REG-Royal Dutch Shell: 4th Quarter and Full Year 2015 Unaudited Results <Origin Href="QuoteRef">RDSa.L</Origin> - Part 2
04/02/2016 07:10
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(2,750) 1,939 (811) 155 (656)
income/(loss) - -
for the period
Capital 501 501 387 888
contributions - - -
from, and other
changes
in,
non-controlling
interest
Dividends paid - - - (11,972) (11,972) (117) (12,089)
Scrip 7 - (7) 2,602 2,602 - 2,602
dividends1
Repurchases of (1) - 1 1 1 - 1
shares2
Shares held in 606 70 676 676
trust: - - -
net sales and
dividends
received
Share-based - - (65) (22) (87) - (87)
compensation
At December 31, 546 (584) (17,186) 180,100 162,876 1,245 164,121
2015
At January 1, 542 (1,932) (2,037) 183,474 180,047 1,101 181,148
2014
Comprehensive - - (12,182) 14,874 2,692 (190) 2,502
income/(loss)
for the period
Capital - - - 727 727 25 752
contributions
from, and other
changes
in,
non-controlling
interest
Dividends paid - - - (11,843) (11,843) (116) (11,959)
Scrip 6 - (6) 2,399 2,399 - 2,399
dividends1
Repurchases of (8) - 8 (2,787) (2,787) - (2,787)
shares
Shares held in - 742 - 107 849 - 849
trust:
net sales and
dividends
received
Share-based - - (148) 30 (118) - (118)
compensation
At December 31, 540 (1,190) (14,365) 186,981 171,966 820 172,786
2014
1 Under the Scrip Dividend Programme some 96.3 million A shares, equivalent to
$2.6 billion, were issued during 2015 and some 64.6 million A shares,
equivalent to $2.4 billion, were issued during 2014.
2 Share repurchases in January 2015 were offset by repurchase commitments
accrued at December 31, 2014. The share buyback programme was suspended in
February 2015.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated
Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
Cash flow from operating activities
942 (7,393) 418 Income/(loss) for the period 2,200 14,730
Adjustment for:
1,212 1,146 2,330 - Current taxation 7,058 13,757
405 426 375 - Interest expense (net) 1,529 1,598
5,281 12,156 4,991 - Depreciation, depletion and 26,714 24,499
amortisation
(1,108) (493) (972) - Net losses/(gains) on sale of (3,460) (3,212)
non-current assets and businesses
1,598 5,883 6,124 - Decrease/(increase) in working 5,521 6,405
capital
(793) (193) (818) - Share of loss/(profit) of joint (3,527) (6,116)
ventures and associates
1,440 1,039 1,531 - Dividends received from joint 4,627 6,902
ventures and associates
(1,827) (2,407) (1,705) - Deferred taxation, retirement (5,827) (1,720)
benefits, decommissioning
and other provisions
(3) 2,302 1,000 - Other1 2,648 2,500
7,147 12,466 13,274 Net cash from operating activities 37,483 59,343
(pre-tax)
(1,724) (1,235) (3,666) Taxation paid (7,673) (14,299)
5,423 11,231 9,608 Net cash from operating activities 29,810 45,044
Cash flow from investing activities
(7,299) (6,412) (8,831) Capital expenditure2 (26,131) (31,676)
(5) (274) 107 Investments in joint ventures and (896) (1,426)
associates
1,398 913 2,245 Proceeds from sale of property, 4,720 9,873
plant and equipment and businesses
26 81 279 Proceeds from sale of joint ventures 276 4,163
and associates
91 82 56 Interest received 288 174
(397) (108) (536) Other2 (664) (765)
(6,186) (5,718) (6,680) Net cash used in investing (22,407) (19,657)
activities
Cash flow from financing activities
(9) (1,394) (173) Net increase/(decrease) in debt with (586) (3,332)
maturity period within three months
5,213 5,490 4,001 Other debt: New borrowings 21,500 7,778
(1,818) (1,387) (571) Repayments (6,023) (4,089)
(484) (532) (310) Interest paid (1,742) (1,480)
177 2 1,002 Change in non-controlling interest 598 989
Cash dividends paid to:
(1,782) (2,362) (2,987) - Royal Dutch Shell plc shareholders (9,370) (9,444)
(45) (27) (39) - Non-controlling interest (117) (116)
- - (971) Repurchases of shares (409) (3,328)
7 (1) (29) Shares held in trust: net sales/ (39) 232
(purchases) and dividends received
1,259 (211) (77) Net cash used in financing 3,812 (12,790)
activities
(590) (437) (271) Currency translation differences (1,070) (686)
relating to cash and
cash equivalents
(94) 4,865 2,580 Increase/(decrease) in cash and cash 10,145 11,911
equivalents
31,846 26,981 19,027 Cash and cash equivalents at 21,607 9,696
beginning of period
31,752 31,846 21,607 Cash and cash equivalents at end of 31,752 21,607
period
1 In 2015, this mainly related to well write-offs.
2 Reflects a minor change to definition with effect from 2015 which has no
overall impact on net cash used in investing activities. Comparative
information has been reclassified.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated
Financial Statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of Royal Dutch
Shell plc and its subsidiaries (collectively referred to as Shell) have been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
the European Union and as issued by the International Accounting Standards
Board and on the basis of the same accounting principles as, and should be read
in conjunction with, the Annual Report and Form 20-F for the year ended
December 31, 2014 (pages 111 to 116) as filed with the U.S. Securities and
Exchange Commission.
The financial information presented in these Condensed Consolidated Financial
Statements does not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006. Statutory accounts for the year ended
December 31, 2014 were published in Shell's Annual Report and a copy was
delivered to the Registrar of Companies in England and Wales. The auditors'
report on those accounts was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis without
qualifying the report and did not contain a statement under sections 498(2) or
498(3) of the Companies Act 2006.
2. Segment information
Segment earnings are presented on a current cost of supplies basis (CCS
earnings), which is the earnings measure used by the Chief Executive Officer
for the purposes of making decisions about allocating resources and assessing
performance. On this basis, the purchase price of volumes sold during the
period is based on the current cost of supplies during the same period after
making allowance for the tax effect. CCS earnings therefore exclude the effect
of changes in the oil price on inventory carrying amounts.
Information by business segment:
Quarters $ million Full year
Q4 2015 Q4 2014 2015 2014
Third-party revenue
6,712 11,251 Upstream 28,480 45,240
51,410 81,093 Downstream 236,384 375,752
24 30 Corporate 96 113
58,146 92,374 Total third-party revenue 264,960 421,105
Inter-segment revenue
5,512 9,429 Upstream 25,447 47,059
386 596 Downstream 1,362 2,294
- - Corporate - -
CCS earnings
(333) 2,645 Upstream1 (5,663) 15,841
2,502 1,544 Downstream2 10,243 3,411
(295) (32) Corporate (425) (156)
1,874 4,157 Total CCS earnings 4,155 19,096
Quarters $ million Full year
Q4 2015 Q4 2014 2015 2014
1,874 4,157 Total CCS earnings 4,155 19,096
Current cost of supplies adjustment:
(1,122) (4,336) Purchases (2,278) (5,087)
320 1,251 Taxation 646 1,454
(130) (654) Share of profit/(loss) of joint ventures and (323) (733)
associates
942 418 Income/(loss) for the period 2,200 14,730
1. Third quarter 2015 Upstream earnings include impairment charges of $3,689
million after taxation, primarily related to North America shale gas
properties, and the impact of the decisions to cease Alaska drilling
activities for the foreseeable future and to cease the Carmon Creek project
($2,584 million and $2,032 million after taxation respectively). Second
quarter 2014 Upstream earnings included an impairment charge of $1,943
million after taxation, partly offset by divestment gains of $1,230 million
after taxation.
2. First quarter 2014 Downstream earnings included an impairment charge of
$2,284 million related to refineries in Asia and Europe.
3. Share capital
Issued and fully paid
Ordinary shares of €0.07 each Sterling deferred
shares
Number of shares A B of £1 each
At January 1, 2015 3,907,302,393 2,440,410,614 50,000
Scrip dividends 96,336,688 - -
Repurchases of shares (12,717,512) - -
At December 31, 2015 3,990,921,569 2,440,410,614 50,000
At January 1, 2014 3,898,011,213 2,472,839,187 50,000
Scrip dividends 64,568,758 - -
Repurchases of shares (55,277,578) (32,428,573) -
At December 31, 2014 3,907,302,393 2,440,410,614 50,000
Nominal value
Ordinary shares of €0.07 each
$ million A B Total
At January 1, 2015 334 206 540
Scrip dividends 7 - 7
Repurchases of shares (1) - (1)
At December 31, 2015 340 206 546
At January 1, 2014 333 209 542
Scrip dividends 6 - 6
Repurchases of shares (5) (3) (8)
At December 31, 2014 334 206 540
The total nominal value of sterling deferred shares is less than $1 million.
At Royal Dutch Shell plc's Annual General Meeting on May 19, 2015, the Board
was authorised to allot ordinary shares in Royal Dutch Shell plc, and to grant
rights to subscribe for or to convert any security into ordinary shares in
Royal Dutch Shell plc, up to an aggregate nominal amount of €147 million
(representing 2,100 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 19, 2016, and the end of the Annual General
Meeting to be held in 2016, unless previously renewed, revoked or varied by
Royal Dutch Shell plc in a general meeting.
4. Other reserves
$ million Merger Share Capital Share Accumulated Total
reserve1 premium redemption plan other
reserve1 reserve2 reserve comprehensive
income
At January 1, 2015 3,405 154 83 1,723 (19,730) (14,365)
Other comprehensive income - - - - (2,750) (2,750)
/(loss) attributable to
Royal Dutch Shell plc
shareholders
Scrip dividends (7) - - - - (7)
Repurchases of shares - - 1 - - 1
Share-based compensation - - - (65) - (65)
At December 31, 2015 3,398 154 84 1,658 (22,480) (17,186)
At January 1, 2014 3,411 154 75 1,871 (7,548) (2,037)
Other comprehensive income - - - - (12,182) (12,182)
/(loss) attributable to
Royal Dutch Shell plc
shareholders
Scrip dividends (6) - - - - (6)
Repurchases of shares - - 8 - - 8
Share-based compensation - - - (148) - (148)
At December 31, 2014 3,405 154 83 1,723 (19,730) (14,365)
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,
p.l.c., 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 Dec 31, 2015 Sep 30, 2015 Dec 31, 2014
Included within:
Trade and other receivables - non-current 744 885 703
Trade and other receivables - current 13,114 12,433 14,037
Trade and other payables - non-current 1,687 1,407 520
Trade and other payables - current 10,757 9,892 11,554
As disclosed in the Consolidated Financial Statements for the year ended
December 31, 2014, presented in the Annual Report and Form 20-F for that year,
Shell is exposed to the risks of changes in fair value of its financial assets
and liabilities. The fair values of the financial assets and liabilities are
defined as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. Methods and assumptions used to estimate the fair values
at December 31, 2015 are consistent with those used in the year ended December
31, 2014, and the carrying amounts of derivative contracts measured using
predominantly unobservable inputs have not changed materially since that date.
The fair value of debt excluding finance lease liabilities at December 31,
2015, was $53,480 million (September 30, 2015: $50,744 million; December 31,
2014: $41,120 million). Fair value is determined from the prices quoted for
those securities.
6. Recommended cash and share offer for BG Group plc by Royal Dutch Shell
plc
On April 8, 2015, the Boards of Royal Dutch Shell plc and BG Group plc
announced that they had reached agreement on the terms of a recommended cash
and share offer to be made by Royal Dutch Shell plc for the entire issued and
to be issued share capital of BG Group plc.
The shareholders of Royal Dutch Shell plc and BG Group plc voted to approve the
transaction at meetings on January 27, 2016 and January 28, 2016 respectively.
The transaction is expected to complete on February 15, 2016, subject to the
satisfaction or waiver of certain customary conditions, including the sanction
of the scheme arrangement to implement the combination by the High Court of
Justice.
Under certain circumstances occurring on or prior to July 31, 2016, Royal Dutch
Shell plc has agreed to pay BG Group plc £750 million by way of compensation
for any loss suffered by BG Group plc in connection with the preparation and
negotiation of the transaction.
ADDITIONAL NOTES FOR INFORMATION
A. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply or
purchase oil and gas products as well as power and environmental products.
Derivative contracts are entered into for mitigation of resulting economic
exposures (generally price exposure) and these derivative contracts are carried
at period-end market price (fair value), with movements in fair value
recognised in income for the period. Supply and purchase contracts entered into
for operational purposes are, by contrast, recognised when the transaction
occurs (see also below); furthermore, inventory is carried at historical cost
or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or
purchase transaction is recognised in a different period; or (b) the inventory
is measured on a different basis.
In addition, certain UK gas contracts held by Upstream are, due to pricing or
delivery conditions, deemed to contain embedded derivatives or written options
and are also required to be carried at fair value even though they are entered
into for operational purposes.
The accounting impacts of the aforementioned are reported as identified items
in this Report.
B. Capital investment
Capital investment is a measure used to make decisions about allocating
resources and assessing performance. It is defined as the sum of capital
expenditure, exploration expense (excluding well write-offs), new investments
in joint ventures and associates, new finance leases and other adjustments.
C. Divestments
Divestment proceeds comprise proceeds from sale of property, plant and
equipment and businesses, joint ventures and associates, and other Upstream and
Downstream investments, adjusted onto an accruals basis.
The term "Divestments" comprises both divestment proceeds as defined above and
proceeds from sale of interests in Shell Midstream Partners, L.P. ("SMP").
Proceeds from sale of interests in SMP are included within "Change in
non-controlling interest" in the Condensed Consolidated Statement of Cash
Flows.
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 and is a common measure of business
performance. In this calculation, ROACE is defined as the sum of income for the
current and previous three quarters, adjusted for after-tax interest expense,
as a percentage of the average capital employed for the same period. The tax
rate used is Shell's effective tax rate for the period. Capital employed
consists of total equity, current debt and non-current debt.
E. Gearing
Gearing, calculated as net debt (total debt less cash and cash equivalents) as
a percentage of total capital (net debt plus total equity), is a key measure of
Shell's capital structure.
F. Operating costs
Operating costs comprise production and manufacturing expenses; selling,
distribution and administrative expenses; and research and development
expenses.
G. Liquidity and capital resources
Fourth quarter net cash from operating activities was $5.4 billion compared
with $9.6 billion for the same period last year.
Total current and non-current debt increased to $58.4 billion at December 31,
2015 from $55.6 billion at September 30, 2015 while cash and cash equivalents
were $31.8 billion at December 31, 2015, in line with the position at September
30, 2015. During the fourth quarter 2015, Shell issued $5.0 billion of debt
under the US shelf registration. No new debt was issued under the European
medium-term note programme.
Capital investment for the fourth quarter 2015 was $7.9 billion, of which $5.8
billion in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate.
Capital investment for the same period last year was $9.7 billion, including
$7.5 billion in Upstream and $2.1 billion in Downstream.
Dividends of $0.47 per share are announced on February 4, 2016 in respect of
the fourth quarter. These dividends are payable on March 29, 2016. In the case
of B shares, the dividends will be payable through the dividend access
mechanism and are expected to be treated as UK-source rather than Dutch-source.
See the Annual Report and Form 20-F for the year ended December 31, 2014 for
additional information on the dividend access mechanism.
Under the Scrip Dividend Programme shareholders can increase their shareholding
in Shell by choosing to receive new shares instead of cash dividends. Only new
A shares will be issued under the Programme, including to shareholders who
currently hold B shares.
Full year net cash from operating activities was $29.8 billion compared with
$45.0 billion last year.
Total current and non-current debt increased to $58.4 billion at December 31,
2015 from $45.5 billion at December 31, 2014 while cash and cash equivalents
increased to $31.8 billion at December 31, 2015 from $21.6 billion at December
31, 2014. During 2015 Shell issued $15.0 billion of debt under the US shelf
registration, and $5.2 billion of debt under the European medium-term note
programme.
Capital investment for 2015 was $28.9 billion, of which $23.6 billion in
Upstream, $5.1 billion in Downstream and $0.2 billion in Corporate. Capital
investment for 2014 was $37.3 billion, of which $31.3 billion in Upstream, $5.9
billion in Downstream and $0.1 billion in Corporate.
CAUTIONARY STATEMENT
The release, presentation, publication or distribution of this announcement in
jurisdictions other than the United Kingdom may be restricted by law and
therefore any persons who are subject to the laws of any jurisdiction other
than the United Kingdom should inform themselves about and observe any
applicable requirements. Any failure to comply with applicable requirements may
constitute a violation of the laws and/or regulations of any such jurisdiction.
This announcement is not intended to and does not constitute or form part of
any offer to sell or subscribe for or any invitation to purchase or subscribe
for any securities or the solicitation of any vote or approval in any
jurisdiction pursuant to the recommended combination of Royal Dutch Shell plc
("Shell") and BG Group plc ("BG") (the "Combination") or otherwise nor shall
there be any sale, issuance or transfer of securities of Shell or BG pursuant
to the Combination in any jurisdiction in contravention of applicable laws.
All amounts shown throughout this announcement are unaudited. All peak
production figures in Portfolio Developments are quoted at 100% expected
production.
The companies in which Royal Dutch Shell plc directly and indirectly owns
investments are separate entities. In this announcement "Shell", "Shell group"
and "Royal Dutch Shell" are sometimes used for convenience where references are
made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the
words "we", "us" and "our" are also used to refer to subsidiaries in general or
to those who work for them. These expressions are also used where no useful
purpose is served by identifying the particular company or companies.
''Subsidiaries'', "Shell subsidiaries" and "Shell companies" as used in this
announcement refer to companies over which Royal Dutch Shell plc either
directly or indirectly has control. Companies over which Shell has joint
control are generally referred to as "joint ventures" and companies over which
Shell has significant influence but neither control nor joint control are
referred to as "associates". The term "Shell interest" is used for convenience
to indicate the direct and/or indirect ownership interest held by Shell in a
venture, partnership or company, after exclusion of all third-party interest.
This announcement contains forward-looking statements concerning the financial
condition, results of operations and businesses of Royal Dutch Shell and of the
Combination. All statements other than statements of historical fact are, or
may be deemed to be, forward-looking statements. Forward-looking statements are
statements of future expectations that are based on management's current
expectations and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or events to differ
materially from those expressed or implied in these statements. Forward-looking
statements include, among other things, statements concerning the potential
exposure of Royal Dutch Shell, BG and the combined group to market risks and
statements expressing management's expectations, beliefs, estimates, forecasts,
projections and assumptions. These forward-looking statements are identified by
their use of terms and phrases such as ''anticipate'', ''believe'', ''could'',
''estimate'', ''expect'', ''goals'', ''intend'', ''may'', ''objectives'',
''outlook'', ''plan'', ''probably'', ''project'', ''risks'', "schedule",
''seek'', ''should'', ''target'', ''will'' and similar terms and phrases. There
are a number of factors that could affect the future operations of Royal Dutch
Shell and could cause those results to differ materially from those expressed
in the forward-looking statements included in this announcement, including
(without limitation): (a) price fluctuations in crude oil and natural gas; (b)
changes in demand for Shell's products; (c) currency fluctuations; (d) drilling
and production results; (e) reserves estimates; (f) loss of market share and
industry competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential acquisition properties
and targets, and successful negotiation and completion of such transactions;
(i) the risk of doing business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and regulatory developments
including regulatory measures addressing climate change; (k) economic and
financial market conditions in various countries and regions; (l) political
risks, including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; and (m) changes in
trading conditions. All forward-looking statements contained in this
announcement are expressly qualified in their entirety by the cautionary
statements contained or referred to in this section. Readers should not place
undue reliance on forward-looking statements. Additional risk factors that may
affect future results are contained in Royal Dutch Shell's Form 20-F for the
year ended December 31, 2014 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all forward-looking
statements contained in this announcement and should be considered by the
reader. Each forward-looking statement speaks only as of the date of this
announcement, February 4, 2016. Neither Royal Dutch Shell plc nor any of its
subsidiaries undertake any obligation to publicly update or revise any
forward-looking statement as a result of new information, future events or
other information. In light of these risks, results could differ materially
from those stated, implied or inferred from the forward-looking statements
contained in this announcement.
This Report contains references to Shell's website. These references are for
the readers' convenience only. Shell is not incorporating by reference any
information posted on www.shell.com
We may have used certain terms, such as resources, in this announcement that
the United States Securities and Exchange Commission (SEC) strictly prohibits
us from including in our filings with the SEC. U.S. investors are urged to
consider closely the disclosure in our Form 20-F, File No 1-32575, available on
the SEC website www.sec.gov. You can also obtain this form from the SEC by
calling 1-800-SEC-0330.
February 4, 2016
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
END
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