BP 2007 Annual Report Download - page 56

54
Liquidity and capital resources
Cash flow
The following table summarizes the group’s cash flows.
$ million
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2007 2006 2005
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Net cash provided by operating activities of continuing operations 24,709 28,172 25,751
Ne
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t cas
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h prov
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ided
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by op
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erat
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ing ac
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tivities
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of
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Innove
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ne
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operat
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ions ––970
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Net cash provided by operating activities 24,709 28,172 26,721
Net cash used in investing activities (14,837) (9,518) (1,729)
Net cash used in financing activities (9,035) (19,071) (23,303)
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Cu
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rrency
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tran
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slatio
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n diff
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eren
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ces relating to cash and cash equivalents 135 47 (88)
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Increase (decrease) in cash and cash equivalents 972 (370) 1,601
Ca
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sh an
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d cash
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equi
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vale
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nts at begi
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nning 2,590 2,960 1,359
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of ye
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ar
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Cash and cash equivalents at end of year 3,562 2,590 2,960
Net cash provided by operating activities for the year ended 31 December Net cash used in financing activities was $9,035 million in 2007
2007 was $24,709 million, compared with $28,172 million for the compared with $19,071 million in 2006 and $23,303 million in 2005. The
equivalent period of 2006 reflecting an increase in working capital reduction in 2007 compared with 2006 reflects a reduction in net
requirements of $6,282 million, a decrease in profit before taxation from repurchases of shares of $8,038 million and an increase in proceeds from
continuing operations of $3,031 million, a decrease in dividends from long-term financing of $4,278 million; these were partially offset by a net
jointly controlled entities and associates of $2,022 million; these were decrease in short-term debt of $2,379 million. The lower outflow in 2006
partially offset by a decrease in income taxes paid of $4,661 million, a compared with 2005 reflects a net increase in short-term debt of
lower net credit for impairment and gain/loss on sale of businesses and $5,330 million, a decrease in repayments of long-term financing of
fixed assets of $2,357 million and higher depreciation, depletion and $1,165 million and higher proceeds from long-term financing of
amortization of $1,451 million. $1,356 million, partially offset by an increase in the net repurchase of
Net cash provided by operating activities for the year ended shares of $3,836 million.
31 December 2006 was $28,172 million, compared with $26,721 million The group has had significant levels of capital investment for many
for the equivalent period of 2005, reflecting a decrease in working capital years. Cashflow in respect of capital investment, excluding acquisitions,
requirements of $4,817 million, an increase in profit before taxation from was $18.4 billion in 2007, $15.7 billion in 2006 and $13.1 billion in 2005.
continuing operations of $2,721 million and an increase in dividends from Sources of funding are completely fungible, but the majority of the
jointly controlled entities and associates of $1,662 million; these were group’s funding requirements for new investment come from cash
partially offset by an increase in income taxes paid of $4,705 million and generated by existing operations. The group’s level of net debt, that is
a higher net credit for impairment and gain/loss on sale of businesses debt less cash and cash equivalents, was $27.5 billion at the end of
and fixed assets of $2,095 million. 2007, $21.4 billion at the end of 2006 and was $16.2 billion at the end of
Net cash used in investing activities was $14,837 million in 2007, 2005. The lower level of debt at the end of 2005 reflects the receipt of
compared with $9,518 million and $1,729 million in 2006 and 2005. The the Innovene disposal proceeds in December 2005.
increase in 2007 reflected a reduction in disposal proceeds of During the period 2005 to 2007 our cash inflows and outflows were
$1,987 million and an increase in capital expenditure of $2,713 million. balanced, with sources and uses both totalling $107 billion. During that
The increase in 2006 compared with 2005 reflected a reduction in period, the price of Brent has averaged $64.00/bbl. The following table
disposal proceeds of $4,946 million and an increase in capital expenditure summarizes the three-year sources and uses of cash.
of $2,844 million.
$billion
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Sources
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Net cash provided by operating activities 79
Divestments 22
Movement in net debt 6
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107
$billion
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Uses
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Capital expenditure 47
Acquisitions 2
Net repurchase of shares 34
Dividends to BP shareholders 23
Dividends to minority interest 1
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107
Trend information
Total production for 2008 is expected to be higher than in 2007. This is
based on the group’s asset portfolio at 1 January 2008, expected start-
ups in 2008 and Brent at $60/bbl, before any 2008 disposal effects and
before any effects of prices above $60/bbl on volumes in PSAs.
We expect capital expenditure, excluding acquisitions and asset
exchanges and excluding the accounting related to our entry into the
Canadian oil sands via two joint ventures with Husky Energy Inc., to be
between $21 billion and $22 billion in 2008. This amount includes other
investments in equity-accounted entities. The exact level will depend on
a number of things including: the actual level of sector inflation that we
will experience in the year; time-critical and material one-off investment
opportunities that further our strategy; and any acquisition opportunities
that may arise.
We expect to restore revenues by ramping up production following our
recent start-ups in the Gulf of Mexico, Angola and Trinidad and to bring
refinery production at the Texas City and Whiting refineries back online.
Acquisitions made for cash were more than offset by divestments. Net
investment during the same period has averaged $9.0 billion per year. Dividends and other distributions to shareholders and gearing
Dividends to BP shareholders, which grew on average by 15.4% per year The total dividend paid in 2007 was $8,106 million, compared with
in dollar terms, used $23 billion. Net repurchase of shares was $34 billion, $7,686 million for 2006. The dividend paid per share was 42.30 cents, an
which includes $35 billion in respect of our share buyback programme increase of 10% compared with 2006. In sterling terms, the dividend
less proceeds from share issues. Finally, cash was used to strengthen remained flat due to the weakness of the dollar. We determine the
the financial condition of certain of our pension funds. In the past three dividend in US dollars, the economic currency of BP.
years, $2.3 billion has been contributed to funded pension plans.