BP Oil Australia Pty Ltd

BP Oil Australia Pty Ltd (formerly BP Australia Holdings Limited)

A.C.N. 008 428 911

Annual Financial Report for the year ended 31 December 2001

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) CORPORATE INFORMATION

ACN 008 428 911 BOARD OF DIRECTORS G.D. Bourne (Managing Director and Chairman) G Nicolaides R.M. Harding G.R. Hueston J. Norman R. Warnock K.M Lucas T.J. Ind (Alternate Director) SECRETARIES R.W. Morrison R.W. Venner DOMICILE AND PLACE OF INCORPORATION Australia HEAD OFFICE Levels 24-31, The Tower, Melbourne Central, 360 Elizabeth Street, Melbourne, 3000 (03 9268 4111) REGISTERED OFFICE Level 29, The Tower, Melbourne Central, 360 Elizabeth Street, Melbourne, 3000 (03 9268-3889) BANKERS TO THE GROUP Australia and New Zealand Banking Group Limited Citibank NA SOLICITORS Corrs Chambers Westgarth AUDITORS Ernst & Young

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) DIRECTORS’ REPORT continued

DIRECTORS' REPORT Your directors submit their report for the year ended 31 December 2001. DIRECTORS The names and details of the company’s directors in office during the financial year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated. Names and qualifications GREGORY DAVID BOURNE - BSc (Hons) Mr Greg Bourne was appointed Managing Director in January 1999. He joined the BP Group in 1967. He has served as Director of BP Scotland and Regional Director - Latin America. Mr Bourne is also a Director of BP New Zealand Limited and is Chairman of the Sustainable Energy Authority of Victoria. GEORGE NICOLAIDES - BS,MS, PH.D. Dr George Nicolaides was appointed to the Board in December 2000. His current position is Director & General Manager, Bulwer Island Refinery. Prior to this position Dr Nicolaides was Vice President, Refining Technology for the company’s world-wide refining system and a member of the corporate Technology Council. He joined Amoco in 1978 and has been involved in a variety of areas including technology development and management, manufacturing operations, planning and economics, strategy formulation, and international business development in Asia for both refining and petrochemicals. Most recently, he led the integration of the BP and Amoco downstream technology groups and the creation of the BP-UOP technology alliance for refining. RICHARD MICHAEL HARDING - M.Sc. Mr Richard Harding is the General Manager Exploration and Gas and is in charge of the resources (upstream) business in Australia. He was appointed to the Board of BP in September 1996. He has over 20 years of ever increasing responsibility in operations, asset and business investment management within the Oil and Gas Industry. This is his second posting to Australia, the first being in 1982 as Technical Manager North West Shelf. Prior to his assuming his current role as President and General Manager, Exploration and Gas, he held a number of management positions in BP, international postings including Asset Manager, Azerbaihjan and Kazakhstan; Project Manager, South Korea and Asset Manager for Wytch Farm at Dorset in the UK. GERALD ROBERT HUESTON - B.Sc., B.Com. Mr Gerry Hueston was appointed Director in June 1998. He joined the BP Group in 1976 and has served BP in Australia, N.Z., Benelux and the U.K. Recent roles include Commercial Director, BP NZ, Commercial Manager, BP Oil Benelux and Senior Business Advisor, Commercial, in the Group Headquarters in London. His current role as CEO Marketing, Australasia involves responsibility for the Downstream business in New Zealand, PNG and South West Pacific along with the Retail, Commercial Fuels, Bitumen, Distributor and Distribution Businesses in Australia. He is also a Director of the Australian Institute of Petroleum Limited. JOHN NORMAN - M.Sc (Econ), UK Chartered Accountant Mr John Norman was appointed to the Board in July 1999. He is the Regional Chief Financial Officer, Eastern Hemisphere, and has oversight responsibility for the financial shared services in the Asia Pacific area. He has over 25 years of increasing management responsibility in the areas of accounting, control, audit, systems, procurement and other business support processes in the Exploration, Oil, Chemicals and Engineering industries. ROSEMARY WARNOCK - B.A. Ms Rosemary Warnock was appointed to the Board in October 2001. She joined the BP Group in 1984 and has worked in a broad span of roles within the group's businesses in Australia, New Zealand, PNG and South West Pacific. Recent roles include Regional Manager NSW and Distributor & Terminals Channel Manager Australia, including the Group's businesses in PNG & South West Pacific. Her current role involves responsibility for the lubricants businesses across Australia and New Zealand.

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KATHLEEN MARIE LUCAS - B.Sc. Mrs Kathleen Lucas was appointed Director in January 2002. She was appointed Business Unit Leader, BP Refinery Kwinana in December 2001. Prior to this assignment, Kathleen was the Business Growth Leader at Kwinana, (Commercial Manager). Kathleen has twenty years experience in the refining industry in a variety of operations, commercial and strategic roles. Kathleen held the position of Optimisation Manager at BP’s Mandan, North Dakota, USA refinery. She also held a variety of roles in BP’s Texas City USA refinery. TIMOTHY JOHN IND - BA Mr Tim Ind was appointed Alternate Director in June 1998. He has been General Manager Air BP since 1996 and was appointed Air BP Manager Asia Pacific in 1999. Mr Ind joined the BP Group in 1971 in the UK and has held a number of Marketing and Business Management posts in different Commercial Businesses within BP's Oil activity in Europe, Middle East and Australia. Mr Ind is a Director of BP South West Pacific Limited and JV Refuelling Companies in Singapore and China. RICHARD ROBERT CAPE - BBA, MBA Mr Richard Cape was appointed to the Board in November 1999. He was the Kwinana Refinery Business Unit Manager until his resignation in December 2001. Prior to this appointment he was General Manager, Downstream Planning and Performance Management, in London. Previous BP roles have included leading a retail and commercial marketing division in the US, serving as the commercial manager of BP’s Ohio refining system, managing international LPG trading from London, representation of BP before the US Federal Government in Washington, D.C., and crude oil trading, also in the US. Before joining BP, Mr Cape managed a family oil and gas drilling business in Texas. STEWART FRASER HOWE - BE (CHE) (Hons) Mr Stewart Howe was appointed to the Board in June 1998. He started with Amoco at Bulwer Island Refinery in 1978 and joined BP in 1984 when it bought Amoco's Australian operations. Much of his career with BP was spent in refining with positions at the Company's Bulwer Island and Kwinana Refineries as well as three years with BP in London working on refining investment strategy. He held the position of Manager, Strategy, Planning and Control for BP Oil's manufacturing and supply business in Australasia prior to taking on the role of General Manager, Commercial Marketing. He was currently Solutions Business Unit Manager Australasia until his resignation in August 2001. CORPORATE STRUCTURE BP Oil Australia Pty Ltd (formerly known as BP Australia Holdings Limited) is a company limited by shares and incorporated and domiciled in Australia. Its ultimate parent company is BP p.l.c. BP Australia has prepared a consolidated financial report incorporating the entities that it controlled during the financial year. EMPLOYEES The consolidated entity employed 2,808 employees as at 31 December 2001 (2000: 2,403 employees). PRINCIPAL ACTIVITIES The principal activities of the Consolidated Entity constituted by the Company and the entities it controlled from time to time during the financial year were in the refining, transportation and marketing of petroleum products and the manufacture and marketing of photovoltaic cells and related solar powered equipment. DIVIDENDS No dividend was declared or paid during 2001 (2000: Nil).

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REVIEW AND RESULTS OF OPERATIONS The financial report of the Consolidated Entity for the year shows an operating profit before income tax of $37.3 million (2000: $166.9 million profit). The profit of the Consolidated Entity for the year after income tax was $44.8 million (2000: $127.2 million profit). The net profit attributable to direct outside equity interest for the year was $4.0 million. Regional refining margins continued to be poor throughout the year, reflecting the surplus refining capacity in the Pacific Rim. Intense competition continues in the Australian marketplace. Oil prices have been at historically high prices throughout the year, which maintained pressure on historic cost operating margins as marketers struggled to pass on price increases in an increasingly competitive environment. Hence the organisation has had to continue its cost reduction and revenue enhancement initiatives to meet income targets. There was no significant change in the affairs of the Consolidated Entity that occurred during the financial year ended 31st December 2001. SIGNIFICANT EVENTS AFTER THE BALANCE DATE On 2 January 2002, the Company repaid the trade bill outstanding at the end of the financial year. The amount repaid was $35 million. There has been a restructure of the BP Group’s assets in Australasia, intended to rationalise and simplify the BP Group’s operations in the region. On 26 March 2002, the Company’s name changed to BP Australia Holdings Pty Ltd as a result of a change of status. On 15 April 2002, the Company’s name changed to BP Oil Australia Pty Ltd. On 1 April 2002, 100% of the shares of the Company were acquired by BP Australia Group Pty Ltd (formerly known as BP Timor Gap West Pty Ltd). This transaction also involved the acquisition by BP Australia Group Pty Ltd of 100% of the shares in Burmah Oil Investments (Australia) Pty Ltd and BP Solar Australia Pty Ltd. The combined consideration for the acquisition of these three companies was US$519 million cash and the issue of US$534 million worth of shares to BP Global Investments Limited (subject to an adjustment payment). A consequence of BP Australia Group Pty Ltd’s acquisition of the Company, is that the Company is no longer the ultimate holding company of the majority of the BP companies operating in Australia. The ultimate holding company of the majority of the BP companies operating in Australia is BP Regional Australasia Holdings Pty Ltd (formerly BP Amoco Australia Holdings Pty Ltd), which acquired BP Australia Group Pty Ltd at market value on 26 March 2002. On 1 April 2002, BP Australia Group Pty Ltd issued additional shares to BP Global Investments Limited (incorporated in England) thereby reducing BP Regional Australasia Holdings Pty Ltd’s ownership to approximately 75%. On 1 April 2002, the shareholding of BP Australia Capital Markets Limited (formerly BP Finance Australia (CP) Limited), transferred to BP Global Investments Limited for a cash consideration of $2. BP Australia Capital Markets Limited was a controlled entity of the Company during 2001. No other matters or circumstances has arisen since the end of the financial year that has significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company, in subsequent years. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS There have been no significant changes in the state of affairs of the Consolidated Entity other than those mentioned elsewhere in this report.

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LIKELY DEVELOPMENTS AND EXPECTED RESULTS In all of its business the Consolidated Entity will continue to look for opportunities to improve its profitability and competitiveness. Profitability will remain sensitive to the competitive pressures in the domestic and international marketplace, the exchange rate of the Australian dollar, international oil prices and government policy and action on domestic prices. Further information as to likely developments and their expected results have not been included in this report as it is likely to result in unreasonable prejudice to the Consolidated Entity. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company's ultimate holding company, BP p.l.c., maintains insurance for directors and officers of all its Group companies insuring them against the financial consequences of actions brought against them for acts or omissions in the performance of their duties. ENVIRONMENTAL REGULATION AND PERFORMANCE “ The world’s need for energy is growing steadily day by day. Energy and materials, used safely and efficiency, are essential to the prosperity and growth of every country and every region in the world. Sustaining and enhancing our quality of life depends on them. To play a leading role in meeting these needs from oil, gas, solar power and petrochemicals without damaging the environment is BP’s goal. Ours is a positive involvement. Innovation will be the hallmark of the way we work with people, technology, assets and relationships. We will always be constructive. Our success depends on our making, and being seen to make, a distinctive contribution in all we do.” What we stand for…” BP’s Health, Safety and Environment commitment states that: “Our goals are simply stated - no accidents, no harm to people and no damage to the environment. We will continue to drive down the environmental and health impact of our operations by reducing waste, emissions and discharges, and using energy efficiently.” and “Openly report our performance, good and bad”. BP’s focus is on reducing our environmental footprint in Australia and around the world, and ensuring our staff and customers are safe and healthy in all interactions with our operations and products. We are doing this by targeting those parts of our business which have the greatest environmental and health & safety impact as articulated by Australians. Key environmental concerns to Australians include local air quality, climate change and water use. There is a culture of continual improvement within BP. This is supported by a robust HSE management and assurance system, based around the 13 expectations highlighted in the document ‘getting HSE right’, yearly HSE performance contracts and regular HSE assurance activities. This has driven us far beyond compliance, where adhering to State and Commonwealth environmental legislation and regulations is accepted as a minimum standard. Details of our environmental performance were published this year in our first ‘Triple Bottom Line’ Report available from the Company or from the web site at www.bp.com.au. Examples of how we reduced the impacts of our operations, and pursued our sustainable development journey include: • BP’s Kwinana Refinery had their Environment Management System certified to ISO14001( Environment

Management Systems) in 2000, and Bulwer Island Refinery had its system certified at the end of 2001. • BP was one of the first signatories to a Greenhouse Challenge Co-Operative Agreement with the Commonwealth

Government, and has reduced CO2(e) emissions by greater than 700,000 tonnes since 1996.

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http://www.bp.com.au/


• BP is an industry leader in adopting innovative Greenhouse abatement policies and programmes, exemplified by our internal emissions trading scheme. BP commenced a pilot internal emissions trading programme in 1998, with Kwinana Refinery being a founding member. 2000 saw the role out of Emissions Trading to the rest of BP.

• BP had its emission inventories verified as part of the Greenhouse Challenge Independent Verification Program. • BP introduced a new programme called BP Global Choice, which enables customers to offset their car’s greenhouse

gas emissions when they buy BP Ultimate petrol. Under the programme, a part of the purchase price paid by motorists who choose to use BP Ultimate, is used for investment in a series of independently verified and Federal Government endorsed greenhouse abatement projects under the ‘Greenhouse Friendly’ program.

• BP has pushed ahead on our cleaner fuels agenda and introduced:

- Low sulphur diesel in Western Australia and Queensland, and can produce Ultra low sulphur Diesel (50 ppm) at the Kwinana Refinery and Bulwer Island Refinery.

- Lead replacement petrol in the Australian states of Western Australia, South Australia, New South Wales,

Australian Capital Territory, Queensland (we were the first company to introduce Lead Replacement Petrol in Australia)

- Invested approx. AUD$300 million to upgrade our Bulwer Island Refinery to produce cleaner fuels.

- EcoUltra, one of the cleanest diesel fuels in the world with a sulphur level of just 50 ppm – a 100 fold reduction in the current national standard of 5000 ppm

- Australia’s cleanest petrol, BP Ultimate, which has the lowest levels of benzene and sulphur and produces less pollution than other Australian petrols. Benzene levels have been reduced from 2% to 1%.

• BP was awarded a grant from the Federal Government under the Greenhouse Gas Abatement Program to assist with

the introduction of fuels containing 10% ethanol to be manufactured at the Bulwer Island Refinery. • BP currently has 23 solar powered service station sites in New South Wales, Queensland, Western Australia, South

Australia and Victoria. • BP is planting trees that helps reduce global warming and land degradation, and has supported the planting of 1.4

million trees in Western Australia since 1998. • Part of the Bulwer Island Refinery clean fuels upgrade requires an increase in water usage. This increase was achieved

by recycling treated wastewater from the near by Council operated Lugage Point wastewater treatment plant. The wastewater is now further purified and then supplied to BP for use in cooling systems, fire water and steam generation. This provides two benefits:

- Reduced treated sewerage discharges to Brisbane River; and - Reduced fresh water consumption for the refinery operations.

The BP Group has been publishing a stand alone Environment Report since the early 90’s. For a full picture of our environmental performance during 2001, this report should be read in conjunction with our BP Group 2000 Environment report, the Australian location report is contained on the BP Group website and listed under “BP alive”. (www.bpamoco.com/alive) and the Australian Triple Bottom Line report referred to earlier. In conclusion the Directors are not aware of any breaches of environmental legislation during the financial year, by the entity, which are material in nature, and have no reason to believe that any possible legal or remedial action would result in a material cost, or loss to the company or the entity.

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http://www.bpamoco.com/alive)


DIRECTORS’ MEETINGS The Directors attended to the Company's business by way of Circulating Resolutions in accordance with the Company's Constitution. Eight such Circulating Resolutions were circulated during the year and were reviewed and signed by the Directors as follows. Number of Circulating

Resolutions circulated whilst in office

Reviewed and Signed

G.D Bourne 8 8 G. Nicolaides 8 8 R.M. Harding 8 8 G.R. Hueston 8 8 J. Norman 8 8 R. Warnock (appointed 15/10/01) 1 1 T.J. Ind (Alternate Director) 8 - S.F. Howe (resigned 31/08/01) 6 6 R.R. Cape (resigned 31/12/01) 8 6 The Directors also attended a Committee of the Board (Regional Leadership Forums) as follows: Number of meetings

whilst in office Attended

G.D Bourne 2 2 G. Nicolaides 2 2 R.M. Harding 2 2 G.R. Hueston 2 - J. Norman 2 2 R. Warnock (appointed 15/10/01) 1 - T.J. Ind (Alternate Director) 2 2 S.F. Howe (resigned 31/08/01) 1 1 R.R. Cape (resigned 31/12/01) 2 1 ROUNDING The amounts contained in this report have been rounded off to the nearest million under the option available to the Company under ASIC Class Order 98/0100. The company is an entity to which the Class Order applies. CORPORATE GOVERNANCE In recognising the need for the highest standards of corporate behaviour and accountability, the directors of BP Oil Australia Pty Ltd (formerly BP Australia Holdings Limited) support and have adhered to the principles of corporate governance. Signed in accordance with a resolution of the directors. Greg Bourne Director Melbourne date

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) STATEMENT OF FINANCIAL PERFORMANCE

YEAR ENDED 31 DECEMBER 2001 Notes CONSOLIDATED BP Australia Holdings Limited 2001 2000 2001 2000 $m $m $m $m

REVENUES FROM ORDINARY ACTIVITIES 2 5,820.6 5,427.9 51.7 74.5

Changes in inventories of finished goods and work in progress 144.2 (134.6) - -

Raw materials and consumables used 4,630.8 4,430.9 - -

Depreciation and amortisation expenses 3 130.3 110.6 - -

Borrowing costs expense 3 57.1 216.4 - -

Salaries and employee benefits expense 234.1 195.2 - -

Other expenses from ordinary activities 586.8 442.5 - 6.0

PROFIT FROM ORDINARY ACTIVITIES BEFORE INCOME TAX EXPENSE

37.3 166.9 51.7 68.5

INCOME TAX EXPENSE/(BENEFIT) RELATING TO ORDINARY ACTIVITIES

4 (7.5) 39.7 14.7 22.5

NET PROFIT

44.8 127.2 37.0 46.0

NET PROFIT ATTRIBUTABLE TO DIRECT OUTSIDE EQUITY INTEREST

22 (4.0) - - -

NET PROFIT ATTRIBUTABLE TO MEMBERS OF BP AUSTRALIA HOLDINGS LIMITED

40.8 127.2 37.0 46.0

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) STATEMENT OF FINANCIAL POSITION

AT 31 DECEMBER 2001 Notes CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

CURRENT ASSETS Cash assets 57.7 50.5 - - Receivables 6 2,083.4 1,839.8 1,127.3 1,142.3 Inventories 7 508.5 648.9 - - Other 8 95.4 116.1 - -

TOTAL CURRENT ASSETS 2,745.0 2,655.3 1,127.3 1,142.3

NON-CURRENT ASSETS Receivables 9 3.0 1.0 - - Other financial assets 10 11.8 11.3 589.9 589.9 Property, plant and equipment 12 1,871.3 1,848.1 - 2.0 Deferred tax assets 4 92.9 59.3 - - Intangible assets 13 2.4 7.8 - -

TOTAL NON-CURRENT ASSETS 1,981.4 1,927.5 589.9 591.9

TOTAL ASSETS 4,726.4 4,582.8 1,717.2 1,734.2

CURRENT LIABILITIES Payables 14 635.2 650.6 27.9 38.4

Interest-bearing liabilities 15 436.9 409.4 - -

Current tax liabilities 4 - - 15.5 21.5

Provisions 16 40.3 41.0 - -

TOTAL CURRENT LIABILITIES 1,112.4 1,101.0 43.4 59.9

NON-CURRENT LIABILITIES

Payables 17 11.8 13.9 - -

Interest-bearing liabilities 18 1,824.6 1,800.4 - 36.2

Deferred tax liabilities 4 264.3 245.2 - 1.3

Provisions 19 49.2 42.7 0.2 0.2

TOTAL NON-CURRENT LIABILITIES 2,149.9 2,102.2 0.2 37.7

TOTAL LIABILITIES 3,262.3 3,203.2 43.6 97.6

NET ASSETS 1,464.1 1,379.6 1,673.6 1,636.6

EQUITY

Parent entity interest Contributed equity 20 10.8 10.8 10.8 10.8 Reserves 21 31.0 31.0 63.0 63.0 Retained profits 21 1,378.6 1,337.8 1,599.8 1,562.8

Total parent entity interest in equity 1,420.4 1379.6 1673.6 1636.6

Direct outside equity interest 22 43.7 - - -

TOTAL EQUITY 1,464.1 1,379.6 1,673.6 1,636.6

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) STATEMENT OF CASH FLOWS

YEAR ENDED 31 DECEMBER 2001 Notes CONSOLIDATED

2001 2000 $m $m

CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 9,787.4 8,331.0

Payments to suppliers and employees (8,957.8) (8,008.2)

GST paid (458.2) (178.2)

Dividend received 9.1 11.0

Interest received 77.3 98.8

Borrowing costs (57.1) (216.3)

Income tax paid (7.5) (15.6)

NET CASH FLOWS FROM OPERATING ACTIVITIES 23 393.2 22.5

CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property, plant and equipment (179.4) (413.4)

Proceeds from sales of property, plant and equipment 66.3 40.0

Cash acquired on acquisition 9.0 5.7

Proceeds on sale of investment 1.4 5.8

Net cash inflow/(outflow) on sale of subsidiaries 4.9 (1.0)

NET CASH FLOWS USED IN INVESTING ACTIVITIES (97.8) (362.9)

CASH FLOWS FROM FINANCING ACTIVITIES Net advances – related parties inflow/(outflow) (322.8) 371.4

Borrowings to other parties (0.4) (2.2)

Proceeds from trade bills 35.0 -

NET CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES

(288.2) 369.2

NET INCREASE IN CASH HELD 7.2 28.8

Add opening cash brought forward 50.5 21.7

CLOSING CASH CARRIED FORWARD 23 57.7 50.5

No cash flow is shown for BP Australia Holdings Limited, as all cash transactions are made on behalf of the entity by BP Finance Australia Limited, a subsidiary.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 31 DECEMBER 2001 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting The financial statements have been prepared in accordance with the historical cost convention. The financial report is a general purpose financial report which has been prepared in accordance with the requirements of the Corporations Act which includes applicable Accounting Standards. Other mandatory professional reporting requirements (Urgent Issues Group Consensus Views) have also been complied with. Changes in Accounting policies The accounting policies adopted by the consolidated group are consistent with those of the prior year. Principles of Consolidation The consolidated financial statements are those of the consolidated entity, comprising BP Australia Holdings Limited (the parent entity) and all the entities which BP Australia Holdings Limited controlled from time to time during the year and at balance date. Information from the financial statements of subsidiaries is included from the date the parent entity obtains control until such time as control ceases. Where there is a loss of control of a subsidiary, the consolidated financial statements include the results for the part of the reporting period during which the parent entity had control. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. All intercompany balances and transactions, including unrealised profits arising from intra group transactions, have been eliminated in full. Foreign Currencies Translation of foreign currency transactions Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction. Amounts payable to and by the entities within the consolidated entity that are outstanding at the balance date and are denominated in foreign currencies have been converted to local currency using rates of exchange ruling at the end of the financial year. Exchange gains and losses on currency trading have been determined by referring to the spot rate on the transaction date relative to the spot rate at balance date. Specific Hedges Where a purchase or sale is specifically hedged, exchange gains or losses on the hedging transaction arising up to the date of purchase or sale and costs, premiums and discounts relative to the hedging transaction are included with the purchase or sale. Exchange gains and losses arising on the hedge transaction after that date are taken to the Statement of Financial Performance.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Cash and cash equivalents Cash on hand and in banks and short term deposits are stated at the lower of cost and net realisable value. For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks, and money market investments readily convertible to cash within 2 working days, net of outstanding bank overdrafts. Cash flows of the Parent Entity are not shown, as all cash transactions are made on behalf of the entity by BP Finance Australia Limited, a subsidiary. Investments All investments (including in associates) are carried at the lower of cost and recoverable amount. Inventories Inventories are valued at the lower of cost and net realisable value. Cost includes appropriate production overheads and is determined on the first in first out basis. Trade and other receivables Trade receivables are recognized and carried at original invoice amount less a provision for any uncollectable debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred. Receivables from related parties are recognized and carried at the nominal amount due. Interest is taken up as income on an accrual basis. Bills of exchange and promissory notes are measured at the lower of cost and net realizable value. Recoverable Amount Non-current assets are not carried at an amount above their recoverable amounts, and where carrying values exceed this recoverable amount, assets are written-down. In determining recoverable amount, the expected net cash flows have not been discounted to their present value using a market determined risk adjusted discount rate. Property Plant & Equipment Cost Property, plant and equipment are carried at cost. Depreciation Depreciation is provided on a straight line basis on all property, plant and equipment, other than freehold land. Major depreciation periods are:

2001 2000

Freehold buildings 20 - 30 years 20 - 30 years Plant and equipment 2.5 - 30 years 2.5 - 30 years Goodwill Goodwill represents the excess of the purchase consideration over the fair value of identifiable net assets acquired at the time of acquisition of a business or shares in a controlled entity. Goodwill is amortised by the straight-line method over the period during which benefits are expected to be received. This is taken as being 20 years. Provisions The provision for restoration represents to the provision for environmental clean up of terminals, recognised when there is a present obligation. This includes provisions for terminals that have been sold, planned to be sold or operating terminals where there is a known problem, which requires attention.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: Sale of Goods Control of the goods has passed to the buyer Rendering of Services Control of a right to be compensated for the services has been attained. Interest Control of a right to receive the interest payment. Dividends Control of a right to receive the dividend payment. Employee Entitlements Provision is made for employee entitlement benefits accumulated as a result of employees rendering services up to the reporting date. These benefits include wages and salaries, annual leave and long service leave. Liabilities arising in respect of wages and salaries, annual leave, and any other employee entitlements expected to be settled within 12 months of the reporting date are measured at their nominal amounts. All other entitlement liabilities are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date. In determining the present value of future cash outflows, the interest rates attaching to the government securities, which have terms to maturity approximating the term of the related liability are used. The value of the employee share scheme described in note 25 is not being charged as an employee entitlement expense. The contributions made to the defined benefits superannuation fund are charged against profits when due. Trade and other payables Liabilities for trade creditors and other amounts are carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the consolidated entity. Payables to related parties are carried at the principal amount. Interest, when charged by the lender, is recognised as an expense on an accrual basis. Deferred cash settlements are recognised at the present value of the outstanding consideration payable on the acquisition of an asset discounted at prevailing commercial borrowing rates.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Income Tax Expense Tax effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised. Tax effect accounting in accordance with AASB 1020 has been adopted by all companies in the Consolidated Entity. The Consolidated Entity has included in its income tax expense the benefits arising from the intra-group transfer of tax losses permitted under Subdivision 170 of the Income Tax Assessment Act. Where consideration is to be given for these benefits from a related body corporate, which is not a member of the Consolidated Entity this has been included as income tax expense. Future income tax benefits related to tax losses and timing differences are not recognised as assets unless recovery is assured beyond any reasonable doubt. Accumulated benefits, which have not been brought to account, will only be realised if in the respective controlled entities: - the companies derive future assessable income of a nature and of an amount sufficient to enable the benefit from the deductions to be realised or are able to transfer the benefit to another related body corporate; - the companies continue to comply with the conditions for deductibility imposed by the law; and - there are no changes in tax legislation adversely affecting the companies in realising the benefit from the deductions. The timing of reversal of future income tax benefits and provision for deferred income tax is dependent on the outcome of future activities. All such balances are classified as non-current. Comparative information Certain comparative information, in respect of the year ended 31 December 2001, has been restated in several cases to ensure that a meaningful comparison can be made with the information of the current year due to the adoption of new and revised accounting standards AASB1018: Statement of Financial Performance, AASB1034: Financial Report Presentation and Disclosures and AASB1040: Statement of Financial Position.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 2. REVENUE FROM ORDINARY ACTIVITIES Notes CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

Revenues from operating activities Revenue from sale of goods 8,398.1 7,921.7 - -Revenue from services 139.6 134.5 0.7 1.5

Total revenues from operating activities 8,537.7 8,056.2 0.7 1.5

Revenues from non-operating activities Rent 11.9 7.8 - -Dividends - other corporations 9.1 11.0 - 1.1Interest - related parties within wholly-owned group 29 - - 51.0 64.6 - other related parties – common controlled entities 29 72.6 98.1 - - - other persons/corporations 4.7 0.7 - -

Total interest 77.3 98.8 51.0 64.6

Proceeds on sale of non-current assets 72.3 49.5 - 7.3

Total revenues from outside the operating activities 170.6 167.1 51.0 73.0

Excise duty (2,887.7) (2,795.4) - -

Total revenues from ordinary activities 5,820.6 5,427.9 51.7 74.5

3. EXPENSES AND LOSSES/(GAINS)

(a) Expenses Cost of goods sold 4,775.0 4,296.3 - - Amortisation of non-current assets Goodwill 6.1 0.7 - -

Depreciation of non-current assets Plant and equipment 110.8 98.6 - - Buildings 13.4 11.3 - -

Total depreciation of non-current assets 124.2 109.9 0.0 0.0

Total depreciation and amortisation expenses 130.3 110.6

Borrowing costs expensed Interest expense Other related parties – common controlled entities 29 55.7 214.0 - - Other persons/corporations 0.5 1.9 - -

56.2 215.9 0.0 0.0 Other borrowing costs Other persons/corporations 0.9 0.5 - -

Total borrowing costs expensed 57.1 216.4 0.0 0.0

15

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 3. EXPENSES AND LOSSES/(GAINS) (cont’d) Notes CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

Bad and doubtful debts – trade debtors 5.4 1.1 - -Bad and doubtful debts – loan to a common controlled entity 45.2 - - -Rental - operating leases 29.9 30.4 - -

(b) Losses/(Gains)

Net loss/(gain) on disposal of property, plant and equipment 16.7 (13.2) - -

Net loss/(gain) on disposal of financial assets (2.8) (1.2) - (1.2)

Net foreign currency losses/(gains) (3.7) 24.1 - -

(c) Significant Item

Interest adjustment 1999 and 2000 (99.9) - - -

The interest adjustment is related to interest overcharges in 1999 and 2000 on current accounts and loan balances payable to BP Asia Pacific Holdings Limited, a UK company.

4. INCOME TAX The prima facie tax, using tax rates applicable in the country of operation, on operating profit differs from the income tax provided in the financial statements as follows:

Prima facie tax on profit from ordinary activities 11.2 57.1 15.5 23.3

Tax effect of permanent differences: Non taxable gain on sale (5.0) (9.3) - -

Depreciation of buildings, profit/loss on sale of non-current assets

3.8 2.3 - -

Other items (net) (39.3) (1.4) (1.2) (0.8)

Gain arising from restatement of deferred tax assets and liabilities due to the change in tax rate

- (2.0) - -

Under/(over) provision of previous year 21.8 (7.0) 0.4 -

Income tax expense/(benefit) attributable to operating activities

(7.5) 39.7 14.7 22.5

Deferred tax assets and liabilities

Current tax payable - - 15.5 21.5

Provision for deferred income tax – non-current 264.3 245.2 - 1.3

Future income tax benefit – non-current 92.9 59.3 - -

16

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 5. DIVIDENDS PAID OR PROVIDED FOR

Notes CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

Dividends paid /proposed Franked dividends - - - - Unfranked dividends - - - -

0.0 0.0 0.0 0.0

The amount of franking credits available for the subsequent financial year are:

- franking account balance as at the end of the financial year (34%) 30% (2001)

63.6 22.5 8.6 6.0

- franking credits that will arise from the payment of income tax payable as at the end of the financial year

- - - -

- franking debits that will arise from the payment of dividends as at the end of the financial year

- - - -

- franking credits that the entity may be prevented from distributing in the subsequent financial year

- - - -

63.6 22.5 8.6 6.0

6. RECEIVABLES (CURRENT) Trade debtors 6(a), (b) 635.9 665.7 - -Provision for doubtful debts (10.0) (5.6) - -

625.9 660.1 0.0 0.0

Sundry debtors 6(b) 46.1 40.3 4.4 3.2Other receivables 6(b) 1.5 3.1 - -Amounts other than trade debts receivable from related parties: Wholly-owned group 29 - - 1,122.9 1,139.1 Other related parties – common controlled entities 6(a), 29 1,455.1 1,136.3 - - Provision for doubtful debts (45.2) - - -

1,409.9 1,136.3 1,122.9 1,139.1

2,083.4 1,839.8 1,127.3 1,142.3

(a) Australian dollar equivalents Australian dollar equivalent of current amounts receivable in foreign currencies not effectively hedged:

- US dollar 970.3 893.8 - -

(b) Terms and conditions Terms and conditions relating to the above financial instruments:

(i) Trade debtors are generally on 30 day terms. (ii) Sundry debtors and other receivables are due on normal commercial terms and conditions.

(iii) Details of the terms and conditions of related party receivables are set out in note 29.

17

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Notes CONSOLIDATED BP Australia Holdings Limited 2001 2000 2001 2000

$m $m $m $m 7. INVENTORIES (CURRENT) Raw materials and stores - at cost 177.2 318.9 - - Provision for stores write-off (1.0) (0.5) - -

176.2 318.4 Work-in-progress - at cost 26.4 15.8 - - Finished goods - at cost 301.6 311.4 - - Other inventory - at cost 4.3 3.3 - -

Total inventories at lower of cost and net realisable value 508.5 648.9 0.0 0.0

8. OTHER CURRENT ASSETS Prepayments 95.4 116.1 - -

9. RECEIVABLES (NON-CURRENT) Staff Loans 0.4 0.1 - -

Investment loans to other companies 2.6 0.9 - -

3.0 1.0 0.0 0.0

10. OTHER FINANCIAL ASSETS (NON-CURRENT) Investments at cost comprise: Controlled entities 11 - - 585.6 585.6 Associated companies 9.3 9.5 4.3 4.3 Other 2.5 1.8 - -

Total investments 11.8 11.3 589.9 589.9

18

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 11. INTERESTS IN SUBSIDIARIES Investments in controlled entities comprises:

Consolidated Entity’s

Place of Parent Entity’s Investment Incorporation Investment Beneficial

Interest 2001 2000

$m $m %

BP Australia Holdings Limited ACT - - BP Australia Ltd VIC 300.0 300.0 100(iv) Controlled Entities of BP Australia Ltd BP (Fremantle) Ltd UK - - 100 Polygon Retailing Ltd VIC - - 100(iv) BP Refinery (Bulwer Island) Ltd ACT - - 100(iv) No. 1 Riverside Quay Pty Ltd VIC - - 100(iv) Inroads Pty Ltd VIC N/A - 100(v) BP Minerals (Roxby Downs) Pty Ltd NSW - - 100 Acroframe Pty Ltd WA - - 100 Taradadis Pty Ltd VIC - - 100(iv) Burmah Fuels Australia Limited NSW - N/A - (vii) Burmah Fuels (Queensland) Pty Limited NSW - N/A - (vii) Queensland Fuels Trust - - N/A - (vii) Controlled Entities of Taradadis Pty Ltd Melbourne Petroleum Pty Ltd VIC - - 100 BP Australia Employee Share Plan Pty Ltd VIC - - 100(iv) Veruba Pty Ltd NSW - - 100 BP Finance Australia Ltd ACT 213.8 213.8 100 Controlled Entities of BP Finance Australia Ltd BP Finance Australia (CP) Ltd VIC - - 100 BP Australia Nominees Pty Ltd VIC (ii) (ii) 100(iv) BP Australia Shipping Pty Ltd WA (iii) (iii) 100(iv) Controlled entities of BP Australia Shipping Pty Ltd BP LNG Shipping Ltd Bermuda - - 100 BP Refinery (Kwinana) Pty Ltd WA 10.0 10.0 100(iv) BP Timor Gap West Pty Ltd VIC (i) (i) 100(iv) BP Petroleum Developments (NWS) Pty Ltd VIC (i) (i) 100 BP Petroleum Development Australia Pty Ltd VIC 25.6 25.6 100(iv) Centrel Pty Ltd VIC N/A - 100 (v) Getfreight Pty Ltd VIC (i) (i) 100 BP Solar Pty Ltd NSW 36.2 36.2 100 Controlled Entities of BP Solar Pty Ltd Alternate Power Supplies Pty Ltd NSW - - 100(vi) Elite Customer Solutions Pty Ltd VIC - - 100 BP Lubricants Services Pty Ltd VIC (i) - 100(vi)

585.6 585.6

(i) $2.00. (ii) $10.00 (iii) $200.00 (iv) This controlled entity has adopted ASIC Class Order 98/1418 providing relief from the requirement to prepare separate accounts. A deed of cross guarantee has been entered into between BP Australia Holdings Limited and each controlled entity (the “Closed Group”) to meet each other’s liabilities in the event of a winding up. (v) Inroads Pty Ltd and Centrel Pty Ltd were disposed of during 2001 (refer to Note 23 for details of disposals). (vi) BP Lubricants Services Pty Ltd was purchased on 20 July 2001 and Alternate Power Supplies Pty Ltd was purchased on 30 March 2001 (refer to Note 23 for details of acquisition).

19

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 11. INTERESTS IN SUBSIDIARIES (cont’d) (vii) BP Australia Ltd has no ownership interest in these entities, however it does have control over these entities by directly dominating the decision-making in relation to the financial and operating policies of these entities. BP Australia Ltd gained control of these entities on 1 January 2001. BP LNG Shipping Ltd conducts business in Bermuda. All other corporations conduct business in Australia. The contributions made by individual corporations do not represent the performance of the Consolidated Entity’s separate business segments, the profitability components of which may be included in the contributions of more than one of the Consolidated Entity’s controlled entities. The consolidated profit and loss statement of the entities, which are members of the “Closed Group”, is as follows: CONSOLIDATED PROFIT AND LOSS STATEMENT 2001 2000

$m $m

OPERATING PROFIT BEFORE INCOME TAX 30.5 128.0

INCOME TAX (EXPENSE)/BENEFIT ATTRIBUTABLE TO OPERATING PROFIT

6.5 (29.7)

OPERATING PROFIT AFTER INCOME TAX 37.0 98.3

RETAINED PROFITS at the beginning of the financial year 1,273.2 1,174.9

RETAINED PROFITS at the end of the financial year 1,310.2 1,273.2

20

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued

11. INTERESTS IN SUBSIDIARIES (cont’d) The consolidated balance sheet of the entities, which are members of the “Closed Group”, is as follows: BALANCE SHEET 2001 2000

$m $m CURRENT ASSETS Cash on hand 38.1 173.1Receivables 678.9 657.2Inventories 467.9 605.1Other 43.4 44.8

TOTAL CURRENT ASSETS 1,228.3 1,480.2

NON-CURRENT ASSETS Receivables 9.8 10.9Investments 48.1 48.4Property, plant and equipment 1,777.0 1,782.6Intangibles 2.5 7.8Other 100.3 32.0

TOTAL NON-CURRENT ASSETS 1,937.7 1,881.7

TOTAL ASSETS 3,166.0 3,361.9

CURRENT LIABILITIES Accounts payable 1,446.5 1,721.9

Borrowings 35.0 -

Provisions 36.8 26.9

TOTAL CURRENT LIABILITIES 1,518.3 1,748.8

NON-CURRENT LIABILITIES

Accounts payable 11.8 13.8

Borrowings - 36.2

Provisions 286.0 250.2

TOTAL NON-CURRENT LIABILITIES 297.8 300.2

TOTAL LIABILITIES 1,816.1 2,049.0

NET ASSETS 1,349.9 1,312.9

SHAREHOLDERS' EQUITY

Share capital 10.8 10.8Reserves 28.9 28.9Retained profits 1,310.2 1,273.2

Total Shareholders’ Equity 1,349.9 1,312.9

21

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 11. INTERESTS IN SUBSIDIARIES (cont’d)

Acquisition/Disposals Of Controlled Entities (a) Entities Acquired:

- BP Lubricants Services Pty Ltd (20/07/01) - Alternate Power Supplies Pty Ltd (30/03/01)

(b) Controlled Entities Disposed of:

- Centrel Pty Ltd (24/07/01) - Inroads Pty Ltd (01/10/01)

12. PROPERTY, PLANT AND EQUIPMENT CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

Freehold land

At cost 135.8 125.6 - -

135.8 125.6 0.0 0.0

Buildings on freehold land At cost 276.5 245.3 - -

Provision for depreciation (113.8) (106.5) - -

162.7 138.8 0.0 0.0

Total land and buildings 298.5 264.4 0.0 0.0

Plant and equipment At cost 2,434.9 2,375.5 - - Provision for depreciation (1,063.5) (1,001.4) - -

1,371.4 1,374.1 0.0 0.0

Work in progress - at cost 201.4 209.6 - 2.0

Total plant and equipment 1,527.8 1,583.7 0.0 2.0

Total property, plant and equipment Cost 3,048.6 2,956.0 0.0 2.0 Provision for depreciation and amortisation (1,177.3) (1,107.9) 0.0 0.0

Total written down amount 1,871.3 1,848.1 0.0 2.0

22

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 12. PROPERTY, PLANT AND EQUIPMENT (cont’d) (a) Valuations In accordance with AASB 1010 “Recoverable Amount of Non Current Assets”, a directors’ valuation as at 31 December 2001 of the Consolidated Entity’s freehold land and buildings (held as at 31 December 2001) was carried out based upon work performed by an independent valuer, Charter Keck Cramer, which was based on the Arthur Andersen valuation at 31 December 1998. Arthur Anderson’s valuation was based upon indexing the independent valuations prepared as at 31 December 1995 by Edward Rushton Australia Pty Ltd. In undertaking the indexation exercise, Charter Keck Cramer made reference to the following material: • Sampling of statutory valuations for individual properties relevant to both 2001, and comparing movements on a regional basis; • Statistical material provided (where available) from the various Responsible Authorities; • Investment Performance Index for commercial property prepared by the Property Council of Australia; and • Charter Keck Cramer property sales database. The value of land and buildings in applying the above basis was determined at $290 million, excluding certain property located at the refineries and is based upon information provided by BP Australia Holdings Limited. No revaluation of Land and Buildings has been brought to account. Capital gains tax implications have not been taken into account in the above valuations as the Consolidated Entity does not expect a significant disposal of land and buildings in the foreseeable future that would give rise to capital gains tax. The Consolidated Entity has a set policy for regular valuation of freehold land and buildings at least once every three years. Notes CONSOLIDATED BP Australia Holdings Limited

2001 2001 $m $m

(b) Reconciliations Reconciliations of the carrying amounts of property, plant and equipment at the beginning and end of the current and previous financial year.

Freehold land Carrying amount at beginning 125.6 - Additions 25.9 - Disposals (15.7) -

135.8 0.0

Buildings on freehold land Carrying amount at beginning 138.8 - Additions 59.1 - Disposals (21.8) - Depreciation expense (13.4) -

162.7 0.0

Plant and Equipment Carrying amount at beginning 1,374.1 - Additions 143.8 - Disposals (35.7) - Depreciation expense (110.8) -

1,371.4 0.0

23

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Notes CONSOLIDATED BP Australia Holdings Limited

2001 2000 2001 2000 $m $m $m $m

13. INTANGIBLES Goodwill 17.1 17.1 - -Provision for amortisation (14.7) (9.3) - -

2.4 7.8 0.0 0.0

14. PAYABLES (CURRENT) Trade creditors 14(b) 271.2 311.8 - -Amounts other than trade debts payable to related parties: Wholly-owned group 29 - - 27.9 38.4 Other related parties – common controlled entities 14(a), 29 235.7 242.7 - -Income received in advance 22.0 - - -Other creditors 14(b), 24 106.3 96.1 - -

635.2 650.6 27.9 38.4

(a) Australian dollar equivalents Australian dollar equivalents of current amounts payable in foreign currencies not effectively hedged:

- US dollar 235.7 242.7 - -

(b) Terms and conditions

Terms and conditions relating to the above financial instruments:

(i) Trade creditors are normally settled on 30 day terms. (ii) Other creditors are settled on normal commercial terms and conditions

(iii) Details of the terms and conditions of related party payables are set out in note 29.

15. INTEREST-BEARING LIABILITIES (CURRENT) Unsecured – trade bill 15(b) 35.0 - - -Borrowings payable to other related parties – common controlled entities

15(a), 29 401.9 409.4 - -

436.9 409.4 - -


- US dollar 82.9 97.5 - -

(b) Terms and conditions

Terms and conditions relating to the above financial instruments:

(i) The trade bills have an average maturity of 2 days.

(ii) Details of the terms and conditions of related party payables are set out in note 29.

24


2001 2000 2001 2000 $m $m $m $m

16. PROVISIONS (CURRENT) Employee entitlements 25 39.3 41.0 - -Restoration 1.0 -

40.3 41.0 - -

17. PAYABLES (NON-CURRENT) Other creditors 17(a), 24 11.8 13.9 - -

(a) Other creditors are settled on normal commercial terms and conditions

18. INTEREST-BEARING LIABILITIES (NON-CURRENT) Borrowings payable to related parties: Wholly-owned group 29 - - - 36.2 Other related parties – common controlled entities 18(a), 29 1,824.6 1,800.4 - -

1,824.6 1,800.4 - 36.2


- US dollar 833.7 768.0 - -

(b) Details of the terms and conditions of related party payables are set out in note 29.

19. PROVISIONS (NON-CURRENT) Employee entitlements 25 30.8 29.6 0.2 0.2Major Repairs 1.3 0.1 - -Restoration 17.1 13.0 - -

49.2 42.7 0.2 0.2

20. CONTRIBUTED EQUITY Issued and paid up capital - 180,250,000 ordinary shares 10.8 10.8 10.8 10.8

25


2001 2000 2001 2000 $m $m $m $m

21. RESERVES AND RETAINED PROFITS Capital reserve 9.4 9.4 44.0 44.0Capital redemption reserve - - 9.6 9.6Capital reserve (not currently available for distribution) 14.5 14.5 9.4 9.4General reserve 7.1 7.1 - -

31.0 31.0 63.0 63.0

Retained profits 1,378.6 1,337.8 1,599.8 1,562.8

(a)Capital reserve (i) Nature and purpose of reserve The capital reserve is used to accumulate realised capital profits. The reserve can be used to pay dividends or issue bonus shares.

(ii) Movements in reserve Balance at end of year 9.4 9.4 44.0 44.0

(b) Capital redemption reserve (i) Nature and purpose of reserve The capital redemption reserve comprises of non-participating preference shares, which have subsequently been redeemed.


(c) Capital reserve (not currently available for distribution) (i) Nature and purpose of reserve The capital reserve is used to accumulate realised capital profits.


(d) General reserve (i) Nature and purpose of reserve The general reserve principally comprises of the entity’s self-insurance reserve.


(e) Retained Profits Balance at the beginning of year 1,337.8 1,210.6 1,562.8 1,516.8Net profit 40.8 127.2 37.0 46.0

Balance at end of year 1,378.6 1,337.8 1,599.8 1,562.8

26


2001 2000 2001 2000 $m $m $m $m

22. DIRECT OUTSIDE EQUITY INTEREST Reconciliation of outside equity interest in controlled entities: Opening Balance - - - - Add share of issued and paid-up capital 53.3 - - - Add share of retained profits at the beginning of year (13.6) - - - Add share of operating profit 4.0 - - -

Closing Balance 43.7 0.0 0.0 0.0

CONSOLIDATED

2001 2000 $m $m

23. STATEMENT OF CASH FLOWS

a) Reconciliation of the operating profit after tax to the net cash flows from operations Profit from ordinary activities after tax 44.8 127.2

Non-cash items Depreciation of non-current assets 124.2 109.5 Amortisation of non-current assets 6.1 0.7 Provision for loan to a common controlled entity 45.2 - Provision for Other (6.0) (0.2) Provision for employee entitlements (0.5) 2.2 Non cash acquisition of investments (0.7) (1.8) Net (profit)/loss on disposal of property, plant and equipment 16.7 (13.2) Net (profit)/loss on disposal of investments and subsidiaries (2.8) (1.2)

Changes in assets and liabilities

Trade receivables 40.4 (236.5) Inventory 141.4 (160.7) Trade and other creditors (43.6) 181.4 Income received in advance 22.0 - Deferred income tax liability 18.6 42.4 Future income tax benefit (33.6) (18.3) Prepayments 21.0 (9.0)

Net cash flow from operating activities 393.2 22.5

b) Reconciliation of cash Cash balance comprises: - cash on hand 57.7 50.5

Closing cash balance 57.7 50.5

27

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Notes CONSOLIDATED

2001 2000 $m $m

23. STATEMENT OF CASH FLOWS (cont’d)

c) Financing facilities available At balance date, the following financing facilities had been negotiated and were available Total facilities: - bank overdraft - inter group financing / US dollar commercial paper

10.05,617.1

10.02,711.5

Facilities used at balance date - bank overdraft - inter group financing / US dollar commercial paper Facilities unused at balance date - bank overdraft - inter group financing / US dollar commercial paper

-1,453.6

10.04,163.5

-1,800.4

10.0911.1

d) Entities Acquired On 20 July 2001, the parent company acquired 100% of the share capital of BP Lubricants Services Pty Ltd, an unlisted Australian entity for cash consideration of $1. This company had no net assets at the date of acquisition. On 30 March 2001, BP Solar Pty Ltd acquired 100% of the share capital of Alternate Power Supplies Pty Ltd, an unlisted Australian entity for $39,471. Considering that this company had no significant assets or liabilities at the date of acquisition, the details of net assets at this date have not been disclosed. e) Entities Disposed Of On 24 July 2001, Centrel Pty Ltd was disposed of for cash consideration of $2. This company had no net assets at the date of disposal. On 1 October 2001, Inroads Pty Ltd was disposed of for cash consideration of $4.6m. This entity had a bank overdraft of $0.3m at the disposal date. $m Net assets of Inroads Pty Ltd at 1 October 2001: - Receivables 1.6

- Inventories 0.3 - Property, plant & equipment 2.2 - Bank overdraft (0.3) - Payables (0.7)

3.1

28


2001 2000 2000 1999 $m $m $m $m

24. EXPENDITURE COMMITMENTS (a) Capital expenditure commitments

Estimated capital expenditure contracted for at balance date but not provided for payable: - not later than one year 17.0 18.9 - -

(b) Lease expenditure commitments (i) Operating leases (non-cancellable) 24(e) - not later than one year 40.7 45.8 - - - later than one year and not later than five years 88.1 110.3 - - - later than five years 67.3 107.8 - -

- aggregate lease expenditure contracted for at balance date 196.1 263.9 0.0 0.0

Aggregate expenditure commitments comprise: Amounts provided for: - surplus lease space -current 14, 24(c) - 1.2 - - -non-current 17, 24(c) - - - -

- 1.2 - -

- lease incentive liability - current 14, 24(d) 2.0 2.0 - - - non-current 17, 24(d) 11.8 13.8 - -

13.8 15.8 - -

Total provided for 13.8 17.0 - -

Amounts not provided for: - rental commitments 182.3 246.9 - -

Total not provided for 182.3 246.9 - -

Aggregate lease expenditure contracted for at balance date 196.1 263.9 - -

(c) These commitments represent payments due for vacant leased premises under a non-cancellable operating lease, and have been recognised as a liability, as the remaining payments for the premises will provide no further benefits to the consolidated entity. The payments have been discounted at the rate implicit in the lease and take into account future rental income and other directly attributable costs.

(d) These commitments represent the non-cash incentive received by the consolidated entity for entering into a non-cancellable operating lease for premises occupied by a controlled entity, entered into in October 1993. The lease term is 18 years, with the first 6 years being rent free. The incentive liability is being reduced evenly over the remainder of the lease.

(e) Operating leases have an average lease term of 2-3 years and an average implicit interest rate ranging between 7% and 9%. Assets that are the subject of operating leases include motor vehicles and items of office equipment.

29

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued Notes CONSOLIDATED BP Australia Holdings

Limited 2001 2000 2001 2000

$m $m $m $m

25. EMPLOYEE ENTITLEMENTS AND SUPERANNUATION COMMITMENTS

Employee Entitlements

The aggregate employee entitlement liability is comprised of: Provisions (current) 16 39.3 41.0 - -

Provisions (non-current) 19 30.8 29.6 0.2 0.2

70.1 70.6 0.2 0.2

Employee Share Scheme Subject to Group results meeting pre agreed criteria, companies within the Consolidated Entity may elect to participate in an annual share scheme offer to their employees. All permanent employees of companies making an offer are entitled to participate, subject to minimum periods of service. There were 1,307 eligible employees in 2001 (2000: 1,323 eligible employees). The scheme enables eligible employees to acquire shares in BP p.l.c. at market value and receive an additional free share funded by the employing company for each share contributed by the employee. Employees and BP purchased and/or contributed 427,301 shares to the scheme in 2001 (2000: 421,541 shares). The market value of shares in BP p.l.c. at 31st December 2001 was $15.22/share (2000: $14.46/share). Superannuation Commitments Until December 1998, the BP Superannuation Fund was a defined benefit fund, with several accumulation benefits provided for within the Fund. In December 1998, a new accumulation section was introduced and the non-contributory defined benefit section closed to new members. Approximately 9% of the existing members elected to transfer to the new accumulation section. The Consolidated Entity remains committed to making contributions to the Fund on the basis of actuarial advice and in amounts to adequately fund the retirement benefits provided for in the rules of the Fund. It has been confirmed by the actuary that the BP Superannuation Fund would be able to satisfy all benefits that would be required in the event of: (a) termination of the fund (b) voluntary termination of the employment of each employee on the initiative of the employee; or (c) compulsory termination of the employment of each employee by the employer. Details of the defined benefit fund as extracted from its most recent actuarial valuation at 31st December 1998 are as follows: Consolidated $'000 Total present value of past liabilities 284,860 Total market value of assets 323,011 Actuarial Surplus 38,151 The Consolidated Entity has a policy of procuring actuarial valuations at least once every three years. The valuation of the BP Superannuation Fund as at 31 December 2001 is in the process of being performed, however the results of this valuation were not available prior to the completion of this annual report and therefore not disclosed.

30


2001 2000 2001 2000 $m $m $m $m

26. CONTINGENT LIABILITIES Contingent liabilities are categorised as follows: Bank guarantees: - Government 13.1 10.1 - -- Other 2.2 1.2 - - Sundry litigation and disputes arising in the normal course of trade

12.7 6.8 - -

Pursuant to Class Order 98/1418, relief has been granted to certain controlled entities from the Corporations Act requirements for preparation, audit and publication of their financial reports. As a condition of the Class Order, the Company has entered into an approved deed of cross guarantee with the controlled entities which wish to take the benefit of the Class Order. The effect of the deed is that the Company has guaranteed to pay any deficiency in the event of winding up of the controlled entities. The controlled entities have also given a similar guarantee in the event that the Company is wound up. No liabilities are expected to arise in relation to the Company or the controlled entities taking the benefit of the Class Order in respect of that deed. A Put and Call Option Agreement exists between ANZ and BP under which ANZ may require BP to assume, or BP may elect to assume, the rights and obligations of ANZ under the Facility Agreement. The maximum amount that may become payable by BP to ANZ under the Facility Agreement, which has not been recognised as a liability, is $180m.

31


2001 2000 2001 2000 $ $ $ $

27. REMUNERATION OF DIRECTORS Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of each entity in the consolidated entity, directly or indirectly, by the entities of which they are directors or any related party: 11,563,401 9,514,787

Income paid or payable, or otherwise made available, in respect of the financial year, to all directors of BP Australia Holdings Limited, directly or indirectly, from the entity or any related party: 8,447,391 6,999,861

The number of directors of BP Australia Holdings Limited whose income (including superannuation contributions) falls within the following bands is:

2001 2000

0 - 9,999 1 2 90,000 - 99,999 1 -

280,000 - 289,999 - 1 500,000 - 509,999 1 - 590,000 - 599,999 - 1 610,000 - 619,999 - 1 670,000 - 679,999 1 - 680,000 - 689,999 - 1

1,100,000 - 1,109,999 1 - 1,220,000 - 1,229,999 1 - 1,240,000 - 1,249,999 - 1 1,310,000 - 1,319,999 1 - 1,330,000 - 1,339,999 - 1 1,550,000 - 1,559,999 1 - 1,970,000 - 1,979,999 1 - 2,220,000 - 2,229,999 - 1

32


2001 2000 2001 2000 28. AUDITORS’ REMUNERATION $ $ $ $

Amounts received or due and receivable by Ernst & Young for:

- an audit or review of the financial report of the entity and any other entity in the consolidated entity

618,950 597,000 - -

- other services in relation to the entity and any other entity in the consolidated entity

143,191 265,865 - -

762,141 862,865 - -

29. RELATED PARTY DISCLOSURES

(a) The directors of BP Australia Holdings Limited during the financial year were:

G D Bourne G Nicolaides R M Harding G R Hueston J Norman R Warnock (appointed 15/10/01)

S F Howe (resigned 31/12/01)

R R Cape (resigned 31/08/01)

T J Ind (alternate director)

(b) The following related party transactions occurred during the financial year:

(i) Transactions with related parties in wholly-owned group Sales and purchases are made under normal commercial terms and conditions. Loans made to and received from wholly-owned subsidiaries are under normal terms and conditions. (ii) Transactions with the directors of BP Australia Holdings Limited and the consolidated entity Nil (iii) Transactions with other related parties Sales of fuel made under normal commercial terms and conditions aggregating to $279,000,000 in sales revenue of BP Australia Ltd were undertaken with distributors with whom BP Australia Ltd have entered into consultancy agreements. Consulting fees received under normal commercial terms and conditions were $720,000. Subsidiaries within the wholly-owned group have provided loans during the period to entities under common control. The total amount outstanding in relation to these transactions is $1,409,900,000 (2000: $1,136,300,000) at period end. Interest on the loans range from 6.3% to 7.1% (2000: 6.3% to 7.1%) at period end, and are repayable on demand. Subsidiaries within the wholly-owned group have received loans during the period from entities under common control. The total amount outstanding in relation to these transactions is $2,226,500,000 (2000: $2,209,800,000) at period end. The loans are repayable on demand with interest rates payable of 6.3% (2000: 6.3%) at period end. Sales and purchases are made under normal commercial terms and conditions. The amount owing to entities under common control in relation to these transactions is $235,700,000 (2000: $242,700,000) at period end. Foreign exchange transactions made under normal commercial terms and conditions. A guarantee has been given by BP p.l.c. to BP Finance Australia Limited indemnifying transactions undertaken by BP Finance Australia Limited with third parties.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 29. RELATED PARTY DISCLOSURES (cont’d) (c) Parent entity BP Australia Holdings Limited is the ultimate Australian parent entity and its ultimate controlling entity is BP p.l.c. (incorporated in England). (d) Hedging instruments The consolidated entity has open hedging transactions with related parties at period end. The hedging transactions are aimed to lock in the price of crude and refined product at the time of delivery, and are at commercial rates. The exposure to price fluctuations is managed on a monthly basis by recognising any gain or loss in the Statement of Financial Performance. The net gain recognised during 2002 was $24.2 million (2000: $6.0 million). The hedging transactions are due to close during the period January 2002 to June 2002. 30. SEGMENT INFORMATION The consolidated entity operates predominantly in Australia in the Petroleum and Petrochemicals industry. The primary operations consist of the refining, distribution and marketing of petroleum products.

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31. FINANCIAL INSTRUMENTS

(a) Interest rate risk The consolidated entity’s exposure to interest rate risks and the effective interest rates of financial assets and financialliabilities, both recognised and unrecognised at the balance date, are as follows:

Fixed interest rate maturing in: Total Weightedcarrying average

Floating Non-interest amount effectiveinterest 1 year Over 1 More than bearing as per the interest

Financial Instruments rate or less to 5 years 5 years balance sheet rate

2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000 2001 2000$m $m $m $m $m $m $m $m $m $m $m $m % %

(i) Financial assetsCash 57.7 50.5 - - - - - - - - 57.7 50.5 4.20% 4.50%Receivables - trade - - - - - - - - 625.9 660.1 625.9 660.1 N/a N/aReceivables - related parties 1,409.9 1,136.3 - - - - - - - - 1,409.9 1,136.3 6.42% 6.66%Sundry Debtors - - - - - - - - 46.1 40.3 46.1 40.3 N/a N/aOther Receivables - - - - - - - - 1.5 3.1 1.5 3.1 N/a N/aPrepayments - - - - - - - - 95.4 116.1 95.4 116.1 N/a N/aTotal financial assets 1,467.6 1,186.8 - - - - - - 768.9 819.6 2,236.5 2,006.4 - -

(ii) Financial liabilitiesTrade Creditors - - - - - - - - 271.2 311.8 271.2 311.8 N/a N/aAccounts Payable - related parties 2,226.5 2,209.8 - - - - - - 235.7 242.7 2,462.2 2,452.5 6.30% 6.65%Other Creditors - - - - - - - - 118.1 110.0 118.1 110.0 N/a N/aTrade Bills - - 35.0 - - - - - - - 35.0 - 4.65% N/aTotal financial liabilities 2,226.5 2,209.8 35.0 - - - - - 625 664.5 2,886.5 2,874.3 - -

N/a not applicable for non-interest bearing financial instruments

RLY BP AUSTRALIA HOLDINGS LIMITED)

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BP OIL AUSTRALIA PTY LTD (FORME NOTES continued

BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) NOTES continued 31. FINANCIAL INSTRUMENTS (cont'd) (b) Net fair values All financial assets and liabilities have been recognised at balance date at their net fair values. The following methods and assumptions are used to determine the net fair values of financial assets and liabilities Recognised financial instruments Cash, cash equivalents and short-term investments: The carrying amount approximates fair value because of their short term to maturity. Trade receivables and payables: The carrying amount approximates fair value. (c) Credit risk exposures The consolidated entity's maximum exposures to credit risk at balance date in relation to each class of recognised financial assets, other than derivatives, is the carrying amount of those assets as indicated in the balance sheet. The maximum credit risk exposure does not take into account the value of any collateral or other security held, in the event other entities/parties fail to perform their obligations under the financial instruments in question. Concentrations of credit risk The company minimises concentrations of credit risk in relation to trade receivables by undertaking transactions with a large number of customers within the petroleum industry. However, the majority of customers are concentrated in Australia. Credit risk in trade receivables is managed in the following ways: - payment terms are normally 30 days; - a risk assessment process is used for customers; and - credit insurance is obtained for high risk customers. (d) Hedging instruments The consolidated entity has open hedging transactions with related parties at period end. The hedging transactions are aimed to lock in the price of crude and refined product at the time of delivery, and are at commercial rates. The exposure to price fluctuations is managed on a monthly basis by recognising any gain or loss in the Statement of Financial Performance. The net gain recognised during 2002 was $24.2 million (2000: $6.0 million). The hedging transactions are due to close during the period January 2002 to June 2002.

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) DIRECTORS’ DECLARATION

In accordance with a resolution of the directors of BP Australia Holdings Limited, I state that:

(1) In the opinion of the directors:

(a) the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act, including:

(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 31

December 2001 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and Corporations Regulations; and

(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they

become due and payable. (2) In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the

members of the Closed Group identified in note 11 will be able to meet any obligations or liabilities to which they are or may become subject to, by virtue of the Deed of Cross Guarantee.

On behalf of the Board Greg Bourne Director Melbourne, Date

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BP OIL AUSTRALIA PTY LTD (FORMERLY BP AUSTRALIA HOLDINGS LIMITED) INDEPENDENT AUDIT REPORT

To the members of BP Australia Holdings Limited Scope We have audited the financial report of BP Australia Holdings Limited for the financial year ended 31 December 2001, as set out on pages 9 to 37, including the Directors’ Declaration. The financial report includes the financial statements of BP Australia Holdings Limited, and the consolidated financial statements of the consolidated entity comprising BP Australia Holdings Limited and the entities it controlled at year’s end or from time to time during the financial year. The company's directors are responsible for the financial report. We have conducted an independent audit of the financial report in order to express an opinion on it to the members of the company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance as to whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards, other mandatory professional reporting requirements and statutory requirements, in Australia, so as to present a view which is consistent with our understanding of the company’s and the consolidated entity’s financial position and performance, as represented by the results of their operations and their cash flows. The audit opinion expressed in this report has been formed on the above basis. Audit Opinion In our opinion, the financial report of BP Australia Holdings Limited is in accordance with: (a) the Corporations Law including:

(i) giving a true and fair view of the company’s and the consolidated entity’s financial position as at 31

December 2001 and of their performance for the year ended on that date; and (ii) complying with the Accounting Standards and the Corporations Regulations; and

(b) other mandatory professional reporting requirements in Australia. Ernst & Young J D Davies Partner Melbourne Date:

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Documents

BP Oil Australia Pty Ltd