BP plc · LSE:BP.
BP — Investor Presentation (March 2002)
14 slides from BP's investor presentation, Mar 21, 2002
Slide 1: Implementing new UK accounting standard FRS 19
Implementing new UK accounting standard FRS 19 Thursday 21st March 2002
Slide 2: Forward-looking statements disclaimer
This presentation and the associated slides and discussion contain statements, particularly those regarding capital employed, capital expenditure, cash flows, costs, savings, debt, demand, disposals, dividends, earnings, efficiency, gearing, growth, margins, performance, prices, production, producti
Slide 3: Delivering strategy
delivering strategy ! organic investment ! high grade portfolio ! capital efficiency ! operating efficiency " increase mid-cycle returns " grow capital employed " grow dividend …within a disciplined financial framework
Slide 4: What is FRS 19
What is FRS 19 New UK GAAP Financial Reporting Standard Requires full provision for deferred taxes in P&L BP to implement for 2002 History to be stated on a comparable basis No economic impact
Slide 5: No economic change due to FRS 19
No economic change due to FRS 19 Cash unchanged Performance targets unchanged Income tax rate increases to include all deferred tax Equivalent reductions in income & capital employed Neutral ROACE impact Financial framework maintained on an equivalent basis
Slide 6: Impact of FRS 19 - 2001: Effective Tax Rate
Impact of FRS 19 - 2001 Effective Tax Rate Pre Post $m FRS19 FRS19 ∆ Proforma RCOP 19,608 19,608 Interest expense (1,608) (1,608) Pre Tax Result 18,000 18,000 Income Tax (4,749) (6,380) (1,631) Effective Tax Rate 26% 35% 9% Statutory tax rate 37% 37% Stock holding losses (1%) (1%) Permanent Differen
Slide 7: Impact of FRS 19 - 2001: Earnings and Cash
Impact of FRS 19 - 2001 Earnings and Cash Pre Post $m FRS 19 FRS 19 ∆ Proforma RCOP 19,608 19,608 Interest Expense (1,608) (1,608) Income Tax (4,749) (6,380) (1,631) Minority Interest (73) (61) 12 Proforma Result 13,178 11,559 (1,619) Oper. Cash Flow * 22,093 22,093 Cash Tax Paid (4,660) (4,660) Net
Slide 8: Impact of FRS 19 - 2001: Returns
Impact of FRS 19 - 2001 Returns Pre Post $m FRS19 FRS19 ∆ Proforma RCOP 19,608 19,608 Income Tax (4,749) (6,380) (1,631) Proforma result before MSI 14,921 13,290 (1,631) and Interest Proforma Average Capital 76,604 67,112 (9,492) Employed Proforma ROACE 19.4% 19.7% 0.3% Source: BP data
Slide 9: Minimal Change to ROACE
Minimal Change to ROACE Proforma ROACE 25% Competitor range* BP Post FRS 19 20% BP Pre FRS 19 15% 10% 5% 0% 1997 1998 1999 2000 2001 * Competitors: XOM, Shell, CVX, TFE; 2001 estimated Consistent handling of major transactions Source: BP data
Slide 10: Financial Framework Unchanged
Financial Framework Unchanged Proforma Net Debt Ratio • Previous target 20% - 30% • FRS19 increases 2001 by 4% • Target band re-calibrated to equivalent 25% - 35% Dividend Mid-Cycle Payout Ratio • Previous target around 50% • FRS19 increases 2001 mid-cycle payout by 9% • Target re-calibrated to arou
Slide 11: Impact of FRS 19 - 2001: Debt Ratio
Impact of FRS 19 - 2001 Debt Ratio Pre Post $m FRS19 FRS19 ∆ Net Debt* 19,609 19,609 Proforma Equity 57,008 46,877 (10,131) End period Proforma 76,617 66,486 (10,131) Net Cap. Emp. Proforma Net Debt Ratio 25.6% 29.5% 3.9% *Net debt = gross debt - cash Source: BP data
Slide 12: Impact of FRS 19 - 2001: Dividend Payout
Impact of FRS 19 - 2001 Dividend Payout Pre Post $m FRS 19 FRS 19 ∆ Proforma Result 13,178 11,559 (1,619) Proforma EPS (¢/share) 58.7 51.5 (7.2) Dividend (¢/share) 22.0 22.0 Proforma Dividend 37% 43% 6% Payout FRS 19 increases the 2001 payout ratio by 9% at mid-cycle conditions Source: BP data
Slide 13: Summary - No economic impact
Summary - No economic impact ! Cash unchanged ! Target Returns constant or rising at mid-cycle ! Performance potential unchanged - $1.4bn pre tax in 2002 ! Financial framework maintained on an equivalent basis Gearing 25% - 35 % Payout around 60% of mid-cycle proforma result Dividend growing with un
Slide 14: Q&A panel
Q&A panel John Buchanan Chief Financial Officer Mike Starkie Chief Accountant Patrick Chapman Head of Group Tax Greg Coleman VP, Investor Relations