REG-Royal Dutch Shell: 3rd Quarter 2014 Unaudited Results <Origin Href="QuoteRef">RDSa.L</Origin> - Part 2
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1,500 1,599
Net cash from operating
15,730 13,021 14,395 activities (pre-tax) 46,069 49,713
(2,919) (4,380) (3,986) Taxation paid (10,633) (15,301)
Net cash from operating
12,811 8,641 10,409 activities 35,436 34,412
Cash flow from investing
activities
(7,867) (7,872) (8,788) Capital expenditure (23,136) (25,637)
Investments in joint ventures and
(151) (493) (352) associates (1,533) (1,015)
3,783 3,539 79 Proceeds from sales of assets 7,628 780
Proceeds from sales of joint
157 3,671 212 ventures and associates 3,884 429
(278) 188 (63) Other investments (net) 62 (390)
29 31 31 Interest received 118 138
Net cash used in investing
(4,327) (936) (8,881) activities (12,977) (25,695)
Cash flow from financing
activities
Net (decrease)/increase in debt
with maturity period within three
(465) (1,397) 124 months (3,159) (113)
442 140 4,402 Other debt: New borrowings 3,777 4,780
(334) (251) (672) Repayments (3,518) (6,413)
(404) (398) (323) Interest paid (1,170) (657)
Change in non-controlling
- (13) 8 interest (13) 9
Cash dividends paid to:
- Royal Dutch Shell plc
(2,994) (1,964) (1,637) shareholders (6,457) (5,588)
(4) (45) (136) - Non-controlling interest (77) (216)
(770) (346) (1,525) Repurchases of shares (2,357) (4,004)
Shares held in trust: net
(purchases)/sales and dividends
48 90 (189) received 261 (631)
Net cash used in financing
(4,481) (4,184) 52 activities (12,713) (12,833)
Currency translation differences
relating to cash and
(395) (26) 158 cash equivalents (415) (156)
Increase/(decrease) in cash and
3,608 3,495 1,738 cash equivalents 9,331 (4,272)
Cash and cash equivalents at
15,419 11,924 12,540 beginning of period 9,696 18,550
Cash and cash equivalents at end
19,027 15,419 14,278 of period 19,027 14,278
Notes 1 to 5 are an integral part of these unaudited Condensed Consolidated
Interim Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial Statements ("Interim
Statements") of Royal Dutch Shell plc and its subsidiaries (collectively
referred to as Shell) have been prepared on the basis of the same accounting
principles as, and should be read in conjunction with, the Annual Report and
Form 20-F for the year ended December 31, 2013 (pages 105 to 110) as filed with
the U.S. Securities and Exchange Commission.
The financial information presented in the Interim Statements does not
constitute statutory accounts within the meaning of section 434(3) of the
Companies Act 2006. Statutory accounts for the year ended December 31, 2013
were published in Shell's Annual Report and a copy was delivered to the
Registrar of Companies in England and Wales. The auditors' report on those
accounts was unqualified, did not include a reference to any matters to which
the auditors drew attention by way of emphasis without qualifying the report
and did not contain a statement under sections 498(2) or 498(3) of the
Companies Act 2006.
2. Segment information
Segment earnings are presented on a current cost of supplies basis (CCS
earnings). 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.
Net capital investment is defined as capital expenditure as reported in the
Condensed Consolidated Statement of Cash Flows, adjusted for: proceeds from
disposals (excluding other investments (net) in the Corporate segment);
exploration expense excluding exploration wells written off; investments in
joint ventures and associates; and leases and other items.
CCS earnings and net capital investment information are the dominant measures
used by the Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance.
Information by business segment:
Quarters $ million Nine months
Q3 2014 Q3 2013 2014 2013
Third-party revenue
10,318 11,563 Upstream 33,989 36,024
97,508 104,914 Downstream 294,659 305,857
25 36 Corporate 83 111
107,851 116,513 Total third-party revenue 328,731 341,992
Inter-segment revenue
12,758 11,569 Upstream 37,630 34,064
627 76 Downstream 1,698 477
- - Corporate - -
Segment earnings
3,949 3,290 Upstream1 13,196 10,792
1,601 906 Downstream2 1,867 3,397
(301) 88 Corporate (124) 506
5,249 4,284 Total segment earnings 14,939 14,695
1 Second quarter 2014 Upstream earnings included an impairment charge of $1,943
million after taxation, partly offset by divestment gains of $1,230 million
after taxation. Second quarter 2013 Upstream earnings included an impairment
charge of $2,071 million after taxation.
2 First quarter 2014 Downstream earnings included an impairment charge of $2,284
million related to refineries in Asia and Europe.
Quarters $ million Nine months
Q3 2014 Q3 2013 2014 2013
5,249 4,284 Total segment earnings 14,939 14,695
Current cost of supplies adjustment:
(894) 541 Purchases (751) (140)
246 (137) Taxation 203 53
Share of profit of joint ventures and
(176) 49 associates (79) 96
4,425 4,737 Income for the period 14,312 14,704
3. Share capital
Issued and fully paid
Sterling deferred
Ordinary shares of euro 0.07 each shares
Number of shares A B of £1 each
At January 1, 2014 3,898,011,213 2,472,839,187 50,000
Scrip dividends 64,568,758 - -
Repurchases of shares (27,917,878) (32,428,573) -
At September 30, 2014 3,934,662,093 2,440,410,614 50,000
At January 1, 2013 3,772,388,687 2,617,715,189 50,000
Scrip dividends 88,288,316 - -
Repurchases of shares - (117,715,539) -
At September 30, 2013 3,860,677,003 2,499,999,650 50,000
Nominal value
Ordinary shares of euro 0.07 each
$ million A B Total
At January 1, 2014 333 209 542
Scrip dividends 6 - 6
Repurchases of shares (2) (3) (5)
At September 30, 2014 337 206 543
At January 1, 2013 321 221 542
Scrip dividends 8 - 8
Repurchases of shares - (10) (10)
At September 30, 2013 329 211 540
The total nominal value of sterling deferred shares is less than $1 million.
At Royal Dutch Shell plc's Annual General Meeting on May 20, 2014, the Board
was authorised to allot ordinary shares in Royal Dutch Shell plc, and to grant
rights to subscribe for or to convert any security into ordinary shares in
Royal Dutch Shell plc, up to an aggregate nominal amount of euro 147 million
(representing 2,100 million ordinary shares of euro 0.07 each), and to list
such shares or rights on any stock exchange. This authority expires at the
earlier of the close of business on August 20, 2015, and the end of the Annual
General Meeting to be held in 2015, unless previously renewed, revoked or
varied by Royal Dutch Shell plc in a general meeting.
4. Other reserves
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve1 reserve1 reserve2 reserve income Total
At January 1, 2014 3,411 154 75 1,871 (7,548) (2,037)
Other comprehensive
loss attributable to
Royal Dutch Shell plc
shareholders - - - - (6,650) (6,650)
Scrip dividends (6) - - - - (6)
Repurchases of shares - - 5 - - 5
Share-based
compensation - - - (122) - (122)
At September 30, 2014 3,405 154 80 1,749 (14,198) (8,810)
At January 1, 2013 3,423 154 63 2,028 (9,420) (3,752)
Other comprehensive
loss attributable to
Royal Dutch Shell plc
shareholders - - - - (210) (210)
Scrip dividends (8) - - - - (8)
Repurchases of shares - - 10 - - 10
Share-based
compensation - - - (256) - (256)
At September 30, 2013 3,415 154 73 1,772 (9,630) (4,216)
1 The merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent company of
Royal Dutch Petroleum Company and The "Shell" Transport and Trading Company,
plc, now The Shell Transport and Trading Company Limited, in 2005.
2 The capital redemption reserve was established in connection with repurchases
of shares of Royal Dutch Shell plc.
5. Derivative contracts
The table below provides the carrying amounts of derivatives contracts held,
disclosed in accordance with IFRS 13 Fair Value Measurement.
$ million Sep 30, 2014 Jun 30, 2014 Sep 30, 2013
Included within:
Trade and other receivables - non-current 1,003 1,587 1,683
Trade and other receivables - current 7,000 8,393 7,218
Trade and other payables - non-current 589 497 583
Trade and other payables - current 6,230 8,949 7,200
As disclosed in the Consolidated Financial Statements for the year ended
December 31, 2013, presented in the Annual Report and Form 20-F for that year,
Shell is exposed to the risks of changes in fair value of its financial assets
and liabilities. The fair values of the financial assets and liabilities are
defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. Methods and assumptions used to estimate the fair values
at September 30, 2014 are consistent with those used in the year ended December
31, 2013, and the carrying amounts of derivative contracts measured using
predominantly unobservable inputs has not changed materially since that date.
The fair value of debt excluding finance lease liabilities at September 30,
2014, was $38,013 million (June 30, 2014: $39,047million; September 30, 2013:
$33,604 million). Fair value is determined from the prices quoted for those
securities.
6. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply or
purchase oil and gas products, and also enters into derivative contracts to
mitigate resulting economic exposures (generally price exposure). Derivative
contracts are carried at period-end market price (fair value), with movements
in fair value recognised in income for the period. Supply and purchase
contracts entered into for operational purposes are, by contrast, recognised
when the transaction occurs (see also below); furthermore, inventory is carried
at historical cost or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or
purchase transaction is recognised in a different period; or (b) the inventory
is measured on a different basis.
In addition, certain UK gas contracts held by Upstream are, due to pricing or
delivery conditions, deemed to contain embedded derivatives or written options
and are also required to be carried at fair value even though they are entered
into for operational purposes.
The accounting impacts of the aforementioned are reported as identified items
in this Report.
7. Return on average capital employed
Return on average capital employed (ROACE) measures the efficiency of Shell's
utilisation of the capital that it employs and is a common measure of business
performance. In this calculation, ROACE is defined as the sum of income for the
current and previous three quarters, adjusted for after-tax interest expense,
as a percentage of the average capital employed for the same period. Capital
employed consists of total equity, current debt and non-current debt.
8. Liquidity and capital resources
Third quarter net cash from operating activities was $12.8 billion compared
with $10.4 billion for the same period last year.
Total current and non-current debt decreased to $43.0 billion at September 30,
2014 from $44.1 billion at June 30, 2014 while cash and cash equivalents
increased to $19.0 billion at September 30, 2014 from $15.4 billion at June 30,
2014. No new debt was issued under the US shelf registration or under the euro
medium-term note programme during the third quarter of 2014.
Net capital investment for the third quarter 2014 was $4.8 billion, of which
$5.4 billion in Upstream, and ($0.6) billion in Downstream. Net capital
investment for the same period of 2013 was $9.4 billion, of which $8.1 billion
in Upstream, $1.2 billion in Downstream and $0.1 billion in Corporate.
Dividends of $0.47 per share are announced on October 30, 2014 in respect of
the third quarter. These dividends are payable on December 22, 2014. In the
case of B shares, the dividends will be payable through the dividend access
mechanism and are expected to be treated as UK-source rather than Dutch-source.
See the Annual Report and Form 20-F for the year ended December 31, 2013 for
additional information on the dividend access mechanism.
Nine months net cash from operating activities was $35.4 billion compared with
$34.4 billion for the same period last year.
Total current and non-current debt decreased to $43.0 billion at September 30,
2014 from $44.6 billion at December 31, 2013 while cash and cash equivalents
increased to $19.0 billion at September 30, 2014 from $9.7 billion at December
31, 2013. New debt was issued under the euro medium-term note programme during
the first nine months 2014.
Net capital investment in the first nine months 2014 was $16.1 billion, of
which $15.3 billion in Upstream, $0.7 billion in Downstream and $0.1 billion in
Corporate. Net capital investment for the same period of 2013 was $28.5
billion, of which $25.1 billion in Upstream, $3.3 billion in Downstream and
$0.1billion in Corporate.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited. All peak production
figures in Portfolio Developments are quoted at 100% expected production.
The companies in which Royal Dutch Shell plc directly and indirectly owns
investments are separate entities. In this document "Shell", "Shell group" and
"Royal Dutch Shell" are sometimes used for convenience where references are
made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the
words "we", "us" and "our" are also used to refer to subsidiaries in general or
to those who work for them. These expressions are also used where no useful
purpose is served by identifying the particular company or companies.
''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this
document refer to companies over which Royal Dutch Shell plc either directly or
indirectly has control. Companies over which Shell has joint control are
generally referred to as "joint ventures" and companies over which Shell has
significant influence but neither control nor joint control are referred to as
"associates". The term "Shell interest" is used for convenience to indicate the
direct and/or indirect ownership interest held by Shell in a venture,
partnership or company, after exclusion of all third-party interest.
This document contains forward-looking statements concerning the financial
condition, results of operations and businesses of Royal Dutch Shell. All
statements other than statements of historical fact are, or may be deemed to
be, forward-looking statements. Forward-looking statements are statements of
future expectations that are based on management's current expectations and
assumptions and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially from those
expressed or implied in these statements. Forward-looking statements include,
among other things, statements concerning the potential exposure of Royal Dutch
Shell to market risks and statements expressing management's expectations,
beliefs, estimates, forecasts, projections and assumptions. These
forward-looking statements are identified by their use of terms and phrases
such as ''anticipate'', ''believe'', ''could'', ''estimate'', ''expect'',
''goals'', ''intend'', ''may'', ''objectives'', ''outlook'', ''plan'',
''probably'', ''project'', ''risks'', "schedule", ''seek'', ''should'',
''target'', ''will'' and similar terms and phrases. There are a number of
factors that could affect the future operations of Royal Dutch Shell and could
cause those results to differ materially from those expressed in the
forward-looking statements included in this document, including (without
limitation): (a) price fluctuations in crude oil and natural gas; (b) changes
in demand for Shell's products; (c) currency fluctuations; (d) drilling and
production results; (e) reserves estimates; (f) loss of market share and
industry competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential acquisition properties
and targets, and successful negotiation and completion of such transactions;
(i) the risk of doing business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and regulatory developments
including regulatory measures addressing climate change; (k) economic and
financial market conditions in various countries and regions; (l) political
risks, including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; and (m) changes in
trading conditions. All forward-looking statements contained in this document
are expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Readers should not place undue
reliance on forward-looking statements. Additional risk factors that may affect
future results are contained in Royal Dutch Shell's Form 20-F for the year
ended December 31, 2013 (available at www.shell.com/investor and www.sec.gov).
These risk factors also expressly qualify all forward-looking statements
contained in this document and should be considered by the reader. Each
forward-looking statement speaks only as of the date of this document, October
30, 2014. 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 document.
We may have used certain terms, such as resources, in this document that the
United States Securities and Exchange Commission (SEC) strictly prohibits us
from including in our filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 20-F, File No 1-32575, available on
the SEC website www.sec.gov. You can also obtain this form from the SEC by
calling 1-800-SEC-0330.
October 30, 2014
The information in this Report 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:
- Investor Relations: International + 31 (0) 70 377 4540; North America +1 832
337 2034
- Media: International +44 (0) 207 934 5550; USA +1 713 241 4544
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