RDS 2nd Quarter and Half Year 2011 Unaudited Results
LONDON, July 28, 2011 /PRNewswire/ –
– Royal Dutch Shell’s (NYSE:RDS.A)(NYSE:RDS.B) second quarter 2011
earnings, on a current cost of supplies (CCS) basis (see Note 1), were $8.0
billion compared with $4.5 billion the same quarter a year ago. Basic CCS
earnings per share increased by 74% versus the second quarter of 2010.
– Second quarter 2011 CCS earnings, excluding identified items (see page
6), were $6.6 billion compared with $4.2 billion in the second quarter 2010,
an increase of 56%. Basic CCS earnings per share excluding identified items
increased by 52% versus the same quarter a year ago.
– Cash flow from operating activities for the second quarter 2011 was
$10.0 billion. Excluding net working capital movements, cash flow from
operating activities in the second quarter 2011 was $12.3 billion, compared
with $8.6 billion in the same quarter last year.
– Net capital investment (see Note 1) for the quarter was $6.0 billion.
Total cash dividends paid to shareholders during the second quarter 2011
were $1.8 billion. Some 23.9 million Class A shares, equivalent to $0.8
billion, were issued under the Scrip Dividend Programme for the first
quarter 2011.
– Gearing at the end of the second quarter 2011 was 12.1%.
– A second quarter 2011 dividend has been announced of $0.42 per
ordinary share, unchanged from the US dollar dividend per share for the same
period in 2010.
Summary of Unaudited Results
Quarters $ million
Q2 2011 Q1 2011 Q2 2010 %[1]
8,662 8,780 4,393 +97 Income attributable to shareholders
Current cost of supplies (CCS)
(667) (1,855) 136 adjustment for Downstream
7,995 6,925 4,529 +77 CCS earnings
1,443 637 321 Less: Identified items[2]
CCS earnings excluding identified
6,552 6,288 4,208 +56 items
Of which:
5,420 4,638 3,260 Upstream
1,081 1,653 1,160 Downstream
Corporate and Non-controlling
51 (3) (212) interest
1.29 1.12 0.74 +74 Basic CCS earnings per share ($)
Basic CCS earnings per share excl.
1.05 1.02 0.69 +52 identified items ($)
0.42 0.42 0.42 - Dividend per share ($)
10,040 8,621 8,096 +24 Cash flow from operating activities
$ million Half year
2011 2010 %
Income attributable to shareholders 17,442 9,874 +77
Current cost of supplies (CCS)
adjustment for Downstream (2,522) (448)
CCS earnings 14,920 9,426 +58
Less: Identified items[2] 2,080 396
CCS earnings excluding identified
items 12,840 9,030 +42
Of which:
Upstream 10,058 7,565
Downstream 2,734 1,938
Corporate and Non-controlling
interest 48 (473)
Basic CCS earnings per share ($) 2.41 1.54 +56
Basic CCS earnings per share excl.
identified items ($) 2.07 1.47 +41
Dividend per share ($) 0.84 0.84 -
Cash flow from operating activities 18,661 12,878 +45
[1] Q2 on Q2 change.
[2] See page 6.
The information in this results announcement reflects the consolidated
financial position and results of Royal Dutch Shell plc (“Royal Dutch
Shell”). The information in this document also represents Royal Dutch
Shell’s half-yearly financial report for the purposes of the Disclosure and
Transparency Rules (DTR) of the UK Financial Services Authority. As such:
(1) the interim management report can be found on pages 3 to 4, 7 to 9 and
16 to 17; (2) the condensed set of financial statements on pages 10 to 15;
and (3) the directors’ responsibility statement and auditors’ independent
review on pages 18 and 19. All amounts shown throughout this report are
unaudited. Company No. 4366849, Registered Office: Shell Centre, London, SE1
7NA, England, United Kingdom.
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
“Our second quarter 2011 earnings were higher than year-ago levels,
driven by increased energy prices and Shell’s operating performance. Shell
reinvests its profits to meet customer demand for low cost energy, and to
pay attractive returns to shareholders.
In Upstream, our volumes increased by 2% excluding asset sales impacts,
driven by new growth projects. In Downstream, maintenance activities and
weak industry refining margins masked a resilient performance from Oil
Products marketing and Chemicals in the quarter.
Shell’s strategy is on track; performance focus, delivering a new wave
of production growth, and maturing the next generation of growth projects
for shareholders.
We continue with company-wide initiatives to reduce costs, and to
improve our operating performance. Asset sales are a key driver of Shell’s
capital efficiency and portfolio enhancement programme. The company has sold
some $4 billion of non-core positions in the first half of 2011, in Upstream
and Downstream.
2011 is an important year for Shell’s growth programme, and the first
half of 2011 saw the successful start-up of three of the largest-scale
projects anywhere in our industry today.
In Canada’s oil sands, the successful start-up of the 100 thousand
barrels per day (b/d) expansion of the Scotford Upgrader marked the
completion of the AOSP Expansion 1 project which will continue to ramp up
across 2011.
In Qatar, the Qatargas 4 project, which came on stream during the first
quarter 2011, has now fully ramped up, reaching planned capacity of 7.8
million tonnes per annum (mtpa) of LNG. In the second quarter 2011 the new
Pearl Gas-To-Liquids (GTL) project in Qatar sold its first GTL gasoil
shipment from Train 1.
In total, these three projects are expected to contribute peak
production of over 400 thousand barrels of oil equivalent per day (boe/d)
for Shell, after some $30 billion of investment, underpinning our targets
for financial and production growth to 2012.”
Voser continued: “We have made important progress with new production in
2011, and the ramp-up of our new projects should drive our financial
performance in the coming quarters.
Shell continues to mature new projects for medium-term growth.
In Downstream, we have launched the Raizen joint venture, which will be
a leading biofuels producer and fuels retailer in Brazil, underscoring
Shell’s commitment to sustainable growth.
In Upstream, we have taken final investment decisions on 9 new projects
this year, including the 3.6 mtpa Prelude Floating LNG project, in
Australia, which is a first for our industry. These investments are part of
Shell’s project flow that underpins Shell’s Upstream production targets of
3.7 million boe/d in 2014, and longer-term growth potential.
Shell’s net capital investment for the first half of 2011 was $8
billion, and spending is anticipated to build across the year as new
projects move into construction. Net capital spending for 2011-14 is
expected to be at least $100 billion, as previously indicated, underlining
Shell’s commitment to medium-term growth in new energy supplies.”
Voser concluded: “Investments such as Pearl, Prelude and Raizen are
unique in our industry. They are a great testament to our staff and our
stakeholders, and reflect Shell’s core strengths. Shell adds value through
innovative technology, sustainable growth, integration across value chains
to bring value-added products to our customers and partners, and creating
long-life returns for shareholders. Our strategy is competitive and
innovative.”
Second Quarter 2011 portfolio developments[1]
Upstream
In Australia, Shell announced the final investment decision on the
Prelude Floating LNG (FLNG) project (Shell interest 100%). The Prelude FLNG
project is expected to produce some 110 thousand boe/d of natural gas and
natural gas liquids, delivering some 3.6 mtpa of LNG, 1.3 mtpa of condensate
and 0.4 mtpa of liquefied petroleum gas (LPG).
In Canada, Shell announced the successful start of production from its
Scotford Upgrader Expansion project (Shell interest 60%). The 100 thousand
b/d expansion takes upgrading capacity at Scotford to 255 thousand b/d of
heavy oil from the Athabasca oil sands. In addition, Shell took the final
investment decision on a debottlenecking project for the Athabasca Oil Sands
Project (AOSP, Shell interest 60%), which is expected to add 10 thousand b/d
at peak. This project is the first of multiple debottlenecking opportunities
for AOSP.
Also in Canada, Shell signed agreements with the Governments of Alberta
and Canada to secure some $0.9 billion in funding for the Quest Carbon
Capture and Storage (CCS) Project (Shell interest 60%), which is expected to
capture and permanently store more than 1 mtpa of CO2 from Shell’s Scotford
Upgrader.
In China, Shell and China National Petroleum Company (CNPC) signed a
Global Alliance Agreement emphasising their shared intent to pursue mutually
beneficial cooperation opportunities internationally as well as in China.
The two parties also signed a Shareholders Agreement to establish a Well
Manufacturing joint venture (50% CNPC and 50% Shell) subject to further
corporate and government approvals.
In Malaysia, Shell approved investment in the offshore Sabah Gas
Kebabangan (KBB) project (Shell interest 30%) with an expected peak
production of 130 thousand boe/d of gas for Malaysia LNG and domestic
markets. The Kebabangan gas field is part of the Kebabangan Cluster
Production Sharing Contract.
In Mexico, Shell agreed to sell its 50% interest in the LNG import and
regasification terminal in Altamira for a total consideration of $0.2
billion. The agreement is subject to the conclusion of project financing and
government approvals.
In Qatar, Qatar Petroleum and Shell announced that the Pearl GTL project
(Shell interest 100%) has sold its first commercial shipment of GTL Gasoil.
The project is expected to reach full production capacity by the middle of
2012. Once fully operational, Pearl GTL is expected to produce 1.6 billion
standard cubic feet of gas per day (scf/d), delivering 140 thousand b/d of
GTL products and 120 thousand b/d of condensate, LPG and ethane.
In Singapore, Shell and CPC Corporation, Taiwan have signed a Heads of
Agreement for the long-term supply of 2 mtpa of LNG for 20 years, starting
in 2016, from Shell’s global LNG portfolio.
In the United Kingdom, Shell approved investment in the offshore
Schiehallion Redevelopment project (Shell interest 36%) with an expected
peak production of 145 thousand boe/d.
In the USA, Shell announced a multi-billion dollar investment to develop
its major Cardamom oil and gas field in the deep waters of the Gulf of
Mexico. The Cardamom project (Shell interest 100%) is expected to produce 50
thousand boe/d at peak production.
On July 5, 2011, Shell agreed to sell its 20% participating interest in
the oil and gas exploration block BM-S-8 in the Santos Basin offshore
Brazilfor a total consideration of $0.4 billion. The agreement is subject to
regulatory approvals.
[1] See page 17 for first quarter 2011 portfolio developments.
Downstream
In Brazil, Shell and Cosan launched a multi-billion dollar joint venture
named Raizen (Shell interest 50%) for the production of ethanol, sugar and
power, and the supply, distribution and retail of transportation fuels.
Raizen will produce over 2 billion litres (over 34 thousand b/d) a year of
biofuels and will distribute over 20 billion litres (over 345 thousand b/d)
of biofuels, industrial and transport fuels annually through a combined
network of nearly 4,500 Shell-branded service stations.
In the United Kingdom, Shell agreed to acquire 254 retail sites from
Rontec Investments LLP (the Snax 24 Consortium) for a total consideration of
around $0.4 billion. The agreement is subject to regulatory approvals.
Shell also completed the sale of its Downstream businesses in Chile and
the Dominican Republic in separate transactions for a total combined
consideration of $0.7 billion.
Key features of the second quarter 2011
- Second quarter 2011 CCS earnings (see Note 1) were $7,995
million, 77% higher than in the same quarter a year ago.
- Second quarter 2011 CCS earnings, excluding identified items
(see page 6), were $6,552 million compared with $4,208 million in the
second quarter 2010.
- Basic CCS earnings per share increased by 74% versus the same
quarter a year ago.
- Basic CCS earnings per share excluding identified items
increased by 52% versus the same quarter a year ago.
- Cash flow from operating activities for the second quarter 2011
was $10.0 billion, compared with $8.1 billion in the same quarter last
year. Excluding net working capital movements, cash flow from operating
activities in the second quarter 2011 was $12.3 billion, compared with
$8.6 billion in the same quarter last year.
- Total cash dividends paid to shareholders during the second
quarter 2011 were $1.8 billion. During the second quarter 2011, some
23.9 million Class A shares, equivalent to $0.8 billion, were issued
under the Scrip Dividend Programme for the first quarter 2011.
- Net capital investment (see Note 1) for the second quarter 2011
was $6.0 billion. Capital investment for the second quarter 2011 was
$7.3 billion.
- Return on average capital employed (ROACE) (see Note 6) at the
end of the second quarter 2011, on a reported income basis, was 14.8%.
- Gearing was 12.1% at the end of the second quarter 2011 versus
16.9% at the end of the second quarter 2010.
Upstream
- Oil and gas production for the second quarter 2011 was 3,046
thousand boe/d, 2% lower than in the second quarter 2010. Production for
the second quarter 2011 excluding the impact of divestments was 2%
higher than in the same quarter last year. New field start-ups and the
continuing ramp-up of fields contributed some 285 thousand boe/d to
production in the second quarter 2011, which more than offset the impact
of field declines.
- LNG sales volumes of 4.81 million tonnes in the second quarter
2011 were 24% higher than in the same quarter a year ago.
Downstream
- Oil Products sales volumes for the second quarter 2011 were
8% lower than in the second quarter 2010. Excluding the impact of
divestments, sales volumes were 4% lower than in the same period last
year. Chemical product sales volumes in the second quarter 2011
decreased by 13% compared with the second quarter 2010.
- Oil Products refinery availability in the second quarter 2011
was 90%, compared with 94% in the second quarter 2010. Chemicals
manufacturing plant availability was 87%, compared with 92% in the same
period last year.
- Supplementary financial and operational disclosure for the
second quarter 2011 is available at http://www.shell.com/investor.
Summary of identified items
CCS earnings in the second quarter 2011 reflected the following items,
which in aggregate amounted to a net gain of $1,443 million (compared with a
net gain of $321 million in the second quarter 2010), as summarised in the
table below:
- Upstream earnings included a net gain of $641 million,
mainly reflecting tax credits, a gain related to the estimated fair
value accounting of commodity derivatives (see Note 5) and divestment
gains, partly offset by environmental provisions. Earnings for the
second quarter 2010 included a net gain of $10 million.
- Downstream earnings included a net gain of $802 million, mainly
reflecting a gain related to the estimated fair value accounting of
commodity derivatives (see Note 5), divestment gains and a gain related
to the contribution of assets into a joint venture, partly offset by
redundancy and decommissioning provisions. Earnings for the second
quarter 2010 included a net gain of $311 million.
Summary of identified items
Quarters[1] $ million
Q2 2011 Q1 2011 Q2 2010
Identified items:
641 1,120 10 Upstream
802 (483) 311 Downstream
Corporate and Non-controlling
- - - interest
1,443 637 321 CCS earnings impact
$ million Half year
2011 2010
Identified items:
Upstream 1,761 120
Downstream 319 276
Corporate and Non-controlling
interest - -
CCS earnings impact 2,080 396
[1] See page 17 for first quarter 2011 identified items description.
These identified items generally relate to events with an impact of more
than $50 million on Royal Dutch Shell’s CCS earnings and are shown to
provide additional insight into segment earnings and income attributable to
shareholders. Further comments on the business segments are provided in the
section ‘Earnings by Business Segment’ on page 7 to 9.
Earnings by Business Segment
Upstream
Quarters $ million
Q2 2011 Q1 2011 Q2 2010 %[1]
Upstream earnings excluding
5,420 4,638 3,260 +66 identified items
6,061 5,758 3,270 +85 Upstream earnings
Upstream cash flow from operating
8,902 6,672 5,411 +65 activities
4,049 1,727 5,664 -29 Upstream net capital investment
Crude oil production available for
1,668 1,678 1,655 +1 sale (thousand b/d)
Natural gas production available
7,996 10,593 8,440 -5 for sale (million scf/d)
Barrels of oil equivalent (thousand
3,046 3,504 3,110 -2 boe/d)
4.81 4.42 3.88 +24 LNG sales volumes (million tonnes)
$ million Half year
2011 2010 %
Upstream earnings excluding
identified items 10,058 7,565 +33
Upstream earnings 11,819 7,685 +54
Upstream cash flow from operating
activities 15,574 13,137 +19
Upstream net capital investment 5,776 11,146 -48
Crude oil production available for
sale (thousand b/d) 1,673 1,694 -1
Natural gas production available
for sale (million scf/d) 9,287 9,611 -3
Barrels of oil equivalent (thousand
boe/d) 3,274 3,351 -2
LNG sales volumes (million tonnes) 9.23 8.11 +14
[1] Q2 on Q2 change
Second quarter Upstream earnings excluding identified items were $5,420
million compared with $3,260 million a year ago. Identified items were a net
gain of $641 million, compared with a net gain of $10 million in the second
quarter 2010 (see page 6).
Upstream earnings excluding identified items, compared with the second
quarter 2010, reflected higher crude oil and natural gas realisations,
higher trading contributions and increased oil production volumes. The
earnings also reflected significantly higher LNG sales volumes as well as
higher realised LNG prices and increased dividends from an LNG venture.
These were partly offset by lower natural gas production volumes, higher
taxes and increased operating expenses, reflecting the start-up of new
projects.
Global liquids realisations were 49% higher than in the second quarter
2010. Global natural gas realisations were 25% higher than in the same
quarter a year ago.
Second quarter 2011 production was 3,046 thousand boe/d compared with
3,110 thousand boe/d a year ago. Crude oil production increased by 1% and
natural gas production decreased by 5% compared with the second quarter
2010. Excluding the impact of divestments, second quarter 2011 production
was 2% higher than in the same period last year.
New field start-ups and the continuing ramp-up of fields contributed
some 285 thousand boe/d to production in the second quarter 2011, in
particular from Qatargas 4 LNG and Pearl GTL in Qatar, Gbaran Ubie in
Nigeria and the expansion of AOSP in Canada, which more than offset the
impact of field declines.
LNG sales volumes of 4.81 million tonnes were 24% higher than in the
same quarter a year ago, reflecting the successful ramp-up of Qatargas 4 LNG
to full capacity during the quarter as well as higher volumes from Nigeria
LNG.
Half year Upstream earnings excluding identified items were $10,058
million compared with $7,565 million in the first half year 2010. Identified
items were a net gain of $1,761 million, compared with a net gain of $120
million in the first half year 2010 (see page 6).
Upstream earnings excluding identified items, compared with the first
half year 2010, reflected higher crude oil and natural gas realisations and
increased trading contributions. The earnings also reflected higher LNG
sales volumes and higher realised LNG prices as well as increased dividends
from an LNG venture. These were partly offset by lower natural gas and crude
oil production volumes, higher taxes and increased operating expenses,
reflecting the start-up of new projects.
Global liquids realisations were 40% higher than in the first half year
2010. Global natural gas realisations were 17% higher than in the first half
year 2010.
Half year 2011 production was 3,274 thousand boe/d compared with 3,351
thousand boe/d for the same period a year ago. Crude oil production was down
1% and natural gas production was down 3% compared with the first half year
2010 production. Excluding the impact of divestments, production in the
first half year of 2011 was 1% higher than in the same period last year.
LNG sales volumes of 9.23 million tonnes were 14% higher than in the
first half year 2010. Volumes reflected the successful ramp-up of Qatargas 4
LNG during the first half year 2011 as well as higher volumes from Nigeria
LNG.
Downstream
Quarters $ million
Q2 2011 Q1 2011 Q2 2010 %[1]
Downstream CCS earnings excluding
1,081 1,653 1,160 -7 identified items
1,883 1,170 1,471 +28 Downstream CCS earnings
Downstream cash flow from
2,077 451 3,197 -35 operating activities
1,949 (118) (21) - Downstream net capital investment
Refinery processing intake
2,834 3,030 3,296 -14 (thousand boe/d)
Oil products sales volumes
6,088 6,167 6,615 -8 (thousand b/d)
Chemicals sales volumes (thousand
4,549 5,010 5,254 -13 tonnes)
$ million Half year
2011 2010 %
Downstream CCS earnings excluding
identified items 2,734 1,938 +41
Downstream CCS earnings 3,053 2,214 +38
Downstream cash flow from
operating activities 2,528 356 +610
Downstream net capital investment 1,831 666 +175
Refinery processing intake
(thousand boe/d) 2,931 3,148 -7
Oil products sales volumes
(thousand b/d) 6,127 6,390 -4
Chemicals sales volumes (thousand
tonnes) 9,559 10,023 -5
[1] Q2 on Q2 change
Second quarter Downstream earnings excluding identified items were
$1,081 million compared with $1,160 million in the second quarter 2010.
Identified items were a net gain of $802 million, compared with a net gain
of $311 million in the second quarter 2010 (see page 6).
Downstream earnings excluding identified items, compared with the second
quarter 2010, reflected higher Oil Products marketing earnings as well as
higher Chemicals earnings, offset by lower Oil Products refining results.
Oil Products marketing earnings increased compared with the second
quarter 2010, mainly reflecting higher contributions from trading as well as
higher B2B and retail earnings.
Oil products sales volumes decreased by 8% compared with the same period
a year ago. Excluding the impact of divestments, sales volumes were 4% lower
than in the second quarter of 2010.
Oil Products refining results decreased compared with the second quarter
2010. Results reflected lower refining margins, which declined significantly
in Europe and Asia, and lower refinery intake volumes.
Refinery intake volumes decreased by 14% compared with the second
quarter of 2010, mainly as a result of divestments and a refinery closure as
well as increased maintenance activities. Excluding portfolio impacts,
refinery intake volumes were 6% lower than in the same period a year ago. As
a result of increased maintenance activities, refinery availability
decreased to 90% compared with 94% in the second quarter 2010.
Chemicals earnings excluding identified items increased to $530 million
compared with $444 million in the second quarter 2010, reflecting higher
realised chemicals margins and higher income from equity-accounted
investments.
Chemicals sales volumes decreased by 13% compared with the same quarter
last year. Chemicals manufacturing plant availability decreased to 87%
compared with 92% in the second quarter 2010, as a result of increased
maintenance activities.
Half year Downstream earnings excluding identified items were $2,734
million compared with $1,938 million in the first half year 2010. Identified
items were a net gain of $319 million, compared with a net gain of $276
million in the first half year 2010 (see page 6).
Downstream earnings excluding identified items compared with the first
half year 2010 reflected higher Oil Products marketing earnings as well as
higher Chemicals earnings, partly offset by slightly lower Oil Products
refining results.
Oil Products marketing earnings increased compared with the first half
year 2010, mainly reflecting higher contributions from trading and B2B,
which were partly offset by lower retail and lubricants earnings.
Oil products sales volumes decreased by 4% compared with the same period
last year. Excluding impacts of divestments, sales volumes were 1% lower
compared with the first half year of 2010.
Oil Products refining results were slightly lower than in the first half
year 2010, reflecting lower refining margins and lower refinery intake
volumes, mainly as a result of divestments and a refinery closure.
Refinery intake volumes decreased by 7% compared with the first half
year 2010. Excluding portfolio impacts, refinery intake volumes increased by
2%. Refinery availability was 91% compared with 92% in the first half year
2010.
Chemicals earnings excluding identified items increased to $1,019
million compared with $757 million in the first half year 2010, reflecting
higher realised chemicals margins and increased income from equity-accounted
investments.
Chemicals sales volumes decreased by 5% compared with the first half
year 2010. Chemicals manufacturing plant availability was 89% compared with
90% in the first half year 2010.
Corporate Non-controlling Interest
Quarters $ million Half year
Q2 2011 Q1 2011 Q2 2010 2011 2010
51 (3) (212) Corporate and Non-controlling
interest excl. identified items 48 (473)
51 (3) (212) Corporate and Non-controlling
interest 48 (473)
Of which:
141 99 (112) Corporate 240 (288)
90 (102) (100) Non-controlling interest (192)(185)
Second quarter Corporate results and Non-controlling interest excluding
identified items were a gain of $51 million compared with a loss of $212
million in the same period last year.
Corporate results excluding identified items, compared with the second
quarter 2010, mainly reflected currency exchange gains, which were partly
offset by increased net interest expense.
Half year Corporate results and Non-controlling interest excluding
identified items were a gain of $48 million compared with a loss of $473
million in the first half year 2010.
Corporate results excluding identified items, compared with the first
half year 2010, mainly reflected currency exchange gains, which were partly
offset by increased net interest expense.
FORTHCOMING EVENTS
Third quarter 2011 results and third quarter 2011 dividend are scheduled
to be announced on October 27, 2011.
Unaudited Condensed Consolidated Interim Financial Statements
Consolidated Statement of Income
Quarters $ million
Q2 2011 Q1 2011 Q2 2010 %[1]
121,261 109,923 90,568 Revenue
Share of profit of
2,126 2,337 1,308 equity-accounted investments
1,175 2,582 (16) Interest and other income
124,562 114,842 91,860 Total revenue and other income
95,275 84,810 69,759 Purchases
Production and manufacturing
6,791 5,913 5,925 expenses
Selling, distribution and
3,749 3,364 3,433 administrative expenses
249 219 180 Research and development
379 401 403 Exploration
Depreciation, depletion and
2,865 3,317 3,237 amortisation
360 395 191 Interest expense
14,894 16,423 8,732 +71 Income before taxation
6,135 7,498 4,245 Taxation
8,759 8,925 4,487 +95 Income for the period
Income attributable to
97 145 94 non-controlling interest
Income attributable to Royal
8,662 8,780 4,393 +97 Dutch Shell plc shareholders
$ million Half year
2011 2010 %
Revenue 231,184 176,630
Share of profit of
equity-accounted investments 4,463 2,954
Interest and other income 3,757 301
Total revenue and other
income 239,404 179,885
Purchases 180,085 134,760
Production and manufacturing
expenses 12,704 11,112
Selling, distribution and
administrative expenses 7,113 7,526
Research and development 468 394
Exploration 780 780
Depreciation, depletion and
amortisation 6,182 6,163
Interest expense 755 452
Income before taxation 31,317 18,698 +67
Taxation 13,633 8,645
Income for the period 17,684 10,053 +76
Income attributable to
non-controlling interest 242 179
Income attributable to Royal
Dutch Shell plc shareholders 17,442 9,874 +77
Earnings per share
Quarters $ Half year
Q2 2011 Q1 2011 Q2 2010 2011 2010
1.39 1.42 0.72 Basic earnings per share 2.82 1.61
1.39 1.42 0.72 Diluted earnings per share 2.81 1.61
Quarters Millions
Q2 2011 Q1 2011 Q2 2010
Weighted average number of shares
as the basis for:
6,216.5 6,163.3 6,134.0 Basic earnings per share
6,227.2 6,174.0 6,143.7 Diluted earnings per share
Shares outstanding at the end of
6,241.8 6,207.4 6,132.5 the period
SHARES[2]
Millions Half year
2011 2010
Weighted average number of shares
as the basis for:
Basic earnings per share 6,189.9 6,130.3
Diluted earnings per share 6,200.6 6,139.7
Shares outstanding at the end of
the period 6,241.8 6,132.5
[1] Q2 on Q2 change.
[2] Royal Dutch Shell plc ordinary shares of EUR0.07 each.
Notes 1 to 6 are an integral part of these Condensed Consolidated
Interim Financial Statements.
Consolidated statement of comprehensive income
Quarters $ million
Q2 2011 Q1 2011 Q2 2010 %[1]
8,759 8,925 4,487 +95 Income for the period
Other comprehensive income, net
of tax:
490 2,134 (3,051) Currency translation differences
Unrealised gains/(losses) on
9 (19) 64 securities
19 22 14 Cash flow hedging gains/(losses)
Share of other comprehensive
income/(loss) of equity-accounted
(29) 99 (18) investments
Other comprehensive income/(loss)
489 2,236 (2,991) for the period
Comprehensive income for the
9,248 11,161 1,496 period
Comprehensive income/(loss)
attributable to non-controlling
128 173 58 interest
Comprehensive income attributable
to Royal Dutch Shell plc
9,120 10,988 1,438 shareholders
$ million Half year
2011 2010 %
Income for the period 17,684 10,053 +76
Other comprehensive income, net
of tax:
Currency translation differences 2,624 (4,618)
Unrealised gains/(losses) on
securities (10) 20
Cash flow hedging gains/(losses) 41 12
Share of other comprehensive
income/(loss) of equity-accounted
investments 70 (29)
Other comprehensive income/(loss)
for the period 2,725 (4,615)
Comprehensive income for the
period 20,409 5,438
Comprehensive income/(loss)
attributable to non-controlling
interest 301 138
Comprehensive income attributable
to Royal Dutch Shell plc
shareholders 20,108 5,300
[1] Q2 on Q2 change.
Consolidated statement of changes in equity
Equity attributable to Royal Dutch Shell plc
shareholders
Ordinary
share Shares
capital held in Other Retained
$ million trust reserves earnings Total
At January 1, 2011 529 (2,789) 10,094 140,179 148,013
Comprehensive
income for the
period - - 2,666 17,442 20,108
Capital
contributions from
and other changes
in non-controlling
interest - - - 44 44
Dividends paid - - - (5,231) (5,231)
Scrip dividends[1] 6 - (6) 1,907 1,907
Shares held in
trust: net sales/
(purchases) and
dividends received - 977 - 66 1,043
Share-based
compensation - - (336) (61) (397)
At June 30, 2011 535 (1,812) 12,418 154,346 165,487
Equity attributable to Royal Dutch Shell
plc shareholders
Non-controlling Total
$ million interest equity
At January 1, 2011 1,767 149,780
Comprehensive
income for the
period 301 20,409
Capital
contributions from
and other changes
in non-controlling
interest (40) 4
Dividends paid (199) (5,430)
Scrip dividends[1] - 1,907
Shares held in
trust: net sales/
(purchases) and
dividends received - 1,043
Share-based
compensation - (397)
At June 30, 2011 1,829 167,316
[1] During the first half of 2011 some 55.1 million Class A shares,
equivalent to $1.9 billion, were issued under the Scrip Dividend Programme.
The fair value of the shares issued in connection with the Scrip Dividend
Programme is reflected in retained earnings.
Equity attributable to Royal Dutch Shell plc
shareholders
Ordinary
share Shares
capital held in Other Retained
$ million trust reserves earnings Total
At January 1, 2010 527 (1,711) 9,982 127,633 136,431
Comprehensive
income for the
period - - (4,574) 9,874 5,300
Capital
contributions from
and other changes
in non-controlling
interest - - - 294 294
Dividends paid - - - (5,003) (5,003)
Shares held in
trust: net sales/
(purchases) and
dividends received - 428 - - 428
Share-based
compensation - - (174) 212 38
At June 30, 2010 527 (1,283) 5,234 133,010 137,488
Equity attributable to Royal Dutch Shell
plc shareholders
Non-controlling Total
$ million interest equity
At January 1, 2010 1,704 138,135
Comprehensive
income for the
period 138 5,438
Capital
contributions from
and other changes
in non-controlling
interest 22 316
Dividends paid (189) (5,192)
Shares held in
trust: net sales/
(purchases) and
dividends received - 428
Share-based
compensation - 38
At June 30, 2010 1,675 139,163
Notes 1 to 6 are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed consolidated balance sheet
$ million
June 30,
2011 Mar 31, 2011 Dec 31, 2010
Assets
Non-current assets:
Intangible assets 4,668 4,725 5,039
Property, plant and equipment 148,057 144,835 142,705
Equity-accounted investments 39,033 35,558 33,414
Investments in securities 3,920 3,971 3,809
Deferred tax 5,612 5,661 5,361
Prepaid pension costs 11,171 10,874 10,368
Trade and other receivables 9,450 9,360 8,970
221,911 214,984 209,666
Current assets:
Inventories 33,955 33,632 29,348
Trade and other receivables 75,493 78,103 70,102
Cash and cash equivalents 19,465 16,608 13,444
128,913 128,343 112,894
Total assets 350,824 343,327 322,560
Liabilities
Non-current liabilities:
Debt 31,477 31,788 34,381
Trade and other payables 5,335 4,417 4,250
Deferred tax 16,626 15,573 13,388
Retirement benefit obligations 6,126 6,105 5,924
Decommissioning and other
provisions 15,063 14,321 14,285
74,627 72,204 72,228
Current liabilities:
Debt 11,022 10,839 9,951
Trade and other payables 79,344 82,270 76,550
Taxes payable 14,798 14,794 10,306
Retirement benefit obligations 395 393 377
Decommissioning and other
provisions 3,322 3,144 3,368
108,881 111,440 100,552
Total liabilities 183,508 183,644 172,780
Equity attributable to Royal Dutch
Shell plc shareholders 165,487 157,805 148,013
Non-controlling interest 1,829 1,878 1,767
Total equity 167,316 159,683 149,780
Total liabilities and equity 350,824 343,327 322,560
Notes 1 to 6 are an integral part of these Condensed Consolidated
Interim Financial Statements.
Condensed consolidated statement of cash flows
Quarters $ million
Q2 2011 Q1 2011 Q2 2010
Cash flow from operating activities:
8,759 8,925 4,487 Income for the period
Adjustment for:
5,546 5,901 4,210 - Current taxation
284 356 161 - Interest expense (net)
2,866 3,316 3,237 - Depreciation, depletion and amortisation
(796) (2,192) (28)- Net (gains)/losses on sale of assets
(2,283) (4,511) (482)- Decrease/(increase) in net working capital
(2,126) (2,337)(1,308)- Share of profit of equity-accounted investments
- Dividends received from equity-accounted
2,560 1,523 1,425 investments
553 1,578 182 - Deferred taxation and other provisions
(72) 213 425 - Other
15,291 12,772 12,309 Net cash from operating activities (pre-tax)
(5,251) (4,151)(4,213) Taxation paid
10,040 8,621 8,096 Net cash from operating activities
Cash flow from investing activities:
(4,980) (4,146) (6,513) Capital expenditure
(669) (703) (136) Investments in equity-accounted investments
1,110 3,111 1,007 Proceeds from sale of assets
Proceeds from sale of equity-accounted
172 53 136 investments
- 1 26 (Additions to)/proceeds from sale of securities
73 37 13 Interest received
(4,294) (1,647) (5,467) Net cash used in investing activities
Cash flow from financing
activities:
Net (decrease)/increase in debt with maturity
period
119 (2,637) 1,017 within three months
286 481 3,323 Other debt: New borrowings
(1,299) (236) (414) Repayments
(522) (500) (379) Interest paid
(9) 9 330 Change in non-controlling interest
Dividends paid to:
(1,766) (1,558) (2,448) - Royal Dutch Shell plc shareholders
(128) (71) (150) - Non-controlling interest
Shares held in trust: net sales/(purchases) and
259 144 86 dividends received
(3,060) (4,368) 1,365 Net cash from/(used in) financing activities
Currency translation differences relating to
cash and
171 558 (434) cash equivalents
2,857 3,164 3,560 Increase/(decrease) in cash and cash equivalents
16,608 13,444 8,448 Cash and cash equivalents at beginning of period
19,465 16,608 12,008 Cash and cash equivalents at end of period
$ million Half year
2011 2010
Cash flow from operating activities:
Income for the period 17,684 10,053
Adjustment for:
- Current taxation 11,447 8,324
- Interest expense (net) 640 392
- Depreciation, depletion and amortisation 6,182 6,163
- Net (gains)/losses on sale of assets (2,988) (251)
- Decrease/(increase) in net working capital (6,794) (6,112)
- Share of profit of equity-accounted investments (4,463) (2,954)
- Dividends received from equity-accounted
investments 4,083 2,969
- Deferred taxation and other provisions 2,131 475
- Other 141 772
Net cash from operating activities (pre-tax) 28,063 19,831
Taxation paid (9,402) (6,953)
Net cash from operating activities 18,661 12,878
Cash flow from investing activities:
Capital expenditure (9,126) (11,760)
Investments in equity-accounted investments (1,372) (761)
Proceeds from sale of assets 4,221 1,373
Proceeds from sale of equity-accounted investments 225 167
(Additions to)/proceeds from sale of securities 1 19
Interest received 110 51
Net cash used in investing activities (5,941) (10,911)
Cash flow from financing activities:
Net (decrease)/increase in debt with maturity period
within three months (2,518) 1,167
Other debt: New borrowings 767 7,530
Repayments (1,535) (2,361)
Interest paid (1,022) (897)
Change in non-controlling interest - 318
Dividends paid to:
- Royal Dutch Shell plc shareholders (3,324) (5,003)
- Non-controlling interest (199) (189)
Shares held in trust: net sales/(purchases) and
dividends received 403 204
Net cash from/(used in) financing activities (7,428) 769
Currency translation differences relating to cash
and
cash equivalents 729 (447)
Increase/(decrease) in cash and cash equivalents 6,021 2,289
Cash and cash equivalents at beginning of period 13,444 9,719
Cash and cash equivalents at end of period 19,465 12,008
Notes 1 to 6 are an integral part of these Condensed Consolidated
Interim Financial Statements.
Notes to the Condensed Consolidated Interim Financial Statements
1. Basis of preparation
These Condensed Consolidated Interim Financial Statements (“Interim
Statements”) of Royal Dutch Shell plc and its subsidiaries (collectively
“Shell”) are prepared in accordance with IAS 34 ‘Interim Financial
Reporting’ 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 / Form 20-F for the year ended December 31, 2010 (pages 102 to 107)
as filed with the US Securities and Exchange Commission. The Directors
consider that, taking into account Shell’s assets and income, Shell has
adequate resources to continue in operational existence for the foreseeable
future. For this reason the Directors adopt the going concern basis for the
financial statements contained in this report.
The financial information presented in the Interim Statements does not
comprise statutory accounts for the purposes of section 435 of the Companies
Act 2006. Statutory accounts for the year ended December 31, 2010 were
published in Shell’s Annual Report / Form 20-F, copies of which were
delivered to the Registrar of Companies. The report of the auditors 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 any statement under sections 498(2) or (3) of
the Companies Act 2006.
The Interim Statements are unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim period.
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 estimated current cost of supplies during the same
period after making allowance for the estimated tax effect. CCS earnings
thus exclude the effect of changes in the oil price on inventory carrying
amounts. Net capital investment information is presented as measured based
on capital expenditure as reported in the Condensed Consolidated Statement
of Cash Flows, adjusted for: proceeds from divestments; exploration expenses
excluding exploration wells written off; investments in equity-accounted
investments; 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.
2. Information by Business Segment
Quarters $ million Half year
Q2 2011 Q2 2010 2011 2010
Third-party revenue
10,119 7,218 Upstream 19,771 16,666
111,132 83,323 Downstream 211,391 159,926
10 27 Corporate 22 38
121,261 90,568 Total third-party revenue 231,184 176,630
Inter-segment revenue
12,377 8,512 Upstream 24,375 16,826
240 69 Downstream 420 153
- - Corporate - -
Segment earnings
6,061 3,270 Upstream 11,819 7,685
1,883 1,471 Downstream 3,053 2,214
141 (112) Corporate 240 (288)
8,085 4,629 Total segment earnings 15,112 9,611
Quarters $ million Half year
Q2 2011 Q2 2010 2011 2010
8,085 4,629 Total segment earnings 15,112 9,611
Current cost of supplies adjustment:
824 (128) Purchases 3,047 600
(236) 27 Taxation (869) (182)
Share of profit of equity-accounted
86 (41) investments 394 24
8,759 4,487 Income for the period 17,684 10,053
3. Ordinary share capital
Issued and fully paid
shares of GBP1
shares of EUR0.07 each each
Sterling
Number of shares Class A Class B deferred
At January 1, 2011 3,563,952,539 2,695,808,103 50,000
Scrip dividends 55,054,930 - -
At June 30, 2011 3,619,007,469 2,695,808,103 50,000
Nominal value
$ million Class A Class B Total
At January 1, 2011 302 227 529
Scrip dividends 6 - 6
At June 30, 2011 308 227 535
The total nominal value of sterling deferred shares is less than $1
million.
At Royal Dutch Shell plc’s Annual General Meeting held on May 17, 2011,
the Board was authorised to allot shares in Royal Dutch Shell plc, to grant
rights to subscribe for or to convert any security into shares in Royal
Dutch Shell plc, in either case up to a nominal amount of EUR146 million.
This authority expires at the earlier of August 17, 2012, and the conclusion
of the Annual General Meeting held in 2012, unless previously revoked or
varied by Royal Dutch Shell plc in general meeting.
4. Other reserves
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve[1] reserve[1] reserve[2] reserve income Total
At January 1,
2011 3,442 154 57 1,483 4,958 10,094
Other
comprehensive
income/(loss)
attributable
to Royal
Dutch Shell
plc
shareholders - - - - 2,666 2,666
Scrip
dividends (6) - - - - (6)
Share-based
compensation - - - (336) - (336)
At June 30,
2011 3,436 154 57 1,147 7,624 12,418
At January 1, 2010 3,444 154 57 1,373 4,954 9,982
Other comprehensive
income/(loss)
attributable to Royal
Dutch Shell plc
shareholders - - - - (4,574) (4,574)
Share-based
compensation - - - (174) - (174)
At June 30, 2010 3,444 154 57 1,199 380 5,234
[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 of 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. 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 the Upstream business 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 the quarterly results.
6. Return on average capital employed (ROACE)
ROACE measures the efficiency of Shell’s utilisation of the capital that
it employs. 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. The tax rate is derived from calculations at the published segment
level.
LIQUIDITY AND CAPITAL RESOURCES
Second quarter Net cash from operating activities in the second quarter
2011 was $10.0 billion compared with $8.1 billion for the same period last
year.
Total current and non-current debt decreased to $42.5 billion at June
30, 2011 from $42.6 billion at March 31, 2011 while cash and cash
equivalents increased to $19.5 billion at June 30, 2011, from $16.6 billion
at March 31, 2011. During the second quarter 2011 no new debt was issued
under the US shelf registration programme.
Net capital investment in the second quarter 2011 was $6.0 billion of
which $4.1 billion was invested in Upstream and $1.9 billion in Downstream.
Net capital investment in Downstream includes the investment in the Raizen
joint venture, of which $1.1 billion remains to be paid. Net capital
investment in the same period of 2010 was $5.6 billion, which was all
invested in Upstream.
Dividends of $0.42 per share are declared on July 28, 2011 in respect of
the second quarter. These dividends are payable on September 19, 2011. In
the case of the Class 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 / Form 20-F for the year ended
December 31, 2010 for additional information on the dividend access
mechanism.
Shell provides shareholders with a choice to receive dividends in cash
or in shares via a Scrip Dividend Programme. Under the Scrip Dividend
Programme shareholders can increase their shareholding in Shell by choosing
to receive new shares instead of cash dividends. Only new Class A shares
will be issued under the Programme, including to shareholders who currently
hold Class B shares.
Half year Net cash from operating activities in the first half 2011 was
$18.7 billion compared with $12.9 billion for the same period last year.
Total current and non-current debt decreased to $42.5 billion at June
30, 2011 from $44.3 billion at December 31, 2010 while cash and cash
equivalents increased to $19.5 billion at June 30, 2011, from $13.4 billion
at December 31, 2010. During the first half 2011 no new debt was issued
under the US shelf registration programme.
Net capital investment in the first half 2011 was $7.7 billion of which
$5.8 billion was invested in Upstream, $1.8 billion in Downstream and $0.1
billion in Corporate. Net capital investment in the same period of 2010 was
$11.8 billion of which $11.1 billion was invested in Upstream and $0.7
billion in Downstream.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting Shell are described in
the Risk Factors section of the Annual Report / Form 20-F for the year ended
December 31, 2010 (pages 13 to 15) and are summarised below. There are no
material changes in those Risk Factors.
- Our operating results and financial condition are exposed to
fluctuating prices of crude oil, natural gas, oil products and
chemicals.
- Our ability to achieve strategic objectives depends on how we
react to competitive forces.
- The global macroeconomic environment as well as financial and
commodity market conditions influence our operating results and
financial condition as our business model involves trading, treasury,
interest rate and foreign exchange risks.
- Our future hydrocarbon production depends on the delivery of
large and complex projects, as well as on our ability to replace oil and
gas reserves.
- An erosion of our business reputation would have a negative
impact on our brand, our ability to secure new resources, our licence to
operate and our financial performance.
- Our future performance depends on the successful development and
deployment of new technologies.
- Rising climate change concerns could lead to additional
regulatory measures that may result in project delays and higher costs.
- The nature of our operations exposes us to a wide range of
health, safety, security and environment risks.
- An erosion of the business and operating environment in Nigeria
could adversely impact our earnings and financial position.
- We operate in more than 90 countries, with differing degrees of
political, legal and fiscal stability. This exposes us to a wide range
of political developments that could result in changes to laws and
regulations. In addition, Shell companies face the risk of litigation
and disputes worldwide.
- Our operations expose us to social instability, terrorism and
acts of war or piracy that could have an adverse impact on our business.
- We rely heavily on information technology systems for our
operations.
- We have substantial pension commitments, whose funding is
subject to capital market risks.
- The estimation of reserves involves subjective judgements based
on available information and the application of complex rules, so
subsequent downward adjustments are possible. If actual production from
such reserves is lower than current estimates indicate, our
profitability and financial condition could be negatively impacted.
- Many of our major projects and operations are conducted in joint
ventures or associated companies. This may reduce our degree of control,
as well as our ability to identify and manage risks.
- Violations of antitrust and competition law carry fines and
expose us or our employees to criminal sanctions and civil suits.
- Shell is currently subject to a Deferred Prosecution Agreement
with the US Department of Justice for violations of the US Foreign
Corrupt Practices Act.
- The Company's Articles of Association determine the jurisdiction
for shareholder disputes. This might limit shareholder remedies.
First quarter 2011 Portfolio Developments
Upstream
In Qatar, Shell and Qatargas announced delivery of the first cargo of
LNG from the Qatargas 4 project (Shell share 30%). Production is expected to
ramp up to 1.4 billion standard cubic feet of gas per day (scf/d),
delivering 7.8 million tonnes per annum (mtpa) of LNG and 70 thousand
barrels per day (b/d) of condensate and liquefied petroleum gas.
In the Netherlands, Shell produced its first oil from the Schoonebeek
Enhanced Oil Recovery (EOR) project (Shell share 30%). The field is expected
to ramp up to produce some 20 thousand barrels of oil equivalent per day
(boe/d).
Shell sold non-core Upstream assets, with proceeds totalling $2.4
billion in the quarter. As previously announced, Shell completed the sale of
a group of predominately mature tight gas fields in South Texas in the USA,
producing some 200 million scf/d (Shell share), for some $1.8 billion. In
addition, Shell sold various other non-core assets in Canada, Pakistan, the
United Kingdom and the USA (combined Shell share of production of some 25
thousand boe/d) as well as exploration acreage in Colombia.
During the first quarter 2011, Shell confirmed a significant oil and gas
discovery, Geronggong, drilled in 2010 in deep water Brunei.
Downstream
Shell sold non-core Downstream assets, mainly in the USA, with proceeds
totalling $0.8 billion in the quarter.
In addition, Shell agreed to divest the majority of its shareholding in
most of its downstream businesses in Africa for a total consideration of
some $1 billion (including estimated working capital of $0.4 billion). The
agreements are subject to regulatory approvals.
Also, in the United Kingdom, Shell agreed the sale of its 272 thousand
b/d Stanlow refinery and associated local marketing businesses for a total
consideration of some $1.3 billion (including estimated working capital of
$0.9 billion).
On April 1, 2011, Shell agreed to sell most of its downstream business
in Chile for a total consideration of some $0.6 billion (including estimated
working capital of $0.1 billion).
In addition, on April 12, 2011, Shell announced a proposal to convert
its 79 thousand b/d Clyde refinery and Gore Bay terminal in Australia into a
fuel import terminal.
First quarter 2011 Summary of identified items
Earnings in the first quarter 2011 reflected the following items, which
in aggregate amounted to a net gain of $637 million (compared with a net
gain of $75 million in the first quarter 2010), as summarised in the table
on page 6:
- Upstream earnings included a net gain of $1,120 million,
reflecting mainly gains related to divestments. These were partly offset
by charges related to a tax provision, the mark-to-market valuation of
certain gas contracts, the estimated fair value accounting of commodity
derivatives (see Note 5), an asset impairment and cost impacts related
to ongoing effects from the US offshore drilling moratorium. Earnings
for the first quarter 2010 included a net gain of $110 million.
- Downstream earnings included a net charge of $483 million,
reflecting charges related to asset impairments and the estimated fair
value accounting of commodity derivatives (see Note 5). Earnings for the
first quarter 2010 included a net charge of $35 million.
Responsibility statement
It is confirmed that to the best of our knowledge: (a) the condensed
consolidated interim financial statements have been prepared in accordance
with IAS 34 ‘Interim Financial Reporting’ as adopted by the European Union;
(b) the interim management report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months of the financial year and description of principal risks and
uncertainties for the remaining six months of the financial year); and (c)
the interim management report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties transactions and
changes thereto).
The Directors of Royal Dutch Shell plc are as listed in the Annual
Report and Form 20-F for the year ended December 31, 2010 except that:
Wim Kok stepped down as a Director on May 17, 2011 and
Linda G. Stuntz was appointed as a Director with effect from June 1,
2011.
Peter Voser
Chief Executive Officer
July 28, 2011
Simon Henry
Chief Financial Officer
July 28, 2011
Independent review report to Royal Dutch Shell plc
Introduction
We have been engaged by the company to review the condensed consolidated
interim financial statements in the half-yearly financial report for the six
months ended June 30, 2011, which comprise the Consolidated Statement of
Income, the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Changes in Equity, the Condensed Consolidated Balance Sheet and
the Condensed Consolidated Statement of Cash Flows and related notes. We
have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed consolidated
interim financial statements.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the Directors. The Directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure and
Transparency Rules of the United Kingdom’s Financial Services Authority.
The annual financial statements of the group are prepared in accordance
with IFRSs as adopted by the European Union. The condensed consolidated
interim financial statements included in this half-yearly financial report
have been prepared in accordance with International Accounting Standard 34,
‘Interim Financial Reporting’, as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the
condensed consolidated interim financial statements in the half-yearly
financial report based on our review. This report, including the conclusion,
has been prepared for and only for the company for the purpose of the
Disclosure and Transparency Rules of the Financial Services Authority and
for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on
Review Engagements (UK and Ireland) 2410, ‘Review of Interim Financial
Information Performed by the Independent Auditor of the Entity’ issued by
the Auditing Practices Board for use in the United Kingdom. A review of
interim financial information consists of making enquiries, primarily of
persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in
scope than an audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed consolidated interim financial statements in the
half-yearly financial report for the six months ended June 30, 2011, are not
prepared, in all material respects, in accordance with International
Accounting Standard 34 as adopted by the European Union and the Disclosure
and Transparency Rules of the United Kingdom’s Financial Services Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
London
July 28, 2011
(a) The maintenance and integrity of the Royal Dutch Shell plc website
(http://www.shell.com/ [http://www.shell.com ]) is the responsibility of the
Directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial statements may differ from legislation in other
jurisdictions.
Cautionary statement
All amounts shown throughout this report are unaudited.
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate entities. In this report “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 report refer to companies in which Royal Dutch
Shell either directly or indirectly has control, by having either a majority
of the voting rights or the right to exercise a controlling influence. The
companies in which Shell has significant influence but not control are
referred to as “associated companies” or “associates” and companies in which
Shell has joint control are referred to as “jointly controlled entities”. In
this report, associates and jointly controlled entities are also referred to
as “equity-accounted investments”. The term “Shell interest” is used for
convenience to indicate the direct and/or indirect (for example, through our
24% shareholding in Woodside Petroleum Ltd.) ownership interest held by
Shell in a venture, partnership or company, after exclusion of all
third-party interest.
This report 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”, ”seek”, “scheduled”,
”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 report,
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 report 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 factors that may affect future
results are contained in Royal Dutch Shell’s Annual Report / Form 20-F for
the year ended December 31, 2010 (available at
http://www.shell.com/investor and http://www.sec.gov/
[http://www.sec.gov ]). These factors also should be considered by the
reader. Each forward-looking statement speaks only as of the date of this
report, July 28, 2011. Neither Royal Dutch Shell 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 report.
July 28, 2011
SOURCE Royal Dutch Shell plc