Royal Dutch Shell plc: 4th Quarter and Full Year 2010 Unaudited Results
LONDON, February 3, 2011 /PRNewswire-FirstCall/ --
- (NYSE: RDS.A) (NYSE: RDS.B)
- Royal Dutch Shell's fourth quarter 2010 earnings, on a
current cost of supplies (CCS) basis, were $5.7 billion compared to
$1.2 billion a year ago. Basic CCS earnings per share increased to
$0.93 from $0.19 in the fourth quarter 2009.
- Fourth quarter 2010 CCS earnings, excluding identified items
(see page 5), were $4.1 billion compared to $2.8 billion in the fourth
quarter 2009.
- Full year 2010 earnings, on a current cost of supplies (CCS)
basis, were $18.6 billion compared to $9.8 billion a year ago. Basic
CCS earnings per share increased by 90% versus a year ago.
- Cash flow from operating activities, excluding net working
capital movements, for the fourth quarter 2010 was $6.2 billion,
compared to $4.4 billion in the same quarter last year. On the same
basis, full year 2010 cash flow from operating activities was $33.3
billion compared to $23.8 billion in 2009.
- Net capital investment for the quarter was $1.5 billion.
Total cash dividends paid to shareholders during the fourth quarter
2010 were $2.0 billion. Some 18.3 million class A Ordinary shares,
equivalent to $0.6 billion, were issued under the Scrip Dividend
Programme for the third quarter 2010.
- Gearing at the end of 2010 was 17.1%.
- A fourth quarter 2010 dividend has been announced of $0.42
per ordinary share, unchanged from the US dollar dividend per share
for the same period in 2009. The first quarter 2011 dividend is
expected to be declared at $0.42 per share.
Summary of unaudited results
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 %[1] 2010 2009 %
5,097 3,153 2,536 Upstream 15,935 8,354
411 325 (1,762) Downstream 2,950 258
Corporate and
188 43 403 Non-controlling interest (242) 1,192
5,696 3,521 1,177 +384 CCS earnings 18,643 9,804 +90
Estimated CCS adjustment
1,094 (58) 784 for Downstream 1,484 2,714
6,790 3,463 1,961 +246 Income attributable to 20,127 12,518 +61
shareholders
Basic CCS earnings per
0.93 0.57 0.19 +389 share ($) 3.04 1.60 +90
0.18 (0.01) 0.13 Estimated CCS adjustment 0.24 0.44
per share ($)
1.11 0.56 0.32 +247 Basic earnings per share($) 3.28 2.04 +61
Cash flow from operating
5,456 9,016 5,660 -4 activities 27,350 21,488 +27
Cash flow from operating
0.89 1.47 0.92 -3 activities per share ($) 4.46 3.51 +27
0.42 0.42 0.42 - Dividend per share ($) 1.68 1.68 -
[1] Q4 on Q4 change
“Our 2010 earnings increased substantially from 2009 levels, driven by
improving industry fundamentals, and Shell’s production growth and cost
performance. Our 2010 oil and natural gas production volumes were 3.3 million
boe/d, an increase of 5%. LNG sales volumes increased by 25%, with continued
growth in Downstream. Fourth quarter and full year 2010 earnings were
supported by higher oil prices and chemicals margins. However, our earnings
were impacted by weak refining margins, pressure on certain regional natural
gas prices, and volatility in Downstream marketing margins as a result of
rising oil prices.
In 2010 Shell made good progress on implementing strategy, improving
near-term performance, delivering a new wave of production growth, and
maturing the next generation of growth options for shareholders.
Shell has a strong focus on continuous improvement, reducing costs,
enhancing Shell’s operating performance, and rebalancing the portfolio for
profitable growth. Underlying costs declined by
to 2009, bringing the total underlying cost reduction to some
2009 and 2010 combined, a reduction of some 10%.
Disposals of
sales in the last 5 years to some
was 17.1%, comfortably within Shell’s 0-30% target range. We have delivered
our 2010-11 asset sales targets ahead of schedule. For 2011, asset sales
proceeds could reach some
from transactions announced in 2010.”
Turning to growth delivery, Voser commented: “Shell’s industry-leading
investment programme is laying down firm foundations for our shareholders and
our customers in the future. In 2010 we started up 6 key projects in Upstream
and Downstream. In
production at the Qatargas 4 LNG facility. Major construction is complete, on
schedule, at the Pearl Gas-to-Liquids (GTL) plant, and commissioning for
start-up is underway as planned.
These projects underpin Shell’s targets for an 11% increase from 2009 to
2012 oil and natural gas production, and enhancement of the Downstream
portfolio. This growth will drive a 50-80% increase in cashflow from
operations from 2009 to 2012, measured at
ambitious targets, but we are on track,” said Voser.
“Shell has made good progress on generating longer-term growth during
2010. Shell took two final investment decisions in 2010 for deepwater
projects, the Mars B project in the
project in
Shell made
exploration activities in 2010. The acquisition of East Resources takes our
resources potential in
partnership with PetroChina, we purchased Arrow Energy, an Australian coal
bed methane and LNG player, and entered into new tight gas and coal bed
methane acreage in
the giant Majnoon and West Qurna fields in
discoveries in 2010, in particular the Appomatox discovery in the
Mexico
progressed a marketing and biofuels joint venture with Cosan in
new 2 million tonnes per year petrochemicals project in
Voser commented: “We continue to invest for medium-term growth to create
value for our shareholders. I expect 2011 net capital investment of some
venture. Dividend will be
expected to be
declared dividends of
our commitment to shareholder returns.”
Voser concluded: “We are making good progress against our targets, and
there is more to come from Shell.”
Fourth quarter 2010 portfolio developments
Upstream
In
Woodside’s issued capital, for a total price of
Shell’s share in the company to 24.27%.
In
production capacity of 107 thousand barrels of oil equivalent per day (boe/d).
In
Gazprom establishing basic guidelines for the companies’ broader
collaboration in both the Upstream and Downstream businesses.
In the
predominately mature tight gas fields in
million cubic feet of gas equivalent per day (Shell share), for approximately
Also in the
oil and gas fields for
and produce some 18 thousand boe/d (Shell share).
During the fourth quarter 2010, Shell participated in 3 exploration
discoveries, 2 in
8 exploration discoveries and 6 successful appraisals, in
overall acreage position, completing acquisitions of new exploration licences
in
Downstream
In
marketing businesses, including Shell’s 100% owned 87 thousand bbl/d
Gothenburg Refinery.
Shell also completed the sale of its Downstream businesses in
In
to jointly study the development of a major petrochemicals complex that would
include a mono-ethylene glycol plant of up to 1.5 million tonnes per annum
and other olefin derivatives to yield over 2 million tonnes of finished
products.
In
buyers for the base oil manufacturing and associated refining facilities of
its 100% owned Harburg refinery (105 thousand bbl/d capacity), with the
intention to convert the remaining portions of the refinery into a
distribution terminal for oil products.
Key features of the fourth quarter and full year 2010
- Fourth quarter 2010 CCS earnings were $5,696 million, 384% higher
than in the same quarter a year ago. Full year 2010 CCS earnings were
$18,643 million, 90% higher than in 2009.
- Fourth quarter 2010 CCS earnings, excluding identified items (see
page 5), were $4,110 million compared to $2,774 million in the fourth
quarter 2009. Full year 2010 CCS earnings, excluding identified items
(see page 5), were $18,073 million compared to $11,553 million in
2009.
- Fourth quarter 2010 reported earnings were $6,790 million compared to
$1,961 million in the same quarter a year ago. Full year 2010
reported earnings were $20,127 million compared to earnings of $12,518
million in 2009.
- Basic CCS earnings per share increased by 389% versus the
same quarter a year ago. Full year 2010 basic CCS earnings per share
increased by 90% compared to 2009.
- Cash flow from operating activities for the fourth quarter
2010 was $5.5 billion, compared to $5.7 billion in the same quarter
last year. Excluding net working capital movements, cash flow from
operating activities in the fourth quarter 2010 was $6.2 billion,
compared to $4.4 billion in the same quarter last year.
Full year 2010 cash flow from operating activities was $27.4 billion
compared to $21.5 billion in 2009. Excluding net working capital
movements, full year 2010 cash flow from operating activities was $33.3
billion compared to $23.8 billion in 2009.
- Total cash dividends paid to shareholders during the fourth quarter
2010 were $2.0 billion, bringing the total for the full year 2010 to
$9.6 billion. During the fourth quarter 2010, some 18.3 million class
A Ordinary shares, equivalent to $0.6 billion, were issued under the
Scrip Dividend Programme for the third quarter 2010.
- Capital investment for the fourth quarter 2010 was $6.2
billion. Net capital investment (capital investment, less divestment
proceeds) for the fourth quarter 2010 was $1.5 billion, bringing the
total for the full year 2010 to $23.7 billion.
- Return on average capital employed (ROACE) at the end of the
fourth quarter 2010, on a reported income basis, was 11.5%.
- Gearing was 17.1% at the end of 2010 versus 15.5% at the end
of 2009.
Upstream
- Oil and gas production for the fourth quarter 2010 was 3,496
thousand boe/d, 5% higher than in the fourth quarter 2009. Full year
2010 oil and gas production was 3,314 thousand boe/d, 5% higher than
in 2009.
Production for the fourth quarter 2010 excluding the impact of
divestments, production sharing contracts (PSC) pricing effects and
OPEC quota restrictions was 8% higher compared to the fourth quarter
2009 (7% for the full year 2010 compared to last year).
Production in the fourth quarter increased by some 160 thousand boe/d
(170 thousand boe/d for the full year 2010) from new field
start-ups and the continuing ramp-up of fields, more than offsetting
the impact of field declines.
- LNG sales volumes of 4.39 million tonnes in the fourth
quarter 2010 were 11% higher than in the same quarter a year ago. Full
year 2010 LNG sales volumes were 16.76 million tonnes compared to
13.40 million tonnes in 2009, an increase of 25%.
Downstream
- Oil Products sales volumes were 6% higher than in the fourth quarter
2009. Chemical product sales volumes in the fourth quarter 2010
increased by 10% compared to the fourth quarter 2009.
Full year 2010 Oil Products sales volumes were 5% higher than
in 2009. Full year 2010 Chemical product sales volumes increased by
13% compared to 2009.
- Oil Products refinery availability was 92% compared to 93%
in the fourth quarter 2009 (92% for the full year 2010 versus 93% in
2009). Chemicals manufacturing plant availability was unchanged from
the fourth quarter 2009 at 95% (94% for the full year 2010 versus 92%
in 2009).
Supplementary financial and operational disclosure for the fourth
quarter and full year 2010 is available at www.shell.com/investor.
Summary of identified items
Earnings in the fourth quarter 2010 reflected the following
items, which in aggregate amounted to a net gain of $1,586 million
(compared to a net charge of $1,597 million in the fourth quarter
2009), as summarised in the table below:
- Upstream earnings included a net gain of $1,657 million reflecting
divestment gains which were partly offset by charges related to
the mark-to-market valuation of certain gas contracts, the estimated
fair value accounting of commodity derivatives (see Note 3),
write-offs and provisions. Earnings for the fourth quarter 2009
included a net charge of $226 million.
- Downstream earnings included a net charge of $71 million
reflecting charges related to write-offs and provisions, which were
partly offset by divestment gains. Earnings for the fourth quarter 2009
included a net charge of $1,335 million.
- Corporate earnings and Non-controlling interest for the fourth quarter
2009 included a charge of $36 million.
SUMMARY OF IDENTIFIED ITEMS
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
Segment earnings impact of
identified items:
1,657 (284) (226) Upstream 1,493 (134)
(71) (1,128) (1,335) Downstream (923) (1,682)
- - (36) Corporate and Non-controlling - 67
interest
1,586 (1,412) (1,597) CCS earnings impact 570 (1,749)
These identified items generally relate to events with an impact of more
than
additional insight into its reported earnings, CCS earnings and income
attributable to shareholders. Further additional comments on the business
segments are provided in the section ‘Earnings by Business Segment’ on page 6
and onwards.
Earnings by business segment
UPSTREAM
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 %[1] 2010 2009 %
5,097 3,153 2,536 +101 Upstream earnings 15,935 8,354 +91
5,596 6,139 5,983 -6 Upstream cash flow from 24,872 19,935 +25
operations
522 9,554 5,947 -91 Net capital investment 21,222 22,326 -5
1,741 1,709 1,703 +2 Crude oil production 1,709 1,680 +2
(thousand b/d)
10,184 7,823 9,379 +9 Natural gas production 9,305 8,483 +10
available for sale (million
scf/d)
3,496 3,058 3,320 +5 Barrels of oil equivalent 3,314 3,142 +5
(thousand boe/d)
4.39 4.26 3.96 +11 LNG sales volumes (million 16.76 13.40 +25
tonnes)
[1] Q4 on Q4 change
Fourth quarter Upstream earnings were
million
identified items, compared to a net charge of
quarter 2009 (see page 5).
Upstream earnings, excluding the impact of identified items, compared to
the fourth quarter 2009 reflected improved realised crude oil and natural gas
prices and increased production volumes, and lower depreciation and
exploration well write-off expenses. These were partially offset by increased
production taxes and lower trading contributions. Earnings also reflected
increased LNG sales volumes and improved realised LNG prices, which were
partly offset by lower dividends from an LNG venture.
In the Americas, Upstream earnings reflected the effect of improved
realised crude oil prices and increased natural gas production volumes. These
were more than offset by the significant impacts of lower realised natural
gas prices, higher tax expenses, lower trading contributions and higher
operating expenses, mainly related to the ramp-up of the Jack Pine Mine at
the Athabasca Oil Sands Project (AOSP), ahead of the planned start-up of the
expansion of the Scotford Upgrader in 2011.
Global liquids realisations were 15% higher than in the fourth quarter
2009. Global gas realisations were 8% higher than in the same quarter a year
ago. In the Americas, gas realisations decreased by 12%, whereas outside the
Americas, gas realisations increased by 12%.
Fourth quarter 2010 production was 3,496 thousand boe/d compared to 3,320
thousand boe/d a year ago. Crude oil production was up 2% and natural gas
production was up 9% compared to the fourth quarter 2009. In
share of Shell Petroleum Development Nigeria Company (SPDC) joint venture
production increased by some 115 thousand boe/d driven by the ramp-up of new
projects and improved security conditions.
Production, compared to the fourth quarter 2009, increased by some 160
thousand boe/d from new field start-ups and the continuing ramp-up of fields
over the past 12 months, more than offsetting field declines.
LNG sales volumes of 4.39 million tonnes were 11% higher than in the same
quarter a year ago, mainly from increased volumes from the Sakhalin II LNG
project and Nigeria LNG.
Full year Upstream earnings were
million
identified items, compared to a net charge of
2009 (see page 5).
Upstream earnings compared to the full year 2009 reflected the
significant impact of higher realised crude oil and natural gas prices,
increased production volumes and lower depreciation and exploration well
write-off expenses. These were partly offset by higher production taxes and
lower trading contributions. In addition, earnings reflected increased LNG
sales volumes and improved LNG realised prices.
Global liquids realisations were 32% higher than in the full year 2009.
Global gas realisations were 2% higher than a year ago. In the Americas, gas
realisations increased by 13% and outside the Americas, gas realisations were
in line with the full year 2009.
Full year 2010 production increased by 5% to 3,314 thousand boe/d from
3,142 thousand boe/d a year ago. Crude oil production was up 2% and natural
gas production increased by 10% compared to the full year 2009 production. In
joint venture production increased by some 120 thousand boe/d driven by the
ramp-up of new projects and improved security conditions.
Production, compared to the full year 2009, increased by some 170
thousand boe/d from new field start-ups and the continuing ramp-up of fields
in 2010, more than offsetting field declines.
LNG sales volumes of 16.76 million tonnes were 25% higher than in 2009.
Volumes mainly reflected the ramp-up in sales volumes from the Sakhalin II
LNG project and increased volumes from Nigeria LNG.
DOWNSTREAM
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 %[1] 2010 2009 %
411 325 (1,762) - Downstream CCS earnings 2,950 258 -
1,117 (61) 810 Estimated CCS adjustment 1,498 2,796
1,528 264 (952) - Downstream earnings 4,448 3,054 +46
(348) 1,953 2,243 - Downstream cash flow from 1,961 4,056 -52
operations
991 701 1,208 -18 Net capital investment 2,358 6,232 -62
3,201 3,292 2,986 +7 Refinery plant intake 3,197 3,067 +4
(thousand b/d)
6,670 6,385 6,296 +6 Oil Products sales volumes 6,460 6,156 +5
(thousand b/d)
5,297 5,333 4,835 +10 Chemicals sales volumes 20,653 18,311 +13
(thousand tonnes)
[1] Q4 on Q4 change
Fourth quarter Downstream CCS earnings were
loss of
charge of
of
Downstream CCS earnings compared to the fourth quarter 2009 reflected
higher Oil Products marketing earnings, improved refining contributions and
higher Chemicals earnings.
Oil Products marketing CCS earnings improved compared to the fourth
quarter 2009, mainly reflecting higher retail, lubricants and B2B earnings,
lower operating expenses and increased trading contributions. Compared to the
third quarter 2010, earnings declined mainly as a result of the impact of
rising oil prices on marketing margins.
Oil Products sales volumes increased by 6% compared to the same quarter
last year. Excluding the impact of divestments, sales volumes increased by 8%.
Refining CCS results remained under pressure but improved compared to the
fourth quarter last year, benefiting from higher realised refining margins
globally, higher refinery plant intake volumes and lower operating expenses.
Compared to the third quarter 2010, results declined mainly reflecting
increased downtime at major refining facilities, including at the catalytic
crackers, concentration of planned maintenance activities and currency
exchange rate impacts. Refinery availability was 92% compared to 93% in the
fourth quarter 2009.
Chemicals CCS earnings compared to the fourth quarter 2009 reflected
improved realised chemicals margins, higher chemicals sales volumes, higher
income from equity-accounted investments and lower operating expenses.
Chemicals sales volumes increased by 10% compared to the same quarter
last year, mainly due to the start-up of the Shell Eastern Petrochemicals
Complex in
unchanged from the fourth quarter 2009 at 95%.
Full year Downstream CCS earnings were
million
identified items, compared to a net charge of
2009 (see page 5).
Downstream CCS earnings compared to the full year 2009 reflected higher
Oil Products marketing earnings, improved refining contributions and higher
Chemicals earnings.
Oil Products marketing CCS earnings improved compared to a year ago,
mainly reflecting higher retail and lubricants earnings, and lower operating
expenses, which were partly offset by lower B2B earnings and reduced trading
contributions.
Oil Products sales volumes increased by 5% compared to 2009. Excluding
the impact of divestments, sales volumes increased by 6%.
Refining CCS results improved from the full year 2009, benefiting from
higher realised refining margins globally and higher refinery plant intake
volumes, mainly in the
compared to 93% in the full year 2009.
Chemicals CCS earnings compared to the full year 2009 reflected improved
realised chemicals margins, higher chemicals sales volumes, higher income
from equity-accounted investments and lower operating expenses.
Chemicals sales volumes increased by 13% compared to the full year 2009,
mainly due to start-up of the Shell Eastern Petrochemicals Complex in
92% in the full year 2009.
Corporate and Non-controlling Interest
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
231 148 427 Corporate 91 1,310
(43) (105) (24) Non-controlling interest (333) (118)
Corporate and Non-controlling
188 43 403 interest (242) 1,192
Fourth quarter Corporate earnings and Non-controlling interest were
million
the fourth quarter 2009 included a charge of
identified item (see page 5).
Corporate earnings for the fourth quarter 2010 reflected a lower net
interest result which was partly offset by higher tax credits and higher
currency exchange gains compared to the same period in 2009.
Full year Corporate earnings and Non-controlling interest were a loss of
Earnings for the full year 2009 included net gains of
identified items (see page 5).
Corporate earnings for the full year 2010 reflected a significantly lower
net interest result and lower currency exchange gains, which were partly
offset by higher tax credits compared to 2009.
FORTHCOMING EVENTS
A Shell strategy update is planned for
results and first quarter 2011 dividend are scheduled to be announced on
are scheduled to be announced on
and third quarter 2011 dividend are scheduled to be announced on
2011
Unaudited Condensed Consolidated Financial Statements
CONSOLIDATED Statement of income
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 %(1) 2010 2009 %
100,714 90,712 81,075 Revenue 368,056 278,188
1,979 1,020 1,767 Share of profit of 5,953 4,976
equity-accounted
investments
2,832 1,010 577 Interest and other 4,143 1,965
income(3)
105,525 92,742 83,419 Total revenue and other 378,152 285,129
income
78,138 70,278 60,879 Purchases 283,176 203,075
7,294 6,052 7,382 Production and 24,458 25,301
manufacturing expenses
4,301 3,701 5,532 Selling, distribution and15,528 17,430
administrative expenses
422 203 331 Research and development 1,019 1,125
646 610 669 Exploration 2,036 2,178
3,236 6,196 3,748 Depreciation, depletion 15,595 14,458
and amortisation
227 317 4 Interest expense 996 542
11,261 5,385 4,874 +131 Income before taxation 35,344 21,020 +68
4,405 1,820 2,863 Taxation 14,870 8,302
6,856 3,565 2,011 +241 Income for the period 20,474 12,718 +61
66 102 50 Income attributable to 347 200
non-controlling interest
Income attributable to
Royal Dutch Shell plc
6,790 3,463 1,961 +246 shareholders 20,127 12,518 +61
Estimated CCS adjustment
(1,094) 58 (784) for Downstream (1,484) (2,714)
5,696 3,521 1,177 +384 CCS earnings 18,643 9,804 +90
Basic earnings per share
Quarters Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
1.11 0.56 0.32 Earnings per share ($) 3.28 2.04
0.93 0.57 0.19 CCS earnings per share ($) 3.04 1.60
Diluted earnings per share
Quarters Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
1.10 0.56 0.32 Earnings per share ($) 3.28 2.04
0.93 0.57 0.19 CCS earnings per share ($) 3.04 1.60
SHARES(2)
Quarters Millions Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
Weighted average number of shares
as the basis for:
6,137.3 6,132.6 6,124.3 Basic earnings per share 6,132.6 6,124.9
6,147.4 6,138.3 6,132.0 Diluted earnings per share 6,139.3 6,128.9
6,154.2 6,132.0 6,122.3 Shares outstanding at the end of 6,154.2 6,122.3
the period
(1) Q4 on Q4 change.
(2) Royal Dutch Shell plc ordinary shares of EUR0.07 each.
(3) Other income includes dividend income, net gains on sale of assets
and net foreign exchange effects on financing activities.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
$ million Ordinary Shares Other Retained Total Non- Total
share held in reserves earnings controlling equity
capital trust interest
At December 31,
2009 527 (1,711) 9,982 127,633 136,431 1,704 138,135
Income for the
period - - - 20,127 20,127 347 20,474
Other
comprehensive
income - - 4 - 4 42 46
Capital
contributions
from and other
changes in
non-controlling
interest - - - 283 283 69 352
Dividends
declared - - - (10,196) (10,196) (395) (10,591)
Scrip dividend(1) 2 - (2) 612 612 - 612
Shares held in
trust: net
sales/(purchases)
and dividends
received(2) - (1,078) - 1,521 443 - 443
Share-based
compensation - - 110 199 309 - 309
At December 31,
2010 529 (2,789)10,094 140,179 148,013 1,767 149,780
$ million Ordinary Shares Other Retained Total Non- Total
share held in reserves earnings controlling equity
capital trust interest
At December 31,
2008 527 (1,867) 3,178 125,447 127,285 1,581 128,866
Income for the
period - - - 12,518 12,518 200 12,718
Other
comprehensive
income - - 6,623 - 6,623 52 6,675
Capital
contributions
from and other
changes in
non-controlling
interest - - - 3 3 62 65
Dividends paid - - - (10,526) (10,526) (191) (10,717)
Shares held in
trust: net
sales/(purchases)
and dividends
received - 156 - - 156 - 156
Share-based
compensation - - 181 191 372 - 372
At December 31,
2009 527 (1,711) 9,982 127,633 136,431 1,704 138,135
(1) During the fourth quarter 2010 some 18.3 million class A
Ordinary shares, equivalent to $0.6 billion, were issued under the
Scrip Dividend Programme for the third quarter 2010. The fair value
of the shares issued in connection with the Scrip Dividend Programme
is reflected in retained earnings.
(2) The historical cumulative amount of dividends received on
shares held in trust is reflected in retained earnings with effect
from the fourth quarter 2010.
CONDENSED CONSOLIDATED balance sheet
$ million
Dec 31, 2010 Sept 30, Dec 31,
2010 2009
Assets
Non-current assets:
Intangible assets 5,039 5,171 5,356
Property, plant and equipment 142,705 139,863 131,619
Equity-accounted investments 33,414 34,015 31,175
Investments in securities 3,809 3,968 3,874
Deferred tax 5,361 5,372 4,533
Pre-paid pension costs 10,368 10,383 10,009
Other 8,970 8,909 9,158
209,666 207,681 195,724
Current assets:
Inventories 29,348 28,922 27,410
Accounts receivable 70,102 62,769 59,328
Cash and cash equivalents 13,444 11,282 9,719
112,894 102,973 96,457
Total assets 322,560 310,654 292,181
Liabilities
Non-current liabilities:
Debt 34,381 35,148 30,862
Deferred tax 13,388 13,179 13,838
Retirement benefit obligations 5,924 6,048 5,923
Other provisions 14,285 14,352 14,048
Other 4,250 4,696 4,586
72,228 73,423 69,257
Current liabilities:
Debt 9,951 9,932 4,171
Accounts payable and accrued 76,550 65,980 67,161
liabilities
Taxes payable 10,306 13,431 9,189
Retirement benefit obligations 377 397 461
Other provisions 3,368 3,046 3,807
100,552 92,786 84,789
Total liabilities 172,780 166,209 154,046
Equity attributable to Royal Dutch
Shell plc shareholders 148,013 142,744 136,431
Non-controlling interest 1,767 1,701 1,704
Total equity 149,780 144,445 138,135
Total liabilities and equity 322,560 310,654 292,181
CONDENSED CONSOLIDATED statement of cash flows
Quarters $ million Full year
Q4 2010 Q3 2010 Q4 2009 2010 2009
Cash flow from operating
activities:
6,856 3,565 2,011 Income for the period 20,474 12,718
Adjustment for:
4,515 3,545 3,409 - Current taxation 16,384 9,297
186 264 390 - Interest (income)/expense 842 1,247
- Depreciation, depletion and
3,236 6,196 3,748 amortisation 15,595 14,458
- Net (gains)/losses on sale
(2,344) (681) (415) of assets (3,276) (781)
- Decrease/(increase) in net
(754) 937 1,253 working capital (5,929) (2,331)
- Share of profit of
(1,979) (1,020) (1,767) equity-accounted investments (5,953) (4,976)
2,064 1,486 1,691 - Dividends received from 6,519 4,903
equity-accounted
investments
- Deferred taxation and other
(468) (1,941) (938) provisions (1,934) (1,925)
(696) (86) (421) - Other (10) (1,879)
Cash flow from operating
10,616 12,265 8,961 activities (pre-tax) 42,712 30,731
(5,160) (3,249) (3,301) Taxation paid (15,362) (9,243)
Cash flow from operating
5,456 9,016 5,660 activities 27,350 21,488
Cash flow from investing
activities:
(5,571) (9,609) (7,506) Capital expenditure (26,940) (26,516)
Investments in
(110) (1,179) (653) equity-accounted investments (2,050) (2,955)
1,286 666 520 Proceeds from sale of assets 3,325 1,325
Proceeds from sale of
3,380 44 1,146 equity-accounted investments 3,591 1,633
(16) (37) (37) (Additions to)/proceeds from (34) (105)
sale of securities
34 51 96 Interest received 136 384
Cash flow from investing
(997) (10,064) (6,434) activities (21,972) (26,234)
Cash flow from
financing
activities:
248 3,232 (816) Net (decrease)/increase in 4,647 (6,507)
debt with maturity period
within three months
120 199 461 Other debt: New borrowings 7,849 19,742
(388) (491) (477) Repayments (3,240) (2,534)
(108) (307) (292) Interest paid (1,312) (902)
Change in non-controlling
66 (3) 20 interest 381 62
Dividends paid to:
- Royal Dutch Shell plc
(1,998) (2,583) (2,613) shareholders (9,584) (10,526)
(38) (168) (27) - Non-controlling interest (395) (191)
Shares held in trust:
- Net sales/(purchases) and
17 (34) (43) dividends received 187 27
Cash flow from financing
(2,081) (155) (3,787) activities (1,467) (829)
(216) 477 5 Currency translation (186) 106
differences relating to cash
and
cash equivalents
(Decrease)/increase in cash
2,162 (726) (4,556) and cash equivalents 3,725 (5,469)
Cash and cash equivalents at
11,282 12,008 14,275 beginning of period 9,719 15,188
Cash and cash equivalents at
13,444 11,282 9,719 end of period 13,444 9,719
EXPLANATORY NOTES
1. Basis of preparation
The quarterly and full year financial report and tables of
Shell
on the basis of the same accounting principles as, and should be read in
conjunction with, the Annual Report on Form 20-F for the year ended
31, 2009
Commission.
With effect from
accounted for in accordance with revised IFRS 3 Business Combinations and IAS
27 Consolidated and Separate Financial Statements. The revised standards
apply with prospective effect to the acquisition of a business or for certain
types of transactions involving an additional investment or a partial
disposal, requiring for example the recognition in income of certain
transaction costs, the recognition at fair value of contingent consideration
payable and the re-measurement of existing interests held or retained. The
exact impact depends on the individual transaction concerned, with
potentially different amounts being recognised in the Consolidated Financial
Statements than would previously have been the case.
With effect from the fourth quarter 2010, Downstream segment earnings are
presented on a current cost of supplies basis (CCS earnings). On this basis,
the purchase price of volumes sold during the period is based on the
estimated current cost of supplies during the same period after making
allowance for the estimated tax effect. CCS earnings thus exclude the effect
of changes in the oil price on inventory carrying amounts. CCS earnings have
become the dominant measure used by the Chief Executive Officer for the
purposes of making decisions about allocating resources to the segment and
assessing its performance.
The information for the period ended
statutory accounts as defined in section 435 of the Companies Act 2006.
Statutory accounts for the year ended
Board of Directors and delivered to the Registrar of Companies. The report of
the auditors on those accounts was unqualified, did not include a reference
to any matters to which the auditors drew attention by way of emphasis
without qualifying the report, and did not contain any statement under
sections 498(2) or (3) of the Companies Act 2006.
2. Return on average capital employed (ROACE)
ROACE is defined as the sum of the current and previous three quarters’
income adjusted for interest expense, after tax, divided by the average
capital employed for the period.
3. Impacts of Accounting for Derivatives
IFRS requires derivative instruments to be recognised in the financial
statements at fair value. Any change in the current period between the
period-end market price and the contract settlement price is recognised in
income where hedge accounting is either not permitted or not applied to these
contracts.
The physical crude oil and related products held by the Downstream
business as inventory are recorded at historical cost or net realisable
value, whichever is lower, as required under IFRS. Consequently, any increase
in value of the inventory over cost is not recognised in income until the
sale of the commodity occurs in subsequent periods.
In the Downstream business, the buying and selling of commodities
includes transactions conducted through the forward markets using commodity
derivatives to reduce economic exposure. Some derivatives are associated with
a future physical delivery of the commodities.
Differences in the accounting treatment for physical inventory (at cost
or net realisable value, whichever is lower) and derivative instruments (at
fair value) have resulted in timing differences in the recognition of gains
or losses between reporting periods.
Similarly, earnings from long-term contracts held in the Upstream
business are recognised in income upon realisation. Associated commodity
derivatives are recognised at fair value as of the end of each quarter.
These differences in accounting treatment for long-term contracts (on an
accrual basis) and derivative instruments (at fair value) have resulted in
timing differences in the recognition of gains or losses between the
reporting periods.
The aforementioned timing differences for Downstream and Upstream are
reported as identified items in the quarterly results and are estimates
derived from the overall portfolio of derivatives.
Certain UK gas contracts held by Upstream contain embedded derivatives or
written options, for which IFRS requires recognition at fair value, even
though they are entered into for operational purposes. The impact of the
mark-to-market calculation is reported as an identified item in the quarterly
results.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
The companies in which
investments are separate entities. In this document “Shell”, “Shell group”
and “Royal Dutch Shell” are sometimes used for convenience where references
are made to
the words “we”, “us” and “our” are also used to refer to subsidiaries in
general or to those who work for them. These expressions are also used where
no useful purpose is served by identifying the particular company or
companies. ”Subsidiaries”, “Shell subsidiaries” and “Shell companies” as
used in this document refer to companies in which
directly or indirectly has control, by having either a majority of the voting
rights or the right to exercise a controlling influence. The companies in
which Shell has significant influence but not control are referred to as
“associated companies” or “associates” and companies in which Shell has joint
control are referred to as “jointly controlled entities”. In this document,
associates and jointly controlled entities are also referred to as
“equity-accounted investments”. The term “Shell interest” is used for
convenience to indicate the direct and/or indirect (for example, through our
24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell
in a venture, partnership or company, after exclusion of all third-party
interest.
This document contains forward-looking statements concerning the
financial condition, results of operations and businesses of
Shell
deemed to be, forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management’s current
expectations and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or events to
differ materially from those expressed or implied in these statements.
Forward-looking statements include, among other things, statements concerning
the potential exposure of
expressing management’s expectations, beliefs, estimates, forecasts,
projections and assumptions. These forward-looking statements are identified
by their use of terms and phrases such as “anticipate”, “believe”, “could”,
“estimate”, “expect”, “intend”, “may”, “plan”, “objectives”, “outlook”,
“probably”, “project”, “will”, “seek”, “target”, “risks”, “goals”, “should”,
“scheduled” and similar terms and phrases. There are a number of factors that
could affect the future operations of
results to differ materially from those expressed in the forward-looking
statements included in this document, including (without limitation): (a)
price fluctuations in crude oil and natural gas; (b) changes in demand for
Shell’s products; (c) currency fluctuations; (d) drilling and production
results; (e) reserve estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks associated with
the identification of suitable potential acquisition properties and targets,
and successful negotiation and completion of such transactions; (i) the risk
of doing business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and regulatory developments
including potential litigation and regulatory effects arising from
recategorisation of reserves; (k) economic and financial market conditions in
various countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with governmental
entities, delays or advancements in the approval of projects and delays in
the reimbursement for shared costs; and (m) changes in trading conditions.
All forward-looking statements contained in this document are expressly
qualified in their entirety by the cautionary statements contained or
referred to in this section. Readers should not place undue reliance on
forward-looking statements. Additional factors that may affect future results
are contained in
ended
www.sec.gov). These factors also should be considered by the reader. Each
forward-looking statement speaks only as of the date of this document,
undertake any obligation to publicly update or revise any forward-looking
statement as a result of new information, future events or other information.
In light of these risks, results could differ materially from those stated,
implied or inferred from the forward-looking statements contained in this
document.
The United States Securities and Exchange Commission (SEC) permits oil
and gas companies, in their filings with the SEC, to disclose only proved
reserves that a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under existing
economic and operating conditions. We use certain terms in this document that
SEC’s guidelines strictly prohibit us from including in filings with the SEC.
U.S. Investors are urged to consider closely the disclosure in our Form 20-F,
File No 1-32575, available on the SEC website http://www.sec.gov. You can
also obtain these forms from the SEC by calling 1-800-SEC-0330.
SOURCE