferred from Refining and Marketing to Alternative Energy.
-- The Biofuels business was transferred from Refining and
Marketing to Alternative Energy. -- The Shipping business was
transferred from Refining and Marketing to Other businesses and
corporate. As a result of the transfers identified above, Other
businesses and corporate has been redefined. It now consists of the
Alternative Energy business, Shipping, the group's aluminium asset,
Treasury (which includes interest income on the group's cash and
cash equivalents) and corporate activities worldwide. Financial
information for 2003 to 2007 has been restated to reflect the
resegmentation and is available in BP Financial and Operating
Information 2003-2007 and to download from
http://www.bp.com/investors. Quarterly data is provided for
2004-2007 and annual data for 2003. 2. Resegmentation and other
changes to comparatives (continued) Resegmented As reported First
Second First Second half quarter half quarter 2007 2007 2007 2007 $
million Total revenues Exploration and Production 18,170 9,028
8,910 4,483 Refining and Marketing 115,735 63,438 116,013 63,570
Gas, Power and Renewables - - 9,746 4,824 Other businesses and
corporate 1,214 617 450 206 Total third party revenues 135,119
73,083 135,119 73,083 Profit before interest and tax Exploration
and Production 13,482 7,165 12,948 6,894 Refining and Marketing
5,078 3,983 5,110 3,981 Gas, Power and Renewables - - 441 235 Other
businesses and corporate (268) (171) (277) (162) 18,292 10,977
18,222 10,948 Consolidation adjustment (56) (98) 14 (69) Profit
before interest and tax 18,236 10,879 18,236 10,879 (b) Revised
income statement presentation We have implemented a minor change in
the presentation of the group income statement whereby the
unwinding of the discount on provisions and on other payables is
now included within finance costs. Previously, this was included
within other finance income or expense. This line item has now been
renamed net finance income or expense relating to pensions and
other post-retirement benefits. This change does not affect profit
before interest and taxation, profit before taxation or profit for
the period. The financial information for comparative periods shows
the revised presentation, as set out below. First Second half
quarter 2007 2007 As reported $ million Profit before interest and
taxation 18,236 10,879 Finance costs 515 251 Other finance income
(189) (96) Profit before taxation 17,910 10,724 As amended $
million Profit before interest and taxation 18,236 10,879 Finance
costs 648 317 Net finance income relating to pensions and other
post-retirement benefits (322) (162) Profit before taxation 17,910
10,724 2. Resegmentation and other changes to comparatives
(continued) (c) Revised definition of net debt Net debt has been
redefined to include the fair value of associated derivative
financial instruments that are used to hedge foreign exchange and
interest rate risks relating to finance debt, for which hedge
accounting is claimed. The derivatives are reported on the balance
sheet within the headings 'Derivative financial instruments'.
Amounts for comparative periods are presented on a consistent
basis. First half and second quarter 2007 As reported $ million Net
debt 21,111 Equity 89,423 Ratio of net debt to net debt plus equity
19% As amended $ million Net debt 20,732 Equity 89,423 Ratio of net
debt to net debt plus equity 19% (d) Minor amendment to first
quarter 2008 results On 13 May 2008, BP p.l.c. made a minor
amendment to its first quarter 2008 results announcement.
Subsequent to making the first quarter results announcement on 29
April 2008, it was discovered that a refining stock valuation error
had led to the value of group-wide inventories being reported as
$26,855 million instead of the correct figure of $26,588 million.
The impact was not significant to the replacement cost profit
attributable to BP shareholders of $6,588 million for the first
quarter of 2008, and this figure was therefore not amended. The
profit (including inventory gains and losses) before interest and
tax for the Refining and Marketing segment was, however, stated to
be $2,840 million instead of $2,573 million, a difference of $267
million. The group's reported profit for the period attributable to
BP shareholders, after tax, was stated to be $7,619 million instead
of $7,451 million, a difference of $168 million. The comparative
figures for the first quarter 2008 in this second quarter and half
year results announcement have been corrected. First quarter 2008
As amended As reported $ million (except per share amounts) Group
income statement Purchases 61,800 61,533 Profit before taxation
11,993 12,260 Taxation 4,410 4,509 Profit for the period 7,583
7,751 Profit attributable to BP shareholders 7,451 7,619 Inventory
holding (gains) losses, net of tax (863) (1,031) Earnings per share
- cents Profit attributable to BP shareholders Basic 39.47 40.36
Diluted 39.12 40.00 Analysis of profit before interest and tax
Refining and Marketing UK 69 69 Rest of Europe 944 944 US 1,115
1,382 Rest of World 445 445 2,573 2,840 Group balance sheet
Inventories 26,588 26,855 Deferred tax liabilities 20,165 20,264
Net assets 99,536 99,704 BP shareholders' equity 98,474 98,642 3.
Significant transaction in the first half In December 2007, BP
signed a memorandum of understanding with Husky Energy Inc. to form
an integrated North American oil sands business. The transaction
was completed on 31 March 2008, with BP contributing its Toledo
refinery to a US jointly controlled entity to which Husky
contributed $250 million cash and a payable of $2,590 million. In
Canada, Husky contributed its Sunrise field to a second jointly
controlled entity, with BP contributing $250 million in cash and a
payable of $2,290 million. The Toledo refinery assets and
associated liabilities were classified as a disposal group held for
sale at 31 December 2007. Both jointly controlled entities are
owned 50:50 by BP and Husky and are accounted for using the equity
method. The amounts set out below reflect the initial recording of
the transaction at 31 March 2008 and subsequent closing
adjustments. $million Income statement Gains on sale of businesses
and fixed assets 806 Profit before taxation 806 Taxation 345 Profit
for the period 461 Balance sheet Non-current assets - investments
in jointly controlled entities 4,752 Current liabilities - trade
and other payables 266 Non-current liabilities Other payables 2,024
Deferred tax liabilities 653 2,677 Total liabilities 2,943 Net
assets 1,809 Cash flow statement Investment in jointly controlled
entities (250) Capital expenditure and acquisitions Exploration and
Production 2,848 Refining and Marketing 1,904 4,752 Including
acquisitions and asset exchanges: 1,904 During the second quarter,
equity-accounted earnings from these jointly controlled entities
amounted to $145 million. BP purchased refined products from the
Toledo jointly controlled entity during the second quarter
amounting to $1,551 million. In addition, BP purchased crude oil
from third parties which it sold to the Toledo jointly controlled
entity under an agency agreement. The fees earned by BP for this
service, and the total amounts receivable and payable at 30 June
2008 under these arrangements, were not significant. BP will also
purchase refinery feedstocks from the Sunrise jointly controlled
entity once production commences, which is expected in 2012. Notes
4. Total revenues Second First Second quarter quarter quarter First
half 2007 2008 2008 2008 2007 $ million $ million By business
17,002 24,065 26,294 Exploration and Production 50,359 33,349
63,960 76,863 98,206 Refining and Marketing 175,069 117,124 976
1,192 1,255 Other businesses and corporate 2,447 1,868 81,938
102,120 125,755 227,875 152,341 Less: sales between businesses
7,974 12,219 13,485 Exploration and Production 25,704 15,179 522
269 960 Refining and Marketing 1,229 1,389 359 409 407 Other
businesses and corporate 816 654 8,855 12,897 14,852 27,749 17,222
Third party revenues 9,028 11,846 12,809 Exploration and Production
24,655 18,170 63,438 76,594 97,246 Refining and Marketing 173,840
115,735 617 783 848 Other businesses and corporate 1,631 1,214
73,083 89,223 110,903 Total third party revenues 200,126 135,119 By
geographical area 27,630 36,897 48,202 UK 85,099 51,730 19,219
23,657 27,806 Rest of Europe 51,463 35,875 26,923 31,731 39,157 US
70,888 50,073 19,314 26,857 33,263 Rest of World 60,120 36,658
93,086 119,142 148,428 267,570 174,336 20,003 29,919 37,525 Less:
sales between areas 67,444 39,217 73,083 89,223 110,903 200,126
135,119 5. Production and similar taxes Second First Second quarter
quarter quarter First half 2007 2008 2008 2008 2007 $ million $
million - 157 68 UK 225 67 827 1,452 2,231 Overseas 3,683 1,507 827
1,609 2,299 3,908 1,574 6. Finance costs Second First Second
quarter quarter quarter First half 2007 2008 2008 2008 2007 $
million $ million 345 382 316 Interest payable 698 692 (94) (45)
(44) Capitalized (89) (177) Unwinding of discount on 66 69 74
provisions 143 133 Unwinding of discount on other - - 35 payables
35 - 317 406 381 787 648 7. Net finance income relating to pensions
and other post-retirement benefits Second First Second quarter
quarter quarter First half 2007 2008 2008 2008 2007 $ million $
million Interest on pension and other post-retirement benefit plan
546 612 612 liabilities 1,224 1,084 Expected return on pension and
other post-retirement benefit (708) (772) (772) plan assets (1,544)
(1,406) (162) (160) (160) (320) (322) 8. Analysis of changes in net
debt Second First Second quarter quarter quarter First half 2007
2008 2008 2008 2007 $ million $ million Opening balance 23,728
31,045 29,871 Finance debt 31,045 24,010 1,956 3,562 4,820 Less:
Cash and cash equivalents 3,562 2,590 Less: FV asset (liability) of
328 666 1,234 hedges related to finance debt 666 298 21,444 26,817
23,817 Opening net debt 26,817 21,122 Closing balance 23,754 29,871
30,189 Finance debt 30,189 23,754 2,643 4,820 3,593 Less: Cash and
cash equivalents 3,593 2,643 Less: FV asset (liability) of 379
1,234 900 hedges related to finance debt 900 379 20,732 23,817
25,696 Closing net debt 25,696 20,732 712 3,000 (1,879) Decrease
(increase) in net debt 1,121 390 Movement in cash and cash
equivalents excluding 661 1,224 (1,225) (exchange adjustments) (1)
16 Net cash outflow (inflow) from financing 79 1,784 (517)
(excluding share capital) 1,267 413 (13) (7) (114) Other movements
(121) (24) Movement in net debt before 727 3,001 (1,856) exchange
effects 1,145 405 (15) (1) (23) Exchange adjustments (24) (15) 712
3,000 (1,879) Decrease (increase) in net debt 1,121 390 Net debt
has been redefined, for further information see Note 2. Amounts for
comparative periods are presented on a consistent basis. 9. TNK-BP
operational and financial information Second First Second quarter
quarter quarter First half 2007 2008 2008 2008 2007 Production (Net
of royalties) (BP share) 837 818 825 Crude oil (mb/d) 821 835 441
512 546 Natural gas (mmcf/d) 529 503 913 906 919 Total hydrocarbons
(mboe/d)(a) 913 922 $ million $ million Income statement (BP share)
1,016 1,209 2,026 Profit before interest and tax 3,235 1,372 (64)
(76) (56) Finance costs (132) (126) (188) (331) (524) Taxation
(855) (291) (78) (58) (95) Minority interest (153) (107) 686 744
1,351 Net Income 2,095 848 Cash Flow 500 1,200 - Dividends received
1,200 500 Balance Sheet 30 June 31 December 2008 2007 Investments
in jointly controlled entities 9,712 8,817 (a) Natural gas is
converted to oil equivalent at 5.8 billion cubic feet = 1 million
barrels A number of differences have arisen between BP and Alfa,
Access/Renova group (AAR), the shareholders of TNK-BP Limited.
These differences include disputes with regard to the provision of
services by BP specialists to the TNK-BP group, the employment of
non-Russian nationals by the TNK-BP group, the board of director
nomination process for certain subsidiaries of the TNK-BP group,
including TNK-BP Holding, and the tenure of TNK-BP's chief
executive officer, Robert (Bob) Dudley. AAR has been reported as
stating that it intends to initiate legal proceedings with regard
to certain of these matters. In addition, a minority shareholder in
TNK-BP Holding has filed a suit in Russia against certain
subsidiaries of TNK-BP and BP Exploration Services Limited alleging
that an agreement for BP specialists to provide services to the
TNK- BP group is invalid and demanding repayment of sums paid to BP
for such services. On 23 July, the court ruled in favour of the
minority shareholder on the validity issue. BP expects to appeal
this decision. A ruling on the claim for repayment has been
postponed pending the outcome of such appeal. On 24 July, Mr Dudley
announced his decision to leave Russia temporarily. He will
continue as TNK-BP's chief executive officer. TNK-BP and certain
executives, including Mr Dudley, as well as certain BP group
companies, are also the subject of a number of tax, labour and
other regulatory investigations in Russia. BP continues to work to
resolve these matters. However, currently, it is not possible to
predict the ultimate outcome if these matters remain unresolved.
10. Third quarter results BP's third quarter results will be
announced on 28 October 2008. 11. Statutory accounts The financial
information shown in this publication is unaudited and does not
constitute statutory financial statements. BP Annual Report and
Accounts 2007 has been filed with the Registrar of Companies; the
report of the auditors on those accounts was unqualified and did
not contain a statement under section 237(2) or section 237(3) of
the Companies Act 1985. DATASOURCE: BP p.l.c.
Copyright
