Dividend and its impact

When setting the dividend, the Board of Directors looks at a range of factors, including the macro environment, the current balance sheet and future investment plans. In addition, we may choose to return cash to shareholders through share buybacks, subject to the capital requirements of Shell. It is our intention that dividends will be declared and paid quarterly.

 Dividends are declared in US dollars and we announce the euro and sterling equivalent amounts at a later date. Dividends declared on Class A shares are paid by default in Euros, although holders of Class A shares are able to elect to receive dividends in sterling. Dividends declared on Class B shares are paid by default in sterling, although holders of Class B shares are able to elect to receive dividends in Euros. Dividends declared on ADSs are paid in US dollars.

 In September 2010, Shell introduced a Scrip Dividend Programme that enables shareholders to increase their shareholding by choosing to receive any dividends declared by the Board in the form of new shares instead of cash. Under the Scrip Dividend Programme, shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends if declared by Shell.

 Shareholders who do not join the Scrip Dividend Programme will continue to receive in cash any dividends declared by Shell.

Scrip Dividend Programme

Shell provides shareholders with a choice to receive dividends in cash or in shares via a Scrip Dividend Programme. Under the Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends if declared by the Board.

 Only new A Shares will be issued under the Programme, including to shareholders who currently hold B Shares. Joining the Programme may offer a tax advantage in some countries compared with receiving cash dividends.

 In particular, dividends paid out as shares will not be subject to Dutch dividend withholding tax (currently 15 per cent) and will not generally be taxed on receipt by a UK shareholder or a Dutch corporate shareholder. Shareholders who elect to join the Programme will increase the number of shares held in Shell without having to buy existing shares in the market, thereby avoiding associated dealing costs.

Balance sheet and capital investment

Shells strategy to invest in the development of major growth projects, primarily in Upstream, explains the most significant changes to the balance sheet in 2010. Property, plant and equipment increased by $11.

 Capital investment was $30.6 billion, 4% lower than in 2009. The effect of capital investment on property, plant and equipment was partly offset by depreciation, depletion and amortisation of some $15 billion in 2010.

 Of the 2010 capital investment, $25.7 billion related to Upstream projects that will deliver organic growth over the long term. These projects include several multi-billion-dollar integrated facilities that are expected to provide significant cash flows for the coming decades. In 2010, the total debt increased by $9.3 billion. Total equity increased by $11.6 billion in 2010, to $149.8 billion.

 The gearing ratio was 17.1% at the end of 2010, compared with 15.5% at the end of 2009. The change reflects the increase of the total debt, partly offset by an increase in the cash and cash equivalents position in 2010. http://www.annualreportandform20f.shell.co m/2010/businessreview/resultsandstrategy/b alancesheet.php