BP 2014 Annual Report Download - page 120

2. Significant event – Gulf of Mexico oil spill – continued
Impact upon the group income statement
The amount of the provision recognized during the year can be reconciled to the charge to the income statement as follows:
$ million
2014 2013 2012
Cumulative since
the incident
Net increase in provision 1,327 1,860 6,074 44,705
Change in discount rate relating to provisions 2(5) – 19
Costs charged directly to the income statement 114 136 257 4,358
Trust fund liability – discounted –– – 19,580
Change in discounting relating to trust fund liability –– – 283
Recognition of reimbursement asset, net (662) (1,542) (1,191) (20,000)
Settlements credited to the income statement –(19) (145) (5,681)
(Profit) loss before interest and taxation 781 430 4,995 43,264
Finance costs 38 39 19 231
(Profit) loss before taxation 819 469 5,014 43,495
The group income statement for 2014 includes a pre-tax charge of $819 million (2013 pre-tax charge of $469 million) in relation to the Gulf of Mexico oil
spill. The costs charged in 2014 relate primarily to the ongoing costs of operating the Gulf Coast Restoration Organization (GCRO) and increases in the
provisions for natural resource damage assessment, business economic loss claims, claims administration costs, legal and litigation costs. Finance
costs of $38 million (2013 $39 million) reflect the unwinding of the discount on payables and provisions. The cumulative amount charged to the income
statement to date comprises spill response costs arising in the aftermath of the incident, GCRO operating costs, amounts charged upon initial
recognition of the trust obligation, litigation, claims, environmental and legal costs not paid through the Trust and estimated obligations for future costs
that can be estimated reliably at this time, net of settlements agreed with the co-owners of the Macondo well and other third parties.
The total amount recognized in the income statement is analysed in the table below.
$ million
2014 2013 2012
Cumulative since
the incident
Trust fund liability – discounted –– – 19,580
Change in discounting relating to trust fund liability –– – 283
Recognition of reimbursement asset, net (662) (1,542) (1,191) (20,000)
Other ––– 8
Total (credit) charge relating to the trust fund (662) (1,542) (1,191) (129)
Environmental – amount provided 190 47 801 3,134
– change in discount rate relating to provisions 2(5) – 19
– costs charged directly to the income statement ––– 70
Total (credit) charge relating to environmental 192 42 801 3,223
Spill response – amount provided –(113) 109 11,465
– costs charged directly to the income statement –– 9 2,839
Total (credit) charge relating to spill response –(113) 118 14,304
Litigation and claims – amount provided, net of provision derecognized 1,137 1,926 5,164 26,596
– costs charged directly to the income statement –– – 184
Total charge relating to litigation and claims 1,137 1,926 5,164 26,780
Clean Water Act penalties – amount provided –– – 3,510
Other costs charged directly to the income statement 114 136 248 1,257
Settlements credited to the income statement –(19) (145) (5,681)
(Profit) loss before interest and taxation 781 430 4,995 43,264
Finance costs 38 39 19 231
(Profit) loss before taxation 819 469 5,014 43,495
The total amounts that will ultimately be paid by BP in relation to all obligations relating to the incident are subject to significant uncertainty as
described under Provisions and contingent liabilities above.
116 BP Annual Report and Form 20-F 2014