BP Annual Report and Form 20-F 2011 - Company Reporting

Business reviewNon-operating itemsNon-operating items are charges and credits arising in consolidated entitiesthat BP discloses separately because it considers such disclosures tobe meaningful and relevant to investors. They are provided in order toenable investors to better understand and evaluate the group’s financialperformance. An analysis of non-operating items is shown in the tablebelow.$ million2011 2010 2009Exploration and ProductionImpairment and gain (loss) on saleof businesses and fixed assets 2,131 3,812 1,574Environmental and other provisions (27) (54) 3Restructuring, integration andrationalization costs – (137) (10)Fair value gain (loss) on embeddedderivatives 191 (309) 664Other a (1,165) (113) 341,130 3,199 2,265Refining and MarketingImpairment and gain (loss) on saleof businesses and fixed assets b (334) 877 (1,604)Environmental and other provisions (219) (98) (219)Restructuring, integration andrationalization costs (4) (97) (907)Fair value gain (loss) on embeddedderivatives – – (57)Other (45) (52) 184(602) 630 (2,603)By businessFuels b (703) 339 (2,394)Lubricants 100 (47) (171)Petrochemicals 1 338 (38)(602) 630 (2,603)Other businesses and corporateImpairment and gain (loss) on saleof businesses and fixed assets 275 5 (130)Environmental and other provisions (220) (103) (75)Restructuring, integration andrationalization costs (39) (81) (183)Fair value gain (loss) on embeddedderivatives c (123) – –Other d (715) (21) (101)(822) (200) (489)Gulf of Mexico oil spill response 3,800 (40,858) –Total before interest and taxation 3,506 (37,229) (827)Finance costs e (58) (77) –Total before taxation 3,448 (37,306) (827)Taxation credit (charge) f (1,253) 11,857 (240)Total after taxation 2,195 (25,449) (1,067)a2011 included a charge of $700 million associated with the termination of the agreement to sell our60% interest in Pan American Energy LLC to Bridas Corporation (see page 85).b2009 included $1,579 million in relation to the impairment of goodwill allocated to the US WestCoast fuels value chain.cRelates to an embedded derivative arising from a financing arrangement.d2011 included charges of $687 million in relation to raw materials purchase contracts associatedwith our exit from the solar business.eFinance costs relate to the Gulf of Mexico oil spill. See Financial statements – Note 2 on page 190for further details.fTax is calculated by applying discrete quarterly effective tax rates (excluding the impact of the Gulfof Mexico oil spill and, for 2011, the impact of a $683-million one-off deferred tax adjustment inrespect of an increase in the supplementary charge on UK oil and gas production) on group profitor loss. However, the US statutory tax rate has been used for recoveries relating to the Gulf ofMexico oil spill and expenditures that qualify for tax relief. In 2009, no tax credit was calculated onthe goodwill impairment in Refining and Marketing because the charge is not tax deductible.Non-GAAP information on fair value accounting effectsThe impacts of fair value accounting effects, relative to management’sinternal measure of performance, and a reconciliation to GAAP informationis also set out below. Further information on fair value accounting effects isprovided on page 110.$ million2011 2010 2009Exploration and ProductionUnrecognized gains (losses) broughtforward from previous period (527) (530) 389Unrecognized (gains) losses carriedforward 538 527 530Favourable (unfavourable) impactrelative to management’smeasure of performance 11 (3) 919Refining and Marketing aUnrecognized gains (losses) broughtforward from previous period 137 179 (82)Unrecognized (gains) losses carriedforward (74) (137) (179)Favourable (unfavourable) impactrelative to management’smeasure of performance 63 42 (261)74 39 658Taxation credit (charge) b (27) (26) (213)47 13 445By regionExploration and ProductionUS 15 141 687Non-US (4) (144) 23211 (3) 919Refining and Marketing aUS – 19 16Non-US 63 23 (277)63 42 (261)aFair value accounting effects arise solely in the fuels business.bTax is calculated by applying discrete quarterly effective tax rates (excluding the impact of the Gulfof Mexico oil spill and, for 2011, the impact of a $683-million one-off deferred tax adjustment inrespect of an increase in the supplementary charge on UK oil and gas production) on group profitor loss.Reconciliation of non-GAAP information$ million2011 2010 2009Exploration and ProductionReplacement cost profit beforeinterest and tax adjusted for fairvalue accounting effects 30,489 30,889 23,881Impact of fair value accountingeffects 11 (3) 919Replacement cost profit beforeinterest and tax 30,500 30,886 24,800Refining and MarketingReplacement cost profit beforeinterest and tax adjusted for fairvalue accounting effects 5,411 5,513 1,004Impact of fair value accountingeffects 63 42 (261)Replacement cost profit beforeinterest and tax 5,474 5,555 743Total groupProfit (loss) before interest and taxadjusted for fair valueaccounting effects 39,743 (3,741) 25,768Impact of fair value accountingeffects 74 39 658Profit (loss) before interest and tax 39,817 (3,702) 26,42658 BP Annual Report and Form 20-F 2011