Royal Dutch Shell: 2nd Quarter and Half Year 2017 Unaudited Results - Part 1
27/07/2017 07:00
ROYAL DUTCH SHELL PLC
2(ND) QUARTER AND HALF YEAR 2017 UNAUDITED RESULTS
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 % (1) Definition 2017 2016 %
1,545 3,538 1,175 +31 Income/(loss) attributable to shareholders 5,083 1,659 +206
1,920 3,381 239 +703 CCS earnings attributable to shareholders A 5,301 1,053 +403
(1,684) (373) (806) Of which: Identified items B (2,057) (1,545)
3,604 3,754 1,045 +245 CCS earnings attributable to shareholders excluding identified items 7,358 2,598 +183
110 109 80 Add: CCS earnings attributable to non-controlling interest 219 163
3,714 3,863 1,125 +230 CCS earnings excluding identified items 7,577 2,761 +174
Of which:
1,169 1,181 868 Integrated Gas 2,350 1,862
339 540 (1,325) Upstream 879 (2,762)
2,529 2,489 1,816 Downstream 5,018 3,826
(323) (347) (234) Corporate (670) (165)
11,285 9,508 2,292 +392 Cash flow from operating activities 20,793 2,953 +604
872 (4,324) (5,450) Cash flow from investing activities (3,452) (22,366)
12,157 5,184 (3,158) Free cash flow H 17,341 (19,413)
0.19 0.43 0.15 +27 Basic earnings per share ($) 0.62 0.22 +182
0.23 0.41 0.03 +667 Basic CCS earnings per share ($) A 0.65 0.14 +364
0.44 0.46 0.13 +238 Basic CCS earnings per share excl. identified items ($) 0.90 0.34 +165
0.47 0.47 0.47 - Dividend per share ($) 0.94 0.94 -
1. Q2 on Q2 change
Compared with the second quarter 2016, CCS earnings attributable to
shareholders excluding identified items of $3.6 billion reflected higher
contributions from Downstream, driven by improved operational performance and
stronger chemicals and refining industry conditions. Earnings also benefited
from higher contributions from Upstream and Integrated Gas which benefited
from higher realised prices and increased production from new fields,
offsetting the impact of reduced volumes from Pearl GTL in Qatar.
Cash flow from operating activities for the second quarter 2017 of $11.3
billion included favourable working capital movements of $2.3 billion,
compared with $2.3 billion in the second quarter 2016, which included negative
working capital movements of $2.5 billion.
Total dividends distributed to shareholders in the quarter were $3.9 billion,
of which $0.9 billion were settled by issuing 33.9 million A shares under the
Scrip Dividend Programme.
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“Shell’s strong results this quarter show that we are reshaping the
company following the integration of BG.
Cash generation has been resilient over four consecutive quarters, at an
average oil price of just under $50 per barrel. This quarter, we generated
robust earnings excluding identified items of $3.6 billion, while over the
past 12 months cash flow from operations of $38 billion has covered our cash
dividend and reduced gearing to 25%.
The external price environment and energy sector developments mean we will
remain very disciplined, with an absolute focus on the four levers within our
control, namely capital efficiency, costs, new project delivery, and
divestments.
I am confident that we are on track to deliver a world-class investment to our
shareholders.”
ADDITIONAL PERFORMANCE MEASURES
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 % (1) Definition 2017 2016 %
6,766 4,720 6,284 Capital investment (2) C 11,486 65,259
9,472 29 1,002 Divestments D 9,501 1,487
3,495 3,752 3,508 - Total production available for sale (thousand boe/d) 3,622 3,584 +1
45.62 48.36 39.31 +16 Global liquids realised price ($) 47.02 34.20 +37
4.22 4.29 3.21 +31 Global natural gas realised price ($) 4.26 3.56 +20
9,548 9,282 11,546 -17 Operating expenses G 18,830 21,660 -13
9,339 9,181 9,790 -5 Underlying operating expenses G 18,520 19,253 -4
4.0% 4.0% -1.4% ROACE (reported income basis) E 4.0% -1.4%
4.2% 3.3% 2.5% ROACE (CCS basis excluding identified items) E 4.2% 2.5%
25.3% 27.2% 28.1% Gearing F 25.3% 28.1%
1. Q2 on Q2 change
2. Half year 2016 included $52,904 million related to the acquisition of BG Group plc.
Supplementary financial and operational disclosure for this quarter is
available at www.shell.com/investor.
SECOND QUARTER 2017 PORTFOLIO DEVELOPMENTS
Integrated Gas
During the quarter, Shell announced the sale of its interest in the Kapuni
assets in New Zealand.
Shell announced an agreement to acquire Chevron’s interests in Trinidad and
Tobago, including its interests in the East Coast Marine Area Blocks 6b, 5a
and E.
Upstream
During the quarter, Shell announced first production at the Lula South
deep-water development with floating production, storage and offloading
(“FPSO”) P66 in the Brazilian pre-salt of the Santos Basin.
The non-operated Schiehallion Redevelopment (Shell interest 55%) in the United
Kingdom reached first production.
Upstream divestments completed during the quarter totalled $8,084 million and
included the sale of Shell’s oil sands and in-situ interests in Canada.
In July, Shell announced that it will purchase the Turritella FPSO currently
contracted for the Stones deep-water development in the Gulf of Mexico from
SBM Offshore.
Also in July, Shell announced the sale of its interests in the Corrib gas
venture in Ireland.
Downstream
During the quarter, Shell announced the sale of its LPG business in Hong Kong
and Macau.
Downstream divestments completed during the quarter totalled $1,348 million
and included the Motiva transaction in the United States (See Note 7), the
sale of Shell’s interests in Vivo Energy in Africa, and of the aviation
business in Australia.
The information in this Report also represents Royal Dutch Shell plc’s
half-yearly financial report for the purposes of the Disclosure Guidance and
Transparency Rules of the UK Financial Conduct Authority. As such: (1) the
interim management report can be found on pages 1 to 7 and 16 to 20; (2) the
condensed set of financial statements on pages 8 to 15; and (3) the
directors’ responsibility statement on page 21 and the auditors’
independent review on page 22.
PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 % (1) 2017 2016 %
1,191 1,822 982 +21 Segment earnings 3,013 1,887 +60
22 641 114 Of which: Identified items (Definition B) 663 25
1,169 1,181 868 +35 Earnings excluding identified items 2,350 1,862 +26
1,951 1,951 2,730 -29 Cash flow from operating activities 3,902 5,387 -28
831 805 1,153 -28 Capital investment (Definition C) (2) 1,636 23,977 -93
188 169 219 -14 Liquids production available for sale (thousand b/d) 178 222 -20
3,683 3,317 3,831 -4 Natural gas production available for sale (million scf/d) 3,501 3,682 -5
823 741 880 -6 Total production available for sale (thousand boe/d) 782 856 -9
8.09 8.18 7.57 +7 LNG liquefaction volumes (million tonnes) 16.27 14.61 +11
16.08 15.84 14.25 +13 LNG sales volumes (million tonnes) 31.92 26.54 +20
1. Q2 on Q2 change
2. Half year 2016 included $21,773 million related to the acquisition of BG Group plc.
Second quarter identified items mainly reflected a gain on fair value
accounting of certain commodity derivatives of $48 million, partly offset by
an impairment of $34 million.
Compared with the second quarter 2016, Integrated Gas earnings excluding
identified items benefited from higher realised oil, gas, and LNG prices,
higher LNG volumes, and lower operating expenses. This more than offset the
impact of lower liquids production volumes and lower contributions from
trading.
Despite higher earnings, cash flow from operating activities decreased
compared with the same quarter a year ago which benefited from favourable
working capital movements of $2,043 million.
Compared with the second quarter 2016, production volumes decreased mainly as
a result of the Pearl GTL shutdown in the first quarter, which was ramping up
again in the second quarter. Pearl GTL is now operating at full planned
production. New field start-ups and the continuing ramp-up of existing fields,
in particular Gorgon in Australia, contributed some 79 thousand boe/d to
production compared with the second quarter 2016.
Compared with the second quarter 2016, LNG liquefaction volumes mainly
reflected the start-up of Gorgon in Australia and lower maintenance, partly
offset by lower feedgas availability mainly at QGC in Australia.
LNG sales volumes mainly reflected increased trading of third-party volumes
and higher liquefaction volumes compared with the same quarter a year ago.
Half year identified items primarily reflected a gain of $492 million related
to the impact of the strengthening Australian dollar on a deferred tax
position and a gain on fair value accounting of certain commodity derivatives
of $216 million.
Compared with the first half 2016, Integrated Gas earnings excluding
identified items benefited from higher realised oil, gas, and LNG prices,
higher LNG volumes, and lower exploration expense. This more than offset the
impact of lower liquids production volumes, the accounting reclassification of
Shell’s investment in Woodside in the second quarter 2016, and increased
depreciation.
Despite higher earnings, cash flow from operating activities decreased
compared with the first half 2016 which benefited from favourable working
capital movements of $3,671 million.
Compared with the first half 2016, production volumes decreased mainly as a
result of the shutdown of Pearl GTL in the first quarter, which was ramping up
again in the second quarter. New field start-ups and the continuing ramp-up of
existing fields, in particular Gorgon in Australia, contributed some 76
thousand boe/d to production compared with the first half 2016.
Compared with the first half 2016, LNG liquefaction volumes mainly reflected
the start-up of Gorgon in Australia.
LNG sales volumes mainly reflected increased trading of third-party volumes
and higher liquefaction volumes compared with the same period a year ago.
UPSTREAM
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 % (1) 2017 2016 %
(544) (530) (1,974) +72 Segment earnings (1,074) (3,324) +68
(883) (1,070) (649) Of which: Identified items (Definition B) (1,953) (562)
339 540 (1,325) +126 Earnings excluding identified items 879 (2,762) +132
4,501 3,849 (297) +1,615 Cash flow from operating activities 8,350 151 +5,430
4,504 2,854 3,700 +22 Capital investment (Definition C) (2) 7,358 38,738 -81
1,626 1,697 1,526 +7 Liquids production available for sale (thousand b/d) 1,662 1,541 +8
6,064 7,618 6,395 -5 Natural gas production available for sale (million scf/d) 6,837 6,884 -1
2,672 3,011 2,628 +2 Total production available for sale (thousand boe/d) 2,840 2,728 +4
1. Q2 on Q2 change
2. Second quarter 2017 includes $1,465 million related to the acquisition of Marathon Oil Canada Corporation in Canada. Half year 2016 included $31,131 million related to the acquisition of BG Group plc.
Second quarter identified items comprised impairments of $695 million, mainly
related to the divestments of Shell’s oil sands interests in Canada and
Shell E&P Ireland Limited, and a charge of $183 million related to the impact
of the weakening Brazilian real on a deferred tax position.
Compared with the second quarter 2016, Upstream earnings excluding identified
items benefited from higher realised oil and gas prices, lower depreciation
including the impact of assets held for sale and divestments, and increased
production volumes mainly from assets ramping up.
Cash flow from operating activities increased driven by higher earnings and
favourable working capital movements of $673 million, compared with negative
working capital movements of $455 million in the same quarter a year ago.
New field start-ups and the continuing ramp-up of existing fields, in
particular Lula Alto, Lula Central, Lula South and Iracema North in Brazil,
Kashagan in Kazakhstan, and Stones in the Gulf of Mexico, contributed some 184
thousand boe/d to production compared with the second quarter 2016, which more
than offset the impact of field declines.
Half year identified items primarily reflected the impact of a $1,453 million
net charge on the divestment of Shell’s oil sands interests in Canada
representing an impairment partly offset by the recognition of a deferred tax
asset. Identified items also included an impairment charge of $348 million
related to the divestment of Shell E&P Ireland Limited.
Compared with the first half 2016, Upstream earnings excluding identified
items benefited from higher realised oil and gas prices, increased production
volumes mainly from assets ramping up, and lower depreciation including the
impact of assets held for sale.
Cash flow from operating activities increased driven by higher earnings,
compared with the same period a year ago, which also included negative working
capital movements of $1,989 million.
New field start-ups and the continuing ramp-up of existing fields, in
particular Lula Central, Lula Alto and Lapa in Brazil, Kashagan in Kazakhstan,
Sabah Gas Kebabangan in Malaysia, and Stones in the Gulf of Mexico,
contributed some 162 thousand boe/d to production compared with the same
period a year ago, which more than offset the impact of field declines.
DOWNSTREAM
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 % (1) 2017 2016 %
2,157 2,580 1,717 +26 Segment earnings (2) 4,737 3,417 +39
(372) 91 (99) Of which: Identified items (Definition B) (281) (409)
2,529 2,489 1,816 +39 Earnings excluding identified items (2) 5,018 3,826 +31
Of which:
1,905 1,653 1,568 +21 Oil Products 3,558 3,201 +11
760 715 459 +66 Refining & Trading 1,475 1,121 +32
1,145 938 1,109 +3 Marketing 2,083 2,080 -
624 836 248 +152 Chemicals 1,460 625 +134
5,126 3,705 571 +798 Cash flow from operating activities 8,831 (863) +1,123
1,419 1,046 1,389 +2 Capital investment (Definition C) 2,465 2,481 -1
2,476 2,630 2,648 -6 Refinery processing intake (thousand b/d) 2,553 2,646 -4
6,467 6,508 6,595 -2 Oil products sales volumes (thousand b/d) 6,487 6,410 +1
4,465 4,546 4,248 +5 Chemicals sales volumes (thousand tonnes) 9,011 8,298 +9
1. Q2 on Q2 change
2. Earnings are presented on a CCS basis (See Note 2).
Second quarter identified items primarily reflected the impact of the Motiva
transaction resulting in a net charge of $546 million which included a
non-cash charge on a taxable gain (see Note 7). This was partly offset by a
gain of $339 million, mainly related to the divestment of assets in Africa and
Australia. Other identified items included an onerous contract provision of
$71 million and impairments of $62 million.
Compared with the second quarter 2016, Downstream earnings excluding
identified items benefited from stronger chemicals and refining industry
conditions, improved operational performance, and lower operating expenses.
Cash flow from operating activities included favourable working capital
movements of $1,744 million compared with negative working capital movements
of $3,415 million in the same quarter a year ago.
Oil Products
* Refining & Trading earnings excluding identified items benefited from
stronger refining industry conditions, improved operational performance and
lower operating expenses.
Refinery processing intake volumes decreased mainly as a result of the Motiva
transaction and the divestment of the Port Dickson refinery in Malaysia.
Excluding these portfolio impacts, intake volumes were 7% higher compared with
the same period a year ago. Refinery availability increased to 91% compared
with 89% in the second quarter 2016, mainly as a result of lower unplanned
maintenance.
* Marketing earnings excluding identified items benefited from lower taxation,
stronger underlying margins and lower operating expenses, more than offsetting
the impact of adverse exchange rate effects and divestments.
Oil products sales volumes reflected lower marketing volumes mainly as a
result of portfolio impacts, partly offset by higher trading volumes.
Chemicals
* Chemicals earnings excluding identified items benefited from improved
operational performance and stronger industry conditions and lower operating
expenses.
Chemicals sales volumes benefited from improved operational performance.
Chemicals manufacturing plant availability increased to 92% from 85% in the
second quarter 2016, mainly reflecting lower downtime.
Half year identified items primarily reflected the impact of the Motiva
transaction resulting in a net charge of $546 million which included a
non-cash charge on a taxable gain (see Note 7). This was partly offset by a
gain of $315 million, mainly related to the divestment of assets in Africa and
Australia. Identified items also included impairments of $162 million, and an
onerous contract provision of $110 million. These charges were partly offset
by a net gain on fair value accounting of commodity derivatives of $301
million.
Compared with the first half 2016, Downstream earnings excluding identified
items benefited from stronger chemicals and refining industry conditions and
improved operational performance.
Cash flow from operating activities included favourable working capital
movements of $1,523 million compared with negative working capital movements
of $6,997 million in the same period a year ago.
Oil Products
* Refining & Trading earnings excluding identified items benefited from
improved refining industry conditions and operational performance, partly
offset by lower contributions from trading.
Refinery processing intake volumes decreased mainly as a result of the Motiva
transaction and the divestment of the Port Dickson refinery in Malaysia.
Excluding these portfolio impacts intake volumes were 7% higher compared with
the same period a year ago. Refinery availability increased to 92% compared
with 89% in the first half 2016, mainly as a result of lower unplanned
maintenance.
* Marketing earnings excluding identified items benefited from lower taxation,
stronger underlying margins and lower operating expenses, more than offsetting
the impact of adverse exchange rate effects and divestments.
Oil products sales volumes reflected higher trading volumes partly offset by
lower marketing volumes, mainly as a result of portfolio impacts.
Chemicals
* Chemicals earnings excluding identified items benefited from stronger
industry conditions and improved operational performance.
Chemicals sales volumes benefited from improved operational performance.
Chemicals manufacturing plant availability increased to 93% from 86% in the
first half 2016, mainly reflecting lower downtime.
CORPORATE
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
(774) (410) (423) Segment earnings (1,184) (879)
(451) (63) (189) Of which: Identified items (Definition B) (514) (714)
(323) (347) (234) Earnings excluding identified items (670) (165)
(293) 3 (712) Cash flow from operating activities (290) (1,722)
Second quarter identified items mainly reflected a non-cash charge of $550
million related to the restructuring of the funding of our businesses in North
America, partly offset by a tax credit of $87 million related to an exchange
rate loss on financing of the Upstream business.
Compared with the second quarter 2016, Corporate earnings excluding identified
items were impacted by higher net interest expense, lower tax credits, and
adverse currency exchange rate effects, partly offset by lower costs.
Half year identified items mainly reflected a non-cash charge of $550 million
related to the restructuring of the funding of our businesses in North
America.
Compared with the first half 2016, Corporate earnings excluding identified
items were impacted by higher net interest expense, partly offset by lower
costs.
OUTLOOK FOR THE THIRD QUARTER 2017
Compared with the third quarter 2016, Integrated Gas production volumes are
expected to be positively impacted by some 60 thousand boe/d mainly associated
with the start-up of Gorgon, partly offset by higher expected maintenance in
the LNG plants.
Compared with the third quarter 2016, Upstream earnings are expected to be
negatively impacted by a reduction of some 190 thousand boe/d associated with
completed divestments, by some 40 thousand boe/d associated with the impact of
lower production at NAM in the Netherlands, and by some 30 thousand boe/d
associated with higher maintenance. Earnings are expected to be positively
impacted by some 90 thousand boe/d associated with restored production in
Nigeria; however, security conditions remain sensitive.
Refinery availability is expected to increase in the third quarter 2017 as a
result of lower levels of maintenance compared with the same period a year
ago.
Chemicals manufacturing plant availability is expected to increase in the
third quarter 2017 reflecting improved operational performance at Bukom and
lower maintenance compared with the third quarter 2016.
As a result of completed divestments in Malaysia, Australia, and the
separation of Motiva assets, oil products sales volumes are expected to
decrease by some 240 thousand barrels per day compared with the same period a
year ago.
Corporate earnings excluding identified items, excluding the impact of
currency exchange rate effects and interest rate movements, are expected to be
a net charge of $350 – 450 million in the third quarter and a net charge of
around $1.4 – 1.6 billion for the full year.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 (1) 2017 2016 (1)
72,131 71,796 58,415 Revenue (2) 143,927 106,969
931 1,198 946 Share of profit of joint ventures and associates 2,129 1,735
(360) 317 910 Interest and other income (3) (43) 1,299
72,702 73,311 60,271 Total revenue and other income 146,013 110,003
53,237 51,266 40,362 Purchases 104,503 73,648
6,934 6,658 8,076 Production and manufacturing expenses 13,592 14,841
2,394 2,412 3,227 Selling, distribution and administrative expenses 4,806 6,333
220 212 243 Research and development 432 486
255 443 535 Exploration 698 992
6,181 7,838 6,097 Depreciation, depletion and amortisation (4) 14,019 12,244
935 1,112 770 Interest expense 2,047 1,140
70,156 69,941 59,310 Total expenditure 140,097 109,684
2,546 3,370 961 Income/(loss) before taxation 5,916 319
904 (274) (319) Taxation charge/(credit) (5) 630 (1,416)
1,642 3,644 1,280 Income/(loss) for the period (2) 5,286 1,735
97 106 105 Income/(loss) attributable to non-controlling interest 203 76
1,545 3,538 1,175 Income/(loss) attributable to Royal Dutch Shell plc shareholders 5,083 1,659
0.19 0.43 0.15 Basic earnings per share ($) (6) 0.62 0.22
0.19 0.43 0.15 Diluted earnings per share ($) (6) 0.62 0.22
1. Second quarter 2016 and Half year 2016 have not been revised to include credits, of $167 million and $254 million after taxation respectively, that resulted from adjustments made in the third quarter 2016 to the fair value of net assets acquired from BG Group plc.
2. See Note 2 “Segment information”
3. Second quarter 2017 includes a net charge of $546 million related to the Motiva transaction (See Note 7) and a pre-tax foreign exchange loss of $545 million related to the restructuring of the funding of our businesses in North America.
4. Second quarter 2017 includes a pre-tax impairment charge of $836 million (Q1 2017: $2,442 million; Q2 2016: $218 million). Half year 2017 includes a pre-tax impairment charge of $3,278 million (Half year 2016: $859 million).
5. Second quarter 2017 includes a loss of $77 million driven by exchange rate movements on tax balances (Q1 2017: $535 million gain; Q2 2016: $53 million loss). Half year 2017 includes a $458 million gain driven by exchange rate movements on tax balances (Half year 2016: $521 million gain) and a $329 million gain from a deferred tax asset recognition following the oil sands divestment.
6. See Note 3 “Earnings per share”
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
1,642 3,644 1,280 Income/(loss) for the period 5,286 1,735
Other comprehensive income net of tax:
Items that may be reclassified to income in later periods:
2,027 1,222 (434) * Currency translation differences 3,249 1,885
(122) 129 (128) * Unrealised gains/(losses) on securities 7 (140)
171 88 (538) * Cash flow hedging gains/(losses) 259 (214)
- - (863) * Net investment hedging gains/(losses) - (727)
72 60 (77) * Share of other comprehensive income/(loss) of joint ventures and associates 132 (69)
2,148 1,499 (2,040) Total 3,647 735
Items that are not reclassified to income in later periods:
1,419 1,753 (2,795) * Retirement benefits remeasurements 3,172 (4,429)
3,567 3,252 (4,835) Other comprehensive income/(loss) for the period 6,819 (3,694)
5,209 6,896 (3,555) Comprehensive income/(loss) for the period 12,105 (1,959)
152 116 96 Comprehensive income/(loss) attributable to non-controlling interest 268 100
5,057 6,780 (3,651) Comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders 11,837 (2,059)
CONDENSED CONSOLIDATED BALANCE SHEET
$ million Jun 30, 2017 (1) Dec 31, 2016
Assets
Non-current assets
Intangible assets 24,507 23,967
Property, plant and equipment (2,3) 231,544 236,098
Joint ventures and associates 28,785 33,255
Investments in securities (4) 8,829 5,952
Deferred tax 16,045 14,425
Retirement benefits 4,403 1,456
Trade and other receivables (5) 8,620 9,553
322,733 324,706
Current assets
Inventories 22,318 21,775
Trade and other receivables (5) 41,742 45,664
Cash and cash equivalents 23,992 19,130
88,052 86,569
Total assets 410,785 411,275
Liabilities
Non-current liabilities
Debt 80,731 82,992
Trade and other payables (5) 5,471 6,925
Deferred tax 14,570 15,274
Retirement benefits 13,031 14,130
Decommissioning and other provisions (6) 29,480 29,618
143,283 148,939
Current liabilities
Debt 9,616 9,484
Trade and other payables (5) 48,518 53,417
Taxes payable 9,043 6,685
Retirement benefits 446 455
Decommissioning and other provisions 3,622 3,784
71,245 73,825
Total liabilities 214,528 222,764
Equity attributable to Royal Dutch Shell plc shareholders 193,042 186,646
Non-controlling interest 3,215 1,865
Total equity 196,257 188,511
Total liabilities and equity 410,785 411,275
1. See Note 7 “Motiva joint venture”
2. Divestments in the second quarter 2017 resulted in a decrease of $8,642 million in the carrying amount of property, plant and equipment, principally related to the divestment of Shell’s oil sands interests in Canada.
3. At June 30, 2017, the carrying amount includes $5,336 million of assets held for sale (December 31, 2016: $282 million).
4. At June 30, 2017, investments include $2,829 million for shares in Canadian Natural Resources Limited received in the second quarter 2017 as partial consideration for the oil sands divestment.
5. See Note 6 “Derivative contracts and debt excluding finance lease liabilities”
6. At June 30, 2017, provisions of $2,534 million relate to assets held for sale (December 31, 2016: $482 million).
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch Shell plc shareholders
$ million Share capital (1) Shares Other reserves (2) Retained earnings Total Non- Total equity
held in controlling
trust interest
At January 1, 2017 683 (901) 11,298 175,566 186,646 1,865 188,511
Comprehensive income/(loss) for the period - - 6,754 5,083 11,837 268 12,105
Dividends paid - - - (7,778) (7,778) (196) (7,974)
Scrip dividends 6 - (6) 2,183 2,183 - 2,183
Share-based compensation - 561 (410) 2 153 - 153
Other changes in non-controlling interest (3) - - - 1 1 1,278 1,279
At June 30, 2017 689 (340) 17,636 175,057 193,042 3,215 196,257
At January 1, 2016 546 (584) (17,186) 180,100 162,876 1,245 164,121
Comprehensive income/(loss) for the period - - (3,718) 1,659 (2,059) 100 (1,959)
Dividends paid - - - (7,411) (7,411) (69) (7,480)
Scrip dividends 9 - (9) 2,717 2,717 - 2,717
Shares issued 120 - 33,930 - 34,050 - 34,050
Share-based compensation - (168) 266 133 231 - 231
Other changes in non-controlling interest - - - 266 266 560 826
At June 30, 2016 675 (752) 13,283 177,464 190,670 1,836 192,506
1. See Note 4 “Share capital”
2. See Note 5 “Other reserves”
3. Primarily reflects the 50% non-controlling interest share in the acquisition of Marathon Oil Canada Corporation in Canada in the second quarter 2017.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
1,642 3,644 1,280 Income/(loss) for the period 5,286 1,735
Adjustment for:
1,508 1,882 119 - Current tax 3,390 872
757 952 671 - Interest expense (net) 1,709 943
6,181 7,838 6,097 - Depreciation, depletion and amortisation 14,019 12,244
68 70 (535) - Net (gains)/losses on sale and revaluation of non-current assets and businesses (1) 138 (710)
2,258 (1,828) (2,474) - Decrease/(increase) in working capital 430 (6,383)
(931) (1,198) (946) - Share of (profit)/loss of joint ventures and associates (2,129) (1,735)
1,493 776 964 - Dividends received from joint ventures and associates 2,269 1,652
(876) (2,039) (533) - Deferred tax, retirement benefits, decommissioning and other provisions (2,915) (2,288)
521 501 (346) - Other (2) 1,022 (638)
(1,336) (1,090) (2,005) Tax paid (2,426) (2,739)
11,285 9,508 2,292 Cash flow from operating activities 20,793 2,953
(5,660) (4,306) (5,796) Capital expenditure (9,966) (11,120)
- - - Acquisition of BG Group plc, net of cash and cash equivalents acquired - (11,421)
(157) (194) (216) Investments in joint ventures and associates (351) (548)
5,584 122 516 Proceeds from sale of property, plant and equipment and businesses (3) 5,706 562
1,081 1 23 Proceeds from sale of joint ventures and associates (4) 1,082 39
207 123 93 Interest received 330 229
(183) (70) (70) Other (253) (107)
872 (4,324) (5,450) Cash flow from investing activities (3,452) (22,366)
(578) (290) 1,870 Net increase/(decrease) in debt with maturity period within three months (868) 2,743
Other debt:
247 364 9,472 - New borrowings 611 9,736
(3,593) (1,322) (972) - Repayments (4,915) (2,941)
(1,002) (850) (725) Interest paid (1,852) (1,259)
6 2 397 Change in non-controlling interest 8 819
Cash dividends paid to:
(2,941) (2,654) (2,436) - Royal Dutch Shell plc shareholders (5,595) (4,694)
(165) (31) (34) - Non-controlling interest (196) (69)
- - - Repurchases of shares - -
7 (60) 6 Shares held in trust: net sales/(purchases) and dividends received (53) 2
(8,019) (4,841) 7,578 Cash flow from financing activities (12,860) 4,337
259 122 (217) Currency translation differences relating to cash and cash equivalents 381 (1,454)
4,397 465 4,203 Increase/(decrease) in cash and cash equivalents 4,862 (16,530)
19,595 19,130 11,019 Cash and cash equivalents at beginning of period 19,130 31,752
23,992 19,595 15,222 Cash and cash equivalents at end of period 23,992 15,222
1. Second quarter 2017 includes $546 million related to the Motiva transaction (See Note 7).
2. Second quarter 2017 includes a $545 million foreign exchange loss related to the restructuring of the funding of our businesses in North America.
3. Second quarter 2017 includes $5,188 million related to the oil sands divestment.
4. See Note 7 “Motiva joint venture”
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial Statements
(“Interim Statements”) of Royal Dutch Shell plc (“the Company”) and
its subsidiaries (collectively referred to as “Shell”) have been prepared
in accordance with IAS 34 Interim Financial Reporting as issued by the
International Accounting Standards Board and as adopted by the European Union,
and on the basis of the same accounting principles as, and should be read in
conjunction with, the Annual Report and Form 20-F for the year ended December
31, 2016 (pages 122 to 127) as filed with the U.S. Securities and Exchange
Commission.
The Directors consider it appropriate to continue to adopt the going concern
basis of accounting in preparing these Interim Statements.
The financial information presented in the Interim Statements does not
constitute statutory accounts within the meaning of section 434(3) of the
Companies Act 2006 (“the Act”). Statutory accounts for the year ended
December 31, 2016 were published in Shell’s Annual Report and a copy was
delivered to the Registrar of Companies in England and Wales. The auditors’
report on those accounts was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report and did not contain a statement under sections 498(2) or
498(3) of the Act.
2. 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.
INFORMATION BY SEGMENT
Quarters $ million Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
Third-party revenue
7,734 8,419 5,373 Integrated Gas 16,153 11,052
1,816 1,609 1,711 Upstream 3,425 3,633
62,575 61,752 51,315 Downstream 124,327 92,244
6 16 16 Corporate 22 40
72,131 71,796 58,415 Total third-party revenue 143,927 106,969
Inter-segment revenue
873 805 896 Integrated Gas 1,678 1,639
7,558 8,661 6,049 Upstream 16,220 11,086
1,099 726 341 Downstream 1,825 672
- - - Corporate - -
CCS earnings
1,191 1,822 982 Integrated Gas 3,013 1,887
(544) (530) (1,974) Upstream (1,074) (3,324)
2,157 2,580 1,717 Downstream 4,737 3,417
(774) (410) (423) Corporate (1,184) (879)
2,030 3,462 302 Total 5,492 1,101
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
1,642 3,644 1,280 Income/(loss) for the period 5,286 1,735
Current cost of supplies adjustment:
515 (217) (1,158) Purchases 298 (760)
(143) 60 323 Taxation (83) 203
16 (25) (143) Share of profit/(loss) of joint ventures and associates (9) (77)
388 (182) (978) 206 (634)
2,030 3,462 302 CCS earnings 5,492 1,101
3. Earnings per share
EARNINGS PER SHARE
Quarters Half year
Q2 2017 Q1 2017 Q2 2016 2017 2016
1,545 3,538 1,175 Income/(loss) attributable to Royal Dutch Shell plc shareholders ($ million) 5,083 1,659
Weighted average number of shares used as the basis for determining:
8,212.9 8,154.8 8,000.0 Basic earnings per share (million) 8,184.0 7,586.7
8,292.3 8,222.9 8,053.3 Diluted earnings per share (million) 8,257.7 7,641.8
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF €0.07 EACH (1)
Number of shares Nominal value ( $ million)
A B A B Total
At January 1, 2017 4,428,903,813 3,745,486,731 374 309 683
Scrip dividends 81,713,949 - 6 - 6
At June 30, 2017 4,510,617,762 3,745,486,731 380 309 689
At January 1, 2016 3,990,921,569 2,440,410,614 340 206 546
Scrip dividends 116,249,778 - 9 - 9
Shares issued 218,728,308 1,305,076,117 17 103 120
At June 30, 2016 4,325,899,655 3,745,486,731 366 309 675
1. Share capital at June 30, 2017 also included 50,000 issued and fully paid sterling deferred shares of £1 each.
At Royal Dutch Shell plc’s Annual General Meeting on May 23, 2017, 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 €190 million
(representing 2,714 million ordinary shares of €0.07 each), and to list such
shares or rights on any stock exchange. This authority expires at the earlier
of the close of business on August 23, 2018, and the end of the Annual General
Meeting to be held in 2018, unless previously renewed, revoked or varied by
Royal Dutch Shell plc in a general meeting.
5. Other reserves
OTHER RESERVES
$ million Merger Share premium reserve Capital redemption reserve Share plan reserve Accumulated other comprehensive income Total
reserve
At January 1, 2017 37,311 154 84 1,644 (27,895) 11,298
Other comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders - - - - 6,754 6,754
Scrip dividends (6) - - - - (6)
Share-based compensation - - - (410) - (410)
At June 30, 2017 37,305 154
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