REG-Royal Dutch Shell: 3rd Quarter 2015 Unaudited Results <Origin Href="QuoteRef">RDSa.L</Origin> - Part 2
29/10/2015 07:00
- Part 2: For the preceding part double click ID:nPRrTA5FDa
11,231 6,050 12,811 Net cash from operating activities 24,387 35,436
Cash flow from investing activities
(6,412) (6,205) (7,783) Capital expenditure1 (18,832) (22,845)
(274) (208) (151) Investments in joint ventures and (891) (1,533)
associates
913 206 3,783 Proceeds from sales of property, 3,322 7,628
plant and equipment and businesses
81 165 157 Proceeds from sales of joint 250 3,884
ventures and associates
82 59 29 Interest received 197 118
(108) (80) (362) Other1 (267) (229)
(5,718) (6,063) (4,327) Net cash used in investing (16,221) (12,977)
activities
Cash flow from financing activities
(1,394) 1,072 (465) Net increase/(decrease) in debt with (577) (3,159)
maturity period within three months
5,490 10,045 442 Other debt: New borrowings 16,287 3,777
(1,387) (2,188) (334) Repayments (4,205) (3,518)
(532) (317) (404) Interest paid (1,258) (1,170)
2 424 - Change in non-controlling interest2 421 (13)
Cash dividends paid to:
(2,362) (2,294) (2,994) - Royal Dutch Shell plc shareholders (7,588) (6,457)
(27) (27) (4) - Non-controlling interest (72) (77)
- - (770) Repurchases of shares (409) (2,357)
(1) (5) 48 Shares held in trust: net sales/ (46) 261
(purchases) and dividends received
(211) 6,710 (4,481) Net cash used in financing 2,553 (12,713)
activities
(437) 417 (395) Currency translation differences (480) (415)
relating to cash and
cash equivalents
4,865 7,114 3,608 Increase/(decrease) in cash and cash 10,239 9,331
equivalents
26,981 19,867 15,419 Cash and cash equivalents at 21,607 9,696
beginning of period
31,846 26,981 19,027 Cash and cash equivalents at end of 31,846 19,027
period
1 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.
2 In the second quarter 2015, this mainly related to the public offering
of limited partner units in Shell Midstream Partners, L.P.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated
Interim Financial Statements.
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 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, 2014 (pages 111 to 116) 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, 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 Nine months
Q3 2015 Q3 2014 2015 2014
Third-party revenue
7,706 10,318 Upstream 21,768 33,989
60,976 97,508 Downstream 184,974 294,659
24 25 Corporate 72 83
68,706 107,851 Total third-party revenue 206,814 328,731
Inter-segment revenue
6,215 12,758 Upstream 19,935 37,630
343 627 Downstream 976 1,698
- - Corporate - -
Segment earnings
(8,643) 3,949 Upstream1 (5,330) 13,196
2,481 1,601 Downstream2 7,741 1,867
109 (301) Corporate (130) (124)
(6,053) 5,249 Total segment earnings 2,281 14,939
Quarters $ million Nine months
Q3 2015 Q3 2014 2015 2014
(6,053) 5,249 Total segment earnings 2,281 14,939
Current cost of supplies adjustment:
(1,569) (894) Purchases (1,156) (751)
443 246 Taxation 326 203
(214) (176) Share of profit of joint ventures and (193) (79)
associates
(7,393) 4,425 Income/(loss) for the period 1,258 14,312
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 47,296,124 - -
Repurchases of shares (12,717,512) - -
At September 30, 2015 3,941,881,005 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 (27,917,878) (32,428,573) -
At September 30, 2014 3,934,662,093 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 4 - 4
Repurchases of shares (1) - (1)
At September 30, 2015 337 206 543
At January 1, 2014 333 209 542
Scrip dividends 6 - 6
Repurchases of shares (2) (3) (5)
At September 30, 2014 337 206 543
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 - - - - (4,298) (4,298)
/(loss) attributable to
Royal Dutch Shell plc
shareholders
Scrip dividends (4) - - - - (4)
Repurchases of shares - - 1 - - 1
Share-based compensation - - - (289) - (289)
At September 30, 2015 3,401 154 84 1,434 (24,028) (18,955)
At January 1, 2014 3,411 154 75 1,871 (7,548) (2,037)
Other comprehensive income - - - - (6,650) (6,650)
/(loss) attributable to
Royal Dutch Shell plc
shareholders
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)
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, 2015 Jun 30, 2015 Sep 30, 2014
Included within:
Trade and other receivables - non-current 885 774 1,003
Trade and other receivables - current 12,433 9,090 7,000
Trade and other payables - non-current 1,407 1,635 589
Trade and other payables - current 9,892 7,574 6,230
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 September 30, 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 September 30,
2015, was $50,744 million (June 30, 2015: $47,942 million; September 30, 2014:
$38,013 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 have 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, representing a value of
approximately £47 billion based on the closing price of 2,208.5 pence per Royal
Dutch Shell plc B share on April 7, 2015.
The transaction is subject to certain pre-conditions and conditions and Royal
Dutch Shell plc has agreed to use its reasonable endeavours to secure the
necessary regulatory clearances and authorisations. It is expected that Royal
Dutch Shell plc's circular and prospectus and BG Group plc's scheme document
will be published at the same time, and no later than 28 days after the
pre-conditions are satisfied and/or waived. The transaction is expected to
complete in early 2016.
Under certain circumstances occurring on or prior to July 31, 2016, such as the
Royal Dutch Shell plc Board withdrawing its recommendation to Royal Dutch Shell
plc shareholders to vote in favour of the transaction, 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. 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.
D. 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.
E. Liquidity and capital resources
Third quarter net cash from operating activities was $11.2 billion compared
with $12.8 billion for the same period last year.
Total current and non-current debt increased to $55.6 billion at September 30,
2015 from $52.9 billion at June 30, 2015 while cash and cash equivalents
increased to $31.8 billion at September 30, 2015 from $27.0 billion at June 30,
2015. During the third quarter 2015, Shell issued $5.2 billion of debt under
the European medium-term note programme. No new debt was issued under the US
shelf registration.
Capital investment for the third quarter 2015 was $7.1 billion, of which $5.8
billion in Upstream and $1.2 billion in Downstream. Capital investment for the
same period last year was $8.5 billion, of which $7.0 billion in Upstream and
$1.4 billion in Downstream.
Dividends of $0.47 per share are announced on October 29, 2015 in respect of
the third quarter. These dividends are payable on December 18, 2015. 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.
Nine months net cash from operating activities was $24.4 billion compared with
$35.4 billion for the same period last year.
Total current and non-current debt increased to $55.6 billion at September 30,
2015 from $45.5 billion at December 31, 2014 while cash and cash equivalents
increased to $31.8 billion at September 30, 2015 from $21.6 billion at December
31, 2014. During the first nine months 2015 Shell issued $10.0 billion of debt
under the US shelf registration, and $5.2 billion of debt under the European
medium-term note programme.
Capital investment for the first nine months 2015 was $21.0 billion, of which
$17.7 billion in Upstream, $3.1 billion in Downstream and $0.1 billion in
Corporate. Capital investment for the same period last year was $27.7 billion,
of which $23.8 billion in Upstream, $3.8 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, October 29, 2015. 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.
October 29, 2015
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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