Source - LSE Regulatory
Royal Dutch Shell 3rd Quarter 2007 results * Royal Dutch Shell's third quarter 2007 earnings, on a current cost of supply (CCS) basis, were $6.4 billion compared to $6.9 billion a year ago. Basic CCS earnings per share decreased by 6% versus the same quarter a year ago. * From 2007 onwards the Group is declaring its dividends in US dollars rather than in euros. A third quarter 2007 dividend has been announced of $0.36 per share, an increase of 14% over the US dollar dividend for the same period in 2006. * $1.5 billion or 0.6% of Royal Dutch Shell shares were bought back for cancellation during the quarter. Royal Dutch Shell Chief Executive Jeroen van der Veer commented: "Given the weaker industry refining margins we have seen in the quarter, these are satisfactory results, underpinned by Shell's operating performance. We continue to rejuvenate our portfolio with sustained investment in new legacy assets, and through disposals. I am pleased with progress during the quarter, with the launch of new refining and liquefied natural gas projects, and further asset sales. The execution of our strategy is on track." Summary unaudited results QUARTERS $ million NINE MONTHS Q3 Q2 Q3 %1 2007 2007 2006 2007 2006 % Income attributable to 6,916 8,667 5,942 +16 shareholders 22,864 20,159 +13 Estimated CCS adjustment for Oil Products and Chemicals (see note (524) (1,111) 1,006 2) (1,984) (809) ______ ______ ______ ______ ______ 6,392 7,556 6,948 -8 CCS earnings 20,880 19,350 +8 ===== ===== ===== ===== ===== 1.10 1.38 0.93 Basic earnings per share ($) 3.64 3.13 Estimated CCS adjustment per share (0.08) (0.18) 0.16 ($) (0.31) (0.13) ______ ______ ______ ______ ______ 1.02 1.20 1.09 -6 Basic CCS earnings per share ($) 3.33 3.00 +11 ===== ===== ===== ===== ===== 0.36 0.36 0.315 Dividend per ordinary share ($)2 1.08 0.945 1 Q3 on Q3 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 in the applicable period converted to ordinary shares). Key features of the third quarter 2007 * Third quarter 2007 CCS earnings were $6,392 million or 8% lower than in the same quarter a year ago. * Third quarter 2007 reported income was $6,916 million or 16% higher than in the same quarter a year ago. * Exploration & Production segment earnings were $3,510 million compared with $3,743 million in the third quarter 2006. Earnings, when compared to the third quarter of 2006, were mainly impacted by lower volumes, higher tax charges and higher costs, reflecting current industry conditions, partly offset by the impact of higher oil prices on revenues. * Gas & Power segment earnings were $568 million compared to $781 million a year ago. Earnings, when compared to the third quarter of 2006, reflected lower marketing and trading results and reduced gas-to-liquids (GTL) sales volumes due to a planned shutdown of the Bintulu GTL plant, which were partly offset by higher revenues from increased equity liquefied natural gas (LNG) sales volumes. * Oil Products CCS segment earnings were $1,651 million compared to $2,160 million in the third quarter 2006. Earnings, when compared to the third quarter of 2006, were mainly impacted by lower realised refining margins, a lower contribution from trading and higher operating costs, which were partly offset by a gain related to a tax rate change in Germany. * Chemicals CCS segment earnings were $360 million compared to $335 million in 2006, mainly reflecting improved margins, which were partly offset by a reduced trading contribution. * Cash flow from operating activities was $9.1 billion compared to $10.1 billion in the third quarter 2006. Excluding working capital movements and taxation effects, cash flow from operating activities was $9.8 billion compared to $9.6 billion a year ago (see note 7). * Total cash returned to shareholders in the form of dividends and share repurchases in the third quarter 2007 was $3.7 billion. * Capital investment for the third quarter 2007 was $6.8 billion. * Return on average capital employed (ROACE), on a reported income basis (see note 3), was 23%. * Gearing (see note 5) was 12.1% at the end of the third quarter 2007 versus 13.4% at the end of the third quarter 2006. * As from the fourth quarter 2007, the Oil Sands segment information will be reported as a separate Downstream business segment. The Oil Sands segment information is currently reported under the Upstream Exploration & Production segment. Basic earnings per share (see notes 1, 2 and 8) QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 1.10 1.38 0.93 Earnings per share ($) 3.64 3.13 1.02 1.20 1.09 CCS earnings per share ($) 3.33 3.00 Diluted earnings per share (see notes 1, 2 and 8) QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 1.10 1.38 0.93 Earnings per share ($) 3.63 3.12 1.02 1.20 1.09 CCS earnings per share ($) 3.32 2.99 Summary segment earnings (see notes 2 and 4) QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % Segment earnings 3,510 3,301 3,743 Exploration & Production 10,319 11,485 568 779 781 Gas & Power2 2,150 2,054 1,651 2,936 2,160 Oil Products (CCS basis) 6,075 5,558 360 494 335 Chemicals (CCS basis) 1,334 822 413 177 266 Corporate2 1,391 45 (110) (131) (337) Minority interest (389) (614) ______ ______ ______ ______ ______ 6,392 7,556 6,948 -8 CCS earnings 20,880 19,350 +8 ===== ===== ===== ===== ===== 1 Q3 on Q3 change 2 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 third quarter 2006 and the nine months period of 2006 results were reclassified and are impacted by $(6) million and $ (14) million in the Gas & Power segment and by $6 million and $14 million in the Corporate segment, respectively. Summary segment earnings - continued Earnings in the third quarter 2007 reflected the following items, which in aggregate amounted to a net income of $265 million (compared to a net charge of $77 million in the third quarter 2006) as summarised in the table below: * Exploration & Production earnings included a net income of $130 million. Earnings for the third quarter 2007 included a gain of $143 million related to an impairment reversal and a combined gain of $228 million related to tax impacts and the benefit of a tax rate change in Germany. These gains were partly offset by charges of $93 million related to the mark-to-market valuation impact of certain UK gas contracts, the write-off of exploration costs in Alaska of $77 million and a $71 million charge related to a one-time pension liability impact (see below). Earnings for the third quarter 2006 included a net charge of $163 million reflecting a gain of $147 million related to the mark-to-market valuation of certain UK gas contracts, more than offset by charges of $310 million related to a UK tax increase effective as from January 1, 2006. * Gas & Power earnings included a net charge of $4 million, reflecting a gain of $11 million related to a tax rate change in Germany, which was more than offset by charges of $10 million related to a one-time pension liability impact (see below) and $5 million related to the mark-to-market valuation impact of certain gas contracts. * Oil Products earnings included a net income of $121 million, reflecting a gain of $149 million related to a tax rate change in Germany, which was partly offset by a charge of $28 million related to a one-time pension liability impact (see below). * Chemicals earnings included a net income of $18 million, reflecting a gain of $19 million related to a tax rate change in Germany, which was partly offset by a charge of $1 million related to a one-time pension liability impact (see below). * Corporate earnings did not include any identified items for the third quarter 2007. Earnings for the third quarter 2006 included $86 million related to tax credits. The Shell Group earnings included a combined charge of $110 million related to a one-time impact on past-service pension liabilities due to implementation of a revised structure for certain employees' remuneration, of which the major elements arose in the Exploration & Production and Oil Products segment earnings. Summary table: QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 Segment earnings impact of identified items: 130 153 (163) Exploration & Production 387 254 (4) 247 - Gas & Power 282 - 121 205 - Oil Products (CCS basis) 150 (65) 18 - - Chemicals (CCS basis) 18 (30) - 55 86 Corporate 459 (314) - - - Minority interest - (41) ______ ______ ______ ______ ______ 265 660 (77) CCS earnings impact 1,296 (196) ===== ===== ===== ===== ===== 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 in the segment earnings, CCS earnings and income attributable to shareholders. Further additional comments are provided in the section 'Earnings per industry segment' on page 5 and onwards. Earnings per industry segment Upstream QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 Realised Oil Prices (period $/bbl average) $/bbl 70.74 64.41 65.60 WOUSA 63.32 62.35 70.34 61.06 62.57 USA 60.72 60.77 70.69 63.92 65.13 Global 62.95 62.15 Realised Gas Prices (period $/thousand scf average) $/thousand scf 6.69 5.95 6.43 Europe 6.86 6.72 4.07 4.01 4.05 WOUSA (including Europe) 4.27 4.35 6.53 7.78 7.31 USA 7.16 8.04 4.57 4.74 4.77 Global 4.84 5.09 Oil and gas marker industry prices (period average) 74.84 68.86 69.63 Brent ($/bbl) 67.15 66.97 75.24 64.89 70.44 WTI ($/bbl) 66.06 68.06 6.14 7.56 6.05 Henry Hub ($/MMBtu) 6.94 6.80 UK National Balancing Point 30.68 20.20 33.77 (pence/therm) 24.39 45.93 Exploration & Production QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % 3,510 3,301 3,743 -6 Segment earnings 10,319 11,485 -10 Crude oil production (thousand b 1,874 1,908 2,054 -9 /d) 1,914 1,973 -3 Natural gas production available 7,329 7,367 6,942 +6 for sale (million scf/d) 7,886 8,365 -6 Barrels of oil equivalent 3,137 3,178 3,251 -4 (thousand boe/d) 3,273 3,415 -4 1 Q3 on Q3 change Third quarter Exploration & Production segment earnings were $3,510 million compared to $3,743 million a year ago. Third quarter Exploration & Production earnings included a net income of $130 million, comprising a gain of $143 million related to an impairment reversal and a combined gain of $228 million related to tax impacts and the benefit of a tax rate change in Germany. These gains were partly offset by charges of $93 million related to the mark-to-market valuation impact of certain UK gas contracts, exploration write-offs in Alaska of $77 million and a $71 million charge related to a one-time pension liability impact. Earnings for the third quarter 2006 included a net charge of $163 million reflecting a gain of $147 million related to the mark-to-market valuation of certain UK gas contracts, more than offset by charges of $310 million related to a UK tax increase effective as from January 1, 2006. Earnings, when compared to the third quarter 2006, were mainly impacted by lower volumes, higher tax charges and higher costs, reflecting current industry conditions, partly offset by the impact of higher oil prices on revenues. In addition, higher exploration expenses, and lower profits from the Sakhalin project, as a consequence of the partial divestment in the second quarter 2007, impacted earnings when compared to the third quarter 2006. Liquids realisations were 9% higher than in the third quarter 2006, following marker crudes Brent and WTI which were both up 7%. Gas realisations were 4% lower than a year ago. Outside the USA gas realisations were relatively unchanged whereas in the USA gas realisations decreased by 11%. Third quarter 2007 production was 3,137 thousand barrels of oil equivalent per day compared to 3,251 thousand barrels of oil equivalent per day a year ago. Total crude oil production (including oil sands) was down 9% and total natural gas production was up 6% when compared to the third quarter 2006. Third quarter 2007 production was mainly impacted by field decline rates and divested volumes, which were partly offset by new fields production and ramp-up volumes when compared to the same quarter last year. Production compared to the third quarter 2006 included increased volumes from E8 and B12 (Shell share 50%) in Malaysia, Pohokura (Shell share 48%) in New Zealand, West Salym (Shell share 50%) in Russia, Changbei (Shell share 50%) in China, Erha (Shell share 44%) in Nigeria, Merganser (Shell share 44%) in the UK, Enfield in Australia (Shell share 21%, indirect) and Deimos (Shell share 71.5%) in the USA. Third quarter portfolio developments: In Austria, Shell announced that it has signed a Sale and Purchase Agreement for the sale of its 25% equity holding in Austrian oil and gas producer, Roh￶l-Aufsuchungs AG (RAG) with completion expected late 2007 or early 2008. In Norway, Shell announced that it has entered into an agreement with E.ON Ruhrgas Norge AS to sell its 28% equity interests in the undeveloped Skarv and Idun fields for $893 million. The sale is subject to the relevant regulatory approval and is expected to be completed by end 2007. In Russia, Shell and Rosneft Open Joint Stock Company have concluded an agreement on Strategic Cooperation, which provides for a joint implementation of upstream and downstream oil and gas projects both in Russia and elsewhere. Also in Russia, Shell and JSC Tatneft concluded an agreement for a Strategic Partnership to devise a programme for heavy oil development in Tatarstan as well as other potential joint activities, including the acquisition of new licenses for hydrocarbon exploration in Tatarstan and elsewhere in Russia. In the United States, Shell announced first production from the Deimos (Shell share 71.5%) discovery in the Gulf of Mexico Mars Basin with a peak production capacity for Phase I of 30 thousand barrels of oil equivalent per day. In Norway, first gas was produced from the Ormen Lange field (Shell share 17%) with a peak production capacity of some 420 thousand barrels of oil equivalent per day. Gas & Power QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % 568 779 781 -27 Segment earnings2 2,150 2,054 +5 Equity LNG sales volume (million 3.29 3.25 2.94 +12 tonnes) 9.84 8.78 +12 1 Q3 on Q3 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 third quarter 2006 and nine months period of 2006 results were reclassified and were impacted by $(6) million and $(14) million respectively. Third quarter Gas & Power segment earnings were $568 million compared to $781 million a year ago. Third quarter 2007 earnings included a net charge of $4 million, reflecting a gain of $11 million related to a tax rate change in Germany, which was more than offset by charges of $10 million related to a one-time pension liability impact and $5 million related to the mark-to-market valuation impact of certain gas contracts. Earnings, when compared to the third quarter 2006, reflected lower marketing and trading results and reduced gas-to-liquids (GTL) sales volumes due to a planned shutdown of the Bintulu GTL plant, which were partly offset by higher earnings from increased equity liquefied natural gas (LNG) sales volumes. LNG equity sales volumes of 3.29 million tonnes were 12% higher than in the same quarter a year ago, driven by additional sales mainly at Nigeria LNG (Shell interest 26%) due to increased feedgas supply. Marketing and trading earnings benefited from storage optimisation in the third quarter 2007. Earnings, when compared to the same period last year, were lower due to less favourable overall trading conditions in both Europe and North America. Third quarter portfolio developments: In Qatar, Shell and Qatar Petroleum announced the formation of Qatar Liquefied Gas Company Limited (4), a joint venture of Qatar Petroleum (70%) and Shell (30%), which signed a Sale and Purchase Agreement with Shell as the buyer of all the LNG volumes produced by the joint venture. An agreement was also signed with Qatargas Transport Company Limited (Nakilat), in which Shell was appointed as the shipping and maritime services provider for Nakilat's fleet of at least 25 newly built liquefied natural gas carriers. In Australia, the final investment decision was taken by Woodside Petroleum Ltd. (Shell interest 34.27%) for the development of the Pluto LNG project in North-West Australia. The Australian Federal Ministry for the Environment issued government approval for the Pluto project in October. Shell and Petrochina concluded a binding Heads of Agreement for the supply of 1 million tonnes per annum of LNG, for 20 years, from the Gorgon project in North-West Australia, conditional on a final investment decision being taken by the Gorgon Joint Venture partners. Gorgon received State and Federal environmental approval during the quarter. Downstream QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 Refining marker industry gross $/bbl margins(period average) $/bbl 8.05 23.10 13.25 ANS US West Coast coking margin 17.75 16.15 15.40 27.05 14.70 WTS US Gulf Coast coking margin 18.45 16.00 3.50 6.30 3.45 Rotterdam Brent complex 4.50 3.50 Singapore 80/20 Arab light/Tapis 2.50 3.60 0.95 complex 3.05 2.05 Oil Products QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % 2,153 3,928 1,214 Segment earnings 7,883 6,334 Estimated CCS adjustment - see (502) (992) 946 note 2 (1,808) (776) ______ ______ ______ ______ ______ 1,651 2,936 2,160 -24 Segment CCS earnings 6,075 5,558 +9 ===== ===== ===== ===== ===== 3,887 3,806 3,907 -1 Refinery intake (thousand b/d) 3,768 3,852 -2 Total Oil products sales 6,756 6,490 6,521 +4 (thousand b/d) 6,552 6,491 +1 1 Q3 on Q3 change Third quarter Oil Products segment earnings were $2,153 million compared to $1,214 million for the same period last year. Third quarter Oil Products CCS segment earnings were $1,651 million compared to $2,160 million in the third quarter of 2006. Earnings for the third quarter 2007 included a net income of $121 million, reflecting a gain of $149 million related to a tax rate change in Germany, which was partly offset by charges of $28 million related to a one-time pension liability impact. CCS earnings, when compared to the third quarter of 2006, were mainly impacted by lower realised refining margins, a lower contribution from trading and higher operating costs, which were partly offset by a gain related to a tax rate change in Germany. In Manufacturing, Supply and Distribution industry refining margins, when compared to the same period a year ago, were higher in the eastern hemisphere and in US Gulf Coast, whilst US West Coast margins declined. Refining margins in Europe were essentially unchanged when compared to the levels of the third quarter of 2006. Despite the hurricane impact in the US Gulf Coast, refinery availability remained relatively stable at 93%, compared to 94% in the third quarter of 2006. In marketing, when compared to the same period a year ago, earnings were relatively stable due to continued strong retail, lubricants and B2B earnings. Marketing sales volumes were in line with volumes in the third quarter 2006. Excluding the impact of divestments, volumes were 2.2% higher than in the third quarter 2006, mainly because of higher retail sales. Third quarter portfolio developments: In the USA, Shell announced, through Motiva Enterprises (Shell share 50%), the final investment decision to proceed with a 325,000 barrels per day capacity expansion at the Port Arthur Refinery, making this the largest refinery in the USA with a total crude oil throughput capacity of 600,000 barrels per day. In France, Shell has signed a Letter of Intent for the possible sale of its Petit Couronne and Reichstett Vendenheim refineries. The sale, amounting to some $875 million, with completion to be expected during 2008, is subject to staff consultation and regulatory approval. Also in France, Shell has received an offer for the sale of its Berre-l'Etang refinery site complex and associated infrastructure and businesses. A purchase price of $700 million has been agreed with completion to be expected in early 2008. The sale is subject to staff consultation and regulatory approval. In Scandinavia, Shell has signed an agreement, which will result in the rebranding of a planned 269 service stations across Norway, Sweden and Denmark. Chemicals QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % 397 626 251 Segment earnings 1,550 880 Estimated CCS adjustment - see (37) (132) 84 note 2 (216) (58) ______ ______ ______ ______ ______ 360 494 335 +7 Segment CCS earnings 1,334 822 +62 ===== ===== ===== ===== ===== 5,702 5,653 5,636 +1 Sales volumes (thousand tonnes) 16,922 17,447 -3 1 Q3 on Q3 change Third quarter Chemicals segment earnings were $397 million compared to $251 million for the same period last year. Third quarter Chemicals CCS segment earnings were $360 million compared to $335 million in the same quarter last year. Earnings for the third quarter 2007 included a net income of $18 million, reflecting a gain of $19 million related to a tax rate change in Germany, which was partly offset by a charge of $1 million related to a one-time pension liability impact. Earnings reflected improved margins, which were mostly offset by a reduced trading contribution. Chemicals manufacturing plant availability increased to 94%, some 6% points higher than in the third quarter 2006, which was impacted by a heavy planned maintenance programme in the USA and Europe. Corporate QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 413 177 266 Segment earnings1 1,391 45 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 and Solar businesses, which were previously reported as part of Other Industry segments, but continue to include some non-material businesses. For comparison purposes, the third quarter 2006 and the nine months period of 2006 results were reclassified and are impacted by $6 million and $14 million respectively. Third quarter Corporate segment earnings were $413 million compared to an income of $266 million for the same period last year. Earnings for the third quarter 2006 included $86 million related to tax credits. Earnings, when compared to the third quarter 2006, reflected higher insurance underwriting income, improved net interest income and positive results from exchange rate movements which were partly offset by lower tax credits. Note All amounts shown throughout this report are unaudited. Fourth quarter results for 2007 are expected to be announced on January 31, 2008. 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 third quarter results are expected to be announced on October 30, 2008. There will be a Group strategy update on March 17, 2008. In this Report "Group" is defined as Royal Dutch Shell together with all of its consolidated subsidiaries. The expressions "Shell", "Group", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made 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 who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. The expression "Group companies" as used in this Report refers 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 the Group has significant influence but not control are referred to as "associated companies" or "associates" and companies in which the Group has joint control are referred to as "jointly controlled entities". In this Report, associates and jointly controlled entities are also referred to as "equity accounted investments". 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'' 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 Report, 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 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, project delay or advancement, approvals and cost estimates; and (m) changes in trading conditions. All forward-looking statements contained in this Report 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. Each forward-looking statement speaks only as of the date of this Report. 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 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 uncertainties that may affect Shell's businesses. Cautionary Note to US Investors: 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 may use certain terms in this announcement that the SEC's guidelines strictly prohibit us from including in filings with the SEC. US Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575 and disclosure in our Forms 6-K, File No 1-32575, available on the SEC's website www.sec.gov . You can also obtain these forms from the SEC by calling 1-800-SEC-0330. October 25, 2007 Appendix 1: Royal Dutch Shell financial report and tables Statement of income (see note 1) QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % 90,703 84,896 84,254 Revenue2 249,079 243,345 76,713 68,715 70,383 Cost of sales 206,094 200,143 ______ ______ ______ _________ _________ 13,990 16,181 13,871 +1 Gross profit 42,985 43,202 -1 Selling, distribution and 3,843 4,120 4,126 administrative expenses 11,741 11,968 608 450 401 Exploration expenses 1,330 932 Share of profit of equity 1,912 2,138 1,358 accounted investments 5,858 5,010 Net finance costs and other (38) (477) (60) (income)/expense (1,416) (168) ______ ______ ______ _______ _______ 11,489 14,226 10,762 +7 Income before taxation 37,188 35,480 +5 4,448 5,415 4,507 Taxation 13,895 14,682 ______ ______ ______ _______ _______ 7,041 8,811 6,255 +13 Income for the period 23,293 20,798 +12 Income attributable to minority 125 144 313 interest 429 639 ______ ______ ______ _______ _______ Income attributable to 6,916 8,667 5,942 +16 shareholders 22,864 20,159 +13 ===== ===== ===== ===== ===== 1 Q3 on Q3 change 2 Revenue is stated after deducting sales taxes, excise duties and similar levies of $20,830 million in Q3 2007, $18,993 million in Q2 2007, $17,305 million in Q1 2007, $18,472 million in Q3 2006, $17,984 million in Q2 2006 and $16,709 million in Q1 2006. Earnings by industry segment (see notes 2 and 4) QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % Exploration & Production: 2,650 2,385 2,650 0 World outside USA 7,691 8,459 -9 860 916 1,093 -21 USA 2,628 3,026 -13 ______ ______ ______ ______ ______ 3,510 3,301 3,743 -6 10,319 11,485 -10 ______ ______ ______ ______ ______ Gas & Power2: 500 494 588 -15 World outside USA 1,676 1,763 -5 68 285 193 -65 USA 474 291 +63 ______ ______ ______ ______ ______ 568 779 781 -27 2,150 2,054 +5 ______ ______ ______ ______ ______ Oil Products (CCS basis): 1,316 1,827 1,665 -21 World outside USA 4,301 4,068 +6 335 1,109 495 -32 USA 1,774 1,490 +19 ______ ______ ______ ______ ______ 1,651 2,936 2,160 -24 6,075 5,558 +9 ______ ______ ______ ______ ______ Chemicals (CCS basis): 368 454 348 +6 World outside USA 1,291 830 +56 (8) 40 (13) USA 43 (8) ______ ______ ______ ______ ______ 360 494 335 +7 1,334 822 +62 ______ ______ ______ ______ ______ 6,089 7,510 7,019 -13 TOTAL OPERATING SEGMENTS 19,878 19,919 ______ ______ ______ ______ ______ Corporate2: Interest and investment income/ 122 158 37 (expense) 863 75 57 20 (19) Currency exchange gains/(losses) 123 20 234 (1) 248 Other - including taxation 405 (50) ______ ______ ______ ______ ______ 413 177 266 1,391 45 ______ ______ ______ ______ ______ (110) (131) (337) Minority interest (389) (614) ______ ______ ______ ______ ______ 6,392 7,556 6,948 -8 CCS EARNINGS 20,880 19,350 +8 ______ ______ ______ ______ ______ Estimated CCS adjustment for Oil 524 1,111 (1,006) Products and Chemicals 1,984 809 ______ ______ ______ ______ ______ Income attributable to shareholders of Royal Dutch Shell 6,916 8,667 5,942 +16 plc 22,864 20,159 +13 ===== ===== ===== ===== ===== 1 Q3 on Q3 change 2 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 third quarter 2006 and the nine months period of 2006 results were reclassified and are impacted by $(6) million and $ (14) million in the Gas & Power segment and by $6 million and $14 million in the Corporate segment, respectively. Summarised balance sheet (see notes 1 and 6) $ million Sep 30 Jun 30 Sep 30 ASSETS 2007 2007 2006 Non-current assets: Intangible assets 5,307 5,126 4,697 Property, plant and equipment 96,611 90,584 96,133 Investments: equity accounted investments 28,717 27,185 19,453 financial assets 2,987 2,954 3,914 Deferred tax 3,375 3,108 2,664 Prepaid pension costs 5,045 4,772 3,459 Other 5,903 5,548 4,598 ________ ________ ________ 147,945 139,277 134,918 ________ ________ ________ Current assets: Inventories 27,906 26,497 23,391 Accounts receivable 61,636 60,649 63,895 Cash and cash equivalents 14,092 15,117 11,240 ________ ________ ________ 103,634 102,263 98,526 ________ ________ ________ TOTAL ASSETS 251,579 241,540 233,444 ====== ====== ====== LIABILITIES Non-current liabilities: Debt 12,660 12,236 7,665 Deferred tax 13,665 13,159 12,485 Retirement benefit obligations 6,449 6,282 6,298 Other provisions 12,467 10,877 8,793 Other 3,797 3,784 4,346 ________ ________ ________ 49,038 46,338 39,587 ________ ________ ________ Current liabilities: Debt 4,683 5,266 6,395 Accounts payable and accrued liabilities 63,224 61,978 64,445 Taxes payable 12,144 11,214 10,679 Retirement benefit obligations 338 324 284 Other provisions 2,126 2,076 1,763 ________ ________ ________ 82,515 80,858 83,566 ________ ________ ________ TOTAL LIABILITIES 131,553 127,196 123,153 ________ ________ ________ Equity attributable to shareholders of Royal Dutch Shell plc 118,194 112,621 101,604 Minority interest 1,832 1,723 8,687 ________ ________ ________ TOTAL EQUITY 120,026 114,344 110,291 ________ ________ ________ TOTAL LIABILITIES AND EQUITY 251,579 241,540 233,444 ====== ====== ====== Summarised statement of cash flows (see notes 1 and 7) QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 CASH FLOW FROM OPERATING ACTIVITIES: 7,041 8,811 6,255 Income for the period 23,293 20,798 Adjustment for: 4,798 5,460 4,403 Current taxation 14,525 14,181 126 130 145 Interest (income)/expense 454 498 Depreciation, depletion and 2,842 3,238 3,365 amortisation 9,340 9,309 (55) (1,133) (86) (Profit)/loss on sale of assets (1,550) (279) Decrease/(increase) in net working (728) (1,704) 560 capital (2,831) (4,695) Share of profit of equity accounted (1,912) (2,138) (1,358) investments (5,858) (5,010) Dividends received from equity 1,567 1,519 1,450 accounted investments 4,673 4,066 Deferred taxation and other (109) 214 133 provisions (47) 1,614 346 (676) (299) Other (777) (317) _______ _______ _______ _______ _______ Cash flow from operating activities 13,916 13,721 14,568 (pre-tax) 41,222 40,165 _______ _______ _______ _______ _______ (4,777) (4,873) (4,489) Taxation paid (12,054) (14,428) _______ _______ _______ _______ _______ 9,139 8,848 10,079 Cash flow from operating activities 29,168 25,737 _______ _______ _______ _______ _______ CASH FLOW FROM INVESTING ACTIVITIES: (5,550) (5,652) (5,408) Capital expenditure (16,563) (15,857) Investments in equity accounted (644) (319) (126) investments (1,333) (534) 174 6,270 289 Proceeds from sale of assets 6,824 1,006 Proceeds from sale of equity 57 279 37 accounted investments 451 81 Proceeds from sale of / (additions to) financial 35 585 (22) assets 1,175 (33) 292 295 285 Interest received 872 759 _______ _______ _______ _______ _______ (5,636) 1,458 (4,945) Cash flow from investing activities (8,574) (14,578) _______ _______ _______ _______ _______ CASH FLOW FROM FINANCING ACTIVITIES: Net increase/(decrease) in debt with maturity period 554 (1,185) (732) within three months (290) (49) - 1,634 191 Other debt: New borrowings 4,396 2,073 (1,235) (274) (302) Repayments (3,122) (1,360) (282) (290) (330) Interest paid (923) (952) (10) (3,585) 287 Change in minority interests (6,705) 1,070 (1,463) (900) (2,801) Net issue/(repurchase) of shares (2,849) (6,657) Dividends paid to: Shareholders of Royal Dutch Shell (2,283) (2,300) (2,083) plc (6,683) (6,012) (67) (77) (53) Minority interest (186) (258) Treasury shares: Net sales/(purchases) and dividends 200 568 149 received 752 375 _______ _______ _______ _______ _______ (4,586) (6,409) (5,674) Cash flow from financing activities (15,610) (11,770) _______ _______ _______ _______ _______ Currency translation differences relating to cash and 58 36 6 cash equivalents 106 121 _______ _______ _______ _______ _______ INCREASE/(DECREASE) IN CASH AND CASH (1,025) 3,933 (534) EQUIVALENTS 5,090 (490) _______ _______ _______ _______ _______ Cash and cash equivalents at 15,117 11,184 11,774 beginning of period 9,002 11,730 Cash and cash equivalents at end of 14,092 15,117 11,240 period 14,092 11,240 Operational data - Upstream QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % thousand b/d CRUDE OIL PRODUCTION thousand b/d 406 442 433 Europe 432 484 333 305 346 Africa 326 335 214 235 254 Asia Pacific 227 239 445 428 489 Middle East, Russia, CIS 431 446 314 328 353 USA 328 313 80 79 81 Other Western Hemisphere 80 82 ______ ______ ______ ______ ______ Total crude oil production 1,792 1,817 1,956 excluding oil sands 1,824 1,899 82 91 98 Production from oil sands 90 74 ______ ______ ______ ______ ______ Total crude oil production 1,874 1,908 2,054 -9 including oil sands 1,914 1,973 -3 ______ ______ ______ ______ ______ million scf/d2 NATURAL GAS PRODUCTION million scf/d2 AVAILABLE FOR SALE 2,231 2,496 2,125 Europe 2,939 3,521 623 601 475 Africa 581 467 2,587 2,414 2,356 Asia Pacific 2,486 2,408 248 251 273 Middle East, Russia, CIS 253 299 1,131 1,091 1,186 USA 1,128 1,160 509 514 527 Other Western Hemisphere 499 510 ______ ______ ______ ______ ______ 7,329 7,367 6,942 +6 7,886 8,365 -6 ______ ______ ______ ______ ______ TOTAL PRODUCTION IN BARRELS thousand boe/d3 OF OIL EQUIVALENT thousand boe/d3 790 872 800 Europe 939 1,091 440 409 428 Africa 426 416 660 651 660 Asia Pacific 656 654 488 471 536 Middle East, Russia, CIS 474 497 509 516 557 USA 522 513 168 168 172 Other Western Hemisphere 166 170 ______ ______ ______ ______ ______ Total production excluding oil 3,055 3,087 3,153 sands 3,183 3,341 82 91 98 Oil sands 90 74 ______ ______ ______ ______ ______ Total production including oil 3,137 3,178 3,251 -4 sands 3,273 3,415 -4 ===== ===== ===== ===== ===== 1 Q3 on Q3 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 Operational data - Downstream QUARTERS NINE MONTHS Q3 Q2 Q3 2007 2007 2006 %1 2007 2006 % thousand b/d thousand b/d REFINERY PROCESSING INTAKE 1,813 1,713 1,758 Europe 1,705 1,708 852 810 797 Other Eastern Hemisphere 808 814 851 905 965 USA 883 964 371 378 387 Other Western Hemisphere 372 366 ______ ______ ______ ______ ______ 3,887 3,806 3,907 -1 3,768 3,852 -2 ______ ______ ______ ______ ______ OIL SALES 2,176 2,224 2,256 Gasolines 2,221 2,198 768 731 750 Kerosenes 740 754 2,396 2,238 2,074 Gas/Diesel oils 2,250 2,113 699 667 729 Fuel oil 682 757 717 630 712 Other products 659 669 ______ ______ ______ ______ ______ 6,756 6,490 6,521 Total oil products * 6,552 6,491 2,477 2,673 2,442 Crude oil 2,601 2,482 ______ ______ ______ ______ ______ 9,233 9,163 8,963 +3 Total oil sales 9,153 8,973 +2 ______ ______ ______ ______ ______ *Comprising: 1,903 1,826 1,948 Europe 1,855 1,973 1,279 1,238 1,215 Other Eastern Hemisphere 1,254 1,220 1,544 1,518 1,506 USA 1,488 1,495 676 679 658 Other Western Hemisphere 669 658 1,354 1,229 1,194 Export sales 1,286 1,145 CHEMICAL SALES VOLUMES BY MAIN thousand tonnes PRODUCT CATEGORY 2** thousand tonnes 3,302 3,222 3,430 Base chemicals 9,804 10,648 2,399 2,429 2,200 First line derivatives 7,110 6,776 1 2 6 Other 8 23 ______ ______ ______ ______ ______ 5,702 5,653 5,636 +1 16,922 17,447 -3 ______ ______ ______ ______ ______ **Comprising: 2,225 2,220 2,232 Europe 6,718 7,128 1,376 1,380 1,385 Other Eastern Hemisphere 4,009 4,199 1,923 1,873 1,851 USA 5,667 5,639 178 180 168 Other Western Hemisphere 528 481 1 Q3 on Q3 change 2 Excluding volumes sold by equity accounted investments, chemical feedstock trading and by-products. Capital investment QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 Capital expenditure: Exploration & Production: 2,956 2,702 3,425 World outside USA 8,898 11,020 721 774 519 USA 2,082 1,312 ______ ______ ______ ______ ______ 3,677 3,476 3,944 10,980 12,332 ______ ______ ______ ______ ______ Gas & Power1: 706 711 600 World outside USA 2,074 1,245 1 2 6 USA 4 15 ______ ______ ______ ______ ______ 707 713 606 2,078 1,260 ______ ______ ______ ______ ______ Oil Products: Refining: 247 355 251 World outside USA 862 866 49 109 75 USA 339 193 ______ ______ ______ ______ ______ 296 464 326 1,201 1,059 ______ ______ ______ ______ ______ Marketing: 523 285 569 World outside USA 1,022 1,072 31 23 36 USA 68 80 ______ ______ ______ ______ ______ 554 308 605 1,090 1,152 ______ ______ ______ ______ ______ Chemicals: 312 184 166 World outside USA 649 265 65 96 53 USA 244 150 ______ ______ ______ ______ ______ 377 280 219 893 415 ______ ______ ______ ______ ______ 101 75 (4) Corporate1: 221 15 ______ ______ ______ ______ ______ 5,712 5,316 5,696 TOTAL CAPITAL EXPENDITURE 16,463 16,233 ______ ______ ______ ______ ______ Exploration costs: 183 143 161 World outside USA 453 414 211 46 67 USA 299 194 ______ ______ ______ ______ ______ 394 189 228 752 608 ______ ______ ______ ______ ______ New equity in equity accounted investments 615 308 112 World outside USA 1,170 311 5 3 3 USA 25 12 ______ ______ ______ ______ ______ 620 311 115 1,195 323 ______ ______ ______ ______ ______ New loans to equity accounted 24 8 11 investments 138 211 ______ ______ ______ ______ ______ 6,750 5,824 6,050 TOTAL CAPITAL INVESTMENT*2 18,548 17,375 ______ ______ ______ ______ ______ *Comprising: 4,427 3,884 4,214 Exploration & Production 12,571 13,204 901 808 658 Gas & Power1 2,441 1,411 942 777 962 Oil Products 2,418 2,279 378 280 219 Chemicals 896 465 102 75 (3) Corporate1 222 16 ______ ______ ______ ______ ______ 6,750 5,824 6,050 18,548 17,375 ______ ______ ______ ______ ______ 1 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 the Gas & Power segment. For comparison purposes, the third quarter 2006 and the nine months period of 2006 capital investment data were reclassified and are impacted by $13 million and $38 million in the Gas & Power segment and by $(13) million and $(38) million in the Corporate segment, respectively. 2 In addition to the above amounts, see Note 6 regarding accounting impacts related to the Shell Canada minority interest acquisition. Additional segmental information 1 QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 Exploration & Production 3,510 3,301 3,743 Segment earnings 10,319 11,485 of which: 608 450 401 Exploration 1,330 932 1,933 2,353 2,391 Depreciation, depletion & amortisation 6,614 6,551 Share of profit of equity accounted 733 659 574 investments 2,305 2,271 6,477 7,452 7,074 Cash flow from operations 20,525 19,711 Less: Net working capital movements 974 1,737 116 and taxation paid/accrued 3,658 415 ______ ______ ______ ______ ______ Cash flow from operations excluding net working capital movements and 5,503 5,715 6,958 taxation paid/accrued 16,867 19,296 48,702 45,879 47,784 Capital employed 48,702 47,784 Gas & Power 568 779 781 Segment earnings 2,150 2,054 of which: 79 77 62 Depreciation, depletion & amortisation 230 204 Share of profit of equity accounted 471 428 375 investments 1,319 1,095 316 210 403 Cash flow from operations 1,113 1,771 Less: Net working capital movements (265) 4 (360) and taxation paid/accrued (353) (509) ______ ______ ______ ______ ______ Cash flow from operations excluding net working capital movements and 581 206 763 taxation paid/accrued 1,466 2,280 17,565 16,133 16,380 Capital employed 17,565 16,380 Oil Products 1,651 2,936 2,160 Segment CCS earnings 6,075 5,558 of which: 606 571 666 Depreciation, depletion & amortisation 1,833 1,993 Share of profit of equity accounted 394 721 432 investments 1,395 1,277 1,700 1,464 2,867 Cash flow from operations 5,287 2,592 Less: Net working capital movements (956) (1,809) 1,399 and taxation paid/accrued (2,792) (5,160) ______ ______ ______ ______ ______ Cash flow from operations excluding net working capital movements and 2,656 3,273 1,468 taxation paid/accrued 8,079 7,752 48,423 46,546 40,839 Capital employed 48,423 40,839 Chemicals 360 494 335 Segment CCS earnings 1,334 822 of which: 154 150 196 Depreciation, depletion & amortisation 459 483 Share of profit of equity accounted 174 167 155 investments 529 301 618 451 609 Cash flow from operations 1,185 1,081 Less: Net working capital movements 104 (177) 387 and taxation paid/accrued (610) (45) ______ ______ ______ ______ ______ Cash flow from operations excluding net working capital movements and 514 628 222 taxation paid/accrued 1,795 1,126 10,240 9,888 8,634 Capital employed 10,240 8,634 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. Notes NOTE 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 the Gas & Power segment and all other activities within Other Industry segments are reported within the Corporate segment. Prior period financial statements have been reclassified accordingly. Purchases of minority interests in Group companies, and disposals of shares in Group companies whilst retaining control, are accounted for as transactions within equity. The difference between the purchase price/disposal proceeds and the relevant proportion of the minority interest is reported in retained earnings as a movement in the Group share of equity. The remaining accounting policies are 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, 2006 on pages 108 to 112. NOTE 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 Oil Products and Chemicals segment earnings. Earnings on an estimated current cost of supplies basis provide useful information concerning the effect of changes in the cost of supplies on Royal Dutch Shell's results of operations and is a measure to manage the performance of the Oil Products and Chemicals segments but is not a measure of financial performance under IFRS. On this basis, Oil Products and Chemicals segment cost of sales 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. NOTE 3. Return on average capital employed (ROACE) ROACE is defined as the sum of the current and previous three quarters' income attributable to shareholders adjusted for Shell's share of interest expense, after tax, as a percentage of Shell's share of average capital employed for the period. Components of the calculation ($ million): Q3 2007 Q3 2006 Income attributable to shareholders (four quarters) 28,147 24,527 Royal Dutch Shell share of interest expense after tax 578 627 ______ ______ ROACE numerator 28,725 25,154 Royal Dutch Shell share of capital employed - opening 114,556 105,779 Royal Dutch Shell share of capital employed - closing 135,272 114,556 ________ ________ Royal Dutch Shell share of capital employed - average 124,914 110,168 ROACE 23.0% 22.8% NOTE 4. Earnings by industry segment Operating segment 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 results of the Corporate segment. Operating segment results are after tax and include equity accounted investments. Segment results in accordance with International Accounting Standard 14 "Segment Reporting" are disclosed in Royal Dutch Shell's Annual Report and Form 20-F, with a reconciliation to the basis as presented here. NOTE 5. Gearing The numerator and denominator in the gearing calculation used by the Group are calculated by adding to reported debt and equity certain off-balance sheet obligations as at the beginning of the year such as operating lease commitments and unfunded retirement benefits (as applicable) which the Group believes to be in the nature of incremental debt, and deducting cash and cash equivalents judged to be in excess of amounts required for operational purposes. Components of the calculation ($ million): Sep 30 Sep 30 2007 2006 Non-current debt 12,660 7,665 Current debt 4,683 6,395 ______ ______ Total debt 17,343 14,060 Add: Net present value of operating lease obligations 11,319 9,442 Unfunded pension benefit obligations - 2,919 Less: Cash and cash equivalents in excess of operational requirements 12,192 9,340 ______ ______ Adjusted debt 16,470 17,081 Total equity 120,026 110,291 ________ ________ Total capital 136,496 127,372 Gearing ratio (adjusted debt as a percentage of total capital) 12.1% 13.4% NOTE 6. Equity Total equity comprises equity attributable to shareholders of Royal Dutch Shell and to the minority interest. Other reserves comprise the capital redemption reserve, share premium reserve, merger reserve, share-based compensation reserve, cumulative currency translation differences, unrealised gains/(losses) on securities and unrealised gains/(losses) on cash flow hedges. Ordinary share Treasury Other Retained $ million capital shares reserves earnings Minority Total Total interest equity At December 31, 2006 545 (3,316) 8,820 99,677 105,726 9,219 114,945 Income for the period - - - 22,864 22,864 429 23,293 Income/(expense) recognised directly in equity - - 3,513 - 3,513 (33) 3,480 Capital contributions from minority shareholders - - - - - 802 802 Acquisition of Shell Canada - - - (5,445) (5,445) (1,639) (7,084) Sakhalin partial divestment - - - - - (6,711) (6,711) Other changes in minority interest - - - 6 6 (49) (43) Dividends paid - - - (6,683) (6,683) (186) (6,869) Treasury shares: net sales/(purchases) and dividends received - 752 - - 752 - 752 Shares repurchased for cancellation (6) - 6 (2,849) (2,849) - (2,849) Share-based compensation - - 310 - 310 - 310 At September 30, 2007 539 (2,564) 12,649 107,570 118,194 1,832 120,026 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 - - - 20,159 20,159 639 20,798 Income/(expense) recognised directly in equity - - 2,528 - 2,528 73 2,601 Capital contributions from minority shareholders - - - - - 1,233 1,233 Effect of Unification - - 154 - 154 - 154 Dividends paid - - - (6,012) (6,012) (258) (6,270) Treasury shares: net sales/(purchases) and dividends received - 375 - - 375 - 375 Shares repurchased for cancellation (22) - 22 (6,811) (6,811) - (6,811) Share-based compensation - - 287 - 287 - 287 At September 30, 2006 549 (3,434) 6,575 97,914 101,604 8,687 110,291 Consistent with the accounting policies disclosed in Note 1, the acquisition of the minority interest in Shell Canada in the first quarter 2007 was accounted for as a transaction between shareholders with the impact reflected in the equity section of the balance sheet. In the first half of 2007, the Group has paid cash of $7.1 billion for shares in Shell Canada that it did not already own. As a result of this transaction, the consolidated financial statements of Royal Dutch Shell plc as at September 30, 2007 reflect some $7.1 billion decrease in shareholders equity, causing a $1,639 million decrease in minority interest, being the book value of the item acquired, with the excess of the purchase price 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 share options were exchanged for a corresponding amount of RDS share options. On April 18, 2007, Royal Dutch Shell signed and completed the Sale and Purchase agreement with OAO Gazprom for the transfer of 50% of its shares in Sakhalin Energy Investment Company Ltd, representing 27.5% of the total outstanding shares, for a sales price of $4.1 billion. In addition, the Ministry of Natural Resources of the Russian Federation announced its approval of the revised Environmental Action Plan. As of the end of the first quarter 2007, 100% of the Sakhalin project net assets of approximately $15 billion were presented in the Group balance sheet, offset by a minority interest of $6.7 billion representing the partners' 45% interest in the project. As a result of this transaction, the consolidated financial statements of Royal Dutch Shell plc as at September 30, 2007 no longer include the separate assets, liabilities and associated minority interest of the Sakhalin project, resulting in a net gain of $0.2 billion which is included in the income statement. The Group's net asset position in the project is now accounted for as a single line item equity accounted investment. NOTE 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, current taxation and taxation paid is calculated using the following line items from the cash flow statement: QUARTERS $ million NINE MONTHS Q3 Q2 Q3 2007 2007 2006 2007 2006 9,139 8,848 10,079 Cash flow from operating activities 29,168 25,737 4,798 5,460 4,403 Current taxation 14,525 14,181 Decrease/(increase) in net working (728) (1,704) 560 capital (2,831) (4,695) (4,777) (4,873) (4,489) Taxation paid (12,054) (14,428) ______ ______ ______ ______ ______ 9,846 9,965 9,605 29,528 30,679 ===== ===== ===== ===== ===== NOTE 8. Earnings per Royal Dutch Shell share The total number of Royal Dutch Shell shares in issue at the end of the period was 6,381.3 million. Royal Dutch Shell reports earnings per share on a basic and on a diluted basis, based on the weighted average number of Royal Dutch Shell (combined A and B) shares outstanding. Shares held in respect of share options and other incentive compensation plans are excluded in determining basic earnings per share. Basic earnings per share calculations are based on the following weighted average number of shares: millions Nine Nine Q3 Q2 Q3 months months 2007 2007 2006 2007 2006 Royal Dutch Shell shares of euro 0.07 6,261.7 6,281.7 6,373.9 6,276.7 6,446.6 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 Nine Nine Q3 Q2 Q3 months months 2007 2007 2006 2007 2006 Royal Dutch Shell shares of euro 0.07 6,285.8 6,303.1 6,399.8 6,296.5 6,470.9 Basic shares outstanding at the end of the following periods are: millions Q3 Q2 Q3 2007 2007 2006 Royal Dutch Shell shares of euro 0.07 6,245.3 6,276.8 6,336.3 One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares. END
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