BP 2015 Annual Report Download - page 210

8. Capital and reserves
See statement of changes in equity for details of all reserves balances.
Share capital
The balance on the share capital account represents the aggregate nominal value of all ordinary and preference shares in issue, including treasury
shares.
Share premium account
The balance on the share premium account represents the amounts received in excess of the nominal value of the ordinary and preference shares.
Capital redemption reserve
The balance on the capital redemption reserve represents the aggregate nominal value of all the ordinary shares repurchased and cancelled.
Merger reserve
The balance on the merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in
an acquisition made by the issue of shares.
Treasury shares
Treasury shares represent BP shares repurchased and available for specific and limited purposes.
For accounting purposes shares held in Employee Share Ownership Plans (ESOPs) to meet the future requirements of the employee share-based
payment plans are treated in the same manner as treasury shares and are therefore included in the financial statements as treasury shares. The ESOPs
are funded by the company and have waived their rights to dividends in respect of such shares held for future awards. Until such time as the shares
held by the ESOPs vest unconditionally to employees, the amount paid for those shares is shown as a reduction in shareholders’ equity. Assets and
liabilities of the ESOPs are recognized as assets and liabilities of the company.
Foreign currency translation reserve
The foreign currency translation reserve records exchange differences arising from the translation of the financial information of the foreign branch.
Upon disposal of foreign operations, the related accumulated exchange differences are recycled to the income statement.
Profit and loss account
The balance held on this reserve is the accumulated retained profits of the company.
The profit and loss account reserve includes $24,107 million (2014 $24,107 million), the distribution of which is limited by statutory or other restrictions.
The accounts for the year ended 31 December 2015 do not reflect the dividend announced on 2 February 2016 and payable in March 2016; this will be
treated as an appropriation of profit in the year ended 31 December 2016.
9. Contingent liabilities
The company has issued guarantees under which the maximum aggregate liabilities at 31 December 2015 were $51,775 million (2014 $51,463
million), the majority of which relate to finance debt of subsidiaries. The carrying value of the guarantees at 31 December 2015 was $211 million (2014
$417 million). The guarantee fee income recognized within profit for the year ending 31 December 2015 was $94 million (2014 $100 million). The
company has also issued uncapped indemnities and guarantees, including a guarantee of subsidiaries’ liabilities under the Plaintiffs’ Steering
Committee settlement agreement relating to the Gulf of Mexico oil spill, and in relation to potential losses arising from environmental incidents
involving ships leased and operated by a subsidiary.
10. Capital management
The company defines capital as total equity (which is the company’s net asset value). The company maintains its financial framework to support the
pursuit of value growth for shareholders, while ensuring a secure financial base. The BP group aims to maintain the net debt ratio, that is, the ratio of
net debt to net debt plus equity, with some flexibility, at around 20%.
11. Share-based payments
Effect of share-based payment transactions on the company’s result and financial position
$ million
2015 2014
Total expense recognized for equity-settled share-based payment transactions 759 770
Total credit recognized for cash-settled share-based payment transactions (50) (81)
Total expense recognized for share-based payment transactions 709 689
Closing balance of liability for cash-settled share-based payment transactions 32 108
Total intrinsic value for vested cash-settled share-based payments –54
Additional information on the company’s share-based payment plans is provided in Note 10 to the consolidated financial statements.
12. Auditor’s remuneration
Note 35 to the consolidated financial statements provides details of the remuneration of the company’s auditor on a BP group basis.
13. Directors’ remuneration
$ million
Remuneration of directors 2015 2014
Total for all directors
Emoluments 10 14
Amounts awarded under incentive schemesa14 10
Total 24 24
aExcludes amounts relating to past directors.
The parent company financial statements of BP p.l.c. on pages 196-213 do not form part of BP’s Annual Report on Form 20-F as filed with the SEC.
206 BP Annual Report and Form 20-F 2015