BP 2014 Annual Report Download - page 26

Financial and operating performance
$ million
2014 2013 2012
Profit before interest and taxation 6,412 31,769 19,769
Finance costs and net finance
expense relating to pensions and
other post-retirement benefits (1,462) (1,548) (1,638)
Taxation (947) (6,463) (6,880)
Non-controlling interests (223) (307) (234)
Profit for the yeara3,780 23,451 11,017
Inventory holding (gains) losses ,
net of tax 4,293 230 411
Replacement cost profit 8,073 23,681 11,428
Net charge (credit) for non-operating
items , net of tax 4,620 (10,533) 5,298
Net (favourable) unfavourable
impact of fair value accounting
effects , net of tax (557) 280 345
Underlying replacement cost profit 12,136 13,428 17,071
Capital expenditure and acquisitions,
on accrual basis 23,781 36,612 25,204
a Profit attributable to BP shareholders.
Segment RC profit (loss) before interest and tax ($ billion)
Group RC profit (loss) before interest and tax
5
(5)
25
15
35
2012 2013 2014
Upstream
Other businesses
and corporate
Rosneft
Unrealized profit
in inventory
Gulf of Mexico
oil spill
TNK-BP
Downstream
Profit for the year ended 31 December 2014 decreased by $19.7 billion
compared with 2013. Excluding inventory holding losses, replacement cost
(RC) profit also decreased by $15.6 billion compared with 2013. Both
results in 2013 included a $12.5-billion non-operating gain relating to the
disposal of our interest in TNK-BP.
After adjusting for a net charge for non-operating items, which mainly
related to impairments and further charges associated with the Gulf of
Mexico oil spill; and net favourable fair value accounting effects, underlying
RC profit for the year ended 31 December 2014 was down by $1.3 billion
compared with 2013. The reduction was mainly due to a lower profit in
Upstream, partially offset by improved earnings from Downstream.
Profit for the year ended 31 December 2013 increased by $12.4 billion
compared with 2012. Excluding inventory holding losses, RC profit also
increased by $12.2 billion compared with 2012. The increase in both results
was due to a $12.5-billion gain of disposal of our interest in TNK-BP.
After adjusting for a net credit for non-operating items, which mainly
related to the gain on disposal of our interest in TNK-BP and was partially
offset by an $845-million write-off and impairments in Upstream and
further charges associated with the Gulf of Mexico oil spill; and net
unfavourable fair value accounting effects, underlying RC profit for the year
ended 31 December 2013 was down by $3.6 billion compared with 2012.
This was impacted by the absence of equity-accounted earnings from
TNK-BP and lower earnings from both Downstream and Upstream,
partially offset by the equity-accounted earnings from Rosneft from
21 March 2013 (when sale and purchase agreements with Rosneft and
Rosneftegaz completed).
For the year ended 31 December 2012 profit was $11.0 billion, RC profit
was $11.4 billion and underlying RC profit was $17.1 billion. There was a
net post-tax charge of $5.3 billion for non-operating items, which included
a $5-billion pre-tax charge relating to the Gulf of Mexico.
More information on non-operating items, and fair value accounting
effects, can be found on page 209. See Gulf of Mexico oil spill on page 36
and Financial statements – Note 2 for further information on the impact of
the Gulf of Mexico oil spill on BP’s financial results.
See Upstream on page 24, Downstream on page 29, Rosneft on
page 33 and Other businesses and corporate on page 35 for
further information on segment results.
Taxation
The charge for corporate income taxes in 2014 was lower than 2013. The
effective tax rate (ETR) was 19% in 2014 (2013 21%, 2012 38%). The low
ETR in 2014 reflects the impairment charges on which tax credits arise in
relatively high tax rate jurisdictions. The lower ETR in 2013 compared with
2012 primarily reflects the gain on disposal of TNK-BP in 2013 for which
there was no corresponding tax charge. The underlying ETR (which
excludes non-operating items and fair value accounting effects) on RC
profit was 36% in 2014 (2013 35%, 2012 30%).
In the current environment, with our current portfolio of assets, the
underlying ETR on RC profit for 2015 is expected to be lower than 2014.
Cash flow and net debt information
$ million
2014 2013 2012
Net cash provided by operating
activities 32,754 21,100 20,479
Net cash used in investing activities (19,574) (7,855) (13,075)
Net cash used in financing activities (5,266) (10,400) (2,010)
Currency translation differences
relating to cash and cash
equivalents (671) 40 64
Increase in cash and cash
equivalents 7,243 2,885 5,458
Cash and cash equivalents at
beginning of year 22,520 19,635 14,177
Cash and cash equivalents at end of year 29,763 22,520 19,635
Gross debt 52,854 48,192 48,800
Net debt 22,646 25,195 27,465
Gross debt to gross debt-plus-equity 31.9% 27.0% 29.0%
Net debt to net debt-plus-equity 16.7% 16.2% 18.7%
Net cash provided by operating activities
Net cash provided by operating activities for the year ended 31 December
2014 increased by $11.7 billion compared with 2013. Excluding the impacts
of the Gulf of Mexico oil spill, net cash provided by operating activities was
$32.8 billion for 2014, an increase of $11.6 billion compared with 2013.
Profit before taxation was lower but this was partially offset by movements
in the adjustments for non-cash items, including depreciation, depletion
and amortization, impairments and gains and losses on sale of businesses
and fixed assets. Furthermore, 2013 was impacted by an adverse
movement in working capital and 2014 was favourably impacted.
The increase in 2013 compared with 2012 primarily benefited from the
reduction of $2.3 billion in the cash outflow in respect of the Gulf of
Mexico oil spill. Excluding the impacts of the Gulf of Mexico oil spill, net
cash provided by operating activities was $21.2 billion for 2013, compared
with $22.9 billion for 2012, a decrease of $1.7 billion. The decrease was
mainly due to an increase in working capital requirements of $3.9 billion,
which was partially offset by a reduction in income tax paid.
Net cash used in investing activities
Net cash used in investing activities for the year ended 31 December 2014
increased by $11.7 billion compared with 2013. The increase reflected a
decrease in disposal proceeds of $18.5 billion, partly offset by a $4.9-billion
decrease in our investments in equity-accounted entities, mainly relating to
the completion of the sale of our interest in TNK-BP and subsequent
investment in Rosneft in 2013. There was also a decrease in our other
capital expenditure excluding acquisitions of $2.0 billion.
BP Annual Report and Form 20-F 201422