EARNINGS PART 2 / BP Announces Third Quarter Result 35% Down on a Year Ago;
The British Petroleum Company p.l.c. and Subsidiaries Summarized Group
Results - Unaudited
Third Second Third
Quarter Quarter Quarter Nine Months
1997A 1998 1998 1998 1997A
$ million $ million
1,100 737 560 Exploration and Production 2,162 3,723
434 493 449 Refining and Marketing 1,328 1,229
229 167 109 Chemicals 469 626
Other businesses
(5) (11) (29) and corporate (50) (29)
Replacement cost
1,758 1,386 1,089 operating profit 3,909 5,549
Profit (loss) on sale
or termination of
(17) 12 740 operations (Note 4) 752 (25)
Replacement cost profit
1,741 1,398 1,829 before interest and tax 4,661 5,524
Inventory holding
58 (116) (87) gains (losses) (Note 6) (724) (472)
Historical cost profit
1,799 1,282 1,742 before interest and tax 3,937 5,052
137 135 160 Interest expense 421 405
1,662 1,147 1,582 Profit before taxation 3,516 4,647
491 355 376 Taxation (Note 7) 1,072 1,566
1,171 792 1,206 Profit after taxation 2,444 3,081
Minority shareholders'
2 1 3 interest 4 13
1,169 791 1,203 Profit for the period 2,440 3,068
Distribution to
517 576 580 shareholders 1,704 1,518
$1.24 $0.82 $1.24 Earnings per ADR $2.53 $3.24
A Restated - for further information see Note 1.
Replacement Cost Results
Third Second Third
Quarter Quarter Quarter Nine Months
1997A 1998 1998 1998 1997A
$ million $ million
Historical cost profit
1,169 791 1,203 for the period 2,440 3,068
Inventory holding
(58) 116 87 (gains) losses 724 472
Replacement cost profit
1,111 907 1,290 for the period 3,164 3,540
Exceptional items,
15 (12) (604) net of tax (623) 23
Replacement cost profit
1,126 895 686 before exceptional items 2,541 3,563
Earnings per ADR
On replacement cost profit
$1.18 $0.93 $0.71 before exceptional items $2.64 $3.76
A Restated - for further information see Note 1.
Analysis of Replacement Cost Operating Profit
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
By business
Exploration and Production
478 459 321 U.K. 1,224 1,627
127 69 56 Rest of Europe 208 351
313 150 103 U.S. 512 1,291
182 59 80 Rest of World 218 454
1,100 737 560 2,162 3,723
Refining and Marketing
62 67 103 U.K. 248 166
125 153 188 Rest of Europe 465 303
129 154 105 U.S. 305 302
118 119 53 Rest of World 310 458
434 493 449 1,328 1,229
Chemicals
110 65 1 U.K. 153 262
81 63 61 Rest of Europe 203 236
29 33 31 U.S. 84 88
9 6 16 Rest of World 29 40
229 167 109 469 626
Other businesses
(5) (11) (29) and corporate (50) (29)
1,758 1,386 1,089 3,909 5,549
By geographical area
642 558 366 U.K. 1,516 1,990
328 292 320 Rest of Europe 891 885
468 328 235 U.S. 870 1,656
320 208 168 Rest of World 632 1,018
1,758 1,386 1,089 3,909 5,549
Includes the following
amounts for the BP/Mobil
European JV and
273 279 327 associated undertakings 929 760
Summarized Group Balance Sheet
September 30, December 31,
1998 1997A
$ million
Fixed assets
Intangible assets 2,137 1,785
Tangible assets 30,789 29,457
Investments 8,503 8,055
41,429 39,297
Current assets
Inventories 2,205 2,809
Receivables 9,777 10,066
Investments 77 88
Cash at bank and in hand 257 188
12,316 13,151
Current liabilities - falling
due within one year
Finance debt 2,205 1,887
Accounts payable and accrued liabilities 11,969 12,798
Net current liabilities (1,858) (1,534)
Total assets less current liabilities 39,571 37,763
Non-current liabilities
Finance debt 5,277 5,330
Accounts payable and accrued liabilities 1,907 2,254
Provisions for liabilities and charges 6,873 6,660
Net assets 25,514 23,519
Minority shareholders' interest 65 93
BP shareholders' interest 25,449 23,426
A Restated - for further information see Note 1.
Summarized Group Cash Flow Statement
Third Second Third
Quarter Quarter Quarter Nine Months
1997A 1998 1998 1998 1997A
$ million $ million
Net cash inflow from
operating activities
1,523 1,259 1,142 (Note 8) 3,990 6,967
Dividends from
165 124 295 joint ventures 478 243
Dividends from
44 145 78 associated undertakings 251 355
Servicing of finance and
returns on investments
19 31 22 Interest received 73 91
(105) (166) (111) Interest paid (444) (398)
5 2 14 Dividends received 16 8
Net cash outflow from
servicing of finance and
(81) (133) (75) returns on investments (355) (299)
Taxation
(92) (61) (56) U.K. corporation tax (163) (196)
(91) (234) (188) Overseas tax (485) (593)
(183) (295) (244) Tax paid (648) (789)
Capital expenditure
(1,286) (1,221) (1,246) Payments for fixed assets (3,851) (3,568)
Proceeds from the sale
16 147 14 of fixed assets 213 70
Net cash inflow for
(1,270) (1,074) (1,232) capital expenditure (3,638) (3,498)
Acquisitions and disposals
Investments in
(26) (12) (54) associated undertakings (328) (99)
Net investment in BP/Mobil
96 18 (61) European joint venture (33) (706)
Proceeds from the sale
21 - 703 of businesses 744 70
Net cash inflow (outflow)
for acquisitions
91 6 588 and disposals 383 (735)
(186) (220) (232) Equity dividends paid (690) (852)
103 (188) 320 Net cash (outflow) inflow (229) 1,392
- (131) 415 Financing (Note 9) (290) 1,048
Management of
8 (15) (4) liquid resources (12) 13
95 (42) (91) Increase (decrease) in cash 73 331
103 (188) 320 (229) 1,392
A Restated - for further information see Note 1.
Capital Expenditure and Acquisitions
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
By business
Exploration and Production
377 429 411 U.K. 1,231 1,130
69 18 26 Rest of Europe 61 170
277 315 297 U.S. 914 797
291 259 192 Rest of World 764 855
1,014 1,021 926 2,970 2,952
Refining and Marketing
39 38 25 U.K. 84 111
100 73 148 Rest of Europe 333 235
54 72 91 U.S. 208 126
82 75 81 Rest of World 202 206
275 258 345 827 678
Chemicals
45 74 71 U.K. 190 130
10 10 20 Rest of Europe 254 31
10 9 11 U.S. 23 36
9 19 22 Rest of World 53 20
74 112 124 520 217
Other businesses
94 23 18 and corporate 328 138
1,457 1,414 1,413 4,645 3,985
By geographical area
541 563 516 U.K. 1,777 1,485
181 102 198 Rest of Europe 691 442
352 396 405 U.S. 1,157 975
383 353 294 Rest of World 1,020 1,083
1,457 1,414 1,413 4,645 3,985
Includes the following
amounts for the BP/Mobil
129 106 161 European joint venture 399 326
Notes
1. New accounting standard
With effect from January 1, 1998 the group has adopted the U.K. Financial
Reporting Standard No. 9 'Associates and Joint Ventures' (FRS9). This
standard requires joint ventures to be accounted by the gross equity method.
As a consequence of adopting FRS9 the BP/Mobil European joint venture is now
accounted for using the gross equity method rather than by proportional
consolidation. Comparative figures for previous periods have been restated to
conform with the 1998 presentation. Previously reported profit for the period
and shareholders' interest are unaffected by this change in treatment.
In addition FRS9 also expands the information reported in the income
statement. The new standard requires, inter alia, income from associated
undertakings and joint ventures to be shown before charging interest expense
and interest expense to be included in the amount reported for the group.
Interest expense for associated undertakings for prior periods previously
included in replacement cost operating profit was as follows:
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
1 1 4 Exploration and Production 5 5
2 1 2 Refining and Marketing 5 5
5 4 9 Chemicals 18 16
Other businesses
4 4 3 and corporate 12 10
12 10 18 40 36
Comparative figures for previous periods have been restated to conform
with the 1998 presentation.
2. Turnover
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
By business
2,963 2,397 2,231 Exploration and Production 7,334 9,829
10,946 7,725 8,463 Refining and Marketing 24,438 35,238
1,292 1,122 1,039 Chemicals 3,387 3,897
Other businesses
29 25 22 and corporate 70 71
15,230 11,269 11,755 35,229 49,035
Less:
1,170 973 815 Sales between businesses 2,785 3,610
14,060 10,296 10,940 Group excluding JV 32,444 45,425
Sales of BP/Mobil
4,439 3,635 4,232 European JV 11,428 12,388
18,499 13,931 15,172 43,872 57,813
By geographical area
7,370 5,077 5,688 U.K. 16,809 23,088
1,391 1,096 1,061 Rest of Europe 3,272 5,572
3,894 3,112 3,207 U.S. 9,365 12,419
2,156 2,201 2,141 Rest of World 6,643 9,128
14,811 11,486 12,097 36,089 50,207
Less:
751 1,190 1,157 Sales between areas 3,645 4,782
14,060 10,296 10,940 32,444 45,425
Sales of BP/Mobil
European JV
1,317 900 861 U.K. 2,645 3,305
3,897 3,436 3,974 Rest of Europe 10,722 11,327
5,214 4,336 4,835 13,367 14,632
Less:
775 701 603 Sales between areas 1,939 2,244
4,439 3,635 4,232 11,428 12,388
3. Operating profits are after charging:
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
Exploration expense
17 8 11 U.K. 26 41
2 5 3 Rest of Europe 23 15
41 20 21 U.S. 64 109
15 28 15 Rest of World 64 75
75 61 50 177 240
Production taxes (i)
46 5 7 U.K. petroleum revenue tax 35 238
164 107 107 Overseas production taxes 331 544
210 112 114 366 782
(i) Production taxes are charged against Exploration and Production's
operating profit and are not included in the charge for taxation in Note 7.
4. Analysis of exceptional items
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
(2) 15 236 Exploration and Production 249 (15)
(2) (7) 417 Refining and Marketing 412 24
- - 91 Chemicals 91 (10)
Other businesses and
(13) 4 (4) corporate - (24)
Exceptional items
(17) 12 740 before taxationA 752 (25)
2 - (136) Taxation (charge) credit (129) 2
Exceptional items
(15) 12 604 after taxation 623 (23)
AIncludes the following
amounts for the BP/Mobil
- - 110 European JV 110 -
5. 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.
6. Inventory holding gains (losses)
- (3) - Exploration and Production (8) 15
62 (89) (71) Refining and Marketing (652) (476)
(4) (24) (16) Chemicals (64) (11)
58 (116) (87) (724) (472)
Includes the following
amounts for the BP/Mobil
European JV and
50 (56) (36) associated undertakings (229) (132)
7. Charge for taxation
126 142 137 U.K. 409 509
365 213 239 Overseas 663 1,057
491 355 376 1,072 1,566
Includes the following
amounts for the BP/Mobil
European JV and
43 23 33 associated undertakings 102 103
8. Net cash inflow from operating activities
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
Reconciliation of
historical cost profit
before interest and tax to
net cash inflow
from operating activities
Historical cost profit
1,799 1,282 1,742 before interest and tax 3,937 5,052
641 650 599 Depreciation 1,916 1,995
Exploration expenditure
17 21 7 written off 48 82
Share of (profits) losses
of BP/Mobil European joint
venture and
(323) (223) (401) associated undertakingsA (810) (628)
(49) (34) (45) Interest and other income (109) (114)
(Profit) loss on sale or
17 (12) (630) termination of operations (642) 25
(Increase) decrease
in working capital
(579) (425) (130) and other items (350) 555
Net cash inflow from
1,523 1,259 1,142 operating activities 3,990 6,967
AIncludes the following
amounts of depreciation
of the BP/Mobil
62 79 76 European JV 224 207
9. Analysis of cash flow
Third Second Third
Quarter Quarter Quarter Nine Months
1997 1998 1998 1998 1997
$ million $ million
Financing
(60) (659) (194) Long-term borrowing (1,011) (109)
Repayments of
114 670 216 long-term borrowing 965 290
(64) (252) 304 Short-term borrowing (559) (231)
Repayments of
45 118 113 short-term borrowing 365 1,157
35 (123) 439 (240) 1,107
Issue of
(35) (8) (24) ordinary share capital (50) (59)
Net cash (inflow) outflow
- (131) 415 from financing (290) 1,048
10. Analysis of changes in net debt
Opening balance
6,623 7,743 7,885 Finance debt 7,217 7,659
415 399 334 Less: Cash 188 161
Current asset
106 90 78 investments 88 98
6,102 7,254 7,473 Opening net debt 6,941 7,400
Closing balance
6,544 7,885 7,482 Finance debt 7,482 6,544
481 334 257 Less: Cash 257 481
Current asset
112 78 77 investments 77 112
5,951 7,473 7,148 Closing net debt 7,148 5,951
(Increase) decrease
151 (219) 325 in net debt (207) 1,449
Movement in cash/bank
95 (43) (90) overdraft 73 331
(Decrease) increase in
8 (15) (4) current asset investments (12) 13
Net cash (inflow) outflow
from financing
35 (123) 439 (excluding share capital) (240) 1,107
(19) (12) (9) Other movements (21) (30)
Movement in net debt before
119 (193) 336 exchange effects (200) 1,421
32 (26) (11) Exchange adjustments (7) 28
(Increase) decrease
151 (219) 325 in net debt (207) 1,449
11. Ordinary shares
Shares in issue at September 30, 1998 = 5,855.9 million (equivalent to
976.0 million ADRs). Average number of shares in issue during January-
September 1998 (excluding shares held by the Employee Share Ownership Plans)
= 5,780.2 million (equivalent to 963.4 million ADRs).
12. Statutory accounts
The financial information shown in this publication is unaudited and does
not constitute statutory accounts. The 1997 statutory accounts have been
delivered to the U.K. Registrar of Companies; the report of the auditors on
those accounts was unqualified.
Notes:
Replacement cost operating profit, which excludes inventory holding gains
and losses, is used in discussing business results, and is before interest
expense, taxation and minority interest.
The BP Group consolidated financial statements are prepared in pounds
sterling in accordance with U.K. accounting principles. Figures given in U.S.
dollars in this publication have been translated from pound sterling amounts
as follows:
(i) Income and cash flow information, and capital expenditure and
acquisitions - at average exchange rates.
1998 1997
January-June pound = $1.65 pound = $1.63
January-September pound = $1.65 pound = $1.63
Quarterly translation of income items to dollars is achieved by
translating the sterling results for the cumulative period of the year at the
average rate for that period and deducting therefrom the amount calculated for
the previous cumulative period.
(ii) Balance sheets - at period end exchange rates
1998 1997
December 31 pound = $1.66
September 30 pound = $1.70 pound = $1.62
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