BP 2005 Annual Report Download - page 48

46 Making energy more
Notes on financial statements continued
4 Discontinued operations
BP announced on 7 October 2005 its intention to sell Innovene, its olefins, derivatives and refining group, to INEOS. The transaction became
unconditional on 9 December 2005 on receipt of European Commission clearance and was completed on 16 December 2005. The transaction
included all Innovene’s manufacturing sites, markets and technologies. The equity-accounted investments in China and Malaysia that were
part of the Olefins and Derivatives business remain with BP and are included within Other businesses and corporate.
The Innovene operations represented a separate major line of business for BP. As a result of the sale, these operations have been treated as
discontinued operations for the year ended 31 December 2005. A single amount is shown on the face of the income statement comprising
the post-tax result of discontinued operations and the post-tax loss recognized on the remeasurement to fair value less costs to sell and on
disposal of the discontinued operation. That is, the income and expenses of Innovene are reported separately from the continuing operations of the
BP group. The table below provides further detail of the amount shown on the income statement. The income statements for prior periods have
been restated to conform to this style of presentation.
In the cash flow statement, the cash provided by the operating activities of Innovene has been separated from that of the rest of the group
and reported as a single line item.
Gross proceeds received amounted to $8,477 million. There were selling costs of $120 million and initial closing adjustments of $43 million.
The proceeds are subject to final closing adjustments. The remeasurement to fair value less costs to sell resulted in a loss of $591 million
before tax. The originally announced transaction value of $9,000 million has been reduced by the value of certain liabilities transferred to INEOS
and certain assets retained by BP on closing.
Financial information for the Innovene operations after group eliminations is presented below.
$ million
2005 2004 2003
Total revenues and other income 12,441 11,327 8,986
Expenses 11,709 12,041 9,034
Profit (loss) before interest and taxation 732 (714) (48)
Other finance income (expense) 3 (17) (15)
Profit (loss) before taxation and loss recognized on remeasurement to fair value less costs to
sell and on disposal 735 (731) (63)
Loss recognized on remeasurement to fair value less costs to sell and on disposal (591) – –
Profit (loss) before taxation from Innovene operations 144 (731) (63)
Tax (charge) credit
On profit (loss) before loss recognized on remeasurement to fair value less costs to sell and on disposal (306) 109 –
On loss recognized on remeasurement to fair value less costs to sell and on disposal 346––
Profit (loss) from Innovene operations 184 (622) (63)
Earnings (loss) per share from Innovene operations – cents
Basic 0.87 (2.85) (0.28)
Diluted 0.86 (2.79) (0.28)
The cash flows of Innovene operations are presented below
Net cash provided by (used in) operating activities 970 (669) 348
Net cash used in investing activities (524) (1,731) (572)
Net cash provided by (used in) financing activities (446) 2,400 224
Further information is contained in Note 5, Disposals.