BP 2014 Annual Report Download - page 259

Replacement cost (RC) profit or loss
Reflects the replacement cost of inventories sold in the period and is
arrived at by excluding inventory holding gains and losses from profit or
loss. RC profit or loss is the measure of profit or loss that is required to
be disclosed for each operating segment under International Financial
Reporting Standards (IFRS). RC profit or loss for the group is not a
recognized GAAP measure. Management believes this measure is
useful to illustrate to investors the fact that crude oil and product prices
can vary significantly from period to period and that the impact on our
reported result under IFRS can be significant. Inventory holding gains
and losses vary from period to period due to changes in prices as well
as changes in underlying inventory levels. In order for investors to
understand the operating performance of the group excluding the
impact of price changes on the replacement of inventories, and to make
comparisons of operating performance between reporting periods, BP’s
management believes it is helpful to disclose this measure. See
Financial statements – Note 4.
Subsidiary
An entity that is controlled by the BP group. Control of an investee
exists when an investor is exposed, or has rights, to variable returns
from its involvement with the investee and has the ability to affect
those returns through its power over the investee.
Tier 1 process safety events
Losses of primary containment from a process of greatest consequence
– causing harm to a member of the workforce or costly damage to
equipment or exceeding defined quantities.
Tight gas
Natural gas reservoirs locked in hard sandstone rocks with low
permeability, making the underground formation extremely tight.
Underlying production
2014 underlying production, when compared with 2013, is after
adjusting for the effects of the Abu Dhabi onshore concession expiry in
January 2014, divestments and entitlement impacts in our production-
sharing agreements.
2015 underlying production, when comparing with 2014, is after
adjusting for divestments and entitlement impacts in our production-
sharing agreements.
Underlying RC profit or loss
RC profit or loss after adjusting for non-operating items and fair value
accounting effects. Underlying RC profit or loss and fair value
accounting effects are not recognized GAAP measures. See pages 209
and 210 for additional information on the non-operating items and fair
value accounting effects that are used to arrive at underlying RC profit
or loss in order to enable a full understanding of the events and their
financial impact. BP believes that underlying RC profit or loss is a useful
measure for investors because it is a measure closely tracked by
management to evaluate BP’s operating performance and to make
financial, strategic and operating decisions and because it may help
investors to understand and evaluate, in the same manner as
management, the underlying trends in BP’s operational performance on
a comparable basis, year on year, by adjusting for the effects of these
non-operating items and fair value accounting effects. The nearest
equivalent measure on an IFRS basis for the group is profit or loss for
the year attributable to BP shareholders. The nearest equivalent
measure on an IFRS basis for segments is RC profit or loss before
interest and taxation.
Unit cash margin
Net cash provided by operating activities for relevant projects in the
Upstream segment, divided by the total number of barrels of oil and gas
equivalent produced for the relevant projects. It excludes dividends and
production for TNK-BP and Rosneft.
Trade marks
Trade marks of the BP group appear throughout this Annual Report
and Form 20-F in italics.
They include:
Aral
ARCO
BP
Titanium Fluid Strength Technology
SaaBre
Wild Bean Cafe
Castrol
EDGE
Permasense is a trade mark of Permasense
Limited.
Field of the Future
Fluid Strength Technology
M&S Simply Food is a registered trade
mark of Marks & Spencer plc.
The Directors’ report on pages 51-71, 90, 167-196 and 207-255 was approved by the board and signed on its behalf by David J Jackson, company
secretary on 3 March 2015.
BP p.l.c.
Registered in England and Wales No. 102498
Shareholder information
BP Annual Report and Form 20-F 2014 255