BP 2013 Annual Report Download - page 173

19. Financial instruments and financial risk factors – continued
Furthermore, 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 shown in the table to show the total net exposure of the group.
$ million
At 31 December 2013
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 7,271 (1,563) 5,708 (344) (231) 5,133
Derivative liabilities (5,457) 1,563 (3,894) 344 – (3,550)
Trade receivables 11,034 (7,744) 3,290 (1,287) (264) 1,739
Trade payables (10,619) 7,744 (2,875) 1,287 – (1,588)
At 31 December 2012
Derivative assets 9,291 (1,870) 7,421 (754) (175) 6,492
Derivative liabilities (6,117) 1,870 (4,247) 754 – (3,493)
Trade receivables 8,829 (6,368) 2,461 (578) (176) 1,707
Trade payables (9,330) 6,368 (2,962) 578 – (2,384)
(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,
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.
The group has in place a European Debt Issuance Programme (DIP) under which the group may raise up to $30 billion of debt for maturities of one
month or longer. At 31 December 2013, the amount drawn down against the DIP was $13,854 million (2012 $14,043 million). Since 5 February 2013,
the group has had a US shelf registration with a limit of $30 billion. This was converted from an unlimited shelf registration following the approval in
December 2012 of the settlement with the US Securities and Exchange Commission in respect of Gulf of Mexico oil spill related claims. Amounts
drawn down since conversion total $6.9 billion. In addition, the group has an Australian Note Issuance Programme of A$5 billion, and as at
31 December 2013 the amount drawn down was A$800 million (2012 A$500 million).
The group’s long-term credit ratings are A (positive outlook) from Standard & Poor’s, and A2 (stable outlook) from Moody’s Investor Services, both
remaining unchanged during 2013.
During 2013, $8.6 billion of long-term taxable bonds were issued with terms ranging from 18 months to 10 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 $22.5 billion at 31 December
2013, primarily invested with highly rated banks or money market funds and readily accessible at immediate and short notice (2012 $19.6 billion). At
31 December 2013, 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 2016. These
facilities were renegotiated during 2013 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 $7,475 million with a number of banks, allowing LCs to be issued for a maximum
one-year duration. There were also uncommitted secured LC facilities in place at 31 December 2013 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.
The amounts shown for finance debt in the table below include future minimum lease payments with respect to finance leases. The table also shows
the timing of cash outflows relating to trade and other payables and accruals.
$ million
2013 2012
Trade and
other
payables Accruals
Finance
debt
Interest
relating to
finance debt
Trade and
other
payables Accruals
Finance
debt
Interest
relating to
finance debt
Within one year 43,790 8,960 7,381 885 42,512 6,875 9,401a893
1 to 2 years 1,007 207 6,630 752 903 136 5,906 755
2 to 3 years 822 66 6,720 621 434 80 5,902 634
3 to 4 years 761 73 5,828 498 373 52 6,024 510
4 to 5 years 1,405 37 5,279 388 71 83 5,797 388
5 to 10 years 207 113 15,933 809 79 84 14,790 885
Over 10 years 80 51 421 119 33 56 348 50
48,072 9,507 48,192 4,072 44,405 7,366 48,168 4,115
aIn addition, current finance debt on the group balance sheet at 31 December 2012 included $632 million in respect of cash deposits received for disposals which completed in 2013.
The group manages liquidity risk associated with derivative contracts, other than derivative hedging instruments, based on the expected maturitiesof
both derivative assets and liabilities as indicated in Note 26. Management does not currently anticipate any cash flows that could be of a significantly
different amount, or could occur earlier than the expected maturity analysis provided.
The table below shows cash outflows for derivative hedging instruments based upon contractual payment dates. The amounts reflect the maturity
profile of the fair value liability where the instruments will be settled net, and the gross settlement amount where the pay leg of a derivative will be
settled separately from the receive leg, as in the case of cross-currency swaps hedging non-US dollar finance debt. The swaps are with high
investment-grade counterparties and therefore the settlement-day risk exposure is considered to be negligible. Not shown in the table are the gross
Financial statements
BP Annual Report and Form 20-F 2013 169