BP 2005 Annual Report Download - page 45

Notes on financial statements
1 Resegmentation
With effect from 1 January 2005, there have been the following changes to the business segments reported by the group:
(a) The Mardi Gras pipeline system in the Gulf of Mexico has been transferred from Exploration and Production to Refining and Marketing.
(b) The aromatics and acetyls operations and the petrochemicals assets that are integrated with our Gelsenkirchen refinery in Germany have been
transferred from the former Petrochemicals segment to Refining and Marketing.
(c) The olefins and derivatives operations have been transferred from the former Petrochemicals segment to the Olefins and Derivatives business.
The legacy historical results of other petrochemicals assets that had been divested during 2004 and 2003 are included within Other businesses
and corporate.
(d) The Grangemouth and Lavéra refineries have been transferred from Refining and Marketing to the Olefins and Derivatives business to maintain
existing operating synergies with the co-located olefins and derivatives operations.
(e) A small US operation, the Hobbs fractionator, which supplies petrochemicals feedstock, has been transferred from Gas, Power and Renewables
to the Olefins and Derivatives business.
The Olefins and Derivatives business is reported within Other businesses and corporate. This reorganization was a precursor to seeking to divest
the Olefins and Derivatives business. As indicated in Note 4, Discontinued operations, during 2005 we divested Innovene and show its activities as
discontinued operations in these accounts. Innovene represented the majority of the Olefins and Derivatives business.
Comparative financial and operating information is shown after resegmentation, the change in accounting policy and the adoption of International
Financial Reporting Standards.
2 Change in accounting policy
The group’s accounting policy has been to present oil, natural gas and power forward sales and purchases gross in the income statement.
However, during 2005, a review was undertaken into the presentation of these commodity derivative transactions and related activity. These
transactions have previously been presented gross in the income statement, although in certain areas of the group’s activity, physical delivery
can be optional and avoided by buying or selling offsetting contracts through a market mechanism. This led to the conclusion that it was more
appropriate to represent transactions in these areas net rather than gross. These sale and purchase transactions are now offset and reported
net in sales and other operating revenues. Other derivative contracts where physical delivery is the norm continue to be reported gross.
This change in accounting policy, while reducing sales and other operating revenues and purchases, has no impact on reported profit, cash flows
and the balance sheet.
Sales and other operating revenues and purchases for prior periods have been restated as set out below. The impact of the change in accounting
policy on sales and other operating revenues and purchases for the year ended 31 December 2005 was approximately $105,000 million.
$ million
Sales and other operating revenues 2004
Gas, Other Consolidation Consolidation
Exploration Refining Power businesses adjustment adjustment Total
and and and and and Total Innovene and continuing
By business – as reported Production Marketing Renewables corporate eliminations group operations eliminations operations
Segment revenues 34,700 192,917 83,320 17,994 (43,999) 284,932 (17,448) 6,169 273,653
Less: sales between businesses (24,756) (10,632) (2,442) (6,169) 43,999 – 6,169 (6,169) –
Third party sales 9,944 182,285 80,878 11,825 – 284,932 (11,279) – 273,653
By business – as restated
Segment revenues 34,700 176,350 26,110 17,994 (43,999) 211,155 (17,448) 6,169 199,876
Less: sales between businesses (24,756) (10,632) (2,442) (6,169) 43,999 – 6,169 (6,169) –
Third party sales 9,944 165,718 23,668 11,825 – 211,155 (11,279) – 199,876
Sales and other operating revenues 2003
By business – as reported
Segment revenues 30,621 159,263 65,639 13,978 (36,993) 232,508 (13,463) 4,501 223,546
Less: sales between businesses (22,885) (7,644) (1,963) (4,501) 36,993 – 4,501 (4,501) –
Third party sales 7,736 151,619 63,676 9,477 – 232,508 (8,962) – 223,546
By business – as restated
Segment revenues 30,621 147,813 22,984 13,978 (36,993) 178,403 (13,463) 4,501 169,441
Less: sales between businesses (22,885) (7,644) (1,963) (4,501) 36,993 – 4,501 (4,501) –
Third party sales 7,736 140,169 21,021 9,477 – 178,403 (8,962) – 169,441
BP Annual Report and Accounts 2005 43