UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of
The Securities Exchange Act of 1934
For November 2012
Commission File Number: 1-32575
Royal Dutch Shell plc
(Exact name of registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
30, Carel van Bylandtlaan, 2596 HR The Hague
The Netherlands
Tel No: (011 31 70) 377 9111
(Address of principal executive officers)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes ¨ No x
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):82-
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 1 |
Royal Dutch Shell plc (the “Registrant”) is filing the following exhibits on this Report on Form 6-K, each of which is hereby incorporated by reference:
| Exhibit No. |
Description | |
| 99.1 | Regulatory release. | |
| 99.2 | Royal Dutch Shell plc – Three and nine month period ended September 30, 2012 Unaudited Condensed Interim Financial Report. | |
This Unaudited Condensed Interim Financial Report contains the Unaudited Condensed Consolidated Interim Financial Statements of the Registrant and its consolidated subsidiaries for the three and nine month period ended September 30, 2012 and Business Review in respect of such period. This Report on Form 6-K contains the Unaudited Condensed Interim Financial Report with additional information required to keep current our registration statement on Form F-3.
This Report on Form 6-K is incorporated by reference into:
| a) | the Registration Statement on Form F-3 of Royal Dutch Shell plc and Shell International Finance B.V. (Registration Numbers 333-177588 and 333-177588-01); and |
| b) | the Registration Statements on Forms S-8 of Royal Dutch Shell plc (Registration Numbers 333-126715, 333-141397 and 333-171206). |
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 2 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorised.
| Royal Dutch Shell plc | ||||
| (Registrant) | ||||
| By: | /s/ Michiel Brandjes | |||
| Name: | Michiel Brandjes | |||
| Title: | Company Secretary | |||
| Date: | November 1, 2012 | |||
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 3 |
Exhibit 99.1
Regulatory release
Three and nine month period ended September 30, 2012
Unaudited Condensed Interim Financial Report
On November 1, 2012, Royal Dutch Shell plc released the Unaudited Condensed Interim Financial Report for the three and nine month period ended September 30, 2012 of Royal Dutch Shell plc and its consolidated subsidiaries (collectively, “Shell”).
| Contact – Investor Relations | ||||
| Europe: | Tjerk Huysinga | +31 70 377 4540 | ||
| USA: | Ken Lawrence | +1 713 241 1042 | ||
| Contact – Media | ||||
| Europe: | Shell Media Contact | +31 70 377 3600 | ||
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 4 |
Exhibit 99.2
Royal Dutch Shell plc
Three and nine month period ended September 30, 2012
Unaudited Condensed Interim Financial Report
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 5 |
3RD QUARTER 2012 UNAUDITED RESULTS
| • | Royal Dutch Shell’s third quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $6.1 billion compared with $7.2 billion in the same quarter a year ago. |
| • | Third quarter 2012 CCS earnings, excluding identified items (see page 11), were $6.6 billion compared with $7.0 billion in the third quarter 2011, a decrease of 6%. Basic CCS earnings per share excluding identified items decreased by 6% versus the same quarter a year ago. |
| • | Cash flow from operating activities for the third quarter 2012 was $9.5 billion. Cash flow from operating activities excluding movements in working capital was $11.7 billion in the third quarter 2012. |
| • | Net capital investment (see Note 1) for the third quarter 2012 was $8.0 billion. Capital investment for the third quarter 2012 was some $8.8 billion and proceeds from divestments were $0.8 billion. |
| • | Total dividends distributed in the quarter were $2.8 billion, of which some $0.8 billion were settled under the Scrip Dividend Programme. During the third quarter 4.3 million shares were bought back for cancellation for a consideration of some $0.1 billion. |
| • | Gearing at the end of the third quarter 2012 was 8.6%. |
| • | A third quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depository Share (ADS), an increase of 2.4% compared with the third quarter 2011. |
SUMMARY OF UNAUDITED RESULTS
| Quarters | $ million |
Nine months | ||||||||||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | %1 | 2012 | 2011 | % | ||||||||||||||||||||||
| 7,139 | 4,063 | 6,976 | +2 | Income attributable to shareholders |
19,921 | 24,418 | -18 | |||||||||||||||||||||
| (1,012 | ) | 1,901 | 270 | Current cost of supplies (CCS) adjustment for Downstream |
(171 | ) | (2,252 | ) | ||||||||||||||||||||
| 6,127 | 5,964 | 7,246 | -15 | CCS earnings |
19,750 | 22,166 | -11 | |||||||||||||||||||||
| (432 | ) | 245 | 245 | Less: Identified items2 |
193 | 2,325 | ||||||||||||||||||||||
| 6,559 | 5,719 | 7,001 | -6 | CCS earnings excluding identified items |
19,557 | 19,841 | -1 | |||||||||||||||||||||
| Of which: |
||||||||||||||||||||||||||||
| 4,888 | 4,507 | 5,435 | Upstream |
15,648 | 15,493 | |||||||||||||||||||||||
| 1,731 | 1,296 | 1,818 | Downstream |
4,148 | 4,552 | |||||||||||||||||||||||
| (60 | ) | (84 | ) | (252 | ) | Corporate and Non-controlling interest |
(239 | ) | (204 | ) | ||||||||||||||||||
| 9,483 | 13,305 | 11,645 | -19 | Cash flow from operating activities |
36,227 | 30,306 | +20 | |||||||||||||||||||||
| 0.98 | 0.95 | 1.16 | -16 | Basic CCS earnings per share ($) |
3.16 | 3.57 | -11 | |||||||||||||||||||||
| 1.96 | 1.90 | 2.32 | Basic CCS earnings per ADS ($) |
6.32 | 7.14 | |||||||||||||||||||||||
| 1.05 | 0.91 | 1.12 | -6 | Basic CCS earnings per share excl. identified items ($) |
3.13 | 3.20 | -2 | |||||||||||||||||||||
| 2.10 | 1.82 | 2.24 | Basic CCS earnings per ADS excl. identified items ($) |
6.26 | 6.40 | |||||||||||||||||||||||
| 0.43 | 0.43 | 0.42 | +2 | Dividend per share ($) |
1.29 | 1.26 | +2 | |||||||||||||||||||||
| 0.86 | 0.86 | 0.84 | Dividend per ADS ($) |
2.58 | 2.52 | |||||||||||||||||||||||
| 1 | Q3 on Q3 change. |
| 2 | See page 11. |
The information in this results announcement reflects the consolidated financial position and results of Royal Dutch Shell plc (“Royal Dutch Shell”). All amounts shown throughout this report are unaudited. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 6 |
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
“Shell is driving a long-term and consistent strategy, against a backdrop of volatile energy markets. Our profits pay for substantial investments in new energy supplies, and they pay dividends for our shareholders.
“Our earnings were driven by lower oil and gas prices, and lower chemicals margins, which offset the benefits of our operating performance, underlying growth in oil and gas production, and higher results in Integrated Gas and Oil Products.
“We’ve made progress with our Alaska exploration programme, commencing drilling operations in the Beaufort and Chukchi seas, as the industry continues to assess offshore potential there. This will be a multi-year exploration programme, demonstrating Shell’s commitments to high standards on sustainable development and safety.
“We continue to refresh our portfolio, launching new oil and gas developments, making new exploration discoveries, purchasing new liquids-rich shale acreage and increasing our positions in oil and gas fields where we can add value with our innovation and scale. We are also continuing with our capital efficiency drive, selling down positions where others can add more value. We have announced around $6 billion of acquisitions and new acreage and also around $6 billion of asset sales in 2012, which will better position Shell for growth.
“I am pleased with our progress in a difficult industry environment. There is more to come from Shell.”
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 7 |
THIRD QUARTER 2012 PORTFOLIO DEVELOPMENTS
Upstream
In Australia, Shell signed a agreement to consolidate the Crux gas and condensate field with Nexus Energy and Osaka Gas. Following the completion of the agreement, which is subject to regulatory approvals, Shell will assume operatorship and hold an 80% interest in the new joint venture.
Also in Australia, Shell agreed to exchange its 33.3% interest in Clio-Acme for Chevron’s 16.7% interest in East Browse and Chevron’s 20% interest in West Browse. In addition to the assets exchanged, a cash payment of some $0.5 billion from Shell to Chevron was agreed. Following the completion of this transaction, Shell’s interest will be 35% in West Browse and 25% in East Browse. The transaction is subject to regulatory approvals.
In China, Shell and China National Petroleum Corporation signed an amendment of the production-sharing contract (“PSC”) for the onshore Changbei block, covering some 1,692 square kilometres in the Ordos basin. The PSC amendment allows for development of additional tight gas sands as well as further development of the already producing main reservoir.
Shell and China National Offshore Oil Corporation (“CNOOC”) agreed for CNOOC to acquire a 25% participating interest in offshore exploration blocks BC9 and BCD10 in Gabon. CNOOC will reimburse Shell for 25% of certain past exploration costs and carry part of the future exploration costs. Following completion of the transaction in October, Shell’s interest is 75%.
In Norway, Shell agreed to acquire BP’s 18.36% interest in the offshore Draugen field for a consideration of some $0.2 billion. Shell is already the operator of the field and this transaction will bring Shell’s interest to 44.56%. The transaction, subject to regulatory approvals, is expected to be completed by the end of the year.
In the United States, Shell agreed to acquire 618 thousand net acres (equivalent to some 2,500 square kilometres) in the Permian basin in West Texas from Chesapeake Energy for a consideration of some $1.9 billion. The acreage is rich in oil and natural gas liquids and currently produces some 26 thousand barrels of oil equivalent per day (“boe/d”) with growth potential. The transaction was completed in October.
Also in the United States, Shell agreed to divest its 50% interest in the mature Holstein field (Shell share of production of 5 thousand boe/d) in the Gulf of Mexico for a consideration of some $0.6 billion. The transaction is expected to be completed by the end of the year.
Shell announced three final investment decisions, including on the Quest carbon capture and storage project (Shell share 60%) in Canada. Quest is expected to capture and store deep underground more than one million tonnes per annum of CO2 produced in bitumen processing. Quest is expected to reduce direct emissions from the Scotford Upgrader by up to 35%. In Italy, the final investment decision was taken on the onshore Tempa Rossa field (Shell share 25%) in the Basilicata region. The project is expected to produce some 45 thousand boe/d at peak production. In October, Shell announced the final investment decision for the Fram oil and gas field (Shell share 32%) in the United Kingdom North Sea. The field will be developed using floating production, storage and offloading technology. The project is expected to produce 35 thousand boe/d at peak production.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 8 |
In Nigeria, Shell completed the sale of its 30% interest in Oil Mining Lease 34 (Shell share of production of some 20 thousand boe/d) in the Niger Delta for a consideration of some $0.4 billion. In a separate transaction, Shell also completed the sale of its 30% interest in the non-producing Oil Mining Lease 40 for a consideration of some $0.1 billion. Including these transactions, Upstream divestment proceeds totalled some $0.6 billion in the third quarter 2012.
During the third quarter 2012, Shell participated in the Satyr-2 gas discovery (Shell share 25%) in the Carnarvon basin offshore Australia and the Tukau Timur Deep gas discovery (Shell share 50%) offshore Malaysia. Shell also drilled a successful appraisal well at Appomattox Southwest (Shell share 80%) in the Gulf of Mexico.
As part of its global exploration programme, Shell spent some $0.6 billion on new acreage positions during the third quarter of 2012, including positions in Benin deepwater, the Gulf of Mexico and onshore North America. New acreage positions were also added offshore Australia, China, Malaysia and Ukraine.
Downstream
In Norway, Shell acquired the remaining outstanding shares in Gasnor AS (“Gasnor”) for some $0.1 billion. Shell previously owned 4.1% of the shares in the company. Gasnor is a market leader in Norway in small scale LNG, supplying LNG as a transport fuel to industrial and marine customers.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 9 |
KEY FEATURES OF THE THIRD QUARTER 2012
| • | Third quarter 2012 CCS earnings (see Note 1) were $6,127 million, 15% lower than in the same quarter a year ago. |
| • | Third quarter 2012 CCS earnings, excluding identified items (see page 11), were $6,559 million compared with $7,001 million in the third quarter 2011, a decrease of 6%. |
| • | Basic CCS earnings per share decreased by 16% versus the same quarter a year ago. |
| • | Basic CCS earnings per share excluding identified items decreased by 6% versus the same quarter a year ago. |
| • | Cash flow from operating activities for the third quarter 2012 was $9.5 billion, compared with $11.6 billion in the same quarter last year. Excluding movements in working capital, cash flow from operating activities in the third quarter 2012 was $11.7 billion, compared with $10.6 billion in the same quarter last year. |
| • | Net capital investment (see Note 1) for the third quarter 2012 was $8.0 billion. Capital investment for the third quarter 2012 was some $8.8 billion and proceeds from divestments were $0.8 billion. |
| • | Total dividends distributed in the third quarter 2012 were $2.8 billion, of which some $0.8 billion were settled by issuing some 22.3 million Class A shares under the Scrip Dividend Programme for the second quarter 2012. Under our share buyback programme some 4.3 million Class B shares were bought back for cancellation during the quarter for a consideration of some $0.1 billion. |
| • | Return on average capital employed (see Note 6) on a reported income basis was 12.9% at the end of the third quarter 2012. |
| • | Gearing was 8.6% at the end of the third quarter 2012 versus 10.8% at the end of the third quarter 2011. |
| • | Oil and gas production for the third quarter 2012 was 2,982 thousand boe/d. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, third quarter 2012 production volumes were 1% higher compared with the same period last year. |
| • | LNG sales volumes of 4.97 million tonnes in the third quarter 2012 were 4% higher than in the same quarter a year ago. |
| • | Oil products sales volumes in the third quarter 2012 were 1% lower compared with the third quarter 2011. |
| • | Chemicals product sales volumes in the third quarter 2012 decreased by 3% compared with the same quarter a year ago. |
| • | Supplementary financial and operational disclosure for the third quarter 2012 is available at www.shell.com/investor. |
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 10 |
SUMMARY OF IDENTIFIED ITEMS
Earnings in the third quarter 2012 reflected the following items, which in aggregate amounted to a net charge of $432 million (compared with a net gain of $245 million in the third quarter 2011), as summarised in the table below:
| • | Upstream earnings included a net charge of $298 million, reflecting impairments of $354 million mainly related to onshore gas properties in North America, a tax charge of $329 million related to the enactment of legislation in the United Kingdom restricting tax relief on decommissioning costs, an update to provisions related to decommissioning and restoration in the United States and the estimated fair value accounting of commodity derivatives. These items were partially offset by divestment gains of $554 million and the mark-to-market valuation of certain gas contracts. Upstream earnings for the third quarter 2011 included a net gain of $636 million. |
| • | Downstream earnings included a net charge of $134 million, reflecting legal and environmental provisions. Downstream earnings for the third quarter 2011 included a net charge of $338 million. |
| • | Corporate results and Non-controlling interest included a net charge of $53 million for the third quarter 2011. |
SUMMARY OF IDENTIFIED ITEMS
| Quarters | $ million |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| Segment earnings impact of identified items: |
||||||||||||||||||||
| (298 | ) | 181 | 636 | Upstream |
336 | 2,397 | ||||||||||||||
| (134 | ) | 64 | (338 | ) | Downstream |
128 | (19 | ) | ||||||||||||
| — | — | (53 | ) | Corporate and Non-controlling interest |
(271 | ) | (53 | ) | ||||||||||||
| (432 | ) | 245 | 245 | Earnings impact |
193 | 2,325 | ||||||||||||||
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 12 to 14.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 11 |
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
| Quarters | $ million |
Nine months | ||||||||||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | %1 | 2012 | 2011 | % | ||||||||||||||||||||||
| 4,888 | 4,507 | 5,435 | -10 | Upstream earnings excluding identified items |
15,648 | 15,493 | +1 | |||||||||||||||||||||
| 4,590 | 4,688 | 6,071 | -24 | Upstream earnings |
15,984 | 17,890 | -11 | |||||||||||||||||||||
| 8,278 | 9,830 | 8,520 | -3 | Upstream cash flow from operating activities |
26,896 | 24,094 | +12 | |||||||||||||||||||||
| 6,932 | 5,293 | 5,944 | +17 | Upstream net capital investment |
15,997 | 11,720 | +36 | |||||||||||||||||||||
| 1,599 | 1,612 | 1,676 | -5 | Liquids production available for sale (thousand b/d) |
1,631 | 1,674 | -3 | |||||||||||||||||||||
| 8,022 | 8,647 | 7,749 | +4 | Natural gas production available for sale (million scf/d) |
9,167 | 8,769 | +5 | |||||||||||||||||||||
| 2,982 | 3,103 | 3,012 | -1 | Total production available for sale (thousand boe/d) |
3,211 | 3,186 | +1 | |||||||||||||||||||||
| 4.97 | 4.57 | 4.76 | +4 | LNG sales volumes (million tonnes) |
14.71 | 13.99 | +5 | |||||||||||||||||||||
| 1 | Q3 on Q3 change |
Third quarter Upstream earnings excluding identified items were $4,888 million compared with $5,435 million a year ago. Identified items were a net charge of $298 million, compared with a net gain of $636 million in the third quarter 2011 (see page 11).
Compared with the third quarter 2011, Upstream earnings excluding identified items benefited from the increased contribution from Integrated Gas, which included an additional dividend from an LNG venture. Upstream Americas incurred a loss as a result of higher depreciation, increased operating expenses, lower gas realisations and the impact of hurricane Isaac on offshore operations in the Gulf of Mexico. Upstream earnings also reflected higher maintenance activities and increased exploration expenses.
Global liquids realisations were 5% lower and synthetic crude oil realisations in Canada were 8% lower than in the third quarter 2011. Global natural gas realisations were 3% lower than in the same quarter a year ago. Natural gas realisations in the Americas decreased by 38%, whereas natural gas realisations outside the Americas increased by 8%.
Third quarter 2012 production was 2,982 thousand boe/d compared with 3,012 thousand boe/d a year ago. Liquids production decreased by 5% and natural gas production increased by 4% compared with the third quarter 2011. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, third quarter 2012 production volumes were 1% higher compared with the same period last year.
New field start-ups and the continuing ramp-up of fields contributed some 163 thousand boe/d to production in the third quarter 2012, in particular from the ramp-up of Pearl GTL in Qatar and Pluto LNG in Australia, which more than offset the impact of field declines.
LNG sales volumes of 4.97 million tonnes were 4% higher than in the same quarter a year ago. LNG sales volumes mainly reflected the contribution from Pluto LNG.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 12 |
DOWNSTREAM
| Quarters | $ million |
Nine months | ||||||||||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | %1 | 2012 | 2011 | % | ||||||||||||||||||||||
| 1,731 | 1,296 | 1,818 | -5 | Downstream CCS earnings excluding identified items | 4,148 | 4,552 | -9 | |||||||||||||||||||||
| 1,597 | 1,360 | 1,480 | +8 | Downstream CCS earnings | 4,276 | 4,533 | -6 | |||||||||||||||||||||
| 335 | 3,265 | 2,069 | -84 | Downstream cash flow from operating activities | 6,808 | 4,597 | +48 | |||||||||||||||||||||
| 1,051 | 967 | 149 | +605 | Downstream net capital investment | 2,804 | 1,980 | +42 | |||||||||||||||||||||
| 2,880 | 2,810 | 2,854 | +1 | Refinery processing intake (thousand b/d) | 2,824 | 2,905 | -3 | |||||||||||||||||||||
| 6,290 | 6,321 | 6,374 | -1 | Oil products sales volumes (thousand b/d) | 6,191 | 6,210 | — | |||||||||||||||||||||
| 4,699 | 4,671 | 4,832 | -3 | Chemicals sales volumes (thousand tonnes) | 14,049 | 14,391 | -2 | |||||||||||||||||||||
| 1 | Q3 on Q3 change |
Third quarter Downstream earnings excluding identified items were $1,731 million compared with $1,818 million in the third quarter 2011. Identified items were a net charge of $134 million, compared with a net charge of $338 million in the third quarter 2011 (see page 11).
Compared with the third quarter 2011, Downstream earnings excluding identified items benefited from a recovery in industry refining margins and Shell’s operating performance. Earnings were also supported by lower operating expenses, mainly as a result of favourable currency exchange rate effects. These items were more than offset by lower Chemicals earnings and reduced contributions from marketing and trading. Rising oil prices during the third quarter 2012 and the global economic slowdown impacted marketing contributions. Compared with the third quarter 2011, Chemicals earnings decreased due to rising feedstock prices in Europe, the impact of hurricane Isaac on operations in the Gulf of Mexico as well as the global economic slowdown.
Oil products sales volumes were 1% lower compared with the same period a year ago. Lower marketing volumes, as a result of weaker demand as well as portfolio divestments, were largely offset by higher trading volumes.
Chemicals sales volumes decreased by 3% compared with the same quarter last year, mainly due to reductions in European capacity and the impact of hurricane Isaac in the Gulf of Mexico. Chemicals manufacturing plant availability was 89% compared with 90% in the third quarter 2011. Improved global operating performance during the quarter largely offset the impact on availability of hurricane Isaac in the Gulf of Mexico.
Refinery intake volumes were 1% higher compared with the third quarter 2011. Excluding portfolio impacts, refinery intake volumes were 3% higher than in the same period a year ago as result of improved operating performance. Excluding the impact of hurricane Isaac in the Gulf of Mexico, availability was in line with the 94% availability in the third quarter 2011.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 13 |
CORPORATE AND NON-CONTROLLING INTEREST
| Quarters | $ million |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| (60 | ) | (84 | ) | (252 | ) | Corporate and Non-controlling interest excl. identified items |
(239 | ) | (204 | ) | ||||||||||
| Of which: |
||||||||||||||||||||
| 15 | (36 | ) | (201 | ) | Corporate |
(51 | ) | 39 | ||||||||||||
| (75 | ) | (48 | ) | (51 | ) | Non-controlling interest |
(188 | ) | (243 | ) | ||||||||||
| (60 | ) | (84 | ) | (305 | ) | Corporate and Non-controlling interest |
(510 | ) | (257 | ) | ||||||||||
Third quarter Corporate results and Non-controlling interest excluding identified items incurred a loss of $60 million compared with a loss of $252 million in the same period last year.
Corporate results excluding identified items compared with the third quarter 2011 mainly reflected favourable currency exchange rate effects and higher tax credits. These items were partly offset by increased net interest expense. In the third quarter 2012 favourable currency exchange rate effects were $77 million compared with adverse currency exchange rate effects of $270 million in the same period last year.
FORTHCOMING EVENTS
Fourth quarter 2012 results and fourth quarter 2012 dividend are scheduled to be announced on January 31, 2013. First quarter 2013 results and first quarter 2013 dividend are scheduled to be announced on May 2, 2013. Second quarter 2013 results and second quarter 2013 dividend are scheduled to be announced on August 1, 2013. Third quarter 2013 results and third quarter 2013 dividend are scheduled to be announced on October 31, 2013.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 14 |
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
| Quarters | $ million |
Nine months | ||||||||||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | %1 | 2012 | 2011 | % | ||||||||||||||||||||||
| 112,118 | 117,068 | 123,412 | Revenue |
349,106 | 354,596 | |||||||||||||||||||||||
| 2,367 | 1,514 | 2,041 | Share of profit of equity-accounted investments |
6,821 | 6,504 | |||||||||||||||||||||||
| 944 | 1,304 | 504 | Interest and other income |
3,162 | 4,261 | |||||||||||||||||||||||
| 115,429 | 119,886 | 125,957 | Total revenue and other income |
359,089 | 365,361 | |||||||||||||||||||||||
| 87,265 | 95,041 | 98,094 | Purchases |
276,375 | 278,179 | |||||||||||||||||||||||
| 6,513 | 6,379 | 6,761 | Production and manufacturing expenses |
18,941 | 19,465 | |||||||||||||||||||||||
| 3,709 | 3,459 | 3,516 | Selling, distribution and administrative expenses |
10,857 | 10,629 | |||||||||||||||||||||||
| 311 | 289 | 253 | Research and development |
895 | 721 | |||||||||||||||||||||||
| 713 | 862 | 661 | Exploration |
1,937 | 1,441 | |||||||||||||||||||||||
| 3,875 | 3,503 | 3,803 | Depreciation, depletion and amortisation |
10,780 | 9,985 | |||||||||||||||||||||||
| 415 | 411 | 331 | Interest expense |
1,378 | 1,086 | |||||||||||||||||||||||
| 12,628 | 9,942 | 12,538 | +1 | Income before taxation |
37,926 | 43,855 | -14 | |||||||||||||||||||||
| 5,389 | 5,874 | 5,505 | Taxation |
17,785 | 19,138 | |||||||||||||||||||||||
| 7,239 | 4,068 | 7,033 | +3 | Income for the period |
20,141 | 24,717 | -19 | |||||||||||||||||||||
| 100 | 5 | 57 | Income attributable to non-controlling interest |
220 | 299 | |||||||||||||||||||||||
| 7,139 | 4,063 | 6,976 | +2 | Income attributable to Royal Dutch Shell plc shareholders |
19,921 | 24,418 | -18 | |||||||||||||||||||||
| 1 | Q3 on Q3 change. |
EARNINGS PER SHARE
| Quarters | $ |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| 1.14 | 0.65 | 1.12 | Basic earnings per share |
3.19 | 3.93 | |||||||||||||||
| 1.14 | 0.65 | 1.12 | Diluted earnings per share |
3.18 | 3.93 | |||||||||||||||
|
SHARES2 |
||||||||||||||||||||
| Quarters | Million |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| Weighted average number of shares as the basis for: |
||||||||||||||||||||
| 6,266.3 | 6,265.9 | 6,238.1 | Basic earnings per share |
6,253.9 | 6,206.2 | |||||||||||||||
| 6,273.9 | 6,273.2 | 6,247.1 | Diluted earnings per share |
6,261.2 | 6,216.2 | |||||||||||||||
| 6,284.8 | 6,266.2 | 6,236.5 | Shares outstanding at the end of the period |
6,284.8 | 6,236.5 | |||||||||||||||
| 2 | Royal Dutch Shell plc ordinary shares of €0.07 each. |
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 15 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| Quarters | $ million |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| 7,239 | 4,068 | 7,033 | Income for the period |
20,141 | 24,717 | |||||||||||||||
| Other comprehensive income, net of tax: |
||||||||||||||||||||
| 2,424 | (2,805 | ) | (4,642 | ) | Currency translation differences |
1,504 | (2,018 | ) | ||||||||||||
| (97 | ) | 70 | 23 | Unrealised gains/(losses) on securities |
(132 | ) | 13 | |||||||||||||
| (187 | ) | 567 | (130 | ) | Cash flow hedging gains/(losses) |
(70 | ) | (89 | ) | |||||||||||
| 27 | 39 | 29 | Share of other comprehensive income/(loss) of equity-accounted investments |
(43 | ) | 99 | ||||||||||||||
| 2,167 | (2,129 | ) | (4,720 | ) | Other comprehensive income/(loss) for the period |
1,259 | (1,995 | ) | ||||||||||||
| 9,406 | 1,939 | 2,313 | Comprehensive income for the period |
21,400 | 22,722 | |||||||||||||||
| 132 | (36 | ) | (46 | ) | Comprehensive income/(loss) attributable to non-controlling interest |
254 | 255 | |||||||||||||
| 9,274 | 1,975 | 2,359 | Comprehensive income attributable to Royal Dutch Shell plc shareholders |
21,146 | 22,467 | |||||||||||||||
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 16 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Equity attributable to Royal Dutch Shell plc shareholders |
||||||||||||||||||||||||||||
| $ million |
Share capital |
Shares held in trust |
Other reserves |
Retained earnings |
Total | Non-controlling interest |
Total equity |
|||||||||||||||||||||
| At January 1, 2012 |
536 | (2,990 | ) | 8,984 | 162,987 | 169,517 | 1,486 | 171,003 | ||||||||||||||||||||
| Comprehensive income for the period |
— | — | 1,225 | 19,921 | 21,146 | 254 | 21,400 | |||||||||||||||||||||
| Capital contributions from and other changes in non-controlling interest |
— | — | — | 36 | 36 | (76 | ) | (40 | ) | |||||||||||||||||||
| Dividends paid |
— | — | — | (8,194 | ) | (8,194 | ) | (266 | ) | (8,460 | ) | |||||||||||||||||
| Scrip dividends1 |
6 | — | (6 | ) | 2,438 | 2,438 | — | 2,438 | ||||||||||||||||||||
| Repurchases of shares2 |
(2 | ) | — | 2 | (1,815 | ) | (1,815 | ) | — | (1,815 | ) | |||||||||||||||||
| Shares held in trust: net sales/ (purchases) and dividends received |
— | 782 | — | 114 | 896 | — | 896 | |||||||||||||||||||||
| Share-based compensation |
— | — | 243 | (482 | ) | (239 | ) | — | (239 | ) | ||||||||||||||||||
| At September 30, 2012 |
540 | (2,208 | ) | 10,448 | 175,005 | 183,785 | 1,398 | 185,183 | ||||||||||||||||||||
| 1 | During the first nine months of 2012 some 69.6 million Class A shares, equivalent to $2.4 billion, were issued under the Scrip Dividend Programme. |
| 2 | Includes shares committed to repurchase at September 30, 2012. |
| Equity attributable to Royal Dutch Shell plc shareholders |
||||||||||||||||||||||||||||
| $ million |
Share capital |
Shares held in trust |
Other reserves |
Retained earnings |
Total | Non-controlling interest |
Total equity |
|||||||||||||||||||||
| At January 1, 2011 |
529 | (2,789 | ) | 10,094 | 140,179 | 148,013 | 1,767 | 149,780 | ||||||||||||||||||||
| Comprehensive income for the period |
— | — | (1,951 | ) | 24,418 | 22,467 | 255 | 22,722 | ||||||||||||||||||||
| Capital contributions from and other changes in non-controlling interest |
— | — | — | 48 | 48 | (46 | ) | 2 | ||||||||||||||||||||
| Dividends paid |
— | — | — | (7,816 | ) | (7,816 | ) | (374 | ) | (8,190 | ) | |||||||||||||||||
| Scrip dividends1 |
9 | — | (9 | ) | 2,627 | 2,627 | — | 2,627 | ||||||||||||||||||||
| Repurchases of shares2 |
(3 | ) | — | 3 | (1,501 | ) | (1,501 | ) | — | (1,501 | ) | |||||||||||||||||
| Shares held in trust: net sales/ (purchases) and dividends received |
— | 961 | — | 99 | 1,060 | — | 1,060 | |||||||||||||||||||||
| Share-based compensation |
— | — | (230 | ) | (67 | ) | (297 | ) | — | (297 | ) | |||||||||||||||||
| At September 30, 2011 |
535 | (1,828 | ) | 7,907 | 157,987 | 164,601 | 1,602 | 166,203 | ||||||||||||||||||||
| 1 | During the first nine months of 2011 some 77.3 million Class A shares, equivalent to $2.6 billion, were issued under the Scrip Dividend Programme. |
| 2 | Includes shares committed to repurchase and repurchases subject to settlement at September 30, 2011. |
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 17 |
CONDENSED CONSOLIDATED BALANCE SHEET
| $ million | ||||||||
| Sept 30, 2012 |
Dec 31, 2011 |
|||||||
| Assets |
||||||||
| Non-current assets: |
||||||||
| Intangible assets |
4,478 | 4,521 | ||||||
| Property, plant and equipment |
162,401 | 152,081 | ||||||
| Equity-accounted investments |
39,033 | 37,990 | ||||||
| Investments in securities |
5,492 | 5,492 | ||||||
| Deferred tax |
4,246 | 4,732 | ||||||
| Prepaid pension costs |
12,461 | 11,408 | ||||||
| Trade and other receivables |
10,070 | 9,256 | ||||||
| 238,181 | 225,480 | |||||||
| Current assets: |
||||||||
| Inventories |
32,358 | 28,976 | ||||||
| Trade and other receivables |
70,972 | 79,509 | ||||||
| Cash and cash equivalents |
18,839 | 11,292 | ||||||
| 122,169 | 119,777 | |||||||
| Total assets |
360,350 | 345,257 | ||||||
| Liabilities |
||||||||
| Non-current liabilities: |
||||||||
| Debt |
28,078 | 30,463 | ||||||
| Trade and other payables |
4,322 | 4,921 | ||||||
| Deferred tax |
16,107 | 14,649 | ||||||
| Retirement benefit obligations |
6,169 | 5,931 | ||||||
| Decommissioning and other provisions |
16,262 | 15,631 | ||||||
| 70,938 | 71,595 | |||||||
| Current liabilities: |
||||||||
| Debt |
8,280 | 6,712 | ||||||
| Trade and other payables |
77,550 | 81,846 | ||||||
| Taxes payable |
14,869 | 10,606 | ||||||
| Retirement benefit obligations |
399 | 387 | ||||||
| Decommissioning and other provisions |
3,131 | 3,108 | ||||||
| 104,229 | 102,659 | |||||||
| Total liabilities |
175,167 | 174,254 | ||||||
| Equity attributable to Royal Dutch Shell plc shareholders |
183,785 | 169,517 | ||||||
| Non-controlling interest |
1,398 | 1,486 | ||||||
| Total equity |
185,183 | 171,003 | ||||||
| Total liabilities and equity |
360,350 | 345,257 | ||||||
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 18 |
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
| Quarters | $ million |
Nine months | ||||||||||||||||||
| Q3 2012 | Q2 2012 | Q3 2011 | 2012 | 2011 | ||||||||||||||||
| Cash flow from operating activities |
||||||||||||||||||||
| 7,239 | 4,068 | 7,033 | Income for the period |
20,141 | 24,717 | |||||||||||||||
| Adjustment for: |
||||||||||||||||||||
| 5,385 | 5,892 | 5,746 | – Current taxation |
16,756 | 17,193 | |||||||||||||||
| 362 | 358 | 249 | – Interest expense (net) |
1,219 | 889 | |||||||||||||||
| 3,875 | 3,503 | 3,803 | – Depreciation, depletion and amortisation |
10,780 | 9,985 | |||||||||||||||
| (428 | ) | (1,193 | ) | (347 | ) | – Net gains on sale of assets |
(2,145 | ) | (3,335 | ) | ||||||||||
| (2,209 | ) | 3,836 | 1,011 | – Decrease/(increase) in net working capital |
2,397 | (5,783 | ) | |||||||||||||
| (2,367 | ) | (1,514 | ) | (2,041 | ) | – Share of profit of equity-accounted investments |
(6,821 | ) | (6,504 | ) | ||||||||||
| 2,537 | 2,799 | 2,402 | – Dividends received from equity-accounted investments |
7,918 | 6,485 | |||||||||||||||
| (75 | ) | (70 | ) | (204 | ) | – Deferred taxation and decommissioning and other provisions |
826 | 1,927 | ||||||||||||
| (205 | ) | 261 | (540 | ) | – Other |
(352 | ) | (399 | ) | |||||||||||
| 14,114 | 17,940 | 17,112 | Net cash from operating activities (pre-tax) |
50,719 | 45,175 | |||||||||||||||
| (4,631 | ) | (4,635 | ) | (5,467 | ) | Taxation paid |
(14,492 | ) | (14,869 | ) | ||||||||||
| 9,483 | 13,305 | 11,645 | Net cash from operating activities |
36,227 | 30,306 | |||||||||||||||
| Cash flow from investing activities |
||||||||||||||||||||
| (8,413 | ) | (7,033 | ) | (7,261 | ) | Capital expenditure |
(21,902 | ) | (16,387 | ) | ||||||||||
| (789 | ) | (724 | ) | (199 | ) | Investments in equity-accounted investments |
(2,811 | ) | (1,571 | ) | ||||||||||
| 786 | 1,675 | 1,594 | Proceeds from sales of assets |
4,833 | 5,815 | |||||||||||||||
| 56 | 170 | 200 | Proceeds from sales of equity-accounted investments |
283 | 425 | |||||||||||||||
| (26 | ) | 10 | 6 | Proceeds from sales/(purchases) of securities (net) |
(56 | ) | 7 | |||||||||||||
| 47 | 45 | 75 | Interest received |
140 | 185 | |||||||||||||||
| (8,339 | ) | (5,857 | ) | (5,585 | ) | Net cash used in investing activities |
(19,513 | ) | (11,526 | ) | ||||||||||
| Cash flow from financing activities |
||||||||||||||||||||
| 507 | 248 | (365 | ) | Net (decrease)/increase in debt with maturity period within three months |
302 | (2,883 | ) | |||||||||||||
| 2,551 | 134 | 477 | Other debt: New borrowings |
3,295 | 1,244 | |||||||||||||||
| (182 | ) | (1,533 | ) | (2,529 | ) | Repayments |
(4,682 | ) | (4,064 | ) | ||||||||||
| (352 | ) | (339 | ) | (173 | ) | Interest paid |
(1,145 | ) | (1,195 | ) | ||||||||||
| (10 | ) | (2 | ) | (3 | ) | Change in non-controlling interest |
(2 | ) | (3 | ) | ||||||||||
| Cash dividends paid to: |
||||||||||||||||||||
| (1,973 | ) | (2,112 | ) | (1,865 | ) | – Royal Dutch Shell plc shareholders |
(5,756 | ) | (5,189 | ) | ||||||||||
| (164 | ) | (78 | ) | (175 | ) | – Non-controlling interest |
(266 | ) | (374 | ) | ||||||||||
| (149 | ) | (890 | ) | (817 | ) | Repurchases of shares |
(1,039 | ) | (817 | ) | ||||||||||
| (93 | ) | (103 | ) | 10 | Shares held in trust: net sales/(purchases) and dividends received |
9 | 413 | |||||||||||||
| 135 | (4,675 | ) | (5,440 | ) | Net cash used in financing activities |
(9,284 | ) | (12,868 | ) | |||||||||||
| 278 | (515 | ) | (829 | ) | Currency translation differences relating to cash and cash equivalents |
117 | (100 | ) | ||||||||||||
| 1,557 | 2,258 | (209 | ) | Increase in cash and cash equivalents |
7,547 | 5,812 | ||||||||||||||
| 17,282 | 15,024 | 19,465 | Cash and cash equivalents at beginning of period |
11,292 | 13,444 | |||||||||||||||
| 18,839 | 17,282 | 19,256 | Cash and cash equivalents at end of period |
18,839 | 19,256 | |||||||||||||||
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 19 |
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 and Form 20-F for the year ended December 31, 2011 (pages 105 to 110) as filed with the US 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, 2011 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 (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 current cost of supplies during the same period after making allowance for the 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 |
Nine months | ||||||||||||||
| Q3 2012 | Q3 2011 | 2012 | 2011 | |||||||||||||
| Third-party revenue |
||||||||||||||||
| 10,028 | 10,888 | Upstream |
32,066 | 30,659 | ||||||||||||
| 102,075 | 112,516 | Downstream |
317,000 | 323,907 | ||||||||||||
| 15 | 8 | Corporate |
40 | 30 | ||||||||||||
| 112,118 | 123,412 | Total third-party revenue |
349,106 | 354,596 | ||||||||||||
| Inter-segment revenue |
||||||||||||||||
| 12,338 | 12,929 | Upstream |
38,337 | 37,304 | ||||||||||||
| 172 | 125 | Downstream |
555 | 545 | ||||||||||||
| — | — | Corporate |
— | — | ||||||||||||
| Segment earnings |
||||||||||||||||
| 4,590 | 6,071 | Upstream |
15,984 | 17,890 | ||||||||||||
| 1,597 | 1,480 | Downstream |
4,276 | 4,533 | ||||||||||||
| 15 | (254 | ) | Corporate |
(285 | ) | (14 | ) | |||||||||
| 6,202 | 7,297 | Total segment earnings |
19,975 | 22,409 | ||||||||||||
| Quarters | $ million |
Nine months | ||||||||||||||
| Q3 2012 | Q3 2011 | 2012 | 2011 | |||||||||||||
| 6,202 | 7,297 | Total segment earnings |
19,975 | 22,409 | ||||||||||||
| Current cost of supplies adjustment: |
||||||||||||||||
| 1,130 | (260 | ) | Purchases |
160 | 2,787 | |||||||||||
| (294 | ) | 75 | Taxation |
(51 | ) | (794 | ) | |||||||||
| 201 | (79 | ) | Share of profit of equity-accounted investments |
57 | 315 | |||||||||||
| 7,239 | 7,033 | Income for the period |
20,141 | 24,717 | ||||||||||||
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 20 |
3. Share capital
Issued and fully paid
| shares of €0.07 each | Sterling shares |
|||||||||||
| Number of shares |
Class A | Class B | each | |||||||||
| At January 1, 2012 |
3,668,550,437 | 2,661,403,172 | 50,000 | |||||||||
| Scrip dividends |
69,588,598 | — | — | |||||||||
| Repurchases of shares |
— | (30,728,970 | ) | — | ||||||||
| At September 30, 2012 |
3,738,139,035 | 2,630,674,202 | 50,000 | |||||||||
Nominal value
| $ million |
Class A | Class B | Total | |||||||||
| At January 1, 2012 |
312 | 224 | 536 | |||||||||
| Scrip dividends |
6 | — | 6 | |||||||||
| Repurchases of shares |
— | (2 | ) | (2 | ) | |||||||
| At September 30, 2012 |
318 | 222 | 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 22, 2012, the Board was authorised to allot ordinary shares in Royal Dutch Shell plc and 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 August 22, 2013, and the conclusion of the Annual General Meeting to be held in 2013, unless previously renewed, revoked or varied in a General Meeting of Shareholders.
4. Other reserves
| $ million |
Merger reserve1 |
Share premium reserve1 |
Capital redemption reserve 2 |
Share plan reserve |
Accumulated other comprehensive income |
Total | ||||||||||||||||||
| At January 1, 2012 |
3,432 | 154 | 60 | 1,571 | 3,767 | 8,984 | ||||||||||||||||||
| Other comprehensive income attributable to Royal Dutch Shell plc shareholders |
— | — | — | — | 1,225 | 1,225 | ||||||||||||||||||
| Scrip dividends |
(6 | ) | — | — | — | — | (6 | ) | ||||||||||||||||
| Repurchases of shares |
— | — | 2 | — | — | 2 | ||||||||||||||||||
| Share-based compensation |
— | — | — | 243 | — | 243 | ||||||||||||||||||
| At September 30, 2012 |
3,426 | 154 | 62 | 1,814 | 4,992 | 10,448 | ||||||||||||||||||
| At January 1, 2011 |
3,442 | 154 | 57 | 1,483 | 4,958 | 10,094 | ||||||||||||||||||
| Other comprehensive loss attributable to Royal Dutch Shell plc shareholders |
— | — | — | — | (1,951 | ) | (1,951 | ) | ||||||||||||||||
| Scrip dividends |
(9 | ) | — | — | — | — | (9 | ) | ||||||||||||||||
| Repurchases of shares |
— | — | 3 | — | — | 3 | ||||||||||||||||||
| Share-based compensation |
— | — | — | (230 | ) | — | (230 | ) | ||||||||||||||||
| At September 30, 2011 |
3,433 | 154 | 60 | 1,253 | 3,007 | 7,907 | ||||||||||||||||||
| 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 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. |
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 21 |
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 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 the quarterly results.
6. Return on average capital employed
Return on average capital employed measures the efficiency of Shell’s utilisation of the capital that it employs and is a common measure of business performance. In this calculation, return on average capital employed 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
Third quarter Net cash from operating activities in the third quarter 2012 was $9.5 billion compared with $11.6 billion for the same period last year.
Total current and non-current debt increased to $36.4 billion at September 30, 2012 from $33.0 billion at June 30, 2012 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $17.3 billion at June 30, 2012. During the third quarter 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.
Net capital investment in the third quarter 2012 was $8.0 billion, of which $6.9 billion was in Upstream and $1.1 billion in Downstream. Net capital investment in the same period of 2011 was $6.1 billion, of which $5.9 billion was in Upstream and $0.2 billion in Downstream.
Dividends of $0.43 per share are announced on November 1, 2012 in respect of the third quarter. These dividends are payable on December 20, 2012. 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 and Form 20-F for the year ended December 31, 2011 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.
Nine months Net cash from operating activities in the first nine months of 2012 was $36.2 billion compared with $30.3 billion for the same period last year.
Total current and non-current debt decreased to $36.4 billion at September 30, 2012 from $37.2 billion at December 31, 2011 while cash and cash equivalents increased to $18.8 billion at September 30, 2012, from $11.3 billion at December 31, 2011. During the first nine months of 2012 Shell issued $2.5 billion of debt under the US universal shelf registration. No new debt was issued under the euro medium-term note programme.
Net capital investment in the first nine months of 2012 was $18.9 billion, of which $16.0 billion was in Upstream, $2.8 billion in Downstream and $0.1 billion in Corporate. Net capital investment in the same period of 2011 was $13.8 billion, of which $11.7 billion was in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 22 |
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 document “Shell”, “Shell Group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this document refer to companies 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 document, 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 23 per cent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This document contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell 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”, “seek”, “should”, “target”, “will” and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward-looking statements included in this document, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Shell’s Annual Report and Form 20-F for the year ended December 31, 2011 (available at www.shell.com/investor and www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this document, November 1, 2012. Neither Shell nor any of its subsidiaries nor the Shell Group undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this document.
We may have used certain terms, such as resources, in this report that 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 these forms from the SEC by calling 1-800-SEC-0330.
November 1, 2012
Contacts:
| • | Investor Relations: Europe: + 31 (0)70 377 4540; USA: +1 713 241 1042 |
| • | Media: Europe: + 31 (0)70 377 3600 |
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 23 |
APPENDIX I
First half year 2012 Portfolio Developments
Upstream
In Australia, the 4.3 million tonnes per annum (“mtpa”) capacity Pluto LNG project (Shell indirect share 20.8%) delivered its first liquefied natural gas (“LNG”) cargo to Japan. The project is expected to produce some 140 thousand barrels of oil equivalent per day (“boe/d”) at peak production.
Shell signed a binding agreement for the long-term supply of 2 mtpa of LNG to CPC Corporation, Taiwan (“CPC”) for 20 years from 2016.
In the United States, first production was achieved at the Caesar/Tonga deepwater project (Shell share 22.5%) in the Gulf of Mexico. At peak, the project is expected to produce some 40 thousand boe/d.
In Canada, Shell, Korea Gas Corporation (“KOGAS”), Mitsubishi Corporation and PetroChina Company Limited announced that they are assessing a potential LNG export facility in Western Canada, near Kitimat, British Columbia. The proposed project, named LNG Canada (Shell share 40%), is expected to initially have two 6 mtpa capacity LNG trains, with an option to expand the project in the future.
In Nigeria, Shell took the Final Investment Decisions on the Forcados Yokri Integrated Project (Shell share 30%) and the Southern Swamp Associated Gas Gathering Project (Shell share 30%). These projects are expected to produce some 100 thousand boe/d and 85 thousand boe/d respectively at peak production and reduce flaring intensity.
In Oman, Petroleum Development Oman (Shell share 34%) achieved first oil at the Harweel Enhanced Oil Recovery project. The project is expected to produce some 40 thousand boe/d at peak production.
In the United Kingdom, Shell agreed to acquire Hess Corporation’s 15.7% interest in the Schiehallion field and its 12.9% interest in the Schiehallion Floating Production, Storage and Offloading facility (“FPSO”) for some $0.5 billion. The transaction, which is subject to regulatory approvals, is expected to close later in 2012, increasing Shell’s interest in the field from 33.3% to 49.0% and in the FPSO from 36.3% to 49.2%.
Shell continued to divest Upstream positions during the first half year 2012, with divestment proceeds totalling some $3.6 billion, including among others its 40% participating interest in the oil and gas exploration block BS-4 in the Santos Basin offshore Brazil and the proceeds from the sale of Shell’s interests in the natural gas transport infrastructure joint venture Gassled in Norway.
Also, in Australia, Shell agreed to sell a combined 32.5% participating interest in the Prelude Floating LNG project under separate agreements to Inpex (17.5%), KOGAS (10%) and CPC (5%). Divestment proceeds from the first two agreements have already been received in the first half year 2012. The completion of these transactions is subject to conditions precedent including regulatory approvals. The combined 32.5% participating interest represents a net book value of some $0.5 billion at the end of the first quarter 2012.
During the first half year 2012, Shell had a successful appraisal at the Vito discovery (Shell share 55%) in the Gulf of Mexico offshore the United States. Shell also had a successful appraisal at the Appomattox discovery (Shell share 80%) in the Gulf of Mexico.
As part of its global exploration programme, Shell spent some $1.0 billion on new acreage positions during the first half year 2012, including deep-water positions, liquids-rich shales potential and tight-gas acreage.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 24 |
Downstream
In Australia, refining operations at Shell’s Clyde refinery (79 thousand barrels per day) ceased in early October 2012. The Clyde refinery and the Gore Bay terminal will be converted into a fuel import facility.
In the United States, inspection activities and repairs continue on the crude distillation unit at the expansion of Motiva’s refinery (Shell share 50%) in Port Arthur, Texas. The crude unit, which is part of the recently completed 325 thousand b/d expansion project at the refinery, was safely shut down without any injuries in early June after it experienced operational issues. Motiva is targeting to restart the crude unit in 2013. The original Port Arthur refinery, which has 275 thousand b/d distillation capacity, continues to operate normally.
In Qatar, Shell and Qatar Petroleum have entered the Front End Engineering and Design phase for a world-scale petrochemicals project (Shell share 20%) in Ras Laffan Industrial City. The scope under consideration includes a plant of up to 1.5 mtpa mono-ethylene glycol and 0.3 mtpa of linear alpha olefins.
Shell continued to divest Downstream positions during the first half year 2012 with divestment proceeds totalling some $0.7 billion. Divestments included retail stations in North America and an LPG business in Asia Pacific. Shell also completed the sale of the majority of its shareholding of its downstream businesses in Côte d’Ivoire, Burkina Faso and Guinea. This represents the second stage of the divestment of the majority of Shell’s shareholding in most of its downstream businesses in Africa as announced in February 2011, with the remainder expected to be completed later in 2012.
In Botswana and Namibia, Shell agreed to divest the majority of its shareholding in its downstream businesses. The agreements, which are subject to regulatory approvals, now form part of the divestment of Shell’s shareholding in most of its downstream businesses in Africa.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 25 |
Identified Items – Nine months ended September 30, 2012
Earnings in the first nine months 2012 reflected the following items, which in aggregate amounted to a net gain of $193 million (compared with a net gain of $2,325 million in the first nine months 2011), as summarised in the table on page 11:
| • | Upstream earnings included a net gain of $336 million, reflecting divestment gains and the mark-to-market valuation of certain gas contracts. These were partly offset by assets impairment, a net tax charge and decommissioning provisions. Upstream earnings for the first nine months 2011 included a net gain of $2,397 million. |
| • | Downstream earnings included a net gain of $128 million, reflecting divestment gains. These were partly offset by legal and environmental provisions. Downstream earnings for the first nine months 2011 included a net loss of $19 million. |
| • | Corporate and Non-controlling interest earnings included a net charge of $271 million, mainly reflecting a tax provision. Corporate and Non-controlling interest earnings for the first nine months 2011 included a net loss of $53 million. |
Earnings by business segment – Nine months ended September 30, 2011
Upstream
Nine months Upstream earnings excluding identified items were $15,648 million compared with $15,493 million in the first nine months 2011. Identified items were a net gain of $336 million, compared with a net gain of $2,397 million in the first nine months 2011 (see page 11).
Compared with the first nine months 2011, Upstream earnings excluding identified items reflected the contribution of Pearl GTL, higher LNG realisations and increased trading contributions. Earnings also benefited from higher liquids realisations and increased gas realisations outside of the Americas. These items were largely offset by higher depreciation, increased operating expenses, lower gas realisations in the Americas and higher exploration expenses.
Global liquids realisations were 2% higher than in the first nine months 2011, whereas synthetic crude oil realisations in Canada decreased by 8%. Global natural gas realisations were in line with the same period a year ago. Natural gas realisations in the Americas decreased by 40%, whereas natural gas realisations outside the Americas increased by 11%.
Nine months 2012 production was 3,211 thousand boe/d compared with 3,186 thousand boe/d for the same period a year ago. Liquids production was down 3% and natural gas production increased by 5% compared with the first nine months 2011. Excluding the impact of divestments, exits, PSC price effects and security impacts onshore Nigeria, production volumes in the first nine months 2012 were 3% higher than in the same period last year.
LNG sales volumes of 14.71 million tonnes were 5% higher than in the first nine months 2011, mainly reflecting the successful ramp-up of Qatargas 4 LNG.
Downstream
Nine months Downstream earnings excluding identified items were $4,148 million compared with $4,552 million in the first nine months 2011. Identified items were a net gain of $128 million, compared with a net charge of $19 million in the first nine months 2011 (see page 11).
Compared with the first nine months 2011, Downstream earnings excluding identified items reflected higher realised refining margins and lower operating expenses, mainly as a result of favourable currency exchange rate effects. These items were more than offset by lower Chemicals earnings as well as reduced contributions from marketing and trading.
Oil products sales volumes were in line with the same period a year ago. Lower marketing volumes, mainly as a result of portfolio divestments, were offset by higher trading volumes. Excluding the impact of divestments and the effects of the formation of the Raízen joint venture, sales volumes were 3% higher compared with the same period last year.
Chemicals sales volumes decreased by 2% compared with the same period last year, mainly due to reductions in European capacity and rationalisation of the contract portfolio. Chemicals manufacturing plant availability increased to 91% compared with 89% in the first nine months 2011.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 26 |
Refinery intake volumes decreased by 3% compared with the first nine months 2012. Excluding portfolio impacts, refinery intake volumes were 3% higher than in the same period a year ago. Refinery availability increased to 93% compared with 92% in the first nine months 2011.
Corporate
Nine months Corporate results and Non-controlling interest excluding identified items (see page 11) were a loss of $239 million compared with a loss of $204 million in the first nine months 2011.
Corporate results excluding identified items, compared with the first nine months 2011, mainly reflected higher net interest expense and increased operating expenses, which was largely offset by higher tax credits and favourable currency exchange rate effects.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 27 |
APPENDIX II
Net capital investment by business segment
Net capital investment 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.
| $ million | ||||||||
| Nine months ended | ||||||||
| September 30, 2012 |
September 30, 2011 |
|||||||
| Net capital investment: |
||||||||
| Upstream |
15,997 | 11,720 | ||||||
| Downstream |
2,804 | 1,980 | ||||||
| Corporate |
106 | 96 | ||||||
|
|
|
|
|
|||||
| Total |
18,907 | 13,796 | ||||||
| Proceeds from divestments |
5,060 | 6,247 | ||||||
|
|
|
|
|
|||||
| Capital investment |
23,967 | 20,043 | ||||||
| Exploration expenses excluding exploration wells written off |
(1,413 | ) | (982 | ) | ||||
| Investments in equity-accounted investments |
(2,811 | ) | (1,571 | ) | ||||
| Leases and other items |
2,159 | (1,103 | ) | |||||
|
|
|
|
|
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| Capital expenditure |
21,902 | 16,387 | ||||||
|
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|
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|
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Return on average capital employed (ROACE)
Return on average capital employed measures the efficiency of Shell’s utilisation of the capital that it employs. In this calculation, return on average capital employed 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.
| Calculation of ROACE | $ million Last twelve months |
|||||||
| September 30, 2012 |
September 30, 2011 |
|||||||
| Income for current and previous three quarters |
26,608 | 31,575 | ||||||
| Interest expense after tax |
891 | 752 | ||||||
| Income before interest expense |
27,499 | 32,327 | ||||||
| Capital employed – opening |
205,563 | 189,525 | ||||||
| Capital employed – closing |
221,541 | 205,563 | ||||||
| Capital employed – average |
213,552 | 197,544 | ||||||
|
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|
|
|
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| ROACE |
12.9 | % | 16.4 | % | ||||
|
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|
|
|
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Share-based compensation
There are a number of share-based compensation plans for Shell employees.
The principal share-based employee compensation plan is the Performance Share Plan (PSP). For the details of the PSP reference is made to the Annual Report and Form 20-F for the year ended December 31, 2011. The following table presents the number of shares and American Depositary Shares (“ADSs”) in the Company conditionally awarded under the PSP outstanding as at September 30, 2012. The measurement period for the shares granted is three years.
| PSPs |
Class A shares |
Class B shares |
Class A ADSs |
|||||||||
| Outstanding at September 30, 2012 (thousands) |
27,260 | 10,454 | 8,584 | |||||||||
Prior to the introduction in 2005 of the PSP, Shell’s plans offered options over shares and ADSs of the Company which were awarded to eligible employees, at a price not less than the fair market value of the shares and ADSs at the date the options were granted.
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 28 |
The following table presents the number of shares and ADSs in the Company under option as at September 30, 2012, and the range of expiration dates.
| Share option plans |
Class A shares |
Class B shares |
Class A ADSs | |||
| Under option at September 30, 2012 (thousands) |
14,621 | 4,674 | 4,125 | |||
| Range of expiration dates |
Nov 2012 – Aug 2016 | Nov 2012 – Nov 2014 | Oct 2012 – May 2014 |
Ratio of earnings to fixed charges
The following table sets out for the years ended December 31, 2007, 2008, 2009, 2010 and 2011 and the nine months ended September 30, 2012, the consolidated unaudited ratio of earnings to fixed charges of Shell.
| Nine
months ended September 30, |
$ million Years ending December 31, |
|||||||||||||||||||||||
| 2012 | 2011 | 2010 | 2009 | 2008 | 2007 | |||||||||||||||||||
| Pre-tax income from continuing operations before income from equity investees |
31,105 | 46,923 | 29,391 | 16,044 | 43,374 | 42,342 | ||||||||||||||||||
| Total fixed charges |
1,331 | 1,608 | 1,684 | 1,669 | 2,009 | 1,840 | ||||||||||||||||||
| Distributed income from equity investees |
7,918 | 9,681 | 6,519 | 4,903 | 9,325 | 6,955 | ||||||||||||||||||
| Less: interest capitalised |
399 | 674 | 969 | 1,088 | 870 | 667 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total earnings |
39,955 | 57,538 | 36,625 | 21,528 | 53,838 | 50,470 | ||||||||||||||||||
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|
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| Interest expensed and capitalised |
1,143 | 1,209 | 1,218 | 902 | 1,371 | 1,235 | ||||||||||||||||||
| Interest within rental expense |
188 | 399 | 466 | 767 | 638 | 605 | ||||||||||||||||||
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|
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|
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|
|
|
|
|
|||||||||||||
| Total fixed charges |
1,331 | 1,608 | 1,684 | 1,669 | 2,009 | 1,840 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Ratio earnings/fixed charges |
30.02 | 35.78 | 21.75 | 12.90 | 26.80 | 27.43 | ||||||||||||||||||
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For the purposes of the table above, “earnings” consists of pre-tax income from continuing operations before adjustment for non-controlling interest plus fixed charges (excluding capitalised interest) less undistributed earnings of equity-accounted investments. Fixed charges consist of expensed and capitalised interest (excluding accretion expense) plus interest within rental expenses (for operating leases).
Capitalisation and indebtedness
The following table sets out the unaudited consolidated combined capitalisation and indebtedness of Shell as of September 30, 2012. This information is derived from the Condensed Consolidated Interim Financial Statements.
| $ million | ||||
| September 30, 2012 |
||||
| Equity attributable to Royal Dutch Shell plc shareholders |
183,785 | |||
| Current debt |
8,280 | |||
| Non-current debt |
28,078 | |||
|
|
|
|||
| Total debt[A] [B] |
36,358 | |||
|
|
|
|||
| Total capitalisation |
220,143 | |||
|
|
|
|||
| [A] | Of total debt, $32.0 billion was unsecured and $4.4 billion was secured. |
| [B] | Includes, as at September 30, 2012, $27.4 billion of debt issued by Shell International Finance B.V., a 100%-owned subsidiary of Royal Dutch Shell plc which is guaranteed by Royal Dutch Shell plc (December 31, 2011: $28.7 billion), with the remainder raised by other subsidiaries with no recourse beyond the immediate borrower and/or the local assets. As at September 30, 2012, Shell also had outstanding guarantees of $3.5 billion, of which $2.2 billion related to debt of equity-accounted investments. |
| Royal Dutch Shell plc Unaudited Condensed Interim Financial Report 29 |