SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
for the period ended 29 July 2003
BP p.l.c.
(Translation of registrant's name into English)
1 ST JAMES'S SQUARE, LONDON, SW1Y 4PD, ENGLAND
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F |X| Form 40-F
--------------- ----------------
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No |X|
--------------- ----------------
BP p.l.c.
Group Results
Second Quarter and Half Year 2003
London 29 July 2003
FOR IMMEDIATE RELEASE
RESULT UP 42%; CONTINUING STRONG CASH GENERATION
---------------------------------------------------------------------------
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 $ million 2003 2002 %
======================= ====================
Replacement cost profit
1,311 3,128 2,454 before exceptional items 5,582 2,235
351 (27) 32 Special items(a) 5 471
537 628 629 Acquisition amortization(b) 1,257 1,075
----------------------- --------------------
Pro forma result adjusted
2,199 3,729 3,115 for special items 6,844 3,781 81
======================= ====================
6.77 10.44 8.67 - per ordinary share (pence) 19.11 11.71 63
9.80 16.70 14.06 - per ordinary share (cents) 30.76 16.86 82
0.58 1.00 0.85 - per ADS (dollars) 1.85 1.00
======================= ====================
o BP's second quarter pro forma result, adjusted for special items, was
$3,115 million, compared with $2,199 million a year ago, an increase of
42%. For the half year, the result was $6,844 million compared with
$3,781 million, up 81%. Replacement cost profit, before exceptional
items, for the second quarter and half year was $2,454 million and
$5,582 million respectively, compared with $1,311 million and $2,235
million a year ago.
o The second quarter trading environment was more favourable than a year
ago.
o Improved operating performance generated additional income for the
quarter and half year. Non-cash costs were higher in both periods.
o Net cash inflow for the quarter and the first half was $2,377 million
and $5,605 million respectively, compared with an inflow of $1,891
million and an outflow of $532 million a year ago. Net cash flow from
operating activities for the quarter and half year was $7,346 million
and $13,307 million respectively compared with $5,133 million and
$8,769 million a year ago.
o The pro forma ratio of net debt to net debt plus equity was 22% at the
end of the quarter.
o Return on average capital employed for the quarter, on a pro forma
basis adjusted for special items, was 17%, compared with 13% a year
ago.
o The TNK-BP deal was signed in June. Subject to various consents, it is
expected to complete later this summer.
o The quarterly dividend increased from 6.25 cents to 6.50 cents per
share ($0.39 per ADS). This compares with 6.00 cents a year ago. For
the half year the dividend showed an increase of 8.5%. In sterling
terms, the quarterly dividend is 4.039 pence per share compared with
3.875 pence a year ago; for the half year the increase was 0.8%. The
company repurchased for cancellation 144 million of its own shares
during the quarter, at a cost of $1 billion. During the first half,
299 million shares have been repurchased and cancelled at a cost of
$2 billion.
BP Group Chief Executive, Lord Browne, said:
"This is another strong quarterly result. Strategy and performance
delivery are on track. Cash flow was robust, which has provided the
opportunity for a good shareholder return through dividends and share
buybacks."
The pro forma result, adjusted for special items, has been derived from the
group's reported UK GAAP accounting information but is not in itself a
recognized UK or US GAAP measure. This financial performance information and
measures derived therefrom, shown above and elsewhere in the document, are
provided in order to enable investors to evaluate better both BP's current
performance, in the context of past performance, and its performance against
that of its competitors.
(a) The special items refer to non-recurring charges and credits. The
special items for the second quarter are restructuring costs in
Exploration and Production, Veba integration costs in Refining and
Marketing, and a reduction in the provision for costs associated with
closure of polypropylene capacity in Petrochemicals.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions.
Summary Quarterly Results
Exploration and Production's second quarter result was up 24% on a year ago,
reflecting higher average realizations.
In Gas, Power and Renewables, the result reflects the absence of a contribution
from Ruhrgas following the sale of our interest last year, mostly offset by
improved performance.
The Refining and Marketing result increased significantly compared with a year
ago due to higher worldwide refining margins and improved retail margins,
particularly in the USA and Europe, with some offset from utility costs.
The Petrochemicals result reflected higher margins from lower feedstock costs,
with flat demand conditions prevailing.
Interest expense for the quarter was $191 million compared with $220 million for
the prior quarter, primarily reflecting lower average debt levels.
The pro forma effective tax rate on replacement cost profit, before exceptional
items, and adjusted for special items, was 34% compared with 36% a year ago.
Capital expenditure, excluding acquisitions, was $3.2 billion for the quarter.
Total capital expenditure and acquisitions was $3.3 billion. Disposal proceeds
were $1.7 billion.
Net cash inflow was $2,377 million compared with $1,891 million a year ago;
higher cash flow from operating activities was partly offset by higher tax
payments and lower disposal proceeds.
Net debt at the end of the quarter was $16.2 billion. The pro forma ratio of net
debt to net debt plus equity was 22%.
---------
The commentaries above and following are based on the pro forma replacement cost
operating results, before exceptional items, adjusted for special items.
To reflect BP's increased focus on chemical products derived from oil and gas,
the Chemicals segment has been renamed Petrochemicals.
Reconciliation of Reported Results to
Pro Forma Results Adjusted for Special Items
Pro Forma Result Pro Forma Result
adjusted for ----- 2Q 2003 --------------- adjusted for
special items special items
-------------------
2Q 1Q 2Q Special Acq. Reported First Half
2002 2003 2003 Items* Amort+ Earnings $ million 2003 2002
=========================================== ==============
Exploration and
2,889 4,888 3,589 12 424 3,153 Production 8,477 5,289
Gas, Power
114 194 103 - - 103 and Renewables 297 225
Refining and
685 854 1,135 41 205 889 Marketing 1,989 972
246 139 308 (5) - 313 Petrochemicals 447 354
Other businesses
(128) (165) (134) - - (134) and corporate (299) (253)
------------------------------------------- --------------
RC operating
3,806 5,910 5,001 48 629 4,324 profit 10,911 6,587
------------------------------------------- --------------
(314) (220) (191) - - (191)Interest expense (411) (647)
(1,243)(1,935)(1,635) (16) - (1,619)Taxation (3,570) (2,100)
(50) (26) (60) - - (60)MSI (86) (59)
------------------------------------------- --------------
RC profit before
2,199 3,729 3,115 32 629 2,454 exceptional items 6,844 3,781
------------------------------------------- --------------
280 Exceptional items before tax
(149)Taxation on exceptional items
-----
2,585 RC profit after exceptional items
(951)Stock holding losses
-----
1,634 HC profit
=====
* The special items refer to non-recurring charges and credits. The special
items for the second quarter are restructuring costs in Exploration and
Production, Veba integration costs in Refining and Marketing, and a
reduction in the provision for costs associated with closure of
polypropylene capacity in Petrochemicals.
+ Acquisition amortization is depreciation and amortization relating to the
fixed asset revaluation adjustments and goodwill consequent upon the ARCO
and Burmah Castrol acquisitions.
Operating Results
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= ==============
Replacement cost
3,250 5,125 4,324 operating profit ($m) 9,449 5,308
----------------------- --------------
Replacement cost profit
1,311 3,128 2,454 before exceptional items ($m) 5,582 2,235
----------------------- --------------
Profit after exceptional items ($m)
1,527 3,468 2,585 Replacement cost 6,053 2,381
2,058 4,267 1,634 Historical cost 5,901 3,354
----------------------- --------------
Per ordinary share (cents)
Pro forma result
9.80 16.70 14.06 adjusted for special items 30.76 16.86
RC profit before
5.85 14.01 11.08 exceptional items 25.09 9.97
9.18 19.11 7.41 HC profit after exceptional items 26.52 14.96
Per ADS (cents)
Pro forma result
58.80 100.20 84.36 adjusted for special items 184.56 101.16
RC profit before
35.10 84.06 66.48 exceptional items 150.54 59.82
55.08 114.66 44.46 HC profit after exceptional items 159.12 89.76
----------------------- --------------
Exploration and Production
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
================= ==============
2,458 4,326 3,153 Replacement cost operating profit 7,479 4,386
90 139 12 Special items 151 217
341 423 424 Acquisition amortization 847 686
----------------- --------------
Pro forma operating result
2,889 4,888 3,589 adjusted for special items 8,477 5,289
================= ==============
Results include:
222 112 101 Exploration expense 213 346
Of which:
147 50 43 Exploration expenditure written off 93 206
----------------- --------------
Production (Net of Royalties)
1,808 1,830 1,712 Crude oil (mb/d) 1,771 1,781
244 233 199 Natural gas liquids (mb/d) 216 239
2,052 2,063 1,911 Total liquids (mb/d)(a) 1,987 2,020
8,667 9,017 8,439 Natural gas (mmcf/d) 8,727 8,706
3,546 3,618 3,366 Total hydrocarbons(b) 3,492 3,521
================= ==============
Average realizations
24.27 31.07 25.73 Crude oil ($/bbl) 28.50 22.07
12.40 19.82 17.49 Natural gas liquids ($/bbl) 18.76 11.77
22.81 29.82 24.90 Total liquids ($/bbl) 27.47 20.81
2.45 3.87 3.39 Natural gas ($/mcf) 3.64 2.36
19.01 26.39 22.43 Total hydrocarbons 24.49 17.63
================= ==============
Average oil marker prices
($/bbl)
25.07 31.47 26.03 Brent 28.77 23.12
26.30 34.00 29.02 West Texas Intermediate 31.53 23.94
25.04 33.16 27.04 Alaska North Slope US West Coast 30.13 22.42
================= ==============
3.38 6.53 5.40 Henry Hub gas price(c) ($/mmBtu) 5.96 2.87
UK Gas - National
12.10 21.28 17.44 Balancing Point (p/therm) 19.35 15.63
================= ==============
(a) Crude oil and natural gas liquids.
(b) Natural gas is converted to oil equivalent at 5.8 billion cubic feet
= 1 million barrels.
(c) Henry Hub First of the Month Index.
Exploration and Production
The pro forma result for the second quarter, adjusted for special items, was
$3,589 million, up 24% from the second quarter of 2002. Special charges were $12
million in respect of our ongoing restructuring activities in the UK. The
acquisition amortization charge included accelerated amortization of $108
million as a result of the impairment of the Kepadong field in Indonesia.
The result for the quarter reflected higher realizations, with liquids up $2.09/
bbl and natural gas up $0.94/mcf on a year ago. North American basin
differentials to the Henry Hub marker price narrowed over the quarter following
the opening of pipeline expansion routes. The result includes a credit of $106
million, reflecting a reduction in the provision for Unrealized Profit in Stock
(UPIS), which removes the upstream margin from downstream inventories, following
a decrease in the Alaska North Slope oil price. This compares with a charge of
$83 million in the equivalent quarter last year.
The half year result also reflected the impact of higher realizations, with
liquids up $6.66/bbl and gas up $1.28/mcf.
During the quarter we had two exploration successes in Angola: Saturno in Block
31 and Clochas in Block 15; along with Saqqara in the Gulf of Suez in Egypt.
Atlantic LNG Train 3 started up ahead of schedule in April and the government of
Trinidad and Tobago approved the Atlantic Train 4 project in June. Construction
of the Baku-Tbilisi-Ceyhan pipeline began in May. Progress in Angola continued
with the approval of the Dalia development by Sonangol in April.
Second quarter production was down 5% (2% after adjusting for divestments). The
decrease, which follows an increase of over 3% in the first quarter, reflects
the pattern of planned quarterly maintenance, the impact of higher prices on
production sharing contract volumes and lower NGL production owing to strong US
gas prices. For the half year, production was down 1% (up 1% after adjusting for
divestments). Declines in existing profit centres were as expected and more than
offset by growth from new profit centres, particularly Trinidad and Deepwater
Gulf of Mexico.
We have continued our programme to improve returns and enhance value by
high-grading our portfolio. We have completed the divestment of several US
onshore and Gulf of Mexico shelf properties and agreed the sale of the Liuhua
and QHD fields in China to the China National Offshore Oil Corporation. On 19
May, the sale of our interest in the Gyda field in Norway to Talisman was
announced. We also announced an agreement in principle to sell 50% of the In
Amenas gas condensate project and 49% of our interest in In Salah gas in Algeria
to Statoil.
Progress continues in the establishment of our new joint venture TNK-BP with the
signing of the agreement with the Alfa Group and Access-Renova on 26 June. The
completion of the deal is subject to various consents.
Gas, Power and Renewables
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
====================== ==============
114 194 103 Replacement cost operating profit 297 225
- - - Special items - -
- - - Acquisition amortization - -
---------------------- --------------
Pro forma operating result
114 194 103 adjusted for special items 297 225
====================== ==============
Gas sales volumes (mmcf/d)
2,349 3,215 2,581 UK 2,896 2,483
390 473 421 Rest of Europe 447 402
8,451 11,734 10,441 USA 11,084 8,591
8,618 11,553 10,839 Rest of World 11,194 8,952
----------------------- --------------
19,808 26,975 24,282 Total gas sales volumes 25,621 20,428
======================= ==============
NGL sales volumes (mb/d)
- - - UK - -
- - - Rest of Europe - -
189 126 136 USA 131 171
196 232 124 Rest of World 178 214
----------------------- --------------
385 358 260 Total NGL sales volumes 309 385
======================= ==============
Gas, Power and Renewables
The pro forma result for the second quarter and half year was $103 million and
$297 million, respectively, compared with $114 million and $225 million a year
ago. The reduction in the second quarter result is due to the absence of a $40
million contribution from Ruhrgas following the sale of our interest last year,
mostly offset by improved performance. The half year result increased due to
improved performance which more than offset the loss of the $96 million Ruhrgas
contribution.
The second quarter and half year results reflected an increase in gas sales
volumes and strong performance from the global LNG business. Second quarter gas
sales volumes were up 23%, and equity LNG sales up 58%. During the quarter, the
first cargo of LNG was sold from the newly commissioned Train 3 of Atlantic
LNG's facility in Trinidad and Tobago. On 1 July, BP took delivery of the LNG
ship, the British Merchant, which is the third and final ship to be delivered
under the initial phase of the global LNG strategy. Also during the quarter, BP
and Oman LNG signed a memorandum of understanding for the supply of up to 4
million tonnes of LNG over a six-year period to strengthen BP's gas marketing
position in Spain.
Higher gas prices relative to liquids prices in North America in the second
quarter have led to lower production and sales volumes in the natural gas
liquids business and a lower result compared with a year ago. The half year
result was flat.
Refining and Marketing
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
======================= =============
603 631 889 Replacement cost operating profit 1,520 671
(114) 18 41 Special items 59 (88)
196 205 205 Acquisition amortization 410 389
----------------------- -------------
Pro forma operating result
685 854 1,135 adjusted for special items 1,989 972
======================= =============
Refinery throughputs (mb/d)
376 377 416 UK 397 384
924 954 991 Rest of Europe 973 879
1,464 1,302 1,465 USA 1,384 1,429
339 391 393 Rest of World 392 357
----------------------- -------------
3,103 3,024 3,265 Total throughput 3,146 3,049
======================= =============
95.8 94.2 96.7 Refining availability(a)(%) 95.4 95.8
======================= =============
Oil sales volumes (mb/d)
Refined products
230 279 279 UK 279 243
1,444 1,318 1,358 Rest of Europe 1,338 1,360
1,941 1,751 1,822 USA 1,787 1,888
522 645 607 Rest of World 626 561
----------------------- --------------
4,137 3,993 4,066 Total marketing sales 4,030 4,052
2,342 2,811 2,957 Trading/supply sales 2,884 2,439
----------------------- --------------
6,479 6,804 7,023 Total refined product sales 6,914 6,491
4,915 4,529 5,679 Crude oil 5,104 4,862
----------------------- --------------
11,394 11,333 12,702 Total oil sales 12,018 11,353
======================= ==============
Global Indicator Refining Margin(b)
($/bbl)
0.59 3.70 2.15 NWE 2.92 0.34
2.62 6.14 3.59 USGC 4.86 2.33
3.76 4.14 4.73 Midwest 4.44 2.91
4.46 6.77 6.34 USWC 6.55 4.95
0.18 2.98 0.66 Singapore 1.81 0.20
2.06 4.52 3.27 BP Average 3.89 1.85
======================= ==============
(a) Refining availability is the weighted average percentage of the period
that refinery units are available for processing, after accounting for
downtime such as turnarounds.
(b) The Global Indicator Refining Margin (GIM) is the average of six
regional indicator margins weighted for BP's crude refining capacity in
each region. Each regional indicator margin is based on a single
representative crude with product yields characteristic of the typical
level of upgrading complexity. The regional indicator margins may not be
representative of the margins achieved by BP in any period because of
BP's particular refinery configurations and crude and product slate.
Refining and Marketing
The pro forma result for the second quarter, adjusted for special items, was
$1,135 million, compared with $685 million for the same period last year. The
special charge of $41 million for the quarter relates to ongoing Veba
integration costs. The half year result is up $1,017 million compared with the
first half of last year.
The results for the quarter and half year reflect improved worldwide refining
margins and higher marketing margins, particularly retail margins in the USA and
Europe, with some offset from higher utility costs. Improved operating
performance also contributed to the results in the marketing businesses.
Refining throughputs increased by 5%, compared with a year ago, with
availability at 96.7%. Marketing volumes were 2% lower than a year ago.
An additional 760 sites were reimaged, bringing the total number of sites with
the BP Helios to some 12,000 worldwide.
Petrochemicals
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
======================= =============
203 139 313 Replacement cost operating profit 452 279
43 - (5) Special items (5) 75
- - - Acquisition amortization - -
----------------------- -------------
Pro forma operating result
246 139 308 adjusted for special items 447 354
======================= =============
109 96 120(b)Chemicals Indicator Margin(a)($/te) 108(b) 95
======================= =============
Petrochemicals production (kte)
837 869 714 UK 1,583 1,666
2,595 2,763 2,681 Rest of Europe 5,444 5,178
2,695 2,536 2,503 USA 5,039 5,184
762 812 872 Rest of World 1,684 1,472
----------------------- --------------
6,889 6,980 6,770 Total production 13,750 13,500
======================= ==============
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected
by Nexant (formerly Chem Systems) in their quarterly market analyses,
then weighted based on BP's product portfolio. It does not cover our
entire portfolio of products, and consequently is only indicative rather
than representative of the margins achieved by BP in any particular
period. Amongst the products and businesses covered in the CIM are
olefins and derivatives, the aromatics and derivatives, linear alpha-
olefins (LAOs), acetic acid, vinyl acetate monomers and nitriles. Not
included are fabrics and fibres, plastic fabrications, poly alpha-
olefins (PAOs), anhydrides, speciality intermediates, and the remaining
parts of the solvents and acetyls businesses.
(b) Provisional. The data for the second quarter is based on two months'
actuals and one month of provisional data.
Petrochemicals
Petrochemicals' pro forma result for the second quarter, after adjusting for
special items, was $308 million, up from $139 million in the first quarter, due
primarily to lower feedstock costs and improved margins in several businesses.
This was the highest quarterly result for the segment since the second quarter
of 2000. Production of 6,770 thousand tonnes in the second quarter was 3% below
the first quarter. Although demand in Europe showed continuing weakness, overall
sales remained flat.
The first half result was 26% above that of a year ago, reflecting improved
margins, cost management and improved reliability of operations. First half
production was 250 thousand tonnes higher than a year ago due to core business
sales growth from Asian PTA and acetic acid plant start-ups and an additional
month of production from Veba.
During the quarter we completed the divestment of our interest in Petrokimia
Nusantara Interindo, PT (PT Peni), our polyethylene joint venture in Indonesia.
The special item for the quarter is a reduction in the provision for costs
associated with the closure of polypropylene capacity in the USA.
Other Businesses and Corporate
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
================= =============
(128) (165) (134) Replacement cost operating loss (299) (253)
- - - Special items - -
- - - Acquisition amortization - -
----------------- -------------
Pro forma operating result
(128) (165) (134) adjusted for special items (299) (253)
================= =============
Other businesses and corporate comprises Finance, the group's coal asset and
aluminium asset, its investments in PetroChina and Sinopec, interest income and
costs relating to corporate activities. In July, BP announced that it has agreed
to sell its 50 per cent interest in the Indonesian coal mining company PT Kaltim
Prima Coal to PT Bumi Resources, subject to the receipt of certain shareholder
and other approvals.
Exceptional Items
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
================= =============
Profit (loss) on sale of fixed assets and
376 394 280 businesses or termination of operations 674 267
(160) (54) (149) Taxation charge (203) (121)
----------------- -------------
216 340 131 Exceptional items after taxation 471 146
================= =============
Exceptional items for the second quarter include a gain on the sale of our
interest in the North Sea Forties oil field, partly offset by a provision for
the loss on disposal of QHD in China.
2003 Dividends
2Q 1Q 2Q First Half
2002 2003 2003 $ million 2003 2002
================= =============
Dividends per ordinary share
6.00 6.25 6.50 cents 12.75 11.75
3.875 3.947 4.039 pence 7.986 7.926
36.0 37.5 39.0 Dividends per ADS (cents) 76.5 70.5
----------------------- --------------
BP today announced a second quarterly dividend for 2003 of 6.50 cents per
ordinary share. Holders of ordinary shares will receive 4.039 pence per share
and holders of American Depositary Receipts (ADRs) $0.39 per ADS share. The
dividend is payable on 8 September to shareholders on the register on 15 August.
Participants in the Dividend Reinvestment Plan (DRIP) or the DRIP facility in
the US Direct Access Plan will receive the dividend in the form of shares, also
on 8 September. The third quarter 2003 results and dividend will be announced on
28 October.
Outlook
BP Group Chief Executive, Lord Browne, concluded:
"World economic activity has continued to grow only slowly during the
second quarter, with OECD industrial production weakening. US consumer
confidence remains below the levels of last June, but with some signs of
modest improvement compared with the first quarter of this year. The
impact of SARS was discernible in lower economic activity in the second
quarter in Asia, but there are already signs that the region is
recovering into the second half of the year.
"Crude oil markets continue to be characterized by relative tightness. On
the basis of preliminary estimates, OECD commercial inventories ended the
quarter at the lowest seasonal level for over a decade. Crude oil prices
have been well supported, averaging $26.03 per barrel (Dated Brent) in
the second quarter and over $28 per barrel in July to date. The seasonal
pick-up in oil demand in the second half of the year, OPEC's June
production cuts and an anticipated slow recovery in Iraqi oil production
point to continued price support in coming months.
"US natural gas prices fell back in the second quarter but remained high,
with the Henry Hub first of the month index averaging $5.40/mmbtu. Gas
price differentials in the Rockies have narrowed significantly following
the opening of the Kern River pipeline expansion. High prices have
instigated a number of market reactions. These, together with mild
weather, have led to a series of very high storage injections in recent
weeks, despite falling domestic production. Prices look set to stay above
residual fuel oil parity during the third quarter.
"Refining margins have started the third quarter at similar levels to the
second quarter (BP GIM $3.27/bbl) and remain firm in most regions. OECD
commercial product inventories are still at five-year lows and should
continue to underpin refining fundamentals in the short term.
"The strong retail margins experienced in the second quarter have
softened and are projected to revert to more typical levels in the third
quarter.
"Petrochemical margins in the first half of 2003 were above those of last
year, with higher product prices for the majority of petrochemical
products. Recent increases in feedstock costs and flat demand are
expected to result in a challenging environment in the third quarter.
"Consistent with our financial framework and plan for the year, we expect
capital expenditure to be in the range of $14 to 14.5 billion, excluding
acquisitions. As previously indicated, 2003 is expected to be the peak
year for our medium term capital spending programme. The $14 to 14.5
billion range excludes the initial cash payment due on completion of the
TNK-BP transaction, expected to complete later in the summer. In
addition, subject to the trading environment, we expect to make payments
of up to $2 billion to a number of the group's pension funds in the
second half of 2003, and, if additional funds are available, to pursue
further share buybacks. We expect gearing to return to the lower half of
our 25-35% target range following these events."
----------------------------------------------------------------------
The foregoing discussion, in particular the statements under "Outlook",
contains forward looking statements particularly those regarding future
performance, prices, margins, returns, dividends, capital expenditure,
investments, divestments, gearing, BP's asset portfolio and changes in
it, timing of pending transactions, share repurchases, and other trend
projections. Forward looking statements by their nature involve risks
and uncertainties and actual results may differ from those expressed in
such statements depending on a variety of factors including the
following: the timing of bringing new fields on stream; industry
product supply, demand and pricing; currency exchange rates;
operational problems; general economic conditions; political stability
and economic growth in relevant areas of the world; changes in
governmental regulations; exchange rate fluctuations; development and
use of new technology and successful commercial relationships; the
actions of competitors; natural disasters and other changes in business
conditions; prolonged adverse weather conditions; and wars and acts of
terrorism or sabotage. For more information you should refer to our
Annual Report and Accounts 2002 and our Annual Report on Form 20-F
filed with the US Securities and Exchange Commission.
----------------------------------------------------------------------
BP p.l.c. and Subsidiaries
Summarized Group Results
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= ==============
$ million $ million
2,458 4,326 3,153 Exploration and Production 7,479 4,386
114 194 103 Gas, Power and Renewables 297 225
603 631 889 Refining and Marketing 1,520 671
203 139 313 Petrochemicals 452 279
(128) (165) (134) Other businesses and corporate (299) (253)
----------------------- --------------
Total replacement cost
3,250 5,125 4,324 operating profit 9,449 5,308
Profit (loss) on sale of
fixed assets and businesses or
376 394 280 termination of operations (Note 4) 674 267
----------------------- --------------
Replacement cost profit before
3,626 5,519 4,604 interest and tax 10,123 5,575
525 799 (951) Stock holding gains (losses)(Note 5) (152) 998
----------------------- --------------
Historical cost profit before
4,151 6,318 3,653 interest and tax 9,971 6,573
314 220 191 Interest expense (Note 6) 411 647
----------------------- --------------
3,837 6,098 3,462 Profit before taxation 9,560 5,926
1,751 1,805 1,768 Taxation (Note 7) 3,573 2,504
----------------------- --------------
2,086 4,293 1,694 Profit after taxation 5,987 3,422
28 26 60 Minority shareholders' interest 86 68
----------------------- --------------
2,058 4,267 1,634 Profit for the period 5,901 3,354
----------------------- --------------
1,347 1,386 1,434 Distribution to shareholders 2,820 2,637
======================= ==============
Earnings per ordinary share - cents
9.18 19.11 7.41 Basic 26.52 14.96
9.13 19.05 7.39 Diluted 26.44 14.88
======================= ==============
Replacement Cost Results
Historical cost profit
2,058 4,267 1,634 for the period 5,901 3,354
Stock holding (gains) losses
(531) (799) 951 net of MSI 152 (973)
----------------------- --------------
Replacement cost profit
1,527 3,468 2,585 for the period 6,053 2,381
(216) (340) (131) Exceptional items, net of tax (471) (146)
----------------------- --------------
Replacement cost profit before
1,311 3,128 2,454 exceptional items 5,582 2,235
----------------------- --------------
Earnings per ordinary share - cents
On replacement cost profit before
5.85 14.01 11.08 exceptional items 25.09 9.97
======================= =============
>
Summarized Group Balance Sheet
30 June 31 December
2003 2002
--------------------------
$ million
Fixed assets
Intangible assets 13,896 15,566
Tangible assets 89,285 87,682
Investments 10,684 10,811
---------------------
113,865 114,059
---------------------
Current assets
Stocks 9,759 10,181
Debtors 36,892 33,150
Investments 329 215
Cash at bank and in hand 2,115 1,520
---------------------
49,095 45,066
Creditors - amounts falling due within one year
Finance debt 5,885 10,086
Other creditors 39,337 36,215
---------------------
Net current assets (liabilities) 3,873 (1,235)
---------------------
Total assets less current liabilities 117,738 112,824
Creditors - amounts falling due
after more than one year
Finance debt 12,709 11,922
Other creditors 3,509 3,455
Provisions for liabilities and charges
Deferred taxation 14,322 13,514
Other provisions 14,117 13,886
---------------------
Net assets 73,081 70,047
Minority shareholders' interest - equity 1,016 638
---------------------
BP shareholders' interest 72,065 69,409
=====================
Movement in BP shareholders' interest: $ million
At 31 December 2002 69,409
Profit for the period 5,901
Distribution to shareholders (2,820)
Currency translation differences (net of tax) 1,493
Issue of ordinary share capital for employee share schemes 81
Repurchase of ordinary share capital (1,999)
------
At 30 June 2003 72,065
======
Summarized Group Cash Flow Statement
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= ============
$ million $ million
Net cash inflow from
5,133 5,961 7,346 operating activities (a) 13,307 8,769
----------------------- ---------------
16 13 28 Dividends from joint ventures 41 99
----------------------- ---------------
Dividends from
154 55 177 associated undertakings 232 207
----------------------- ---------------
Servicing of finance and returns
on investments
57 31 52 Interest received 83 105
(342) (207) (446) Interest paid (653) (651)
58 6 42 Dividends received 48 60
Dividends paid to
(3) (2) (11) minority shareholders (13) (16)
----------------------- ---------------
Net cash outflow from servicing of
(230) (172) (363) finance and returns on investments (535) (502)
----------------------- ---------------
Taxation
(167) (312) (280) UK corporation tax (592) (354)
(760) (320) (1,573) Overseas tax (1,893) (1,018)
----------------------- ---------------
(927) (632) (1,853) Tax paid (2,485) (1,372)
----------------------- ---------------
Capital expenditure and
financial investment
(2,793) (2,877) (2,760) Payments for fixed assets (5,637) (5,592)
Proceeds from the sale
939 2,317 1,652 of fixed assets 3,969 1,256
----------------------- ---------------
Net cash outflow for
capital expenditure and
(1,854) (560) (1,108) financial investment (1,668) (4,336)
----------------------- --------------
Acquisitions and disposals
Investments in associated
(488) (186) (331) undertakings (517) (631)
(139) - (150) Acquisitions, net of cash acquired (150) (1,689)
(68) (14) (2) Net investment in joint ventures (16) (114)
Proceeds from the sale
1,584 160 19 of businesses 179 1,615
----------------------- ---------------
Net cash (outflow) inflow for
889 (40) (464) acquisitions and disposals (504) (819)
----------------------- ---------------
(1,290) (1,397) (1,386) Equity dividends paid (2,783) (2,578)
----------------------- ---------------
1,891 3,228 2,377 Net cash inflow (outflow) 5,605 (532)
======================= ===============
2,017 3,593 1,355 Financing (b) 4,948 (266)
33 13 93 Management of liquid resources 106 (132)
(159) (378) 929 Increase (decrease) in cash 551 (134)
----------------------- ---------------
1,891 3,228 2,377 5,605 (532)
======================= ===============
Analysis of Cash Flow
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= ==============
$ million $ million
(a) Reconciliation of historical
cost profit before interest
and tax to net cash inflow
from operating activities
Historical cost profit before
4,151 6,318 3,653 interest and tax 9,971 6,573
2,227 2,709 2,653 Depreciation and amounts provided 5,362 4,380
Exploration expenditure
147 50 43 written off 93 206
Share of profits of joint ventures
(288) (304) (207) and associated undertakings (511) (544)
(118) (48) (100) Interest and other income (148) (181)
(Profit) loss on sale of fixed
(374) (394) (280) assets and businesses (674) (265)
325 202 204 Charge for provisions 406 494
(373) (228) (316) Utilization of provisions (544) (611)
(807) 376 193 Decrease (increase) in stocks 569 (1,303)
(1,614) (6,935) 3,252 (Increase) decrease in debtors (3,683) (2,024)
1,857 4,215 (1,749) Increase (decrease) in creditors 2,466 2,044
----------------------- ---------------
Net cash inflow from
5,133 5,961 7,346 operating activities 13,307 8,769
======================= ===============
(b) Financing
(752) (1,015) (208) Long-term borrowing (1,223) (2,498)
663 403 607 Repayments of long-term borrowing 1,010 897
(753) (626) (418) Short-term borrowing (1,044) (4,252)
Repayments of short-term
2,891 3,899 388 borrowing 4,287 5,710
----------------------- ---------------
2,049 2,661 369 3,030 (143)
(32) (67) (14) Issue of ordinary share capital (81) (123)
Repurchase of ordinary
- 999 1,000 share capital 1,999 -
----------------------- ---------------
Net cash outflow
2,017 3,593 1,355 (inflow)from financing 4,948 (266)
======================= ===============
Capital Expenditure and Acquisitions
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
By business
Exploration and Production
247 196 220 UK 416 508
57 51 73 Rest of Europe 124 128
1,077 966 1,009 USA 1,975 2,244
1,192 924 1,160 Rest of World(a) 2,084 2,006
----------------------- --------------
2,573 2,137 2,462 4,599 4,886
----------------------- --------------
Gas, Power and Renewables
5 8 24 UK 32 21
87 15 9 Rest of Europe(b) 24 91
32 38 48 USA 86 48
8 7 17 Rest of World 24 18
----------------------- --------------
132 68 98 166 178
----------------------- --------------
Refining and Marketing
100 73 66 UK 139 176
2,556 104 64 Rest of Europe(c) 168 5,288
260 336 228 USA 564 563
49 24 27 Rest of World 51 75
----------------------- --------------
2,965 537 385 922 6,102
----------------------- --------------
Petrochemicals
17 - 30 UK 30 25
60 31 21 Rest of Europe 52 105
55 46 95 USA 141 97
38 19 52 Rest of World 71 131
----------------------- --------------
170 96 198 294 358
----------------------- --------------
267 36 183 Other businesses and corporate(d) 219 319
----------------------- --------------
6,107 2,874 3,326 6,200 11,843
======================= ==============
By geographical area
400 301 361 UK 662 809
2,953 202 167 Rest of Europe 369 5,805
1,467 1,396 1,542 USA 2,938 2,998
1,287 975 1,256 Rest of World 2,231 2,231
----------------------- --------------
6,107 2,874 3,326 6,200 11,843
======================= ==============
(a) 2Q and first half 2002 included the acquisition of an additional
interest in Sidanco.
(b) 2Q and first half 2002 included the acquisition of a 5% stake in Enagas.
(c) 1Q 2002 and 2Q 2002 included the acquisition of 51% and 49% of Veba
respectively.
(d) 2Q and first half 2002 included the acquisition of the minority interest
in Veba's upstream oil and gas assets.
US dollar/Sterling exchange rates
1.46 1.60 1.62 Average rate for the period 1.61 1.44
1.52 1.57 1.65 Period-end rate 1.65 1.52
======================= =============
Analysis of Replacement Cost Operating Profit
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
By business
Exploration and Production
649 1,134 473 UK 1,607 1,376
172 193 141 Rest of Europe 334 324
771 1,805 1,441 USA 3,246 1,093
866 1,194 1,098 Rest of World 2,292 1,593
----------------------- --------------
2,458 4,326 3,153 7,479 4,386
----------------------- --------------
Gas, Power and Renewables
1 3 18 UK 21 3
35 (9) (5) Rest of Europe (14) 82
13 36 85 USA 121 (12)
65 164 5 Rest of World 169 152
----------------------- -------------
114 194 103 297 225
----------------------- -------------
Refining and Marketing
(61) 26 (31) UK (5) (185)
249 337 423 Rest of Europe 760 388
279 97 323 USA 420 200
136 171 174 Rest of World 345 268
----------------------- -------------
603 631 889 1,520 671
----------------------- -------------
Petrochemicals
(10) (34) 25 UK (9) (41)
64 88 199 Rest of Europe 287 111
84 42 65 USA 107 107
65 43 24 Rest of World 67 102
----------------------- -------------
203 139 313 452 279
----------------------- -------------
(128) (165) (134) Other businesses and corporate (299) (253)
----------------------- --------------
3,250 5,125 4,324 9,449 5,308
======================= ==============
By geographical area
504 1,053 363 UK 1,416 1,034
526 602 756 Rest of Europe 1,358 912
1,103 1,882 1,863 USA 3,745 1,261
1,117 1,588 1,342 Rest of World 2,930 2,101
----------------------- --------------
3,250 5,125 4,324 9,449 5,308
======================= ==============
Included above
89 117 101 Share of profits of joint ventures 218 159
Share of profits of
196 180 110 associated undertakings 290 384
----------------------- --------------
285 297 211 508 543
======================= ==============
Notes
1. Turnover
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= ==============
$ million $ million
By business
6,539 9,068 7,433 Exploration and Production 16,501 12,177
8,235 17,998 14,875 Gas, Power and Renewables 32,873 16,003
31,870 41,435 36,949 Refining and Marketing 78,384 56,759
3,584 3,938 4,003 Petrochemicals 7,941 6,226
Other businesses
136 111 129 and corporate 240 271
----------------------- ---------------
50,364 72,550 63,389 135,939 91,436
Less: sales between
6,709 8,762 7,082 businesses 15,844 11,491
----------------------- ---------------
43,655 63,788 56,307 Group excluding JVs 120,095 79,945
404 398 364 Sales of joint ventures 762 683
----------------------- ---------------
44,059 64,186 56,671 120,857 80,628
======================= ===============
By geographical area
Group excluding JVs
12,509 15,427 13,456 UK 28,883 23,504
12,219 13,022 12,206 Rest of Europe 25,228 21,338
19,663 31,098 25,984 USA 57,082 34,928
8,035 13,736 12,102 Rest of World 25,838 15,019
----------------------- ---------------
52,426 73,283 63,748 137,031 94,789
Less: sales between
8,771 9,495 7,441 areas 16,936 14,844
----------------------- ---------------
43,655 63,788 56,307 120,095 79,945
======================= ===============
2. Replacement cost profit
Replacement cost profits reflect the current cost of supplies. The
replacement cost profit for the period is arrived at by excluding from
the historical cost profit stock holding gains and losses.
Notes
3. Operating profits are after charging:
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
Exploration expense
4 3 2 UK 5 10
13 4 5 Rest of Europe 9 36
133 37 47 USA 84 175
72 68 47 Rest of World 115 125
----------------------- --------------
222 112 101 213 346
======================= ==============
Production taxes (a)
90 133 58 UK petroleum revenue tax 191 153
225 371 324 Overseas production taxes 695 409
----------------------- --------------
315 504 382 886 562
======================= ==============
(a) Production taxes are charged against Exploration and Production's
operating profit and are not included in the charge for taxation in
Note 7.
4. Analysis of exceptional items
427 433 333 Exploration and Production 766 432
(1) - 6 Gas, Power and Renewables 6 (1)
31 (52) (49) Refining and Marketing (101) (14)
(85) 7 2 Petrochemicals 9 (145)
4 6 (12) Other businesses and corporate (6) (5)
----------------------- --------------
Profit (loss) on sale of fixed
assets and businesses or
376 394 280 termination of operations 674 267
(160) (54) (149) Taxation charge (203) (121)
----------------------- --------------
Exceptional items
216 340 131 after taxation 471 146
======================= ==============
Notes
5. Stock holding gains (losses)
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
(1) 6 (3) Exploration and Production 3 2
4 27 (72) Gas, Power and Renewables (45) 8
444 620 (773) Refining and Marketing (153) 939
78 146 (103) Petrochemicals 43 49
---------------------- --------------
525 799 (951) (152) 998
(6) - - Minority shareholders' interest - 25
---------------------- --------------
531 799 (951) (152) 973
====================== ==============
6. Interest expense
261 187 163 Group interest payable 350 528
(25) (34) (43) Capitalized (77) (40)
----------------------- --------------
236 153 120 273 488
15 13 17 Joint ventures 30 29
21 10 12 Associated undertakings 22 45
Unwinding of discount
42 44 42 on provisions 86 85
----------------------- --------------
314 220 191 411 647
======================= ==============
7. Charge for taxation
1,040 1,581 1,406 Current 2,987 1,573
711 224 362 Deferred(a) 586 931
----------------------- --------------
1,751 1,805 1,768 3,573 2,504
======================= ==============
646 485 413 UK(a) 898 835
1,105 1,320 1,355 Overseas 2,675 1,669
----------------------- --------------
1,751 1,805 1,768 3,573 2,504
======================= ==============
(a) Includes the adjustment
to the North Sea deferred
tax balance for the
supplementary
355 - - UK corporation tax of 10% - 355
----------------------- --------------
Notes
8. Analysis of changes in net debt
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
Opening balance
24,531 22,008 19,042 Finance debt 22,008 21,417
1,379 1,520 1,151 Less: Cash 1,520 1,358
286 215 228 Current asset investments 215 450
----------------------- ---------------
22,866 20,273 17,663 Opening net debt 20,273 19,609
----------------------- ---------------
Closing balance
21,409 19,042 18,594 Finance debt 18,594 21,409
1,284 1,151 2,115 Less: Cash 2,115 1,284
285 228 329 Current asset investments 329 285
----------------------- ---------------
19,840 17,663 16,150 Closing net debt 16,150 19,840
----------------------- ---------------
Decrease (increase)
3,026 2,610 1,513 in net debt 4,123 (231)
======================= ===============
Movement in cash/
(159) (378) 929 bank overdrafts 551 (134)
Increase (decrease) in
33 13 93 current asset investments 106 (132)
Net cash outflow (inflow)
from financing(excluding
2,049 2,661 369 share capital) 3,030 (143)
Partnership interests
1,135 - - exchanged for BP loan notes - 1,135
Exchange of Exchangeable Bonds
for Lukoil American
- 420 - Depositary Shares 420 -
19 64 106 Other movements 170 44
- - - Debt acquired - (999)
----------------------- --------------
Movement in net debt before
3,077 2,780 1,497 exchange effects 4,277 (229)
(51) (170) 16 Exchange adjustments (154) (2)
----------------------- --------------
Decrease (increase)
3,026 2,610 1,513 in net debt 4,123 (231)
======================= ==============
Notes
9. Consolidated statement of cash flows presented on a US GAAP format
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
Operating activities
2,086 4,293 1,694 Profit after taxation 5,987 3,422
Adjustments to reconcile
profits after tax to net
cash provided by
operating activities
Depreciation and
2,227 2,709 2,653 amounts provided 5,362 4,380
Exploration expenditure
147 50 43 written off 93 206
Share of (profit) loss of
joint ventures and associates
(23) (148) 30 less dividends received (118) (40)
(Profit) loss on sale
of businesses and
(374) (394) (280) fixed assets (674) (265)
Working capital movement
(652) (1,475) 1,107 (see analysis below) (368) (1,321)
711 224 362 Deferred taxation 586 931
52 2 (220) Other (218) (56)
----------------------- ---------------
Net cash provided by
4,174 5,261 5,389 operating activities 10,650 7,257
----------------------- ---------------
Investing activities
(2,818) (2,911) (2,803) Capital expenditures (5,714) (5,632)
Acquisitions, net of
(139) - (150) cash acquired (150) (1,689)
Investment in
(488) (186) (331) associated undertakings (517) (631)
Net investment in
(68) (14) (2) joint ventures (16) (114)
Proceeds from
2,523 2,477 1,671 disposal of assets 4,148 2,871
----------------------- --------------
Net cash used in
(990) (634) (1,615) investing activities (2,249) (5,195)
----------------------- --------------
Notes
9. Consolidated statement of cash flows presented on a US GAAP format
(continued)
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million $ million
Financing activities
Net proceeds from shares
32 (932) (986) issued (repurchased) (1,918) 123
Proceeds from
752 1,015 208 long-term financing 1,223 2,498
Repayments of
(663) (403) (607) long-term financing (1,010) (897)
Net (decrease) increase
(2,138) (3,273) 30 in short-term debt (3,243) (1,458)
Dividends paid
(1,290) (1,397) (1,386) - BP shareholders (2,783) (2,578)
(3) (2) (11) - Minority shareholders (13) (16)
----------------------- -------------
Net cash used in
(3,310) (4,992) (2,752) financing activities (7,744) (2,328)
----------------------- --------------
Currency translation
differences relating to
30 9 43 cash and cash equivalents 52 27
----------------------- --------------
Increase (decrease) in
(96) (356) 1,065 cash and cash equivalents 709 (239)
Cash and cash equivalents
1,665 1,735 1,379 at beginning of period 1,735 1,808
----------------------- --------------
Cash and cash equivalents
1,569 1,379 2,444 at end of period 2,444 1,569
----------------------- --------------
Analysis of working
capital movement
Decrease (increase)
(807) 376 193 in stocks 569 (1,303)
(Increase) decrease
(1,691) (6,946) 3,234 in debtors (3,712) (2,134)
Increase (decrease)
1,846 5,095 (2,320) in creditors 2,775 2,116
----------------------- --------------
Total working
(652) (1,475) 1,107 capital movement (368) (1,321)
======================= ==============
Notes
10. Ordinary shares
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
================================== ================
(shares thousand) (Shares thousand)
Shares in
issue at period
22,463,182 22,241,895 22,101,622 end (a) 22,101,622 22,463,182
Average number
of shares
outstanding
22,426,830 22,326,486 22,164,026 (b) 22,244,797 22,414,904
---------------------------------- ----------------------
(a) Each BP ADS represents six BP Ordinary Shares.
(b) Excludes shares held by the Employee Share Ownership Plans.
11. Statutory accounts
The financial information shown in this publication is unaudited and
does not constitute statutory accounts. The 2002 group accounts have
been delivered to the UK Registrar of Companies; the report of the
auditors on those accounts was unqualified.
Contacts
London New York
------------------- ----------------
Press Roddy Kennedy Ian Fowler
Office +44 (0)20 7496 4624 +1 212 451 8008
Investor Fergus McLeod Terry LaMore
Relations +44 (0)20 7496 4717 +1 212 451 8034
http://www.bp.com/investors
BP p.l.c.
Group Results
Second Quarter and Half Year 2003
London 29 July 2003
INVESTOR RELATIONS SUPPLEMENT
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR SPECIAL ITEMS(a) AND ACQUISITION
AMORTIZATION(b)
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
768 1,220 519 UK 1,739 1,577
172 193 141 Rest of Europe 334 324
1,047 2,145 1,698 USA 3,843 1,712
902 1,330 1,231 Rest of World 2,561 1,676
----------------------- --------------
2,889 4,888 3,589 8,477 5,289
----------------------- --------------
Gas, Power and Renewables
1 3 18 UK 21 3
35 (9) (5) Rest of Europe (14) 82
13 36 85 USA 121 (12)
65 164 5 Rest of World 169 152
----------------------- --------------
114 194 103 297 225
----------------------- --------------
Refining and Marketing
39 136 79 UK 215 12
272 355 464 Rest of Europe 819 437
238 192 418 USA 610 255
136 171 174 Rest of World 345 268
----------------------- --------------
685 854 1,135 1,989 972
----------------------- --------------
Petrochemicals
12 (34) 25 UK (9) (19)
80 88 199 Rest of Europe 287 129
89 42 60 USA 102 142
65 43 24 Rest of World 67 102
----------------------- --------------
246 139 308 447 354
----------------------- --------------
Other businesses and corporate
(75) (76) (122) UK (198) (119)
6 (7) (2) Rest of Europe (9) 7
(44) (98) (51) USA (149) (127)
(15) 16 41 Rest of World 57 (14)
----------------------- --------------
(128) (165) (134) (299) (253)
----------------------- --------------
3,806 5,910 5,001 10,911 6,587
======================= ==============
(a) The special items refer to non-recurring charges and credits. The
special items for the second quarter are restructuring costs in
Exploration and Production, Veba integration costs in Refining and
Marketing, and a reduction in the provision for costs associated with
closure of polypropylene capacity in Petrochemicals.
(b) Acquisition amortization is depreciation and amortization relating to
the fixed asset revaluation adjustments and goodwill consequent upon
the ARCO and Burmah Castrol acquisitions.
PER SHARE AMOUNTS
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
=================================== ======================
Shares in issue
at period
22,463,182 22,241,895 22,101,622 end (thousand) 22,101,622 22,463,182
- ADS equivalent
3,743,864 3,706,983 3,683,604 (thousand) 3,683,604 3,743,864
Average number
of shares
outstanding
22,426,830 22,326,486 22,164,026 (thousand)* 22,244,797 22,414,904
- ADS equivalent
3,737,805 3,721,081 3,694,004 (thousand) 3,707,466 3,735,817
----------------------------------- ----------------------
Replacement cost
profit after
exceptional
1,527 3,468 2,585 items ($m) 6,053 2,381
cents/ordinary
6.81 15.53 11.68 share 27.21 10.62
0.41 0.93 0.70 dollars/ADS 1.63 0.64
----------------------------------- ----------------------
Replacement cost
profit before
exceptional
1,311 3,128 2,454 items ($m) 5,582 2,235
cents/ordinary
5.85 14.01 11.08 share 25.09 9.97
0.35 0.84 0.67 dollars/ADS 1.51 0.60
----------------------------------- ----------------------
Pro forma result
adjusted for special
2,199 3,729 3,115 items ($m) 6,844 3,781
9.80 16.70 14.06 cents/ordinary share 30.76 16.86
0.59 1.00 0.85 dollars/ADS 1.85 1.01
----------------------------------- ----------------------
* Excludes shares held by the Employee Share Ownership Plans.
ACQUISITION AMORTIZATION BY BUSINESS
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
37 33 34 UK 67 69
268 259 257 USA 516 549
36 131 133 Rest of World 264 68
----------------------- -------------
341 423 424 847 686
----------------------- -------------
Refining and Marketing
100 110 110 UK 220 197
96 95 95 USA 190 192
----------------------- -------------
196 205 205 410 389
----------------------- -------------
537 628 629 Total acquisition amortization 1,257 1,075
======================= =============
SPECIAL ITEMS BY BUSINESS (PRE-TAX)
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
Exploration and Production
82 53 12 UK 65 132
- - - Rest of Europe - -
8 81 - USA 81 70
- 5 - Rest of World 5 15
----------------------- -------------
90 139 12 151 217
----------------------- -------------
Gas, Power and Renewables
- - - UK - -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- - - - -
----------------------- -------------
Refining and Marketing
- - - UK - -
23 18 41 Rest of Europe 59 49
(137) - - USA - (137)
- - - Rest of World - -
----------------------- -------------
(114) 18 41 59 (88)
----------------------- -------------
Petrochemicals
22 - - UK - 22
16 - - Rest of Europe - 18
5 - (5) USA (5) 35
- - - Rest of World - -
----------------------- -------------
43 - (5) (5) 75
----------------------- -------------
Other businesses and corporate
- - - UK - -
- - - Rest of Europe - -
- - - USA - -
- - - Rest of World - -
----------------------- -------------
- - - - -
----------------------- -------------
19 157 48 Total 205 204
======================= =============
PRODUCTION AND REALIZATIONS
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
Production
Crude oil (mb/d) (net of royalties)
457 442 325 UK 383 457
102 90 80 Rest of Europe 85 100
605 606 569 USA 588 594
644 692 738 Rest of World 715 630
----------------------- -------------
1,808 1,830 1,712 Total crude oil production 1,771 1,781
======================= =============
Natural gas liquids (mb/d) (net of royalties)
24 29 18 UK 24 24
6 5 5 Rest of Europe 5 6
186 167 144 USA 155 181
28 32 32 Rest of World 32 28
----------------------- -------------
Total natural gas
244 233 199 liquids production 216 239
======================= =============
Liquids (b)(mb/d) (net of royalties)
481 471 343 UK 407 481
108 95 85 Rest of Europe 90 106
791 773 713 USA 743 775
672 724 770 Rest of World 747 658
----------------------- -------------
2,052 2,063 1,911 Total liquids production 1,987 2,020
======================= =============
Natural gas (a) (mmcf/d) (net of royalties)
1,602 1,798 1,407 UK 1,602 1,615
157 131 103 Rest of Europe 117 159
3,565 3,437 3,145 USA 3,290 3,563
3,343 3,651 3,784 Rest of World 3,718 3,369
----------------------- -------------
8,667 9,017 8,439 Total natural gas production 8,727 8,706
======================= =============
Average realizations
Crude oil ($/bbl)
25.15 31.16 25.16 UK 28.60 23.09
24.53 31.74 27.09 USA 29.48 21.86
22.75 29.91 24.16 Rest of World 26.90 20.92
24.27 31.07 25.73 BP Average 28.50 22.07
======================= =============
Natural gas liquids ($/bbl)
13.95 23.28 11.97 UK 18.86 14.08
11.91 18.26 17.80 USA 18.05 11.12
13.63 23.05 20.16 Rest of World 21.63 12.73
12.40 19.82 17.49 BP Average 18.76 11.77
======================= =============
Liquids (b) ($/bbl)
24.59 30.67 24.45 UK 28.04 22.59
21.81 29.36 25.61 USA 27.55 19.61
22.20 29.48 23.93 Rest of World 26.58 20.43
22.81 29.82 24.90 BP Average 27.47 20.81
======================= =============
Natural gas ($/mcf)
2.50 3.32 2.84 UK 3.11 2.81
2.76 5.27 4.52 USA 4.91 2.44
2.04 2.70 2.53 Rest of World 2.63 1.98
2.45 3.87 3.39 BP Average 3.64 2.36
======================= =============
(a) Natural gas is converted to oil equivalent at 5.8 billion cubic feet =
1 million barrels.
(b) Crude oil and natural gas liquids.
RECONCILIATION OF HISTORICAL COST PROFIT (LOSS)
TO PRO FORMA RESULT ADJUSTED FOR SPECIAL ITEMS
pro forma result
adjusted for
Reported Acquisition Special special
$ million Earnings Amortization Items(a) items
==============================================
1Q 2003
Exploration and Production 4,326 423 139 4,888
Gas, Power and Renewables 194 - - 194
Refining and Marketing 631 205 18 854
Petrochemicals 139 - - 139
Other businesses & corporate (165) - - (165)
----------------------------------------------
RC operating profit 5,125 628 157 5,910
----------------------------------------------
Interest expense (220) - - (220)
Taxation (1,751) - (184) (1,935)
MSI (26) - - (26)
----------------------------------------------
RC profit before
exceptional items 3,128 628 (27) 3,729
================================
Exceptional items before tax 394
Taxation on exceptional items (54)
-----
RC profit after
exceptional items 3,468
Stock holding gains (losses) 799
-----
HC profit 4,267
=====
2Q 2002
Exploration and Production 2,458 341 90 2,889
Gas, Power and Renewables 114 - - 114
Refining and Marketing 603 196 (114) 685
Petrochemicals 203 - 43 246
Other businesses & corporate (128) - - (128)
----------------------------------------------
RC operating profit 3,250 537 19 3,806
----------------------------------------------
Interest expense (314) - - (314)
Taxation (1,591) - 348 (1,243)
MSI (34) - (16) (50)
----------------------------------------------
RC profit before
exceptional items 1,311 537 351 2,199
================================
Exceptional items before tax 376
Taxation on exceptional items (160)
-----
RC profit after
exceptional items 1,527
Stock holding gains (losses) 531
-----
HC profit 2,058
=====
(a) The special items for the first quarter 2003 are restructuring and
impairment charges in Exploration and Production, Veba integration costs
in Refining and Marketing and tax restructuring benefits. The special
items in the second quarter 2002 comprise restructuring charges for
Exploration and Production and Petrochemicals, business interruption
insurance proceeds and costs related to a pipeline incident in Refining
and Marketing, Veba, Solvay and Erdolchemie integration costs and an
adjustment to the North Sea deferred tax balance for the supplementary
UK corporation tax rate.
RECONCILIATION OF HISTORICAL COST PROFIT (LOSS)
TO PRO FORMA RESULT ADJUSTED FOR SPECIAL ITEMS
pro forma result
adjusted for
Reported Acquisition Special special
$ million Earnings Amortization Items(a) items
==============================================
1H 2003
Exploration and Production 7,479 847 151 8,477
Gas, Power and Renewables 297 - - 297
Refining and Marketing 1,520 410 59 1,989
Petrochemicals 452 - (5) 447
Other businesses & corporate (299) - - (299)
----------------------------------------------
RC operating profit 9,449 1,257 205 10,911
----------------------------------------------
Interest expense (411) - - (411)
Taxation (3,370) - (200) (3,570)
MSI (86) - - (86)
----------------------------------------------
RC profit before
exceptional items 5,582 1,257 5 6,844
================================
Exceptional items before tax 674
Taxation on exceptional items (203)
-----
RC profit after
exceptional items 6,053
Stock holding gains (losses) (152)
-----
HC profit 5,901
=====
1H 2002
Exploration and Production 4,386 686 217 5,289
Gas, Power and Renewables 225 - - 225
Refining and Marketing 671 389 (88) 972
Petrochemicals 279 - 75 354
Other businesses & corporate (253) - - (253)
----------------------------------------------
RC operating profit 5,308 1,075 204 6,587
----------------------------------------------
Interest expense (647) - - (647)
Taxation (2,383) - 283 (2,100)
MSI (43) - (16) (59)
----------------------------------------------
RC profit before
exceptional items 2,235 1,075 471 3,781
================================
Exceptional items before tax 267
Taxation on exceptional items (121)
-----
RC profit after
exceptional items 2,381
Stock holding gains (losses) 973
-----
HC profit 3,354
=====
(a) The special items for the first half 2003 comprise restructuring and
impairment charges in Exploration and Production, Veba integration costs
in Refining and Marketing, a reduction in the provision for costs
associated with closure of polypropylene capacity in Petrochemicals and
tax restructuring benefits. The special items for the first half 2002
comprise restructuring charges for Exploration and Production and
Petrochemicals, business interruption insurance proceeds and costs
related to a pipeline incident in Refining and Marketing, Veba, Solvay
and Erdolchemie integration costs and an adjustment to the North Sea
deferred tax balance for the supplementary UK corporation tax rate.
REPLACEMENT COST OPERATING PROFIT ADJUSTED FOR
NON-CASH CHARGES AND CERTAIN OTHER ITEMS
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
Replacement cost operating profit
3,250 5,125 4,324 (reported) (a) 9,449 5,308
2,227 2,709 2,653 Depreciation and amounts provided (b) 5,362 4,380
147 50 43 Exploration expenditure written off 93 206
Dividends from JVs and associates
(115) (229) (6) less share of RCOP (235) (237)
(3) (2) (11) Dividends paid to minority shareholders (13) (16)
(48) (26) (112) Adjust provisions to cash basis (c) (138) (117)
Adjust interest and other income
(3) (11) (6) to cash basis (d) (17) (16)
----------------------- -------------
5,455 7,616 6,885 14,501 9,508
(887) (650) (1,861) Tax paid adjusted for certain items* (2,511) (1,479)
----------------------- -------------
4,568 6,966 5,024 Adjusted RCOP after tax paid 11,990 8,029
----------------------- -------------
* Calculation of tax paid adjusted
for certain items
(927) (632) (1,853) Cash tax paid (2,485) (1,372)
160 54 149 Tax charge on exceptional items 203 121
(120) (72) (157) Tax shield assumption + (229) (228)
----------------------- -------------
(887) (650) (1,861) (2,511) (1,479)
----------------------- -------------
+ Calculation of tax shield assumption
(342) (207) (446) Interest paid (653) (651)
35% 35% 35% Tax rate assumption (e) 35% 35%
----------------------- -------------
(120) (72) (157) (229) (228)
----------------------- -------------
(a) Total replacement cost operating profit is before exceptional items,
stock holding gains and losses and interest expense.
(b) Includes depreciation and amortization relating to the fixed asset
revaluation adjustment and goodwill consequent upon the ARCO and Burmah
Castrol acquisitions.
(c) Calculated as the net of charge for provisions and utilization of
provisions.
(d) Calculated as interest and other income, less interest received and
dividends received from the group cash flow statement.
(e) Deemed tax rate for tax shield adjustment is equal to the US statutory
tax rate.
RETURN ON AVERAGE CAPITAL EMPLOYED
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
Replacement cost basis
1,311 3,128 2,454 RC profit before exceptional items 5,582 2,235
153 99 78 Interest + 177 317
34 26 60 Minority shareholders' interest 86 43
----------------------- --------------
1,498 3,253 2,592 Adjusted RC profit 5,845 2,595
======================= ==============
90,774 91,610 91,420 Average capital employed 91,865 88,356
6.6% 14.2% 11.3% ROACE - replacement cost basis 12.7% 5.9%
----------------------- -------------
Pro forma basis
1,498 3,253 2,592 Adjusted RC profit 5,845 2,595
537 628 629 Acquisition amortization 1,257 1,075
367 (27) 32 Special items (post-tax) 5 487
90,774 91,610 91,420 Average capital employed 91,865 88,356
Average capital employed
18,163 15,940 14,839 acquisition adjustment 15,571 18,455
----------------------- -------------
Average capital employed
72,611 75,670 76,581 (pro forma basis) 76,294 69,901
ROACE - Pro forma basis
13.2% 20.4% 17.0% adjusted for special items 18.6% 11.9%
----------------------- ------------
Historical cost basis
Historical cost profit (loss)
2,058 4,267 1,634 after exceptional items 5,901 3,354
153 99 78 Interest + 177 317
28 26 60 Minority shareholders' interest 86 68
----------------------- --------------
2,239 4,392 1,772 Adjusted historical cost profit 6,164 3,739
======================= ==============
90,774 91,610 91,420 Average capital employed 91,865 88,356
9.9% 19.2% 7.8% ROACE - historical cost basis 13.4% 8.5%
+ Excludes interest on joint venture and associated undertakings debt as
well as unwinding of discount on provisions and effect of change in
discount rate on provisions, and is on a post-tax basis, using a deemed
tax rate equal to the US statutory tax rate.
NET DEBT RATIO - NET DEBT: NET DEBT + EQUITY
Second First Second
Quarter Quarter Quarter First Half
2002 2003 2003 2003 2002
======================= =============
$ million
21,409 19,042 18,594 Gross debt 18,594 21,409
1,569 1,379 2,444 Cash and current asset investments 2,444 1,569
----------------------- --------------
19,840 17,663 16,150 Net debt 16,150 19,840
======================= =============
68,126 72,123 73,081 Equity 73,081 68,126
23% 20% 18% Net debt ratio 18% 23%
----------------------- --------------
18,028 15,208 14,469 Acquisition adjustment 14,469 18,028
----------------------- --------------
28% 24% 22% Net debt ratio - pro forma basis 22% 28%
======================= ==============
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
BP p.l.c.
(Registrant)
Dated: 29 July, 2003 /s/ D. J. PEARL
..............................
D. J. PEARL
Deputy Company Secretary