4TH QUARTER AND FULL YEAR 2009 UNAUDITED RESULTS
* Royal Dutch Shell's fourth quarter 2009 earnings, on a current cost of
supplies (CCS) basis, were $1.2 billion compared to $4.8 billion a year
ago. Basic CCS earnings per share decreased by 76% versus the same quarter
a year ago.
* Fourth quarter 2009 CCS earnings, excluding identified items (see page 5),
were $2.8 billion compared to $3.9 billion in the fourth quarter 2008.
* Full year 2009 earnings, on a current cost of supplies (CCS) basis, were
$9.8 billion compared to $31.4 billion a year ago. Basic CCS earnings per
share decreased by 69% versus a year ago.
* Cash flow from operating activities for the fourth quarter 2009 was $5.7
billion.
* Net capital investment for the quarter was $7.2 billion. Total dividends
paid to shareholders during the fourth quarter 2009 were $2.6 billion.
* Gearing at the end of the fourth quarter 2009 was 15.5%.
* A fourth quarter 2009 dividend has been announced of $0.42 per share, an
increase of 5% over the US dollar dividend per share for the same period in
2008. The first quarter 2010 dividend is expected to be declared at $0.42
per share.
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Full Year
Q3
Q4 2009 2009 Q4 2008 %1 2009 2008 %
2,536 1,543 4,663 Upstream 8,354 26,506
(1,762) 1,292 561 Downstream 258 5,309
403 155 (439) Corporate and Minority interest 1,192 (449)
1,177 2,990 4,785 -75 CCS earnings 9,804 31,366 -69
Estimated CCS adjustment for
784 257 (7,595) Downstream (see Note 2) 2,714 (5,089)
Income attributable to
1,961 3,247 (2,810) - shareholders 12,518 26,277 -52
0.19 0.49 0.78 -76 Basic CCS earnings per share ($) 1.60 5.09 -69
Estimated CCS adjustment per
0.13 0.04 (1.22) share ($) 0.44 (0.82)
0.32 0.53 (0.44) - Basic earnings per share ($) 2.04 4.27 -52
Cash flow from operating
5,660 7,350 10,287 -45 activities 21,488 43,918 -51
Cash flow from operating
0.92 1.20 1.68 -45 activities per share ($) 3.51 7.13 -51
0.42 0.42 0.40 +5 Dividend per share ($) 1.68 1.60 +5
1 Q4 on Q4 change
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
"Our fourth quarter 2009 results were impacted by the weak global economy. Oil
prices have increased compared to a year ago, but gas prices and refining
margins have declined sharply, because of weaker demand and high industry
inventory levels. We are not assuming that there will be a quick recovery, and
the outlook for 2010 is uncertain.
Our strategy is on track, although the near-term industry outlook does remain
challenging. We are taking steps to improve our performance, to bridge the
company, and our shareholders, into a period of significant growth in the
coming years.
We are making good progress on our plans to raise Shell's competitive
performance. The Transition 2009 programme, which was launched in mid-2009, is
now completed. We have reduced complexity in the company, and our new
organisation, announced in July 2009, is now fully up and running. Our Upstream
organisation is simpler and our new Projects & Technology organisation makes
for better technical integration on bigger projects and a sharper innovation
focus along the value chain.
These changes, combined with our global Downstream organisation, and continued
streamlining in the corporate functions, have created a powerful platform for
future performance. We're seeing a new way of working in Shell, with increased
empowerment and accountability for our people.
As a result of our actions in 2009, some 5,000 employees will leave Shell, a
reduction of 10% in the impacted areas. We have reduced underlying operating
costs by some $1 billion in the fourth quarter 2009, and by over $2 billion in
2009 compared to 2008.
Downstream is facing some tough times. There is a significant overhang of
industry refining capacity, exacerbated by the economic downturn. That's why we
have initiatives underway to refocus Shell's Downstream footprint into fewer,
more profitable markets with growth potential, through disposals and selective
growth investment.
In 2009, Shell sold some $1.2 billion of non-core Downstream assets, bringing
the five year total to $11 billion, and in early 2010 announced plans to close
the 130 thousand barrels per day (b/d) Montreal East refinery in Canada. Asset
sales will continue in 2010, with some 560 thousand b/d of refining capacity,
15% of Shell's total, and selected marketing positions, under review.
Cost focus is now embedded in our day-to-day operations. For 2010, we are
targeting a further underlying cost reduction of at least $1 billion, and a
reduction of some 1,000 employees. Much of this will come from Downstream and
ongoing cost initiatives in the corporate functions.
I am pleased with the portfolio progress in 2009. We had successful start-ups
of Sakhalin II in Russia and BC-10 in Brazil, and these projects, plus Ormen
Lange in Norway have completed their production ramp-ups. We have taken final
investment decisions on two substantial new projects; Gorgon LNG in Australia,
and Caesar/Tonga in the deep water Gulf of Mexico, and launched a front-end
engineering and design study for floating LNG for the Prelude gas field in
Australia. Exploration and appraisal performance in 2009 has been strong, with
particularly good results in North America tight gas and Western Australia gas.
I see exciting opportunities for the medium-term."
FOURTH QUARTER 2009 PORTFOLIO DEVELOPMENTS
In Australia, Shell confirmed that it has accepted Woodside Petroleum Ltd.'s
entitlement offer of new shares at a total cost of $0.8 billion, maintaining
its 34.27% share in the company.
In Iraq, Shell was awarded a contract as lead operator in developing the
Majnoon field (Shell share 45%). Production is expected to reach 1.8 million
barrels of oil equivalent per day (boe/d), up from a current level of
approximately 45 thousand boe/d (100% basis). In addition, Shell was awarded a
15% share in a contract for the development of the West Qurna 1 field.
Shell has agreed an asset swap to acquire assets in Gabon and in the UK North
Sea, in return for its interest in a pair of Norwegian offshore fields. This
transaction, which is still subject to government approval and other requisite
consents, is a strategic trade and no cash payment is involved.
In Egypt, Shell signed agreements to acquire a 40% holding and become the
operator on the Alam El Shawish West Concession, where oil and gas discoveries
have been confirmed.
In Bolivia and Brazil, Shell has sold its share in a gas pipeline and in a
thermoelectric power plant and its related assets for a total of $100 million.
During 2009, Shell participated in 10 discoveries, in Australia, the US Gulf of
Mexico, Malaysia and Norway. Shell is seeing particularly strong results from
exploration and appraisal drilling in the North American Haynesville and
Groundbirch tight gas areas, and offshore Western Australia. Shell also
increased its overall acreage position, completing acquisitions of new
exploration licences in Australia, Brazil, Canada, Guyana, Italy, Jordan,
Norway and the USA and successfully bidding for new licences in Egypt, South
Africa and French Guiana.
In Singapore, Shell announced the successful start-up of its new world-scale
monoethylene glycol (MEG) unit at the Shell Eastern Petrochemicals Complex with
a nameplate capacity of 750 thousand tonnes per annum.
Also in Singapore, Shell sold 49% of its share in two chemicals joint ventures
(Petrochemical Corporation of Singapore and The Polyolefin Company).
In Australia and New Zealand, Shell announced the sale of its share in two
bitumen joint ventures. The sale will be concluded in several phases and
finalised by 2014.
KEY FEATURES OF THE FOURTH QUARTER AND FULL YEAR 2009
* Fourth quarter 2009 CCS earnings were $1,177 million, 75% lower than in the
same quarter a year ago. Full year 2009 CCS earnings were $9,804 million,
69% lower than in 2008.
* Fourth quarter 2009 CCS earnings, excluding identified items (see page 5),
were $2,774 million compared to $3,888 million in the fourth quarter 2008.
* Fourth quarter 2009 reported earnings were $1,961 million compared to a
loss of $2,810 million in the same quarter a year ago. Full year 2009
reported earnings were $12,518 million compared to earnings of $26,277
million in 2008.
* Basic CCS earnings per share decreased by 76% versus the same quarter a
year ago. Full year 2009 basic CCS earnings per share decreased by 69%
compared to 2008.
* Cash flow from operating activities for the fourth quarter 2009 was $5.7
billion, compared to $10.3 billion in the same quarter last year. Excluding
net working capital movements, cash flow from operating activities in the
fourth quarter 2009 was $4.4 billion. Full year 2009 cash flow from
operating activities was $21.5 billion compared to $43.9 billion in 2008.
* Total dividends paid to shareholders during the fourth quarter 2009 were
$2.6 billion, bringing the total for the full year 2009 to $10.5 billion.
* Capital investment for the fourth quarter 2009 was $8.8 billion. Net
capital investment (capital investment, less divestment proceeds) for the
fourth quarter 2009 was $7.2 billion, bringing the total for the full year
2009 to some $29 billion.
* Return on average capital employed (ROACE), on a reported income basis (see
Note 3), was 8.0%.
* Gearing was 15.5% at the end of the fourth quarter 2009 versus 5.9% at the
end of the fourth quarter 2008.
Upstream
* Oil and gas production for the fourth quarter 2009 was 3,331 thousand boe/
d.
Full year 2009 oil and gas production was 3,152 thousand boe/d. Production for
the fourth quarter and the full year 2009 excluding the impact of divestments,
production sharing contracts (PSC) pricing effects and OPEC quota restrictions
was 2% lower compared to the same periods last year.
Underlying production, in the fourth quarter and full year 2009, increased by
some 200 thousand boe/d from new field start-ups and the continuing ramp-up of
fields, more than offsetting the impact of field declines.
* LNG sales volumes of 3.96 million tonnes in the fourth quarter 2009 were
18% higher than in the same quarter a year ago. Full year 2009 LNG sales
volumes were 13.40 million tonnes compared to 13.05 million tonnes in 2008,
an increase of 3%.
Downstream
* Oil Products sales volumes were 2% lower than in the fourth quarter 2008.
Chemical product sales volumes in the fourth quarter 2009 increased by 8%
compared to the fourth quarter 2008.
The weak global economy impacted downstream sales volumes in 2009. Full year
2009 Oil Products sales volumes were 6% lower than in 2008. Full year 2009
Chemical product sales volumes decreased by 10% compared to 2008.
* Oil Products refinery availability was 93% compared to 90% in the fourth
quarter 2008 (93% for the full year 2009 versus 91% in 2008). Chemicals
manufacturing plant availability was 95%, 2% higher than in the fourth
quarter 2008 (92% for the full year 2009 versus 94% in 2008).
* Supplementary financial and operational disclosure for the fourth quarter
and full year 2009 is available at www.shell.com/investor .
SUMMARY OF IDENTIFIED ITEMS
Earnings in the fourth quarter 2009 reflected the following items, which in
aggregate amounted to a net charge of $1,597 million (compared to a net gain of
$897 million in the fourth quarter 2008), as summarised in the table below:
* Upstream earnings included a net charge of $226 million, reflecting
redundancy provisions and a net charge related to changes in the
mark-to-market valuation and accounting of certain gas contracts, which
were partly offset by a net gain related to asset impairment reversals,
divestment gains and tax credits. Earnings for the fourth quarter 2008
included a net gain of $1,398 million.
* Downstream earnings included a net charge of $1,335 million, reflecting
asset impairments, redundancy and restructuring provisions, a charge
related to the estimated fair value accounting of commodity derivatives
(see Note 7), tax charges and provisions, which were partly offset by
divestment gains. Earnings for the fourth quarter 2008 included a net
charge of $405 million.
* Corporate earnings and Minority interest included a charge of $36 million,
related to redundancy provisions. Earnings for the fourth quarter 2008
included a charge of $96 million.
Redundancy provisions related to the Transition 2009 programme impacted CCS
earnings in the fourth quarter 2009 by some $0.9 billion.
SUMMARY OF IDENTIFIED ITEMS
Quarters $ million Full Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
Segment earnings impact of
identified items:
(226) (123) 1,398 Upstream (134) 3,487
(1,335) 536 (405) Downstream (1,682) (435)
(36) (42) (96) Corporate and Minority interest 67 (96)
(1,597) 371 897 CCS earnings impact (1,749) 2,956
These identified items generally relate to events with an impact of more than
$50 million on Royal Dutch Shell's earnings and are shown to provide additional
insight into its segment 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 Q3 Q4
2009 2009 2008 %1 2009 2008 %
2,536 1,543 4,663 -46 Upstream earnings 8,354 26,506 -68
5,983 4,168 4,199 +42 Upstream cash flow from operations 19,935 38,681 -48
6,682 5,879 6,951 -4 Capital investment 23,951 32,166 -26
Crude oil production (thousand b/
1,701 1,648 1,772 -4 d)2 1,678 1,771 -5
Natural gas production available
9,452 7,411 9,531 -1 for sale (million scf/d) 8,553 8,569 -
Barrels of oil equivalent
3,331 2,926 3,415 -2 (thousand boe/d) 3,152 3,248 -3
3.96 3.49 3.36 +18 LNG sales volumes (million tonnes) 13.40 13.05 +3
1 Q4 on Q4 change
2 Includes oil sands bitumen production
Fourth quarter Upstream earnings were $2,536 million compared to $4,663 million
a year ago. Earnings included a net charge of $226 million related to
identified items, compared to a net gain of $1,398 million in the fourth
quarter 2008 (see page 5).
Upstream earnings compared to the fourth quarter 2008 reflected the impact of
lower realised natural gas and LNG prices, lower oil production volumes and
redundancy provisions. These impacts were partially offset by the effect of
higher realised oil prices and increased LNG sales volumes compared to the
fourth quarter 2008.
Fourth quarter 2009 oil prices increased compared to the fourth quarter 2008,
while fourth quarter 2009 gas prices declined versus the fourth quarter 2008.
The benefit from higher realised oil prices on fourth quarter 2009 earnings was
more than offset by the combined effect of the reduction in worldwide natural
gas prices and lower realised natural gas prices mainly due to time lag pricing
effects in many of the natural gas and LNG sales contracts. A generally weak
environment for natural gas marketing and trading activities also affected the
fourth quarter 2009 earnings.
Global liquids realisations were 23% higher than in the fourth quarter 2008.
Global gas realisations were 31% lower than in the same quarter a year ago. In
the Americas, gas realisations decreased by 23% whereas outside the Americas,
gas realisations decreased by 34%.
Fourth quarter 2009 production was 3,331 thousand boe/d compared to 3,415
thousand boe/d a year ago. Crude oil production was down 4% and natural gas
production was broadly in line with the fourth quarter 2008.
Underlying production, compared to the fourth quarter 2008, increased by some
200 thousand boe/d from new field start-ups and the continuing ramp-up of
fields over the last 12 months, more than offsetting field declines.
LNG sales volumes of 3.96 million tonnes were 18% higher than in the same
quarter a year ago. Volumes reflected the continuous ramp-up in sales volumes
from the Sakhalin II LNG project and Train 5 at the North West Shelf project
and higher sales from Oman LNG, which were partly offset by lower volumes from
Nigeria LNG.
Full year Upstream earnings were $8,354 million compared to $26,506 million in
2008. Earnings included a net charge of $134 million related to identified
items, compared to a net gain of $3,487 million in the full year 2008 (see page
5).
Upstream earnings compared to the full year 2008 reflected the impact of
significantly lower oil and gas prices and lower oil production volumes. These
impacts were partially offset by increased LNG sales volumes, reflecting the
continuous ramp-up in sales volumes from the Sakhalin II LNG project and Train
5 at the North West Shelf project, lower royalty and tax expenses and higher
natural gas trading contributions compared to the full year 2008.
Global liquids realisations were 38% lower than in the full year 2008. Global
gas realisations were 34% lower than a year ago. In the Americas, gas
realisations decreased by 53% whereas outside the Americas, gas realisations
decreased by 24%.
Full year 2009 production was 3,152 thousand boe/d compared to 3,248 thousand
boe/d a year ago. Crude oil production was down 5% and natural gas production
was in line with full year 2008 production.
Underlying production, compared to the full year 2008, increased by some 200
thousand boe/d from new field start-ups and the continuing ramp-up of fields in
2009, more than offsetting field declines.
LNG sales volumes of 13.40 million tonnes were 3% higher than in 2008. Volumes
reflected the ramp-up in sales volumes from the Sakhalin II LNG project and
Train 5 at the North West Shelf project, which was partly offset by lower
volumes from Nigeria LNG and reduced LNG demand.
DOWNSTREAM
Quarters $ million Full Year
Q3
Q4 2009 2009 Q4 2008 %1 2009 2008 %
(1,762) 1,292 561 - Downstream CCS earnings 258 5,309 -95
Estimated CCS adjustment (see
810 251 (7,810) Note 2) 2,796 (5,270)
(952) 1,543 (7,249) +87 Downstream earnings 3,054 39 -
Downstream cash flow from
2,243 3,157 7,401 -70 operations 4,056 8,607 -53
2,078 1,819 2,105 -1 Capital investment 7,510 6,036 +24
Refinery plant intake (thousand
2,986 2,997 3,125 -4 boe/d) 3,067 3,388 -9
Oil Products sales volumes
6,296 6,121 6,400 -2 (thousand b/d) 6,156 6,568 -6
Chemicals sales volumes
4,835 4,723 4,483 +8 (thousand tonnes) 18,311 20,327 -10
1 Q4 on Q4 change
Fourth quarter Downstream CCS results were a loss of $1,762 million compared to
earnings of $561 million in the fourth quarter 2008. Results included a net
charge of $1,335 million related to identified items, compared to a net charge
of $405 million in the fourth quarter 2008 (see page 5).
Downstream CCS results compared to the fourth quarter 2008 reflected
substantially lower realised refining margins and lower refinery plant intake
volumes, asset impairments, redundancy and restructuring provisions and
non-cash pension charges, which were partly offset by lower operating costs and
improved Chemicals earnings. In addition, adverse global downstream market
conditions impacted the fourth quarter 2009 results through substantially lower
marketing margins and reduced Oil Products sales volumes.
Oil Products marketing CCS earnings compared to the same period a year ago
decreased due to lower retail and B2B earnings and reduced trading
contributions, which were partly offset by improved lubricants contributions.
Oil Products sales volumes decreased by 2% compared to the same quarter last
year, mainly because of lower B2B volumes, partly offset by increased retail
sales volumes.
Industry refining margins declined significantly worldwide compared to the same
period a year ago, impacting realised refining margins. The lower refinery
plant intake volumes, which decreased by 4% compared to the same quarter last
year, reflected the reduced demand for refined products coupled with new
refining capacity brought on-stream.
Refinery availability was 93% compared to 90% in the fourth quarter 2008.
Chemicals CCS earnings compared to the fourth quarter 2008 reflected improved
income from equity- accounted investments, higher sales volumes and lower
operating costs, which were partly offset by lower realised chemicals margins.
Chemicals sales volumes increased by 8% compared to the same quarter last year.
Chemicals manufacturing plant availability increased to 95%, some 2% higher
than in the fourth quarter 2008.
Full year Downstream CCS earnings were $258 million compared to $5,309 million
in the full year 2008. Earnings included a net charge of $1,682 million related
to identified items, compared to a net charge of $435 million in the full year
2008 (see page 5).
Downstream CCS earnings compared to the full year 2008 were significantly
impacted by the weak global economy, and reflected substantially reduced Oil
Products refining and marketing earnings. In addition, earnings were impacted
by asset impairments, redundancy and restructuring provisions and non-cash
pension charges, which were partly offset by divestment gains and lower
operating costs.
Oil Products marketing CCS earnings compared to the full year 2008 decreased
mainly due to lower retail and B2B earnings, which were partly offset by higher
lubricants and trading contributions.
Oil Products sales volumes decreased by 6% compared to 2008, mainly because of
lower B2B volumes, partly offset by increased retail sales volumes. During 2009
Oil Products sales volumes were impacted worldwide by lower demand as a
consequence of the weak global economy.
Industry refining margins for the full year 2009, compared to 2008, declined
significantly worldwide, impacting realised refining margins. Reduced global
demand for refined products coupled with new refining capacity brought
on-stream led to lower refinery plant intake volumes, which decreased by 9%
compared to 2008.
Refinery availability was 93% compared to 91% in the full year 2008.
Chemicals CCS earnings compared to the full year 2008 reflected improved income
from equity-accounted investments and lower operating costs, which were partly
offset by lower realised chemicals margins and lower chemicals sales volumes.
Chemicals sales volumes decreased by 10% compared to the full year 2008.
Chemicals manufacturing plant availability decreased to 92%, some 2% lower than
in the full year 2008.
CORPORATE AND MINORITY INTEREST
Quarters $ million Full Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
427 202 (373) Corporate1 1,310 (69)
(24) (47) (66) Minority interest (118) (380)
403 155 (439) Corporate and Minority interest 1,192 (449)
1 See Note 4
Fourth quarter Corporate earnings and Minority interest were $403 million
compared to a loss of $439 million for the same period last year. Earnings for
the fourth quarter 2009 included a charge of $36 million related to an
identified item compared to a charge of $96 million in the fourth quarter 2008
(see page 5).
Corporate earnings compared to the fourth quarter 2008 mainly reflected
currency exchange gains and higher net interest income.
Full year Corporate earnings and Minority interest were $1,192 million compared
to a loss of $449 million for the full year 2008. Earnings included net gains
of $67 million related to identified items compared to a charge of $96 million
in the full year 2008 (see page 5).
Corporate earnings compared to the full year 2008 mainly reflected currency
exchange gains of $644 million compared to losses of $650 million in 2008.
FORTHCOMING EVENTS
First quarter 2010 results and first quarter 2010 dividend are scheduled to be
announced on April 28, 2010. Second quarter 2010 results and second quarter
2010 dividend are scheduled to be announced on July 29, 2010. Third quarter
2010 results and third quarter 2010 dividend are scheduled to be announced on
October 28, 2010. A Shell strategy update is planned on March 16, 2010.
APPENDIX: ROYAL DUTCH SHELL FINANCIAL REPORT AND TABLES
STATEMENT OF INCOME3
$ Full
Quarters million Year
Q4 2009 Q3 2009 Q4 2008 %1 2009 2008 %
81,075 75,009 81,073 Revenue 278,188 458,361
Share of profit
of
equity-accounted
1,767 746 350 investments 4,976 7,446
Interest and
577 271 1,279 other income5 1,965 5,133
Total revenue
83,419 76,026 82,702 and other income 285,129 470,940
60,879 55,781 66,943 Purchases6 203,075 359,587
Production and
manufacturing
7,382 5,885 6,746 expenses 25,301 25,565
Selling,
distribution and
administrative
5,532 4,306 4,435 expenses 17,430 16,906
Research and
331 318 384 development 1,125 1,230
669 637 635 Exploration 2,178 1,995
Depreciation,
depletion and
3,748 4,341 3,684 amortisation4 14,458 13,656
4 189 345 Interest expense 542 1,181
Income before
4,874 4,569 (470) - taxation 21,020 50,820 -59
2,863 1,281 2,489 Taxation 8,302 24,344
Income for the
2,011 3,288 (2,959) - period 12,718 26,476 -52
Income
attributable to
minority
50 41 (149) interest 200 199
Income
attributable to
Royal Dutch
Shell plc
1,961 3,247 (2,810) - shareholders 12,518 26,277 -52
Estimated CCS
adjustment for
(784) (257) 7,595 Downstream (2,714) 5,089
1,177 2,990 4,785 -75 CCS earnings 9,804 31,366 -69
BASIC EARNINGS PER SHARE3
Full
Quarters Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
Earnings
per share
0.32 0.53 (0.44) ($) 2.04 4.27
CCS
earnings
per share
0.19 0.49 0.78 ($) 1.60 5.09
DILUTED EARNINGS PER SHARE3
Full
Quarters Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
Earnings
per share
0.32 0.53 (0.44) ($) 2.04 4.26
CCS
earnings
per share
0.19 0.49 0.78 ($) 1.60 5.08
SHARES2,3
Full
Millions Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
Weighted
average
number of
shares as
the basis
for:
Basic
earnings
6,124.3 6,127.0 6,123.8 per share 6,124.9 6,159.1
Diluted
earnings
6,132.0 6,131.0 6,127.5 per share 6,128.9 6,171.5
Basic
shares
outstanding
at the end
of the
6,122.3 6,125.2 6,121.7 period 6,122.3 6,121.7
1 Q4 on Q4 change.
2 Royal Dutch Shell plc ordinary shares of euro 0.07 each.
3 See Notes 1, 2 and 6, where applicable.
4 Includes net impairment charges of $1.8 billion for the full year 2009
and $0.9 billion for the full year 2008.
5 Includes gains/(losses) on sale of assets.
6 Includes inventory movements.
SUMMARISED BALANCE SHEET (SEE NOTES 1 AND 5)
$ million
Sept 30,
Dec 31, 2009 2009 Dec 31, 2008
Assets
Non-current assets:
Intangible assets 5,356 5,288 5,021
Property, plant and equipment 131,619 127,207 112,038
Investments:
- equity-accounted investments 31,175 30,265 28,327
- financial assets 3,874 4,187 4,065
Deferred tax 4,533 4,309 3,418
Pre-paid pension costs 10,009 9,691 6,198
Other 9,158 9,646 6,764
195,724 190,593 165,831
Current assets:
Inventories 27,410 25,420 19,342
Accounts receivable 59,328 66,966 82,040
Cash and cash equivalents 9,719 14,275 15,188
96,457 106,661 116,570
Total assets 292,181 297,254 282,401
Liabilities
Non-current liabilities:
Debt 30,862 31,522 13,772
Deferred tax 13,838 13,917 12,518
Retirement benefit obligations 5,923 5,918 5,469
Other provisions 14,048 13,523 12,570
Other 4,586 4,719 3,677
69,257 69,599 48,006
Current liabilities:
Debt 4,171 4,774 9,497
Accounts payable and accrued liabilities 67,161 69,489 85,091
Taxes payable 9,189 11,879 8,107
Retirement benefit obligations 461 435 383
Other provisions 3,807 2,566 2,451
84,789 89,143 105,529
Total liabilities 154,046 158,742 153,535
Equity attributable to Royal Dutch Shell
plc shareholders 136,431 136,863 127,285
Minority interest 1,704 1,649 1,581
Total equity 138,135 138,512 128,866
Total liabilities and equity 292,181 297,254 282,401
SUMMARISED STATEMENT OF CASH FLOWS (SEE NOTE 1)
Quarters $ million Full Year
Q4 2009 Q3 2009 Q4 2008 2009 2008
Cash flow from operating
activities:
2,011 3,288 (2,959) Income for the period 12,718 26,476
Adjustment for:
3,409 1,677 2,411 - Current taxation 9,297 24,452
390 157 414 - Interest (income)/expense 1,247 1,039
- Depreciation, depletion and
3,748 4,341 3,684 amortisation1 14,458 13,656
- (Gains)/losses on sale of
(415) (81) (1,234) assets (781) (4,071)
- Decrease/(increase) in net
1,253 (384) 14,687 working capital (2,331) 7,935
- Share of profit of
(1,767) (746) (350) equity-accounted investments (4,976) (7,446)
- Dividends received from
1,691 993 2,522 equity-accounted investments 4,903 9,325
- Deferred taxation and other
(938) (401) (1,105) provisions (1,925) (1,030)
(421) 332 (35) - Other (1,879) (549)
Cash flow from operating
8,961 9,176 18,035 activities (pre-tax) 30,731 69,787
(3,301) (1,826) (7,748) Taxation paid (9,243) (25,869)
Cash flow from operating
5,660 7,350 10,287 activities 21,488 43,918
Cash flow from investing
activities:
(7,506) (6,219) (7,892) Capital expenditure (26,516) (35,065)
Investments in equity-accounted
(653) (448) (193) investments (2,955) (1,885)
520 327 1,179 Proceeds from sale of assets 1,325 4,737
Proceeds from sale of
1,146 267 569 equity-accounted investments 1,633 2,062
Proceeds from sale of /(additions
(37) (16) (36) to) financial assets (105) 224
96 118 191 Interest received 384 1,012
Cash flow from investing
(6,434) (5,971) (6,182) activities (26,234) (28,915)
Cash flow from financing
activities:
Net increase/(decrease) in debt
with maturity period
(816) (57) 3,970 within three months (6,507) 4,161
461 5,353 3,001 Other debt: New borrowings 19,742 3,555
(477) (241) (581) Repayments (2,534) (2,890)
(292) (86) (409) Interest paid (902) (1,371)
20 23 31 Change in minority interest 62 40
- - (302) Repurchase of shares - (3,573)
Dividends paid to:
- Royal Dutch Shell plc
(2,613) (2,656) (2,408) shareholders (10,526) (9,516)
(27) (65) (54) - Minority interest (191) (325)
Treasury shares:
- Net sales/(purchases) and
(43) (17) 47 dividends received 27 525
Cash flow from financing
(3,787) 2,254 3,295 activities (829) (9,394)
Currency translation differences
relating to cash and
5 46 (33) cash equivalents 106 (77)
Increase/(decrease) in cash and
(4,556) 3,679 7,367 cash equivalents (5,469) 5,532
Cash and cash equivalents at
14,275 10,596 7,821 beginning of period 15,188 9,656
Cash and cash equivalents at end
9,719 14,275 15,188 of period 9,719 15,188
1 Includes net impairment charges of $1.8 billion for the full year 2009 and
$0.9 billion for the full year 2008.
EQUITY (SEE NOTE 5)
Ordinary
share
capital
Treasury Other Retained Minority Total
$ million shares reserves earnings Total interest equity
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/
(repayments) from/
to minority
shareholders and
other changes in
minority interest - - - 3 3 62 65
Dividends paid - - - (10,526) (10,526) (191) (10,717)
Treasury shares:
net sales/
(purchases) and
dividends received - 156 - - 156 - 156
Repurchases of
shares - - - - - - -
Share-based
compensation - - 181 191 372 - 372
At December 31,
2009 527 (1,711) 9,982 127,633 136,431 1,704 138,135
Ordinary
share Treasury Other Retained Minority Total
$ million capital shares reserves earnings Total interest equity
At December 31,
2007 536 (2,392) 14,148 111,668 123,960 2,008 125,968
Income for the
period - - - 26,277 26,277 199 26,476
Other
comprehensive
income - - (11,049) - (11,049) (341) (11,390)
Capital
contributions/
(repayments) from/
to minority
shareholders and
other changes in
minority interest - - - 58 58 40 98
Dividends paid - - - (9,516) (9,516) (325) (9,841)
Treasury shares:
net sales/
(purchases) and
dividends received - 525 - - 525 - 525
Repurchases of
shares (9) - 9 (3,082) (3,082) - (3,082)
Share-based
compensation - - 70 42 112 - 112
At December 31,
2008 527 (1,867) 3,178 125,447 127,285 1,581 128,866
EXPLANATORY NOTES
1. Accounting policies and basis of presentation
The quarterly financial report and tables are prepared in accordance with the
accounting policies set out in Note 2 to the Consolidated Financial Statements
of Royal Dutch Shell plc in the Annual Report and Form 20-F for the year ended
December 31, 2008 on pages 118 to 122. The accounting policies are in
accordance with IFRS as adopted by the European Union.
This publication is unaudited and does not comprise statutory financial
statements. Statutory financial statements for the year ended December 31, 2008
were approved by the Board of Directors on March 11, 2009 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 237(2) or (3) of the Companies Act 1985.
The presentation of the Statement of Income has been changed to provide
additional information for the evaluation of Shell's performance. This change
provides additional information in relation to our costs and more alignment
with industry practice. The main changes are the disclosure of purchases,
production and manufacturing expenses and research and development separately
(previously disclosed within cost of sales). Depreciation, depletion and
amortisation charges previously included in cost of sales, selling,
distribution and administrative expenses and exploration are now disclosed
separately. Gains and losses on sale of assets are now included in interest and
other income.
Purchases are all costs related to the acquisition of supplies, including those
used for conversion into finished or intermediary products. Production and
manufacturing expenses are the costs of operating, maintaining and managing
production and manufacturing assets. Selling, distribution and administrative
expenses include direct and indirect costs of marketing and selling products.
2. Earnings on an estimated current cost of supplies (CCS) basis
To facilitate a better understanding of underlying business performance, the
financial results are also analysed on an estimated current cost of supplies
(CCS) basis as applied for the Downstream segment earnings. Earnings on an
estimated current cost of supplies basis provides useful information concerning
the effect of changes in the cost of supplies on Shell's results of operations
and is a measure to manage the performance of the Downstream segment but is not
a measure of financial performance under IFRS.
On this basis, the purchase price of the volumes sold during the period is
based on the cost of supplies during the same period after making allowance for
the estimated tax effect, instead of the first-in, first-out (FIFO) method of
inventory accounting. Earnings calculated on this basis do not represent an
application of the last-in, first-out (LIFO) inventory basis and do not reflect
any inventory drawdown effects.
3. 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.
4. Segmental reporting
Segmental reporting has been changed with effect from the third quarter 2009,
in line with the change in the way Shell's businesses are managed. Shell now
reports its business through three (previously six) reporting segments,
Upstream (previously Exploration & Production, Gas & Power and Oil Sands),
Downstream (previously Oil Products and Chemicals) and Corporate. Upstream is
the aggregation of two operating segments, Upstream International and Upstream
Americas, which have similar economic characteristics. Corporate represents the
key support functions, comprising holdings and treasury, headquarters, central
functions and Shell insurance companies. Prior period financial information has
been reclassified accordingly.
Upstream and Downstream results are presented before deduction of minority
interest and also exclude interest and other income of a non-operational
nature, interest expense, non-trading currency exchange effects and tax on
these items, which are included in the Corporate results. With effect from the
third quarter 2009, insurance premium costs (excluding external insurance) and
self-insured claims are reported within the Corporate segment; previously they
were reported within the relevant business segments. The impact of this change
in allocation is a reduction of $255 million (pre-tax) of the Corporate
earnings in the fourth quarter 2009 ($422 million for the third and fourth
quarter 2009), with no effect on Shell's income for the period. Prior period
segment earnings are not reclassified (the insurance costs were $22 million
(pre-tax) in the fourth quarter 2008 and $172 million (pre-tax) in the full
year 2008). Segment results include equity-accounted investments and are after
tax.
5. Equity
Total equity comprises equity attributable to Royal Dutch Shell plc
shareholders and to minority interest. Other reserves comprise the capital
redemption reserve, share premium reserve, merger reserve, share plan reserve
and other accumulated comprehensive income (currency translation differences,
unrealised gains/(losses) on securities and unrealised gains/(losses) on cash
flow hedges).
6. Earnings per share
Basic earnings per share is calculated by dividing the income attributable to
Royal Dutch Shell plc shareholders for the period by the weighted average
number of Class A and B ordinary shares outstanding during the period. To
calculate the diluted earnings per share the weighted average number of shares
outstanding is adjusted for the number of shares related to share option
schemes.
7. 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 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 also reported as an identified item in the
quarterly results.
Contacts:
* Investor Relations: Europe: + 31 (0)70 377 4540; USA: +1 713 241 1042
* Media: Europe: + 31 (0)70 377 3600
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
First quarter 2010 results and first quarter 2010 dividend are scheduled to be
announced on April 28, 2010. Second quarter 2010 results and second quarter
2010 dividend, are scheduled to be announced on July 29, 2010. Third quarter
2010 results and third quarter 2010 dividend, are scheduled to be announced on
October 28, 2010. A Shell strategy update is planned on March 16, 2010.
The companies in which Royal Dutch Shell plc directly and indirectly owns
investments are separate entities. In this document "Shell", "Shell group" and
"Royal Dutch Shell" are sometimes used for convenience where references are
made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, 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 Royal Dutch Shell either 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 34% 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 Royal Dutch Shell. All
statements other than statements of historical fact are, or may be 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 Royal Dutch
Shell to market risks and statements 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 Royal Dutch Shell and could cause those
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 the
Group'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 Royal Dutch Shell's
Annual Report and Form 20-F for the year ended December 31, 2008 (available at
www.shell.com/investor and 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, February 4, 2010. Neither Royal Dutch Shell nor any of
its subsidiaries 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 www.sec.gov . You can also obtain these forms from
the SEC by calling 1-800-SEC-0330.
February 4, 2010
END
ROYAL DUTCH SHELL PLC
