BP 2011 Annual Report Download - page 60

58 BP Annual Report and Form 20-F 2011
Business review
Non-operating items
Non-operating items are charges and credits arising in consolidated entities
that BP discloses separately because it considers such disclosures to
be meaningful and relevant to investors. They are provided in order to
enable investors to better understand and evaluate the group’s financial
performance. An analysis of non-operating items is shown in the table
below.
$ million
2011 2010 2009
Exploration and Production
Impairment and gain (loss) on sale
of businesses and fixed assets 2,131 3,812 1,574
Environmental and other provisions (27) (54) 3
Restructuring, integration and
rationalization costs –(137) (10)
Fair value gain (loss) on embedded
derivatives 191 (309) 664
Othera(1,165) (113) 34
1,130 3,199 2,265
Refining and Marketing
Impairment and gain (loss) on sale
of businesses and fixed assetsb(334) 877 (1,604)
Environmental and other provisions (219) (98) (219)
Restructuring, integration and
rationalization costs (4) (97) (907)
Fair value gain (loss) on embedded
derivatives ––(57)
Other (45) (52) 184
(602) 630 (2,603)
By business
Fuelsb(703) 339 (2,394)
Lubricants 100 (47) (171)
Petrochemicals 1338 (38)
(602) 630 (2,603)
Other businesses and corporate
Impairment and gain (loss) on sale
of businesses and fixed assets 275 5(130)
Environmental and other provisions (220) (103) (75)
Restructuring, integration and
rationalization costs (39) (81) (183)
Fair value gain (loss) on embedded
derivativesc(123) – –
Otherd(715) (21) (101)
(822) (200) (489)
Gulf of Mexico oil spill response 3,800 (40,858) –
Total before interest and taxation 3,506 (37,229) (827)
Finance costse(58) (77) –
Total before taxation 3,448 (37,306) (827)
Taxation credit (charge)f(1,253) 11,857 (240)
Total after taxation 2,195 (25,449) (1,067)
a
2011 included a charge of $700 million associated with the termination of the agreement to sell our
60% interest in Pan American Energy LLC to Bridas Corporation (see page 85).
b
2009 included $1,579 million in relation to the impairment of goodwill allocated to the US West
Coast fuels value chain.
c
Relates to an embedded derivative arising from a financing arrangement.
d
2011 included charges of $687 million in relation to raw materials purchase contracts associated
with our exit from the solar business.
e
Finance costs relate to the Gulf of Mexico oil spill. See Financial statements – Note 2 on page 190
for further details.
f
Tax is calculated by applying discrete quarterly effective tax rates (excluding the impact of the Gulf
of Mexico oil spill and, for 2011, the impact of a $683-million one-off deferred tax adjustment in
respect of an increase in the supplementary charge on UK oil and gas production) on group profit
or loss. However, the US statutory tax rate has been used for recoveries relating to the Gulf of
Mexico oil spill and expenditures that qualify for tax relief. In 2009, no tax credit was calculated on
the goodwill impairment in Refining and Marketing because the charge is not tax deductible.
Non-GAAP information on fair value accounting effects
The impacts of fair value accounting effects, relative to management’s
internal measure of performance, and a reconciliation to GAAP information
is also set out below. Further information on fair value accounting effects is
provided on page 110.
$ million
2011 2010 2009
Exploration and Production
Unrecognized gains (losses) brought
forward from previous period (527) (530) 389
Unrecognized (gains) losses carried
forward 538 527 530
Favourable (unfavourable) impact
relative to management’s
measure of performance 11 (3) 919
Refining and Marketinga
Unrecognized gains (losses) brought
forward from previous period 137 179 (82)
Unrecognized (gains) losses carried
forward (74) (137) (179)
Favourable (unfavourable) impact
relative to management’s
measure of performance 63 42 (261)
74 39 658
Taxation credit (charge)b(27) (26) (213)
47 13 445
By region
Exploration and Production
US 15 141 687
Non-US (4) (144) 232
11 (3) 919
Refining and Marketinga
US –19 16
Non-US 63 23 (277)
63 42 (261)
a Fair value accounting effects arise solely in the fuels business.
b
Tax is calculated by applying discrete quarterly effective tax rates (excluding the impact of the Gulf
of Mexico oil spill and, for 2011, the impact of a $683-million one-off deferred tax adjustment in
respect of an increase in the supplementary charge on UK oil and gas production) on group profit
or loss.
Reconciliation of non-GAAP information
$ million
2011 2010 2009
Exploration and Production
Replacement cost profit before
interest and tax adjusted for fair
value accounting effects 30,489 30,889 23,881
Impact of fair value accounting
effects 11 (3) 919
Replacement cost profit before
interest and tax 30,500 30,886 24,800
Refining and Marketing
Replacement cost profit before
interest and tax adjusted for fair
value accounting effects 5,411 5,513 1,004
Impact of fair value accounting
effects 63 42 (261)
Replacement cost profit before
interest and tax 5,474 5,555 743
Total group
Profit (loss) before interest and tax
adjusted for fair value
accounting effects 39,743 (3,741) 25,768
Impact of fair value accounting
effects 74 39 658
Profit (loss) before interest and tax 39,817 (3,702) 26,426