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Shell pays £63m in streamlining costs

The Guardian: Shell pays £63m in streamlining costs 

Terry Macalister

Friday May 20, 2005

Shell has been forced to pay $115m (£63m) in advisers’ fees and taxes to move from a dual-company structure to a more traditional unified board following its reserves scandal.

Documents released by the oil major last night make clear the huge cost of the shake-up, aimed to reassure investors that Shell’s management is becoming more streamlined.

A terse statement in the listings particulars states: “The aggregate costs and expenses payable by RDS [Royal Dutch Shell] group in connection with the transaction are estimated to amount to $115m.” Some will go to investment houses such as Deutsche Bank and ABN Amro, which are independent advisers to the British and Dutch arms of Shell respectively. Meanwhile, audit fees to KPMG and PricewaterhouseCoopers have soared from $32m in 2003 to $42m in 2004.

The documents also show Shell plans to favour shares from its Dutch rather than its British holding company in its share buyback programme this year, which could amount to $5bn.

The revelations were among details on its unification, which is now set for July 20. It helped lift its Amsterdam-listed stock by 1% to €46.15, while the London shares remained flat at 472p.

Shell said it would buy A shares to be awarded to holders of Royal Dutch rather than B shares given to Shell Transport & Trading investors after unification. This is partly because the Dutch shares have underperformed British counterparts by more than 4% since Shell announced plans last year to change its structure.

The move follows the worst year in the oil group’s history, when it was forced to downgrade its recoverable reserves. This led to the exit of the former chairman Sir Philip Watts and other directors.

The merged Royal Dutch Shell will have its primary listing in London but headquarters in The Hague. It is hoped the simpler structure will make it more efficient; the reserves fiasco was in part blamed on the complex structure.

Jeroen van der Veer, the former chairman, is already acting as chief executive but the main changes have to be formally endorsed by shareholders at an annual meeting set for June 28.,,1488271,00.html

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