THE HAGUE, Netherlands,
July 28, 2016 /PRNewswire/ --
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 %[1] 2016 2015 %
Income attributable to
1,175 484 3,986 -71 shareholders 1,659 8,416 -80
Current cost of supplies
(CCS) adjustment for
(936) 330 (625) Downstream[2] (606) (294)
CCS earnings attributable
239 814 3,361 -93 to shareholders[3] 1,053 8,122 -87
(806) (739) (399) Identified items[2],[4] (1,545) 624
CCS earnings attributable
to shareholders excluding
1,045 1,553 3,760 -72 identified items 2,598 7,498 -65
Of which:
868 994 1,403 Integrated Gas 1,862 2,894
(1,325) (1,437) (469) Upstream (2,762) (664)
1,816 2,010 2,961 Downstream 3,826 5,607
Corporate and
(314) (14) (135) Non-controlling interest (328) (339)
Cash flow from operating
2,292 661 6,050 -62 activities 2,953 13,156 -78
Basic CCS earnings per
0.03 0.11 0.53 -94 share ($) 0.14 1.29 -89
Basic CCS earnings per ADS
0.06 0.22 1.06 ($) 0.28 2.58
Basic CCS earnings per
share excl. identified
0.13 0.22 0.60 -78 items[4] ($) 0.34 1.19 -71
Basic CCS earnings per ADS
excl. identified items[4]
0.26 0.44 1.20 ($) 0.68 2.38
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. Attributable to shareholders
3. CCS earnings are defined in Note [3] and CCS earnings attributable to
shareholders in Definition [A].
4. See page 5 and Definition [C]. Comparative information has been restated.
- Following the acquisition on February
15, 2016, BG Group plc ("BG") has been consolidated within
Royal Dutch Shell's results.
- Royal Dutch Shell's second quarter 2016 CCS earnings
attributable to shareholders were $0.2
billion compared with $3.4
billion for the same quarter a year ago.
- Second quarter 2016 CCS earnings attributable to shareholders
excluding identified items were $1.0
billion compared with $3.8
billion for the second quarter 2015, a decrease of 72%.
- Compared with the second quarter 2015, CCS earnings
attributable to shareholders excluding identified items were
impacted by the decline in oil, gas and LNG prices, the
depreciation step-up resulting from the BG acquisition, weaker
refining industry conditions, and increased taxation. Earnings
benefited from increased production volumes from BG assets.
- Second quarter 2016 basic CCS earnings per share excluding
identified items decreased by 78% versus the second quarter
2015.
- Cash flow from operating activities for the second quarter 2016
was $2.3 billion, which included
negative working capital movements of $2.5
billion.
- Total dividends distributed to shareholders in the quarter were
$3.7 billion, of which $1.2 billion were settled by issuing 50.5 million
A shares under the Scrip Dividend Programme.
- Gearing at the end of the second quarter 2016 was 28.1% versus
12.7% at the end of the second quarter 2015. This increase mainly
reflects the impact of the acquisition of BG.
- A second quarter 2016 dividend has been announced of
$0.47 per ordinary share and
$0.94 per American Depositary Share
("ADS").
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
"Downstream and Integrated Gas businesses contributed strongly
to the results, alongside Shell's self-help programme. However,
lower oil prices continue to be a significant challenge across the
business, particularly in the Upstream.
We are managing the company through the down-cycle by reducing
costs, by delivering on lower and more predictable investment
levels, executing our asset sales plans and starting up profitable
new projects. At the same time, integration of Shell and BG is
making strong progress, and our operating performance continues to
further improve.
We are making significant and lasting changes to Shell's working
practices and cost structure. Shell is firmly on track to deliver a
$40 billion underlying operating cost
run rate at the end of 2016.
Looking through the cycle, our investment plans and portfolio
actions are focused firmly on reshaping Shell into a world-class
investment case through stronger, sustained and growing free cash
flow per share."
SUMMARY OF CCS EARNINGS EXCLUDING IDENTIFIED ITEMS
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 %[1] 2016 2015 %
CCS earnings attributable
239 814 3,361 -93 to shareholders 1,053 8,122 -87
Of which:
982 905 1,335 -26 Integrated Gas 1,887 2,474 -24
(1,974) (1,350) (561) -252 Upstream (3,324) 839 -496
1,717 1,700 2,746 -37 Downstream 3,417 5,260 -35
1,490 1,294 2,243 -34 Oil Products 2,784 4,357 -36
227 406 503 -55 Chemicals 633 903 -30
Corporate and
(486) (441) (159) -206 Non-controlling interest (927) (451) -106
(806) (739) (399) Identified items[2] (1,545) 624
Of which:
114 (89) (68) Integrated Gas 25 (420)
(649) 87 (92) Upstream (562) 1,503
(99) (310) (215) Downstream (409) (347)
(78) (339) (155) Oil Products (417) (278)
(21) 29 (60) Chemicals 8 (69)
Corporate and
(172) (427) (24) Non-controlling interest (599) (112)
CCS earnings attributable
to shareholders excluding
1,045 1,553 3,760 -72 identified items 2,598 7,498 -65
Of which:
868 994 1,403 -38 Integrated Gas 1,862 2,894 -36
(1,325) (1,437) (469) -183 Upstream (2,762) (664) -316
1,816 2,010 2,961 -39 Downstream 3,826 5,607 -32
1,568 1,633 2,398 -35 Oil Products 3,201 4,635 -31
248 377 563 -56 Chemicals 625 972 -36
Corporate and
(314) (14) (135) -133 Non-controlling interest (328) (339) +3
1. Q2 on Q2 change
2. See page 5. Comparative information has been restated.
SECOND QUARTER 2016 PORTFOLIO
DEVELOPMENTS
Integrated Gas
During the quarter, Mahanagar Gas Limited (MGL), a joint venture
between BG Asia Pacific Holdings (a Shell subsidiary) and GAIL
(India) Limited, completed an
initial public offering (IPO) for 25% of the equity for a total of
around $154 million (Shell share
$77 million). The IPO was an
obligation under the original approval/ licensing permits granted
by the Government of India's
Foreign Investment Promotion Board in 1994. Immediately prior to
the IPO, the Government of Maharashtra increased its interest to
10% as a result of the conversion of the Compulsory Convertible
Debentures resulting in a dilution for each of Shell and GAIL to
45%. After completion of both transactions, Shell and GAIL each
hold a 32.5% interest in MGL (previously 49.75% each), with a 10%
interest held by the Government of Maharashtra (previously 0.5%)
and 25% held by public shareholders (previously 0%).
During the quarter, the Māui joint venture (Shell interest
83.75%) completed the sale of the Māui onshore natural gas pipeline
in New Zealand, to infrastructure
funds managed by First State Investments for a consideration of
$0.2 billion.
In July, the LNG Canada joint venture announced that the joint
venture participants - Shell, PetroChina, Mitsubishi Corporation
and Kogas - decided to delay final investment decision on the LNG
Canada project (Shell interest 50%) that was planned for the end of
2016.
Also in July, Shell decided to delay final investment decision
on the Lake Charles LNG project (Shell capacity interest 100%) that
was planned for 2016, in the United
States. The Lake Charles LNG project is proposed to convert
the existing Lake Charles LNG regasification facility owned by
Energy Transfer to a liquefaction facility.
Upstream
Shell had continued success in its exploration programme with 2
discoveries in Oman and
the United States. This included a
notable oil discovery in the United
States with the Shell-operated Fort Sumter well (Shell
interest 100%) in the Gulf of
Mexico. The initial estimated recoverable resources for the
Fort Sumter well are more than 125 million barrels of oil
equivalent.
In July, the non-operated ML South development (Shell interest
35%) in Brunei reached first
production. The expected peak production from this development is
around 35 thousand barrels of oil equivalent per day ("boe/d").
Also in July, the non-operated Lula Central production system
was started up with the interconnection of the first production
well to FPSO Cidade de Saquarema (Shell interest 25%), the eighth
FPSO in the Santos Basin pre-salt offshore Brazil. FPSO Cidade de Saquarema has a
processing capacity of 150 thousand barrels of oil and compressing
capacity of up to 212 million standard cubic feet of gas per
day.
Downstream
During the quarter, Shell announced a final investment decision
to build a major petrochemical complex, comprising an ethylene
cracker with polyethylene derivatives unit in Pennsylvania, USA. Main construction will
start approximately 18 months from the decision date in order to
manage capital spending, with commercial production expected to
begin early in the next decade.
Shell announced that it has completed the sale of Dansk Fuels in
Denmark for a consideration of
$0.3 billion. Dansk Fuels comprises
retail, commercial fuels, commercial fleet and aviation businesses,
and products trading and supply activities associated with those
businesses.
In the United States, Shell
Midstream Partners, L.P. acquired additional interests in Zydeco
Pipeline Company, Colonial Pipeline Company, and Bengal Pipeline
Company for $700 million from Shell
Pipeline Company. The acquisition increased Shell Midstream
Partners' ownership interest in Zydeco from 62.5% to 92.5%, in
Colonial from 3% to 6%, and in Bengal from 49% to 50%.
Shell also completed the sale of an additional 3.59% interest in
Shell Midstream Partners, L.P. to public investors via the issuance
of an additional 12,075,000 LP units for net proceeds of
$398 million.
KEY FEATURES OF THE SECOND QUARTER
2016
- Second quarter 2016 CCS earnings attributable to shareholders
were $239 million, 93% lower than for
the same quarter a year ago.
- Second quarter 2016 CCS earnings attributable to shareholders
excluding identified items were $1,045
million compared with $3,760
million for the second quarter 2015, a decrease of 72%.
- Basic CCS earnings per share for the second quarter 2016
decreased by 94% versus the same quarter a year ago.
- Basic CCS earnings per share excluding identified items for the
second quarter 2016 decreased by 78% versus the same quarter a year
ago.
- Cash flow from operating activities for the second quarter 2016
was $2.3 billion, which included
negative working capital movements of $2.5
billion, compared with $6.1
billion for the same quarter last year.
- Capital investment (see Definition [C]) for the second quarter
2016 was $6.3 billion. Half year 2016
capital investment was $65.3 billion,
which included $52.9 billion related
to the acquisition of BG. Organic capital investment for the full
year 2016 is expected to be $29
billion, compared with combined capital investment of
$47 billion in 2014.
- Divestments (see Definition [D]) for the second quarter 2016
were $1.0 billion.
- Operating expenses (see Definition [G]) for the second quarter
2016 increased by $1.7 billion versus
the same quarter a year ago, and included $1.4 billion related to redundancy and
restructuring charges and $0.4
billion related to a provision for onerous contracts.
Compared with the second quarter 2015, operating expenses excluding
identified items decreased by $0.9
billion before the increase of $1.0
billion due to the consolidation of BG. Operating expenses
are trending towards an underlying run rate of $40 billion by the end of 2016.
- Total dividends distributed to shareholders in the second
quarter 2016 were $3.7 billion, of
which $1.2 billion were settled by
issuing 50.5 million A shares under the Scrip Dividend
Programme.
- Return on average capital employed on a reported income basis
(see Definition [E]) was a negative -1.4% at the end of the second
quarter 2016 compared with 6.3% at the end of the second quarter
2015. Return on average capital employed on a CCS basis excluding
identified items was 2.5% at the end of the second quarter 2016
compared with 7.6% at the end of the second quarter 2015.
- Gearing (see Definition [F]) was 28.1% at the end of the second
quarter 2016 versus 12.7% at the end of the second quarter 2015.
This increase mainly reflects the impact of the BG acquisition
including 1.6% related to the recognition of associated finance
leases in the first quarter of 2016.
- Global liquids realisations were 29% lower and global natural
gas realisations were 28% lower than for the same quarter a year
ago.
- Oil and gas production for the second quarter 2016 was 3,508
thousand boe/d, an increase of 28% compared with the second quarter
2015. The impact of BG on the second quarter 2016 production was an
increase of 768 thousand boe/d. Excluding the impact of
divestments, curtailment and underground storage utilisation at NAM
in the Netherlands, a Malaysia PSC
expiry, PSC price effects, the Woodside accounting change (see page
12), and security impacts in Nigeria, second quarter 2016 production
increased by 30% compared with the same period last year, or 2%
excluding BG.
- LNG liquefaction volumes of 7.57 million tonnes for the second
quarter 2016, of which BG contributed 2.42 million tonnes, were 39%
higher than for the same quarter a year ago.
- LNG sales volumes of 14.25 million tonnes for the second
quarter 2016 were 52% higher than for the same quarter a year ago,
mainly reflecting Shell's enlarged portfolio after the acquisition
of BG.
- Oil products sales volumes for the second quarter 2016 were 1%
higher than for the second quarter 2015.
- Chemicals sales volumes for the second quarter 2016 decreased
by 2% compared with the same quarter a year ago.
- Supplementary financial and operational disclosure for this
quarter is available at http://www.shell.com/investor.
SUMMARY OF IDENTIFIED ITEMS
With effect from 2016, identified items include the impact of
exchange rate movements on certain deferred tax balances, as set
out in Definition [B]. The comparative information in this Report
has been restated following this change.
CCS earnings attributable to shareholders for the second quarter
2016 reflected the following items, which in aggregate amounted to
a net charge of $806 million
(compared with a net charge of $399
million for the second quarter 2015), as summarised
below:
- Integrated Gas earnings included a net gain of $114 million, primarily reflecting the impact of
some $580 million
following a change in accounting classification for Woodside (see
page 12), from an associate to an investment in securities. As a
consequence, SEC proved reserves of 103 million boe at December 31, 2015, have been de-booked and
production decreases by 25 thousand boe/d. Earnings were also
impacted by divestment gains of some $200
million. This was partly offset by redundancy and
restructuring charges of some $250
million, a charge of some $220
million related to the impact of the weakening Australian
dollar on a deferred tax position, and a net charge on fair value
accounting of certain commodity derivatives and gas contracts of
some $190 million. Integrated Gas
earnings for the second quarter 2015 included a net charge of
$68 million.
- Upstream earnings included a net charge of $649 million, primarily reflecting redundancy and
restructuring charges of some $570
million, other items including a provision for onerous
contracts of some $240 million,
impairments of some $140 million and
a net charge on fair value accounting of certain commodity
derivatives and gas contracts of some $80
million. These charges were partly offset by a gain of some
$360 million related to the impact of
the strengthening Brazilian real on a deferred tax position.
Upstream earnings for the second quarter 2015 included a net charge
of $92 million.
- Downstream earnings included a net charge of $99 million, primarily reflecting redundancy and
restructuring charges of some $250
million and impairment charges of some $50 million, partly offset by other tax-related
credits of some $150 million.
Downstream earnings for the second quarter 2015 included a net
charge of $215 million.
- Corporate results and Non-controlling interest included a net
charge of $172 million, mainly
reflecting the impact of the strengthening Brazilian real on
deferred tax positions related to financing of the Upstream
business. Earnings for the second quarter 2015 included a net
charge of $24 million.
Identified items for the first quarter 2016 and 2015 can be
found on page 27.
EARNINGS BY SEGMENT
INTEGRATED GAS
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 %[1] 2016 2015 %
Integrated Gas earnings
868 994 1,403 -38 excluding identified items 1,862 2,894 -36
982 905 1,335 -26 Integrated Gas earnings 1,887 2,474 -24
Integrated Gas cash flow
2,730 2,657 1,444 +89 from operating activities 5,387 3,978 +35
Integrated Gas capital
investment excluding BG
1,153 1,051 1,313 -12 acquisition impact 2,204 2,614 -16
Integrated Gas BG-related
- 21,773 - capital investment 21,773 -
Liquids production
available for sale
219 224 199 +10 (thousand b/d) 222 200 +11
Natural gas production
available for sale (million
3,831 3,532 2,350 +63 scf/d) 3,682 2,398 +54
Total production available
880 833 604 +46 for sale (thousand boe/d) 856 613 +40
LNG liquefaction volumes
7.57 7.04 5.46 +39 (million tonnes) 14.61 11.63 +26
LNG sales volumes (million
14.25 12.29 9.40 +52 tonnes) 26.54 19.21 +38
1. Q2 on Q2 change
Second quarter Integrated Gas earnings excluding identified
items were $868 million compared with
$1,403 million a year ago. Identified
items were a net gain of $114
million, compared with a net charge of $68 million for the second quarter 2015 (see page
5).
Compared with the second quarter 2015, earnings excluding
identified items were impacted by the decline in oil and LNG
prices, and increased depreciation including a step-up resulting
from the BG acquisition. The consolidation of BG resulted in higher
operating expenses. This was partly offset by higher LNG and
liquids production volumes, related to the contribution of BG
assets.
Second quarter 2016 production was 880 thousand boe/d compared
with 604 thousand boe/d a year ago. Liquids production increased by
10% and natural gas production increased by 63% compared with the
second quarter 2015.
LNG liquefaction volumes of 7.57 million tonnes increased by 39%
compared with the same quarter a year ago, mainly reflecting the
impact of the acquisition of BG, including an increase associated
with Queensland Curtis LNG in Australia and Atlantic LNG in Trinidad and Tobago.
LNG sales volumes of 14.25 million tonnes increased by 52%
compared with the same quarter a year ago, mainly reflecting
Shell's enlarged portfolio after the acquisition of BG.
Half year Integrated Gas earnings excluding identified items
were $1,862 million compared with
$2,894 million for the first half
year 2015. Identified items were a net gain of $25 million, compared with a net charge of
$420 million for the first half year
2015 (see page 5).
Compared with the first half year 2015, Integrated Gas earnings
excluding identified items were impacted by the decline in oil and
LNG prices and the Malaysia LNG Dua JVA expiry. The consolidation
of BG resulted in higher operating expenses and a step-up in
depreciation. This was partly offset by increased production
volumes mainly as a result of the contribution of BG assets and
higher uptime at Pearl GTL in Qatar, and lower well write-offs.
Half year 2016 production was 856 thousand boe/d compared with
613 thousand boe/d for the same period a year ago. Liquids
production increased by 11% and natural gas production increased by
54% compared with the first half year 2015.
LNG liquefaction volumes of 14.61 million tonnes were 26% higher
than for the first half year 2015, mainly reflecting the impact of
the acquisition of BG, including an increase associated with
Queensland Curtis LNG in Australia, partly offset by lower feedgas
availability and the expiry of the Malaysia LNG Dua JVA.
LNG sales volumes of 26.54 million tonnes increased by 38%
compared with the first half year 2015, mainly reflecting Shell's
enlarged portfolio after the acquisition of BG.
UPSTREAM
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 %[1] 2016 2015 %
Upstream earnings
(1,325) (1,437) (469) -183 excluding identified items (2,762) (664) -316
(1,974) (1,350) (561) -252 Upstream earnings (3,324) 839 -496
Upstream cash flow from
(297) 448 648 -146 operating activities 151 2,243 -93
Upstream capital
investment excluding BG
3,700 3,907 4,603 -20 acquisition impact 7,607 9,245 -18
Upstream BG-related
- 31,131 - capital investment 31,131 -
Liquids production
available for sale
1,526 1,557 1,233 +24 (thousand b/d) 1,541 1,287 +20
Natural gas production
available for sale
6,395 7,373 5,184 +23 (million scf/d) 6,884 6,075 +13
Total production available
2,628 2,828 2,127 +24 for sale (thousand boe/d) 2,728 2,335 +17
1. Q2 on Q2 change
Second quarter Upstream earnings excluding identified items were
a loss of $1,325 million compared
with a loss of $469 million a year
ago. Identified items were a net charge of $649 million compared with a net charge of
$92 million for the second quarter
2015 (see page 5).
Compared with the second quarter 2015, earnings excluding
identified items were impacted by the decline in oil and gas prices
and depreciation step-up resulting from the BG acquisition. This
was partly offset by increased production volumes, mainly from BG
assets and improved operational performance. Operating expenses and
exploration expenses were lower, as steps taken by the company to
reduce these costs more than offset the increases due to the
consolidation of BG.
Second quarter 2016 production was 2,628 thousand boe/d compared
with 2,127 thousand boe/d a year ago. Liquids production increased
by 24% and natural gas production increased by 23% compared with
the second quarter 2015, driven by the impact of BG.
New field start-ups and the continuing ramp-up of existing
fields, in particular the Corrib gas field in Ireland, and Erha North ph2 in Nigeria, contributed some 53 thousand boe/d to
production compared with the second quarter 2015.
Half year Upstream earnings excluding identified items were a
loss of $2,762 million compared with
a loss of $664 million for the same
period a year ago. Identified items were a net charge of
$562 million compared with a net gain
of $1,503 million for the first half
year 2015 (see page 5).
Compared with the first half year 2015, earnings excluding
identified items were impacted by the decline in oil and gas
prices, and increased depreciation mainly related to a step-up
resulting from the BG acquisition. This was partly offset by
increased production volumes mainly from BG assets. Exploration
expense and operating expenses were lower, as steps taken by the
company to reduce these costs more than offset the increases due to
the consolidation of BG.
Half year 2016 production was 2,728 thousand boe/d compared with
2,335 thousand boe/d for the same period last year. Liquids
production increased by 20% and natural gas production increased by
13% compared with the first half year 2015.
New field start-ups and the continuing ramp-up of existing
fields, in particular Erha North ph2 in Nigeria, the Corrib gas field in Ireland, and North American shales,
contributed some 58 thousand boe/d to production compared with the
first half year 2015.
DOWNSTREAM
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 %[1] 2016 2015 %
Downstream earnings
excluding identified
1,816 2,010 2,961 -39 items[2] 3,826 5,607 -32
Of which:
1,568 1,633 2,398 -35 Oil Products 3,201 4,635 -31
248 377 563 -56 Chemicals 625 972 -36
1,717 1,700 2,746 -37 Downstream earnings[2] 3,417 5,260 -35
Downstream cash flow from
571 (1,434) 3,816 -85 operating activities (863) 5,370 -116
Downstream capital
1,389 1,092 1,085 +28 investment 2,481 1,934 +28
Refinery processing intake
2,648 2,645 2,944 -10 (thousand b/d) 2,646 2,908 -9
Oil products sales volumes
6,595 6,225 6,531 +1 (thousand b/d) 6,410 6,423 -
Chemicals sales volumes
4,248 4,050 4,326 -2 (thousand tonnes) 8,298 8,518 -3
1. Q2 on Q2 change
2. Earnings are presented on a CCS basis
Second quarter Downstream earnings excluding identified items
were $1,816 million compared with
$2,961 million for the second quarter
2015. Identified items were a net charge of $99 million, compared with a net charge of
$215 million for the second quarter
2015 (see page 5).
Compared with the second quarter 2015, Downstream earnings
excluding identified items were mainly impacted by weaker refining
industry conditions, increased taxation, and lower Chemicals
margins. Downstream earnings benefited from lower costs, including
the impact of favourable exchange rate effects and divestments.
Oil Products
- Refining & Trading earnings excluding
identified items were $459 million in
the second quarter 2016 compared with $1,313
million for the same period last year. Second quarter 2016
earnings were impacted by lower realised refining margins,
reflecting the weaker global refining industry conditions due to
oversupply and high inventory levels, and weaker operating
performance, and increased taxation.
Refinery intake volumes were 10% lower compared with the same
quarter last year. Excluding portfolio impacts, refinery intake
volumes were 9% lower compared with the same period a year ago.
Refinery availability decreased to 89% compared with 95% in the
second quarter 2015, mainly as a result of increased
maintenance.
- Marketing earnings excluding identified items
were $1,109 million in the second
quarter 2016 compared with $1,085
million for the same period a year ago. Second quarter 2016
earnings benefited from lower costs and stronger underlying unit
margins, offsetting the impact of adverse exchange rate effects and
divestments.
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
- Chemicals earnings excluding identified items
were $248 million in the second
quarter 2016 compared with $563
million for the same period last year. Second quarter 2016
earnings were mainly impacted by weaker base chemicals industry
conditions in the United States
and the impact of unit shutdowns at the Bukom chemical site in
Singapore, partly offset by
recovery at the Moerdijk chemical site in the Netherlands.
Chemicals sales volumes decreased by 2% compared with the same
quarter last year, mainly as a result of weaker intermediates
demand and reduced availability driven by unit shutdowns at Bukom,
partly offset by recovery at Moerdijk. Chemicals manufacturing
plant availability decreased to 85% from 86% in the second quarter
2015, mainly reflecting unit shutdowns at Bukom, partly offset by
recovery at Moerdijk.
Half year Downstream earnings excluding identified items were
$3,826 million compared with
$5,607 million for the same period a
year ago. Identified items were a net charge of $409 million, compared with a net charge of
$347 million for the first half year
2015 (see page 5).
Compared with the first half year 2015, Downstream earnings
excluding identified items were mainly impacted by weaker refining
industry conditions, increased taxation, and lower Chemicals
margins. Downstream earnings benefited from lower costs, including
the impact of favourable exchange rate effects and divestments.
Oil Products
- Refining & Trading earnings excluding
identified items were $1,121 million
in the first half year 2016 compared with $2,575 million for the same period last year.
Half year 2016 earnings were impacted by lower realised refining
margins, reflecting the weaker global refining industry conditions
due to oversupply and high inventory levels, and weaker operating
performance.
Refinery intake volumes were 9% lower compared with the first half
year 2015. Excluding portfolio impacts, refinery intake volumes
were 7% lower compared with the same period a year ago. Refinery
availability decreased to 89% compared with 95% for the first half
year 2015, mainly as a result of increased maintenance.
- Marketing earnings excluding identified items
were $2,080 million in the first half
year 2016 compared with $2,060
million for the same period a year ago. Half year 2016
earnings benefited from stronger underlying unit margins and lower
costs, offsetting the impact of adverse exchange rate effects and
divestments. Earnings were impacted by increased taxation.
Oil products sales volumes were in line with the first half year
2015.
Chemicals
- Chemicals earnings excluding identified items
were $625 million in the first half
year 2016 compared with $972 million
for the same period last year. Half year 2016 earnings were
primarily impacted by weaker base chemicals industry conditions in
the US and the impact of unit shutdowns at the Bukom chemical site
in Singapore, partly offset by
recovery at the Moerdijk chemical site in the Netherlands.
Half year Chemicals sales volumes decreased by 3% compared with the
same period last year, mainly as a result of weaker intermediates
demand and reduced availability driven by unit shutdowns at Bukom,
partly offset by recovery at Moerdijk. Chemicals manufacturing
plant availability increased to 86% from 85% in the first half year
2015, mainly reflecting recovery at Moerdijk, partly offset by unit
shutdowns at Bukom.
CORPORATE AND NON-CONTROLLING INTEREST
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Corporate and Non-controlling interest
(314) (14) (135) earnings excl. identified items (328) (339)
Of which:
(234) 69 (41) Corporate (165) (124)
(80) (83) (94) Non-controlling interest (163) (215)
Corporate and Non-controlling interest
(486) (441) (159) earnings (927) (451)
Second quarter Corporate results and Non-controlling interest
excluding identified items were a loss of $314 million, compared with a loss of
$135 million for the same period last
year. Identified items for the second quarter 2016 were a net
charge of $172 million, and earnings
for the second quarter 2015 included a net charge of $24 million (see page 5).
Compared with the second quarter 2015, Corporate results
excluding identified items mainly reflected higher net interest
expense and adverse exchange rate effects, partly offset by higher
tax credits.
Half year Corporate results and Non-controlling interest
excluding identified items were a loss of $328 million, compared with a loss of
$339 million for the same period last
year. Identified items for the first half year 2016 were a net
charge of $599 million, and earnings
for the first half year 2015 included a net charge of $112 million (see page 5).
Compared with the first half year 2015, Corporate results
excluding identified items mainly reflected favourable exchange
rate effects, offset by higher net interest expense and costs, and
lower tax credits.
OUTLOOK FOR THE THIRD QUARTER
2016
Compared with the third quarter 2015, Integrated Gas earnings
are expected to be negatively impacted by a reduction of some 15
thousand boe/d associated with the impact of maintenance.
Compared with the third quarter 2015, Upstream earnings are
expected to be negatively impacted by a reduction of some 35
thousand boe/d associated with sabotage incidents and repairs in
Nigeria. Earnings could be further
impacted if the security conditions continue to deteriorate.
Refinery availability is expected to marginally increase in the
third quarter 2016 as a result of lower planned maintenance
compared with the same period a year ago. Chemicals manufacturing
plant availability is expected to increase in the third quarter
2016 driven by the planned restart of the Bukom chemical site in
Singapore compared with the third
quarter 2015, which was heavily impacted by unit shutdowns at the
Moerdijk chemical site in the
Netherlands.
As a result of divestments in Denmark, Norway and France, Oil products sales volumes are
expected to decrease by some 200 thousand barrels per day compared
with the third quarter 2015.
Compared with the third quarter 2015, the BG purchase price
allocation is expected to increase depreciation by up to
$0.3 billion.
Following the completion of the BG acquisition, the
sensitivities to earnings have been updated:
- Integrated Gas - around $2
billion per annum for every $10 per barrel movement in Brent
- Upstream - around $3 billion per
annum for every $10 per barrel
movement in Brent
FORTHCOMING EVENTS
Third quarter 2016 results and third quarter 2016 dividend are
scheduled to be announced on November 1,
2016. Shell will host a North America Investor Day on
November 8, 2016 in New York City.
UNAUDITED CONDENSED CONSOLIDATED INTERIM
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
58,415 48,554 72,402 Revenue[1] 106,969 138,108
Share of profit of joint ventures
946 789 1,136 and associates 1,735 2,541
910 389 412 Interest and other income 1,299 2,147
60,271 49,732 73,950 Total revenue and other income 110,003 142,796
40,362 33,286 52,441 Purchases 73,648 99,866
Production and manufacturing
8,076 6,765 6,506 expenses 14,841 13,161
Selling, distribution and
3,227 3,106 3,076 administrative expenses 6,333 5,970
243 243 252 Research and development 486 505
535 457 964 Exploration 992 1,764
Depreciation, depletion and
6,097 6,147 4,673 amortisation 12,244 9,277
770 370 466 Interest expense 1,140 842
59,310 50,374 68,378 Total expenditure 109,684 131,385
961 (642) 5,572 Income/(loss) before taxation 319 11,411
(319) (1,097) 1,458 Taxation charge/(credit) (1,416) 2,760
1,280 455 4,114 Income/(loss) for the period[1] 1,735 8,651
Income/(loss) attributable to
105 (29) 128 non-controlling interest 76 235
Income/(loss) attributable to
Royal Dutch Shell plc
1,175 484 3,986 shareholders 1,659 8,416
0.15 0.07 0.63 Basic earnings per share[2] 0.22 1.34
0.15 0.07 0.62 Diluted earnings per share[2] 0.22 1.32
1. See Note 3 "Segment information"
2. See Note 4 "Earnings per share"
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
1,280 455 4,114 Income/(loss) for the period 1,735 8,651
Other comprehensive income
net of tax:
Items that may be
reclassified to income in
later periods:
- Currency translation
(434) 2,319 1,668 differences 1,885 (2,531)
- Unrealised gains/(losses)
(128) (12) (129) on securities (140) (264)
- Cash flow hedging
(538) 324 133 gains/(losses) (214) 124
- Net investment hedging
(863) 136 - gains/(losses)[1] (727) -
- Share of other
comprehensive income/(loss)
of joint ventures and
(77) 8 (25) associates (69) (18)
(2,040) 2,775 1,647 Total 735 (2,689)
Items that are not
reclassified to income in
later periods:
- Retirement benefits
(2,795) (1,634) 5,496 remeasurements (4,429) 4,180
Other comprehensive
(4,835) 1,141 7,143 income/(loss) for the period (3,694) 1,491
Comprehensive income/(loss)
(3,555) 1,596 11,257 for the period (1,959) 10,142
Comprehensive income/(loss)
attributable to
96 4 161 non-controlling interest 100 224
Comprehensive income/(loss)
attributable to Royal Dutch
(3,651) 1,592 11,096 Shell plc shareholders (2,059) 9,918
1. See Note [1] "Basis of preparation"
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
Jun 30, Mar 31, Dec 31,
2016[1] 2016[1] 2015
Assets
Non-current assets
Intangible assets 21,093 21,327 6,283
Property, plant and equipment 242,907 245,133 182,838
Joint ventures and associates[2] 33,850 35,654 30,150
Investments in securities[2] 5,709 3,474 3,416
Deferred tax 15,812 15,311 11,033
Retirement benefits 1,645 3,108 4,362
Trade and other receivables[3] 11,030 11,047 8,717
332,046 335,054 246,799
Current assets
Inventories 20,626 17,396 15,822
Trade and other receivables[3],[4] 49,547 47,872 45,784
Cash and cash equivalents 15,222 11,019 31,752
85,395 76,287 93,358
Total assets 417,441 411,341 340,157
Liabilities
Non-current liabilities
Debt[5] 79,466 73,005 52,849
Trade and other payables[3] 4,393 3,917 4,528
Deferred tax 15,904 16,677 8,976
Retirement benefits 15,882 13,516 12,587
Decommissioning and other
provisions 31,825 32,710 26,148
147,470 139,825 105,088
Current liabilities
Debt 10,863 7,868 5,530
Trade and other payables[3],[4] 52,669 51,069 52,770
Taxes payable 8,291 10,387 8,233
Retirement benefits 392 401 350
Decommissioning and other
provisions 5,250 3,777 4,065
77,465 73,502 70,948
Total liabilities 224,935 213,327 176,036
Equity attributable to Royal Dutch
Shell plc shareholders 190,670 196,521 162,876
Non-controlling interest 1,836 1,493 1,245
Total equity 192,506 198,014 164,121
Total liabilities and equity 417,441 411,341 340,157
1. See Note 2 "Acquisition of BG Group plc"
2. During the second quarter 2016, management concluded that a change in
Shell's level of involvement over Woodside's financial and operating policy
decisions resulted in no longer having significant influence. Its
classification was therefore changed from an associate (carrying amount:
$2,144 million) to an investment in securities (carrying amount at fair
value: $2,442 million). The consequential revaluation and related release
of cumulative currency translation differences were reported in interest
and other income in the Consolidated Statement of Income.
3. See Note 7 "Derivative contracts"
4. The amounts at March 31, 2016 have been reduced by $4,963 million in
order to appropriately reflect certain contracts on a net basis which were
previously presented gross.
5. During the second quarter 2016, debt of $9,246 million was issued under
the US shelf registration and EMTN programme.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch
Shell plc shareholders
Share Shares Other Non-
capital held in reserves Retained controlling Total
$ million [1] trust [2] earnings Total interest equity
At January 1,
2016 546 (584) (17,186) 180,100 162,876 1,245 164,121
Comprehensive
income/(loss)
for the period - - (3,718) 1,659 (2,059) 100 (1,959)
Dividends paid - - - (7,411) (7,411) (69) (7,480)
Scrip dividends 9 - (9) 2,717 2,717 - 2,717
Shares issued
for the
acquisition of
BG Group plc[3] 120 - 33,930 - 34,050 - 34,050
Repurchases of
shares - - - - - - -
Share-based
compensation[4] - (168) 266 133 231 - 231
Capital
contributions
from, and other
changes
in, non-controlling
interest - - - 266 266 560 826
At June 30,
2016 675 (752) 13,283 177,464 190,670 1,836 192,506
At January 1,
2015 540 (1,190) (14,365) 186,981 171,966 820 172,786
Comprehensive
income/(loss)
for the period - - 1,502 8,416 9,918 224 10,142
Dividends paid - - - (5,957) (5,957) (45) (6,002)
Scrip dividends 2 - (2) 731 731 - 731
Repurchases of
shares (1) - 1 1 1 - 1
Share-based
compensation - 634 - 39 673 - 673
Capital
contributions
from, and other
changes in,
non-controlling
interest - - - (98) (98) 222 124
At June 30,
2015 541 (556) (13,285) 190,087 176,787 1,221 178,008
1. See Note 5 "Share capital"
2. See Note 6 "Other reserves"
3. See Note 2 "Acquisition of BG Group plc"
4. Includes a reclassification of $534 million between Shares held in trust
and Other reserves, with no impact on total equity, in order to appropriately
reflect the carrying amount of Shares held in trust at cost.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Cash flow from operating
activities
Income/(loss) for
1,280 455 4,114 the period 1,735 8,651
Adjustment for:
119 753 1,753 - Current tax 872 4,700
- Interest expense
671 272 395 (net) 943 698
- Depreciation,
depletion and
6,097 6,147 4,673 amortisation 12,244 9,277
- Net (gains)/losses
on sale of
non-current assets
(535) (175) (247) and businesses[1] (710) (1,859)
- Decrease/(increase)
(2,474) (3,909) (1,588) in working capital (6,383) (1,960)
- Share of
(profit)/loss of
joint ventures and
(946) (789) (1,136) associates (1,735) (2,541)
- Dividends received
from joint ventures
964 688 1,071 and associates 1,652 2,148
- Deferred tax,
retirement benefits,
decommissioning
(533) (1,755) (90) and other provisions (2,288) (1,593)
(346) (292) 255 - Other (638) 349
Net cash from operating
4,297 1,395 9,200 activities (pre-tax) 5,692 17,870
(2,005) (734) (3,150) Tax paid (2,739) (4,714)
Net cash from operating
2,292 661 6,050 activities 2,953 13,156
Cash flow from investing
activities
(5,796) (5,324) (6,205) Capital expenditure (11,120) (12,420)
Acquisition of BG Group
plc, net of cash and
cash equivalents
- (11,421) - acquired[2] (11,421) -
Investments in joint
(216) (332) (208) ventures and associates (548) (617)
Proceeds from sale of
property, plant and
equipment and
516 46 206 businesses 562 2,409
Proceeds from sale of
joint ventures and
23 16 165 associates 39 169
93 136 59 Interest received 229 115
(70) (37) (80) Other (107) (159)
Net cash used in
(5,450) (16,916) (6,063) investing activities (22,366) (10,503)
Cash flow from
financing activities
Net increase/(decrease)
in debt with maturity
period
1,870 873 1,072 within three months 2,743 817
Other debt:
9,472 264 10,045 - New borrowings 9,736 10,797
(972) (1,969) (2,188) - Repayments (2,941) (2,818)
(725) (534) (317) Interest paid (1,259) (726)
Change in
non-controlling
397 422 424 interest 819 419
Cash dividends paid to:
- Royal Dutch Shell plc
(2,436) (2,258) (2,294) shareholders (4,694) (5,226)
- Non-controlling
(34) (35) (27) interest (69) (45)
- - - Repurchases of shares - (409)
Shares held in trust:
net sales/(purchases)
6 (4) (5) and dividends received 2 (45)
Net cash from/(used in)
7,578 (3,241) 6,710 financing activities 4,337 2,764
Currency translation
differences relating to
cash and
(217) (1,237) 417 cash equivalents (1,454) (43)
Increase/(decrease) in
cash and cash
4,203 (20,733) 7,114 equivalents (16,530) 5,374
Cash and cash
equivalents at
11,019 31,752 19,867 beginning of period 31,752 21,607
Cash and cash
equivalents at end of
15,222 11,019 26,981 period 15,222 26,981
1. Includes the increase to fair value in the carrying amount of Woodside
in the second quarter 2016 (see page 12).
2. See Note 2 "Acquisition of BG Group plc"
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 ("the
Company") and its subsidiaries (collectively referred to as
"Shell") have been prepared in accordance with IAS 34 Interim
Financial Reporting as issued by the International Accounting
Standards Board and as adopted by the European Union, 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, 2015 (pages 120 to
125) as filed with the U.S. Securities and Exchange Commission. In
addition to those accounting policies, following the acquisition of
BG Group plc, Shell accounts for net investment hedges where the
effective portion of gains and losses arising on hedging
instruments that are used to hedge net investments in foreign
operations are recognised in other comprehensive income until the
related investment is disposed of.
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 ("the Act"). Statutory
accounts for the year ended December 31,
2015 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 Act.
2. Acquisition of BG Group plc
On February 15, 2016, the Company
acquired all the voting rights in BG by means of a Scheme of
Arrangement under Part 26 of the Act for a purchase consideration
of $54,034 million. This included
cash of $19,036 million and the fair
value ($34,050 million) of 218.7
million A shares and 1,305.1 million B shares issued in exchange
for all BG shares. The fair value of the shares issued was
calculated using the market price of the Company's A and B shares
of 1,545.0 and 1,538.5 pence
respectively on the London Stock Exchange at its opening of
business on February 15, 2016.
BG's activities mainly comprise exploration, development,
production, liquefaction and marketing of hydrocarbons, the
development and use of LNG import facilities, and the purchase,
shipping and sale of LNG and regasified natural gas. The
acquisition is expected to accelerate Shell's growth strategy in
global LNG and deep water. It is expected to add material proved
oil and gas reserves and production volumes, and provides Shell
with enhanced positions in competitive new oil and gas projects,
particularly in Australia LNG and
Brazil deep water.
Goodwill of $9,024 million was
recognised on the acquisition, being the excess of the purchase
consideration over the fair value of net assets acquired as set out
below. The net asset value, in line with accounting standards, is
determined by reference to oil and gas prices, as reflected in the
prevailing market view on the day of completion. Oil and gas prices
are based on the forward price curve for the first two years, and
subsequent years based on the market consensus price view.
The fair values of the net assets, and therefore the resultant
goodwill, are provisional.
FAIR VALUE OF NET ASSETS ACQUIRED (PROVISIONAL)
$ million
Assets
Non-current assets
Intangible assets 6,178
Property, plant and equipment 58,444
Joint ventures and associates 4,702
Deferred tax 2,432
Other 2,181
73,937
Current assets
Inventories 417
Trade and other receivables 4,202
Cash and cash equivalents 6,803
11,422
Total assets 85,359
Liabilities
Non-current liabilities
Debt 18,949
Deferred tax 8,393
Decommissioning and other provisions 6,401
Other 665
34,408
Current liabilities
Debt 1,345
Trade and other payables 3,926
Other 670
5,941
Total liabilities 40,349
Total 45,010
Acquisition costs of $391 million
were recognised in the Consolidated Statement of Income in
production and manufacturing and selling, distribution and
administrative expenses ($47 million
in 2015 and $344 million in the first
quarter 2016).
The acquired activities of BG are now significantly integrated
with those of other Shell entities and therefore it is
impracticable to identify separately either the amounts of revenue
and income since the date of acquisition that BG has contributed to
the Consolidated Statement of Comprehensive Income, or the revenue
and income of Shell for the half year 2016 as though the
acquisition date of BG had been as at January 1, 2016.
3. Segment information
Segmental reporting has been changed with effect from 2016, in
line with a change in the way Shell's businesses are managed. Shell
now reports its business through the segments Integrated Gas
(previously part of Upstream), Upstream, Downstream and Corporate.
Comparative information has been reclassified.
Integrated Gas is engaged in the liquefaction and transportation
of gas, and the conversion of natural gas to liquids to provide
fuels and other products, as well as projects with an integrated
activity from producing to commercialising gas. Upstream combines
the operating segments Upstream, which is engaged in the
exploration for and extraction of crude oil, natural gas and
natural gas liquids, the transportation of oil and wind energy, and
Oil Sands, which is engaged in the extraction of bitumen from oil
sands that is converted into synthetic crude oil. These operating
segments have similar economic characteristics because their
earnings are significantly dependent on crude oil and natural gas
prices and production volumes, and because their projects generally
require significant investment, are complex and generate revenues
for many years.
INFORMATION BY SEGMENT
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Third-party revenue
5,373 5,679 4,807 Integrated Gas 11,052 10,756
1,711 1,922 1,489 Upstream 3,633 3,306
51,315 40,929 66,082 Downstream 92,244 123,998
16 24 24 Corporate 40 48
58,415 48,554 72,402 Total third-party revenue 106,969 138,108
Inter-segment revenue
896 743 1,167 Integrated Gas[1] 1,639 2,144
6,049 5,037 7,507 Upstream[1] 11,086 14,301
1,993 1,455 271 Downstream 3,448 633
- - - Corporate - -
CCS earnings
982 905 1,335 Integrated Gas 1,887 2,474
(1,974) (1,350) (561) Upstream (3,324) 839
1,717 1,700 2,746 Downstream 3,417 5,260
(423) (456) (68) Corporate (879) (239)
302 799 3,452 Total CCS earnings[2] 1,101 8,334
1. Inter-segment revenue for the first quarter 2016 has been amended for
Integrated Gas and Upstream to include revenue previously accounted for as
intra-segment revenue.
2. See pages 5 and 27 for a summary of significant items, including redundancy
and restructuring charges, impacting segment earnings.
RECONCILIATION OF CCS EARNINGS TO INCOME FOR THE PERIOD
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
302 799 3,452 Total CCS earnings 1,101 8,334
Current cost of supplies
adjustment:
1,158 (398) 765 Purchases 760 413
(323) 120 (219) Taxation (203) (117)
Share of profit/(loss) of joint
143 (66) 116 ventures and associates 77 21
1,280 455 4,114 Income/(loss) for the period 1,735 8,651
4. Earnings per share
EARNINGS PER SHARE
Quarters Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Income attributable to Royal
Dutch Shell plc shareholders ($
1,175 484 3,986 million) 1,659 8,416
Weighted average number of shares
as the basis for:
Basic earnings per share
8,000.0 7,173.4 6,304.6 (million) 7,586.7 6,298.4
Diluted earnings per share
8,053.3 7,230.4 6,383.9 (million) 7,641.8 6,380.5
5. Share Capital
ISSUED AND FULLY PAID
Sterling
Ordinary shares of EUR0.07 each deferred shares
Number of shares A B of GBP1 each
At January 1, 2016 3,990,921,569 2,440,410,614 50,000
Scrip dividends 116,249,778 - -
Shares issued for
the acquisition of
BG Group plc[1] 218,728,308 1,305,076,117 -
Repurchases of
shares - - -
At June 30, 2016 4,325,899,655 3,745,486,731 50,000
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
1. See Note 2 "Acquisition of BG Group plc"
NOMINAL VALUE
Ordinary shares of EUR0.07 each
$ million A B Total
At January 1, 2016 340 206 546
Scrip dividends 9 - 9
Shares issued for
the acquisition of
BG Group plc[1] 17 103 120
Repurchases of
shares - - -
At June 30, 2016 366 309 675
At January 1, 2015 334 206 540
Scrip dividends 2 - 2
Repurchases of
shares (1) - (1)
At June 30, 2015 335 206 541
1. See Note 2 "Acquisition of BG Group plc"
The total nominal value of sterling deferred shares is less than
$1 million.
At Royal Dutch Shell plc's Annual General Meeting on
May 24, 2016, 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 €185 million (representing 2,643 million ordinary
shares of €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 24, 2017, and
the end of the Annual General Meeting to be held in 2017, unless
previously renewed, revoked or varied by Royal Dutch Shell plc in a
general meeting.
6. Other reserves
OTHER RESERVES
Accumulated
Share Capital other
Merger premium redemption Share plan comprehensive
$ million reserve reserve reserve reserve income Total
At January 1, 2016 3,398 154 84 1,658 (22,480) (17,186)
Other comprehensive
income/(loss)
attributable to Royal
Dutch Shell plc
shareholders - - - - (3,718) (3,718)
Scrip dividends (9) - - - - (9)
Shares issued for the
acquisition of BG
Group plc[1] 33,930 - - - - 33,930
Repurchases of shares - - - - - -
Share-based
compensation - - - (268) 534 266
At June 30, 2016 37,319 154 84 1,390 (25,664) 13,283
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)
1. See Note [2] "Acquisition of BG Group plc"
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, p.l.c., now The Shell Transport and Trading
Company Limited, in 2005. The increase in the merger reserve in the
first half year 2016 in respect of the shares issued for the
acquisition of BG represents the difference between the fair value
and the nominal value of the shares. The capital redemption reserve
was established in connection with repurchases of shares of Royal
Dutch Shell plc. The share plan reserve is in respect of
equity-settled share-based compensation plans.
7. Derivative contracts
The table below provides the carrying amounts of derivatives
contracts held, disclosed in accordance with
IFRS 13 Fair Value Measurement.
DERIVATIVE CONTRACTS
$ million Jun 30, 2016 Mar 31, 2016 Dec 31, 2015
Included within:
Trade and other receivables -
non-current 1,143 1,250 744
Trade and other receivables -
current[1] 9,188 12,297 13,114
Trade and other payables -
non-current 1,742 1,369 1,687
Trade and other payables -
current[1] 9,493 11,026 10,757
1. The amounts at March 31, 2016 have been reduced by $4,963 million in order to
appropriately reflect certain contracts on a net basis which were previously
presented gross.
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2015,
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, 2016 are consistent with those used in
the year ended December 31, 2015, 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, 2016 was $83,367 million (March 31,
2016: $71,903 million;
December 31, 2015: $53,480 million). Fair value is determined from
the prices quoted for those securities.
DEFINITIONS
- Earnings on a current cost of supplies basis attributable to
shareholders
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.
The current cost of supplies adjustment does not impact net cash
from operating activities in the Condensed Consolidated Statement
of Cash Flows. The reconciliation of CCS earning to net income is
as follows.
Quarters $ million Half year
Q2 Q1 Q2
2016 2016 2015 2016 2015
Earnings on a current cost of
302 799 3,452 supplies basis (CCS earnings) 1,101 8,334
Attributable to non-controlling
(63) 15 (91) interest (48) (212)
Earnings on a current cost of
supplies basis attributable to
Royal Dutch Shell plc
239 814 3,361 shareholders 1,053 8,122
Current cost of supplies
978 (344) 662 adjustment 634 317
(42) 14 (37) Non-controlling interest (28) (23)
Income attributable to Royal
1,175 484 3,986 Dutch Shell plc shareholders 1,659 8,416
105 (29) 128 Non-controlling interest 76 235
1,280 455 4,114 Income for the period 1,735 8,651
B. Identified items
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, impairments, fair value
accounting of commodity derivatives and certain gas contracts (see
below), and redundancy and restructuring. Further items may be
identified in addition to the above.
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.
Impacts of exchange rate movements on deferred
tax balances
With effect from 2016, identified items include the impact on
deferred tax balances of exchange rate movements arising on:
The conversion to dollars of the local currency tax base of
non-monetary assets and liabilities, as well as losses. This
primarily impacts the Integrated Gas and Upstream segments.
The conversion of dollar-denominated inter-segment loans to
local currency. This primarily impacts the Corporate segment.
The comparative information presented in this Report has been
restated for this definition change. The following table sets out
the impact of the definition change on the identified items for the
year 2015.
RESTATED IDENTIFIED ITEMS BY SEGMENT
$ million Quarters
Q1 2015 Q2 2015 Q3 2015 Q4 2015
Identified items as
previously reported
Integrated Gas 15 (117) (878) (347)
Upstream 1,849 (146) (7,340) (479)
Downstream (132) (215) (136) 978
Corporate and
Non-controlling interest (217) 4 464 (137)
Impact of definition
change
Integrated Gas (367) 50 (469) 227
Upstream (254) 53 (292) 30
Downstream - - - -
Corporate and
Non-controlling interest 129 (28) 155 (4)
Identified items as
restated
Integrated Gas (352) (67) (1,347) (120)
Upstream 1,595 (93) (7,632) (449)
Downstream (132) (215) (136) 978
Corporate and
Non-controlling interest (88) (24) 619 (141)
C. 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, acquisition of BG, exploration
expense (excluding well write-offs), new investments in joint
ventures and associates, new finance leases and other adjustments.
The reconciliation of Capital expenditure to Capital investment is
as follows.
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Capital investment:
1,153 22,824 1,313 Integrated Gas 23,977 2,614
3,700 35,038 4,603 Upstream 38,738 9,245
1,389 1,092 1,085 Downstream 2,481 1,934
42 21 49 Corporate 63 99
6,284 58,975 7,050 Total 65,259 13,892
Capital investment related to the
- (52,904) - acquisition of BG Group plc (52,904) -
Investments in joint ventures and
(216) (332) (208) associates (548) (617)
Exploration expense, excluding
(336) (224) (643) exploration wells written off (560) (1,145)
9 (414) (18) Finance leases (405) (24)
55 223 24 Other 278 314
5,796 5,324 6,205 Capital expenditure 11,120 12,420
D. Divestments
"Divestments" is a measure used to monitor the progress of
Shell's divestment programme. This measure comprises proceeds from
sale of property, plant and equipment and businesses, joint
ventures and associates, and other Integrated Gas, Upstream and
Downstream investments, adjusted onto an accruals basis, and
proceeds from sale of interests in an entity while retaining
control (for example, proceeds from sale of interest in Shell
Midstream Partners, L.P.).
Quarters $ million Half year
Q2 2016 Q1 2016 Q2 2015 2016 2015
Proceeds from sale of property,
516 46 206 plant and equipment and businesses 562 2,409
Proceeds from sale of joint
23 16 165 ventures and associates 39 169
Other (in Cash flow from investing
(70) (37) (80) activities) (107) (159)
Proceeds from sale of interests in
398 421 298 Shell Midstream Partners, L.P. 819 298
135 39 93 Other[1] 174 129
1,002 485 682 Total 1,487 2,846
1. Mainly changes in non-current receivables included within Other (in
Cash flow from investing activities), which are not considered to be
divestments.
E. 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. Capital employed consists of total equity, current
debt and non-current debt.
$ million Jun 30, 2016 Jun 30, 2015
Income for current and previous three
quarters (4,716) 13,494
Interest expense after tax 1,139 1,033
Income before interest expense (3,576) 14,527
Capital employed - opening 230,949 230,235
Capital employed - closing 282,835 230,949
Capital employed - average 256,892 230,592
ROACE -1.4% 6.3%
Return on average capital employed on a CCS basis excluding
identified items is defined as the sum of CCS earnings attributable
to shareholders excluding identified items for the current and
previous three quarters, as a percentage of the average capital
employed for the same period.
$ million Jun 30, 2016 Jun 30, 2015
CCS earnings excluding identified items
for current and previous three quarters 6,546 17,474
Capital employed - opening 230,949 230,235
Capital employed - closing 282,835 230,949
Capital employed - average 256,892 230,592
ROACE on a CCS basis excluding
identified items 2.5% 7.6%
F. 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.
$ million Jun 30, Mar 31, Dec 31, Jun 30,
2016 2016 2015 2015
Current debt 10,863 7,868 5,530 7,366
Non-current debt 79,466 73,005 52,849 45,575
Less: Cash and cash
equivalents (15,222) (11,019) (31,752) (26,981)
Net debt 75,107 69,854 26,624 25,960
Add: Total equity 192,506 198,014 164,121 178,008
Total capital 267,613 267,868 190,748 203,968
Gearing 28.1% 26.1% 14.0% 12.7%
G. Operating expenses
Operating expenses comprise production and manufacturing
expenses; selling, distribution and administrative expenses; and
research and development expenses.
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,
2015 (pages 8 to 12) 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.
- The acquisition of BG Group plc exposes us to integration risks
and other challenges.
- Following the acquisition of BG, we seek to execute divestments
in the pursuit of our strategy. We may not be able to successfully
divest these assets in line with our strategy.
- 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.
- 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.
- 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 contractual terms, laws and regulations. For example,
the outcome of the United
Kingdom's (UK) recent referendum to leave the European Union
(EU) could have a material effect on us depending on the impact of
future changes in UK and EU laws and regulations. In addition, we
and our joint arrangements and associates face the risk of
litigation worldwide.
- Our operations expose us to social instability, civil unrest,
terrorism, piracy, acts of war and risks of pandemic diseases that
could have a material adverse effect on our business.
- A further erosion of the business and operating environment in
Nigeria could have a material
adverse effect on us.
- Rising climate change concerns have led and could lead to
additional legal and/or regulatory measures which could result in
project delays or cancellations, a decrease in demand for fossil
fuels and additional compliance obligations, and therefore could
adversely impact our costs and/or revenue.
- The nature of our operations exposes us, and the communities in
which we work, to a wide range of health, safety, security and
environment risks.
- The operation of the Groningen asset in the Netherlands continues to expose
communities to earth tremor risks.
- Our future performance depends on the successful development
and deployment of new technologies and new products.
- We are exposed to treasury and trading risks, including
liquidity risk, interest rate risk, foreign exchange risk,
commodity price risk and credit risk. We are affected by the global
macroeconomic environment as well as financial and commodity market
conditions.
- We have substantial pension commitments, whose funding is
subject to capital market risks.
- We mainly self-insure our risk exposure. We could incur
significant losses from different types of risks that are not
covered by insurance from third-party insurers.
- An erosion of our business reputation could have a material
adverse effect on our brand, our ability to secure new resources
and our licence to operate.
- Many of our major projects and operations are conducted in
joint arrangements or associates. This could reduce our degree of
control, as well as our ability to identify and manage risks.
- We rely heavily on information technology systems for our
operations.
- Violations of antitrust and competition laws carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
- Violations of anti-bribery and corruption laws and anti-money
laundering laws 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, carry fines
and expose us and our employees to criminal sanctions and civil
suits.
- The Company's Articles of Association determine the
jurisdiction for shareholder disputes. This could limit shareholder
remedies.
FIRST QUARTER 2016 PORTFOLIO DEVELOPMENTS
During the quarter, Shell completed the acquisition of BG for a
purchase consideration of $54,034
million. This includes cash of $19,036 million, and the fair value ($34,050 million) of 1,523.8 million shares issued
in exchange for all BG shares. Following completion of the
acquisition on February 15, 2016, BG
was consolidated within Shell's results. For practical purposes,
this includes February and March
2016, as the impact for the first half of February is deemed
immaterial.
The consolidation of BG resulted in an increase to first quarter
2016 cash flow from operating activities of $0.8 billion and an increase to CCS earnings
attributable to shareholders excluding identified items of
$0.2 billion.
Goodwill of $9,024 million was
recognised on the acquisition, being the excess of the purchase
consideration over the fair value of net assets acquired (see Note
2).
Shell completed the United
Kingdom office footprint review announced during the final
stages of the BG combination. The outcomes of the review are
subject to appropriate engagement with employees and employee
representatives. The review recommended a consolidation of all
Shell's London and South East
based operations into Central
London with the intention to close the Thames Valley Park
office in Reading by the end of 2016. The review also recommended
that all Aberdeen-based onshore
operations move to the Shell Aberdeen Tullos office, with BG's
offices at Albyn Place closing by 2016 and the closure of Shell's
Brabazon House office in Manchester by the end of 2017.
Integrated Gas
During the quarter, first LNG production was achieved at the
non-operated Gorgon project (Shell interest 25%) on Barrow Island,
offshore Australia. Subsequent to
first LNG cargo delivery, LNG production was temporarily halted due
to mechanical issues with the propane refrigerant compressor on
Train 1.
In Australia, the Browse Joint
Venture participants (Shell interest 27%) decided not to progress
with the development concept being studied for the resource as it
did not meet commercial requirements for a positive final
investment decision ("FID"), considering the current economic and
market environment.
In Indonesia, INPEX as operator
of the Abadi field (Shell interest 35%) received a notification
from the Indonesian government authorities instructing to
re-propose a plan of development based on onshore LNG for the Abadi
LNG project. Shell and INPEX remain committed to work together with
the Government of Indonesia to
ensure that the Abadi project moves forward to optimally develop
the Abadi gas reserves in a manner that benefits all.
Upstream
In Brazil, Shell announced the
start of oil production from the third phase of the deep-water
Parque das Conchas BC-10 development (Shell interest 50%) in the
Campos basin.
Also in Brazil, the seventh
non-operated FPSO, Cidade de Maricá, (Shell interest 25%) reached
first oil in the BM-S-11 block of the Santos Basin, offshore
Brazil. The FPSO has a production
capacity of 150 thousand barrels per day.
Shell announced that it has decided to exit the joint
development of the Bab sour gas reservoirs (Shell interest 40%)
with ADNOC in the emirate of Abu Dhabi,
United Arab Emirates, and to stop further joint work on the
project. This reflects the economic climate prevailing in the
energy industry.
In the United Kingdom, Shell
has agreed to sell its 7.59% interest in the Maclure oil and gas
field in the North Sea for a purchase consideration of some
$24 million. Completion is subject to
necessary approvals.
Shell had continued success in its exploration programme with 10
discoveries and appraisals in Brunei, Egypt, Malaysia, Nigeria, Oman, and the United
States. This included a notable oil discovery in
the United States with the
non-operated Kepler North well (Shell interest 50%) in the
Gulf of Mexico, and a notable gas
discovery with the non-operated Jerun-1 well (Shell interest 30%)
in Malaysia.
Upstream divestments totalled some $38
million for the first quarter 2016 and reflected, among
others, the first tranche of the sale proceeds of the Anasuria
development in the North Sea.
Downstream
During the quarter, Shell announced a conditional agreement for
the sale of its 51% shareholding in the Shell Refining Company in
Malaysia for $66 million. The transaction is expected to
complete in 2016, subject to regulatory approval.
In the United States, Shell
announced that it has signed a non-binding Letter of Intent to
divide the assets of Motiva Enterprises LLC. The Motiva joint
venture was formed in 1998 and has operated as a 50/50 refining and
marketing joint venture between Saudi Arabian Oil Company and Shell
since 2002. In the proposed division of assets, Shell will assume
sole ownership of the Norco,
Louisiana refinery (where Shell operates a chemicals plant),
the Convent, Louisiana refinery,
nine distribution terminals, and Shell branded markets in
Florida, Louisiana, and the Northeastern region. Saudi
Refining Inc. will retain the Motiva name, assume sole ownership of
the Port Arthur refinery in
Texas, retain 26 distribution
terminals, and have an exclusive licence to use the Shell brand for
gasoline and diesel sales in Texas, and in the majority of the Mississippi
Valley, the Southeast and Mid-Atlantic markets.
Also in the United States,
Shell completed the sale of an additional 4.66% interest in Shell
Midstream Partners, L.P. to public investors via the issuance of an
additional 13,400,000 LP units for net proceeds of $421 million.
Shell announced FID on a project to expand China National
Offshore Oil Corporation ("CNOOC") and Shell Petrochemical
Company's ("CSPC") existing 50/50 joint venture in Huizhou, Guangdong
Province, China. Subject to
regulatory approvals, Shell and CNOOC have agreed that CSPC will
take over CNOOC's ongoing project to build additional chemical
facilities next to CSPC's petrochemical complex. The project
includes the ongoing construction of a new ethylene cracker and
ethylene derivatives units, which will increase ethylene capacity
by more than 1 million tonnes per year, about double the current
capacity. It will also include a styrene monomer and propylene
oxide plant.
In May, Shell announced that it completed the sale of Dansk
Fuels in Denmark for a
consideration of $0.3 billion. Dansk
Fuels comprises retail, commercial fuels, commercial fleet and
aviation businesses, and products trading and supply activities
associated with those businesses.
FIRST QUARTER SUMMARY OF IDENTIFIED ITEMS
With effect from 2016, identified items include the impact of
exchange rate movements on certain deferred tax balances, as set
out in Definition A. The comparative information in this Report has
been restated following this change.
CCS earnings attributable to shareholders for the first quarter
2016 reflected the following items, which in aggregate amounted to
a net charge of $739 million
(compared with a net gain of $1,023
million for the first quarter 2015), as summarised
below:
- Integrated Gas earnings included a net charge of $89 million, primarily reflecting a gain of some
$400 million related to the impact of
the strengthening Australian dollar on a deferred tax position,
offset by a net charge on fair value accounting of certain
commodity derivatives and gas contracts of some $170 million, asset impairments of some
$130 million, and other items
including a litigation provision. Integrated Gas earnings for the
first quarter 2015 included a net charge of $352 million.
- Upstream earnings included a net gain of $87 million, primarily reflecting a gain of some
$360 million related to the impact of
the strengthening Brazilian real on a deferred tax position, partly
offset by asset impairments of some $300
million. Upstream earnings for the first quarter 2015
included a net gain of $1,595
million.
- Downstream earnings included a net charge of $310 million, primarily reflecting the net impact
of fair value accounting of commodity derivatives of some
$240 million and impairments of some
$190 million, partly offset by gains
on divestments of some $130 million.
Downstream earnings for the first quarter 2015 included a net
charge of $132 million.
- Corporate results and Non-controlling interest included a net
charge of $427 million, mainly
reflecting a charge of $266 million
related to the payment of stamp duty in the United Kingdom for the acquisition of BG, and
a charge of some $190 million related
to the impact of the strengthening Brazilian real on deferred tax
positions related to financing of the Upstream business, partly
offset by $100 million for the
non-controlling interest share of an impairment of a Downstream
asset. Earnings for the first quarter 2015 included a net charge of
$88 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 Guidance 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 shown on pages 62-64
in the Annual Report and Form 20-F for the year ended December 31, 2015.
On behalf of the Board
Ben van Beurden Simon Henry
Chief Executive Officer Chief Financial Officer
July 28, 2016 July 28, 2016
INDEPENDENT REVIEW REPORT TO ROYAL DUTCH SHELL
PLC
Introduction
We have been engaged by Royal Dutch Shell plc to review the
Condensed Consolidated Interim Financial Statements in the
half-yearly financial report for the six months ended June 30, 2016, which comprise the Consolidated
Statement of Income, the Consolidated Statement of Comprehensive
Income, the Condensed Consolidated Balance Sheet, the Consolidated
Statement of Changes in Equity, the Condensed Consolidated
Statement of Cash Flows and Notes 1 to 7. 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 set
of financial statements.
This report is made solely to Royal Dutch Shell plc in
accordance with guidance contained in the International Standard on
Review Engagements 2410 (UK and Ireland) "Review of Interim Financial
Information Performed by the Independent Auditor of the Entity"
issued by the Auditing Practices Board. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than Royal Dutch Shell plc, for our work, for this
report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report 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 Guidance and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
The annual Consolidated Financial Statements of Royal Dutch
Shell plc and its subsidiaries are prepared in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board (IASB) and as adopted by
the European Union (EU). The condensed set of financial statements
included in the half-yearly financial report has been prepared in
accordance with International Accounting Standard 34 Interim
Financial Reporting, as issued by the IASB and as adopted by the
EU.
Our responsibility
Our responsibility is to express to Royal Dutch Shell plc a
conclusion on the Condensed Consolidated Interim Financial
Statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland), "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.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the Condensed Consolidated Interim
Financial Statements in the half-yearly financial report for the
six months ended June 30, 2016 are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as issued by the IASB and as
adopted by the EU and the Disclosure Guidance and Transparency
Rules of the United Kingdom's
Financial Conduct Authority.
Ernst & Young LLP
London
July 28, 2016
The maintenance and integrity of the Royal Dutch Shell plc
website (http://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.
Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
CAUTIONARY STATEMENT
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 legal 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. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
"joint ventures" and "joint operations" respectively. Entities 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. 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 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. There can be no assurance that future dividend
payments will match or exceed previous dividend payments. 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, 2015 (available
at http://www.shell.com/investor and http://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 28, 2016. 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.
This Report contains references to Shell's website. These
references are for the readers' convenience only. Shell is not
incorporating by reference any information posted on
http://www.shell.com
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 http://www.sec.gov. You can also obtain this form from
the SEC by calling 1-800-SEC-0330.
This announcement contains inside information.
July 28, 2016
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 Guidance and Transparency Rules of the UK Financial
Conduct Authority. As such: (1) the interim management report can
be found on pages 2 to 10 and 21 to 27; (2) the condensed set of
financial statements on pages 11 to 20; and (3) the directors'
responsibility statement on page 28 and the auditors' independent
review on page 29. Company No. 4366849, Registered Office: Shell
Centre, London, SE1 7NA,
England, UK.
Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
Contacts:
- Michiel Brandjes, Company
Secretary
- 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
SOURCE Royal Dutch Shell plc