TIDMRDSA TIDMRDSB 
 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF 
YEAR UNAUDITED RESULTS 
----------------------------------------------------- 
 
 
 
 
SUMMARY OF UNAUDITED RESULTS 
                   Quarters                                            $ million                                                     Half year 
    Q2 2021     Q1 2021       Q2 2020    %(1)                                                              Reference           2021          2020     % 
    3,428       5,660      (18,131)      -39     Income/(loss) attributable to shareholders                                 9,087      (18,155)      +150 
    2,634       4,345      (18,377)      -39     CCS earnings attributable to shareholders                  Note 2          6,980      (15,620)      +145 
    5,534       3,234           638      +71     Adjusted Earnings(2)                                          A            8,768         3,498      +151 
   13,507      11,490         8,491              Adjusted EBITDA (CCS basis)                                   A           24,997        20,031 
   12,617       8,294         2,563      +52     Cash flow from operating activities                                       20,910        17,415      +20 
  (2,946)       (590)       (2,320)              Cash flow from investing activities                                      (3,535)       (5,039) 
    9,671       7,704           243              Free cash flow                                                G           17,375        12,376 
    4,383       3,974         3,617              Cash capital expenditure                                      C            8,357         8,587 
    8,470       9,436         8,423      -10     Operating expenses                                            F           17,905        17,042       +5 
    8,505       8,724         7,504       -3     Underlying operating expenses                                 F           17,228        16,105       +7 
       3.2%      (4.7)%        (2.9)%            ROACE (Net income basis)                                      D               3.2%        (2.9)% 
                                                 ROACE on an Adjusted Earnings plus Non-controlling 
       4.9%        3.0%          5.3%             interest (NCI) basis                                         D               4.9%          5.3% 
   65,735      71,252        77,843              Net debt                                                      E           65,735        77,843 
      27.7%       29.9%         32.7%            Gearing                                                       E              27.7%         32.7% 
    3,254       3,489         3,379       -7     Total production available for sale (thousand boe/d)                       3,371         3,549       -5 
     0.44        0.73          (2.33)    -40     Basic earnings per share ($)                                                1.17        (2.33)      +150 
     0.71        0.42          0.08      +69     Adjusted Earnings per share ($)                               B             1.13          0.45      +151 
     0.24      0.1735          0.16      +38     Dividend per share ($)                                                    0.4135          0.32      +29 
---------    --------    ----------    --------  ------------------------------------------------------  -------------  ---------    ----------    -------- 
 
   1.     Q2 on Q1 change. 
   2.     Adjusted Earnings is defined as income/(loss) attributable to shareholders plus cost of supplies adjustment (see Note 2) and excluding identified items (see Reference A). 

Second quarter 2021 income attributable to Royal Dutch Shell plc shareholders was $3.4 billion, which included post-tax impairment charges of $1.8 billion and charges of $1.2 billion due to the fair value accounting of commodity derivatives.

Adjusted Earnings for the quarter were $5.5 billion. Cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders for the second quarter 2021 was negative $0.8 billion.

Cash flow from operating activities for the second quarter 2021 was $12.6 billion, which included negative working capital movements of $1.6 billion. Cash flow from investing activities for the quarter was an outflow of $2.9 billion, mainly driven by capital expenditure and partly offset by proceeds from sale of property, plant and equipment and businesses.

Compared with the first quarter 2021, current quarter Adjusted Earnings reflected higher realised oil prices, one-off favourable tax impacts, higher marketing margins and lower operating expenses. This was partly offset by lower contributions from trading and optimisation.

At the end of the second quarter 2021, net debt was $65.7 billion, compared with $71.3 billion at the end of the first quarter 2021, mainly driven by free cash flow generation in the quarter. Gearing was 27.7% at the end of the second quarter 2021, compared with 29.9% at the end of the first quarter 2021, mainly driven by net debt reduction and improved earnings.

Dividends declared to Royal Dutch Shell plc shareholders for the quarter amount to $0.24 per share. Share buybacks of $2 billion launched today which is targeted to be completed by the end of 2021.

This announcement, together with supplementary financial and operational disclosure and a separate press release for this quarter, is available at www.shell.com/investors1.

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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1. Not incorporated by reference.

SECOND QUARTER 2021 PORTFOLIO DEVELOPMENTS

Integrated Gas

In June 2021, the New Jersey Board of Public Utilities issued an order giving Atlantic Shores Offshore Wind (Atlantic Shores), the 50-50 joint venture between EDF Renewables North America and Shell New Energies US LLC (Shell), the right to provide clean offshore wind energy to power the state of New Jersey. Through a rigorous bid and selection process, Atlantic Shores won the rights to provide 1.5 gigawatts (GW) of renewable offshore energy, which is enough energy to power over 700,000 homes.

In July 2021, Shell Gas & Power Developments BV (Shell) and T-Systems International GmbH (T-Systems), Deutsche Telekom's corporate customers arm, have signed a memorandum of understanding (MOU) to advance digital innovation as both companies accelerate their transitions to net-zero emissions. The MOU builds on an existing technological relationship between Shell and T-Systems. Under the terms of the agreement the two companies will pursue the net-zero goals of both companies, their supply chains and customers; collaborate on innovations and services to accelerate Shell's digital transformation; and work together to identify opportunities to co-invest and participate in new business models focused on the decarbonisation of society.

In July 2021, Shell Trinidad and Tobago (through BG International, a subsidiary of Royal Dutch Shell plc) announced that production has started on Block 5C in the East Coast Marine Area (ECMA) in Trinidad and Tobago. This marks a significant milestone in the delivery of gas both domestically and internationally through Atlantic LNG, where Shell's equity in the Atlantic plant ranges from 46% to 57.5% in each of the four trains at the facility.

Upstream

In May 2021, Shell Petroleum N.V. signed an agreement with Malampaya Energy XP Pte Ltd (a subsidiary of Udenna Corporation) for the sale of its 100% shareholding in Shell Philippines Exploration B.V. (SPEX). SPEX holds a 45% operating interest in Service Contract 38 (SC38), which includes the producing Malampaya gas field. The base consideration for the sale is $380 million, with additional payments of up to $80 million between 2022 to 2024 contingent on asset performance and commodity prices. Subject to partner and regulatory approval, the transaction is targeted to complete by the end of 2021.

In July 2021, Shell Offshore Inc. announced the final investment decision for Whale, a deep-water development in the US Gulf of Mexico that features a 99% replicated hull and an 80% replication of the topsides from the Vito project.

Oil Products

In May 2021, Shell Oil Company reached an agreement for the sale of its interest in Deer Park Refining Limited Partnership, a 50-50 joint venture between Shell Oil Company and P.M.I. Norteamerica, S.A. De C.V. (a subsidiary of Petroleos Mexicanos, or Pemex). The transaction will transfer Shell's interest in the partnership, and therefore full ownership of the refinery, to Pemex, subject to regulatory approvals. The transaction is expected to complete by the end of 2021. Shell Chemical L.P. will continue to operate its 100% owned Deer Park Chemicals facility located adjacent to the site.

In July 2021, Shell announced the start-up of Europe's largest polymer electrolyte membrane hydrogen electrolyser at its Energy and Chemicals Park Rheinland, producing green hydrogen. The project, backed by a European consortium, will accelerate hydrogen production and contribute to Europe's goal to achieve climate neutrality. As part of the Refhyne European consortium and with European Commission funding through the Fuel Cells and Hydrogen Joint Undertaking, the fully operational plant is the first to use this technology at such a large scale in a refinery.

In July 2021, Shell Deutschland reached an agreement with Alcmene GmbH (part of the Liwathon Group) for the sale of its non-operated 37.5% shareholding in the Germany PCK Schwedt Refinery. The transaction is expected to close in the second half of 2021, subject to partner rights and regulatory approval.

The agreements for the sale of interests in Deer Park Refining Limited Partnership, the PCK Schwedt Refinery, Puget Sound Refinery and the Mobile Refinery (Chemicals), as well as completion of the sale of the Fredericia Refinery, reflect ongoing portfolio management activities as part of the Powering Progress strategy.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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PERFORMANCE BY SEGMENT

 
 
 
INTEGRATED GAS 
                  Quarters                                             $ million                                                    Half year 
    Q2 2021    Q1 2021      Q2 2020    %(1)                                                                 Reference         2021         2020     % 
      422      2,527      (7,959)      -83     Segment earnings                                                            2,949      (6,147)      +148 
  (1,187)      1,112      (8,321)                Of which: Identified items                                     A           (75)      (8,652) 
    1,609      1,415          362      +14     Adjusted Earnings                                                A          3,025        2,506      +21 
    3,364      3,206        2,767              Adjusted EBITDA (CCS basis)                                      A          6,571        6,650 
    3,761      2,491        2,663      +51     Cash flow from operating activities                                         6,252        6,649       -6 
                                               Cash flow from operating activities excluding working 
    4,350      3,653        2,871      +19     capital movements                                                H          8,003        6,224      +29 
      880      1,015          736              Cash capital expenditure                                         C          1,895        1,618 
      162        170          151       -5     Liquids production available for sale (thousand b/d)                          166          157       +6 
                                               Natural gas production available for sale (million 
    4,502      4,621        4,369       -3      scf/d)                                                                     4,561        4,482       +2 
      938        967          904       -3     Total production available for sale (thousand boe/d)                          952          930       +2 
     7.49       8.16         8.36       -8     LNG liquefaction volumes (million tonnes)                                   15.65        17.23       -9 
    15.92      16.38        17.38       -3     LNG sales volumes (million tonnes)2                                         32.30        37.10      -13 
---------    -------    ---------    --------  ---------------------------------------------------------  -------------  -------    ---------    -------- 
 

1.Q2 on Q1 change.

2.Prior period comparatives have been revised, and had been previously reported as Q1 2021: 15.80 million tonnes, Q2 2020: 16.65 million tonnes and half year 2020: 35.65 million tonnes.

Second quarter segment earnings were $422 million. This included losses of $781 million due to the fair value accounting of commodity derivatives and post-tax impairment charges of $494 million (see Note 7). These losses are part of identified items (see Reference A). Adjusted Earnings for the quarter were $1,609 million.

Cash flow from operating activities for the quarter was $3,761 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as cash inflows from commodity derivatives in gas and power trading. This was partly offset by negative working capital movements.

Compared with the first quarter 2021, Integrated Gas Adjusted Earnings primarily reflected higher realised prices for LNG, oil and gas, lower comparative operating expenses due to credit provisions in the first quarter 2021 and favourable deferred tax movements. This was partly offset by lower contributions from trading and optimisation.

Compared with the first quarter 2021, total oil and gas production decreased by 3% mainly due to higher maintenance activities and field decline, partly offset by production sharing contract effects. LNG liquefaction volumes decreased by 8% due to higher maintenance activities and feedgas constraints.

Half year segment earnings were $2,949 million. This included gains on sale of assets of $1,097 million offset by post-tax impairment charges of $586 million and losses of $518 million due to the fair value accounting of commodity derivatives. These gains and losses are part of identified items (see Reference A). Adjusted Earnings for the half year were $3,025 million.

Cash flow from operating activities for the half year was $6,252 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as cash inflows from commodity derivatives. This was partly offset by negative working capital movements.

Compared with the first half 2020, Integrated Gas Adjusted Earnings primarily reflected higher realised prices for oil, gas and LNG as well as favourable deferred tax movements. This was partly offset by lower contributions from trading and optimisation as well as higher operating expenses related to credit provisions.

Compared with the first half 2020, total oil and gas production increased by 2% mainly due to the restart of production at the Prelude floating LNG operations in Australia, increased demand, new fields, production sharing contract effects and lower maintenance activities. LNG liquefaction volumes decreased by 9% due to feedgas constraints and higher maintenance activities, partly offset by the restart of production at the Prelude floating LNG operations in Australia.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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UPSTREAM 
                 Quarters                                            $ million                                                     Half year 
  Q2 2021    Q1 2021      Q2 2020    %(1)                                                                 Reference          2021         2020     % 
  2,415      1,096      (6,721)      +120    Segment earnings                                                             3,511      (7,584)      +146 
   (53)        133      (5,209)                Of which: Identified items                                     A              80      (6,364) 
  2,469        963      (1,512)      +156    Adjusted Earnings                                                A           3,432      (1,220)      +381 
  6,714      5,387        1,674              Adjusted EBITDA (CCS basis)                                      A          12,100        6,510 
  5,056      4,108          319      +23     Cash flow from operating activities                                          9,163        5,926      +55 
                                             Cash flow from operating activities excluding working 
  5,444      4,702          548      +16     capital movements                                                H          10,146        4,265      +138 
  1,696      1,534        1,876              Cash capital expenditure                                         C           3,229        4,397 
  1,558      1,579        1,609       -1     Liquids production available for sale (thousand b/d)                         1,568        1,670       -6 
  4,082      5,126        4,673      -20     Natural gas production available for sale (million                           4,601        5,176      -11 
                                              scf/d) 
  2,262      2,462        2,415       -8     Total production available for sale (thousand boe/d)                         2,362        2,562       -8 
-------    -------    ---------    --------  ---------------------------------------------------------  -------------  --------    ---------    -------- 
 
   1.    Q2 on Q1 change. 

Second quarter segment earnings were $2,415 million. This included a net charge of $164 million related to the sale of assets, losses of $129 million due to the fair value accounting of commodity derivatives and post-tax impairment charges of $91 million, partly offset by a gain of $325 million related to the impact of the strengthening Brazilian real on a deferred tax position. These net losses are part of identified items (see Reference A). Adjusted Earnings were $2,469 million.

Cash flow from operating activities for the quarter was $5,056 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, partly offset by negative working capital movements.

Compared with the first quarter 2021, Upstream Adjusted Earnings reflected higher realised oil prices, and the one-off release of a tax provision in Nigeria of $628 million.

Compared with the first quarter 2021, total production decreased by 8%, mainly due to unfavourable seasonal effects and higher maintenance activities.

Half year segment earnings were $3,511 million. This included a net gain of $247 million related to the sale of assets, and losses of $197 million due to the fair value accounting of commodity derivatives. These net gains are part of identified items (see Reference A). Adjusted Earnings were $3,432 million.

Cash flow from operating activities for the half year was $9,163 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, partly offset by negative working capital movements.

Compared with the first half 2020, Upstream Adjusted Earnings reflected higher realised oil and gas prices, the one-off release of a tax provision in Nigeria and lower depreciation.

Compared with the first half 2020, total production decreased by 8%, mainly due to higher maintenance activities and the impact of divestments.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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OIL PRODUCTS 
                  Quarters                                             $ million                                                     Half year 
    Q2 2021    Q1 2021      Q2 2020    %(1)                                                                 Reference           2021         2020     % 
       33        650      (3,023)      -95     Segment earnings(2)                                                             682        (811)      +184 
  (1,267)      (227)      (5,433)                Of which: Identified items                                     A          (1,494)      (4,585) 
    1,299        877        2,411      +48     Adjusted Earnings(2)                                             A            2,176        3,774      -42 
                                                 Of which: 
      112      (105)        1,500      +207          Refining & Trading(3)                                                       7        1,658      -100 
    1,187        982          911      +21           Marketing(3)                                                            2,169        2,116       +3 
    2,608      2,112        3,747              Adjusted EBITDA (CCS basis)                                      A            4,720        6,614 
                                                 Of which: 
      676        467        2,267                    Refining & Trading(3)                                                   1,143        3,197 
    1,932      1,646        1,479                    Marketing(3)                                                            3,577        3,417 
    2,213        893        (362)      +148    Cash flow from operating activities                                           3,106        4,516      -31 
                                               Cash flow from operating activities excluding working 
    3,365      3,313        2,430       +2     capital movements                                                H            6,678        2,783      +140 
      882        668          606              Cash capital expenditure                                         C            1,550        1,186 
    1,833      1,751        1,944       +5     Refinery processing intake (thousand b/d)                                     1,792        2,170      -17 
    4,552      4,164        4,041       +9     Oil Products sales volumes (thousand b/d)                                     4,359        4,659       -6 
---------    -------    ---------    --------  ---------------------------------------------------------  -------------  ---------    ---------    -------- 
 
   1.    Q2 on Q1 change. 
   2.    Earnings are presented on a CCS basis (see Note 2). 
   3.    With effect from Q1 2021, changes are made in the cost and activity allocation between Marketing and Refining & Trading. This resulted in a net Q2 2021 charge of $45 million (half year 2021: $219 million) to Refining & Trading, with an offsetting amount in Marketing. This change does not impact consolidated Oil Products Adjusted Earnings. 

Second quarter segment earnings were $33 million. This included post-tax impairment charges of $1,021 million, mainly related to refining assets classified as held for sale in the USA, and losses of $275 million due to the fair value accounting of commodity derivatives. These net losses are part of identified items (see Reference A). Adjusted Earnings were $1,299 million.

Cash flow from operating activities for the second quarter 2021 was $2,213 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, partly offset by negative working capital movements and cash outflows for commodity derivatives.

Compared with the first quarter 2021, Oil Products Adjusted Earnings reflected higher Retail margins, and higher contributions from trading and optimisation, partly offset by higher operating expenses driven by recovery in sales volumes.

Oil Products sales volumes increased due to higher demand and favourable seasonal effects.

--Refining & Trading Adjusted Earnings reflected higher realised refining margins (while Refining Adjusted Earnings still being negative), higher contributions from trading and optimisation and lower depreciation.

--Marketing Adjusted Earnings reflected higher Retail margins partly offset by higher operating expenses driven by recovery in sales volumes.

Refinery utilisation was 76% compared with 72% in the first quarter 2021, with higher demand and lower unplanned downtime in the second quarter 2021.

Half year segment earnings were $682 million. This included post-tax impairment charges of $1,130 million, redundancy and restructuring costs of $244 million, and losses of $105 million due to the fair value accounting of commodity derivatives. These net losses are part of identified items (see Reference A). Adjusted Earnings were $2,176 million.

Cash flow from operating activities for the half year was $3,106 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, partly offset by negative working capital movements and cash outflows for commodity derivatives.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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Compared with the first half 2020, Oil Products Adjusted Earnings reflected lower contributions from trading and optimisation, lower realised refining margins, and higher operating expenses. These were partly offset by higher marketing margins.

Oil Products sales volumes increased due to higher demand compared with the first half 2020.

--Refining & Trading Adjusted Earnings reflected lower contributions from trading and optimisation, lower refining margins, and higher operating expenses. These were partly offset by higher Oil Sands margins and lower depreciation.

--Marketing Adjusted Earnings reflected higher sales volumes in Lubricants and Retail, partly offset by higher operating expenses.

Refinery utilisation was 74% compared with 75% in the first half 2020, with higher planned and unplanned downtime in the first quarter 2021.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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CHEMICALS 
                Quarters                                           $ million                                                   Half year 
  Q2 2021    Q1 2021    Q2 2020    %(1)                                                                 Reference         2021       2020     % 
    462        689        164      -33     Segment earnings(2)                                                         1,152        311      +271 
  (208)       (41)       (41)                Of which: Identified items                                     A          (248)       (43) 
    670        730        206       -8     Adjusted Earnings(2)                                             A          1,400        354      +295 
  1,036      1,041        507              Adjusted EBITDA (CCS basis)                                      A          2,077        973 
  1,133        324        734      +249    Cash flow from operating activities                                         1,457        556      +162 
                                           Cash flow from operating activities excluding working 
  1,225      1,045        304      +17     capital movements                                                H          2,270        492      +361 
    895        730        369              Cash capital expenditure                                         C          1,625      1,215 
  3,609      3,583      3,623       +1     Chemicals sales volumes (thousand tonnes)                                   7,192      7,494       -4 
-------    -------    -------    --------  ---------------------------------------------------------  -------------  -------    -------    -------- 
 
   1.    Q2 on Q1 change. 
   2.    Earnings are presented on a CCS basis (see Note 2). 

Second quarter segment earnings were $462 million. This included post-tax impairment charges of $180 million, which are part of identified items (see Reference A). Adjusted earnings were $670 million.

Cash flow from operating activities for the quarter was $1,133 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, the timing impact of dividends from Joint Ventures and Associates, partly offset by negative working capital movements.

Compared with the first quarter 2021, Chemicals Adjusted Earnings reflected higher base chemicals margins, partly offset by lower intermediate margins, and higher operating expenses due to maintenance phasing.

Chemicals manufacturing plant utilisation was 82% compared with 79% in the first quarter 2021, due to lower unplanned downtime.

Half year segment earnings were $1,152 million. This included post-tax impairment charges of $208 million, which are part of identified items (see Reference A). Adjusted earnings were $1,400 million.

Cash flow from operating activities for the half year was $1,457 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and cost-of-sales adjustments, partly offset by negative working capital movements.

Compared with the first half 2020, Chemicals Adjusted Earnings reflected higher realised margins in base chemicals and intermediates from a stronger price environment.

Chemicals manufacturing plant utilisation remained at 81% compared with the first half 2020.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 
 
 
 
CORPORATE 
           Quarters                                       $ million                                                 Half year 
  Q2 2021    Q1 2021    Q2 2020                                                                 Reference           2021         2020 
  (592)      (531)      (805)      Segment earnings                                                            (1,124)      (1,258) 
  (193)        134        (9)       Of which: Identified items                                      A             (59)          526 
  (399)      (666)      (796)      Adjusted Earnings                                                A          (1,065)      (1,784) 
  (101)      (172)      (171)      Adjusted EBITDA (CCS basis)                                      A            (273)        (587) 
    454        478      (791)      Cash flow from operating activities                                             932        (232) 
                                   Cash flow from operating activities excluding working 
  (208)       (30)        390      capital movements                                                H            (238)          151 
-------    -------    -------    -----------------------------------------------------------  -------------  ---------    --------- 
 

Second quarter segment earnings were an expense of $592 million. This included a loss of $193 million from the deferred tax impact of the strengthening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were a net expense of $399 million.

Compared with the first quarter 2021, Adjusted Earnings reflected favourable movements in tax credits and favourable currency exchange rate effects, partly offset by higher net interest expense.

Half year segment earnings were an expense of $1,124 million. This included a loss of $59 million from the deferred tax impact of the strengthening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were a net expense of $1,065 million.

Compared with the first half 2020, Adjusted Earnings reflected favourable currency exchange rate effects, lower net interest expense and favourable movements in tax credits.

OUTLOOK FOR THE THIRD QUARTER 2021

As a result of the COVID-19 pandemic, there continues to be significant uncertainty surrounding how quickly macroeconomic conditions will recover, and the associated impacts on demand for oil, gas and related products. The third quarter 2021 outlook provides ranges for operational and financial metrics based on current expectations, but these are subject to change in the light of evolving market conditions. Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics.

Due to the impact of maintenance activities, Integrated Gas production is expected to be approximately 870 - 920 thousand boe/d and LNG liquefaction volumes are expected to be approximately 7.4 - 8.0 million tonnes.

Upstream production is expected to be approximately 2,100 - 2,250 thousand boe/d.

Refinery utilisation is expected to be approximately 73% - 81%.

Oil Products sales volumes are expected to be approximately 4,300 - 5,300 thousand b/d.

Chemicals manufacturing plant utilisation is expected to be approximately 77% - 85%.

Chemicals sales volumes are expected to be approximately 3,600 - 3,900 thousand tonnes.

Corporate Adjusted Earnings are expected to be a net expense of approximately $600 - $700 million in the third quarter 2021 and a net expense of approximately $2,300 - $2,600 million for the full year 2021. This excludes the impact of currency exchange rate effects.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 
 
 
CONSOLIDATED STATEMENT OF INCOME 
              Quarters                                       $ million                                 Half year 
   Q2 2021     Q1 2021       Q2 2020                                                                  2021          2020 
  60,515      55,665        32,504    Revenue(1)                                                 116,181        92,533 
   1,114         995         (161)    Share of profit of joint ventures and associates             2,108           693 
     134       2,455           148    Interest and other income(2)                                 2,590           224 
  61,764      59,115        32,491    Total revenue and other income                             120,879        93,450 
  39,717      34,369        18,093    Purchases                                                   74,086        61,306 
   5,162       6,808         5,822    Production and manufacturing expenses                       11,970        11,803 
   3,107       2,462         2,370    Selling, distribution and administrative expenses            5,569         4,763 
     201         166           232    Research and development                                       366           475 
     332         285           723    Exploration                                                    617         1,018 
   8,223       5,896        28,089    Depreciation, depletion and amortisation(2)                 14,119        35,182 
     893         892         1,070    Interest expense                                             1,784         2,188 
  57,634      50,878        56,398    Total expenditure                                          108,512       116,735 
   4,130       8,237      (23,907)    Income/(loss) before taxation                               12,367      (23,284) 
     571       2,453       (5,806)    Taxation charge/(credit)(2)                                  3,024       (5,160) 
   3,559       5,784      (18,101)    Income/(loss) for the period(1)                              9,343      (18,124) 
     131         124            30    Income/(loss) attributable to non-controlling interest         255            31 
                                      Income/(loss) attributable to Royal Dutch Shell plc 
   3,428       5,660      (18,131)     shareholders                                                9,087      (18,155) 
    0.44        0.73        (2.33)    Basic earnings per share ($)(3)                               1.17        (2.33) 
    0.44        0.72        (2.33)    Diluted earnings per share ($)(3)                             1.16        (2.33) 
--------    --------    ----------    -------------------------------------------------------  ---------    ---------- 
 
   1.    See Note 2 "Segment information". 
   2.    See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements". 
   3.    See Note 3 "Earnings per share". 
 
 
 
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 
             Quarters                                          $ million                                    Half year 
  Q2 2021    Q1 2021       Q2 2020                                                                         2021          2020 
  3,559      5,784      (18,101)    Income/(loss) for the period                                        9,343      (18,124) 
                                    Other comprehensive income/(loss) net of tax: 
                                        Items that may be reclassified to income in later 
                                         periods: 
    575      (852)         1,588        -- Currency translation differences                             (277)       (2,347) 
    (2)       (14)            43        -- Debt instruments remeasurements                               (16)            15 
   (84)        132         (137)        -- Cash flow hedging gains/(losses)                                48         (289) 
   (51)        171          (99)        -- Net investment hedging gains/(losses)                          120          (99) 
   (20)       (34)            55        -- Deferred cost of hedging                                      (54)           156 
                                        -- Share of other comprehensive income/(loss) of joint 
    (7)       (56)            30         ventures and associates                                         (63)          (30) 
    410      (652)         1,481       Total                                                            (242)       (2,593) 
                                        Items that are not reclassified to income in later 
                                         periods: 
  1,675      4,628       (4,924)        -- Retirement benefits remeasurements                           6,303       (3,167) 
     10         40            77        -- Equity instruments remeasurements                               50          (60) 
                                        -- Share of other comprehensive income/(loss) of joint 
   (42)       (25)            19         ventures and associates                                         (67)            67 
  1,643      4,643       (4,828)    Total                                                               6,285       (3,160) 
  2,053      3,991       (3,347)    Other comprehensive income/(loss) for the period                    6,044       (5,753) 
  5,612      9,775      (21,448)    Comprehensive income/(loss) for the period                         15,386      (23,877) 
    145        121            43    Comprehensive income/(loss) attributable to non-controlling           266          (80) 
                                    interest 
  5,467      9,653      (21,490)    Comprehensive income/(loss) attributable to Royal                  15,121      (23,797) 
                                     Dutch Shell plc shareholders 
-------    -------    ----------    ---------------------------------------------------------------  --------    ---------- 
 

Page 9

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 
 
 
 
CONDENSED CONSOLIDATED BALANCE SHEET 
           $ million 
                                  June 30, 2021    December 31, 2020 
Assets 
Non-current assets 
Intangible assets                        22,462             22,822 
Property, plant and equipment           205,272            210,847 
Joint ventures and associates            23,248             22,451 
Investments in securities                 3,554              3,222 
Deferred tax                             14,392             16,311 
Retirement benefits(1)                    7,941              2,474 
Trade and other receivables               7,798              7,641 
Derivative financial 
 instruments(2)                           1,508              2,805 
                                        286,175            288,573 
Current assets 
Inventories                              25,097             19,457 
Trade and other receivables              43,694             33,625 
Derivative financial 
 instruments(2)                           8,787              5,783 
Cash and cash equivalents                34,104             31,830 
                                        111,682             90,695 
Total assets                            397,857            379,268 
Liabilities 
Non-current liabilities 
Debt                                     87,034             91,115 
Trade and other payables                  2,885              2,304 
Derivative financial 
 instruments(2)                             385                420 
Deferred tax                             11,717             10,463 
Retirement benefits1,3                   12,435             15,605 
Decommissioning and other 
 provisions                              27,657             27,310 
                                        142,112            147,217 
Current liabilities 
Debt                                     13,042             16,899 
Trade and other payables(3)              54,948             44,572 
Derivative financial 
 instruments(2)                          10,385              5,308 
Income taxes payable(3)                   2,837              3,111 
Decommissioning and other 
 provisions                               3,290              3,624 
                                         84,502             73,514 
Total liabilities                       226,614            220,731 
Equity attributable to Royal 
 Dutch Shell plc shareholders           167,999            155,310 
Non-controlling interest                  3,244              3,227 
Total equity                            171,243            158,537 
Total liabilities and equity            397,857            379,268 
--------------------------------  -------------  ----------------- 
 
   1.    See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements". 
   2.    See Note 6 "Derivative financial instruments and debt excluding lease liabilities". 

3. As from January 1, 2021 the 'Retirement benefits' liability has been classified under non-current liabilities (previously partly presented within current liabilities) and taxes payable not related to income tax are presented within 'Trade and other payables' (previously 'Taxes payable'). Prior period comparatives have been revised to conform with current year presentation. See Note 7.

Page 10

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 
 
 
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
                        Equity attributable to Royal Dutch Shell plc 
                                        shareholders 
                                Shares 
                      Share     held in     Other     Retained            Non-controlling    Total 
    $ million       capital(1)   trust   reserves(2)  earnings   Total       interest        equity 
At January 1, 2021         651    (709)       12,752   142,616   155,310            3,227   158,537 
Comprehensive 
 income/(loss) for 
 the period                 --       --        6,033     9,087    15,121              266    15,386 
Transfer from 
 other 
 comprehensive 
 income                     --       --         (15)        15        --               --        -- 
Dividends(3)                --       --           --   (2,620)   (2,620)            (265)   (2,886) 
Share-based 
 compensation               --      350        (219)        59       190               --       190 
Other changes in 
 non-controlling 
 interest                   --       --           --       (2)       (2)               16        15 
At June 30, 2021           651    (358)       18,552   149,155   167,999            3,244   171,243 
At January 1, 2020         657  (1,063)       14,451   172,431   186,476            3,987   190,463 
Comprehensive 
 income/(loss) for 
 the period                 --       --      (5,642)  (18,155)  (23,797)             (80)  (23,877) 
Transfer from 
 other 
 comprehensive 
 income                     --       --           17      (17)        --               --        -- 
Dividends3                  --       --           --   (4,718)   (4,718)            (178)   (4,896) 
Repurchases of 
 shares                    (6)       --            6   (1,214)   (1,214)               --   (1,214) 
Share-based 
 compensation               --      539        (324)     (231)      (16)               --      (16) 
Other changes in 
 non-controlling 
 interest                   --       --           --       426       426            (440)      (14) 
At June 30, 2020           651    (524)        8,508   148,521   157,156            3,289   160,445 
------------------  ----------  -------  -----------  --------  --------  ---------------  -------- 
 
   1.    See Note 4 "Share capital". 
   2.    See Note 5 "Other reserves". 
   3.    The amount charged to retained earnings is based on prevailing exchange rates on payment date. 

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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CONSOLIDATED STATEMENT OF CASH FLOWS 
               Quarters                                              $ million                                        Half year 
    Q2 2021      Q1 2021       Q2 2020                                                                                2021          2020 
    4,130        8,237      (23,907)    Income before taxation for the period                                     12,367      (23,284) 
                                        Adjustment for: 
      797          757           889        -- Interest expense (net)                                              1,554         1,786 
    8,223        5,896        28,089        -- Depreciation, depletion and amortisation                           14,119        35,182 
      108          136           518        -- Exploration well write-offs                                           244           601 
                                            -- Net (gains)/losses on sale and revaluation of non-current 
       55      (2,073)         (128)        assets and businesses                                                (2,018)          (21) 
  (1,114)        (995)           161        -- Share of (profit)/loss of joint ventures and associates           (2,108)         (693) 
      782          580           610        -- Dividends received from joint ventures and associates               1,361         1,141 
  (2,495)      (3,426)       (3,713)        -- (Increase)/decrease in inventories                                (5,921)         5,881 
  (4,080)      (6,829)         3,959        -- (Increase)/decrease in current receivables                       (10,909)        10,273 
    5,016        5,865       (4,226)        -- Increase/(decrease) in current payables                            10,881      (12,655) 
    2,173          185           837        -- Derivative financial instruments                                    2,358           665 
       47          109           293        -- Retirement benefits                                                   156           203 
    (124)           77           392        -- Decommissioning and other provisions                                 (46)           290 
      561          583         (480)        -- Other                                                               1,145            98 
  (1,465)        (809)         (730)    Tax paid                                                                 (2,274)       (2,051) 
   12,617        8,294         2,563    Cash flow from operating activities                                       20,910        17,415 
  (4,232)      (3,885)       (3,436)    Capital expenditure                                                      (8,117)       (7,699) 
    (115)         (69)         (161)    Investments in joint ventures and associates                               (184)         (720) 
     (36)         (21)          (20)    Investments in equity securities                                            (57)         (167) 
                                        Proceeds from sale of property, plant and equipment 
    1,162        3,106           211     and businesses                                                            4,268         1,824 
                                        Proceeds from joint ventures and associates from sale, 
        4          275           423     capital reduction and repayment of long-term loans(2)                       279           970 
      108           31            62    Proceeds from sale of equity securities                                      139           135 
      110           98           118    Interest received                                                            209           310 
      799          711         1,174    Other investing cash inflows                                               1,510         2,029 
    (746)        (837)         (691)    Other investing cash outflows                                            (1,583)       (1,719) 
  (2,946)        (590)       (2,320)    Cash flow from investing activities                                      (3,535)       (5,039) 
                                        Net increase/(decrease) in debt with maturity period 
     (34)          113            90     within three months                                                          79           412 
                                        Other debt: 
       57          109        15,238        -- New borrowings                                                        166        16,241 
  (3,901)      (5,707)       (7,113)        -- Repayments                                                        (9,607)       (9,836) 
  (1,162)        (806)       (1,088)    Interest paid                                                            (1,968)       (2,121) 
     (57)        (449)           324    Derivative financial instruments                                           (506)           243 
       --           15          (32)    Change in non-controlling interest                                            15          (40) 
                                        Cash dividends paid to: 
  (1,310)      (1,292)       (1,397)        -- Royal Dutch Shell plc shareholders(1)                             (2,602)       (4,880) 
    (140)        (125)          (68)        -- Non-controlling interest                                            (265)         (178) 
       --        (216)         (216)    Repurchases of shares3                                                     (216)       (1,702) 
                                        Shares held in trust: net sales/(purchases) and dividends 
      (2)         (63)          (18)     received                                                                   (65)         (199) 
  (6,550)      (8,420)         5,721    Cash flow from financing activities                                     (14,970)       (2,060) 
      (2)        (128)           164    Effects of exchange rate changes on cash and cash                          (130)         (431) 
                                         equivalents 
    3,119        (844)         6,128    Increase/(decrease) in cash and cash equivalents                           2,275         9,884 
   30,985       31,830        21,811    Cash and cash equivalents at beginning of period                          31,830        18,055 
   34,104       30,985        27,939    Cash and cash equivalents at end of period                                34,104        27,939 
---------    ---------    ----------    --------------------------------------------------------------------  ----------    ---------- 
 

1. Cash dividends paid represents the payment of net dividends (after deduction of withholding taxes where applicable) and payment of withholding taxes on dividends paid in the previous quarter.

2. As from 2021 renamed from 'Proceeds from sale of joint ventures and associates'.

3. The amount in Q1 2021 represents a payment of withholding taxes related to repurchases of shares in Q1 2020.

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UNAUDITED RESULTS 
----------------------------------------------------- 
 

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 ("IASB") and as adopted by the UK. For periods beginning on or after January 1, 2021, Shell's (interim) financial statements are prepared in accordance with UK-adopted international accounting standards which were established as a result of the UK's exit from the European Union. As applied to Shell there are no material differences from International Financial Reporting Standards as issued by the IASB. Except for the application of UK-adopted international accounting standards these Interim Statements have been prepared on the basis of the same accounting principles as those used in the Annual Report and Accounts (pages 216 to 264) and Form 20-F (pages 164 to 211) for the year ended December 31, 2020 as filed with the Registrar of Companies for England and Wales and the US Securities and Exchange Commission, respectively, and should be read in conjunction with these filings.

The financial information presented in the unaudited 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, 2020 were published in Shell's Annual Report and Accounts, a copy of which was delivered to the Registrar of Companies for England and Wales, and in Shell's Form 20-F. The auditor's report on those accounts was unqualified, did not include a reference to any matters to which the auditor 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.

Going concern

These unaudited Interim Statements have been prepared on the going concern basis of accounting. In assessing the appropriateness of the going concern assumption over the period to December 31, 2022 (the "going concern period"), management have stress tested Shell's most recent financial projections to incorporate a range of potential future outcomes by considering Shell's principal risks, further potential downside pressures on commodity prices and cash preservation measures, including reduced future operating costs, capital expenditure, shareholder distributions and increased divestments. This assessment confirmed that Shell has adequate cash, other liquid resources and undrawn credit facilities to enable it to meet its obligations as they fall due in order to continue its operations during the going concern period. Therefore, the Directors consider it appropriate to continue to adopt the going concern basis of accounting in preparing these unaudited Interim Statements.

Key accounting considerations, significant judgements and estimates

Future commodity price assumptions and management's view on the future development of refining margins represent a significant estimate and both were subject to change in 2020, resulting in the recognition of impairments in 2020. These assumptions continue to apply for impairment testing purposes in the second quarter 2021.

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. Sales between segments are based on prices generally equivalent to commercially available prices.

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 
 
 
 
INFORMATION BY SEGMENT 
               Quarters                     $ million              Half year 
    Q2 2021      Q1 2021       Q2 2020                            2021          2020 
                                        Third-party 
                                        revenue 
    9,247       11,258         7,436       Integrated Gas     20,505        17,593 
    2,242        1,941         1,177       Upstream            4,183         3,521 
   44,570       38,382        21,596       Oil Products       82,952        65,893 
    4,444        4,070         2,283       Chemicals           8,514         5,504 
       12           14            12       Corporate              26            22 
                                        Total third-party 
   60,515       55,665        32,504    revenue(1)           116,181        92,533 
                                        Inter-segment 
                                        revenue 
    1,794        1,351           558       Integrated Gas      3,145         1,449 
    8,924        7,254         4,117       Upstream           16,178        10,592 
    3,017        2,457         1,082       Oil Products        5,473         2,933 
    1,633        1,187           475       Chemicals           2,820         1,350 
       --           --            --       Corporate              --            -- 
                                        CCS earnings 
      422        2,527       (7,959)       Integrated Gas      2,949       (6,147) 
    2,415        1,096       (6,721)       Upstream            3,511       (7,584) 
       33          650       (3,023)       Oil Products          682         (811) 
      462          689           164       Chemicals           1,152           311 
    (592)        (531)         (805)       Corporate         (1,124)       (1,258) 
                                        Total CCS 
    2,741        4,430      (18,343)    earnings               7,171      (15,490) 
---------    ---------    ----------    -----------------  ---------    ---------- 
 
   1.    Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Second quarter 2021 included losses of $340 million (Q1 2021: $1,211 million income; Q2 2020: $1,405 million income). This amount includes both the reversal of prior losses of $374 million (Q1 2021: $385 million losses; Q2 2020: $686 million gains) related to sales contracts and prior gains of $434 million (Q1 2021: $465 million gains; Q2 2020: $507 million losses) related to purchase contracts that were previously recognised and where physical settlement took place in the second quarter 2021. 
 
 
 
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS 
              Quarters                                       $ million                                 Half year 
  Q2 2021      Q1 2021       Q2 2020                                                                  2021          2020 
                                      Income/(loss) attributable to Royal Dutch Shell plc 
  3,428        5,660      (18,131)     shareholders                                                9,087      (18,155) 
    131          124            30    Income/(loss) attributable to non-controlling interest         255            31 
  3,559        5,784      (18,101)    Income/(loss) for the period                                 9,343      (18,124) 
                                      Current cost of supplies adjustment: 
  (994)      (1,631)         (432)    Purchases                                                  (2,625)         3,342 
    208          353            98    Taxation                                                       562         (819) 
   (33)         (76)            92    Share of profit/(loss) of joint ventures and associates      (108)           111 
  (818)      (1,354)         (242)    Current cost of supplies adjustment                        (2,172)         2,634 
                                      of which: 
  (793)      (1,314)         (246)    Attributable to Royal Dutch Shell plc shareholders         (2,108)           2,535 
   (25)         (39)               4  Attributable to non-controlling interest                      (64)             100 
  2,741        4,430      (18,343)    CCS earnings                                                 7,171      (15,490) 
                                      of which: 
  2,634        4,345      (18,377)    CCS earnings attributable to Royal Dutch Shell plc           6,980      (15,620) 
                                       shareholders 
    106           85            34    CCS earnings attributable to non-controlling interest          191           131 
-------    ---------    ----------    -------------------------------------------------------  ---------    ---------- 
 

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 

3. Earnings per share

 
 
 
EARNINGS PER SHARE 
               Quarters                                                                                  Half year 
    Q2 2021      Q1 2021       Q2 2020                                                                  2021          2020 
                                        Income/(loss) attributable to Royal Dutch Shell plc 
    3,428        5,660      (18,131)    shareholders ($ million)                                     9,087      (18,155) 
 
                                        Weighted average number of shares used as the basis 
                                        for determining: 
  7,790.1      7,782.1       7,789.8       Basic earnings per share (million)                      7,786.1       7,804.8 
  7,835.9      7,832.3       7,789.8       Diluted earnings per share (million)                    7,834.2       7,804.8 
---------    ---------    ----------    -------------------------------------------------------  ---------    ---------- 
 

4. Share capital

 
 
 
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH1 
                                                Nominal value ($ 
                      Number of shares              million) 
                      A              B           A       B   Total 
At January 1, 
 2021           4,101,239,499  3,706,183,836    345     306   651 
At June 30, 
 2021           4,101,239,499  3,706,183,836    345     306   651 
At January 1, 
 2020           4,151,787,517  3,729,407,107    349     308   657 
Repurchases of 
 shares          (50,548,018)   (23,223,271)    (4)     (2)   (6) 
At June 30, 
 2020           4,101,239,499  3,706,183,836    345     306   651 
--------------  -------------  -------------  --------  ---  ----- 
 
   1.    Share capital at June 30, 2021 also included 50,000 issued and fully paid sterling deferred shares of GBP1 each. 

At Royal Dutch Shell plc's Annual General Meeting on May 18, 2021, 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 EUR182.1 million (representing 2,602 million ordinary shares of EUR0.07 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 18, 2022, and the end of the Annual General Meeting to be held in 2022, unless previously renewed, revoked or varied by Royal Dutch Shell plc in a general meeting.

5. Other reserves

 
 
 
OTHER RESERVES 
                                                                                              Accumulated 
                                                                Share    Capital     Share       other 
                                                      Merger   premium  redemption   plan    comprehensive 
                     $ million                        reserve  reserve   reserve    reserve     income        Total 
At January 1, 2021                                     37,298      154         129      906       (25,735)   12,752 
Other comprehensive income/(loss) attributable to 
Royal Dutch Shell plc shareholders                         --       --          --       --          6,033    6,033 
Transfer from other comprehensive income                   --       --          --       --           (15)     (15) 
Share-based compensation                                   --       --          --    (219)             --    (219) 
At June 30, 2021                                       37,298      154         129      687       (19,717)   18,552 
At January 1, 2020                                     37,298      154         123    1,049       (24,173)   14,451 
Other comprehensive income/(loss) attributable to 
Royal Dutch Shell plc shareholders                         --       --          --       --        (5,642)  (5,642) 
Transfer from other comprehensive income                   --       --          --       --             17       17 
Repurchases of shares                                      --       --           6       --             --        6 
Share-based compensation                                   --       --          --    (324)             --    (324) 
At June 30, 2020                                       37,298      154         129      725       (29,798)    8,508 
----------------------------------------------------  -------  -------  ----------  -------  -------------  ------- 
 

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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 

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 merger reserve increased in 2016 following the issuance of shares for the acquisition of BG Group plc. 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.

6. Derivative financial instruments and debt excluding lease liabilities

As disclosed in the Consolidated Financial Statements for the year ended December 31, 2020, presented in the Annual Report and Accounts 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, 2021, are consistent with those used in the year ended December 31, 2020, though the carrying amounts of derivative financial instruments measured using predominantly unobservable inputs have changed since that date.

The table below provides the comparison of the fair value with the carrying amount of debt excluding lease liabilities, disclosed in accordance with IFRS 7 Financial Instruments: Disclosures.

 
 
 
DEBT EXCLUDING LEASE LIABILITIES 
           $ million              June 30, 2021    December 31, 2020 
Carrying amount                          71,736             79,594 
Fair value(1)                            78,216             88,294 
--------------------------------  -------------  ----------------- 
 
   1.    Mainly determined from the prices quoted for these securities. 

7. Other notes to the unaudited Condensed Consolidated Interim Financial Statements

Consolidated Statement of Income

Interest and other income

 
 
 
           Quarters                                    $ million                             Half year 
  Q2 2021    Q1 2021    Q2 2020                                                              2021       2020 
    134      2,455        148    Interest and other income                                2,590        224 
                                 of which: 
     95        134        158    Interest income                                            230        357 
                                 Dividend income (from investments in equity 
     34          1         14    securities)                                                 35         16 
                                 Net gains on sales and revaluation of non-current 
   (55)      2,073        128     assets and businesses                                   2,018         21 
                                 Net foreign exchange (losses)/gains on financing 
      4         85      (124)    activities                                                  90      (206) 
     56        161       (27)    Other                                                      217         36 
-------    -------    -------    -----------------------------------------------------  -------    ------- 
 

Depreciation, depletion and amortisation

 
 
 
               Quarters                     $ million             Half year 
     Q2 2021      Q1 2021      Q2 2020                             2021        2020 
                                        Depreciation, 
                                        depletion and 
     8,223        5,896       28,089    amortisation           14,119      35,182 
----------    ---------    ---------    -----------------  ----------    -------- 
 

Depreciation, depletion and amortisation in Q2 2021 includes $2,333 million pre-tax (Q1 2021:$84 million; Q2 2020:$21,780 million) of impairments mainly related to two refineries in the USA within Oil Products classified as held for sale ($1,207 million), one site in the USA within Chemicals classified as held for sale ($177 million) and an exploration and evaluation asset within Integrated Gas ($600 million).

Page 16

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
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Taxation charge/(credit)

 
 
 
               Quarters                      $ million               Half year 
     Q2 2021      Q1 2021      Q2 2020                               2021         2020 
                                        Taxation 
       571        2,453      (5,806)    charge/(credit)           3,024      (5,160) 
----------    ---------    ---------    -------------------  ----------    --------- 
 

The taxation charge for Q2 2021 includes a one-off release of a tax provision in Nigeria of $628 million.

Condensed Consolidated Balance Sheet

Retirement benefits

 
 
 
        $ million 
                            June 30, 2021    December 31, 2020 
Non-current assets 
Retirement benefits                 7,941              2,474 
Non-current liabilities 
Retirement benefits(1)             12,435             15,605 
Deficit                             4,494             13,131 
--------------------------  -------------  ----------------- 
 

1.As from January 1, 2021 the 'Retirement benefits' liability has been classified under non-current liabilities (previously partly presented within current liabilities). Prior period comparatives have been revised by $437 million to conform with current year presentation.

The decrease in the net retirement benefit liability is mainly driven by an increase of the market yield on high-quality corporate bonds in the USA, the UK and Eurozone and positive returns on plan assets, partly offset by an increase in expected inflation in the UK and Eurozone. Amounts recognised in the balance sheet in relation to defined benefit plans include both plan assets and obligations that are presented on a net basis on a plan-by-plan basis.

Income taxes payable

 
 
 
       $ million 
                         June 30, 2021    December 31, 2020 
Income taxes payable             2,837              3,111 
 

As from January 1, 2021 taxes payable not related to income tax are presented within 'Trade and other payables' (previously within 'Taxes payable') and 'Taxes payable' has been renamed into 'Income taxes payable'. Prior period comparatives have been revised by $2,895 million to conform with current year presentation.

8. Climate case ruling

In May 2021 the District Court in The Hague delivered its ruling in the climate change case filed against Royal Dutch Shell plc ("Shell") by Milieudefensie (Friends of the Earth Netherlands), other NGOs and a group of private individuals. The court ruled that Shell must reduce the CO2 emissions of Shell group operations and energy-carrying products sold by 45% (net) by the end of 2030 compared to its emissions in 2019. Shell will appeal this decision in the Dutch Court of Appeal, which may take between two and three years. This case does not have a financial impact on the unaudited Interim Statements.

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ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES

A.Adjusted Earnings and Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA)

The "Adjusted Earnings" measure aims to facilitate a comparative understanding of Shell's financial performance from period to period by removing the effects of oil price changes on inventory carrying amounts and removing the effects of identified items. These items are in some cases driven by external factors and may, either individually or collectively, hinder the comparative understanding of Shell's financial results from period to period. This measure excludes earnings attributable to non-controlling interest.

The "Adjusted EBITDA (FIFO basis)" and "Adjusted EBITDA (CCS basis)" measures are introduced with effect from January 1, 2021. Management uses both measures to evaluate Shell's performance in the period and over time.

We define "Adjusted EBITDA (FIFO basis)" as "Income/(loss) attributable to Royal Dutch Shell plc shareholders" adjusted for identified items; tax charge/(credit); depreciation, amortisation and depletion; exploration well write-offs and net interest expense. We also use "Adjusted EBITDA" on a CCS basis as the current cost of supplies adjustment aims to remove the impact of price changes on our inventories in our Oil Products and Chemicals segments, therefore enabling comparisons over time.

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ADJUSTED EARNINGS 
               Quarters                                          $ million                                   Half year 
    Q2 2021      Q1 2021       Q2 2020                                                                      2021          2020 
                                        Income/(loss) attributable to Royal Dutch Shell plc 
    3,428        5,660      (18,131)     shareholders                                                    9,087      (18,155) 
                                        Add: Current cost of supplies adjustment attributable 
    (793)      (1,314)         (246)     to Royal Dutch Shell plc shareholders (Note 2)                (2,108)         2,535 
                                        Less: Identified items attributable to Royal Dutch 
  (2,899)        1,112      (19,015)     Shell plc shareholders                                        (1,788)      (19,118) 
    5,534        3,234           638    Adjusted Earnings                                                8,768         3,498 
                                        Of which: 
    1,609        1,415           362      Integrated Gas                                                 3,025         2,506 
    2,469          963       (1,512)      Upstream                                                       3,432       (1,220) 
    1,299          877         2,411      Oil Products                                                   2,176         3,774 
      112        (105)         1,500       Refining and Trading                                              7         1,658 
    1,187          982           911       Marketing                                                     2,169         2,116 
      670          730           206      Chemicals                                                      1,400           354 
    (399)        (666)         (796)      Corporate                                                    (1,065)       (1,784) 
      115           85            34      Less: Non-controlling interest                                   199           131 
                                        Add: Taxation charge/(credit) excluding tax impact 
    1,178        1,550           114     of identified items                                             2,728         1,447 
                                        Add: Depreciation, depletion and amortisation excluding 
    5,890        5,812         6,308    impairments                                                     11,702        12,652 
      108          136           518    Add: Exploration well write-offs                                   244           601 
      893          892         1,070    Add: Interest expense excluding identified items                 1,784         2,188 
       95          134           158    Less: Interest income                                              230           357 
   13,507       11,490         8,491    Adjusted EBITDA (CCS basis)                                     24,997        20,031 
                                        Of which: 
    3,364        3,206         2,767      Integrated Gas                                                 6,571         6,650 
    6,714        5,387         1,674      Upstream                                                      12,100         6,510 
    2,608        2,112         3,747      Oil Products                                                   4,720         6,614 
      676          467         2,267       Refining and Trading                                          1,143         3,197 
    1,932        1,646         1,479       Marketing                                                     3,577         3,417 
    1,036        1,041           507      Chemicals                                                      2,077           973 
    (101)        (172)         (171)      Corporate                                                      (273)         (587) 
      115           85            34      Less: Non-controlling interest                                   199           131 
                                        Less: Current cost of supplies adjustment attributable 
    (793)      (1,314)         (246)     to Royal Dutch Shell plc shareholders (Note 2)                (2,108)         2,535 
                                        Add: Current cost of supplies adjustment to taxation 
      208          353            98     charge/(credit) (Note 2)                                          562         (819) 
   14,508       13,157         8,835    Adjusted EBITDA (FIFO basis)                                    27,666        16,678 
                                        Of which: 
    3,364        3,206         2,767      Integrated Gas                                                 6,571         6,650 
    6,714        5,387         1,674      Upstream                                                      12,100         6,510 
    3,553        3,586         4,217      Oil Products                                                   7,139         3,615 
    1,370        1,715         2,889       Refining and Trading                                          3,085           439 
    2,182        1,872         1,328       Marketing                                                     4,054         3,177 
    1,117        1,274           376      Chemicals                                                      2,392           518 
    (101)        (172)         (171)      Corporate                                                      (273)         (587) 
      139          124            30      Less: Non-controlling interest                                   264            31 
---------    ---------    ----------    -----------------------------------------------------------  ---------    ---------- 
 

Identified items

Identified items comprise: divestment gains and losses, impairments, redundancy and restructuring, provisions for onerous contracts, fair value accounting of commodity derivatives and certain gas contracts and the impact of exchange rate movements on certain deferred tax balances, and other items.

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IDENTIFIED ITEMS 
              Quarters                                          $ million                                   Half year 
    Q2 2021     Q1 2021       Q2 2020                                                                      2021          2020 
                                       Identified items before tax 
     (55)       2,073           128         Divestment gains/(losses)                                   2,018            51 
  (2,333)        (84)      (22,332)         Impairments                                               (2,417)      (23,082) 
       68       (748)         (518)         Redundancy and restructuring                                (679)         (536) 
       --          --            --         Provisions for onerous contracts                               --            -- 
                                            Fair value accounting of commodity derivatives and 
  (1,373)         388       (1,884)         certain gas contracts                                       (985)         (916) 
     (29)          31         (427)         Other                                                           2         (427) 
  (3,722)       1,661      (25,033)    Total identified items before tax                              (2,062)      (24,908) 
      815       (549)         6,018    Total tax impact of identified items                               265         5,790 
                                       Identified items after tax 
     (83)       1,410            10         Divestment gains/(losses)                                   1,328          (22) 
  (1,787)        (94)      (16,842)         Impairments                                               (1,881)      (17,378) 
       45       (486)         (375)         Redundancy and restructuring                                (441)         (382) 
       --          --            --         Provisions for onerous contracts                               --            -- 
                                            Fair value accounting of commodity derivatives and 
  (1,181)         365       (1,540)         certain gas contracts                                       (816)         (702) 
      121       (110)          (44)         Impact of exchange rate movements on tax balances              11         (410) 
     (23)          25         (224)         Other                                                           2         (224) 
  (2,908)       1,112      (19,015)    Impact on CCS earnings                                         (1,796)      (19,118) 
                                         Of which: 
  (1,187)       1,112       (8,321)          Integrated Gas                                              (75)       (8,652) 
     (53)         133       (5,209)          Upstream                                                      80       (6,364) 
  (1,267)       (227)       (5,433)          Oil Products                                             (1,494)       (4,585) 
    (208)        (41)          (41)          Chemicals                                                  (248)          (43) 
    (193)         134           (9)          Corporate                                                   (59)           526 
  (2,899)       1,112      (19,015)    Impact on CCS earnings attributable to shareholders            (1,788)      (19,118) 
      (8)          --            --    Impact on CCS earnings attributable to non-controlling             (8)            -- 
                                        interest 
---------    --------    ----------    -----------------------------------------------------------  ---------    ---------- 
 

The identified items categories above may include after-tax impacts of identified items of joint ventures and associates which are fully reported within "Share of profit of joint ventures and associates" in the Consolidated Statement of Income, and fully reported as identified items before tax in the table above. Identified items related to subsidiaries are consolidated and reported across appropriate lines of the Consolidated Statement of Income. Only pre-tax identified items reported by subsidiaries are taken into account in the calculation of underlying operating expenses (Reference F).

Provisions for onerous contracts: Provisions for onerous contracts that relate to businesses that Shell has exited or to redundant assets or assets that cannot be used.

Fair value accounting of commodity derivatives and certain gas contracts: 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. Shell also enters into contracts for tolling, pipeline and storage capacity. 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, as well as contracts for tolling, pipeline and storage capacity, are, by contrast, recognised when the transaction occurs; 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 contracts 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 are reported as identified items.

Impacts of exchange rate movements on tax balances represent the impact on tax balances of exchange rate movements arising on (a) the conversion to dollars of the local currency tax base of non-monetary assets and liabilities, as well as losses (this primarily impacts the Upstream and Integrated Gas segments) and (b) the conversion of dollar-

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denominated inter-segment loans to local currency, leading to taxable exchange rate gains or losses (this primarily impacts the Corporate segment).

Other identified items represent other credits or charges that based on Shell management's assessment hinder the comparative understanding of Shell's financial results from period to period.

   B.    Adjusted Earnings per share 

Adjusted Earnings per share is calculated as Adjusted Earnings (see Reference A), divided by the weighted average number of shares used as the basis for basic earnings per share (see Note 3).

   C.    Cash capital expenditure 

Cash capital expenditure represents cash spent on maintaining and developing assets as well as on investments in the period. Management regularly monitors this measure as a key lever to delivering sustainable cash flows. Cash capital expenditure is the sum of the following lines from the Consolidated Statement of Cash flows: Capital expenditure, Investments in joint ventures and associates and Investments in equity securities.

 
 
 
               Quarters                      $ million               Half year 
     Q2 2021      Q1 2021      Q2 2020                                 2021       2020 
     4,232        3,885        3,436    Capital expenditure         8,117      7,699 
                                        Investments in joint 
                                        ventures and 
       115           69          161    associates                    184        720 
                                        Investments in 
        36           21           20    equity securities              57        167 
                                        Cash capital 
     4,383        3,974        3,617    expenditure                 8,357      8,587 
                                        Of which: 
       880        1,015          736          Integrated Gas        1,895      1,618 
     1,696        1,534        1,876          Upstream              3,229      4,397 
       882          668          606          Oil Products          1,550      1,186 
       895          730          369          Chemicals             1,625      1,215 
        30           28           30          Corporate                58        171 
----------    ---------    ---------    --------------------  -----------    ------- 
 
   D.    Return on average capital employed 

Return on average capital employed ("ROACE") measures the efficiency of Shell's utilisation of the capital that it employs. Shell uses two ROACE measures: ROACE on a Net income basis and ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis, both adjusted for after-tax interest expense.

Both measures refer to Capital employed which consists of total equity, current debt and non-current debt.

ROACE on a Net income basis

In this calculation, the sum of income for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period.

 
 
 
                       $ million                                    Quarters 
                                                           Q2 2021   Q1 2021   Q2 2020 
Income - current and previous three quarters                 5,933  (15,727)  (11,011) 
Interest expense after tax - current and previous 
 three quarters                                              2,668     2,728     3,014 
Income before interest expense - current and previous 
three quarters                                               8,601  (12,999)   (7,997) 
Capital employed -- opening                                265,435   278,444   288,900 
Capital employed -- closing                                271,319   269,323   265,435 
Capital employed -- average                                268,377   273,883   277,168 
ROACE on a Net income basis                                   3.2%    (4.7)%    (2.9)% 
--------------------------------------------------------  --------  --------  -------- 
 

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ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis

In this calculation, the sum of Adjusted Earnings (see Reference A) plus non-controlling interest (NCI) excluding identified items for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period. This measure was previously referred to as "ROACE on a CCS basis excluding identified items" and was renamed to improve clarity with effect from the second quarter 2021. There is no change to the calculation outcome as result of this nomenclature update.

 
 
 
                        $ million                                    Quarters 
                                                             Q2 2021  Q1 2021  Q2 2020 
Adjusted Earnings - current and previous three quarters 
(Reference A)                                                 10,115    5,220   11,196 
Add: Income/(loss) attributable to NCI - current and 
 previous three quarters                                         371      269      300 
Add: Current cost of supplies adjustment attributable 
 to NCI - current and previous three quarters                   (90)     (62)      105 
Less: Identified items attributable to NCI (Reference 
 A) - current and previous three quarters                       (18)     (10)       -- 
Adjusted Earnings plus NCI excluding identified items 
 - current and previous three quarters                        10,414    5,437   11,602 
Add: Interest expense after tax - current and previous 
 three quarters                                                2,668    2,728    3,014 
Adjusted Earnings plus NCI excluding identified items 
 before interest expense - current and previous three 
 quarters                                                     13,081    8,165   14,616 
Capital employed - average                                   268,377  273,883  277,168 
ROACE on an Adjusted Earnings plus NCI basis                    4.9%     3.0%     5.3% 
----------------------------------------------------------  --------  -------  ------- 
 
   E.    Gearing 

Gearing is a measure of Shell's capital structure and is defined as net debt as a percentage of total capital. Net debt is defined as the sum of current and non-current debt, less cash and cash equivalents, adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt, and associated collateral balances. Management considers this adjustment useful because it reduces the volatility of net debt caused by fluctuations in foreign exchange and interest rates, and eliminates the potential impact of related collateral payments or receipts. Debt-related derivative financial instruments are a subset of the derivative financial instrument assets and liabilities presented on the balance sheet. Collateral balances are reported under "Trade and other receivables" or "Trade and other payables" as appropriate.

 
 
 
                      $ million                                            Quarters 
                                                         June 30, 2021  March 31, 2021   June 30, 2020 
Current debt                                                    13,042          14,541          17,530 
Non-current debt                                                87,034          87,828          87,460 
Total debt                                                     100,076         102,369         104,990 
  Of which lease liabilities                                    28,340          28,177          29,073 
Add: Debt-related derivative financial instruments: 
 net liability/(asset)                                           (912)           (864)             525 
Add: Collateral on debt-related derivatives: net 
 liability/(asset)                                                 675             732             266 
Less: Cash and cash equivalents                               (34,104)        (30,985)        (27,939) 
Net debt                                                        65,735          71,252          77,843 
Add: Total equity                                              171,243         166,953         160,445 
Total capital                                                  236,978         238,205         238,288 
Gearing                                                     27.7%           29.9%           32.7% 
------------------------------------------------------  --------   ---  --------   ---  -------- --- 
 
   F.    Operating expenses 

Operating expenses is a measure of Shell's cost management performance, comprising the following items from the Consolidated Statement of Income: production and manufacturing expenses; selling, distribution and administrative expenses; and research and development expenses.

Underlying operating expenses is a measure aimed at facilitating a comparative understanding of performance from period to period by removing the effects of identified items, which, either individually or collectively, can cause volatility, in some cases driven by external factors.

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              Quarters                            $ million                    Half year 
    Q2 2021      Q1 2021      Q2 2020                                          2021        2020 
                                       Production and manufacturing 
    5,162        6,808        5,822    expenses                            11,970      11,803 
                                       Selling, distribution and 
    3,107        2,462        2,370    administrative expenses              5,569       4,763 
      201          166          232    Research and development               366         475 
    8,470        9,436        8,423    Operating expenses                  17,905      17,042 
                                       Of which identified items: 
                                             Redundancy and 
                                             restructuring 
       68        (747)        (508)          (charges)/reversal             (679)       (526) 
     (31)           --        (411)          (Provisions)/reversal           (31)       (411) 
      (2)           35           --          Other                             33          -- 
       35        (712)        (919)                                         (677)       (937) 
    8,505        8,724        7,504    Underlying operating expenses       17,228      16,105 
---------    ---------    ---------    -------------------------------  ---------    -------- 
 
   G.    Free cash flow 

Free cash flow is used to evaluate cash available for financing activities, including dividend payments and debt servicing, after investment in maintaining and growing the business. It is defined as the sum of "Cash flow from operating activities" and "Cash flow from investing activities".

Cash flows from acquisition and divestment activities are removed from Free cash flow to arrive at the Organic free cash flow, a measure used by management to evaluate the generation of free cash flow without these activities.

 
 
 
             Quarters                                       $ million                                Half year 
    Q2 2021    Q1 2021      Q2 2020                                                                  2021         2020 
   12,617      8,294        2,563    Cash flow from operating activities                         20,910       17,415 
  (2,946)      (590)      (2,320)    Cash flow from investing activities                        (3,535)      (5,039) 
    9,671      7,704          243    Free cash flow                                              17,375       12,376 
    1,274      3,412          696    Less: Divestment proceeds (Reference I)                      4,686        2,929 
                                     Add: Tax paid on divestments (reported under "Other 
       24         --           --     investing cash outflows")                                      24           -- 
                                     Add: Cash outflows related to inorganic capital 
        2         89          199    expenditure1                                                    92          602 
    8,424      4,381        (254)    Organic free cash flow2                                     12,805       10,050 
---------    -------    ---------    -------------------------------------------------------  ---------    --------- 
 

1.Cash outflows related to inorganic capital expenditure includes portfolio actions which expand Shell's activities through acquisitions and restructuring activities as reported in capital expenditure lines in the Consolidated Statement of Cash Flows.

2.Free cash flow less divestment proceeds, adding back outflows related to inorganic expenditure.

   H.    Cash flow from operating activities excluding working capital movements 

Working capital movements are defined as the sum of the following items

in the Consolidated Statement of Cash Flows:    (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current receivables, and (iii) increase/(decrease) in current payables. 

Cash flow from operating activities excluding working capital movements is a measure used by Shell to analyse its operating cash generation over time excluding the timing effects of changes in inventories and operating receivables and payables from period to period.

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              Quarters                                         $ million                                  Half year 
    Q2 2021      Q1 2021      Q2 2020                                                                     2021          2020 
   12,617        8,294        2,563    Cash flow from operating activities                            20,910        17,415 
  (2,495)      (3,426)      (3,713)    (Increase)/decrease in inventories                            (5,921)         5,881 
  (4,080)      (6,829)        3,959    (Increase)/decrease in current receivables                   (10,909)        10,273 
    5,016        5,865      (4,226)    Increase/(decrease) in current payables                        10,881      (12,655) 
  (1,559)      (4,390)      (3,980)    (Increase)/decrease in working capital                        (5,949)         3,499 
                                       Cash flow from operating activities excluding working 
   14,176       12,683        6,543    capital movements                                              26,859        13,916 
                                       Of which: 
    4,350        3,653        2,871          Integrated Gas                                            8,003         6,224 
    5,444        4,702          548          Upstream                                                 10,146         4,265 
    3,365        3,313        2,430          Oil Products                                              6,678         2,783 
    1,225        1,045          304          Chemicals                                                 2,270           492 
    (208)         (30)          390          Corporate                                                 (238)           151 
---------    ---------    ---------    ---------------------------------------------------------  ----------    ---------- 
 
   I.    Divestment proceeds 

Divestment proceeds represent cash received from divestment activities in the period. Management regularly monitors this measure as a key lever to deliver sustainable cash flow.

 
 
 
            Quarters                                      $ million                                Half year 
  Q2 2021    Q1 2021     Q2 2020                                                                   2021       2020 
                                  Proceeds from sale of property, plant and equipment 
  1,162        3,106         211   and businesses                                                 4,268      1,824 
                                  Proceeds from joint ventures and associates from sale, 
      4          275         423  capital reduction and repayment of long-term loans(1)             279        970 
    108           31          62  Proceeds from sale of equity securities                           139        135 
  1,274        3,412         696  Divestment proceeds                                             4,686      2,929 
-------    ---------  ----------  ----------------------------------------------------------  ---------  --------- 
 

1.As from 2021 renamed from 'Proceeds from sale of joint ventures and associates'.

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PRINCIPAL RISKS AND UNCERTAINTIES

The principal risks and uncertainties affecting Shell are described in the Risk Factors section of the Annual Report and Accounts (pages 28 to 37) and Form 20-F (pages 18 to 22) for the year ended December 31, 2020 and are summarised below. There are no material changes in those Risk Factors for the remaining 6 months of the financial year.

STRATEGIC RISKS

--We are exposed to macroeconomic risks including 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 accuracy of our price assumptions.

--Our ability to achieve our strategic objectives depends on how we react to competitive forces.

--If we fail to stay in step with the pace and extent of society's demands with regard to the energy transition to a low-carbon future, we could fail in sustaining and growing our business.

--Rising climate change concerns and the effects of the energy transition have led and could lead to a decrease in demand and potentially affect prices for fossil fuels. This may also lead to additional legal and/or regulatory measures which could result in project delays or cancellations, potential litigation, operational restrictions and additional compliance obligations.

--We seek to execute divestments in pursuing our strategy. We may be unable to divest these assets successfully in line with our strategy.

--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. We and our joint arrangements and associates also face the risk of litigation and disputes worldwide.

OPERATIONAL RISKS

--Our future hydrocarbon production depends on the delivery of large and integrated projects, and 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. This means subsequent downward adjustments are possible.

--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.

--A further erosion of the business and operating environment in Nigeria could have a material adverse effect on us.

--An erosion of our business reputation could have a material adverse effect on our brand, our ability to secure new resources or access capital markets, and on our licence to operate.

--We rely heavily on Operational Technology (OT) and Information Technology (IT) systems in our operations. This exposes OT and IT infrastructure to both internal and external cybersecurity risks, cyber-disruptions and legal and regulatory measures.

--Our business exposes us to risks of social instability, criminality, civil unrest, terrorism, piracy, cyber-disruption and acts of war that could have a material adverse effect on our operations.

--Production from the Groningen field in the Netherlands causes earthquakes that affect local communities.

--We are exposed to treasury and trading risks, including liquidity risk, interest rate risk, foreign exchange risk and credit risk. We are affected by the global macroeconomic environment and the conditions of financial and commodity markets.

--Our future performance depends on the successful development and deployment of new technologies and new products.

--We have substantial pension commitments, the funding of which is subject to capital market risks and other factors.

--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.

--Many of our major projects and operations are conducted in joint arrangements or with associates. This could reduce our degree of control and our ability to identify and manage risks.

CONDUCT RISKS

--We are exposed to commodity trading risks, including market and operational risks.

--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, tax-evasion and anti-money laundering laws carry fines and expose us and/or our employees to criminal sanctions, civil suits and ancillary consequences (such as debarment and the revocation of licences).

--Violations of data protection laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.

--Violations of trade compliance laws and regulations, including sanctions, carry fines and expose us and our employees to criminal sanctions and civil suits.

OTHER (generally applicable to an investment in securities)

--The Company's Articles of Association determine the jurisdiction for shareholder disputes. This could limit shareholder remedies.

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FIRST QUARTER 2021 PORTFOLIO DEVELOPMENTS

Integrated Gas

In March 2021, QGC Common Facilities Company Pty Ltd, a wholly-owned subsidiary of Shell, completed the sale of a 26.25% interest in the Queensland Curtis LNG (QCLNG) Common Facilities to Global Infrastructure Partners Australia for $2.5 billion, following the receipt of regulatory approval.

Upstream

In January 2021, Shell completed the sale of its 30% interest in Oil Mining Lease 17 in the Eastern Niger Delta, and associated infrastructure, to TNOG Oil and Gas Limited, a related company of Heirs Holdings Limited and Transnational Corporation of Nigeria Plc, for a consideration of $533 million. A total of $453 million was paid by completion with the balance to be paid over an agreed period.

In February 2021, an agreement was reached with publicly listed Canadian energy company Crescent Point Energy Corp. to sell the Duvernay shale light oil position in Alberta, Canada. The transaction completed on April 1, 2021. The consideration received consisted of $533 million in cash and 50 million shares in Crescent Point Energy common stock (TSX: CPG) valued at $208 million based on the closing price on March 31, 2021.

In March 2021, Shell Egypt and one of its affiliates signed an agreement with a consortium made up of subsidiaries of Cheiron Petroleum Corporation and Cairn Energy plc to acquire Shell's upstream assets in Egypt's Western Desert for a base consideration of $646 million and additional payments of up to $280 million between 2021 and 2024, contingent on the oil price and the results of further exploration. The transaction is subject to government and regulatory approvals and is expected to complete in the second half of 2021.

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 issued by the International Accounting Standards Board ("IASB") and as adopted by the UK; (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 114-120 in the Annual Report and Accounts and on pages 89 to 94 in the Form 20-F for the year ended December 31, 2020 save for the following changes:

Sir Andrew Mackenzie: appointed Company Chair with effect from the conclusion of the 2021 Annual General Meeting, held on May 18, 2021.

Jane Lute: appointed Non-executive Director with effect from May 19, 2021.

Charles O. Holliday: stepped down following the conclusion of the 2021 Annual General Meeting, held on May 18, 2021.

Sir Nigel Sheinwald: stepped down following the conclusion of the 2021 Annual General Meeting, held on May 18, 2021.

On behalf of the Board

 
 
Ben van Beurden                     Jessica Uhl 
Chief Executive Officer             Chief Financial Officer 
July 29, 2021                       July 29, 2021 
 

Page 26

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 

INDEPENT REVIEW REPORT TO ROYAL DUTCH SHELL PLC

Conclusion

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, 2021, 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 Consolidated Statement of Cash Flows and Notes 1 to 8. 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.

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, 2021 are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

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. 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 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.

From 2021 the annual Consolidated Financial Statements of Royal Dutch Shell plc and its subsidiaries are prepared in accordance with UK adopted international accounting standards. 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 International Accounting Standards Board and as adopted by the UK.

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.

Our responsibility

In reviewing the half-yearly financial report, we are responsible for expressing to Royal Dutch Shell plc a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

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.

Ernst & Young LLP

London

July 29, 2021

Page 27

 
 
 
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR 
UNAUDITED RESULTS 
----------------------------------------------------- 
 

CAUTIONARY STATEMENT

All amounts shown throughout this announcement are unaudited. All peak production figures in Portfolio Developments are quoted at 100% expected production. The numbers presented throughout this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures, due to rounding.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this announcement "Shell", "Shell Group" and "Group" 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 Royal Dutch Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to entities 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 an entity or unincorporated joint arrangement, after exclusion of all third-party interest.

This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of 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 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 "aim", "ambition", "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "milestones", "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 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; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided 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 plc's Form 20-F for the year ended December 31, 2020 (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 29, 2021. 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.

The content of websites referred to in this announcement does not form part of 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. 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.

This announcement contains inside information.

July 29, 2021

 
 
The information in this announcement reflects the unaudited 
consolidated financial position and results of Royal Dutch 
Shell plc. Company No. 4366849, Registered Office: Shell 
Centre, London, SE1 7NA, England, UK. 
-------------------------------------------------------------- 
 

Contacts:

- Linda M. Coulter, Company Secretary

- Media: International +44 (0) 207 934 5550; USA +1 832 337 4355

LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70

Classification: Inside Information

Page 28

 
 

(END) Dow Jones Newswires

July 29, 2021 02:00 ET (06:00 GMT)

Copyright (c) 2021 Dow Jones & Company, Inc.
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