31st Jan 2008 07:00
4TH QUARTER 2007 UNAUDITED RESULTS
* Royal Dutch Shell's fourth quarter 2007 earnings, on a current cost of
supplies (CCS) basis, were $6.7 billion compared to $6.0 billion a year
ago. Basic CCS earnings per share increased by 13% versus the same quarter
a year ago.
* Full year 2007 CCS earnings were $27.6 billion compared to $25.4 billion
for the full year 2006. Basic CCS earnings per share for the full year 2007
increased by 11% when compared to 2006.
* A fourth quarter 2007 dividend has been announced of $0.36 per share, an
increase of 11% over the US dollar dividend for the same period in 2006.
From 2007 onwards the Group has been declaring its dividends in US dollars
rather than in euros.
* The first quarter 2008 dividend is expected to be declared at $0.40 per
share, an increase of 11% compared to the first quarter dividend of 2007.
* $1.5 billion or 0.6% of Royal Dutch Shell shares were bought back for
cancellation during the quarter. Shares bought back for cancellation in
2007 totalled $4.4 billion or 1.7% of the shares.
Royal Dutch Shell Chief Executive Jeroen van der Veer commented: "Overall theseare satisfactory results. We made good progress in 2007, launched new projectsupstream and downstream, and achieved exploration successes. In the fourthquarter, we continued to see weak refining margins. We are proceeding with therejuvenation of our portfolio with investment in new legacy assets, and throughdisposals. The execution of our strategy is on track." SUMMARY UNAUDITED RESULTS
Quarters $ million Full Year
Q4 2007 Q3 2007 Q4 2006 %1 2007 2006
% Income attributable to 8,467 6,916 5,283 +60 shareholders 31,331 25,442 +23 Less: Estimated CCS adjustment for Oil Products and Chemicals 1,783 524 (732) (see note 2) 3,767 77 6,684 6,392 6,015 +11 CCS earnings 27,564 25,365 +9 1.36 1.10 0.84 +62 Basic earnings per share ($) 5.00 3.97 +26 Less: Estimated CCS adjustment 0.29 0.08 (0.11) per share ($) 0.60 0.01 1.07 1.02 0.95 +13 Basic CCS earnings per share ($) 4.40 3.96 +11 0.36 0.36 0.325 +11 Dividend per ordinary share ($)2 1.44 1.27 +13 1 Q4 on Q4 change 2 From 2007 onwards dividends are declared in US dollars. 2006 dividends were declared in euros and translated, for comparison purposes, to US dollars (based on the US dollar dividend of American Depositary Receipts converted to ordinary shares in the applicable period).
KEY FEATURES OF THE FOURTH QUARTER 2007 AND FULL YEAR 2007
Fourth quarter 2007 CCS earnings were $6,684 million or 11% higher than in thesame quarter a year ago. Full year 2007 CCS earnings were $27,564 million or 9%higher than in 2006.
* Fourth quarter 2007 reported income was $8,467 million or 60% higher than
in the same quarter a year ago. Full year 2007 reported income was $31,331
million or 23% higher than in 2006.
* Basic CCS earnings per share increased by 13% versus the same quarter a
year ago. Full year 2007 basic CCS earnings per share increased 11% when
compared to 2006.
* Total cash returned to shareholders in the form of dividends and share
repurchases in the fourth quarter 2007 was $3.9 billion, bringing the total
for the full year 2007 to $13.4 billion.
* Cash flow from operating activities was $5.3 billion compared to $6.0
billion in the fourth quarter 2006. Excluding working capital movements and
taxation effects, cash flow from operating activities was $9.9 billion
compared to $8.8 billion a year ago. Full year 2007 cash flow from
operating activities was $34.5 billion compared to $31.7 billion in 2006.
Adjusted for working capital movements and taxation effects, cash flow from
operating activities for the full year 2007 was $39.5 billion, similar to
full year 2006.
* Capital investment for the fourth quarter 2007 was $8.5 billion. Full year
2007 capital investment was $26.6 billion, excluding the minority share of Sakhalin of $0.5 billion, with an additional $7.1 billion used for the acquisition of the minority shares of Shell Canada. Approximately $9.9
billion of proceeds were realised from divestments. Net capital investment
(capital investment, including acquisition of minority interests, less
divestment proceeds and the minority share of Sakhalin) for the full year
2007 was $23.8 billion. Net capital investment for 2008 is expected to be
in the range of $24 - $25 billion, broadly unchanged from 2007 levels.
* Return on average capital employed (ROACE), on a reported income basis (see
note 3), was 24.4%.
* Gearing (see note 5) was 16.3% at the end of 2007 versus 14.8% at the end
of 2006.
* Oil and gas production, including oil sands production, for the fourth quarter
2007 was 3,436 thousand barrels of oil equivalent per day (boe/d), compared to
3,645 thousand boe/d in the same quarter last year. Full year 2007 oil and gas
production, including oil sands production, was 3,315 thousand boe/d, compared
to 3,473 thousand boe/d in 2006. Excluding the impact of divestments,
contractual settlements and production sharing contract (PSC) pricing effects,
fourth quarter 2007 production increased by 1% compared to the same quarter
last year and full year 2007 production decreased by 2% compared to 2006
levels.
* Liquefied Natural Gas (LNG) equity sales volumes of 3.34 million tonnes
were in line with the same quarter a year ago. Full year 2007 equity LNG
sales were 13.18 million tonnes, up 9% compared to 12.12 million tonnes in
2006.
* Oil Products refinery availability remained relatively stable at 94%
compared to the fourth quarter of 2006 (91% for the full year 2007 versus
92% in 2006). Chemicals manufacturing plant availability was 93% compared
to 87% in the fourth quarter 2006 (93% for the full year 2007 versus 90% in
2006). Oil Sands upgrader availability was 79%, compared to 98% in the same
quarter last year (89% for the full year 2007 versus 99% in 2006).
SUMMARY UNAUDITED RESULTS
Quarters $ million Full Year Q4 Q3 Q4 2007 2007 2006 %1 2007 2006 % 4,867 3,327 3,536 Exploration & Production2 14,686 14,544 631 568 579 Gas & Power3 2,781 2,633 82 183 174 Oil Sands2 582 651 876 1,651 1,469 Oil Products (CCS basis) 6,951 7,027 348 360 273 Chemicals (CCS basis) 1,682 1,095 (4) 413 249 Corporate3 1,387 294 (116) (110) (265) Minority interest (505) (879) 6,684 6,392 6,015 +11 CCS earnings 27,564 25,365 +9 1 Q4 on Q4 change 2 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment,are disclosed as a separate business segment. For comparison purposes, the
Exploration & Production earnings up to the third quarter 2007 are reclassified by the amounts reported under the Oil Sands segment.
3 As from 2007, the Gas & Power earnings include earnings generated by the Windand Solar businesses, which were previously reported as part of Other Industry segments. For comparison purposes, the fourth quarter 2006 and the full year 2006 results were reclassified and were impacted by $(3) million and $(17) million in the Gas & Power segment and by $3 million and $17 million in the Corporate segment, respectively.
SUMMARY OF IDENTIFIED ITEMS
Earnings in the fourth quarter 2007 reflected the following items, which in aggregate amounted to a net gain of $963 million (compared to a net gain of $515 million in the fourth quarter 2006) as summarised in the table below:
* Exploration & Production earnings included a net gain of $715 million,
reflecting net divestment gains of $1,514 million and tax credits of $233
million mainly related to tax rate changes in Canada and Italy. These gains
were partly offset by tax impacts of $173 million, an asset impairment of
$60 million in the USA, $83 million related to the mark-to-market valuation
impact of certain UK gas contracts and an aggregate charge of $716 million
regarding Nigeria, mainly relating to the onshore assets, including
impairments and provisions arising from funding and the security situation.
Earnings for the fourth quarter 2006 included a net gain of $387 million
reflecting both divestment gains and the mark-to-market valuation of
certain UK gas contracts, partly offset by tax effects and pension costs.
* Gas & Power earnings included a charge of $7 million related to the mark-to-market valuation impact of certain gas contracts. * Oil Sands earnings included a gain of $94 million related to a tax rate change in Canada.
* Oil Products earnings included a net gain of $177 million, reflecting a net
gain of $124 million mainly related to an impairment reversal in France,
and tax gains of $220 million related to tax rate changes in Canada and
Germany, which were partly offset by legal and environmental provisions of
$167 million. Earnings for the fourth quarter 2006 included a net gain of
$103 million reflecting tax effects partly offset by pension costs.
* Chemicals earnings included a net charge of $46 million, reflecting a
charge of $50 million mainly related to an impairment in France, which was
partly offset by $4 million related to a tax rate change in Canada.
Earnings for the fourth quarter 2006 included net charges of $83 million
from legal costs and pension costs partly offset by tax effects. * Corporate earnings included a gain of $30 million related to interest income on divestment receivables. Earnings for the fourth quarter 2006 included $108 million related to net tax credits.
SUMMARY OF IDENTIFIED ITEMS
Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Segment earnings impact of identified items: 715 130 387 Exploration & Production 1,102 521 (7) (4) - Gas & Power 275 - 94 - - Oil Sands 94 120 177 121 103 Oil Products (CCS basis) 327 38 (46) 18 (83) Chemicals (CCS basis) (28) (113) 30 - 108 Corporate 489 (206) - - - Minority interest - (41) 963 265 515 CCS earnings impact 2,259 319
These items generally relate to events with an impact of greater than $50 million on Shell Group earnings and are shown to provide additional insight into the segment earnings, CCS earnings and income attributable to shareholders. Further additional comments are provided in the section 'Earnings per industry segment' on page 4 and onwards.
EARNINGS PER INDUSTRY SEGMENT
EXPLORATION & PRODUCTION Quarters $ million Full Year Q4 Q3 Q4 2007 2007 2006 %2 2007 2006 % 4,867 3,327 3,536 +38 Segment earnings 3 14,686 14,544 +1 Crude oil production (thousand b/ 1,798 1,792 2,095 -14 d) 1 1,818 1,948 -7 Natural gas production available 9,185 7,329 8,377 +10 for sale (million scf/d) 8,214 8,368 -2 Barrels of oil equivalent 3,381 3,055 3,539 -4 (thousand boe/d) 1 3,234 3,391 -5
1 Excludes oil sands bitumen production
2 Q4 on Q4 change 3 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment,are disclosed as a separate business segment. For comparison purposes, the
Exploration & Production earnings up to the third quarter 2007 are reclassified by the amounts reported under the Oil Sands segment.
Fourth quarter Exploration & Production segment earnings were $4,867 million compared to $3,536 million a year ago. Earnings included a net gain of $715 million related to identified items, when compared to a net gain of $387 million in the fourth quarter 2006 (see page 3 for details).
Earnings, when compared to the fourth quarter 2006, reflected the impact of higher oil and gas prices on revenues, which was partly offset by lower production volumes, higher taxes and royalty charges and higher costs, reflecting current industry conditions. In addition, earnings were impacted by lower profits from the Sakhalin project, as a consequence of the partial divestment in the second quarter 2007.
Liquids realisations were 50% higher than in the fourth quarter 2006, followingmarker crudes Brent and WTI increases which were up 48% and 51% respectively.Global gas realisations were 19% higher than a year ago. Outside the USA gasrealisations increased by 23% whereas in the USA gas realisations increased by8%.Fourth quarter 2007 production was 3,381 thousand barrels of oil equivalent perday compared to 3,539 thousand barrels of oil equivalent per day a year ago.Total crude oil production (excluding oil sands bitumen production) was down14% and total natural gas production was up 10% when compared to the fourthquarter 2006. Fourth quarter 2007 production was impacted by a reduction of 53thousand barrels of oil equivalent per day due to the resolution of contractualissues. Fourth quarter 2006 production benefited by 103 thousand barrels of oilequivalent per day also related to the resolution of contractual issues.Production compared to the fourth quarter 2006 included increased volumes fromWest Salym (Shell share 50%) in Russia, Deimos (Shell share 71.5%) in the USA,Ormen Lange (Shell share 17%) in Norway, Changbei (Shell share 50%) in China,Merganser (Shell share 44%) in the United Kingdom and Stybarrow in Australia(indirect Shell share 17.1%).
Full year Exploration & Production segment earnings were $14,686 million compared to $14,544 million in 2006. Earnings included a net gain of $1,102 million related to identified items, when compared to a net gain of $521 million in 2006.
Earnings, when compared to full year 2006, reflected the impact of higher oiland gas prices on revenues, which was partly offset by lower productionvolumes, higher tax charges, higher exploration expenses and higher costs,reflecting current industry conditions. In addition, earnings were impacted bylower profits from the Sakhalin project, as a consequence of the partialdivestment in the second quarter 2007.Liquids realisations were 12% higher than in 2006, following marker crudesBrent and WTI increases which were up 11% and 9% respectively. Global gasrealisations were 1% higher than a year ago. Outside the USA gas realisationswere 5% higher than a year ago, whereas in the USA gas realisations decreasedby 7%.Full year production was 3,234 thousand barrels of oil equivalent per daycompared to 3,391 thousand barrels of oil equivalent per day in 2006. Totalcrude oil production (excluding oil sands bitumen production) was down 7% andtotal natural gas production was down 2% when compared to the full year 2006.Full year 2007 production was impacted by a reduction of 13 thousand barrels ofoil equivalent per day due to the resolution of contractual issues. Full year2006 production benefited by 27 thousand barrels of oil equivalent per day alsorelated to the resolution of contractual issues.Production compared to 2006 included increased volumes from Erha (Shell share44%) in Nigeria, E8 and B12 (Shell share 50%) in Malaysia, West Salym (Shellshare 50%) in Russia, Pohokura (Shell share 48%) in New Zealand, Changbei(Shell share 50%) in China, Merganser (Shell share 44%) in the United Kingdom,Enfield in Australia (indirect Shell share 21%), Stybarrow in Australia(indirect Shell share 17.1%) and Deimos (Shell share 71.5%) in the USA.
Fourth quarter portfolio developments
In Norway, Shell announced that on December 1, 2007 it assumed responsibility for operations in the recently opened Ormen Lange gas field. Production is expected to reach a peak of 70 million standard cubic metres per day, continuing for some 40 years.
In the Netherlands, through its joint venture, Nederlandse Aardolie Maatschappij B.V. (NAM), Shell announced the decision to resume oil production in the Schoonebeek field using new and innovative technology, with expected production of some 100 to 120 million barrels of oil in the coming 25 years.
In Australia, at the end of the third quarter, Shell agreed to sell a 25% interest in Australia's NT/P48 Permit, which includes the Evans Shoal joint venture in the Timor Sea, offshore Australia's Northern Territory, to Petroliam Nasional Berhad (PETRONAS). During the fourth quarter, in Malaysia, Shell signed a production sharing contract (PSC) with PETRONAS for the Kebabangan Cluster fields (Shell share 30%), enabling parties to conduct exploration, development and production of natural gas.
In China, Shell acquired a 55% equity interest in a coalbed methane venture in Shanxi Province, of which it will also become the operator.
In the USA, Shell completed the sales of the Barnett Shale and Wilcox assets.
In the United Kingdom, Shell agreed to sell the Dunlin Cluster fields in the North Sea.
During 2007 the Group made 11 material discoveries, which are located in Australia, Brunei, Kazakhstan, Malaysia, Nigeria and the USA. Shell also significantly increased its overall acreage position, especially through new exploration licenses in Australia, China, Colombia, Tunisia and the USA.
GAS & POWER Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 %1 2007 2006 % 631 568 579 +9 Segment earnings2 2,781 2,633 +6 Equity LNG sales volume (million 3.34 3.29 3.34 tonnes) 13.18 12.12 +9 1 Q4 on Q4 change
2 As from 2007, the Gas & Power earnings include earnings generated by the Wind and Solar businesses, which were previously reported as part of Other Industry segments. For comparison purposes, the fourth quarter 2006 and the full year 2006 results were reclassified and were impacted by $(3) million and $(17)
million respectively.
Fourth quarter Gas & Power segment earnings were $631 million compared to $579 million a year ago. Fourth quarter 2007 earnings included a charge of $7 million related to an identified item (see page 3 for details).
Earnings, when compared to the fourth quarter 2006, reflected higher realised LNG prices, which were partly offset by lower earnings from marketing and trading.
LNG equity sales volumes of 3.34 million tonnes were in line with the same quarter a year ago.
Marketing and trading earnings were lower than the same quarter a year ago, reflecting less favourable market conditions in both North America and Europe.
Full year Gas & Power segment earnings were $2,781 million compared to $2,633million in 2006. Earnings for the full year 2007 included a net gain of $275million related to identified items.
Earnings, when compared to the full year 2006, reflected growth in LNG equity sales volumes, higher realised LNG prices and gains from divestments, which were partly offset by lower marketing and trading earnings.
LNG equity sales volumes of 13.18 million tonnes were 9% higher than in 2006, mainly driven by increased gas supply to the Nigeria LNG venture.
Marketing and trading earnings were lower in 2007, reflecting the strong trading conditions in both Europe and North America in 2006.
Fourth quarter portfolio developments
In Germany, Shell has agreed to sell its share in the transport business of theGerman joint venture BEB Erdgas und Erdoel GmbH (BEB) including the technicaloperations to NV Nederlandse Gasunie (Gasunie). The deal is subject toregulatory approvals and is expected to be completed during 2008.In the USA, a final investment decision was made for the construction of the100 megawatt Phase II expansion of the Mount Storm wind farm (Shell share 50%).Phase I (164 megawatts) is expected to be completed in 2008.In Nigeria, construction of the train 6 expansion of the Nigeria LNG venture(NLNG, Shell share 26%) was completed at year-end, increasing capacity by 4million tonnes per annum (on a 100% basis). Project delivery was on budget, ontime and completed with a good safety performance.
Two further coal gasification licences were sold in the quarter, the 16th in China and the first in Vietnam.
OIL SANDS Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 %1 2007 2006 % 82 183 174 -53 Segment earnings 582 651 -11 Bitumen production (thousand b/ 55 82 106 -48 d) 81 82 -1 97 121 171 -43 Sales volumes (thousand b/d) 125 133 -6 79 90 98 Upgrader availability (%) 89 99 1 Q4 on Q4 change
Fourth quarter Oil Sands segment earnings were $82 million compared to $174 million in the same quarter last year. Earnings for the fourth quarter 2007 included a gain of $94 million related to an identified item (see page 3 for details).
The mid-November fire at the Scotford Upgrader and subsequent shutdownsignificantly impacted earnings, production volumes and upgrader availabilityfor the quarter. Operations restarted at the end of the quarter and productionis expected to ramp up to full capacity during the first quarter 2008.Earnings, when compared to the fourth quarter 2006, reflected lower productionvolumes, higher costs, largely associated with the upgrader repairs, andincreased royalty charges following project payout in July 2007. These werepartly offset by the impact of higher oil prices on revenues and a gain relatedto a Canadian tax rate change.Bitumen production, when compared to the same quarter last year, decreased by48%. Upgrader availability decreased to 79% compared to 98% in the fourthquarter 2006, mainly as a consequence of the fire and the subsequent unplannedshutdown.Full year Oil Sands segment earnings were $582 million compared to $651 millionin 2006. Earnings for the full year 2007 included a gain of $94 million relatedto an identified item when compared to a gain of $120 million in 2006.Earnings, when compared to the full year 2006, reflected higher operating andmaintenance costs and increased royalty expenses, which were partly offset bythe impact of higher oil prices.
Full year 2007 bitumen production, when compared to the full year 2006, was relatively unchanged.
Oil Sands upgrader availability decreased to 89% compared to 99% in 2006, mainly as a consequence of the mid-November fire at the Scotford Upgrader and subsequent shutdown.
Fourth quarter portfolio developments
In 2007 Shell acquired some 27,000 hectares of mineable leases compared to some23,000 hectares acquired in 2006. In the past two years lease holdings haveincreased by some 50%. OIL PRODUCTS Quarters $ million Full Year Q4 Q3 Q4 2007 2007 2006 %1 2007 2006 % 2,556 2,153 791 Segment earnings 10,439 7,125 Less: Estimated CCS adjustment 1,680 502 (678) (see note 2) 3,488 98 876 1,651 1,469 -40 Segment CCS earnings 6,951 7,027 -1 3,812 3,887 3,890 -2 Refinery intake (thousand b/d) 3,779 3,862 -2 Total Oil Products sales 6,842 6,756 6,467 +6 (thousand b/d) 6,625 6,485 +2 94 93 94 Refinery availability (%) 91 92 1 Q4 on Q4 change
Fourth quarter Oil Products segment earnings were $2,556 million compared to $791 million for the same period last year.
Fourth quarter Oil Products CCS segment earnings were $876 million compared to$1,469 million in the fourth quarter 2006. Earnings included a net gain of $177million related to identified items, compared to a net gain of $103 million inthe fourth quarter 2006 (see page 3 for details).CCS earnings, when compared to the fourth quarter 2006, were mainly impacted bysignificantly lower realised refining margins and higher operating costs, whichwere partly offset by higher marketing margins. Trading contributions were atsimilar levels when compared to those in the fourth quarter 2006.
In Manufacturing, the industry refining margins, when compared to the same period a year ago, were higher in Europe and the eastern hemisphere, while refining margins declined in the US Gulf Coast and US West Coast. Refinery availability was similar to the fourth quarter 2006 at around 94%. However, realised refining margins were lower than the industry margins reflecting unplanned downtime in certain refinery conversion units, in particular the Bukom refinery in Singapore, and the narrowing of light-heavy oil price differentials.
In Marketing, when compared to the same period a year ago, earnings increasedmainly due to higher retail and higher finished lubricants margins, which werepartly offset by lower lubricants base oil margins. B2B earnings were similarto those a year ago.
Marketing sales volumes were 2.2% higher than in the fourth quarter 2006. Excluding the impact of divestments, volumes were 3.5% higher than in the fourth quarter 2006, mainly because of higher retail and aviation sales.
Full year Oil Products segment earnings were $10,439 million compared to $7,125 million in 2006.
Full year Oil Products CCS segment earnings were $6,951 million compared to $7,027 million in 2006. Earnings for the full year 2007 included a net gain of $327 million related to identified items when compared to a net gain of $38 million in 2006.
CCS earnings, when compared to the full year 2006, were mainly impacted by lower realised refining margins, a lower trading contribution and higher operating costs, which were partly offset by higher marketing margins.
In Manufacturing, the industry refining margins, when compared to the same period a year ago, were higher in the US Gulf Coast, Europe and eastern hemisphere, while industry margins in the US West Coast declined. Full year refinery availability was 91% compared to 92% in 2006.
In Marketing, earnings increased when compared to 2006 due to higher retail, B2B and lubricant earnings.
Marketing sales volumes declined 1.1% when compared to volumes in 2006. Excluding the impact of divestments, volumes were 1.1% higher than in 2006, mainly because of higher retail sales.
CHEMICALS Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 %1 2007 2006 % 501 397 184 Segment earnings 2,051 1,064 Less: Estimated CCS adjustment 153 37 (89) (see note 2) 369 (31) 348 360 273 +27 Segment CCS earnings 1,682 1,095 +54 5,633 5,702 5,690 -1 Sales volumes (thousand tonnes) 22,555 23,137 -3 Manufacturing plant availability 93 94 87 (%) 93 90 1 Q4 on Q4 change
Fourth quarter Chemicals segment earnings were $501 million compared to $184 million for the same period last year.
Fourth quarter Chemicals CCS segment earnings were $348 million compared to$273 million in the same quarter last year. Earnings included a net charge fromidentified items of $46 million compared to a net charge of $83 million in thefourth quarter 2006 (see page 3 for details).
CCS earnings, when compared to the fourth quarter 2006, reflected improved margins and lower fixed costs, which were partly offset by lower income from equity-accounted investments and reduced trading contributions.
Chemicals manufacturing plant availability increased to 93%, some 6% points higher than in the fourth quarter 2006, which was impacted by a heavy planned and extended maintenance programme in the USA and in Europe.
Full year Chemicals segment earnings were $2,051 million compared to $1,064 million in 2006.
Full year Chemicals CCS segment earnings were $1,682 million compared to $1,095million in 2006. Earnings for the full year 2007 included a net charge of $28million related to identified items compared to a net charge of $113 million in2006.Earnings, when compared to full year 2006, reflected higher margins, higherearnings from equity-accounted investments and lower fixed costs, which werepartly offset by a reduced trading contribution. Earnings from equity-accountedinvestments included the first full year of operations of the Nanhaipetrochemicals complex in China (Shell share 50%).
Chemicals manufacturing plant availability increased to 93%, some 3% points higher than in 2006, which was impacted by a heavy planned maintenance programme in the USA and Europe.
CORPORATE Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 (4) 413 249 Segment earnings1 1,387 294 1 As from 2007, the segment Other Industry and Corporate has been renamed as Corporate. Its earnings no longer include the results generated by the Wind andSolar businesses, which were previously reported as part of Other Industry
segments, but continue to include some non-material businesses. For comparison purposes, the fourth quarter 2006 and the full year 2006 results were
reclassified and are impacted by $3 million and $17 million respectively. Fourth quarter Corporate segment results were a loss of $4 million compared toincome of $249 million for the same period last year. Earnings for the fourthquarter 2007 included a gain of $30 million related to an identified item (seepage 3 for details).Earnings, when compared to the fourth quarter 2006, reflected lower tax creditsand higher shareholder costs, which were partly offset by higher interest andinsurance underwriting income.
Full year Corporate segment earnings were $1,387 million compared to $294 million in 2006. Earnings for the full year 2007 included a net gain of $489 million related to identified items when compared to a net charge of $206 million in 2006.
Earnings, when compared to 2006, reflected higher insurance underwriting income, improved interest and investment income and positive results from exchange rate movements, which were partly offset by lower tax credits. The full year 2007 earnings included gains on the sale of the equity portfolio held by the group insurance companies of some $404 million.
PRICE AND MARGIN INFORMATION OIL & GAS Quarters Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Realised oil prices - Exploration & Production1 $/bbl (period average) $/bbl 82.11 70.88 55.82 WOUSA 68.24 60.99 88.92 70.34 52.94 USA 66.49 58.53 82.96 70.81 55.37 Global 67.99 60.64 Realised oil prices - Oil Sands $/bbl (period average) $/bbl 71.45 69.31 47.03 Canada 61.97 53.93 Realised gas prices (period $/thousand scf average) $/thousand scf 8.15 6.69 7.63 Europe 7.24 6.94 5.64 4.07 4.59 WOUSA (including Europe) 4.61 4.41 7.45 6.53 6.87 USA 7.23 7.74 6.00 4.57 5.06 Global 5.14 5.08 Oil and gas marker industry prices (period average) 88.35 74.84 59.59 Brent ($/bbl) 72.45 65.10 90.47 75.24 59.90 WTI ($/bbl) 72.16 66.04 89.00 77.11 57.21 Edmonton Par ($/bbl) 72.13 64.62 6.93 6.14 6.68 Henry Hub ($/MMBtu) 6.94 6.76 UK National Balancing Point 46.86 30.68 29.93 (pence/therm) 30.01 41.93 Japanese Crude Cocktail - JCC ($ 76.24 70.91 60.97 /bbl)2 65.55 64.08
REFINING & CRACKER INDUSTRY MARGINS3 Quarters Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Refining marker industry gross $/bbl margins (period average) $/bbl 10.60 8.05 15.65 ANS US West Coast coking margin 15.95 16.05 9.65 15.40 10.00 WTS US Gulf Coast coking margin 16.30 14.55 4.35 3.50 2.05 Rotterdam Brent complex 4.45 3.15 Singapore 80/20 Arab light/Tapis 1.95 2.50 1.10 complex 2.80 1.80 Cracker industry margins (period $/tonnes average) $/tonnes 356.00 351.50 415.50 US Ethane ($/tonne) 339.75 452.08 331.46 469.00 686.25 Western Europe naphtha ($/tonne) 436.99 459.06 North East Asia naphtha ($/ 10.00 288.33 598.33 tonne) 240.42 480.83
1 As from the fourth quarter 2007, the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production realised oil prices are reclassified for the presentedperiods.
2 JCC prices for the fourth quarter and full year 2007 are based on available market data up to the end of October 2007. Prices for these periods will be
updated when full market data is available. 3 The refining and cracker industry margins shown above do not represent actualShell realised margins for the periods. These are estimated industry margins based on available market information. OIL & GAS - OPERATIONAL DATA Quarters Full Year Q4 2007 Q3 2007 Q4 2006 %1 2007 2006 % thousand b/d Crude oil production thousand b/d 395 406 533 Europe 423 496 352 333 352 Africa 332 339 227 214 251 Asia Pacific 227 242 438 445 480 Middle East, Russia, CIS 433 455 310 314 349 USA 324 322 76 80 130 Other Western Hemisphere 79 94 Total crude oil production 1,798 1,792 2,095 -14 excluding oil sands 1,818 1,948 -7 55 82 106 Bitumen production - oil sands 81 82 Total crude oil production 1,853 1,874 2,201 -16 including oil sands 1,899 2,030 -6 Natural gas production available million scf/ million scf/d2 for sale d2 4,569 2,231 3,529 Europe 3,350 3,523 594 623 418 Africa 584 455 2,166 2,587 2,459 Asia Pacific 2,405 2,421 239 248 268 Middle East, Russia, CIS 250 291 1,138 1,131 1,173 USA 1,130 1,163 479 509 530 Other Western Hemisphere 495 515 9,185 7,329 8,377 +10 8,214 8,368 -2 Total production in barrels of thousand boe/d3 oil equivalent thousand boe/d3 1,183 790 1,142 Europe 1,001 1,104 454 440 424 Africa 433 417 600 660 675 Asia Pacific 641 659 479 488 526 Middle East, Russia, CIS 476 505 506 509 551 USA 519 523 159 168 221 Other Western Hemisphere 164 183 Total production excluding oil 3,381 3,055 3,539 -4 sands 3,234 3,391 -5 55 82 106 Bitumen production - oil sands 81 82 Total production including oil 3,436 3,137 3,645 -6 sands 3,315 3,473 -5 1 Q4 on Q4 change
2 scf/d = standard cubic feet per day; 1 standard cubic foot = 0.0283 cubic
metre 3 Natural gas converted to oil equivalent at 5.8 million scf/d = thousand boe/d
OIL PRODUCTS AND CHEMICALS - OPERATIONAL DATA Quarters Full Year Q4 Q3 Q4 2007 2007 2006 %1 2007 2006 % thousand b/d Refinery processing intake thousand b/d 1,803 1,813 1,800 Europe 1,731 1,732 821 852 791 Other Eastern Hemisphere 811 808 869 851 933 USA 879 956 319 371 366 Other Western Hemisphere 358 366 3,812 3,887 3,890 -2 3,779 3,862 -2 Oil sales 2,051 2,176 2,232 Gasolines 2,178 2,206 802 768 732 Kerosenes 756 749 2,429 2,396 2,087 Gas/diesel oils 2,295 2,106 769 699 715 Fuel oil 704 747 791 717 701 Other products 692 677 6,842 6,756 6,467 +6 Total oil products * 6,625 6,485 +2 *Comprising: 1,983 1,903 1,976 Europe 1,886 1,973 1,369 1,279 1,248 Other Eastern Hemisphere 1,283 1,227 1,485 1,544 1,398 USA 1,487 1,471 678 676 654 Other Western Hemisphere 672 657 1,327 1,354 1,191 Export sales 1,297 1,157 Chemical sales volumes by main thousand tonnes product category 2** thousand tonnes 3,164 3,302 3,498 Base chemicals 12,968 14,146 2,467 2,399 2,188 First line derivatives 9,577 8,964 2 1 4 Other 10 27 5,633 5,702 5,690 -1 22,555 23,137 -3 **Comprising: 2,190 2,225 2,233 Europe 8,908 9,361 1,457 1,376 1,474 Other Eastern Hemisphere 5,466 5,673 1,802 1,923 1,825 USA 7,469 7,464 184 178 158 Other Western Hemisphere 712 639 1 Q4 on Q4 change 2 Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products. NOTE
All amounts shown throughout this Report are unaudited.
First quarter results for 2008 are expected to be announced on April 29, 2008,second quarter results are expected to be announced on July 31, 2008 and thirdquarter results are expected to be announced on October 30, 2008. There will bea Group strategy update on March 17, 2008.In this Report "Group" is defined as Royal Dutch Shell together with all of itsconsolidated subsidiaries. The expressions "Shell", "Group", "Shell Group" and"Royal Dutch Shell" are sometimes used for convenience where references aremade to the Group or Group companies in general. Likewise, the words "we", "us"and "our" are also used to refer to Group companies in general or to those whowork for them. These expressions are also used where no useful purpose isserved by identifying the particular company or companies. The expression"Group companies" as used in this Report refers to companies in which RoyalDutch Shell either directly or indirectly has control, by having either amajority of the voting rights or the right to exercise a controlling influence.The companies in which the Group has significant influence but not control arereferred to as "associated companies" or "associates" and companies in whichthe Group has joint control are referred to as "jointly controlled entities".In this Report, associates and jointly controlled entities are also referred toas "equity accounted investments".This document contains forward-looking statements concerning the financialcondition, results of operations and businesses of Royal Dutch Shell. Allstatements other than statements of historical fact are, or may be deemed tobe, forward-looking statements. Forward-looking statements are statements offuture expectations that are based on management's current expectations andassumptions and involve known and unknown risks and uncertainties that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in these statements. Forward-looking statements include,among other things, statements concerning the potential exposure of Royal DutchShell to market risks and statements expressing management's expectations,beliefs, estimates, forecasts, projections and assumptions. Theseforward-looking statements are identified by their use of terms and phrasessuch as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'',''intend'', ''may'', ''plan'', ''objectives'', ''outlook'', ''probably'',''project'', ''will'', ''seek'', ''target'', ''risks'', ''goals'', ''should''and similar terms and phrases. There are a number of factors that could affectthe future operations of Royal Dutch Shell and could cause those results todiffer materially from those expressed in the forward-looking statementsincluded in this Report, including (without limitation): (a) price fluctuationsin crude oil and natural gas; (b) changes in demand for the Group's products;(c) currency fluctuations; (d) drilling and production results; (e) reserveestimates; (f) loss of market and industry competition; (g) environmental andphysical risks; (h) risks associated with the identification of suitablepotential acquisition properties and targets, and successful negotiation andcompletion of such transactions; (i) the risk of doing business in developingcountries and countries subject to international sanctions; (j) legislative,fiscal and regulatory developments including potential litigation andregulatory effects arising from recategorisation of reserves; (k) economic andfinancial market conditions in various countries and regions; (l) politicalrisks, project delay or advancement, approvals and cost estimates; and (m)changes in trading conditions. All forward-looking statements contained in thisReport are expressly qualified in their entirety by the cautionary statementscontained or referred to in this section. Readers should not place unduereliance on forward-looking statements. Each forward-looking statement speaksonly as of the date of this Report. Neither Royal Dutch Shell nor any of itssubsidiaries undertake any obligation to publicly update or revise anyforward-looking statement as a result of new information, future events orother information. In light of these risks, results could differ materiallyfrom those stated, implied or inferred from the forward-looking statementscontained in this Report.Please refer to the Annual Report and Form 20-F for the year ended December 31,2006 for a description of certain important factors, risks and uncertaintiesthat may affect Shell's businesses.
Cautionary Note to US Investors:
The United States Securities and Exchange Commission (SEC) permits oil and gascompanies, in their filings with the SEC, to disclose only proved reserves thata company has demonstrated by actual production or conclusive formation teststo be economically and legally producible under existing economic and operatingconditions. We may use certain terms in this announcement that the SEC'sguidelines strictly prohibit us from including in filings with the SEC. USInvestors are urged to consider closely the disclosure in our Form 20-F, FileNo 001-32575 and disclosure in our Forms 6-K, File No 001-32575, available onthe SEC's website www.sec.gov . You can also obtain these forms from the SEC bycalling 1-800-SEC-0330. January 31, 2008
APPENDIX: ROYAL DUTCH SHELL FINANCIAL REPORT AND TABLES
STATEMENT OF INCOME (SEE NOTE 1) Quarters $ million Full Year Q3 Q4 Q4 2007 2007 2006 %1 2007 2006 % 106,703 90,703 75,500 Revenue2 355,782 318,845 90,603 76,713 62,846 Cost of sales 296,697 262,989
16,100 13,990 12,654 +27 Gross profit 59,085 55,856
+6 Selling, distribution and 4,880 3,843 4,648 administrative expenses 16,621 16,616 382 608 630 Exploration 1,712 1,562 Share of profit of equity 2,376 1,912 1,661 accounted investments 8,234 6,671 Net finance costs and other (174) (38) (111) (income)/expense (1,590) (279)
13,388 11,489 9,148 +46 Income before taxation 50,576 44,628
+13 4,755 4,448 3,635 Taxation 18,650 18,317
8,633 7,041 5,513 +57 Income for the period 31,926 26,311
+21 Income attributable to minority 166 125 230 interest 595 869 Income attributable to
8,467 6,916 5,283 +60 shareholders 31,331 25,442
+23 1 Q4 on Q4 change
2 Revenue is stated after deducting sales taxes, excise duties and similar levies of $21,552 million in Q4 2007, $20,830 million in Q3 2007, $18,993 million in Q2 2007, $17,305 million in Q1 2007, $17,764 million in Q4 2006, $18,472 million in Q3 2006, $17,984 million in Q2 2006 and $16,709 million in Q1 2006.
BASIC EARNINGS PER SHARE (SEE NOTES 1, 2 AND 8) Quarters Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 1.36 1.10 0.84 Earnings per share ($) 5.00 3.97 1.07 1.02 0.95 CCS earnings per share ($) 4.40 3.96
DILUTED EARNINGS PER SHARE (SEE NOTES 1, 2 AND 8) Quarters Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 1.36 1.10 0.83 Earnings per share ($) 4.99 3.95 1.07 1.02 0.95 CCS earnings per share ($) 4.39 3.94
EARNINGS PER INDUSTRY SEGMENT (SEE NOTES 2 AND 4)
Quarters $ million Full Year
Q4 2007 Q3 2007 Q4 2006 %1 2007 2006
% Exploration & Production2: 3,763 2,467 2,833 +33 - World outside USA 10,954 10,815 +1 1,104 860 703 +57 - USA 3,732 3,729 0 4,867 3,327 3,536 +38 14,686 14,544 +1 Gas & Power3: 639 500 582 +10 - World outside USA 2,315 2,345 -1 (8) 68 (3) - USA 466 288 +62 631 568 579 +9 2,781 2,633 +6 82 183 174 -53 Oil Sands2: 582 651 -11 Oil Products (CCS basis): 789 1,316 1,254 -37 - World outside USA 5,090 5,322 -4 87 335 215 -60 - USA 1,861 1,705 +9 876 1,651 1,469 -40 6,951 7,027 -1 Chemicals (CCS basis): 370 368 233 +59 - World outside USA 1,661 1,063 +56 (22) (8) 40 - USA 21 32 -34 348 360 273 +27 1,682 1,095 +54 6,804 6,089 6,031 +13 Total operating segments 26,682 25,950 +3 Corporate3: - Interest and investment income 12 122 1 /(expense) 875 76 - Currency exchange gains/ 82 57 93 (losses) 205 113 (98) 234 155 - Other - including taxation 307 105 (4) 413 249 1,387 294 (116) (110) (265) Minority interest (505) (879) 6,684 6,392 6,015 +11 CCS earnings 27,564 25,365 +9 Estimated CCS adjustment for Oil 1,783 524 (732) Products and Chemicals 3,767 77 Income attributable to shareholders of Royal Dutch 8,467 6,916 5,283 +60 Shell plc 31,331 25,442 +23 1 Q4 on Q4 change 2 As from the fourth quarter 2007, the earnings of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the
Exploration & Production earnings up to the third quarter 2007 are reclassified by the amounts reported under the Oil Sands segment.
3 As from 2007, the segment Other Industry and Corporate has been renamed as Corporate. Its earnings no longer include the results generated by the Wind and Solar businesses, which were previously reported as part of Other Industry
segments, but continue to include some non-material businesses. The Wind and Solar businesses earnings are, as from 2007, reported under the Gas & Power
segment. For comparison purposes, the fourth quarter 2006 and the full year 2006 results were reclassified and are impacted by $(3) million and $(17) million in the Gas & Power segment and by $3 million and $17 million in the Corporate segment, respectively.
SUMMARISED BALANCE SHEET (SEE NOTES 1 AND 6)
$ million Dec 31, 2007 Sep 30, 2007 Dec 31, 2006 Assets Non-current assets: Intangible assets 5,366 5,307 4,808
Property, plant and equipment 101,521 96,611 100,988
Investments:
- equity accounted investments 29,153 28,717 20,740
- financial assets 3,461 2,987 4,493 Deferred tax 3,253 3,375 2,968 Pre-paid pension costs 5,559 5,045 3,926 Other 5,760 5,903 5,468 154,073 147,945 143,391 Current assets: Inventories 31,503 27,906 23,215 Accounts receivable 74,238 61,636 59,668 Cash and cash equivalents 9,656 14,092 9,002 115,397 103,634 91,885 Total assets 269,470 251,579 235,276 Liabilities Non-current liabilities: Debt 12,363 12,660 9,713 Deferred tax 13,039 13,665 13,094
Retirement benefit obligations 6,165 6,449 6,096
Other provisions 13,658 12,467 10,355 Other 3,893 3,797 4,325 49,118 49,038 43,583 Current liabilities: Debt 5,736 4,683 6,060
Accounts payable and accrued liabilities 75,697 63,224 62,556
Taxes payable 9,733 12,144 6,021
Retirement benefit obligations 426 338 319
Other provisions 2,792 2,126 1,792 94,384 82,515 76,748 Total liabilities 143,502 131,553 120,331
Equity attributable to shareholders of
Royal Dutch Shell plc 123,960 118,194 105,726 Minority interest 2,008 1,832 9,219 Total equity 125,968 120,026 114,945 Total liabilities and equity 269,470 251,579 235,276
SUMMARISED STATEMENT OF CASH FLOWS (SEE NOTES 1 AND 7)
Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Cash flow from operating activities: 8,633 7,041 5,513 Income for the period 31,926 26,311 Adjustment for: 5,551 4,798 3,157 - Current taxation 20,076 17,338 96 126 218 - Interest (income)/expense 550 716 - Depreciation, depletion and 3,840 2,842 3,306 amortisation 13,180 12,615 (1,799) (55) (292) - (Profit)/loss on sale of assets (3,349) (571) - Decrease/(increase) in net (3,375) (728) 643 working capital (6,206) (4,052) - Share of profit of equity (2,375) (1,912) (1,661) accounted investments (8,233) (6,671) - Dividends received from equity 2,282 1,567 1,422 accounted investments 6,955 5,488 - Deferred taxation and other (726) (109) 219 provisions (773) 1,833 (25) 346 51 - Other (802) (266) Cash flow from operating 12,102 13,916 12,576 activities (pre-tax) 53,324 52,741 (6,809) (4,777) (6,617) Taxation paid (18,863) (21,045) Cash flow from operating 5,293 9,139 5,959 activities 34,461 31,696 Cash flow from investing activities: (8,013) (5,550) (7,065) Capital expenditure (24,576) (22,922) Investments in equity accounted (519) (644) (317) investments (1,852) (851) 1,742 174 605 Proceeds from sale of assets 8,566 1,611 Proceeds from sale of equity 561 57 201 accounted investments 1,012 282 Proceeds from sale of /(additions to) financial (120) 35 55 assets 1,055 22 353 292 238 Interest received 1,225 997 Cash flow from investing (5,996) (5,636) (6,283) activities (14,570) (20,861) Cash flow from financing activities: Net increase/(decrease) in debt with maturity period 317 459 124 within three months (455) 75 195 48 2,190 Other debt: New borrowings 4,565 4,263 (182) (1,188) (872) Repayments (2,796) (2,232) (312) (282) (344) Interest paid (1,235) (1,296) (52) (10) 364 Change in minority interest (6,757) 1,434 (1,538) (1,463) (1,390) Net issue/(repurchase) of shares (4,387) (8,047) Dividends paid to: - Shareholders of Royal Dutch (2,318) (2,283) (2,130) Shell plc (9,001) (8,142) (17) (67) (31) - Minority interest (203) (289) Treasury shares: - Net sales/(purchases) and 124 200 118 dividends received 876 493 Cash flow from financing (3,783) (4,586) (1,971) activities (19,393) (13,741) Currency translation differences relating to cash and 50 58 57 cash equivalents 156 178 Increase/(decrease) in cash and (4,436) (1,025) (2,238) cash equivalents 654 (2,728) Cash and cash equivalents at 14,092 15,117 11,240 beginning of period 9,002 11,730 Cash and cash equivalents at end 9,656 14,092 9,002 of period 9,656 9,002 CAPITAL INVESTMENT Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Capital expenditure: Exploration & Production1: 2,704 2,463 3,289 - World outside USA 10,320 13,767 1,321 721 694 - USA 3,403 2,006 4,025 3,184 3,983 13,723 15,773 Gas & Power2: 862 706 681 - World outside USA 2,936 1,926 11 1 68 - USA 15 83 873 707 749 2,951 2,009 649 493 323 Oil Sands1 1,931 865 Oil Products: 1,257 770 1,006 - World outside USA 3,141 2,944 123 80 146 - USA 530 419 1,380 850 1,152 3,671 3,363 Chemicals: 419 312 254 - World outside USA 1,068 519 103 65 152 - USA 347 302 522 377 406 1,415 821 193 101 250 Corporate2 414 265 7,642 5,712 6,863 Total capital expenditure 24,105 23,096 Exploration expense 193 183 235 - World outside USA 646 649 170 211 106 - USA 469 300 363 394 341 1,115 949 New equity in equity accounted investments 237 615 226 - World outside USA 1,407 537 40 5 49 - USA 65 61 277 620 275 1,472 598 New loans to equity accounted 242 24 42 investments 380 253 8,524 6,750 7,521 Total capital investment*3 27,072 24,896 *Comprising: 4,630 3,934 4,417 - Exploration & Production1 15,919 17,079 1,091 901 940 - Gas & Power2 3,532 2,351 649 493 323 - Oil Sands1 1,931 865 1,438 942 1,178 - Oil Products 3,856 3,457 523 378 412 - Chemicals 1,419 877 193 102 251 - Corporate2 415 267 8,524 6,750 7,521 27,072 24,896
1 As from the fourth quarter 2007, the results of the Oil Sands operations, which were previously reported as part of the Exploration & Production segment, are disclosed as a separate business segment. For comparison purposes, the Exploration & Production results up to the third quarter 2007 were reclassified by the amounts reported under the Oil Sands segment.
2 As from 2007, the segment Other Industry and Corporate has been renamed as Corporate. Its financial information no longer includes data related to the
Wind and Solar businesses, which were previously reported as part of Other Industry segments, but continues to include some non-material businesses. The Wind and Solar businesses financial data are, as from 2007, reported under theGas & Power segment. For comparison purposes, the fourth quarter 2006 and the full year 2006 capital investment data were reclassified and are impacted by $113 million and $151 million in the Gas & Power segment and by $(113) millionand $(151) million in the Corporate segment, respectively. 3 In addition to the above amounts, see Note 6 regarding accounting impacts related to the Shell Canada minority interest acquisition. ADDITIONAL SEGMENTAL INFORMATION1
Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Exploration & Production 4,867 3,327 3,536 Segment earnings 14,686 14,544 Including: 382 608 630 - Exploration 1,712 1,562 - Depreciation, depletion & 2,848 1,891 2,240 amortisation 9,338 8,672 - Share of profit of equity 1,278 733 804 accounted investments 3,583 3,075 5,135 6,072 3,165 Cash flow from operations 24,348 21,956 Less: Net working capital movements and taxation paid/ (317) 853 (3,194) accrued 2,666 (3,198) Cash flow from operations excluding net working capital movements and taxation paid/ 5,452 5,219 6,359 accrued 21,682 25,154 47,682 44,419 50,405 Capital employed 47,682 50,405 Gas & Power 631 568 579 Segment earnings 2,781 2,633 Including: - Depreciation, depletion & 85 79 80 amortisation 315 284 - Share of profit of equity 533 471 414 accounted investments 1,852 1,509 295 316 448 Cash flow from operations 1,408 2,219 Less: Net working capital movements and taxation paid/ (420) (265) 151 accrued (773) (358) Cash flow from operations excluding net working capital movements and taxation paid/ 715 581 297 accrued 2,181 2,577 19,383 17,565 17,909 Capital employed 19,383 17,909 Oil Sands 82 183 174 Segment earnings 582 651 Including: - Depreciation, depletion & 42 42 53 amortisation 166 172 208 405 353 Cash flow from operations 1,520 1,273 Less: Net working capital movements and taxation paid/ 143 121 135 accrued 818 554 Cash flow from operations excluding net working capital movements and taxation paid/ 65 284 218 accrued 702 719 4,603 4,283 3,048 Capital employed 4,603 3,048
1 Corporate segment information has not been included in the above table. Please refer to the Earnings per industry segment section for additional information. The above data does not consider Minority interest impacts on the segments.
ADDITIONAL SEGMENTAL INFORMATION1 (continued)
Quarters $ million Full Year Q4 2007 Q3 2007 Q4 2006 2007 2006 Oil Products 876 1,651 1,469 Segment CCS earnings 6,951 7,027 Including: - Depreciation, depletion & 607 606 587 amortisation 2,440 2,580 - Share of profit of equity 328 394 308 accounted investments 1,723 1,585 (1,605) 1,700 1,001 Cash flow from operations 3,682 3,593 Less: Net working capital movements and taxation paid/ (4,093) (956) 197 accrued (6,885) (4,963) Cash flow from operations excluding net working capital movements and taxation paid/ 2,488 2,656 804 accrued 10,567 8,556 54,515 48,423 42,245 Capital employed 54,515 42,245 Chemicals 348 360 273 Segment CCS earnings 1,682 1,095 Including: - Depreciation, depletion & 207 154 185 amortisation 666 668 - Share of profit of equity 165 174 193 accounted investments 694 494 688 618 772 Cash flow from operations 1,873 1,853 Less: Net working capital movements and taxation paid/ (219) 104 520 accrued (829) 475 Cash flow from operations excluding net working capital movements and taxation paid/ 907 514 252 accrued 2,702 1,378 10,571 10,240 8,468 Capital employed 10,571 8,468
1 Corporate segment information has not been included in the above table. Please refer to the Earnings per industry segment section for additional information. The above data does not consider Minority interest impacts on thesegments. NOTES
1. Accounting policies and basis of presentation
The quarterly financial statements are prepared in accordance with International Financial Reporting Standards (IFRS) and are also in accordance with IFRS as adopted by the European Union.
With effect from the first quarter 2007, Wind and Solar are reported within theGas & Power segment and all other activities within Other Industry segments arereported within the Corporate segment. The Oil Sands operations, which werepreviously reported within the Exploration & Production segment, are reportedas a separate segment with effect from the fourth quarter 2007. Prior periodfinancial statements have been reclassified accordingly.Purchases of minority interests in Group companies, and disposals of shares inGroup companies while retaining control, are accounted for as transactionswithin equity. The difference between the purchase price/disposal proceeds andthe relevant proportion of the minority interest is reported in retainedearnings as a movement in the Group share of equity. The remaining accountingpolicies are set out in Note 2 to the Consolidated Financial Statements ofRoyal Dutch Shell plc in the Annual Report and Form 20-F for the year endedDecember 31, 2006 on pages 108 to 112.
2. Earnings on an estimated current cost of supplies (CCS) basis
To facilitate a better understanding of underlying business performance, thefinancial results are also analysed on an estimated current cost of supplies(CCS) basis as applied for the Oil Products and Chemicals segment earnings.Earnings on an estimated current cost of supplies basis provides usefulinformation concerning the effect of changes in the cost of supplies on RoyalDutch Shell's results of operations and is a measure to manage the performanceof the Oil Products and Chemicals segments but is not a measure of financialperformance under IFRS.On this basis, Oil Products and Chemicals segment cost of sales of the volumessold during the period is based on the cost of supplies during the same periodafter making allowance for the estimated tax effect, instead of the first-in,first-out (FIFO) method of inventory accounting. Earnings calculated on thisbasis 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' incomeattributable to shareholders adjusted for Shell's share of interest expense,after tax, as a percentage of Shell's share of average capital employed for theperiod.
Components of the calculation are:
$ million 2007 2006 Income attributable to shareholders (four quarters) 31,331 25,442 Royal Dutch Shell share of interest expense after
tax 641 662 ROACE numerator 31,972 26,104
Royal Dutch Shell share of capital employed -
opening 120,235 102,917
Royal Dutch Shell share of capital employed -
closing 141,770 120,235
Royal Dutch Shell share of capital employed -
average 131,003 111,576 ROACE 24.4% 23.4%
4. Earnings per industry segment
Operating segment results are presented before deduction of minority interestand 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 results of the Corporate segment. Operating segmentresults are after tax and include equity accounted investments.
5. Gearing
The numerator and denominator in the gearing calculation, as demonstratedbelow, used by the Group are calculated by adding to reported debt and equitycertain off-balance sheet obligations as at the beginning of the year such asoperating lease commitments and unfunded retirement benefits (as applicable)which the Group believes to be in the nature of incremental debt, and deductingcash and cash equivalents judged to be in excess of amounts required foroperational purposes.$ million Dec 31, 2007 Dec 31, 2006 Non-current debt 12,363 9,713 Current debt 5,736 6,060 Total debt 18,099 15,773
Add: Net present value of operating lease obligations 13,707 11,319 Unfunded retirement benefit obligations (after tax) - -
Less: Cash and cash equivalents in excess of
operational requirements 7,356 7,102 Adjusted debt 24,450 19,990 Total equity 125,968 114,945 Total capital 150,418 134,935
Gearing ratio (adjusted debt as a percentage of
total capital) 16.3% 14.8% 6. EquityTotal equity comprises equity attributable to shareholders of Royal Dutch Shelland to the minority interest. Other reserves comprise the capital redemptionreserve, share premium reserve, merger reserve, share-based compensationreserve, cumulative currency translation differences, unrealised gains/(losses)on securities and unrealised gains/(losses) on cash flow hedges. Ordinary share capital Treasury Other Retained Minority Total $ million shares reserves earnings Total interest equity At December 31, 2006 545 (3,316) 8,820 99,677 105,726 9,219 114,945 Income for the period - - - 31,331 31,331 595 31,926 Income/(expense) recognised directly in equity - - 4,933 - 4,933 27 4,960 Capital contributions from minority shareholders - - - - - 748 748 Acquisition of Shell Canada - - - (5,445) (5,445) (1,639) (7,084) Sakhalin partial divestment - - - - - (6,711) (6,711) Other changes in minority interest - - - (28) (28) (28) (56) Dividends paid - - - (9,001) (9,001) (203) (9,204) Treasury shares: net sales/ (purchases) and dividends received - 924 - - 924 - 924 Shares repurchased for cancellation (9) - 9 (4,866) (4,866) - (4,866) Share-based compensation - - 386 - 386 - 386 At December 31, 2007 536 (2,392) 14,148 111,668 123,960 2,008 125,968 Ordinary share Treasury Other Retained Minority Total $ million capital shares reserves earnings Total interest equity At December 31, 2005 571 (3,809) 3,584 90,578 90,924 7,000 97,924 Income for the period - - - 25,442 25,442 869 26,311 Income/(expense) recognised directly in equity - - 4,671 - 4,671 38 4,709 Capital contributions from minority shareholders - - - - - 1,601 1,601 Effect of Unification - - 154 - 154 - 154 Dividends paid - - - (8,142) (8,142) (289) (8,431) Treasury shares: net sales/ (purchases) and dividends received - 493 - - 493 - 493 Shares repurchased for cancellation (26) - 26 (8,201) (8,201) - (8,201) Share-based compensation - - 385 - 385 - 385 At December 31, 2006 545 (3,316) 8,820 99,677 105,726 9,219 114,945 Consistent with the accounting policies disclosed in Note 1, the acquisition ofthe minority interest in Shell Canada in the first quarter 2007 was accountedfor as a transaction between shareholders with the impact reflected in theequity section of the balance sheet. In the first half of 2007, the Group paidcash of $7.1 billion for shares in Shell Canada that it did not already own. Asa result of this transaction, the consolidated financial statements of RoyalDutch Shell plc as at December 31, 2007 reflect some $7.1 billion decrease inshareholders equity, causing a $1,639 million decrease in minority interest,being the book value of the item acquired, with the excess of the purchaseprice over the book value of $5,445 million being taken to retained earnings.In addition to the share purchase price, $0.4 billion of Shell Canada shareoptions were exchanged for a corresponding amount of RDS share options.On April 18, 2007, Royal Dutch Shell signed and completed the Sale and Purchaseagreement with OAO Gazprom for the transfer of 50% of its shares in SakhalinEnergy Investment Company Ltd, representing 27.5% of the total outstandingshares, for a sales price of $4.1 billion. In addition, the Ministry of NaturalResources of the Russian Federation announced its approval of the revisedEnvironmental Action Plan. As of the end of the first quarter 2007, 100% of theSakhalin project net assets of approximately $15 billion were presented in theGroup balance sheet, offset by a minority interest of $6.7 billion representingthe partners' 45% interest in the project. As a result of this transaction, theconsolidated financial statements of Royal Dutch Shell plc no longer includethe separate assets, liabilities and associated minority interest of theSakhalin project, resulting in a net gain of $0.2 billion which is included inthe income statement. The Group's net asset position in the project is nowaccounted for as a single line item equity accounted investment.
7. Statement of cash flows
This statement reflects cash flows of Royal Dutch Shell and its subsidiaries as measured in their own currencies, which are translated into US dollars at average rates of exchange for the periods and therefore exclude currency translation differences except for those arising on cash and cash equivalents.
Cash from operating activities excluding net working capital movements, currenttaxation and taxation paid is calculated using the following line items fromthe cash flow statement:Quarters $ million Full Year
Q4 2007 Q3 2007 Q4 2006 2007 2006
Cash flow from operating 5,293 9,139 5,959 activities 34,461 31,696 5,551 4,798 3,157 Current taxation 20,076 17,338 Decrease/(increase) in net (3,375) (728) 643 working capital (6,206) (4,052) (6,809) (4,777) (6,617) Taxation paid (18,863) (21,045) 9,926 9,846 8,776 39,454 39,455
8. Basis for Royal Dutch Shell earnings per share
The total number of Royal Dutch Shell shares in issue at the end of the periodwas 6,342.9 million. Royal Dutch Shell reports earnings per share on a basicand on a diluted basis, based on the weighted average number of Royal DutchShell (combined A and B) shares outstanding. Shares held in respect of shareoptions and other incentive compensation plans are excluded in determiningbasic earnings per share.Basic earnings per share calculations are based on the following weightedaverage number of shares:millions Q4 2007 Q3 2007 Q4 2006 Full Year Full Year 2007 2006
Royal Dutch Shell shares of
euro 0.07 6,225.3 6,261.7 6,314.8 6,263.8 6,413.4
Diluted earnings per share calculations are based on the following weighted average number of shares. This adjusts the basic number of shares for all share options currently in-the-money.
millions Q4 2007 Q3 2007 Q4 2006 Full Year Full Year 2007 2006 Royal Dutch Shell shares of euro 0.07 6,248.8 6,285.8 6,341.9 6,283.8 6,440.0
Basic shares outstanding at the end of the following periods are:
millions Q4 2007 Q3 2007 Q4 2006 Royal Dutch Shell shares of euro 0.07 6,210.4 6,245.3 6,298.8
One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares.
Contacts:
* Investor Relations: Europe: + 31 (0)70 377 4540; USA: +1 212 218 3113
* Media: Europe: +44 (0)20 7934 3505
ROYAL DUTCH SHELL 'B' PLCRelated Shares:
RDSA.LRDSB.L