Shell yesterday ruled out making any significant changes to its auditing arrangements in the wake of the Enron scandal, declaring that it was "very happy" with its present set-up.
The defiant message came as the Anglo-Dutch oil group announced its first profit from UK petrol retailing in a decade and unveiled a series of boardroom changes that strengthen the British grip on the business.
Shell has two sets of auditors – KPMG and PricewaterhouseCoopers – who between them earn $40m (£28m) a year in audit fees and about $80m from consultancy. Mr Watts said that all consultancy work was put out to competitive tender and its two firms of auditors probably won about half the work they bid for. "We are very confident the situation we have is properly managed with due sensitivity," Mr Watts said.
Judy Boynton, Shell's finance director, said she saw potential benefits in the idea floated by Sir Howard Davies, the chairman of the Financial Services Authority, for mandatory rotation of auditors. But she also said it would entail large start-up costs, adding that Shell's practice of having dual auditors provided a balance that other oil companies lacked.
The profit on UK petrol retailing – estimated at £1m to £5m – was achieved with the help of a 40 per cent reduction in the costs of operating Shell's chain of service stations. The number of forecourts operated by the company has fallen from 1,400 to 1,100 in the past 18 months but its UK market share has only dropped from 14.5 to 13.5 per cent, said David Moss, the head of Shell's UK retail arm.
The boardroom changes will see Malcolm Brinded, currently the chairman of Shell UK, become a group managing director of Royal Dutch/Shell, replacing the Dutch executive Harry Roels, whose departure was announced last month. The changeover means three of Royal Dutch/Shell's five-strong board will be from the UK.
Profits last year reached $12bn – the second highest on record. But Mr Watts indicated this year would be tougher with lower oil prices. Shell is sticking by its target of a 3 per cent annual increase in production and a 50 per cent increase in returns to shareholders compared with 2000. Shell, which repurchased $4bn of shares last year, is seeking authority to buy back $5bn.Reuse content