REG - BP PLC - 2Q17 Part 1 of 1 <Origin Href="QuoteRef">BP.L</Origin> - Part 3
01/08/2017 07:07
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697 (1,991)
Other comprehensive income 342 1,933 (1,196) 2,275 (958)
Total comprehensive income 498 3,425 (2,586) 3,923 (2,906)
Attributable to
BP shareholders 472 3,363 (2,604) 3,835 (2,955)
Non-controlling interests 26 62 18 88 49
498 3,425 (2,586) 3,923 (2,906)
Top of page 16
BP p.l.c. Group results
Second quarter and half year 2017
Group statement of changes in equity
BP
shareholders' Non-controlling Total
$ million equity interests equity
At 1 January 2017 95,286 1,557 96,843
Total comprehensive income 3,835 88 3,923
Dividends (2,850) (77) (2,927)
Share-based payments, net of tax 334 - 334
Share of equity-accounted entities' change in equity, net of tax 198 - 198
Transactions involving non-controlling interests - 90 90
At 30 June 2017 96,803 1,658 98,461
BP
shareholders' Non-controlling Total
$ million equity interests equity
At 1 January 2016 97,216 1,171 98,387
Total comprehensive income (2,955) 49 (2,906)
Dividends (2,268) (52) (2,320)
Share-based payments, net of tax 447 - 447
Share of equity-accounted entities' change in equity, net of tax 65 - 65
Transactions involving non-controlling interests 221 214 435
At 30 June 2016 92,726 1,382 94,108
Top of page 17
BP p.l.c. Group results
Second quarter and half year 2017
Group balance sheet
30 June 31 December
$ million 2017 2016
Non-current assets
Property, plant and equipment 130,715 129,757
Goodwill 11,395 11,194
Intangible assets 17,399 18,183
Investments in joint ventures 8,550 8,609
Investments in associates 15,408 14,092
Other investments 1,048 1,033
Fixed assets 184,515 182,868
Loans 540 532
Trade and other receivables 1,425 1,474
Derivative financial instruments 4,446 4,359
Prepayments 1,076 945
Deferred tax assets 5,114 4,741
Defined benefit pension plan surpluses 1,281 584
198,397 195,503
Current assets
Loans 268 259
Inventories 16,449 17,655
Trade and other receivables 20,350 20,675
Derivative financial instruments 2,218 3,016
Prepayments 1,222 1,486
Current tax receivable 864 1,194
Other investments 77 44
Cash and cash equivalents 23,270 23,484
64,718 67,813
Total assets 263,115 263,316
Current liabilities
Trade and other payables 36,642 37,915
Derivative financial instruments 2,295 2,991
Accruals 4,221 5,136
Finance debt 7,385 6,634
Current tax payable 1,716 1,666
Provisions 2,583 4,012
54,842 58,354
Non-current liabilities
Other payables 12,556 13,946
Derivative financial instruments 4,210 5,513
Accruals 489 469
Finance debt 55,619 51,666
Deferred tax liabilities 7,435 7,238
Provisions 20,501 20,412
Defined benefit pension plan and other post-retirement benefit plan deficits 9,002 8,875
109,812 108,119
Total liabilities 164,654 166,473
Net assets 98,461 96,843
Equity
BP shareholders' equity 96,803 95,286
Non-controlling interests 1,658 1,557
Total equity 98,461 96,843
Top of page 18
BP p.l.c. Group results
Second quarter and half year 2017
Condensed group cash flow statement
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Operating activities
Profit (loss) before taxation 928 2,115 (3,376) 3,043 (4,241)
Adjustments to reconcile profit (loss) before
taxation to net cash provided by operating
activities
Depreciation, depletion and amortization and
exploration expenditure written off 4,546 4,103 3,897 8,649 7,788
Impairment and (gain) loss on sale of businesses
and fixed assets (146) 408 (27) 262 (352)
Earnings from equity-accounted entities,
less dividends received (103) (220) (485) (323) (509)
Net charge for interest and other finance
expense, less net interest paid 84 252 113 336 281
Share-based payments 156 162 204 318 463
Net operating charge for pensions and other post-
retirement benefits, less contributions and
benefit payments for unfunded plans 54 (73) (56) (19) (24)
Net charge for provisions, less payments 183 (177) 4,565 6 5,300
Movements in inventories and other current and
non-current assets and liabilities 3 (3,600) (863) (3,597) (2,590)
Income taxes paid (815) (856) (89) (1,671) (361)
Net cash provided by operating activities 4,890 2,114 3,883 7,004 5,755
Investing activities
Expenditure on property, plant and equipment,
intangible and other assets (4,181) (3,823) (4,283) (8,004) (8,664)
Acquisitions, net of cash acquired (123) (42) - (165) -
Investment in joint ventures (10) (20) (8) (30) (12)
Investment in associates (174) (183) (196) (357) (289)
Total cash capital expenditure (4,488) (4,068) (4,487) (8,556) (8,965)
Proceeds from disposal of fixed assets 312 188 153 500 391
Proceeds from disposal of businesses, net of
cash disposed 140 73 291 213 1,202
Proceeds from loan repayments 19 14 6 33 52
Net cash used in investing activities (4,017) (3,793) (4,037) (7,810) (7,320)
Financing activities
Proceeds from long-term financing 1,720 3,713 2,710 5,433 5,448
Repayments of long-term financing (1,463) (917) (1,318) (2,380) (4,877)
Net increase (decrease) in short-term debt (299) 315 300 16 188
Net increase (decrease) in non-controlling interests 51 30 368 81 438
Dividends paid - BP shareholders (1,546) (1,304) (1,169) (2,850) (2,268)
- non-controlling interests (62) (15) (43) (77) (52)
Net cash provided by (used in) financing activities (1,599) 1,822 848 223 (1,123)
Currency translation differences relating to cash
and cash equivalents 202 167 (226) 369 (184)
Increase (decrease) in cash and cash equivalents (524) 310 468 (214) (2,872)
Cash and cash equivalents at beginning of period 23,794 23,484 23,049 23,484 26,389
Cash and cash equivalents at end of period 23,270 23,794 23,517 23,270 23,517
Top of page 19
BP p.l.c. Group results
Second quarter and half year 2017
Notes
Note 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
2016 included in BP Annual Report and Form 20-F 2016.
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 2017, which do not differ significantly from those used in BP Annual Report and
Form 20-F 2016.
Note 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 2016 - Financial
statements - Note 2 and Legal proceedings on page 261.
The group income statement includes a pre-tax charge for the second quarter of $347 million to reflect the latest estimate
for claims, including business economic loss claims, and associated administration costs, and $121 million for finance
costs relating to the unwinding of discounting effects. The equivalent amounts for the half year were $382 million and $247
million respectively. The cumulative pre-tax income statement charge since the incident, in April 2010, amounts to $63,214
million.
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
$ million 2017 2017 2016 2017 2016
Income statement
Production and manufacturing expenses 347 35 5,106 382 5,900
Profit (loss) before interest and taxation (347) (35) (5,106) (382) (5,900)
Finance costs 121 126 123 247 246
Profit (loss) before taxation (468) (161) (5,229) (629) (6,146)
Taxation 154 48 2,533 202 2,784
Profit (loss) for the period (314) (113) (2,696) (427) (3,362)
Top of page 20
BP p.l.c. Group results
Second quarter and half year 2017
Note 2. Gulf of Mexico oil spill (continued)
30 June 31 December
$ million 2017 2016
Balance sheet
Current assets
Trade and other receivables 172 194
Current liabilities
Trade and other payables (2,202) (3,056)
Provisions (955) (2,330)
Net current assets (liabilities) (2,985) (5,192)
Non-current assets
Deferred tax assets 3,001 2,973
Non-current liabilities
Other payables (12,151) (13,522)
Provisions - (112)
Deferred tax liabilities 5,294 5,119
Net non-current assets (liabilities) (3,856) (5,542)
Net assets (liabilities) (6,841) (10,734)
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Cashflow statement - Operating activities
Profit (loss) before taxation (468) (161) (5,229) (629) (6,146)
Adjustments to reconcile profit (loss) before
taxation to net cash provided by
operating activities
Net charge for interest and other finance
expense, less net interest paid 121 126 123 247 246
Net charge for provisions, less payments 298 (5) 4,466 293 5,223
Movements in inventories and other current
and non-current assets and liabilities (1,976) (2,254) (971) (4,230) (2,059)
Pre-tax cash flows (2,025) (2,294) (1,611) (4,319) (2,736)
Cash outflows in 2016 and 2017 include payments made under the 2012 agreement with the US government to resolve all federal
criminal claims arising from the incident and the 2016 consent decree and settlement agreement with the United States and
the five Gulf coast states. Included in the current quarter cash outflow are payments of $379 million and $490 million
relating to Clean Water Act penalties and natural resource damages settlements respectively. Net cash from operating
activities relating to the Gulf of Mexico oil spill, on a post-tax basis, amounted to an outflow of $2,025 million and
$4,319 million in the second quarter and first half of 2017 respectively. For the same periods in 2016, the amount was an
outflow of $1,398 million and $2,523 million respectively.
Top of page 21
BP p.l.c. Group results
Second quarter and half year 2017
Note 2. Gulf of Mexico oil spill (continued)
(b) Provisions and other payables
Provisions
Movements in the remaining provision, which relates to litigation and claims, are shown in the table below.
$ million
At 1 April 2017 1,350
Net increase in provision 337
Reclassified to other payables (94)
Utilization (638)
At 30 June 2017 955
Movements in the remaining provision during the first half are shown in the table below.
$ million
At 1 January 2017 2,442
Net increase in provision 362
Reclassified to other payables (690)
Utilization (1,159)
At 30 June 2017 955
The 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.
PSC settlement
The provision for the cost associated with the 2012 Plaintiffs' Steering Committee (PSC) settlement has been increased in
the second quarter to reflect the latest estimate for claims, including business economic loss claims and associated
administration costs. However, the amounts ultimately payable may differ from the amount provided and the timing of
payments is uncertain.
A significant number of claims determined by the settlement programme have been and may be appealed by BP and/or the
claimants. Depending upon the resolution of these claims, the amount payable may differ from what is currently provided
for. There is additional uncertainty in relation to the impact of the recent Fifth Circuit decision (on the policy
addressing the matching of revenue with expenses in relation to business economic loss claims), including on those business
economic loss claims that have not yet been determined and those that are under appeal within the settlement programme (see
Legal proceedings on page 35 for further details on the Fifth Circuit decision).
Amounts to resolve remaining claims under the PSC settlement are now expected to be substantially paid by the end of 2018.
The timing of payments is uncertain, and in particular, will be impacted by how long it takes to resolve claims that have
been appealed and may be appealed in the future.
Other payables
Other payables include amounts payable under the 2012 agreement with the US government to resolve all federal criminal
claims arising from the incident, amounts payable under the consent decree and settlement agreement with the United States
and the five Gulf coast states for natural resource damages, state claims and Clean Water Act penalties, BP's remaining
commitment to fund the Gulf of Mexico Research Initiative, and amounts payable for certain economic loss and property
damage claims.
Further information on provisions, other payables, and contingent liabilities is provided in BP Annual Report and Form
20-F 2016 - Financial statements - Note 2.
Top of page 22
BP p.l.c. Group results
Second quarter and half year 2017
Note 3. 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
$ million 2017 2017 2016 2017 2016
Upstream 795 1,256 (109) 2,051 (1,314)
Downstream 1,567 1,706 1,405 3,273 3,285
Rosneft 279 99 246 378 312
Other businesses and corporate(a) (721) (431) (5,525) (1,152) (6,599)
1,920 2,630 (3,983) 4,550 (4,316)
Consolidation adjustment - UPII* 135 (68) (121) 67 (81)
RC profit (loss) before interest and tax* 2,055 2,562 (4,104) 4,617 (4,397)
Inventory holding gains (losses)*
Upstream 1 (6) 85 (5) 54
Downstream (579) 98 1,058 (481) 961
Rosneft (net of tax) (8) (26) 45 (34) 41
Profit (loss) before interest and tax 1,469 2,628 (2,916) 4,097 (3,341)
Finance costs 487 460 414 947 808
Net finance expense relating to pensions and
other post-retirement benefits 54 53 46 107 92
Profit (loss) before taxation 928 2,115 (3,376) 3,043 (4,241)
RC profit (loss) before interest and tax
US 302 513 (5,394) 815 (6,650)
Non-US 1,753 2,049 1,290 3,802 2,253
2,055 2,562 (4,104) 4,617 (4,397)
(a) Includes costs related to the Gulf of Mexico oil spill. See Note 2 for further information.
Top of page 23
BP p.l.c. Group results
Second quarter and half year 2017
Note 4. Segmental analysis
Sales and other operating revenues Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
By segment
Upstream 10,493 11,327 8,176 21,820 15,607
Downstream 52,195 50,080 42,809 102,275 77,361
Other businesses and corporate 326 285 422 611 818
63,014 61,692 51,407 124,706 93,786
Less: sales and other operating revenues
between segments
Upstream 6,161 5,777 4,301 11,938 7,934
Downstream 208 (86) 475 122 593
Other businesses and corporate 134 138 189 272 305
6,503 5,829 4,965 12,332 8,832
Third party sales and other operating revenues
Upstream 4,332 5,550 3,875 9,882 7,673
Downstream 51,987 50,166 42,334 102,153 76,768
Other businesses and corporate 192 147 233 339 513
Total sales and other operating revenues 56,511 55,863 46,442 112,374 84,954
By geographical area
US 21,577 21,152 17,701 42,729 31,277
Non-US 41,103 40,020 32,482 81,123 59,628
62,680 61,172 50,183 123,852 90,905
Less: sales and other operating revenues
between areas 6,169 5,309 3,741 11,478 5,951
56,511 55,863 46,442 112,374 84,954
Depreciation, depletion and amortization Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Upstream
US 1,133 1,237 1,064 2,370 2,153
Non-US 2,090 2,054 1,993 4,144 4,097
3,223 3,291 3,057 6,514 6,250
Downstream
US 219 216 210 435 420
Non-US 274 279 279 553 546
493 495 489 988 966
Other businesses and corporate
US 16 16 20 32 35
Non-US 61 40 71 101 116
77 56 91 133 151
Total group 3,793 3,842 3,637 7,635 7,367
Note 5. Production and similar taxes
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
US 41 36 67 77 85
Non-US 148 270 191 418 187
189 306 258 495 272
Top of page 24
BP p.l.c. Group results
Second quarter and half year 2017
Note 6. 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
$ million 2017 2017 2016 2017 2016
Results for the period
Profit (loss) for the period attributable to
BP shareholders 144 1,449 (1,419) 1,593 (2,002)
Less: preference dividend 1 - 1 1 1
Profit (loss) attributable to BP ordinary
shareholders 143 1,449 (1,420) 1,592 (2,003)
Number of shares (thousand)(a)(b)
Basic weighted average number of
shares outstanding 19,686,613 19,518,500 18,685,199 19,602,785 18,577,135
ADS equivalent 3,281,102 3,253,083 3,114,200 3,267,130 3,096,189
Weighted average number of shares
outstanding used to calculate
diluted earnings per share 19,783,548 19,621,566 18,685,199 19,713,151 18,577,135
ADS equivalent 3,297,258 3,270,261 3,114,200 3,285,525 3,096,189
Shares in issue at period-end 19,738,566 19,664,528 18,777,156 19,738,566 18,777,156
ADS equivalent 3,289,761 3,277,421 3,129,526 3,289,761 3,129,526
(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.
Note 7. Dividends
Dividends payable
BP today announced an interim dividend of 10.00 cents per ordinary share which is expected to be paid on 22 September 2017
to shareholders and American Depositary Share (ADS) holders on the register on 11 August 2017. The corresponding amount in
sterling is due to be announced on 12 September 2017, calculated based on the average of the market exchange rates for the
four dealing days commencing on 6 September 2017. Holders of ADSs are expected to receive $0.600 per ADS (less applicable
fees). A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of
new ordinary shares and ADS holders in the form of new ADSs. Details of the second quarter dividend and timetable are
available at bp.com/dividends and details of the scrip dividend programme are available at bp.com/scrip.
Second First Second First First
quarter quarter quarter half half
2017 2017 2016 2017 2016
Dividends paid per ordinary share
cents 10.000 10.000 10.000 20.000 20.000
pence 7.756 8.159 6.917 15.915 13.929
Dividends paid per ADS (cents) 60.00 60.00 60.00 120.00 120.00
Scrip dividends
Number of shares issued (millions) 70.1 115.1 134.4 185.2 288.8
Value of shares issued ($ million) 420 642 695 1,062 1,434
Top of page 25
BP p.l.c. Group results
Second quarter and half year 2017
Note 8. Net Debt*
Net debt ratio * Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Gross debt 63,004 61,832 55,727 63,004 55,727
Fair value (asset) liability of hedges related
to finance debt(a) 60 597 (1,279) 60 (1,279)
63,064 62,429 54,448 63,064 54,448
Less: cash and cash equivalents 23,270 23,794 23,517 23,270 23,517
Net debt 39,794 38,635 30,931 39,794 30,931
Equity 98,461 99,282 94,108 98,461 94,108
Net debt ratio 28.8% 28.0% 24.7% 28.8% 24.7%
Analysis of changes in net debt Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Opening balance
Finance debt 61,832 58,300 54,012 58,300 53,168
Fair value (asset) liability of hedges related to
finance debt(a) 597 697 (967) 697 379
Less: cash and cash equivalents 23,794 23,484 23,049 23,484 26,389
Opening net debt 38,635 35,513 29,996 35,513 27,158
Closing balance
Finance debt 63,004 61,832 55,727 63,004 55,727
Fair value (asset) liability of hedges related to
finance debt(a) 60 597 (1,279) 60 (1,279)
Less: cash and cash equivalents 23,270 23,794 23,517 23,270 23,517
Closing net debt 39,794 38,635 30,931 39,794 30,931
Decrease (increase) in net debt (1,159) (3,122) (935) (4,281) (3,773)
Movement in cash and cash equivalents
(excluding exchange adjustments) (726) 143 694 (583) (2,688)
Net cash outflow (inflow) from financing
(excluding share capital and dividends) 42 (3,111) (1,692) (3,069) (759)
Other movements (13) (66) 36 (79) 395
Movement in net debt before exchange effects (697) (3,034) (962) (3,731) (3,052)
Exchange adjustments (462) (88) 27 (550) (721)
Decrease (increase) in net debt (1,159) (3,122) (935) (4,281) (3,773)
(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 $1,167 million (first quarter 2017 liability of $1,746 million and second quarter 2016 liability of $1,440 million) are not included in the calculation of net debt shown above as hedge accounting is not applied for these instruments.
Note 9. Inventory valuation
A provision of $635 million was held at 30 June 2017 ($499 million at 31 March 2017 and $689 million at 30 June 2016) to
write inventories down to their net realizable value. The net movement charged to the income statement during the second
quarter 2017 was $132 million (first quarter 2017 was a credit of $4 million and second quarter 2016 was a charge of $12
million).
Note 10. Statutory accounts
The financial information shown in this publication, which was approved by the Board of Directors on 31 July 2017, is
unaudited and does not constitute statutory financial statements. Audited financial information will be published in BP
Annual Report and Form 20-F2017. BP Annual Report and Form 20-F 2016 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.
Top of page 26
BP p.l.c. Group results
Second quarter and half year 2017
Additional information
Capital expenditure*
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Capital expenditure on a cash basis
Organic capital expenditure* 4,348 3,538 4,205 7,886 8,683
Inorganic capital expenditure*(a) 140 530 282 670 282
4,488 4,068 4,487 8,556 8,965
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Organic capital expenditure by segment
Upstream
US 805 641 948 1,446 2,195
Non-US 3,005 2,339 2,769 5,344 5,578
3,810 2,980 3,717 6,790 7,773
Downstream
US 149 152 193 301 312
Non-US 316 320 257 636 526
465 472 450 937 838
Other businesses and corporate
US 3 21 4 24 4
Non-US 70 65 34 135 68
73 86 38 159 72
4,348 3,538 4,205 7,886 8,683
Organic capital expenditure by geographical area
US 957 814 1,145 1,771 2,511
Non-US 3,391 2,724 3,060 6,115 6,172
4,348 3,538 4,205 7,886 8,683
(a) First quarter and first half 2017 include amounts paid to purchase an interest in the Zohr gas field in Egypt and in exploration blocks in Senegal.
Top of page 27
BP p.l.c. Group results
Second quarter and half year 2017
Non-operating items*
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Upstream
Impairment and gain (loss) on sale of businesses
and fixed assets(a) (18) (382) - (400) 4
Environmental and other provisions - - - - -
Restructuring, integration and rationalization costs (19) 2 (3) (17) (266)
Fair value gain (loss) on embedded derivatives 5 25 28 30 41
Other 11 (5) (18) 6 (127)
(21) (360) 7 (381) (348)
Downstream
Impairment and gain (loss) on sale of businesses
and fixed assets 156 (11) 23 145 344
Environmental and other provisions - - (3) - (3)
Restructuring, integration and rationalization costs (18) (65) (54) (83) (89)
Fair value gain (loss) on embedded derivatives - - - - -
Other - - (3) - (3)
138 (76) (37) 62 249
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
and fixed assets 8 (15) 4 (7) 4
Environmental and other provisions (3) - (35) (3) (35)
Restructuring, integration and rationalization costs (23) (8) (11) (31) (59)
Fair value gain (loss) on embedded derivatives - - - - -
Gulf of Mexico oil spill(b) (347) (35) (5,106) (382) (5,900)
Other 10 67 (1) 77 (55)
(355) 9 (5,149) (346) (6,045)
Total before interest and taxation (238) (427) (5,179) (665) (6,144)
Finance costs(b) (121) (126) (123) (247) (246)
Total before taxation (359) (553) (5,302) (912) (6,390)
Taxation credit (charge) 144 248 2,483 392 2,793
Total after taxation for period (215) (305) (2,819) (520) (3,597)
(a) First quarter and first half 2017 relate primarily to an impairment charge arising following the announcement on 3 April 2017 of the agreement to sell the Forties Pipeline System business to INEOS.
(b) See Note 2 for further details regarding costs relating to the Gulf of Mexico oil spill.
Top of page 28
BP p.l.c. Group results
Second quarter and half year 2017
Non-GAAP information on fair value accounting effects
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Favourable (unfavourable) impact relative to
management's measure of performance
Upstream 106 246 (145) 352 (248)
Downstream 16 40 (71) 56 (290)
122 286 (216) 408 (538)
Taxation credit (charge) (38) (79) 68 (117) 151
84 207 (148) 291 (387)
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 the
income statement. This is 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 commodity is sold in a
subsequent accounting period. Gains and losses on the related derivative commodity contracts are recognized in the income
statement, from the time the derivative commodity contract is entered into, on a fair value basis using forward prices
consistent with the contract maturity.
BP enters into physical commodity contracts to meet certain business requirements, such as the purchase of crude for a
refinery or the sale of BP's gas production. Under IFRS these physical contracts are treated as derivatives and are
required to be fair valued when they are managed as part of a larger portfolio of similar transactions. In addition,
derivative instruments are used to manage the price risk associated with certain future natural gas sales. Gains and losses
arising are recognized in the income statement from the time the derivative commodity contract is entered into.
IFRS require that inventory held for trading is recorded at its fair value using period-end spot prices, whereas any
related derivative commodity instruments are required to be recorded at values based on forward prices consistent with the
contract maturity. Depending on market conditions, these forward prices can be either higher or lower than spot prices,
resulting in measurement differences.
BP enters into contracts for pipelines and storage capacity, oil and gas processing and liquefied natural gas (LNG) that,
under IFRS, are recorded on an accruals basis. These contracts are risk-managed using a variety of derivative instruments
that are fair valued under IFRS. This results in measurement differences in relation to recognition of gains and losses.
The way that BP manages the economic exposures described above, and measures performance internally, differs from the way
these activities are measured under IFRS. BP calculates this difference for consolidated entities by comparing the IFRS
result with management's internal measure of performance. Under management's internal measure of performance the inventory
and capacity contracts in question are valued based on fair value using relevant forward prices prevailing at the end of
the period. The fair values of certain derivative instruments used to risk manage certain LNG and oil and gas contracts and
gas sales contracts, are deferred to match with the underlying exposure and the commodity contracts for business
requirements are accounted for on an accruals basis. We believe that disclosing management's estimate of this difference
provides useful information for investors because it enables investors to see the economic effect of these activities as a
whole. The impacts of fair value accounting effects, relative to management's internal measure of performance, are shown in
the table above. A reconciliation to GAAP information is set out below.
Second First Second First First
quarter quarter quarter half half
$ million 2017 2017 2016 2017 2016
Upstream
Replacement cost profit (loss) before interest and
tax adjusted for fair value accounting effects 689 1,010 36 1,699 (1,066)
Impact of fair value accounting effects 106 246 (145) 352 (248)
Replacement cost profit before interest and tax 795 1,256 (109) 2,051 (1,314)
Downstream
Replacement cost profit before interest and tax
adjusted for fair value accounting effects 1,551 1,666 1,476 3,217 3,575
Impact of fair value accounting effects 16 40 (71) 56 (290)
Replacement cost profit before interest and tax 1,567 1,706 1,405 3,273 3,285
Total group
Profit (loss) before interest and tax adjusted for
fair value accounting effects 1,347 2,342 (2,700) 3,689 (2,803)
Impact of fair value accounting effects 122 286 (216) 408 (538)
Profit (loss) before interest and tax 1,469 2,628 (2,916) 4,097 (3,341)
Top of page 29
BP p.l.c. Group results
Second quarter and half year 2017
Readily marketable inventory* (RMI)
30 June 31 December
$ million 2017 2016
RMI at fair value 4,387 5,952
Paid-up RMI* 2,470 2,705
Readily marketable inventory (RMI) is oil and oil products inventory held and price risk-managed by BP's integrated supply
and trading function (IST) which could be sold to generate funds if required. Paid-up RMI is RMI that BP has paid for.
We believe that disclosing the amounts of RMI and paid-up RMI is useful to investors as it enables them to better
understand and evaluate the group's inventories and liquidity position by enabling them to see the level of discretionary
inventory held by IST and to see builds or releases of liquid trading inventory.
See the Glossary on page 32 for a more detailed definition of RMI. RMI, RMI at fair value and paid-up RMI are non-GAAP
measures. A reconciliation of total inventory as reported on the group balance sheet to paid-up RMI is provided below.
30 June 31 December
$ million
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