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 December 31, 2001
BP p.l.c.
(Translation of registrant's name into English)
BRITANNIC HOUSE, 1 FINSBURY CIRCUS, LONDON, EC2M 7BA, 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|
----------------- -----------------
THIS REPORT ON FORM 6-K SHALL BE DEEMED TO BE INCORPORATED BY REFERENCE IN THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE NO.
333-9790) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM F-3 (FILE NO. 333-65996) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-39075) OF BP AMERICA INC. AND BP
p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM F-3 (FILE
NO. 33-20338) OF BP AMERICA INC. AND BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM F-3 (FILE NO. 33-29102) OF THE STANDARD OIL
COMPANY AND BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM S-8 (FILE NO. 33-21868) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-9020) OF BP p.l.c., THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-9798) OF BP p.l.c., THE PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON
FORM S-8 (FILE NO. 333-79399) OF BP p.l.c., AND THE PROSPECTUS INCLUDED IN THE
REGISTRATION STATEMENT ON FORM S-8 (FILE NO. 333-34968) OF BP p.l.c., AND THE
PROSPECTUS INCLUDED IN THE REGISTRATION STATEMENT ON FORM S-8 (FILE NO.
333-67206) OF BP p.l.c., AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS
REPORT IS FURNISHED, TO THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS
SUBSEQUENTLY FILED OR FURNISHED.
Page 2
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GROUP RESULTS JANUARY - DECEMBER 2001
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 36,817 44,562 174,218 148,062
Total replacement cost operating profit - $m 1,907 4,763 16,135 17,756
Replacement cost profit before
exceptional items - $m 1,056 2,799 9,880 11,214
Replacement cost profit for the period - $m 892 2,971 9,910 11,142
Historical cost profit for the period - $m (405) 2,410 8,010 11,870
Profit per Ordinary Share - cents (1.78) 10.53 35.70 54.85
Dividends per Ordinary Share - cents 5.75 5.25 22.0 20.5
(a) For further information on replacement cost profit see Note 6 of Notes to
Consolidated Financial Statements
The following discussion should be read in conjunction with the consolidated
financial statements provided elsewhere in this Form 6-K and with the
consolidated financial statements and related notes for the year ended December
31, 2000 included in BP p.l.c.'s Annual Report on Form 20-F for the year ended
December 31, 2000. Comparative figures for year ended December 31, 2000 have
been restated to reflect the transfer of BP's North American NGL business from
Refining and Marketing to Gas and Power.
The changes in turnover for the fourth quarter primarily reflect significant
decreases in oil and gas prices in Exploration and Production, as well as lower
retail and wholesale fuel prices in Refining and Marketing. Turnover for the
year also reflects the inclusion of ARCO for the whole of the year in 2001,
compared to around nine months (from April 14) in 2000, the acquisition of
Burmah Castrol from July 7, 2000 and the consolidation of the European fuels
business with effect from August 1, 2000, which more than offset lower prices.
Replacement cost profit before exceptional items (which excludes inventory
holding gains and losses) was $1,056 million for the three months ended December
31, 2001, compared with $2,799 million for the equivalent period of 2000. These
results are after charging special items of $714 million ($571 million after
tax) for the three months ended December 31, 2001, and $962 million ($693
million after tax) for the equivalent period of 2000. The results for the three
months ended December 31, 2001 and 2000 are also after charging acquisition
amortization of $577 million and $598 million, respectively. Acquisition
amortization refers to depreciation relating to the fixed asset revaluation
adjustment and amortization of goodwill consequent upon the ARCO and Burmah
Castrol acquisitions. The special charges for the three months ended December
31, 2001 comprised additional severance charges, mainly related to former ARCO
employees, Grangemouth, Scotland restructuring charges, an impairment charge for
our partner operated Lake Maracaibo operations in Venezuela, Castrol, Solvay and
Erdolchemie integration costs and a litigation charge. Those for the
corresponding period of 2000 related to ARCO, Vastar and Castrol integration
costs, rationalization costs post the BP/Amoco merger, environmental charges and
asset writedowns.
For the year ended December 31, 2001, the replacement cost profit before
exceptional items was $9,880 million, down from $11,214 million in 2000. The
results for 2001 are after charging special items of $1,058 million ($821
million after tax) and acquisition amortization of $2,477 million. The results
for 2000 include special charges of $1,994 million ($1,454 million after tax),
and acquisition amortization of $1,535 million.
The historical cost loss for the three months ended December 31, 2001 was $405
million after inventory holding losses of $1,297 million and net exceptional
losses of $38 million ($164 million after tax) in respect of net losses on the
sale of fixed assets and businesses and termination of operations. For the
equivalent period of 2000 there was a profit of $2,410 million after inventory
holding losses of $561 million, and including net exceptional gains of $78
million ($172 million loss after tax) in respect of net profits on the sale of
fixed assets and businesses and termination of operations.
For the year ended December 31, 2001, the historical cost profit was $8,010
million, after inventory holding losses of $1,900 million and including net
exceptional gains of $535 million ($30 million after tax) in respect of net
profits on sale of fixed assets and businesses and terminations of operations.
For the year ended December 31, 2000, the historical cost profit was $11,870
million, including inventory holding gains of $728 million and net exceptional
gains of $220 million ($72 million loss after tax) in respect of net profits on
sale of fixed assets and businesses and terminations of operations.
Page 3
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Net taxation, other than production taxes, charged for the three months ended
December 31, 2001 was $537 million compared with $1,242 million in the
equivalent period last year. The fourth quarter 2001 included a tax charge of
$126 million in respect of exceptional items compared with a tax credit of $94
million for the fourth quarter of 2000. The effective tax rate on replacement
cost profit before exceptional items was 28% for the three months ended December
31, 2001 and 31% for the year, compared with 32% and 29% for the equivalent
period of 2000. The rate reduction for the fourth quarter was due to tax relief
on inventory holding losses, which more than offset the impact of higher
acquisition amortization. The higher rate for the year was largely due to the
increase in acquisition amortization, which is not tax deductible.
Interest expense for the three months ended December 31, 2001 was $414 million
compared with $611 million (including $111 million relating to a bond redemption
charge) in the equivalent period of 2000 reflecting lower interest rates. For
the year ended December 31, 2001, interest expense was $1,670 million compared
to $1,770 million a year ago (including $62 million and $111 million,
respectively, relating to bond redemption charges). Lower interest rates during
2001 were partly offset by higher average debt and the impact of revaluing
environmental and other provisions at a lower interest rate.
Net cash outflow for the three months ended December 31, 2001 was $1.0 billion,
compared with $1.6 billion for the equivalent period of 2000. Operating cash
flow was similar in both periods, with higher tax payments in the fourth quarter
of 2000. For the year 2001, net cash inflow was $1.0 billion compared with a net
cash inflow of $3.7 billion in the same period in 2000. For the year ended
December 31, 2001 the overall decreased cash flow is primarily driven by higher
capital expenditure and significantly lower divestment proceeds (the second
quarter of 2000 included the proceeds from the sale of the ARCO Alaska assets).
Capital expenditure and acquisitions in the fourth quarter and year of 2001 were
$4.4 billion and $14.1 billion, respectively. Expenditure for the year 2001
included the acquisition of Bayer's 50% interest in Erdolchemie and the
formation of the joint venture with Solvay. Excluding acquisitions, capital
expenditure for the fourth quarter and year 2001 was $4.0 billion and $13.2
billion. For the three months and year ended December 31, 2000 capital
expenditure and acquisitions were $5.0 billion and $47.6 billion, respectively.
Expenditure for the year ended December 31, 2000 included the acquisition of
ARCO, Burmah Castrol, the Mobil share of the European Joint Venture and the
minority interest in Vastar, a 2.2% interest in PetroChina, and Exxon's aviation
lubricants business. Excluding the effect of these acquisitions, capital
expenditure for the fourth quarter and year 2000 was $3.4 billion and $11.2
billion, respectively.
Net debt at December 31, 2001 was $19.6 billion. The ratio of net debt to net
debt plus equity was 21% compared to the 19% rate at September 30, 2001 and 21%
at December 31, 2000. After adjusting for the fixed asset revaluation adjustment
and goodwill consequent upon the ARCO and Burmah Castrol acquisitions, the ratio
of net debt to net debt plus equity was 26% at December 31, 2001 compared with
24% at September 30, 2000 and 27% at December 31, 2000. In addition to reported
debt, BP uses conventional off balance sheet sources of finance such as
operating leases and associate and joint venture borrowing.
The group has access to significant sources of liquidity in the form of
committed facilities and other funding through the capital markets. At December
31, 2001 the group had available undrawn committed facilities of $3.4 billion.
These committed facilities, which are mainly with a number of international
banks, expire in 2002 and we expect to renew tham on an annual basis. BP
believes that, taking into account the substantial amounts of undrawn borrowing
facilities available, the Group has sufficient working capital for foreseeable
requirements.
The return on average capital employed on a replacement cost basis for the three
months ended December 31, 2001 was 6% compared with 15% for the equivalent
period of 2000. For the year ended December 31, 2001, the return on average
capital employed was 12%. For further information on the return on average
capital employed calculation see Note 12 of Notes to Consolidated Financial
Statements.
BP purchased for cancellation approximately 14 million of its own shares during
the fourth quarter of 2001 at a cost of $99 million. Total share purchases over
the year to December 31, 2001 amounted to approximately 154 million at a cost of
$1,281 million.
BP announced a fourth quarterly dividend for 2001 of 5.75 cents per ordinary
share. Holders of ordinary shares will receive 4.055 pence per share and holders
of American Depositary Receipts (ADRs) $0.345 per ADS. The dividend for the year
was 22.00 cents per share, up 7%, which is equivalent to 15.436 pence per share,
up 12% over last year. The dividend is payable on March 18, 2002 to shareholders
on the register on February 22, 2002. Participants in the Dividend Reinvestment
Plan or the dividend reinvestment facility in the US Direct Access Plan will
receive the dividend in the form of shares on March 18, 2002.
[BP intends to continue to pay dividends in the future of around 50% of its
replacement cost profit before exceptional items after adjusting for special
items and acquisition amortization, adjusted to mid-cycle operating conditions.
Mid-cycle conditions are our best estimate of likely average prices and margins
over the long term.]
Page 4
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Owing to the significant acquisitions that took place in 2000, in addition to
its reported results, BP is presenting pro forma results adjusted for special
items in order to enable shareholders to assess current performance in the
context of BP's past performance and against that of its competitors. The pro
forma result is replacement cost profit before exceptional items excluding
acquisition amortization as defined in footnote (a) below. The pro forma result,
adjusted for special items, has been derived from BP's UK GAAP accounting
information but is not in itself a recognized UK or US GAAP measure.
Pro forma
Reconciliation of reported result
profit (loss) to pro forma result Acquisition Special adjusted for
adjusted for special items Reported amortization(a) items(b) special items
--------- ------------ ------- -------------
($ million)
Three months ended December 31, 2001
Exploration and Production 1,655 397 322 2,374
Gas and Power 106 - - 106
Refining and Marketing 392 180 213 785
Chemicals (67) - 106 39
Other businesses and corporate (179) - 73 (106)
--------- ---------- --------- ---------
Replacement cost operating profit 1,907 577 714 3,198
Interest expense (414) - - (414)
Taxation (411) - (143) (544)
Minority shareholders' interest (26) - - (26)
--------- ---------- --------- ---------
Replacement cost profit before
exceptional items 1,056 577 571 2,204
--------- ========= ========= ---------
per ordinary share (cents) 4.73 9.85
========= =========
Three months ended December 31, 2000
Exploration and Production 4,238 413 49 4,700
Gas and Power 183 - - 183
Refining and Marketing 792 185 344 1,231
Chemicals (82) - 222 140
Other businesses and corporate (368) - 236 (132)
--------- ---------- --------- ---------
Replacement cost operating profit 4,763 598 851 6,212
Interest expense (611) - 111 (500)
Taxation (1,336) - (269) (1,605)
Minority shareholders' interest (17) - - (17)
--------- ---------- --------- ---------
Replacement cost profit before
exceptional items 2,799 598 693 4,090
--------- ========= ========= ---------
per ordinary share (cents) 12.40 18.25
========= =========
---------------
(a) Acquisition amortization refers to depreciation relating to the fixed asset
revaluation adjustment and amortization of goodwill consequent upon the
ARCO and Burmah Castrol acquisitions in 2000.
(b) The special items refer to non-recurring charges and credits. The special
items for the fourth quarter 2001 comprise additional severance charges,
mainly related to former ARCO employees, an impairment charge for our
partner operated Venezuelan Lake Maracaibo operations, Castrol, Solvay and
Erdolchemie integration costs, Grangemouth restructuring and litigation
costs. The special items for the fourth quarter 2000 comprise principally
ARCO, Vasta and Burmah Castrol integration costs, rationalization costs
post the BP Amoco merger, environmental charges and asset writedowns.
Page 5
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
Pro forma
Reconciliation of reported result
profit (loss) to pro forma result Acquisition Special adjusted for
adjusted for special items Reported amortization(a) items(b) special items
--------- ------------ ------- -------------
($ million)
Year ended December 31, 2001
Exploration and Production 12,417 1,759 322 14,498
Gas and Power 521 - - 521
Refining and Marketing 3,625 718 487 4,830
Chemicals 128 - 114 242
Other businesses and corporate (556) - 73 (483)
--------- ---------- --------- ---------
Replacement cost operating profit 16,135 2,477 996 19,608
Interest expense (1,670) - 62 (1,608)
Taxation (4,512) - (237) (4,749)
Minority shareholders' interest (73) - - (73)
--------- ---------- --------- ---------
Replacement cost profit before
exceptional items 9,880 2,477 821 13,178
--------- ========= ========= ---------
per ordinary share (cents) 44.03 58.73
========= =========
Year ended December 31, 2000
Exploration and Production 14,012 1,174 524 15,710
Gas and Power 571 - - 571
Refining and Marketing 3,523 440 595 4,558
Chemicals 760 - 276 1,036
Other businesses and corporate (1,110) - 488 (622)
--------- ---------- --------- ---------
Replacement cost operating profit 17,756 1,614 1,883 21,253
Interest expense (1,770) - 111 (1,659)
Taxation (4,680) - (540) (5,220)
Minority shareholders' interest (92) (79) - (171)
--------- ---------- --------- ---------
Replacement cost profit before
exceptional items 11,214 1,535 1,454 14,203
--------- ========= ========= ---------
per ordinary share (cents) 51.82 65.63
========= =========
---------------
(a) Acquisition amortization refers to depreciation relating to the fixed asset
revaluation adjustment and amortization of goodwill consequent upon the
ARCO and Burmah Castrol acquisitions in 2000.
(b) The special items refer to non-recurring charges and credits. The special
items for 2001 comprise additional severance charges, mainly related to
former ARCO employees, rationalization costs in the European downstream
commercial business, an impairment charge for our partner operated
Venezuelan Lake Maracaibo operations, Castrol, Solvay and Erdolchemie
integration costs, Grangemouth restructuring and litigation costs. The
special items for 2000 comprise principally ARCO, Vastar and Burmah Castrol
integration costs, rationalization costs post the BP Amoco merger,
environmental charges and asset writedowns.
Page 6
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OPERATING INFORMATION
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Crude oil and natural gas liquids production
(thousand barrels per day), (net of royalties)
UK 500 514 485 534
Rest of Europe 116 92 100 90
USA 772 725 744 729
Rest of World 629 600 602 575
------- ------- ------- -------
Total crude oil and liquids production 2,017 1,931 1,931 1,928
======= ======= ======= =======
Natural gas production (million cubic feet per day),
(net of royalties)
UK 1,715 1,893 1,713 1,652
Rest of Europe 160 156 147 136
USA 3,621 3,403 3,554 3,054
Rest of World 3,268 3,169 3,218 2,767
------- ------- ------- -------
Total natural gas production 8,764 8,621 8,632 7,609
======= ======= ======= =======
Total production (a)
(thousand barrels of oil equivalent per day),
(net of royalties)
UK 796 840 780 819
Rest of Europe 144 119 125 113
USA 1,396 1,312 1,357 1,256
Rest of World 1,192 1,146 1,157 1,052
------- ------- ------- -------
Total production 3,528 3,417 3,419 3,240
======= ======= ======= =======
Natural gas sales volumes
(million cubic feet per day)
UK 2,534 3,019 2,641 2,526
Rest of Europe 232 224 213 178
USA 8,094 8,206 8,327 6,525
Rest of World 8,867 6,007 7,613 5,243
------- ------- ------- -------
Total natural gas sales volumes (b) 19,727 17,456 18,794 14,471
======= ======= ======= =======
NGL sales volumes (thousand barrels per day)
UK - - - -
Rest of Europe - - - -
USA 226 169 221 154
Rest of World 215 241 189 195
------- ------- ------- -------
Total NGL sales volumes 441 410 410 349
======= ======= ======= =======
---------------
(a) Expressed in thousand barrels of oil equivalent per day (mboe/d). Natural
gas is converted to oil equivalent at 5.8 billion cubic feet: 1 million
barrels. (b) Encompasses sales by Exploration and Production and Gas and
Power, including marketing, trading and supply sales.
Page 7
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OPERATING INFORMATION
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Oil sales volumes (thousand barrels per day)
Refined products
UK 268 295 266 256
Rest of Europe 1,084 1,077 1,062 901
USA 1,773 1,974 1,866 1,783
Rest of World 612 539 603 480
------- ------- ------- -------
Total marketing sales 3,737 3,885 3,797 3,420
Trading/supply sales 2,710 2,878 2,409 2,103
------- ------- ------- -------
Total refined product sales 6,447 6,763 6,206 5,523
Crude oil 4,599 5,442 4,473 5,984
------- ------- ------- -------
Total oil sales 11,046 12,205 10,679 11,507
======= ======= ======= =======
Refinery throughputs (thousand barrels per day)
UK 415 391 364 324
Rest of Europe 692 727 663 602
USA 1,371 1,584 1,526 1,625
Rest of World 369 383 376 365
------- ------- ------- -------
Total throughput 2,847 3,085 2,929 2,916
======= ======= ======= =======
Chemicals production (thousand tonnes)
UK 792 833 3,126 3,137
Rest of Europe 2,278 1,701 7,925 6,713
USA 2,279 2,255 8,943 9,874
Rest of World 699 596 2,722 2,341
------- ------- ------- -------
Total production 6,048 5,385 22,716 22,065
======= ======= ======= =======
Page 8
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
DETAILED REVIEW OF BUSINESSES (EXCLUDING EXCEPTIONAL ITEMS)
EXPLORATION AND PRODUCTION
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 5,336 8,965 28,229 30,942
Total replacement cost operating profit - $m 1,655 4,238 12,417 14,012
Results included:
Exploration expense - $m 144 157 480 599
Key Statistics:
Average prices :Crude oil (a) - $/bbl 17.72 28.08 22.50 26.63
realized by BP
:Natural gas - $/mcf 2.28 3.76 3.30 2.91
Brent oil price - $/bbl 19.41 29.56 24.44 28.44
West Texas intermediate oil price - $/bbl 20.31 31.99 25.89 30.38
Henry Hub gas price (b) - $/mmBtu 2.43 5.28 4.26 3.90
---------------
(a) Crude oil and natural gas liquids
(b) Henry Hub First of the Month Index
Total replacement cost operating profit for the three months and year ended
December 31, 2001 was $1,655 million and $12,417 million respectively. This
compares with $4,238 million and $14,012 million for the corresponding periods
in 2000. Significantly lower oil and gas prices are reflected in both turnover
and replacement cost operating profit for the fourth quarter 2001. Average
liquids realizations declined by over $10 a barrel for the fourth quarter and $4
for the year; average natural gas realizations were down $1.48 per thousand
cubic feet for the quarter and up slightly for the year. The impact of lower
prices on turnover and replacement cost operating profit for the year was partly
offset by the inclusion of ARCO and other portfolio changes for the whole year,
compared to only around nine months (from April 14) for the same period in 2000.
The special items for the quarter and the year included a $175 million
impairment of our partner operated Venezuelan Lake Maracaibo operations,
following a technical reassessment, $77 million additional severance costs, $60
million litigation and $10 million Grangemouth restructuring costs. The fourth
quarter benefited from higher volumes and continued productivity driven cost
savings with lifting costs declining versus the previous quarter and the
equivalent quarter last year. The year also benefited from operational
improvements.
Total hydrocarbon production for 2001 increased 5.5%, in line with our growth to
target. Production for the fourth quarter was a record 3.5 mmboe/d, which was up
over 3% compared with a year ago and up over 4% on a consistent current
portfolio basis. Liquids production increased by over 4% and benefited from new
production from Girassol in Angola, Northstar in Alaska and Qinghangdao in China
as well as further production increases in Norway and the Gulf of Mexico.
Natural gas production for the quarter was up 1.5% and 3.5% when adjusted for
disposals.
The reserve replacement ratio was 191% with 2.2 billion barrels of oil
equivalent booked through extensions, discoveries, revisions and improved
recovery. Replacement exceeded production for the eighth consecutive year.
In support of continued growth, 2001 capital expenditure, at $8.9 billion
(including $0.3 billion of acquisitions), was nearly $2.5 billion higher than
last year. During the quarter, the Mad Dog development (BP 60.5% and operator),
in the US Gulf of Mexico, was approved. Also, BP announced that the assets of
Chernogorneft have been returned to Sidanco (BP 11.2%). This completes the
restructuring of Sidanco with its debt substantially repaid, subsidiaries
recovered and non-core assets disposed of. Sidanco is now positioned as a low
cost Russian producer.
Page 9
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
GAS AND POWER
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 7,452 8,553 39,208 21,013
Total replacement cost operating profit - $m 106 183 521 571
On January 1, 2001, the natural gas liquids (NGL) business located in North
America was moved to Gas and Power from Refining and Marketing. Comparative
information has been restated.
The decrease in turnover for the fourth quarter 2001 reflects the significant
fall in natural gas prices, which has more than offset volume increases during
the same period. The increase in turnover for the year is primarily due to
higher sales volumes in the natural gas marketing and trading business.
Replacement cost operating profit for the fourth quarter and year was $106
million and $521 million, respectively, compared with $183 million and $571
million for the corresponding periods in 2000. Profit for the quarter is down on
a year ago due to lower contributions from trading and marketing and NGLs.
Despite continued growth in gas sales volumes (up 13% on the fourth quarter of
2000), marketing and trading profit is down due to less favourable market
conditions. NGL volumes have increased but margins are lower than a year ago.
For the year, lower contribution from NGLs was partly offset by better results
from marketing and trading and Ruhrgas. NGL margins have declined significantly
relative to 2000 levels.
The BP gas and power business in Spain took part in the Spanish Release Gas
programme, an initiative to liberalise the market in line with the European gas
directive. BP captured 25% of the total 150 bcf of gas supply auctioned by the
incumbent monopoly company.
The Tangguh LNG project (BP approximately 50%) in Eastern Indonesia has secured
the first letter of intent for delivery of LNG to GNPower in the Philippines.
BP and Chevron Texaco have announced that they are to build and operate a 22.5
megawatt wind farm at their jointly owned Nerefco oil refinery in the
Netherlands. It will generate electricity equivalent to the consumption of
20,000 households, displacing 20,000 tonnes of carbon dioxide emissions a year.
The scheme will begin operations in the second half of 2002.
Page 10
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
REFINING AND MARKETING
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 26,528 32,708 120,233 107,883
Total replacement cost operating profit - $m 392 792 3,625 3,523
Global Indicator Refining Margin (a) - $/bbl 2.40 4.46 4.06 4.22
---------------
(a) The Global Indicator Refining Margin (GIM) is the average of seven 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 decrease in turnover for the fourth quarter reflects lower retail and
wholesale fuel prices. Turnover for the year primarily reflects the inclusion of
ARCO for the whole of the year in 2001, compared to around nine months (from
April 14) in 2000, the acquisition of Burmah Castrol on July 7, 2000 and the
consolidation of the European fuels business with effect from August 1, 2000.
Replacement cost operating profit for the three months and year ended December
31, 2001 was $392 million and $3,625 million, respectively, including special
charges of $213 million and $487 million. For the corresponding periods in 2000,
replacement cost operating profit was $792 and $3,523 after special charges of
$344 million and $595 million, respectively. The special charges for the fourth
quarter comprised $146 million Castrol integration costs, $37 million associated
with restructuring of operations at the Grangemouth, Scotland refinery and $30
million additional severance charges related to former ARCO employees. Special
charges for the year also included rationalization costs in the downstream
European commercial business. Lower profit for the fourth quarter was primarily
the result of lower US and European refining margins. Refining throughputs in
the quarter declined by 8% compared with the previous year because of the sale
of the Mandan, North Dakota and Salt Lake City, Utah refineries in the third
quarter of 2001 and a turnaround at the Whiting, Indiana refinery. Marketing
volumes declined by 3% in the quarter, reflecting the slowdown in the world
economy. Retail shop sales increased by 14% versus a year ago, reflecting the
impact of new BP Connect stations and worldwide growth in shop sales. Average
retail margins were little changed from a year ago, though fell away at the end
of the quarter. Profit for the year reflects the benefit of the ARCO and Burmah
Castrol acquisitions and the consolidation of the fuels business in Europe, and
improved marketing volumes, offset by the effects of a larger refinery
maintenance programme in 2001.
For the year marketing volumes increased by 11% (2% excluding portfolio
changes). Retail shop sales grew 23% (7% excluding portfolio changes). We
achieved a unit cash cost reduction of 6% during the year, compared to our
target of 2.5%.
The clean fuels programme was rolled out to the 113th city by the end of the
year. A total of 339 BP Connect stations were open at the end of the year, in
the USA, Europe, Australia and New Zealand. In addition, we have reimaged in
excess of 4,600 retail stations worldwide to incorporate BP's new Helios logo.
In December, BP received approval from the European Commission and German Cartel
office for its acquisition of Veba Oel AG, subject to certain disposals. The
deal, initially for a 51% interest, was completed on February 1, 2002. This
completes one part of the arrangement initially announced in mid 2001.
Page 11
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
CHEMICALS
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 2,481 2,754 11,515 11,247
Total replacement cost - $m (67) (82) 128 760
operating profit
Chemicals Indicator Margin (a) - $/te 108 (b) 117 (c) 108 (b) 126 (c)
---------------
(a) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected by
Chem Systems in their quarterly market analyses, then weighted based on
BP's product portfolio. While it does not cover our entire portfolio, it
includes a broader range of products than our previous indicator. Amongst
the products and businesses covered in the CIM are olefins and derivatives,
aromatics and derivatives, linear alpha olefins, acetic acid, vinyl acetate
monomer and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha olefins, anhydrides, engineering polymers and
carbon fibres, speciality intermediates, and the remaining parts of the
solvents and acetyls businesses.
(b) Provisional. The data for the fourth quarter is based on two months'
actuals and one month of provisional data.
(c) Restated following review of product margins with Chem Systems.
Turnover for the fourth quarter primarily reflects lower prices. For the year,
the effect of lower prices was more than offset by the inclusion of 100% of
Erdolchemie in 2001. Replacement cost operating loss for the three months ended
December 31, 2001 was $67 million compared with $82 million for the prior year,
including special charges of $106 million and $222 million, respectively. For
the year, replacement cost operating profit was $128 million in 2000 compared
with $760 million in the previous year, including special charges of $114
million and $276 million, respectively. Excluding special charges, fourth
quarter profit reflected ongoing deterioration in market conditions during 2001.
Profit for the year decreased due to a weaker trading environment, operational
problems in the first half of 2001, and costs associated with restructuring to
improve the efficiency of underlying operations.
Chemicals production of 6,048 thousand tonnes in the fourth quarter was just
above the previous quarter, as a result of the Solvay joint venture and organic
growth from our new linear alpha olefins, vinyl acetate monomer and ethyl
acetate plants coming on stream. Production for the year was 22,716 thousand
tonnes, up 3% on 2000 due to new production and acquired assets.
Major restructuring continued throughout 2001, aimed at repositioning the
portfolio and lowering the cost base. Special charges for the year of $106
million and $114 million for the quarter and year, respectively, include charges
for Grangemouth restructuring and those related to Erdolchemie and Solvay
integration costs. In addition to special items, the fourth quarter and full
year results include $36 million and $102 million, respectively, for
rationalization costs.
During the quarter we announced further portfolio rationalization, including the
sale of our butyl and isopropyl acetate business in Antwerp, Belgium, the
closure of a high-density polyethylene facility as part of the restructuring at
Grangemouth, Scotland, the idling of one of the polypropylene lines at Chocolate
Bayou, USA and the cessation of alcohol production to concentrate on production
of linear alpha olefins at Pasadena, USA.
Page 12
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - continued
OTHER BUSINESSES AND CORPORATE
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Turnover - $m 216 51 783 249
Replacement cost operating profit - $m (179) (368) (556) (1,110)
Other businesses and Corporate comprises Finance, BP Solar, the Group's coal
asset, aluminium asset, its investments in PetroChina and Sinopec, interest
income and costs relating to corporate activities.
Replacement cost operating loss for the three months and year ended December 31,
2001 was $179 million and $556 million, respectively, after special charges of
$73 million comprising additional severance charges mainly related to former
ARCO employees. This compares with $368 million and $1,110 million for the
corresponding periods in 2000, after special charges of $236 million and $488
million, respectively, comprising rationalization costs post the BP Amoco
merger, ARCO integration costs and an environmental charge.
BP Solar increased its share of the world's solar market to 18% during 2001;
production for the year was 30% higher. At the end of the year, as part of its
global real estate strategy, BP completed the purchase of a new head office
building in London, England. This will permit rationalization of other BP
occupied London properties.
EXCEPTIONAL ITEMS
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Profit (loss) on sale of fixed assets and
businesses and termination of operations - $m (38) 78 535 220
Taxation credit (charge) - $m (126) 94 (505) (292)
------- ------- ------- ------
Exceptional items after taxation - $m (164) 172 30 (72)
------- ------- ------- ------
Exceptional items for the fourth quarter include losses on the termination or
sale of chemicals activities and the sale of BP's interest in Kazakhstan
pipeline ventures, largely offset by gains on the sale of our majority interest
in Vysis and the Frontier and Mandan pipeline systems in the USA.
OUTLOOK
Demand for oil and gas is weaker than last year because of the global economy, a
mild US winter and reduced jet fuel demand following the events of September 11.
The crude oil market looks broadly balanced for the first half of 2002, if
OPEC's latest round of quota reductions offset current demand weakness.
Additional OPEC oil may be required in the second half of the year to balance
the market if demand improves in line with an economic recovery.
In the US gas market, a combination of economic recovery and lower gas prices
may boost demand over the course of 2002 whilst lower drilling activity could
curtail domestic production growth. In the near term, high levels of gas in
storage are likely to maintain the downward pressure on prices. UK gas
fundamentals had improved following cold weather across Europe during November
and December, though prices have eased recently, reflecting warmer weather.
Refining margins have been poor so far in 2002 and may remain under pressure in
the near term because of weak oil product demand growth and relatively high
inventories, especially in the key US market. Retail margins are currently
weaker due to intense competitive pressure.
In Chemicals, the near-term pattern of demand is likely to be unchanged.
Page 13
BP p.l.c. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - concluded
FORWARD-LOOKING STATEMENTS
In order to utilize the 'Safe Harbor' provisions of the United States Private
Securities Litigation Reform Act of 1995, BP is providing the following
cautionary statement. The foregoing discussion, in particular, although not
limited to, the statements under `Outlook', with regard to trends in the trading
environment, oil and gas prices, refining, marketing, NGL and chemicals margins,
inventory and product stock levels, supply capacity, capital expenditure,
working capital, profitability, results of operation, dividend payments
liquidity or financial position and statements regarding our targets are all
forward-looking in nature. Forward-looking statements are identified by such
phrases as `will', `expects', `is expected to', `may', `is likely to', `intends'
and `believes'. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future and are outside the control of BP. Actual results may differ
materially from those expressed in such statements, depending on a variety of
factors, including the specific factors identified in the discussions
accompanying such forward-looking statements; future levels of industry product
supply, demand and pricing; political stability and economic growth in relevant
areas of the world; development and use of new technology and successful
partnering; the actions of competitors; natural disasters and other changes to
business conditions; wars and acts of terrorism or sabotage; and other factors
discussed elsewhere in this report. In addition to factors set forth elsewhere
in this report, the factors set forth above are important factors, although not
exhaustive, that may cause actual results and developments to differ materially
from those expressed or implied by these forward-looking statements. Additional
information, including information on factors which may affect BP's business, is
contained in BP's Annual Report and Accounts for 2000 and in the Annual Report
on Form 20-F for 2000 filed with the US Securities and Exchange Commission.
2001 DIVIDENDS
On February 12,2002, BP p.l.c. announced a fourth quarterly dividend for 2001 of
5.75 cents per ordinary share of 25 cents (ordinary shares), representing $0.345
per American Depositary Share (ADS) amounting to $1,289 million in total. The
record date for qualifying US resident holders of American Depositary Shares as
well as holders of ordinary shares was February 12, 2002, with payment to be
made on March 18, 2002.
The dividend payable on March 18 2002 entitles qualifying US ADS shareholders to
a refund of the 1/9th UK tax credit (approximately $0.038) attaching to the
dividend less a UK withholding tax limited to the amount of the tax credit. The
effect of these arrangements for ADS holders is currently a cash payment of
$0.345, a gross dividend for tax purposes of $0.383 and a potential tax credit
of $0.038 per ADS.
There is a Dividend Reinvestment Plan whereby holders of ordinary shares can
elect to reinvest the net cash dividend in shares purchased on the London Stock
Exchange. This plan is not available to any person resident in the USA or
Canada, or in any jurisdiction outside the UK where such an offer requires
compliance by the Company with any governmental or regulatory procedures or any
similar formalities. A dividend reinvestment facility is, however, available for
holders of ADSs through the Direct Access Plan of Morgan Guaranty Trust Company
of New York. Participants in the Dividend Reinvestment Plan or the dividend
reinvestment facility included in the US Direct Access Plan will receive the
dividend in the form of shares on March 18, 2002.
Page 14
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million, except per share amounts)
Turnover - Note 3 37,114 44,846 175,389 161,826
Less: joint ventures 297 284 1,171 13,764
------- ------ ------- -------
Group turnover 36,817 44,562 174,218 148,062
Replacement cost of sales 32,499 36,827 146,893 121,516
Production taxes - Note 4 336 564 1,689 2,061
------- ------ ------- -------
Gross profit 4,032 7,171 25,636 24,485
Distribution and administration expenses 2,499 2,875 10,918 8,535
Exploration expense - Note 5 144 157 480 599
------- ------ ------- -------
1,389 4,139 14,238 15,351
Other income 208 272 694 805
------- ------ ------- -------
Group replacement cost operating profit 1,597 4,411 14,932 16,156
Share of profits of joint ventures 91 92 443 808
Share of profits of associated undertakings 219 260 760 792
------- ------ ------- -------
Total replacement cost operating profit
Notes 6 and 7 1,907 4,763 16,135 17,756
Profit (loss) on sale of fixed assets and businesses
and termination of operations - Note 8 38 (78) (537) (196)
------- ------ ------- -------
Replacement cost profit before interest and tax
- Note 6 1,869 4,841 16,670 17,976
Inventory holding gains (losses) - Note 9 (1,297) (561) (1,900) 728
------- ------ ------- -------
Historical cost profit before interest and tax 572 4,280 14,770 18,704
Interest expense - Note 10 414 611 1,670 1,770
------- ------ ------- -------
Profit before taxation 158 3,669 13,100 16,934
Taxation - Note 11 537 1,242 5,017 4,972
------- ------ ------- -------
Profit after taxation (379) 2,427 8,083 11,962
Minority shareholders' interest 26 17 73 92
------- ------ ------- -------
Profit for the period (405) 2,410 8,010 11,870
======= ====== ======= =======
Earnings per ordinary share - cents (a)
Basic (1.78) 10.53 35.70 54.85
Diluted (1.76) 10.47 35.48 54.48
------- ------ ------- -------
Earnings per American depositary share - cents (a)
Basic (10.68) 63.18 214.2 329.1
Diluted (10.56) 62.82 212.9 362.9
------- ------ ------- -------
Average number of outstanding ordinary
shares (millions) 22,396 22,516 22,436 21,638
======= ====== ======= =======
Page 15
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31, 2001 December 31, 2000
(Unaudited)
($ million)
Fixed assets
Intangible assets 15,593 16,893
Tangible assets 77,410 74,284
Investments 12,047 11,962
-------- --------
105,050 103,007
Current assets
Business held for resale - 636
Inventories 7,631 9,234
Receivables 26,669 28,418
Investments 450 661
Cash at bank and in hand 1,358 1,170
-------- --------
36,108 40,119
-------- --------
Current liabilities - falling due within one year
Finance debt 9,090 6,418
Accounts payable and accrued liabilities 28,524 31,298
-------- --------
37,614 37,716
-------- --------
Net current assets (liabilities) (1,056) 2,403
-------- --------
Total assets less current liabilities 103,544 105,410
Noncurrent liabilities
Finance debt 12,327 14,772
Accounts payable and accrued liabilities 3,086 3,842
Provisions for liabilities and charges 13,137 12,795
-------- --------
28,550 31,409
-------- --------
Net assets 74,994 74,001
Minority shareholders' interest 627 585
-------- --------
BP shareholders' interest (a) - Note 15 74,367 73,416
======== ========
Represented by:
Capital shares
Preference 21 21
Ordinary 5,608 5,632
Paid-in surplus 4,014 3,770
Merger reserve 26,286 26,869
Retained earnings 23,757 36,668
Other reserves 247 456
-------- --------
74,367 73,416
======== ========
Page 16
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Net cash inflow from operating activities 5,547 5,779 22,409 20,416
------- ------- ------- -------
Dividends from joint ventures 12 - 104 645
------- ------- ------- -------
Dividends from associated undertakings 104 120 528 394
------- ------- ------- -------
Servicing of finance and returns on investments
Interest received 83 100 256 444
Interest paid (229) (471) (1,282) (1,354)
Dividends received 35 30 132 42
Dividends paid to minority shareholders (38) (4) (54) (24)
------- ------- ------- -------
Net cash outflow from servicing of finance (149) (345) (948) (892)
and returns on investments
------- ------- ------- -------
Taxation
UK corporation tax (454) (428) (1,058) (869)
Overseas tax (968) (1,571) (3,602) (5,329)
------- ------- ------- -------
Tax paid (1,422) (1,999) (4,660) (6,198)
------- ------- ------- -------
Capital expenditure
Payments for fixed assets (3,688) (3,689) (12,214) (10,101)
Proceeds from the sale of fixed assets 615 917 2,365 3,029
------- ------- ------- -------
Net cash outflow for capital expenditure (3,073) (2,772) (9,849) (7,072)
------- ------- ------- -------
Acquisitions and disposals
Investments in associated undertakings (179) (88) (586) (985)
Acquisitions, net of cash acquired (602) (1,561) (1,210) (6,265)
Net investment in joint ventures (220) - (497) (218)
Proceeds from the sale of businesses 231 402 538 8,333
------- ------- ------- -------
Net cash (outflow) inflow for (770) (1,247) (1,755) 865
acquisitions and disposals
------- ------- ------- -------
Equity dividends paid (1,232) (1,183) (4,827) (4,415)
------- ------- ------- -------
Net cash inflow (outflow) (983) (1,647) 1,002 3,743
======= ======= ======= =======
Financing (855) (1,059) 972 3,413
Management of liquid resources (65) (158) (211) 452
Increase (decrease) in cash (63) (430) 241 (122)
------- ------- ------- -------
(983) (1,647) 1,002 3,743
======= ======= ======= =======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement presented on a SFAS95 format is included in Note 16.
Page 17
BP p.l.c. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS - continued
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Reconciliation of historical cost profit before interest
and tax to net cash inflow from operating activities
Historical cost profit before interest and tax 572 4,280 14,770 18,704
Depreciation and amounts provided 2,430 2,228 8,750 7,449
Exploration expenditure written off 85 73 238 264
Share of profits of joint ventures and
associated undertakings (303) (350) (1,194) (1,853)
Interest and other income (132) (79) (478) (360)
(Profit) loss on sale of fixed assets and businesses 36 (78) (537) (196)
Charge for provisions 187 33 1,008 702
Utilization of provisions (221) (426) (1,119) (969)
Decrease (increase) in stocks 1,368 (185) 1,490 (1,449)
Decrease (increase) in debtors 1,241 (1,952) 1,989 (5,587)
Increase (decrease) in creditors 284 2,235 (2,508) 3,711
------- ------- ------- -------
Net cash inflow from operating activities 5,547 5,779 22,409 20,416
======= ======= ======= =======
Financing
Long-term borrowing (267) (96) (1,296) (1,680)
Repayments of long-term borrowing 434 1,359 2,602 2,353
Short-term borrowing (2,764) (3,072) (6,257) (4,120)
Repayments of short-term borrowing 1,656 148 4,823 4,821
------- ------- ------- -------
(941) (1,661) (128) 1,374
Issue of ordinary share capital (13) (16) (181) (257)
Repurchase of ordinary share capital 99 618 1,281 2,001
Stamp duty reserve tax - - - 295
------- ------- ------- -------
Net cash outflow from financing (855) (1,059) 972 3,413
======= ======= ======= =======
---------------
(a) This cash flow statement has been prepared in accordance with UK GAAP. A
cash flow statement presented on a SFAS95 format is included in Note 16.
Page 18
BP p.l.c. AND SUBSIDIARIES
CAPITAL EXPENDITURE AND ACQUISITIONS
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
By business
Exploration and Production
UK 312 362 1,095 961
Rest of Europe 99 85 329 195
USA 862 897 4,155 3,179
Rest of World 880 781 3,282 2,048
------- ------- ------- -------
2,153 2,125 8,861 6,383
------- ------- ------- -------
Gas and Power
UK (a) 46 86 97 194
Rest of Europe 45 13 82 16
USA (b) 61 5 109 73
Rest of World 57 23 71 53
------- ------- ------- -------
209 127 359 336
------- ------- ------- -------
Refining and Marketing
UK (c)(d) 127 393 394 5,409
Rest of Europe (d) 209 328 380 1,712
USA (e) 623 652 1,311 1,092
Rest of World 157 227 330 480
------- ------- ------- -------
1,116 1,600 2,415 8,693
------- ------- ------- -------
Chemicals
UK 26 210 205 620
Rest of Europe (f) 294 17 917 112
USA 167 166 460 349
Rest of World 107 119 344 504
------- ------- ------- -------
594 512 1,926 1,585
------- ------- ------- -------
Other businesses and corporate (g) 356 596 563 30,616
------- ------- ------- -------
4,428 4,960 14,124 47,613
======= ======= ======= =======
By geographical area
UK 745 1,144 2,128 7,438
Rest of Europe 709 443 1,787 2,041
USA 1,758 1,796 6,160 34,037
Rest of World 1,216 1,577 4,049 4,097
------- ------- ------- -------
4,428 4,960 14,124 47,613
======= ======= ======= =======
---------------
(a) 4Q 2000 included $62 million for the second instalment on two LNG ships.
Year 2000 also included investment in Great Yarmouth Power Station plus the
first and second instalment on the two LNG ships.
(b) Year 2000, 4Q 2001 and year 2001 included investment in Green Mountain
Energy Company.
(c) Year 2000 included $4,686 million for the purchase of Burmah Castrol's
issued share capital. 4Q and year 2000 included $175 million for the
acquisition of the minority interest in Castrol India.
(d) Year 2000 included $1,450 million for the acquisition of the Mobil share of
the European Joint Venture.
(e) 4Q and year 2000 included $110 million for the Olympic pipeline and $70
million for Exxon's aviation lubricants business.
(f) 4Q 2001 included the formation of the joint venture with Solvay. Year 2001
also included the acquisition of Bayer's 50% interest in Erdolchemie.
(g) 4Q and year 2000 included $416 million for the investment in Sinopec. Year
2000 included $27,506 million for the acquisition of ARCO, $1,688 million
for the acquisition of the minority interest in Vastar and $578 million for
the acquisition of a 2.2% interest in PetroChina.
Page 19
BP p.l.c. AND SUBSIDIARIES
ENVIRONMENTAL INDICATORS
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Average oil realizations (a) - $/bbl
UK 18.53 28.55 23.55 27.38
USA 17.05 28.02 21.87 25.94
Rest of World 17.70 27.48 21.90 26.49
BP average 17.72 28.08 22.50 26.63
Brent oil price 19.41 29.56 24.44 28.44
West Texas Intermediate oil price 20.31 31.99 25.89 30.38
Alaska North Slope US West Coast 17.79 29.42 23.18 28.35
Average natural gas realizations - $/mcf
UK 3.15 3.03 3.07 2.42
USA 2.06 5.15 3.99 3.72
Rest of World 1.99 2.63 2.52 2.25
BP average 2.28 3.76 3.30 2.91
Henry Hub gas price (b) ($/mmBtu) 2.45 5.28 4.26 3.90
Global Indicator Refining Margins (c) - $/bbl
Northwest Europe 1.53 3.63 2.24 3.35
US Gulf Coast 1.79 3.78 4.84 3.99
Midwest 2.63 3.54 6.05 4.03
US West Coast 6.25 10.21 8.60 8.77
Singapore 1.20 2.18 0.90 2.11
BP average 2.40 4.46 4.06 4.22
Chemicals Indicator Margin (d) - $/te 108(e) 117(f) 108(e) 126(f)
---------------
(a) Crude oil and natural gas liquids.
(b) Henry Hub First of Month Index.
(c) The Global Indicator Refining Margin (GIM) is the average of seven regional
indicator margins weighted for BP's crude refining capacity in each region.
Each regional indicator margin is based on a single representative crude
with product yields characteristic of the typical level of upgrading
complexity.
(d) The Chemicals Indicator Margin (CIM) is a weighted average of
externally-based product margins. It is based on market data collected by
Chem Systems in their quarterly market analyses, then weighted based on
BP's product portfolio. While it does not cover our entire portfolio, it
includes a broader range of products than our previous indicator. Amongst
the products and businesses covered in the CIM are olefins and derivatives,
aromatics and derivatives, linear alpha olefins, acetic acid, vinyl acetate
monomer and nitriles. Not included are fabrics and fibres, plastic
fabrications, poly alpha olefins, anhydrides, engineering polymers and
carbon fibres, speciality intermediates, and the remaining parts of the
solvents and acetyls businesses.
(e) Provisional. The data for the fourth quarter is based on two months'
actuals and one month of provisional data.
(f) Restated following review of product margins with Chem Systems.
US dollar/sterling exchange rates
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
Average rates for the period 1.44 1.45 1.44 1.51
Period-end rates 1.45 1.49 1.45 1.49
======= ======= ====== =======
Page 20
BP p.l.c. AND SUBSIDIARIES
SPECIAL ITEMS AND ACQUISITION AMORTIZATION BY SEGMENT (PRE-TAX)
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Special items
Exploration and Production
UK 70 5 70 117
Rest of Europe - - - -
USA 77 25 77 312
Rest of World 175 19 175 95
------- ------- ------- -------
322 49 322 524
------- ------- ------- -------
Gas and Power
UK - - - -
Rest of Europe - - - -
USA - - - -
Rest of World - - - -
------- ------- ------- -------
- - - -
------- ------- ------- -------
Refining and Marketing
UK 70 59 131 73
Rest of Europe 44 38 167 89
USA 63 188 82 358
Rest of World 36 59 107 75
------- ------- ------- -------
213 344 487 595
------- ------- ------- -------
Chemicals
UK 89 1 89 6
Rest of Europe 33 18 41 20
USA (16) 18 (16) 65
Rest of World - 185 - 185
------- ------- ------- -------
106 222 114 276
------- ------- ------- -------
Other businesses and corporate
UK - 63 - 119
Rest of Europe - - - -
USA 73 173 73 369
Rest of World - - - -
------- ------- ------- -------
73 236 73 488
------- ------- ------- -------
Total special items before interest 714 851 996 1,883
Interest - bond redemption charges - 111 62 111
------- ------- ------- -------
Total 714 962 1,058 1,994
======= ======= ======= =======
Acquisition amortization
Exploration and Production
UK 41 30 151 85
USA 323 373 1,474 1,058
Rest of World 33 10 134 31
------- ------- ------- -------
397 413 1,759 1,174
------- ------- ------- -------
Refining and Marketing
UK 99 104 394 208
USA 81 81 324 232
------- ------- ------- -------
180 185 718 440
======= ======= ======= =======
Total 577 598 2,477 1,614
======= ======= ======= =======
Page 21
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The financial statements and notes included in this Report for the year
ended December 31, 2001 do not constitute statutory accounts. It is an
extract from the 2001 annual accounts (except Notes 16 and 17), approved by
a duly appointed and authorized committee of the Board of Directors at the
Results Committee on February 12, 2002, but not yet delivered to the UK
Registrar of Companies; the report of the auditors on those accounts was
unqualified. The accounting policies used in preparing the 2001 annual
accounts are consistent with those applied in the preceding annual
accounts. The results for the three months ended December 31, 2001 and 2000
are unaudited and in the opinion of management include all adjustments
necessary for a fair presentation of the results for the periods presented.
The 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 December 31, 2000 included in BP's Annual Report on Form
20-F filed with the Securities and Exchange Commission.
2. Business held for resale
The sale of Foseco was completed during the third quarter of 2001. The
other former Burmah Castrol chemicals businesses originally categorized as
businesses held for resale will for now be retained and have been included
within the Chemicals segment from July 1, 2001.
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
3. Turnover
By business
Exploration and Production 5,336 8,965 28,229 30,942
Gas and Power 7,452 8,553 39,208 21,013
Refining and Marketing 26,528 32,708 120,233 107,883
Chemicals 2,481 2,754 11,515 11,247
Other businesses and corporate 216 51 783 249
------- ------ -------- --------
42,013 53,031 199,968 171,334
Less: sales between businesses 5,196 8,469 25,750 23,272
------- ------ -------- --------
Group excluding joint ventures 36,817 44,562 174,218 148,062
Sales of joint ventures 297 284 1,171 13,764
------- ------ -------- --------
37,114 44,846 175,389 161,826
======= ====== ======== ========
By geographical area
UK 11,432 11,982 47,618 45,400
Rest of Europe 8,657 11,217 36,701 20,553
USA 16,039 19,023 84,696 71,084
Rest of World 7,285 9,406 33,911 31,014
------- ------ -------- --------
43,413 51,628 202,926 168,051
Less: Sales between areas 6,596 7,066 28,708 19,989
------- ------ -------- --------
Group excluding joint ventures 36,817 44,562 174,218 148,062
======= ====== ======== ========
Sales of joint ventures
UK 13 - 13 3,314
Rest of Europe 30 - 30 12,316
USA 82 87 318 270
Rest of World 172 197 810 686
------- ------ -------- --------
297 284 1,171 16,586
Less: sales between areas - - - 2,822
------- ------ -------- --------
297 284 1,171 13,764
======= ====== ======== ========
4. Production taxes
UK petroleum revenue tax 147 162 600 707
Overseas production taxes 189 402 1,089 1,354
------- ------ -------- --------
336 564 1,689 2,061
======= ====== ======== ========
Page 22
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
5. Exploration expense
Exploration and Production
UK 9 13 14 36
Rest of Europe 7 10 22 42
USA 82 72 256 257
Rest of World 46 62 188 264
------- ------- ------- -------
144 157 480 599
======= ======= ======= =======
6. 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 inventory holding gains and losses. These are the
difference between the amount that is charged to cost of sales on a
first-in, first-out (FIFO) basis of inventory valuation and the amount
charged to cost of sales based on the average cost of supplies incurred
during the period. The former basis is used in arriving at the historical
cost result whereas the latter basis is used in arriving at the replacement
cost result. For further discussion of replacement cost operating profit
see Item 3 of BP`s Annual Report on Form 20-F for the year ended December
31, 2000.
7. Total replacement cost operating profit
By business
Exploration and Production
UK 571 1,082 3,424 4,043
Rest of Europe 144 232 748 826
USA 440 1,678 4,629 5,114
Rest of World 500 1,246 3,616 4,029
------- ------- ------- -------
1,655 4,238 12,417 14,012
------- ------- ------- -------
Gas and Power
UK (29) 1 58 14
Rest of Europe 61 54 181 148
USA 45 29 265 104
Rest of World 29 99 17 305
------- ------- ------- -------
106 183 521 571
------- ------- ------- -------
Refining and Marketing
UK (197) (71) (475) 173
Rest of Europe 227 354 762 753
USA 59 388 2,637 2,211
Rest of World 303 121 701 386
------- ------- ------- -------
392 792 3,625 3,523
------- ------- ------- -------
Chemicals
UK (75) 10 (216) (71)
Rest of Europe (1) 15 185 286
USA (9) 56 62 581
Rest of World 18 (163) 97 (36)
------- ------- ------- -------
(67) (82) 128 760
------- ------- ------- -------
Other businesses and corporate (179) (368) (556) (1,110)
------- ------- ------- -------
1,907 4,763 16,135 17,756
======= ======= ======= =======
By geographical area
UK 375 834 2,668 3,773
Rest of Europe 388 608 1,814 2,013
USA 243 2,026 7,049 7,296
Rest of World 901 1,295 4,604 4,674
------- ------- ------- -------
1,907 4,763 16,135 17,756
======= ======= ======= =======
Page 23
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
8. Analysis of exceptional items
Profit (loss) on sale of fixed assets and
businesses and termination of operations
Exploration and Production (85) (96) 195 119
Gas and Power - 2 (1) 1
Refining and Marketing 18 (87) 471 98
Chemicals (130) 28 (297) (212)
Other businesses and corporate 159 231 167 214
------- ------- ------- -------
Exceptional items before taxation (38) 78 535 220
Taxation charge (126) 94 (505) (292)
------- ------- ------- -------
Exceptional items after taxation (164) 172 30 (72)
======= ======= ======= =======
9. Inventory holding gains (losses)
Exploration and Production (5) (1) (6) 4
Gas and Power (20) (11) (81) 11
Refining and Marketing (1,138) (520) (1,583) 620
Chemicals (134) (29) (230) 93
------- ------- ------- -------
(1,297) (561) (1,900) 728
======= ======= ======= =======
10.Interest expense
Group interest payable (a) 286 532 1,308 1,482
Capitalized (7) (42) (81) (119)
------- ------- ------- -------
279 490 1,227 1,363
Joint ventures 21 19 70 78
Associated undertakings 26 42 135 140
Unwinding of discount on provisions 46 60 196 189
Change in discount rate for provisions 42 - 42 -
------- ------- ------- -------
414 611 1,670 1,770
======= ======= ======= =======
(a)Includes charges relating to the
early redemption of debt (a) - 111 62 111
------- ------- ------- -------
11.Charge for taxation
United Kingdom 174 334 940 1,207
Overseas 363 908 4,077 3,765
------- ------- ------- -------
537 1,242 5,017 4,972
======= ======= ======= =======
Page 24
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
12.Return on average capital employed (ROACE)
Replacement cost basis
Replacement cost profit before
exceptional items 1,056 2,799 9,880 11,214
Interest 414 611 1,670 1,770
Minority shareholders' interest 26 17 73 92
------- ------- ------- -------
1,496 3,427 11,623 13,076
====== ======= ======= =======
Average capital employed 97,025 94,402 95,829 86,214*
ROACE 6.2% 15% 12.1% 16%
------- ------- ------- -------
Acquisitions and special items adjustments
Acquisition amortization 577 598 2,477 1,614
Special items (post tax) 571 582 775 1,343
Average capital employed 18,275 20,762 19,225 20,755*
ROACE - pro forma basis adjusted
for special items 13.4% 25% 19.4% 23%
------- ------- ------- -------
Historical cost basis
Historical cost profit after exceptional items (405) 2,410 8,010 11,870
Interest 414 611 1,670 1,770
Minority shareholders' interest 26 17 73 92
------- ------- ------- -------
35 3,038 9,753 13,732
======= ======= ======= =======
ROACE 0.1% 13% 10.2% 17%
======= ======= ======= =======
* As the acquisition of ARCO was completed in April 2000 and Burmah Castrol
in July 2000, the average capital employed for 2000 has been calculated as
the average of the four discrete quarters.
13.Analysis of changes in net debt
Opening balance
Finance debt 20,474 19,688 21,190 14,544
Less:Cash 1,438 1,607 1,170 1,331
Current asset investments 519 862 661 220
------- ------- ------- -------
Opening net debt 18,517 17,219 19,359 12,993
------- ------- ------- -------
Closing balance
Finance debt 21,417 21,190 21,417 21,190
Less:Cash 1,358 1,170 1,358 1,170
Current asset investments 450 661 450 661
------- ------- ------- -------
Closing net debt 19,609 19,359 19,609 19,359
------- ------- ------- -------
Decrease (increase) in net debt (1,092) (2,140) (250) (6,366)
======= ======= ======= =======
Movement in cash/bank overdrafts (63) (430) 241 (122)
(Decrease) increase in current
asset investments (65) (158) (211) 452
Net cash (inflow) outflow from
financing (excluding share capital) (941) (1,661) (128) 1,374
Other movements (17) (24) (36) (44)
Debt acquired (8) - (55) (8,072)
------- ------- ------- -------
Movements in net debt before
exchange effects (1,094) (2,273) (189) (6,412)
Exchange adjustments 2 133 (61) 46
------- ------- ------- -------
Decrease (increase) in net debt (1,092) (2,140) (250) (6,366)
======= ======= ======= =======
Page 25
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
14.Net debt ratio - net debt: net debt + equity
Gross debt 21,417 21,190 21,417 21,190
Cash and current asset investments 1,808 1,831 1,808 1,831
------- ------- ------- -------
Net debt 19,609 19,359 19,609 19,359
Equity 74,994 74,001 74,94 74,001
------- ------- ------- -------
Net debt ratio 21% 21% 21% 21%
Acquisition adjustment (a) 17,986 20,463 17,986 20,463
------- ------- ------- -------
Net debt ratio - pro forma basis (b) 26% 27% 26% 27%
======= ======= ======= =======
---------------
(a) Acquisition adjustment refers to the fixed asset revaluation adjustment and
goodwill consequent upon the ARCO and Burmah Castrol acquisitions.
(b) Based on equity excluding the fixed asset revaluation adjustment and
goodwill resulting from the ARCO and Burmah Castrol acquisitions.
15.Movement in BP shareholders' interest $ million
Balance at December 31, 2000 73,416
Profit for the period 8,010
Distribution to shareholders (4,935)
Currency translation differences (908)
Employee share schemes 181
Share buyback (1,281)
Redemption of ARCO preference shares (116)
-------
Balance at December 31, 2001 74,367
=======
Page 26
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
16. Consolidated statement of cash flows presented on a SFAS95 format
Three months ended Year ended
December 31 December 31
(Unaudited)
2001 2000 2001 2000
------------------ ------------------
($ million)
Operating activities
Profit after taxation (379) 2,427 8,083 11,962
Adjustments to reconcile profits after tax to
net cash provided by operating activities
Depreciation and amounts provided 2,430 2,228 8,750 7,449
Exploration expenditure written off 85 73 238 264
Share of profits of joint ventures and
associates less dividends received (52) (78) (60) (377)
(Profit) loss on sale of businesses
and fixed assets 36 (78) (537) (196)
Working capital movement (see analysis below) 2,087 (578) 1,319 (2,848)
Other (71) (393) (225) (1,650)
------- ------- ------- -------
Net cash provided by operating activities 4,136 3,601 17,568 14,604
------- ------- ------- -------
Investing activities
Capital expenditures (3,695) (3,731) (12,295) (10,220)
Acquisitions, net of cash acquired (602) (1,561) (1,210) (6,265)
Investment in associated undertakings (179) (88) (586) (985)
Net investment in joint ventures (220) - (497) (218)
Proceeds from disposal of assets 846 1,319 2,903 11,362
------- ------- ------- -------
Net cash used in investing activities (3,850) (4,061) (11,685) (6,326)
------- ------- ------- -------
Financing activities
Net proceeds from shares (repurchased) issued (86) (602) (1,100) (2,039)
Proceeds from long-term financing 267 96 1,296 1,680
Repayments of long-term financing (434) (1,359) (2,602) (2,353)
Net increase (decrease) in short-term debt 1,108 2,924 1,434 (701)
Dividends paid - BP shareholders (1,232) (1,183) (4,827) (4,415)
- Minority shareholders (38) (4) (54) (24)
------- ------- ------- -------
Net cash used in financing activities (415) (128) (5,853) (7,852)
------- ------- ------- -------
Currency translation differences
relating to cash and cash equivalents (20) (50) (53) (50)
------- ------- ------- -------
(Increase) decrease in cash and
cash equivalents (149) (638) (23) 376
------- ------- ------- -------
Cash and cash equivalents at
beginning of period 1,957 2,469 1,831 1,455
------- ------- ------- -------
Cash and cash equivalents at end of period 1,808 1,831 1,808 1,831
======= ======= ======= =======
Analysis of working capital movement
Decrease (increase) in inventories 1,368 (185) 1,490 (1,449)
Decrease (increase) in receivables 1,202 (1,904) 1,905 (5,501)
(Decrease) increase in current
liabilities (excluding finance debt) (483) 1,511 (2,076) 4,102
------- ------- ------- -------
Total working capital movement 2,087 (578) 1,319 (2,848)
======= ======= ======= =======
Page 27
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17.Restatement of 2000 segment information
On January 1, 2001 the natural gas liquids (NGL) operations located in the
USA and Canada, were moved to the Gas and Power business from Refining and
Marketing. Comparative information for 2000 has been restated as shown below.
First Second Third Fourth
Quarter Quarter Quarter Quarter 2000
-------------------------------------------------
($ million)
Replacement cost operating profit
Previously reported Refining and Marketing total 674 1,271 1,048 915 3,908
Previously reported Gas and Power total 52 26 48 60 186
=================================================
Restated as:
Refining and Marketing
UK 33 148 63 (71) 173
Rest of Europe 36 130 233 354 753
USA 409 814 600 388 2,211
Rest of World 106 91 68 121 386
------------------------------------------------
584 1,183 964 792 3,523
=================================================
Gas and Power
UK (5) 4 14 1 14
Rest of Europe 55 11 28 54 148
USA 14 47 14 29 104
Rest of World 78 52 76 99 305
------------------------------------------------
142 114 132 183 571
=================================================
Turnover
Previously reported Refining and Marketing total 20,778 25,120 32,555 34,362 112,815
Previously reported Gas and Power total 2,173 2,772 4,237 6,899 16,081
=================================================
Restated as:
Refining and Marketing 19,696 24,168 31,311 32,708 107,883
Gas and Power 3,255 3,724 5,481 8,553 21,013
=================================================
Page 28
BP p.l.c. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - continued
17.Restatement of 2000 segment information - concluded
First Second Third Fourth
Quarter Quarter Quarter Quarter 2000
-------------------------------------------------
($ million)
Exceptional items
Previously reported Refining and Marketing total 19 5 160 (85) 99
Previously reported Gas and Power total - - - - -
=================================================
Restated as:
Refining and Marketing 19 5 161 (87) 98
Gas and Power - - (1) 2 1
=================================================
Capital expenditure and acquisitions
Previously reported Refining and Marketing total 1,102 518 5,504 1,626 8,750
Previously reported Gas and Power total 7 57 114 101 279
=================================================
Restated as:
Refining and Marketing
UK 889 29 4,098 393 5,409
Rest of Europe 44 65 1,275 328 1,712
USA 76 334 30 652 1,092
Rest of World 87 76 90 227 480
-------------------------------------------------
1,096 504 5,493 1,600 8,693
=================================================
Gas and Power
UK 2 28 78 86 194
Rest of Europe 1 1 1 13 16
USA 1 30 37 5 73
Rest of World 9 12 9 23 53
-------------------------------------------------
13 71 125 127 336
=================================================
Page 29
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: February 19, 2002 /S/ D. J. PEARL
............................
D. J. PEARL
Deputy Company Secretary