REG - BP PLC - 2Q16 Part 1 of 1 <Origin Href="QuoteRef">BP.L</Origin> - Part 2
26/07/2016 07:05
- Part 2: For the preceding part double click ID:nRSZ1829Fa
shareholders' Non-controlling Total
$ million equity interests equity
At 1 January 2015 111,441 1,201 112,642
Total comprehensive income (2,219) 75 (2,144)
Dividends (3,400) (42) (3,442)
Share-based payments, net of tax 300 - 300
Share of equity-accounted entities' change in equity, net of tax (3) - (3)
Transactions involving non-controlling interests - (2) (2)
At 30 June 2015 106,119 1,232 107,351
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Financial statements (continued)
Group balance sheet
30 June 31 December
$ million 2016 2015
Non-current assets
Property, plant and equipment 125,946 129,758
Goodwill 11,288 11,627
Intangible assets 18,444 18,660
Investments in joint ventures 8,324 8,412
Investments in associates 11,221 9,422
Other investments 1,002 1,002
Fixed assets 176,225 178,881
Loans 500 529
Trade and other receivables 2,193 2,216
Derivative financial instruments 5,286 4,409
Prepayments 1,020 1,003
Deferred tax assets 4,573 1,545
Defined benefit pension plan surpluses 774 2,647
190,571 191,230
Current assets
Loans 242 272
Inventories 16,398 14,142
Trade and other receivables 22,672 22,323
Derivative financial instruments 2,934 4,242
Prepayments 1,941 1,838
Current tax receivable 374 599
Other investments 107 219
Cash and cash equivalents 23,517 26,389
68,185 70,024
Assets classified as held for sale (Note 3) 4,380 578
72,565 70,602
Total assets 263,136 261,832
Current liabilities
Trade and other payables 36,561 31,949
Derivative financial instruments 2,139 3,239
Accruals 4,918 6,261
Finance debt 5,120 6,944
Current tax payable 1,310 1,080
Provisions 5,637 5,154
55,685 54,627
Liabilities directly associated with assets classified as held for sale (Note 3) 2,525 97
58,210 54,724
Non-current liabilities
Other payables 13,870 2,910
Derivative financial instruments 4,268 4,283
Accruals 502 890
Finance debt 50,607 46,224
Deferred tax liabilities 7,797 9,599
Provisions 23,693 35,960
Defined benefit pension plan and other post-retirement benefit plan deficits 10,081 8,855
110,818 108,721
Total liabilities 169,028 163,445
Net assets 94,108 98,387
Equity
BP shareholders' equity 92,726 97,216
Non-controlling interests 1,382 1,171
Total equity 94,108 98,387
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Financial statements (continued)
Condensed group cash flow statement
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Operating activities
(8,612) (865) (3,376) Profit (loss) before taxation (4,241) (6,336)
Adjustments to reconcile profit (loss) before taxation
to net cash provided by operating activities
Depreciation, depletion and amortization and
4,571 3,891 3,897 exploration expenditure written off 7,788 8,499
Impairment and (gain) loss on sale of businesses
153 (325) (27) and fixed assets (352) 212
Earnings from equity-accounted entities,
(654) (24) (485) less dividends received (509) (930)
Net charge for interest and other finance
13 168 113 expense less net interest paid 281 142
255 259 204 Share-based payments 463 17
Net operating charge for pensions and other post-
retirement benefits, less contributions and
(30) 32 (56) benefit payments for unfunded plans (24) (87)
10,700 735 4,565 Net charge for provisions, less payments 5,300 11,088
Movements in inventories and other current and
492 (1,727) (863) non-current assets and liabilities (2,590) (3,366)
(602) (272) (89) Income taxes paid (361) (1,095)
6,286 1,872 3,883 Net cash provided by operating activities 5,755 8,144
Investing activities
(4,529) (4,381) (4,283) Capital expenditure (8,664) (9,165)
(54) (4) (8) Investment in joint ventures (12) (123)
(218) (93) (196) Investment in associates (289) (305)
308 238 153 Proceeds from disposal of fixed assets 391 961
Proceeds from disposal of businesses, net of
224 911 291 cash disposed 1,202 1,311
45 46 6 Proceeds from loan repayments 52 48
(4,224) (3,283) (4,037) Net cash used in investing activities (7,320) (7,273)
Financing activities
83 2,738 2,710 Proceeds from long-term financing 5,448 7,871
(542) (3,559) (1,318) Repayments of long-term financing (4,877) (2,849)
(13) (112) 300 Net increase (decrease) in short-term debt 188 712
- 70 368 Net increase (decrease) in non-controlling interests 438 -
(1,691) (1,099) (1,169) Dividends paid - BP shareholders (2,268) (3,400)
(30) (9) (43) - non-controllinginterests (52) (42)
(2,193) (1,971) 848 Net cash provided by (used in) financing activities (1,123) 2,292
Currency translation differences relating to cash
286 42 (226) and cash equivalents (184) (337)
155 (3,340) 468 Increase (decrease) in cash and cash equivalents (2,872) 2,826
32,434 26,389 23,049 Cash and cash equivalents at beginning of period 26,389 29,763
32,589 23,049 23,517 Cash and cash equivalents at end of period 23,517 32,589
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Financial statements (continued)
Notes
1. Basis of preparation
The interim financial information included in this report has been prepared in accordance with IAS 34 'Interim Financial
Reporting'.
The results for the interim periods are unaudited and, in the opinion of management, include all adjustments necessary for
a fair presentation of the results for each period. All such adjustments are of a normal recurring nature. This report
should be read in conjunction with the consolidated financial statements and related notes for the year ended 31 December
2015 included in the BP Annual Report and Form 20-F 2015.
The directors have made an assessment of the group's ability to continue as a going concern and consider it appropriate to
adopt the going concern basis of accounting in preparing these interim financial statements.
BP prepares its consolidated financial statements included within BP Annual Report and Form 20-F on the basis of
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), IFRS
as adopted by the European Union (EU) and in accordance with the provisions of the UK Companies Act 2006. IFRS as adopted
by the EU differs in certain respects from IFRS as issued by the IASB. The differences have no impact on the group's
consolidated financial statements for the periods presented.
The financial information presented herein has been prepared in accordance with the accounting policies expected to be used
in preparing BP Annual Report and Form 20-F 2016, which do not differ significantly from those used in BP Annual Report and
Form 20-F 2015.
In BP Annual Report and Form 20-F 2015 we disclosed a significant estimate or judgement relating to provisions arising from
the Gulf of Mexico oil spill in 2010. At that time, no reliable estimate could be made of any business economic loss (BEL)
claims under the Plaintiffs' Steering Committee (PSC) settlement that were not yet processed or processed but not yet paid,
except where an eligibility notice had been issued and was not subject to appeal by BP within the Deepwater Horizon Court
Supervised Settlement Program claims facility (DHCSSP). A reliable estimate could also not be made in relation to
securities-related litigation and other litigation, including economic loss and property damage claims from parties
excluded from and/or who opted out of the PSC settlement. No amounts were provided for these items and they were disclosed
as contingent liabilities.
As a result of developments during the second quarter of 2016 sufficient information now exists in order to make a reliable
estimate of the amounts that BP will pay relating to all outstanding BEL claims under the DHCSSP, securities class actions
and economic loss and property damage claims from parties who were excluded from and/or opted out of the PSC settlement.
Liabilities have therefore been recognized in the financial statements for these items. See Note 2 for further
information.
2. Gulf of Mexico oil spill
(a) Overview
The information presented in this note should be read in conjunction with BP Annual Report and Form 20-F 2015 - Financial
statements - Note 2 and Legal proceedings on page 237 and on page 33 of this report.
Following significant progress in resolving outstanding claims arising from the 2010 Deepwater Horizon accident and oil
spill, a reliable estimate has now been determined for all remaining material liabilities arising from the incident, and an
additional charge has been recorded this quarter.
The group income statement includes a pre-tax charge of $5,229 million for the second quarter and $6,146 million for the
first half 2016 in relation to the Gulf of Mexico oil spill. The cumulative pre-tax income statement charge since the
incident, in April 2010, amounts to $61,597 million. It is now possible to reliably estimate the cost of resolving all
outstanding business economic loss claims under the Plaintiffs' Steering Committee (PSC) settlement and the cost of
resolving economic loss and property damage claims from individuals and businesses that either opted out of the PSC
settlement and/or were excluded from that settlement. The second-quarter increase in provisions of $4,935 million is
primarily attributable to the recognition of additional provisions for these claims. The remainder of the income statement
charge for the second quarter relates predominantly to the cost of the securities claims settlement with the certified
class of post-explosion ADS purchasers, which was agreed in June 2016 and recognized in Other payables, and finance costs
relating to the unwinding of discounting effects. The charge for the half year also includes charges recorded in the first
quarter for increases in provisions for certain business economic loss claims under the PSC settlement and the settlement
of certain civil claims outside of the PSC settlement and additional finance costs.
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Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
The amounts set out below reflect the impacts on the financial statements of the Gulf of Mexico oil spill for the periods
presented. The income statement, balance sheet and cash flow statement impacts are included within the relevant line items
in those statements as set out below.
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Income statement
10,747 794 5,106 Production and manufacturing expenses 5,900 11,070
(10,747) (794) (5,106) Profit (loss) before interest and taxation (5,900) (11,070)
8 123 123 Finance costs 246 17
(10,755) (917) (5,229) Profit (loss) before taxation (6,146) (11,087)
3,601 251 2,533 Taxation 2,784 3,713
(7,154) (666) (2,696) Profit (loss) for the period (3,362) (7,374)
Further to recording a charge for all remaining material liabilities relating to the Gulf of Mexico oil spill, the overall
tax position was reviewed and the tax credit for the quarter reflects tax on the charge taken and other positive tax
adjustments.
30 June 31 December
$ million 2016 2015
Balance sheet
Current assets
Trade and other receivables 359 686
Prepayments 5 -
Current liabilities
Trade and other payables (2,813) (693)
Accruals - (40)
Provisions (3,427) (3,076)
Net current assets (liabilities) (5,876) (3,123)
Non-current assets
Deferred tax assets 7,771 -
Non-current liabilities
Other payables (13,268) (2,057)
Accruals - (186)
Provisions (3,063) (13,431)
Deferred tax - 5,200
Net non-current assets (liabilities) (8,560) (10,474)
Net assets (liabilities) (14,436) (13,597)
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Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Cashflow statement - Operating activities
(10,755) (917) (5,229) Profit (loss) before taxation (6,146) (11,087)
Adjustments to reconcile profit (loss)
before taxation to net cash provided by
operating activities
Net charge for interest and other finance
8 123 123 expense, less net interest paid 246 17
10,607 757 4,466 Net charge for provisions, less payments 5,223 10,834
Movements in inventories and other current
34 (1,088) (971) and non-current assets and liabilities (2,059) (561)
(106) (1,125) (1,611) Pre-tax cash flows (2,736) (797)
Net cash from operating activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of
$1,398 million and an outflow of $2,523 million in the second quarter and first half of 2016 respectively. For the same
periods in 2015, the amounts were an outflow of $106 million and an outflow of $797 million respectively.
Trust fund
During the first half of 2016, the remaining cash in the Deepwater Horizon Oil Spill Trust (the Trust) was exhausted and BP
commenced paying claims and other costs previously funded from the Trust. For certain costs, these payments are made by BP
into a qualified settlement fund, the fund then distributes the amounts to the claimant; $860 million was paid into a
qualified settlement fund during the second quarter ($1,399 million during the first half).
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Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
(b) Provisions and contingent liabilities
Provisions
BP had recorded provisions relating to the Gulf of Mexico oil spill in relation to environmental expenditure, litigation
and claims, and Clean Water Act penalties. Movements in the second quarter, all of which relate to litigation and claims
provisions, are presented in the table below.
$ million Total
At 1 April 2016 2,869
Net increase (decrease) in provision 4,935
Utilization - paid by BP (469)
- paid by settlement fund or Trust (845)
At 30 June 2016 6,490
Of which - current 3,427
- non-current 3,063
Movements in each class of provision during the first half are presented in the table below.
Litigation Clean
and Water Act
Environmental claims penalties Total
$ million
At 1 January 2016 5,919 6,459 4,129 16,507
Net increase (decrease) in provision - 5,715 - 5,715
Unwinding of discount 52 25 38 115
Reclassified to Other payables (5,970) (3,741) (4,167) (13,878)
Utilization - paid by BP (1) (491) - (492)
- paid by settlement fund or
Trust - (1,477) - (1,477)
At 30 June 2016 - 6,490 - 6,490
Environmental
The environmental provisions relating to natural resource damage costs and the early restoration framework agreement were
reclassified to Other payables during the first quarter following approval by the Court in April 2016 of the Consent Decree
between the United States, the Gulf states and BP. Remaining amounts related to early restoration were paid during the
second quarter.
Litigation and claims
The litigation and claims provision includes amounts for the future cost of resolving claims by individuals and businesses
for damage to real or personal property, lost profits or impairment of earning capacity and loss of subsistence use of
natural resources. Claims administration costs and legal costs have also been provided for.
At 31 December 2015, the litigation and claims provision included amounts provided under the state claims settlement
agreement with the Gulf states in relation to state claims that had not yet been paid. These amounts were reclassified to
Other payables during the first quarter and are payable over 18 years; $0.9 billion was paid in July 2016.
Litigation and claims - PSC settlement
BP has provided for its best estimate of the cost associated with the 2012 PSC settlement.
Prior to the second quarter of 2016, no reliable estimate could be made of any business economic loss claims not yet
processed or processed but not yet paid, except where an eligibility notice had been issued and was not subject to appeal
by BP within the DHCSSP.
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Financial statements (continued)
Notes
2. Gulf of Mexico oil spill (continued)
The DHCSSP continues to process business economic loss claims and, for certain lower-value claims, simplified processing
procedures have been implemented by the DHCSSP. In recent quarters the pace of processing claims has accelerated and, by
the end of the second quarter, over three quarters of the total claims had been determined. Furthermore, the number of
claims that had been processed using specialized frameworks for particular industry groups, that include the application of
the revised policy for matching revenue and expenses, had increased significantly. Additional insight has also been
obtained into the population of undetermined claims, including the industry groupings they fall within, which enhances BP's
understanding of the claims yet to be determined. The combination of these factors provides sufficient information to
reliably estimate the liability for the remaining business economic loss claims. Accordingly, a provision has been
established for these items as at 30 June 2016. Amounts to settle these claims are expected to be paid by 2019.
The provision has been determined based upon an expected value of the remaining business economic loss claims. Claims are
determined by the DHCSSP in accordance with the PSC settlement agreement. The amounts ultimately payable may differ from
the amount provided.
Litigation and claims - Other claims
During the second quarter, significant progress was also made in resolving economic loss and property damage claims from
individuals and businesses that either opted out of the PSC settlement and/or were excluded from that settlement. On 14
July 2016 the federal district court issued an order, details of which are described in Legal proceedings on page 33.
Following this court order, the vast majority of these claims have now been either resolved or dismissed. Therefore, an
estimate of the cost of the remaining claims, most of which is expected to be paid by the end of 2016, is also recognized
in provisions.
Clean Water Act penalties
The provision previously recognized for penalties under Section 311 of the Clean Water Act, as determined by the civil
settlement with the United States, was reclassified to Other payables during the first quarter following approval by the
Court of the Consent Decree. The amount is payable in instalments over 15 years, commencing April 2017. The unpaid balance
of this penalty accrues interest at a fixed rate.
Further information on provisions is provided in BP Annual Report and Form 20-F 2015 - Financial statements - Note 2.
Contingent liabilities
Any further outstanding Deepwater Horizon related claims are not expected to have a material impact on the group's
financial performance.
3. Non-current assets held for sale
On 15 January 2016 BP and Rosneft announced that they had signed definitive agreements to dissolve the German refining
joint operation Ruhr Oel GmbH (ROG). The restructuring, which is expected to be completed in 2016, will result in Rosneft
taking ownership of ROG's interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries. In exchange, BP will take
sole ownership of the Gelsenkirchen refinery and the solvent production facility DHC Solvent Chemie. Assets and associated
liabilities relating to BP's share of ROG's interests in the Bayernoil, MiRO Karlsruhe and PCK Schwedt refineries are
classified as held for sale in the group balance sheet.
On 10 June 2016 BP and Det norske oljeselskap announced the creation of Aker BP ASA, an independent oil and gas company.
Under the terms of the proposed transaction, which is expected to be completed in 2016, the BP Norge AS and Det norske
businesses will combine and be renamed Aker BP ASA. The transaction will result in Aker BP ASA being owned by current Det
norske shareholder Aker (40%), other Det norske shareholders (30%) and BP (30%). Assets and associated liabilities relating
to BP Norge AS are classified as held for sale in the group balance sheet at 30 June 2016.
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Financial statements (continued)
Notes
4. Analysis of replacement cost profit (loss) before interest and tax and
reconciliation to profit (loss) before taxation
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
228 (1,205) (109) Upstream (1,314) 600
1,628 1,880 1,405 Downstream 3,285 3,711
510 66 246 Rosneft 312 693
(11,202) (1,074) (5,525) Other businesses and corporate(a) (6,599) (11,833)
(8,836) (333) (3,983) (4,316) (6,829)
(39) 40 (121) Consolidation adjustment - UPII* (81) (168)
(8,875) (293) (4,104) RC profit (loss) before interest and tax* (4,397) (6,997)
Inventory holding gains (losses)*
(3) (31) 85 Upstream 54 15
606 (97) 1,058 Downstream 961 1,306
24 (4) 45 Rosneft (net of tax) 41 62
(8,248) (425) (2,916) Profit (loss) before interest and tax (3,341) (5,614)
289 394 414 Finance costs 808 570
Net finance expense relating to pensions
75 46 46 and other post-retirement benefits 92 152
(8,612) (865) (3,376) Profit (loss) before taxation (4,241) (6,336)
RC profit (loss) before interest and tax
(10,641) (1,256) (5,394) US (6,650) (11,138)
1,766 963 1,290 Non-US 2,253 4,141
(8,875) (293) (4,104) (4,397) (6,997)
(a) Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information.
5. Sales and other operating revenues
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
By segment
11,036 7,431 8,176 Upstream 15,607 22,666
56,737 34,552 42,809 Downstream 77,361 106,185
512 396 422 Other businesses and corporate 818 940
68,285 42,379 51,407 93,786 129,791
Less: sales and other operating revenues
between segments
5,590 3,633 4,301 Upstream 7,934 11,153
402 118 475 Downstream 593 578
242 116 189 Other businesses and corporate 305 490
6,234 3,867 4,965 8,832 12,221
Third party sales and other operating revenues
5,446 3,798 3,875 Upstream 7,673 11,513
56,335 34,434 42,334 Downstream 76,768 105,607
270 280 233 Other businesses and corporate 513 450
62,051 38,512 46,442 Total sales and other operating revenues 84,954 117,570
By geographical area
21,824 13,576 17,701 US 31,277 40,665
44,535 27,146 32,482 Non-US 59,628 84,546
66,359 40,722 50,183 90,905 125,211
Less: sales and other operating revenues
4,308 2,210 3,741 between areas 5,951 7,641
62,051 38,512 46,442 84,954 117,570
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Financial statements (continued)
Notes
6. Production and similar taxes
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
33 18 67 US 85 67
140 (4) 191 Non-US 187 468
173 14 258 272 535
7. Earnings per share and shares in issue
Basic earnings per ordinary share (EpS) amounts are calculated by dividing the profit for the period attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
The calculation of EpS is performed separately for each discrete quarterly period, and for the year-to-date period. As a
result, the sum of the discrete quarterly EpS amounts in any particular year-to-date period may not be equal to the EpS
amount for the year-to-date period.
For the diluted EpS calculation the weighted average number of shares outstanding during the period is adjusted for the
number of shares that are potentially issuable in connection with employee share-based payment plans using the treasury
stock method.
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Results for the period
Profit (loss) for the period
(5,823) (583) (1,419) attributable to BP shareholders (2,002) (3,221)
1 - 1 Less: preference dividend 1 1
Profit (loss) attributable to BP
(5,824) (583) (1,420) ordinary shareholders (2,003) (3,222)
Number of shares (thousand)(a)(b)
Basic weighted average number of
18,299,877 18,468,632 18,685,199 shares outstanding 18,577,135 18,287,176
3,049,979 3,078,105 3,114,200 ADS equivalent 3,096,189 3,047,862
Weighted average number of shares
outstanding used to calculate
18,299,877 18,468,632 18,685,199 diluted earnings per share 18,577,135 18,287,176
3,049,979 3,078,105 3,114,200 ADS equivalent 3,096,189 3,047,862
18,318,924 18,635,861 18,777,156 Shares in issue at period-end 18,777,156 18,318,924
3,053,154 3,105,976 3,129,526 ADS equivalent 3,129,526 3,053,154
(a) Excludes treasury shares and includes certain shares that will be issued in the future under employee share-based payment plans.
(b) If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.
8. Dividends
Dividends payable
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 16 September 2016
to shareholders and American Depositary Share (ADS) holders on the register on 5 August 2016. The corresponding amount in
sterling is due to be announced on 6 September 2016, calculated based on the average of the market exchange rates for the
four dealing days commencing on 31 August 2016. Holders of ADSs are expected to receive $0.600 per ADS (less applicable
fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of
new ordinary shares and ADS holders in the form of new ADSs. Details of the second-quarter dividend and timetable are
available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
Top of page 24
Financial statements (continued)
Notes
8. Dividends (continued)
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 2016 2015
Dividends paid per ordinary share
10.000 10.000 10.000 cents 20.000 20.000
6.530 7.012 6.917 pence 13.929 13.200
60.00 60.00 60.00 Dividends paid per ADS (cents) 120.00 120.00
Scrip dividends
18.9 154.4 134.4 Number of shares issued (millions) 288.8 34.6
134 739 695 Value of shares issued ($ million) 1,434 243
9. Net debt*
Net debt ratio*
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
57,104 54,012 55,727 Gross debt 55,727 57,104
Fair value (asset) liability of hedges related
315 (967) (1,279) to finance debt(a) (1,279) 315
57,419 53,045 54,448 54,448 57,419
32,589 23,049 23,517 Less: cash and cash equivalents 23,517 32,589
24,830 29,996 30,931 Net debt 30,931 24,830
107,351 97,289 94,108 Equity 94,108 107,351
18.8% 23.6% 24.7% Net debt ratio 24.7% 18.8%
Analysis of changes in net debt
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Opening balance
57,731 53,168 54,012 Finance debt 53,168 52,854
Fair value (asset) liability of hedges related to
(174) 379 (967) finance debt(a) 379 (445)
32,434 26,389 23,049 Less: cash and cash equivalents 26,389 29,763
25,123 27,158 29,996 Opening net debt 27,158 22,646
Closing balance
57,104 54,012 55,727 Finance debt 55,727 57,104
Fair value (asset) liability of hedges related to
315 (967) (1,279) finance debt(a) (1,279) 315
32,589 23,049 23,517 Less: cash and cash equivalents 23,517 32,589
24,830 29,996 30,931 Closing net debt 30,931 24,830
293 (2,838) (935) Decrease (increase) in net debt (3,773) (2,184)
Movement in cash and cash equivalents
(131) (3,382) 694 (excluding exchange adjustments) (2,688) 3,163
Net cash outflow (inflow) from financing
472 933 (1,692) (excluding share capital and dividends) (759) (5,734)
(1) 359 36 Other movements 395 10
340 (2,090) (962) Movement in net debt before exchange effects (3,052) (2,561)
(47) (748) 27 Exchange adjustments (721) 377
293 (2,838) (935) Decrease (increase) in net debt (3,773) (2,184)
(a) Derivative financial instruments entered into for the purpose of managing interest rate and foreign currency exchange risk associated with net debt with a fair value liability position of $1,440 million (first quarter 2016 liability of $1,225 million and second quarter 2015 liability of $1,357 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.
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Financial statements (continued)
Notes
10. Inventory valuation
A provision of $689 million was held at 30 June 2016 ($677 million at 31 March 2016 and $590 million at 30 June 2015) to
write inventories down to their net realizable value. The net movement charged to the income statement during the second
quarter 2016 was $12 million (first quarter 2016 was a credit of $616 million and second quarter 2015 was a credit of $210
million).
11. Statutory accounts
The financial information shown in this publication, which was approved by the Board of Directors on 25 July 2016, is
unaudited and does not constitute statutory financial statements. BP Annual Report and Form 20-F 2015 has been filed with
the Registrar of Companies in England and Wales. The report of the auditor on those accounts was unqualified and did not
contain a statement under section 498(2) or section 498(3) of the UK Companies Act 2006.
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Additional information
Capital expenditure on an accruals basis*(a)
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Capital expenditure on an accruals basis
4,492 3,944 3,919 Organic capital expenditure* 7,863 8,929
159 - 276 Inorganic capital expenditure* 276 159
4,651 3,944 4,195 8,139 9,088
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Organic capital expenditure by segment
Upstream
991 1,060 754 US 1,814 2,098
2,962 2,583 2,699 Non-US 5,282 5,858
3,953 3,643 3,453 7,096 7,956
Downstream
190 110 191 US 301 335
290 155 237 Non-US 392 489
480 265 428 693 824
Other businesses and corporate
6 1 12 US 13 22
53 35 26 Non-US 61 127
59 36 38 74 149
4,492 3,944 3,919 7,863 8,929
Organic capital expenditure by geographical area
1,187 1,171 957 US 2,128 2,455
3,305 2,773 2,962 Non-US 5,735 6,474
4,492 3,944 3,919 7,863 8,929
(a) The definitions of Capital expenditure on an accruals basis and Inorganic capital expenditure have been revised to exclude asset exchanges as they are non-cash transactions. Previously reported amounts have been amended with no significant impact on the comparative periods shown. Previously reported amounts for Organic capital expenditure are unchanged.
Reconciliation of additions to non-current assets to capital expenditure on an accruals basis
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
5,297 3,935 3,993 Additions to non-current assets(a) 7,928 9,566
9 6 12 Additions to other investments 18 11
Element of business combinations not related to
1 - - non-current assets - 17
(649) 54 190 (Additions to) reductions in decommissioning asset 244 (471)
(7) (51) - Asset exchanges (51) (35)
4,651 3,944 4,195 Capital expenditure on an accruals basis 8,139 9,088
(a) Includes additions to property, plant and equipment; goodwill; intangible assets; investments in joint ventures; and investments in associates.
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Additional information (continued)
Non-operating items*
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Upstream
Impairment and gain (loss) on sale of businesses
(194) 4 - and fixed assets 4 (307)
- - - Environmental and other provisions - 11
(67) (263) (3) Restructuring, integration and rationalization costs (266) (248)
21 13 28 Fair value gain (loss) on embedded derivatives 41 62
4 (109) (18) Other(a) (127) 4
(236) (355) 7 (348) (478)
Downstream
Impairment and gain (loss) on sale of businesses
68 321 23 and fixed assets 344 134
(7) - (3) Environmental and other provisions (3) (7)
(182) (35) (54) Restructuring, integration and rationalization costs (89) (210)
- - - Fair value gain (loss) on embedded derivatives - -
(1) - (3) Other (3) (2)
(122) 286 (37) 249 (85)
Rosneft
Impairment and gain (loss) on sale of businesses
- - - and fixed assets - -
- - - Environmental and other provisions - -
- - - Restructuring, integration and rationalization costs - -
- - - Fair value gain (loss) on embedded derivatives - -
- - - Other - -
- - - - -
Other businesses and corporate
Impairment and gain (loss) on sale of businesses
(27) - 4 and fixed assets 4 (39)
(4) - (35) Environmental and other provisions (35) (4)
(23) (48) (11) Restructuring, integration and rationalization costs (59) (29)
- - - Fair value gain (loss) on embedded derivatives - -
(10,747) (794) (5,106) Gulf of Mexico oil spill(b) (5,900) (11,070)
- (54) (1) Other (55) -
(10,801) (896) (5,149) (6,045) (11,142)
(11,159) (965) (5,179) Total before interest and taxation (6,144) (11,705)
(8) (123) (123) Finance costs(b) (246) (17)
(11,167) (1,088) (5,302) Total before taxation (6,390) (11,722)
3,681 310 2,483 Taxation credit (charge) 2,793 3,823
(7,486) (778) (2,819) Total after taxation for period (3,597) (7,899)
(a) First quarter and first half 2016 principally relate to BP's share of impairment losses recognized by equity-accounted entities.
(b) See Note 2 for further details regarding costs relating to the Gulf of Mexico oil spill.
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Additional information (continued)
Non-GAAP information on fair value accounting effects
Second First Second First First
quarter quarter quarter half half
2015 2016 2016 $ million 2016 2015
Favourable (unfavourable) impact relative to
management's measure of performance
(30) (103) (145) Upstream (248) (20)
(117) (219) (71) Downstream (290) (229)
(147) (322) (216) (538) (249)
54 83 68 Taxation credit (charge) 151 95
(93) (239) (148) (387) (154)
BP uses derivative instruments to manage the economic exposure relating to inventories above normal operating requirements
of crude oil, natural gas and petroleum products. Under IFRS, these inventories are recorded at historical cost. The
related derivative instruments, however, are required to be recorded at fair value with gains and losses recognized in
income because hedge accounting is either not permitted or not followed, principally due to the impracticality of
effectiveness testing requirements. Therefore, measurement differences in relation to recognition of gains and losses
occur. Gains and losses on these inventories are not recognized until the
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