Royal Dutch Shell

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Royal Dutch Shell Financial Statement Analysis

Subject: Accounting Class of International Business School of UTM

Yudanto Hendratmoko MR061025

KUALA LUMPUR 2 0 0 6

EXECUTIVE SUMMARY

Shell as major integrated oil and gas company has been listed in different stock market. For reviewing, price calculated will be based on New York market using USD as currency. Starting 2004, for its financial statement, the company has used IFRS format that is adopted by Europe Union. Before US GAAP was used. However in the annual report, some information has been put to reconcile back IFRS format to US GAAP format even though some data are eliminated during reconciliation.

After getting US GAAP format, ratio analysis must be done in Malaysia Ringgit currency. To get the rate, Asian Development Bank has records for the exchange rate on average based or end of year period based. For balance sheet, because it is a snap shot of financial position at the end of the year, the rate is based at the end of the year as well. Since Shell has quarterly report for income statement and pay dividend quarterly, exchange rate between USD and MYR is on average. Benchmarking is done using industry peer, Exxon, as comparison. Sometimes the general rules of ratios don’t apply for oil industry, but benchmarking can give better perspective for analyzing.

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TABLE OF CONTENTS

1.

INTRODUCTION ..................................................................................6

1.1. 1.2. 1.3. 1.4.

Overview of Accounting Course.................................................................................. 6 Lesson from the Course .............................................................................................. 6 Lesson from the Project .............................................................................................. 6 Comment on the Course ............................................................................................. 7

2.
2.1. 2.2. 2.3. 2.4. 2.5. 2.6.

COMPANY BACKGROUND ..................................................................8 VISION...................................................................................................................... 8 MISSION ................................................................................................................... 8 BOARD OF DIRECTORS .............................................................................................. 8 ROYAL DUTCH SHELL BUSINESS AND STRATEGY......................................................... 9 RECENT MERGER ..................................................................................................... 13 INDUSTRY OUTLOOK ............................................................................................... 15

3.
3.1. 3.2. 3.3. 3.4. 3.5. 3.6. 3.7. 3.8. 3.9.

FINANCIAL INFORMATION ................................................................19 Financial Statements ................................................................................................ 19 Reconciliation from previous GAAP to IFRS ............................................................... 20 Auditors .................................................................................................................. 22 Currency translation................................................................................................. 23 Directors’ Interest..................................................................................................... 23 Substantial shareholdings ........................................................................................ 23 Compensation structure............................................................................................ 24 Base pay ................................................................................................................. 24 Consolidated Income of Statement...
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