BP's Annual Results for 2007 Take Downward Turn

BP's fourth-quarter replacement cost profit was $2,972 million, compared with $3,895 million a year ago, a decrease of 24%. For the full year, replacement cost profit was $17,287 million compared with $22,253 million, down 22%.

The fourth-quarter result included a net non-operating charge of $1,030 million, including pre-tax charges of $603 million for the impairment of US Convenience Retail and $338 million for restructuring, integration and rationalization costs associated with BP's Forward Agenda. This compares with a net non-operating charge of $152 million in the fourth quarter of 2006. For the full year, the net non-operating charge was $272 million compared with a net non-operating gain of $1,062 million in 2006.

Net cash provided by operating activities for the quarter and year was $4.3 billion and $24.7 billion respectively compared with $5.0 billion and $28.2 billion a year ago.

The effective tax rate on replacement cost profit from continuing operations for the fourth quarter was 45% compared with 25% a year ago. For the year, the rate was 37% compared with 35% a year ago. The increased rate in the fourth quarter reflects the effect of inventory holding gains and losses, which are eliminated in the replacement cost profit, while the tax charge remains unadjusted and includes the tax effect on inventory holding gains and losses. If this effect is excluded, the rate would have been 38% in the fourth quarter compared to 31% a year ago.

Net debt at the end of the quarter was $27.5 billion. The ratio of net debt to net debt plus equity was 23% compared with 20% a year ago.

Capital expenditure, excluding acquisitions and asset exchanges, was $6.6 billion for the quarter and for the year was $19.2 billion. Total capital expenditure and acquisitions was $6.6 billion for the quarter and $20.6 billion for the year. The year included $1.1 billion in respect of the acquisition of Chevron's Netherlands manufacturing company. Disposal proceeds were $0.4 billion for the quarter and were $4.3 billion for the year.

The quarterly dividend, to be paid in March, is 13.525 cents per share ($0.8115 per ADS) compared with 10.325 cents per share a year ago. For the year, the dividend showed an increase of 16%. The dividend increase marks a shift in the balance between dividends and share buybacks as a means of returning value to shareholders. In sterling terms, the quarterly dividend is 6.813 pence per share, compared with 5.258 pence per share a year ago; for the year the increase was 7%. During the quarter, the company repurchased 121 million of its own shares for cancellation at a cost of $1.5 billion. For the year, share repurchases were 663 million at a cost of $7.5 billion.

Information on fair value accounting effects in relation to Refining and Marketing and Gas, Power and Renewables is set out on page 10.