BP 2015 Annual Report Download - page 154

28. Financial instruments and financial risk factors – continued
Management information used to monitor credit risk indicates that 81% (2014 82%) of total unmitigated credit exposure relates to counterparties of
investment-grade credit quality.
$ million
Trade and other receivables at 31 December 2015 2014
Neither impaired nor past due 21,064 28,519
Impaired (net of provision) 22 37
Not impaired and past due in the following periods
within 30 days 414 841
31 to 60 days 75 249
61 to 90 days 118 178
over 90 days 521 727
22,214 30,551
Movements in the impairment provision for trade receivables are shown in Note 20.
Financial instruments subject to offsetting, enforceable master netting arrangements and similar agreements
The following table shows the amounts recognized for financial assets and liabilities which are subject to offsetting arrangements on a gross basis, and
the amounts offset in the balance sheet.
Amounts which cannot be offset under IFRS, but which could be settled net under the terms of master netting agreements if certain conditions arise,
and collateral received or pledged, are also presented in the table to show the total net exposure of the group.
$ million
At 31 December 2015
Gross
amounts of
recognized
financial
assets
(liabilities)
Amounts
set off
Net amounts
presented on
the balance
sheet
Related amounts not set off
in the balance sheet
Net amount
Master
netting
arrangements
Cash
collateral
(received)
pledged
Derivative assets 10,206 (1,859) 8,347 (1,109) (297) 6,941
Derivative liabilities (9,280) 1,859 (7,421) 1,109 – (6,312)
Trade receivables 7,091 (3,689) 3,402 (322) (161) 2,919
Trade payables (5,720) 3,689 (2,031) 322 – (1,709)
At 31 December 2014
Derivative assets 11,515 (2,383) 9,132 (1,164) (458) 7,510
Derivative liabilities (8,971) 2,383 (6,588) 1,164 – (5,424)
Trade receivables 10,502 (6,080) 4,422 (485) (145) 3,792
Trade payables (9,062) 6,080 (2,982) 485 – (2,497)
(c) Liquidity risk
Liquidity risk is the risk that suitable sources of funding for the group’s business activities may not be available. The group’s liquidity is managed
centrally with operating units forecasting their cash and currency requirements to the central treasury function. Unless restricted by local regulations,
generally subsidiaries pool their cash surpluses to treasury, which will then arrange to fund other subsidiaries’ requirements, or invest any net surplus
in the market or arrange for necessary external borrowings, while managing the group’s overall net currency positions.
Standard & Poor’s Ratings long-term credit rating for BP is A negative (stable outlook) and Moody’s Investors Service rating is A2 (rating under review
from positive).
During 2015, $8 billion of long-term taxable bonds were issued with terms ranging from 1 to 11 years. Commercial paper is issued at competitive rates
to meet short-term borrowing requirements as and when needed.
As a further liquidity measure, the group continues to maintain suitable levels of cash and cash equivalents, amounting to $26.4 billion at 31 December
2015 (2014 $29.8 billion), primarily invested with highly rated banks or money market funds and readily accessible at immediate and short notice. At
31 December 2015, the group had substantial amounts of undrawn borrowing facilities available, consisting of $7,375 million of standby facilities, of
which $6,975 million is available to draw and repay until the first half of 2018, and $400 million is available to draw and repay until April 2017. These
facilities were renegotiated during 2015 with 26 international banks, and borrowings under them would be at pre-agreed rates.
The group also has committed letter of credit (LC) facilities totalling $6,850 million with a number of banks, allowing LCs to be issued for a maximum
two-year duration. There were also uncommitted secured LC facilities in place at 31 December 2015 for $2,410 million, which are secured against
inventories or receivables when utilized. The facilities only terminate by either party giving a stipulated termination notice to the other.
150 BP Annual Report and Form 20-F 2015