BP 2006 Annual Report Download - page 114

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5 Non-current assets held for sale and discontinued operations continued
Discontinued operations
The sale of Innovene, BP’s olefins, derivatives and refining group, to INEOS was completed on 16 December 2005.
The Innovene operations represented a separate major line of business for BP. As a result of the sale, these operations were treated as discontinued
operations for the year ended 31 December 2005. A single amount was shown on the face of the income statement comprising the post-tax result of
discontinued operations and the post-tax loss recognized on the remeasurement to fair value less costs to sell and on disposal of the discontinued
operation. That is, the income and expenses of Innovene are reported separately from the continuing operations of the BP group. The table below
provides further detail of the amount shown in the income statement.
In the cash flow statement, the cash provided by the operating activities of Innovene has been separated from that of the rest of the group and
reported as a single line item.
Gross proceeds received amounted to $8,477 million. In 2005 there were selling costs of $120 million and initial closing adjustments of $43 million. In
2006 there was a final closing adjustment of $34 million. The remeasurement to fair value less costs to sell resulted in a loss of $775 million before tax
($184 million recognized in 2006 and $591 million in 2005).
Financial information for the Innovene operations after group eliminations is presented below.
$ million
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2006 2005 2004
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Total revenues and other income –12,441 11,327
Expenses –11,709 12,041
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Profit (loss) before interest and taxation –732 (714)
Other finance income (expense) –3(17)
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Profit (loss) before taxation and loss recognized on remeasurement to fair value less costs to sell and on disposal –735 (731)
Loss recognized on the remeasurement to fair value less costs to sell and on disposal (184) (591) –
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Profit (loss) before taxation from Innovene operations (184) 144 (731)
Tax (charge) credit
on profit (loss) before loss recognized on remeasurement to fair value less costs to sell and on disposal 166 (306) 109
on loss recognized on the remeasurement to fair value less costs to sell and on disposal (7) 346 –
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Profit (loss) from Innovene operations (25) 184 (622)
Earnings (loss) per share from Innovene operations – cents
Basic (0.13) 0.87 (2.85)
Diluted (0.12) 0.86 (2.79)
The cash flows of Innovene operations are presented below
Net cash provided by (used in) operating activities –970 (669)
Net cash used in investing activities –(524) (1,731)
Net cash provided by (used in) financing activities –(446) 2,400
Further information is contained in Note 6.
6 Disposals
$ million
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2006 2005 2004
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Proceeds from the sale of Innovene operations (34) 8,304 –
Proceeds from the sale of other businesses 325 93 725
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Proceeds from the sale of businesses 291 8,397 725
Proceeds from disposal of fixed assets 5,963 2,803 4,236
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6,254 11,200 4,961
By business
Exploration and Production 4,005 1,416 914
Refining and Marketing 1,789 888 1,007
Gas, Power and Renewables 297 540 144
Other businesses and corporate 163 8,356 2,896
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6,254 11,200 4,961
As part of the strategy to upgrade the quality of its asset portfolio, the group has an active programme to dispose of non-strategic assets. In the normal
course of business in any particular year, the group may sell interests in exploration and production properties, service stations and pipeline interests as
well as non-core businesses.
Cash received during the year from disposals amounted to $6.3 billion (2005 $11.2 billion and 2004 $5.0 billion). The major transactions in 2006 were
the disposals of our interests in the Gulf of Mexico Shelf and our interest in the Shenzi discovery in the Gulf of Mexico. The divestment of Innovene
contributed $8.3 billion to the total in 2005. The major transactions in 2004 that generated over $2.3 billion of proceeds were the sale of the group’s
investments in PetroChina and Sinopec. The principal transactions generating the proceeds for each business segment are described below.