BP 2006 Annual Report Download - page 113

BP Annual Report and Accounts 2006 111
4 Acquisitions
Acquisitions in 2006
BP made a number of minor acquisitions in 2006 for a total consideration of $256 million. All these business combinations were in the Gas, Power and
Renewables segment and were accounted for using the acquisition method of accounting. Fair value adjustments were made to the acquired assets
and liabilities and goodwill of $64 million arose on these acquisitions.
Acquisitions in 2005
BP made a number of minor acquisitions in 2005 for a total consideration of $84 million. All these business combinations were accounted for using the
acquisition method of accounting. No significant fair value adjustments were made to the acquired assets and liabilities. Goodwill of $27 million arose on
these acquisitions. There was also additional goodwill on the Solvay acquisition of $59 million (see below).
Acquisitions in 2004
On 2 November 2004, Solvay exercised its option to sell its interests in BP Solvay Polyethylene Europe and BP Solvay Polyethylene North America
to BP. Solvay held 50% of BP Solvay Polyethylene Europe and 51% of BP Solvay Polyethylene North America. On completion, the two entities,
which manufacture and market high-density polyethylene, became wholly owned subsidiaries of BP. The total consideration for the acquisition was
$1,391 million, subject to final closing adjustments. There were closing adjustments and selling costs in 2005 amounting to $59 million. These created
additional goodwill of $59 million, which was written off. Other minor acquisitions were made for a total consideration of $14 million. All business
combinations have been accounted for using the acquisition method of accounting. The fair value of the property, plant and equipment was estimated
by determining the net present value of future cash flows. No significant adjustments were made to the other assets and liabilities acquired. The assets
and liabilities acquired as part of the 2004 acquisitions are shown in aggregate in the table below.
$ million
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2004
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Book value
on
acquisition
Fair value
adjustments Fair value
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment 703 760 1,463
Intangible assets 15 – 15
Current assets (excluding cash) 721 – 721
Cash and cash equivalents 36 – 36
Trade and other payables (329) – (329)
Deferred tax liabilities – (185) (185)
Defined benefit pension plan deficits (3) – (3)
Net investment in equity-accounted entities transferred to full consolidation (547) (94) (641)
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Net assets acquired 596 481 1,077
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Goodwill 328
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Consideration 1,405
5 Non-current assets held for sale and discontinued operations
Non-current assets held for sale
On 27 June 2006, BP announced its intention to sell the Coryton refinery in the UK, following a review of its European refinery portfolio which
concluded that the group would optimise its value by focusing on a smaller, but more advantaged refining portfolio in Europe. In addition, given the
integrated nature of the operations, the bitumen business in the UK is also included with the divestment, along with the Coryton bulk terminal (together
‘the Coryton disposal group’).
At 31 December 2006, negotiations for the sale were in progress and the assets and associated liabilities were classified as a disposal group held for
sale. No impairment loss was recognized at the time of reclassification of the Coryton disposal group as held for sale nor at 31 December 2006.
The major classes of assets and liabilities of the Coryton disposal group, reported within the Refining and Marketing segment, classified as held for
sale at 31 December 2006 are set out below.
$ million
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Assets
Property, plant and equipment 564
Goodwill 60
Inventories 454
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Assets classified as held for sale 1,078
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Liabilities
Current liabilities 54
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Liabilities directly associated with assets classified as held for sale 54
In addition, accumulated foreign exchange gains recognized directly in equity relating to the Coryton disposal group amounted to $122 million at
31 December 2006. On disposal such foreign exchange differences are recycled to the income statement.
On 1 February 2007, it was agreed to sell the Coryton disposal group, subject to required regulatory approval, to Petroplus Holdings AG, an
independent refiner and wholesaler of petroleum products headquartered in Zug, Switzerland, for a sale price of $1.4 billion, plus hydrocarbons to be
valued at closing.