ROYAL DUTCH SHELL
PLC
2ND QUARTER AND HALF YEAR 2015 UNAUDITED RESULTS |
- Royal Dutch Shell’s second quarter 2015 earnings, on a current
cost of supplies (CCS) basis (see Note 2), were $3.4 billion compared with $5.1 billion for the same quarter a year
ago.
- Second quarter 2015 CCS earnings excluding identified items
(see page 4) were $3.8 billion
compared with $6.1 billion for the
second quarter 2014, a decrease of 37%.
- Compared with the second quarter 2014, CCS earnings excluding
identified items benefited from strong Downstream results
reflecting steps taken by the company to improve financial
performance and higher realised refining margins. In Upstream,
earnings were impacted by the significant decline in oil and gas
prices and decreased production volumes, partly offset by lower
costs and depreciation.
- Basic CCS earnings per share excluding identified items
decreased by 37% versus the same quarter last year.
- Cash flow from operating activities for the second quarter 2015
was $6.1 billion, compared with
$8.6 billion for the same quarter
last year. Excluding working capital movements, cash flow from
operating activities for the second quarter 2015 was $7.6 billion, compared with $11.0 billion for the second quarter 2014.
- Total dividends distributed to Royal Dutch Shell plc
shareholders in the quarter were $3.0
billion, of which $0.7 billion
were settled under the Scrip Dividend Programme. No shares were
bought back during the second quarter.
- Gearing at the end of the second quarter 2015 was 12.7%.
- A second quarter 2015 dividend has been announced of
$0.47 per ordinary share and
$0.94 per American Depositary Share
(“ADS”).
| SUMMARY
OF UNAUDITED RESULTS |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
%1 |
|
2015 |
2014 |
% |
| 3,986 |
4,430 |
5,307 |
-25 |
Income attributable
to Royal Dutch Shell plc shareholders |
8,416 |
9,816 |
-14 |
| (625) |
331 |
(160) |
|
Current cost of
supplies (CCS) adjustment for Downstream |
(294) |
(204) |
|
| 3,361 |
4,761 |
5,147 |
-35 |
CCS
earnings |
8,122 |
9,612 |
-16 |
| (474) |
1,515 |
(979) |
|
Identified items2 |
1,041 |
(3,841) |
|
| 3,835 |
3,246 |
6,126 |
-37 |
CCS earnings
excluding identified items |
7,081 |
13,453 |
-47 |
|
|
|
|
Of which: |
|
|
|
| 1,037 |
675 |
4,722 |
|
Upstream |
1,712 |
10,432 |
|
| 2,961 |
2,646 |
1,347 |
|
Downstream |
5,607 |
2,922 |
|
| (163) |
(75) |
57 |
|
Corporate and Non-controlling interest |
(238) |
99 |
|
| 6,050 |
7,106 |
8,641 |
-30 |
Cash flow from
operating activities |
13,156 |
22,625 |
-42 |
| 0.53 |
0.76 |
0.81 |
-35 |
Basic CCS earnings
per share ($) |
1.29 |
1.52 |
-15 |
| 1.06 |
1.52 |
1.62 |
|
Basic CCS earnings per
ADS ($) |
2.58 |
3.04 |
|
| 0.61 |
0.52 |
0.97 |
-37 |
Basic CCS earnings
per share excl. identified items ($) |
1.12 |
2.13 |
-47 |
| 1.22 |
1.04 |
1.94 |
|
Basic CCS earnings per
ADS excl. identified items ($) |
2.24 |
4.26 |
|
| 0.47 |
0.47 |
0.47 |
- |
Dividend per share
($) |
0.94 |
0.94 |
- |
| 0.94 |
0.94 |
0.94 |
|
Dividend per ADS
($) |
1.88 |
1.88 |
|
1 Q2 on Q2
change
2 See page 4 |
SECOND QUARTER 2015
PORTFOLIO DEVELOPMENTS1
Upstream
During the quarter, the Malaysia LNG
Dua Joint Venture Agreement (“JVA”) expired and Shell transferred
its 15% shareholding to Petronas, in accordance with the original
JVA terms.
As part of its global exploration
programme, Shell added new acreage positions following
successful bidding results in the United
States, the United Kingdom
and Indonesia.
In July, the Browse Joint Venture
agreed to enter the front end engineering and design (“FEED”) phase
for the proposed non-operated Browse Floating Liquefied Natural Gas
(FLNG) development (Shell interest 27%), using Shell FLNG
technology. The proposed development is expected to deliver around
12 million tonnes per annum of LNG.
In July, Shell announced the final
investment decision (“FID”) to advance the Appomattox deep-water
development (Shell interest 79%) in the
United States. The Appomattox platform will be Shell’s
seventh 4-column host in the Gulf of
Mexico. The Appomattox development will initially produce
from the Appomattox and Vicksburg fields, with average peak
production estimated to reach approximately 175 thousand barrels of
oil equivalent per day (boe/d).
In July, Shell announced that it
reached an agreement with Kinder
Morgan, Inc. for the sale of Shell’s entire 49% equity
interest in Elba Liquefaction Company, LLC, the owner of the Elba
Liquefaction Project, which is proposed to be constructed and
operated at the existing Elba Island LNG Terminal in the United States.
Downstream
In France, Shell received a binding offer of
euro 464 million ($529 million) from DCC Energy for its Butagaz
Liquefied Petroleum Gas business. The transaction, subject to
regulatory approvals following staff consultations, is expected to
complete in 2015.
In the United
States, Shell Midstream Partners, L.P. announced the
execution of a purchase and sale agreement to acquire additional
interests in Zydeco Pipeline Company and Colonial Pipeline Company
for $448 million from Shell Pipeline
Company. The acquisition will increase Shell Midstream Partners’
ownership interest in Zydeco from 43.0% to 62.5% and in Colonial
from 1.612% to 3.0%.
Also in the
United States, Shell Pipeline Company sold its 100% interest
in the Port Arthur Products Station and Shell Ex Facility, known as
PAPS, to Colonial Pipeline Company.
In July, Shell Midstream Partners, L.P.
completed the acquisition of a 36% equity interest in Poseidon Oil
Pipeline Company for $350 million
from Equilon Enterprises LLC, a subsidiary of Shell Oil Products
US.
1 See page 18 for first quarter 2015
portfolio developments.
KEY FEATURES OF THE
SECOND QUARTER 2015
- Second quarter 2015 CCS earnings (see Note 2)were $3,361 million, 35% lower than for the same
quarter a year ago.
- Second quarter 2015 CCS earnings excluding identified items
(see page 4) were $3,835
million compared with $6,126
million for the second quarter 2014, a decrease of 37%.
Second quarter 2015 CCS earnings excluding identified items
benefited from strong Downstream results reflecting steps taken by
the company to improve financial performance and higher realised
refining margins. In Upstream, earnings were impacted by the
significant decline in oil and gas prices and decreased production
volumes, partly offset by lower costs and depreciation.
- Basic CCS earnings per share decreased by 35% versus the same
quarter a year ago.
- Basic CCS earnings per share excluding identified items
decreased by 37% versus the same quarter a year ago.
- Cash flow from operating activitiesfor the second quarter 2015
was $6.1 billion, compared with
$8.6 billion for the same quarter
last year. Excluding working capital movements, cash flow from
operating activities for the second quarter 2015 was $7.6 billion, compared with $11.0 billion for the same quarter last
year.
- Capital investment (see Note B) for the second quarter 2015 was
$7.1 billion and divestment proceeds
were $0.4 billion.
- Total dividends distributed to Royal Dutch Shell plc
shareholders in the second quarter 2015 were $3.0 billion, of which $0.7 billion were settled by issuing some 23.4
million A shares under the Scrip Dividend Programme for the first
quarter 2015 dividend.
- Return on average capital employed on a reported income basis
(see Note C) was 6.3% at the end of the second quarter 2015 versus
7.9% at the end of the second quarter 2014.
- Gearing (see Note D) was 12.7% at the end of the second quarter
2015 versus 13.4% at the end of the second quarter 2014.
- Oil and gas production for the second quarter 2015 was 2,731
thousand boe/d, 11% lower than for the second quarter 2014.
Excluding the impact of divestments, curtailment and underground
storage reinjection at NAM in the
Netherlands, PSC price effects, and security impacts in
Nigeria, second quarter 2015
production was 3% lower than for the same period last year.
- Equity sales of LNG of 5.46 million tonnes for the second
quarter 2015 were 9% lower than for the same quarter a year
ago.
- Oil products sales volumes for the second quarter 2015 were 1%
higher than for the second quarter 2014. Chemicals sales volumes
for the second quarter 2015 decreased by 1% compared with the same
quarter a year ago.
- Supplementary financial and operational disclosure for the
second quarter 2015 is available at www.shell.com/investor .
SUMMARY OF
IDENTIFIED ITEMS
Earnings for the second quarter 2015
reflected the following items, which in aggregate amounted to a net
charge of $474 million (compared with
a net charge of $979 million for the
second quarter 2014), as summarised in the table below:
- Upstream earnings included a net charge of $263 million, reflecting a net charge on fair
value accounting of certain commodity derivatives and gas contracts
of $171 million, the negative impact
of a statutory tax rate change in Canada of $150
million, asset impairments, and redundancy and restructuring
charges. These items were partly offset by net divestment gains of
$168 million. Upstream earnings for
the second quarter 2014 included a net charge of $902 million.
- Downstream earnings included a net charge of $215 million, reflecting asset impairments of
$276 million, the negative impact of
a statutory tax rate change in Canada, and redundancy and restructuring
charges. These items were partly offset by the net impact of fair
value accounting of commodity derivatives and gains on divestments.
Downstream earnings for the second quarter 2014 included a net
charge of $76 million.
- Corporate results and Non-controlling interest included a net
gain of $4 million. Earnings for the
second quarter 2014 included a net charge of $1 million.
| SUMMARY OF
IDENTIFIED ITEMS |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 20151 |
Q2 2014 |
|
2015 |
2014 |
|
|
|
Segment earnings
impact of identified items: |
|
|
| (263) |
1,864 |
(902) |
Upstream |
1,601 |
(1,185) |
| (215) |
(132) |
(76) |
Downstream |
(347) |
(2,656) |
| 4 |
(217) |
(1) |
Corporate
and Non-controlling interest |
(213) |
- |
| (474) |
1,515 |
(979) |
Earnings
impact |
1,041 |
(3,841) |
| 1 See page
18 |
These identified items are shown to
provide additional insight into segment earnings and income
attributable to shareholders. They include the full impact on
Shell’s CCS earnings of the following items:
- Divestment gains and losses
- Fair value accounting of certain commodity derivatives and gas
contracts (see Note A)
- Redundancy and restructuring
Further items may be identified in
addition to the above.
EARNINGS BY
BUSINESS SEGMENT
|
UPSTREAM |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
%1 |
|
2015 |
2014 |
% |
| 1,037 |
675 |
4,722 |
-78 |
Upstream earnings
excluding identified items |
1,712 |
10,432 |
-84 |
| 774 |
2,539 |
3,820 |
-80 |
Upstream
earnings |
3,313 |
9,247 |
-64 |
| 2,092 |
4,129 |
8,919 |
-77 |
Upstream cash flow
from operating activities |
6,221 |
17,994 |
-65 |
| 5,916 |
5,943 |
7,102 |
-17 |
Upstream capital
investment |
11,859 |
16,759 |
-29 |
| 1,432 |
1,542 |
1,499 |
-4 |
Liquids production
available for sale (thousand b/d) |
1,487 |
1,490 |
- |
| 7,534 |
9,421 |
9,153 |
-18 |
Natural gas production
available for sale (million scf/d) |
8,473 |
9,687 |
-13 |
| 2,731 |
3,166 |
3,077 |
-11 |
Total production
available for sale (thousand boe/d) |
2,948 |
3,160 |
-7 |
| 5.46 |
6.17 |
6.00 |
-9 |
Equity sales of LNG
(million tonnes) |
11.63 |
12.09 |
-4 |
| 1 Q2 on Q2
change |
Second quarter Upstream earnings
excluding identified items were $1,037
million compared with $4,722
million a year ago. Identified items were a net charge of
$263 million, compared with a net
charge of $902 million for the second
quarter 2014 (see page 4).
Compared with the second quarter 2014,
earnings excluding identified items were impacted by the
significant decline in oil and gas prices. Earnings were further
reduced as a result of lower oil and gas production volumes driven
by planned maintenance at Pearl GTL in Qatar, heavy oil in Canada, and deep-water in the Gulf of Mexico, lower fiscal entitlement at
Majnoon in Iraq, curtailment and
underground storage reinjection at NAM in the Netherlands, and divestments in
North America resources plays.
Earnings benefited from lower costs, decreased depreciation, and
new liquids production volumes, mainly from Cardamom and Mars B in
the Gulf of Mexico.
Upstream Americas excluding identified
items incurred a loss.
Global liquids realisations were 43%
lower than for the second quarter 2014. Global natural gas
realisations were 31% lower than for the same quarter a year ago,
with a 53% decrease in the Americas and a 24% decrease outside the
Americas.
Second quarter 2015 production was
2,731 thousand boe/d compared with 3,077 thousand boe/d a year ago.
Liquids production decreased by 4% and natural gas production
decreased by 18% compared with the second quarter 2014. Excluding
the impact of divestments, curtailment and underground storage
reinjection at NAM in the
Netherlands, PSC price effects, and security impacts in
Nigeria, second quarter 2015
production was 3% lower than for the same period last year.
Compared with the second quarter 2014, production volumes were
negatively impacted by 131 thousand boe/d due to higher planned
maintenance activities.
New field start-ups and the continuing
ramp-up of fields, in particular Bonga NW in Nigeria, Gumusut Kakap in Malaysia, and Cardamom and Mars B in the
Gulf of Mexico contributed some
126 thousand boe/d to production for the second quarter 2015, which
more than offset the impact of field declines.
Equity sales of LNG of 5.46 million
tonnes decreased by 9% compared to the same quarter a year ago,
mainly reflecting the impact of an unplanned shutdown at NWS in
Australia, the Woodside
divestment, and lower volumes for Malaysia LNG Dua where the JVA
expired.
Half year Upstream earnings excluding
identified items were $1,712 million
compared with $10,432 million for the
first half year 2014. Identified items were a net gain of
$1,601 million, compared with a net
charge of $1,185 million for the
first half year 2014 (see page 4).
Compared with the first half year 2014,
Upstream earnings excluding identified items reflected
significantly lower oil and gas prices, and lower contributions
from trading. Earnings benefited from lower costs and fewer well
write-offs.
Compared with the first half year 2014,
the weakening Australian dollar and Brazilian real reduced earnings
by some $583 million and $313 million respectively. The impact of these
items was some $518 million after
tax, compared with a favourable impact of some $378 million after tax in the first half year
2014.
Global liquids realisations were 48%
lower than for the first half year 2014. Global natural gas
realisations were 28% lower than for the same period a year ago,
with a 50% decrease in the Americas and a 25% decrease outside the
Americas.
Half year 2015 production was 2,948
thousand boe/d compared with 3,160 thousand boe/d for the same
period a year ago. Liquids production was in line with the first
half year 2014 and natural gas production decreased by 13%.
Excluding the impact of divestments, curtailment and underground
storage reinjection at NAM in the
Netherlands, Abu Dhabi
license expiry, PSC price effects, and security impacts in
Nigeria, first half year 2015
production was 1% lower than for the same period last year.
Equity sales of LNG of 11.63 million
tonnes were 4% lower than for the first half year 2014, reflecting
the impact of an unplanned shutdown at NWS in Australia, the Woodside divestment, and lower
volumes for Malaysia LNG Dua where the JVA expired, partly offset
by improved operating performance.
|
DOWNSTREAM |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
%1 |
|
2015 |
2014 |
% |
| 2,961 |
2,646 |
1,347 |
+120 |
Downstream CCS
earnings excluding identified items |
5,607 |
2,922 |
+92 |
| 2,746 |
2,514 |
1,271 |
+116 |
Downstream CCS
earnings |
5,260 |
266 |
+1,877 |
| 3,816 |
1,554 |
262 |
+1,356 |
Downstream cash flow
from operating activities |
5,370 |
3,407 |
+58 |
| 1,085 |
849 |
1,402 |
-23 |
Downstream capital
investment |
1,934 |
2,386 |
-19 |
| 2,944 |
2,871 |
3,034 |
-3 |
Refinery processing
intake (thousand b/d) |
2,908 |
3,000 |
-3 |
| 6,531 |
6,313 |
6,453 |
+1 |
Oil products sales
volumes (thousand b/d) |
6,423 |
6,386 |
+1 |
| 4,326 |
4,192 |
4,387 |
-1 |
Chemicals sales
volumes (thousand tonnes) |
8,518 |
8,672 |
-2 |
| 1 Q2 on Q2
change |
Second quarter Downstream earnings
excluding identified items were $2,961
million compared with $1,347
million for the second quarter 2014. Identified items were a
net charge of $215 million, compared
with a net charge of $76 million for
the second quarter 2014 (see page 4).
Compared with the second quarter 2014,
Downstream earnings excluding identified items benefited from lower
costs, higher contributions from manufacturing reflecting improved
operating performance, and lower taxation. Chemicals earnings
benefited from improved intermediates market conditions which more
than offset lower base chemicals industry conditions as well as the
impact of unit shut-downs at the Moerdijk chemical site in
the Netherlands.
Refinery intake volumes were 3% lower
compared with the same quarter last year. Excluding portfolio
impacts, refinery intake volumes were in line with the second
quarter 2014. Refinery availability increased to 95% compared with
94% in the second quarter 2014.
Oil products sales volumes increased by
1% compared with the same period a year ago reflecting higher
trading volumes partly offset by lower marketing volumes.
Chemicals sales volumes decreased by 1%
compared with the same quarter last year, mainly as a result of
reduced availability driven by downtime at the Moerdijk chemical
site in the Netherlands. Chemicals
manufacturing plant availability decreased to 86% from 90% for the
second quarter 2014, mainly reflecting increased maintenance
activities.
Half year Downstream earnings excluding
identified items were $5,607 million
compared with $2,922 million for the
first half year 2014. Identified items were a net charge of
$347 million, compared with a net
charge of $2,656 million for the
first half year 2014 (see page 4).
Compared with the first half year 2014,
Downstream earnings excluding identified items benefited from
higher contributions from manufacturing reflecting higher realised
refining margins and improved operating performance. Earnings also
benefited from lower costs, including the impact of favourable
exchange rate effects and divestments, and lower taxation. Earnings
were impacted by negative exchange rate effects in marketing,
despite stronger underlying performance. Chemicals earnings
benefited from improved intermediates market conditions which more
than offset lower base chemicals industry conditions as well as the
impact of unit shut-downs at the Moerdijk chemical site in
the Netherlands.
Refinery intake volumes were 3% lower
compared with the first half year 2014. Excluding portfolio
impacts, refinery intake volumes were 1% higher than in the first
half year 2014, mainly as a result of improved operating
performance. Refinery availability increased to 95% from 93% for
the same period a year ago.
Oil products sales volumes increased by
1% compared with the same period a year ago, mainly as a result of
higher trading volumes partly offset by lower marketing
volumes.
Chemicals sales volumes decreased by 2%
compared with the first half year 2014, mainly as a result of
reduced availability driven by downtime at the Moerdijk chemical
site in the Netherlands. Chemicals
manufacturing plant availability decreased to 85% from 93% for the
first half year 2014, mainly reflecting increased maintenance
activities.
| CORPORATE
AND NON-CONTROLLING INTEREST |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
|
2015 |
2014 |
| (163) |
(75) |
57 |
Corporate and
Non-controlling interest excl. identified items |
(238) |
99 |
|
|
|
Of which: |
|
|
| (69) |
46 |
101 |
Corporate |
(23) |
177 |
| (94) |
(121) |
(44) |
Non-controlling interest |
(215) |
(78) |
| (159) |
(292) |
56 |
Corporate and
Non-controlling interest |
(451) |
99 |
Second quarter Corporate results and
Non-controlling interest excluding identified items were a loss of
$163 million, compared with a gain of
$57 million for the same period last
year. Identified items for the second quarter 2015 were a net gain
of $4 million, whereas earnings for
the second quarter 2014 included a net charge of $1 million (see page 4).
Compared with the second quarter 2014,
Corporate results excluding identified items were impacted by lower
tax credits, adverse currency exchange rate effects, and higher
costs, partly offset by lower net interest expense.
Half year Corporate results and
Non-controlling interest excluding identified items were a loss of
$238 million compared with a gain of
$99 million for the first half year
2014. Identified items for the first half year 2015 were a net
charge of $213 million, compared with
nil impact for the first half year 2014 (see page 4).
Compared with the first half year 2014,
Corporate results excluding identified items were impacted by
adverse currency exchange rate effects, partly offset by lower net
interest expense.
Compared with the first half year 2014,
earnings benefited from the impact of the weakening Brazilian real
on deferred tax positions in Upstream by some $101 million. The impact of this on the first
half 2015 earnings excluding identified items was a gain of some
$101 million after tax, compared with
nil impact in the first half 2014.
OPERATIONAL OUTLOOK
FOR THE THIRD QUARTER 2015
Compared with the third quarter 2014,
Upstream earnings are expected to be impacted by some 104 thousand
boe/d as a result of divestments, some 80 thousand boe/d associated
with the impact of curtailment and underground storage reinjection
at NAM, and some 33 thousand boe/d driven by planned maintenance in
the third quarter 2015.
As a result of asset sales in
Australia and Italy, refining capacity is expected to
decrease by 60 thousand barrels per day and marketing volumes are
expected to decrease by some 100 thousand barrels per day compared
with the third quarter 2014. Refinery availability is expected to
decline in the third quarter 2015 as a result of increased planned
maintenance compared to the same period a year ago. Unit shut-downs
at the Moerdijk chemical site in the
Netherlands are expected to continue to impact Chemicals
manufacturing plant availability.
FORTHCOMING
EVENTS
Third quarter 2015 results and third
quarter 2015 dividend are scheduled to be announced on October 29, 2015.
UNAUDITED CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
|
CONSOLIDATED STATEMENT OF INCOME |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
%1 |
|
2015 |
2014 |
% |
| 72,402 |
65,706 |
111,222 |
|
Revenue |
138,108 |
220,880 |
|
| 1,136 |
1,405 |
1,716 |
|
Share of profit of
joint ventures and associates |
2,541 |
3,786 |
|
| 412 |
1,735 |
2,336 |
|
Interest and other
income |
2,147 |
2,687 |
|
| 73,950 |
68,846 |
115,274 |
|
Total revenue and
other income |
142,796 |
227,353 |
|
| 52,441 |
47,425 |
85,296 |
|
Purchases |
99,866 |
169,131 |
|
| 6,506 |
6,655 |
7,839 |
|
Production and
manufacturing expenses |
13,161 |
15,018 |
|
| 3,076 |
2,894 |
3,755 |
|
Selling, distribution
and administrative expenses |
5,970 |
7,189 |
|
| 252 |
253 |
274 |
|
Research and
development |
505 |
557 |
|
| 964 |
800 |
1,128 |
|
Exploration |
1,764 |
2,055 |
|
| 4,673 |
4,604 |
7,354 |
|
Depreciation, depletion
and amortisation |
9,277 |
14,778 |
|
| 466 |
376 |
505 |
|
Interest expense |
842 |
957 |
|
| 5,572 |
5,839 |
9,123 |
-39 |
Income before
taxation |
11,411 |
17,668 |
-35 |
| 1,458 |
1,302 |
3,778 |
|
Taxation |
2,760 |
7,781 |
|
| 4,114 |
4,537 |
5,345 |
-23 |
Income for the
period |
8,651 |
9,887 |
-13 |
| 128 |
107 |
38 |
|
Income attributable to
non-controlling interest |
235 |
71 |
|
| 3,986 |
4,430 |
5,307 |
-25 |
Income attributable
to Royal Dutch Shell plc shareholders |
8,416 |
9,816 |
-14 |
| 1 Q2 on Q2
change |
| EARNINGS
PER SHARE |
|
Quarters |
$ |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
|
2015 |
2014 |
| 0.63 |
0.70 |
0.84 |
Basic earnings per
share |
1.34 |
1.56 |
| 0.62 |
0.69 |
0.84 |
Diluted earnings per
share |
1.32 |
1.56 |
|
SHARES1 |
|
Quarters |
Millions |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
|
2015 |
2014 |
|
|
|
Weighted average number
of shares as the basis for: |
|
|
| 6,304.6 |
6,292.2 |
6,323.0 |
Basic earnings per
share |
6,298.4 |
6,305.5 |
| 6,383.9 |
6,377.0 |
6,323.4 |
Diluted earnings per
share |
6,380.5 |
6,305.8 |
| 6,325.2 |
6,302.3 |
6,341.7 |
Shares outstanding at
the end of the period |
6,325.2 |
6,341.7 |
| 1 Royal
Dutch Shell plc ordinary shares of euro 0.07 each |
Notes 1 to 6 are an integral part of
these unaudited Condensed Consolidated Interim Financial
Statements.
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
|
2015 |
2014 |
|
4,114 |
4,537 |
5,345 |
Income for the
period |
8,651 |
9,887 |
|
|
|
Other comprehensive
income net of tax: |
|
|
|
|
|
Items that may be
reclassified to income in later periods: |
|
|
| 1,668 |
(4,199) |
591 |
- Currency
translation differences |
(2,531) |
40 |
| (129) |
(135) |
(182) |
- Unrealised
gains/(losses) on securities |
(264) |
(154) |
| 133 |
(9) |
(18) |
- Cash flow
hedging gains/(losses) |
124 |
1 |
| (25) |
7 |
5 |
- Share of other
comprehensive income/(loss) of joint ventures and associates |
(18) |
(2) |
| 1,647 |
(4,336) |
396 |
Total |
(2,689) |
(115) |
|
|
|
Items that are not
reclassified to income in later periods: |
|
|
| 5,496 |
(1,316) |
(253) |
- Retirement
benefits remeasurements |
4,180 |
(799) |
| 7,143 |
(5,652) |
143 |
Other comprehensive
income/(loss) for the period |
1,491 |
(914) |
| 11,257 |
(1,115) |
5,488 |
Comprehensive
income/(loss) for the period |
10,142 |
8,973 |
| 161 |
63 |
48 |
Comprehensive
income/(loss) attributable to non-controlling interest |
224 |
77 |
| 11,096 |
(1,178) |
5,440 |
Comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
9,918 |
8,896 |
Notes 1 to 6 are an integral part of
these unaudited Condensed Consolidated Interim Financial
Statements.
| CONDENSED
CONSOLIDATED BALANCE SHEET |
|
$
million |
|
Jun 30,
2015 |
Mar 31, 2015 |
Dec 31, 2014 |
| Assets |
|
|
|
| Non-current
assets: |
|
|
|
| Intangible assets |
6,779 |
6,852 |
7,076 |
| Property, plant and
equipment |
192,633 |
189,263 |
192,472 |
| Joint ventures and
associates |
32,284 |
31,643 |
31,558 |
| Investments in
securities |
3,854 |
3,952 |
4,115 |
| Deferred tax |
7,969 |
8,439 |
8,131 |
| Retirement
benefits |
3,892 |
1,912 |
1,682 |
| Trade and other
receivables |
8,522 |
8,240 |
8,304 |
|
255,933 |
250,301 |
253,338 |
| Current
assets: |
|
|
|
| Inventories |
22,485 |
19,968 |
19,701 |
| Trade and other
receivables |
50,929 |
51,696 |
58,470 |
| Cash and cash
equivalents |
26,981 |
19,867 |
21,607 |
|
100,395 |
91,531 |
99,778 |
| Total
assets |
356,328 |
341,832 |
353,116 |
| Liabilities |
|
|
|
| Non-current
liabilities: |
|
|
|
| Debt |
45,575 |
35,703 |
38,332 |
| Trade and other
payables |
4,877 |
4,769 |
3,582 |
| Deferred tax |
11,676 |
10,240 |
12,052 |
| Retirement
benefits |
12,642 |
17,642 |
16,318 |
| Decommissioning and
other provisions |
25,055 |
25,154 |
23,834 |
|
99,825 |
93,508 |
94,118 |
| Current
liabilities: |
|
|
|
| Debt |
7,366 |
8,137 |
7,208 |
| Trade and other
payables |
56,424 |
55,761 |
64,864 |
| Taxes payable |
10,362 |
11,705 |
9,797 |
| Retirement
benefits |
367 |
361 |
377 |
| Decommissioning and
other provisions |
3,976 |
3,538 |
3,966 |
|
78,495 |
79,502 |
86,212 |
| Total
liabilities |
178,320 |
173,010 |
180,330 |
| Equity attributable
to Royal Dutch Shell plc shareholders |
176,787 |
167,960 |
171,966 |
| Non-controlling
interest |
1,221 |
862 |
820 |
| Total
equity |
178,008 |
168,822 |
172,786 |
| Total liabilities
and equity |
356,328 |
341,832 |
353,116 |
Notes 1 to 6 are an integral part of
these unaudited Condensed Consolidated Interim Financial
Statements.
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
|
Equity
attributable to Royal Dutch Shell plc shareholders |
|
| $ million |
Share capital |
Shares held in
trust |
Other reserves |
Retained earnings |
Total |
Non-controlling
interest |
Total
equity |
| At January 1,
2015 |
540 |
(1,190) |
(14,365) |
186,981 |
171,966 |
820 |
172,786 |
| Comprehensive income
for the period |
- |
- |
1,502 |
8,416 |
9,918 |
224 |
10,142 |
| Capital contributions
from, and other changes in, non-controlling interest |
- |
- |
- |
(98) |
(98) |
222 |
124 |
| Dividends paid |
- |
- |
- |
(5,957) |
(5,957) |
(45) |
(6,002) |
| Scrip dividends1 |
2 |
- |
(2) |
731 |
731 |
- |
731 |
| Repurchases of
shares2 |
(1) |
- |
1 |
1 |
1 |
- |
1 |
| Shares held in trust:
net sales and dividends received |
- |
634 |
- |
39 |
673 |
- |
673 |
| Share-based
compensation |
- |
- |
(421) |
(26) |
(447) |
- |
(447) |
| At June 30,
2015 |
541 |
(556) |
(13,285) |
190,087 |
176,787 |
1,221 |
178,008 |
| At January 1,
2014 |
542 |
(1,932) |
(2,037) |
183,474 |
180,047 |
1,101 |
181,148 |
| Comprehensive income
for the period |
- |
- |
(920) |
9,816 |
8,896 |
77 |
8,973 |
| Capital contributions
from, and other changes in, non-controlling interest |
- |
- |
- |
3 |
3 |
(7) |
(4) |
| Dividends paid |
- |
- |
- |
(5,862) |
(5,862) |
(73) |
(5,935) |
| Scrip dividends1 |
6 |
- |
(6) |
2,399 |
2,399 |
- |
2,399 |
| Repurchases of
shares2 |
(4) |
- |
4 |
(1,028) |
(1,028) |
- |
(1,028) |
| Shares held in trust:
net sales and dividends received |
- |
809 |
- |
56 |
865 |
- |
865 |
| Share-based
compensation |
- |
- |
(305) |
- |
(305) |
- |
(305) |
| At June 30,
2014 |
544 |
(1,123) |
(3,264) |
188,858 |
185,015 |
1,098 |
186,113 |
1 Under the
Scrip Dividend Programme some 23.4 million A shares, equivalent to
$0.7 billion, were issued during the first half year 2015 and some
64.6 million A shares, equivalent to $2.4 billion, were issued
during the first half year 2014.
2 Includes shares committed to repurchase and repurchases subject
to settlement at the end of the quarter. |
Notes 1 to 6 are an integral part of
these unaudited Condensed Consolidated Interim Financial
Statements.
| CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q1 2015 |
Q2 2014 |
|
2015 |
2014 |
|
|
|
Cash flow from
operating activities |
|
|
| 4,114 |
4,537 |
5,345 |
Income for the
period |
8,651 |
9,887 |
|
|
|
Adjustment for: |
|
|
| 1,753 |
2,947 |
4,336 |
- Current taxation |
4,700 |
8,736 |
| 395 |
303 |
468 |
- Interest expense
(net) |
698 |
846 |
| 4,673 |
4,604 |
7,355 |
- Depreciation,
depletion and amortisation |
9,277 |
14,779 |
| (247) |
(1,612) |
(2,203) |
- Net losses/(gains) on
sale of non-current assets and businesses |
(1,859) |
(2,162) |
| (1,588) |
(372) |
(2,335) |
- Decrease/(increase)
in working capital |
(1,960) |
(1,460) |
| (1,136) |
(1,405) |
(1,716) |
- Share of
loss/(profit) of joint ventures and associates |
(2,541) |
(3,786) |
| 1,071 |
1,077 |
1,768 |
- Dividends received
from joint ventures and associates |
2,148 |
3,275 |
| (90) |
(1,503) |
(396) |
- Deferred taxation,
retirement benefits, decommissioning
and other provisions |
(1,593) |
(704) |
| 255 |
94 |
399 |
- Other |
349 |
928 |
| 9,200 |
8,670 |
13,021 |
Net cash from operating
activities (pre-tax) |
17,870 |
30,339 |
| (3,150) |
(1,564) |
(4,380) |
Taxation paid |
(4,714) |
(7,714) |
| 6,050 |
7,106 |
8,641 |
Net cash from
operating activities |
13,156 |
22,625 |
|
|
|
Cash flow from
investing activities |
|
|
| (6,205) |
(6,215) |
(7,906) |
Capital
expenditure1 |
(12,420) |
(15,062) |
| (208) |
(409) |
(493) |
Investments in joint
ventures and associates |
(617) |
(1,382) |
| 206 |
2,203 |
3,539 |
Proceeds from sales of
property, plant and equipment and businesses |
2,409 |
3,845 |
| 165 |
4 |
3,671 |
Proceeds from sales of
joint ventures and associates |
169 |
3,727 |
| 59 |
56 |
31 |
Interest received |
115 |
89 |
| (80) |
(79) |
222 |
Other1 |
(159) |
133 |
| (6,063) |
(4,440) |
(936) |
Net cash used in
investing activities |
(10,503) |
(8,650) |
|
|
|
Cash flow from
financing activities |
|
|
| 1,072 |
(255) |
(1,397) |
Net increase/(decrease)
in debt with maturity period within three months |
817 |
(2,694) |
| 10,045 |
752 |
140 |
Other debt: New
borrowings |
10,797 |
3,335 |
| (2,188) |
(630) |
(251) |
Repayments |
(2,818) |
(3,184) |
| (317) |
(409) |
(398) |
Interest paid |
(726) |
(766) |
| 424 |
(5) |
(13) |
Change in
non-controlling interest2 |
419 |
(13) |
|
|
|
Cash dividends paid
to: |
|
|
| (2,294) |
(2,932) |
(1,964) |
- Royal Dutch Shell plc
shareholders |
(5,226) |
(3,463) |
| (27) |
(18) |
(45) |
- Non-controlling
interest |
(45) |
(73) |
| - |
(409) |
(346) |
Repurchases of
shares |
(409) |
(1,587) |
| (5) |
(40) |
90 |
Shares held in trust:
net sales/(purchases) and dividends received |
(45) |
213 |
| 6,710 |
(3,946) |
(4,184) |
Net cash used in
financing activities |
2,764 |
(8,232) |
| 417 |
(460) |
(26) |
Currency translation
differences relating to cash and cash equivalents |
(43) |
(20) |
| 7,114 |
(1,740) |
3,495 |
Increase/(decrease)
in cash and cash equivalents |
5,374 |
5,723 |
| 19,867 |
21,607 |
11,924 |
Cash and cash
equivalents at beginning of period |
21,607 |
9,696 |
| 26,981 |
19,867 |
15,419 |
Cash and cash
equivalents at end of period |
26,981 |
15,419 |
1 Reflects
a minor change to definition with effect from 2015 which has no
overall impact on net cash used in investing activities.
Comparative data has been reclassified accordingly.
2 Q2 2015 mainly relates to the public offering of limited partner
units in Shell Midstream Partners, L.P. |
Notes 1 to 6 are an integral part of
these unaudited Condensed Consolidated Interim Financial
Statements.
NOTES TO THE UNAUDITED CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated
Interim Financial Statements (“Interim Statements”) of Royal Dutch
Shell plc and its subsidiaries (collectively referred to as Shell)
have been prepared in accordance with IAS 34 Interim Financial
Reporting as adopted by the European Union and as issued by the
International Accounting Standards Board and on the basis of the
same accounting principles as, and should be read in conjunction
with, the Annual Report and Form 20-F for the year ended
December 31, 2014 (pages 111 to 116)
as filed with the U.S. Securities and Exchange Commission.
The Directors consider it appropriate
to continue to adopt the going concern basis of accounting in
preparing these Interim Statements.
The financial information presented in
the Interim Statements does not constitute statutory accounts
within the meaning of section 434(3) of the Companies Act 2006.
Statutory accounts for the year ended December 31, 2014 were published in Shell’s
Annual Report and a copy was delivered to the Registrar of
Companies in England and
Wales. The auditors’ report on
those accounts was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Companies Act 2006.
2. Segment information
Segment earnings are presented on a
current cost of supplies basis (CCS earnings), which is the
earnings measure used by the Chief Executive Officer for the
purposes of making decisions about allocating resources and
assessing performance. On this basis, the purchase price of volumes
sold during the period is based on the current cost of supplies
during the same period after making allowance for the tax effect.
CCS earnings therefore exclude the effect of changes in the oil
price on inventory carrying amounts.
Information by business segment:
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q2 2014 |
|
2015 |
2014 |
|
|
Third-party
revenue |
|
|
| 6,296 |
10,658 |
Upstream |
14,062 |
23,671 |
| 66,082 |
100,548 |
Downstream |
123,998 |
197,151 |
| 24 |
16 |
Corporate |
48 |
58 |
| 72,402 |
111,222 |
Total third-party
revenue |
138,108 |
220,880 |
|
|
Inter-segment
revenue |
|
|
| 7,490 |
12,621 |
Upstream |
13,720 |
24,872 |
| 271 |
463 |
Downstream |
633 |
1,071 |
| - |
- |
Corporate |
- |
- |
|
|
Segment
earnings |
|
|
| 774 |
3,820 |
Upstream1 |
3,313 |
9,247 |
| 2,746 |
1,271 |
Downstream2 |
5,260 |
266 |
| (68) |
100 |
Corporate |
(239) |
177 |
| 3,452 |
5,191 |
Total segment
earnings |
8,334 |
9,690 |
|
Quarters |
$ million |
Half
year |
| Q2 2015 |
Q2 2014 |
|
2015 |
2014 |
| 3,452 |
5,191 |
Total segment
earnings |
8,334 |
9,690 |
|
|
Current cost of
supplies adjustment: |
|
|
| 765 |
151 |
Purchases |
413 |
143 |
| (219) |
(42) |
Taxation |
(117) |
(43) |
| 116 |
45 |
Share of
profit/(loss) of joint ventures and associates |
21 |
97 |
| 4,114 |
5,345 |
Income for the
period |
8,651 |
9,887 |
1 Second
quarter 2014 Upstream earnings included an impairment charge of
$1,943 million after taxation, partly offset by divestment gains of
$1,230 million after taxation.
2 First quarter 2014 Downstream earnings included an impairment
charge of $2,284 million related to refineries in Asia and
Europe. |
3. Share capital
Issued and fully paid
|
Ordinary
shares of euro 0.07 each |
Sterling deferred
shares |
| Number of shares |
A |
B |
of £1 each |
| At January 1, 2015 |
3,907,302,393 |
2,440,410,614 |
50,000 |
| Scrip dividends |
23,430,143 |
- |
- |
| Repurchases of
shares |
(12,717,512) |
- |
- |
| At June 30,
2015 |
3,918,015,024 |
2,440,410,614 |
50,000 |
| At January 1, 2014 |
3,898,011,213 |
2,472,839,187 |
50,000 |
| Scrip dividends |
64,568,758 |
- |
- |
| Repurchases of
shares |
(8,620,000) |
(32,428,573) |
- |
| At June 30,
2014 |
3,953,959,971 |
2,440,410,614 |
50,000 |
Nominal value
|
Ordinary
shares of euro 0.07 each |
| $ million |
A |
B |
Total |
| At January 1, 2015 |
334 |
206 |
540 |
| Scrip dividends |
2 |
- |
2 |
| Repurchases of
shares |
(1) |
- |
(1) |
| At June 30,
2015 |
335 |
206 |
541 |
| At January 1, 2014 |
333 |
209 |
542 |
| Scrip dividends |
6 |
- |
6 |
| Repurchases of
shares |
(1) |
(3) |
(4) |
| At June 30,
2014 |
338 |
206 |
544 |
| The
total nominal value of sterling deferred shares is less than $1
million. |
At Royal Dutch Shell plc’s Annual
General Meeting on May 19, 2015, the
Board was authorised to allot ordinary shares in Royal Dutch Shell
plc, and to grant rights to subscribe for or to convert any
security into ordinary shares in Royal Dutch Shell plc, up to an
aggregate nominal amount of euro 147
million (representing 2,100 million ordinary shares of
euro 0.07 each), and to list such
shares or rights on any stock exchange. This authority expires at
the earlier of the close of business on August 19, 2016, and the end of the Annual
General Meeting to be held in 2016, unless previously renewed,
revoked or varied by Royal Dutch Shell plc in a general
meeting.
4. Other reserves
| $ million |
Merger reserve1 |
Share premium
reserve1 |
Capital redemption
reserve2 |
Share plan
reserve |
Accumulated other
comprehensive income |
Total |
| At January 1,
2015 |
3,405 |
154 |
83 |
1,723 |
(19,730) |
(14,365) |
| Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
1,502 |
1,502 |
| Scrip dividends |
(2) |
- |
- |
- |
- |
(2) |
| Repurchases of
shares |
- |
- |
1 |
- |
- |
1 |
| Share-based
compensation |
- |
- |
- |
(421) |
- |
(421) |
| At June 30,
2015 |
3,403 |
154 |
84 |
1,302 |
(18,228) |
(13,285) |
| At January 1,
2014 |
3,411 |
154 |
75 |
1,871 |
(7,548) |
(2,037) |
| Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
(920) |
(920) |
| Scrip dividends |
(6) |
- |
- |
- |
- |
(6) |
| Repurchases of
shares |
- |
- |
4 |
- |
- |
4 |
| Share-based
compensation |
- |
- |
- |
(305) |
- |
(305) |
| At June 30,
2014 |
3,405 |
154 |
79 |
1,566 |
(8,468) |
(3,264) |
1 The
merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent
company of Royal Dutch Petroleum Company and The “Shell” Transport
and Trading Company, plc, now The Shell Transport and Trading
Company Limited, in 2005.
2 The capital redemption reserve was established in connection with
repurchases of shares of Royal Dutch Shell plc.
|
5. Derivative contracts
The table below provides the carrying
amounts of derivatives contracts held, disclosed in accordance with
IFRS 13 Fair Value Measurement.
| $ million |
Jun 30,
2015 |
Mar 31, 2015 |
Dec 31, 2014 |
| Included within: |
|
|
|
| Trade and other
receivables – non-current |
774 |
799 |
703 |
| Trade and other
receivables – current |
9,090 |
11,378 |
14,037 |
| Trade and other
payables – non-current |
1,635 |
1,643 |
520 |
| Trade and other
payables – current |
7,574 |
9,644 |
11,554 |
As disclosed in the Consolidated
Financial Statements for the year ended December 31, 2014, presented in the Annual Report
and Form 20-F for that year, Shell is exposed to the risks of
changes in fair value of its financial assets and liabilities. The
fair values of the financial assets and liabilities are defined as
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Methods and assumptions used
to estimate the fair values at June 30,
2015 are consistent with those used in the year ended
December 31, 2014, and the carrying
amounts of derivative contracts measured using predominantly
unobservable inputs have not changed materially since that
date.
The fair value of debt excluding
finance lease liabilities at June 30,
2015, was $47,942 million
(March 31, 2015: $39,753 million; December
31, 2014: $41,120 million).
Fair value is determined from the prices quoted for those
securities.
6. Recommended cash and share offer for
BG Group plc by Royal Dutch Shell plc
On April 8,
2015, the Boards of Royal Dutch Shell plc and BG Group plc
announced that they have reached agreement on the terms of a
recommended cash and share offer to be made by Royal Dutch Shell
plc for the entire issued and to be issued share capital of BG
Group plc, representing a value of approximately £47 billion based
on the closing price of 2,208.5 pence
per Royal Dutch Shell plc B share on April
7, 2015.
The transaction is subject to certain
pre-conditions and conditions and Royal Dutch Shell plc has agreed
to use its reasonable endeavours to secure the necessary regulatory
clearances and authorisations. It is expected that Royal Dutch
Shell plc’s circular will be despatched to shareholders, and its
prospectus published, at the same time as BG Group’s scheme
document is published, and no later than 28 days after the
pre-conditions are satisfied and/or waived. The transaction is
expected to complete in early 2016.
Under certain circumstances occurring
on or prior to July 31, 2016, such as
the Royal Dutch Shell plc Board withdrawing its recommendation to
Royal Dutch Shell plc shareholders to vote in favour of the
transaction, Royal Dutch Shell plc has agreed to pay BG Group plc
£750 million by way of compensation for any loss suffered by BG
Group plc in connection with the preparation and negotiation of the
transaction.
ADDITIONAL NOTES FOR INFORMATION
A. Impacts of accounting for
derivatives
In the ordinary course of business
Shell enters into contracts to supply or purchase oil and gas
products as well as power and environmental products. Derivative
contracts are entered into for mitigation of resulting economic
exposures (generally price exposure) and these derivative contracts
are carried at period-end market price (fair value), with movements
in fair value recognised in income for the period. Supply and
purchase contracts entered into for operational purposes are, by
contrast, recognised when the transaction occurs (see also below);
furthermore, inventory is carried at historical cost or net
realisable value, whichever is lower.
As a consequence, accounting mismatches
occur because: (a) the supply or purchase transaction is recognised
in a different period; or (b) the inventory is measured on a
different basis.
In addition, certain UK gas contracts
held by Upstream are, due to pricing or delivery conditions, deemed
to contain embedded derivatives or written options and are also
required to be carried at fair value even though they are entered
into for operational purposes.
The accounting impacts of the
aforementioned are reported as identified items in this Report.
B. Capital investment
Capital investment is a measure used to
make decisions about allocating resources and assessing
performance. It is defined as the sum of capital expenditure,
exploration expense (excluding well write-offs), new investments in
joint ventures and associates, new finance leases and other
adjustments.
C. Return on average capital
employed
Return on average capital employed
(ROACE) measures the efficiency of Shell’s utilisation of the
capital that it employs and is a common measure of business
performance. In this calculation, ROACE is defined as the sum of
income for the current and previous three quarters, adjusted for
after-tax interest expense, as a percentage of the average capital
employed for the same period. The tax rate used is Shell’s
effective tax rate for the period. Capital employed consists of
total equity, current debt and non-current debt.
D. Gearing
Gearing, calculated as net debt (total
debt less cash and cash equivalents) as a percentage of total
capital (net debt plus total equity), is a key measure of Shell’s
capital structure.
E. Liquidity and capital resources
Net cash from operating activities for
the second quarter 2015 was $6.1
billion compared with $8.6
billion for the same period last year.
Total current and non-current debt
increased to $52.9 billion at
June 30, 2015 from $43.8 billion at March 31,
2015 while cash and cash equivalents increased to
$27.0 billion at June 30, 2015 from $19.9
billion at March 31, 2015.
During the second quarter 2015 Shell issued $10.0 billion of debt under the US shelf
registration. No new debt was issued under the euro medium-term
note programme.
Capital investment for the second
quarter 2015 was $7.1 billion, of
which $5.9 billion in Upstream and
$1.1 billion in Downstream. Capital
investment for the same period of 2014 was $8.5 billion, of which $7.1 billion in Upstream and $1.4 billion in Downstream.
Dividends of $0.47 per share are announced on July 30, 2015 in respect of the second quarter.
These dividends are payable on September 21,
2015. In the case of B shares, the dividends will be payable
through the dividend access mechanism and are expected to be
treated as UK-source rather than Dutch-source. See the Annual
Report and Form 20-F for the year ended December 31, 2014 for additional information on
the dividend access mechanism.
Under the Scrip Dividend Programme
shareholders can increase their shareholding in Shell by choosing
to receive new shares instead of cash dividends. Only new A shares
will be issued under the Programme, including to shareholders who
currently hold B shares.
Half year net cash from
operating activities was $13.2
billion compared with $22.6
billion for the same period last year.
Total current and non-current debt
increased to $52.9 billion at
June 30, 2015 from $45.5 billion at December
31, 2014 while cash and cash equivalents increased to
$27.0 billion at June 30, 2015 from $21.6
billion at December 31, 2014.
During the first half year 2015 Shell issued $10.0 billion of debt under the US shelf
registration. No new debt was issued under the euro medium-term
note programme.
Capital investment for the first half
year 2015 was $13.9 billion, of which
$11.9 billion in Upstream and
$1.9 billion in Downstream. Capital
investment for the same period of 2014 was $19.2 billion, of which $16.8 billion in Upstream and $2.4 billion in Downstream.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties
affecting Shell are described in the Risk Factors section of the
Annual Report and Form 20-F for the year ended December 31, 2014 (pages 11 to 14) and are
summarised below. There are no material changes in those Risk
Factors for the remaining 6 months of the financial year.
- We are exposed to fluctuating prices of crude oil, natural gas,
oil products and chemicals.
- Our ability to deliver competitive returns and pursue
commercial opportunities depends in part on the robustness and,
ultimately, the accuracy of our price assumptions.
- Our ability to achieve strategic objectives depends on how we
react to competitive forces.
- As our business model involves treasury and trading risks, we
are affected by the global macroeconomic environment as well as
financial and commodity market conditions.
- Our future hydrocarbon production depends on the delivery of
large and complex projects, as well as on our ability to replace
proved oil and gas reserves.
- An erosion of our business reputation would have a negative
impact on our brand, our ability to secure new resources and our
licence to operate.
- Our future performance depends on the successful development
and deployment of new technologies.
- Rising climate change concerns could lead to additional
regulatory measures that may result in project delays and higher
costs.
- The nature of our operations exposes the communities in which
we work and us to a wide range of health, safety, security and
environment risks.
- Shell mainly self-insures its risk exposures.
- A further erosion of the business and operating environment in
Nigeria would adversely impact
Shell.
- We operate in more than 70 countries that have differing
degrees of political, legal and fiscal stability. This exposes us
to a wide range of political developments that could result in
changes to laws and regulations. In addition, Shell and its joint
ventures and associates face the risk of litigation and disputes
worldwide.
- Our operations expose us to social instability, civil unrest,
terrorism, piracy, acts of war, and risks of pandemic diseases that
could have an adverse impact on our business.
- We rely heavily on information technology systems for our
operations.
- We have substantial pension commitments, whose funding is
subject to capital market risks.
- The estimation of proved oil and gas reserves involves
subjective judgements based on available information and the
application of complex rules, so subsequent downward adjustments
are possible.
- Many of our major projects and operations are conducted in
joint arrangements or associates. This may reduce our degree of
control, as well as our ability to identify and manage risks.
- Violations of antitrust and competition law carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
- Violations of anti-bribery and corruption law and anti-money
laundering law carry fines and expose us and/or our employees to
criminal sanctions and civil suits.
- Violations of data protection laws carry fines and expose us
and/or our employees to criminal sanctions and civil suits.
- Violations of trade controls, including sanctions expose us and
our employees to criminal sanctions and civil suits.
- We execute acquisitions and divestments in the pursuit of our
strategy. A number of risks impact the success of such acquisitions
and divestments.
- The Company’s Articles of Association determine the
jurisdiction for shareholder disputes. This might limit shareholder
remedies.
FIRST QUARTER 2015 PORTFOLIO
DEVELOPMENTS
Upstream
In April, the Boards of Royal Dutch
Shell plc and BG Group plc announced that they have reached
agreement on the terms of a recommended cash and share offer to be
made by Royal Dutch Shell plc for the entire issued and to be
issued share capital of BG Group plc.
In Shell’s heartlands exploration
programme there were two non-operated gas discoveries offshore
Australia, Blake (Shell interest
50%) and Isosceles (Shell interest 25%), during the quarter. In
Brazil, hydrocarbons were
discovered at the non-operated Libra C-1 well (Shell interest
20%).
Shell had continued success with
near-field exploration discoveries in New
Zealand and Oman.
As part of its global exploration
programme, Shell added new acreage positions following successful
bidding results in Algeria,
Australia, Italy, Myanmar and Norway.
In Nigeria, the Shell Petroleum Development
Company of Nigeria Limited (“SPDC”), a subsidiary of Shell,
completed the divestment of its 30% interest in oil mining lease
(“OML”) 18 and related facilities in the Eastern Niger Delta for a
consideration of some $0.7
billion.
Also in Nigeria, SPDC completed the divestment of its
30% interest in OML 29 and the Nembe Creek Trunk Line and related
facilities in the Eastern Niger Delta for a consideration of some
$1.7 billion.
Downstream
In Canada, Shell has taken final investment
decision (“FID”) on the Scotford HCU debottleneck project (Shell
interest 100%) which is expected to increase hydrocracking capacity
by 20%.
In Denmark, Shell announced that it has reached
an agreement with Couche-Tard for the sale of its marketing
operations including retail, commercial fleet, commercial fuels,
aviation and connected trading and supply products businesses. The
sale is subject to regulatory approvals and is expected to complete
in 2015.
In Qatar, Shell announced that as a result of
high capital costs, Shell and its partner, Qatar Petroleum, will
not proceed with the proposed Al Karaana petrochemicals project and
will stop further work on it.
In April, Shell announced that it has
accepted offers for the sale of 185 service stations across the
United Kingdom to independent
dealers and has exchanged contracts for 158 of these service
stations with two dealer groups. All 185 service stations will
retain the Shell brand and sell Shell’s fuels.
FIRST QUARTER 2015 SUMMARY OF
IDENTIFIED ITEMS
Earnings for the first quarter 2015
reflected the following items, which in aggregate amounted to a net
gain of $1,515 million (compared with
a net charge of $2,862 million in the
first quarter 2014), as summarised below:
- Upstream earnings included a net gain of $1,864 million, mainly reflecting a gain of
$1,415 million related to divestments
and a credit of some $600 million
reflecting a statutory tax rate reduction in the United Kingdom. These items were partly offset
by asset impairments of $159 million.
Earnings for the first quarter 2014 included a net charge of
$283 million.
- Downstream earnings included a net charge of $132 million, including the net impact of fair
value accounting of commodity derivatives of $56 million. Earnings for the first quarter 2014
included a net charge of $2,580
million.
- Corporate and Non-controlling interest earnings included a net
charge of $217 million mainly
reflecting a tax charge related to prior years. Earnings for the
first quarter 2014 included a net gain of $1
million.
RESPONSIBILITY STATEMENT
It is confirmed that to the best of our
knowledge: (a) the Condensed Consolidated Interim Financial
Statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the European Union; (b) the
interim management report includes a fair review of the information
required by Disclosure and Transparency Rule (DTR) 4.2.7R
(indication of important events during the first six months of the
financial year, and their impact on the Condensed Consolidated
Interim Financial Statements, and description of principal risks
and uncertainties for the remaining six months of the financial
year); and (c) the interim management report includes a fair review
of the information required by DTR 4.2.8R (disclosure of related
parties transactions and changes thereto).
The Directors of Royal Dutch Shell plc
are as shown on pages 58-60 in the Annual Report and Form 20-F for
the year ended December 31, 2014
except that Jorma Ollila stepped
down as a Director on May 19,
2015.
On behalf of the Board
Ben van
Beurden
Simon Henry
Chief Executive Officer
Chief Financial Officer
July 30,
2015
July 30, 2015
INDEPENDENT REVIEW REPORT TO ROYAL
DUTCH SHELL PLC
REPORT ON THE CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
Our conclusion
We have reviewed the Condensed
Consolidated Interim Financial Statements, defined below, in the
half-yearly financial report of Royal Dutch Shell plc for the six
months ended June 30, 2015. Based on
our review, nothing has come to our attention that causes us to
believe that the Condensed Consolidated Interim Financial
Statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34 as adopted by
the European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct
Authority. This conclusion is to be read in the context of what we
say in the remainder of this report.
What we have reviewed
The Condensed Consolidated Interim
Financial Statements, which are prepared by Royal Dutch Shell plc,
comprise:
- the Consolidated Statement of Income and Consolidated Statement
of Comprehensive Income for the six months ended June 30, 2015;
- the Condensed Consolidated Balance Sheet as at June 30, 2015;
- the Consolidated Statement of Changes in Equity and Condensed
Consolidated Statement of Cash Flows for the six months ended
June 30, 2015; and
- the explanatory notes to the Condensed Consolidated Interim
Financial Statements.
The annual financial statements of
Royal Dutch Shell plc are prepared in accordance with applicable
law and International Financial Reporting Standards (IFRSs) as
adopted by the European Union. The Condensed Consolidated Interim
Financial Statements included in this half-yearly financial report
have been prepared in accordance with International Accounting
Standard 34, ‘Interim Financial Reporting’, as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct
Authority.
What a review of the Condensed
Consolidated Financial Statements involves
We conducted our review in accordance
with International Standard on Review Engagements (UK and
Ireland) 2410, ‘Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity’ issued by the Auditing Practices Board for use in the
United Kingdom. A review of
interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does
not enable us to obtain assurance that we would become aware of all
significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion. We have read the
other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or
material inconsistencies with the information in the Condensed
Consolidated Interim Financial Statements.
RESPONSIBILITIES FOR THE CONDENSED
CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND THE REVIEW
Our responsibilities and those of the
directors
The half-yearly financial report,
including the Condensed Consolidated Interim Financial Statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency
Rules of the United Kingdom's
Financial Conduct Authority. Our responsibility is to express to
the company a conclusion on the Condensed Consolidated Interim
Financial Statements in the half-yearly financial report based on
our review. This report, including the conclusion, has been
prepared for and only for the company for the purpose of complying
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
July 30,
2015
a) The maintenance and integrity of the
Royal Dutch Shell plc website (www.shell.com) are the
responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the Condensed Consolidated Interim
Financial Statements since they were initially presented on the
website.
b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
CAUTIONARY STATEMENT
The release, presentation, publication
or distribution of this announcement in jurisdictions other than
the United Kingdom may be
restricted by law and therefore any persons who are subject to the
laws of any jurisdiction other than the United Kingdom should inform themselves about
and observe any applicable requirements. Any failure to comply with
applicable requirements may constitute a violation of the laws
and/or regulations of any such jurisdiction.
This announcement is not intended to
and does not constitute or form part of any offer to sell or
subscribe for or any invitation to purchase or subscribe for any
securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the recommended combination of Royal Dutch
Shell plc (“Shell”) and BG Group plc (“BG”) (the “Combination”) or
otherwise nor shall there be any sale, issuance or transfer of
securities of Shell or BG pursuant to the Combination in any
jurisdiction in contravention of applicable laws.
All amounts shown throughout this
announcement are unaudited. All peak production figures in
Portfolio Developments are quoted at 100% expected production.
The companies in which Royal Dutch
Shell plc directly and indirectly owns investments are separate
entities. In this announcement “Shell”, “Shell group” and “Royal
Dutch Shell” are sometimes used for convenience where references
are made to Royal Dutch Shell plc and its subsidiaries in general.
Likewise, the words “we”, “us” and “our” are also used to refer to
subsidiaries 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. ‘‘Subsidiaries’’,
“Shell subsidiaries” and “Shell companies” as used in this
announcement refer to companies over which Royal Dutch Shell plc
either directly or indirectly has control. Companies over which
Shell has joint control are generally referred to as “joint
ventures” and companies over which Shell has significant influence
but neither control nor joint control are referred to as
“associates”. The term “Shell interest” is used for convenience to
indicate the direct and/or indirect ownership interest held by
Shell in a venture, partnership or company, after exclusion of all
third-party interest.
This announcement contains
forward-looking statements concerning the financial condition,
results of operations and businesses of Royal Dutch Shell and of
the Combination. 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, BG and the
combined group 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’’,
‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’,
‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”,
‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ 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 announcement, including (without
limitation): (a) price fluctuations in crude oil and natural gas;
(b) changes in demand for Shell’s products; (c) currency
fluctuations; (d) drilling and production results; (e) reserves
estimates; (f) loss of market share 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
regulatory measures addressing climate change; (k) economic and
financial market conditions in various countries and regions; (l)
political risks, including the risks of expropriation and
renegotiation of the terms of contracts with governmental entities,
delays or advancements in the approval of projects and delays in
the reimbursement for shared costs; and (m) changes in trading
conditions. All forward-looking statements contained in this
announcement 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. Additional risk factors that may affect future results
are contained in Royal Dutch Shell’s Form 20-F for the year ended
December 31, 2014 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this announcement and
should be considered by the reader. Each forward-looking statement
speaks only as of the date of this announcement, July 30, 2015.
Neither Royal Dutch Shell plc 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 announcement.
We may have used certain terms, such as
resources, in this announcement that the United States Securities
and Exchange Commission (SEC) strictly prohibits us from including
in our filings with the SEC. U.S. investors are urged to consider
closely the disclosure in our Form 20-F, File No 1-32575, available
on the SEC website www.sec.gov. You can also obtain this form from
the SEC by calling 1-800-SEC-0330.
July 30,
2015
The information in this Report reflects
the unaudited consolidated financial position and results of Royal
Dutch Shell plc. The information in this Report also represents
Royal Dutch Shell plc’s half-yearly financial report for the
purposes of the Disclosure and Transparency Rules of the UK
Financial Conduct Authority. As such: (1) the interim management
report can be found on pages 2 to 7 and 15 to 18; (2) the condensed
set of financial statements on pages 8 to 15; and (3) the
directors’ responsibility statement on page 19 and the auditors’
independent review on page 20. Company No. 4366849, Registered
Office: Shell Centre, London, SE1
7NA, England, UK.
Contacts:
- Investor Relations: International +
31 (0) 70 377 4540; North America
+1 832 337 2034
- Media: International +44 (0) 207 934
5550; USA +1 713 241 4544