BP 2008 Annual Report Download - page 121

BP Annual Report and Accounts 2008
Notes on financial statements
6. Segmental analysis
The group’s primary format for segment reporting is business segments and the secondary format is geographical segments. The risks and returns of
the group’s operations are primarily determined by the nature of the different activities that the group engages in, rather than the geographical location
of these operations. This is reflected by the group’s organizational structure and internal financial reporting systems.
In 2008, BP had two reportable operating segments: Exploration and Production and Refining and Marketing. Exploration and Production’s
activities include oil and natural gas exploration, development and production (upstream activities), together with related pipeline, transportation and
processing activities (midstream activities), as well as the marketing and trading of natural gas (including LNG), power and natural gas liquids (NGLs).
The activities of Refining and Marketing include the supply and trading, refining, manufacturing, marketing and transportation of crude oil, petroleum
and chemicals products and related services. The group is managed on an integrated basis.
Other businesses and corporate comprises the Alternative Energy business, Shipping, the group’s aluminium asset, Treasury (which in the
segmental analysis includes all of the group’s cash, cash equivalents and associated interest income), and corporate activities worldwide.
The accounting policies of the operating segments are the same as the group’s accounting policies described in Note 1.
Sales between segments are made at prices that approximate market prices, taking into account the volumes involved. Segment revenues
and segment results include transactions between business segments. These transactions and any unrealized profits and losses are eliminated on
consolidation, unless unrealized losses provide evidence of an impairment of the asset transferred.
The group’s geographical segments are based on the location of the group’s assets. The UK and the US are significant countries of activity
for the group; the other geographical segments are groupings of countries determined by geographical location.
Sales to external customers are based on the location of the seller, which in most circumstances is not materially different from the location
of the customer. Crude oil and LNG are commodities for which there is an international market and buyers and sellers can be widely separated
geographically. The UK segment includes the UK-based international activities of Refining and Marketing.
$ million
2008
Other Consolidation
Exploration Refining businesses adjustment
and and and and Total
By business Production Marketing corporate eliminations group
Sales and other operating revenues
Segment sales and other operating revenues 86,170 320,039 4,634 (49,700) 361,143
Less: sales between businesses (45,931) (1,918) (1,851) 49,700 –
Third party sales 40,239 318,121 2,783 – 361,143
Equity-accounted earnings 3,565 131 125 – 3,821
Interest and other revenues 167 288 281 – 736
Total revenues 43,971 318,540 3,189 – 365,700
Segment results
Profit (loss) before interest and taxation 37,915 (1,884) (1,258) 466 35,239
Finance costs and net finance income relating to pensions
and other post-retirement benefits – – – (956) (956)
Profit (loss) before taxation 37,915 (1,884) (1,258) (490) 34,283
Taxation – – – (12,617) (12,617)
Profit (loss) for the year 37,915 (1,884) (1,258) (13,107) 21,666
Assets and liabilities
Segment assets 136,665 75,329 19,079 (3,212) 227,861
Current tax receivable – – – 377 377
Total assets 136,665 75,329 19,079 (2,835) 228,238
Includes
Equity-accounted investments 20,131 6,622 1,073 – 27,826
Segment liabilities (39,611) (28,668) (18,218) 2,914 (83,583)
Current tax payable – – – (3,144) (3,144)
Finance debt – – – (33,204) (33,204)
Deferred tax liabilities – – – (16,198) (16,198)
Total liabilities (39,611) (28,668) (18,218) (49,632) (136,129)
Other segment information
Capital expenditure and acquisitions
Goodwill and other intangible assets 4,940 145 89 – 5,174
Property, plant and equipment 14,117 4,417 959 – 19,493
Other 3,170 2,072 791 – 6,033
Tot al 22,227 6,634 1,839 – 30,700
Depreciation, depletion and amortization 8,440 2,208 337 – 10,985
Impairment losses 1,186 159 227 – 1,572
Impairment reversals 155 – – – 155
Losses on sale of businesses and fixed assets 18 297 1 – 316
Gains on sale of businesses and fixed assets 34 1,258 61 – 1,353
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