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 April 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  þ            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  þ

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

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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 month period ended March 31, 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 month period ended March 31, 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

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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:		April 26, 2012

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 3

Exhibit 99.1

Regulatory release

Three month period ended March 31, 2012

Unaudited Condensed Interim Financial Report

On April 26, 2012, Royal Dutch Shell plc released the Unaudited Condensed Interim Financial Report for the three month period ended March 31, 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 month period ended March 31, 2012

Unaudited Condensed Interim Financial Report

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 5

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1^ST QUARTER 2012 UNAUDITED RESULTS

 

•

Royal Dutch Shell’s first quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $7.7 billion compared with $6.9 billion in the same quarter a year ago.

 

•

First quarter 2012 CCS earnings excluding identified items (see page 10) were $7.3 billion compared with $6.3 billion in the first quarter 2011, an increase of 16%.

 

•

Basic CCS earnings per share excluding identified items for the first quarter 2012 increased by 15% versus the same quarter a year ago.

 

•

Cash flow from operating activities for the first quarter 2012 was $13.4 billion. Excluding net working capital movements, cash flow from operating activities in the first quarter 2012 was $12.7 billion.

 

•

Capital investment for the first quarter 2012 was $7.0 billion. Net capital investment (see Note 1) for the quarter was $4.6 billion. Total dividends distributed in the quarter were $2.7 billion, of which $1.0 billion were settled under the Scrip Dividend Programme.

 

•

Gearing at the end of the first quarter 2012 was 9.9%.

 

•

A first quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depositary Share (ADS), an increase of 2.4% compared with the first quarter 2011 US dollar dividend.

SUMMARY OF UNAUDITED RESULTS

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011				%1
Income attributable to shareholders			8,719				6,500				8,780				-1
Current cost of supplies (CCS) adjustment for Downstream			(1,060	)			(41	)			(1,855	)
CCS earnings			7,659				6,459				6,925				+11
Less: Identified items2			380				1,613				637
CCS earnings excluding identified items			7,279				4,846				6,288				+16
Of which:
Upstream			6,253				5,107				4,638
Downstream			1,121				(278	)			1,653
Corporate and Non-controlling interest			(95	)			17				(3	)
Cash flow from operating activities			13,439				6,465				8,621				+56
Basic CCS earnings per share ($)			1.23				1.04				1.12				+10
Basic CCS earnings per ADS ($)			2.46				2.08				2.24
Basic CCS earnings per share excl. identified items ($)			1.17				0.78				1.02				+15
Basic CCS earnings per ADS excl. identified items ($)			2.34				1.56				2.04
Dividend per share ($)			0.43				0.42				0.42				+2
Dividend per ADS ($)			0.86				0.84				0.84

 

1	Q1 on Q1 change

2	See page 10

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 6

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¹ Production outlook at $80 per barrel oil price, after ~250 thousand boe/d of expected asset sales and licence expiries. Cash flow from operations outlook at $80-$100 per barrel Brent oil price and improved North American natural gas prices and downstream margins relative to 2011. Cash flow from operations excludes working capital movements.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 7

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FIRST QUARTER 2012 PORTFOLIO DEVELOPMENTS

Upstream

In Australia, first gas entered the 4.3 mtpa capacity Pluto LNG project (Shell indirect share 21%). The project is expected to produce some 140 thousand 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.

Shell continued to divest Upstream positions during the first quarter of 2012, with proceeds totalling some $2.1 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%), with divestment proceeds expected later in 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 quarter of 2012, Shell had a successful appraisal at the Appomattox discovery (Shell share 80%) in the Gulf of Mexico. This prospect is now believed to hold around 500 million boe of potential resources, doubling the previous estimates, with further upside potential.

As part of its global exploration programme, Shell spent some $0.6 billion on new acreage positions during the quarter, totalling some 77,000 square kilometres. New offshore positions include Nova Scotia in Canada, Malaysia, Tanzania, and United Kingdom North Sea as well as exploration rights in the Orange Basin, South Africa. Onshore positions were added in Albania, Argentina, Canada, China and the United States.

In April, Cove Energy Plc’s (“Cove Energy”) management has recommended Shell’s intended cash offer of £2.20 per share for the entire issued and to be issued share capital of Cove Energy. Cove Energy has a 8.5% stake in the Mozambique Rovuma Offshore Area 1 Block, a 10% stake in an onshore block in Mozambique and various stakes in 7 offshore blocks in Kenya. The offer values Cove Energy at some $1.8 bilion.

Downstream

Shell continued to divest Downstream positions during the first quarter of 2012 with proceeds totalling some $0.3 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 April, crude oil processing commenced at the Port Arthur refinery expansion project of Motiva Enterprises (Shell share 50%) in the United States. Following this expansion of 325 thousand barrels per day (“b/d”), total capacity of the Port Arthur refinery is some 600 thousand b/d, making it one of the largest refineries in the country.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 8

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KEY FEATURES OF THE FIRST QUARTER 2012

 

•

First quarter 2012 CCS earnings (see Note 1) were $7,659 million, 11% higher than in the same quarter a year ago.

 

•

First quarter 2012 CCS earnings excluding identified items (see page 10) were $7,279 million compared with $6,288 million in the first quarter 2011.

 

•

Basic CCS earnings per share increased by 10% versus the same quarter a year ago.

 

•

Basic CCS earnings per share excluding identified items increased by 15% versus the same quarter a year ago.

 

•

Cash flow from operating activities for the first quarter 2012 was $13.4 billion, compared with $8.6 billion in the same quarter last year. Excluding net working capital movements, cash flow from operating activities in the first quarter 2012 was $12.7 billion, compared with $13.1 billion in the same quarter last year.

 

•

Net capital investment (see Note 1) for the first quarter 2012 was $4.6 billion. Capital investment for the first quarter 2012 was $7.0 billion and proceeds from divestments were $2.4 billion.

 

•

Total dividends distributed in the first quarter 2012 were $2.7 billion of which $1.0 billion were settled by issuing some 27.5 million Class A shares under the Scrip Dividend Programme for the fourth quarter 2011.

 

•

Return on average capital employed (see Note 6) at the end of the first quarter 2012 on a reported income basis was 15.4%.

 

•

Gearing was 9.9% at the end of the first quarter 2012 versus 14.0% at the end of the first quarter 2011.

 

•

Oil and gas production for the first quarter 2012 was 3,552 thousand boe/d. Excluding the impact of divestments, exits and PSC price effects, first quarter 2012 production was 4% higher than in the same period last year.

 

•

LNG sales volumes of 5.17 million tonnes in the first quarter 2012 were 17% higher than in the same quarter a year ago.

 

•

Oil products sales volumes were 3% lower than in the first quarter 2011. Chemicals product sales volumes in the first quarter 2012 decreased by 7% compared with the same quarter a year ago.

 

•

Supplementary financial and operational disclosure for the first quarter 2012 is available at www.shell.com/investor.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 9

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SUMMARY OF IDENTIFIED ITEMS

Earnings in the first quarter 2012 reflected the following items, which in aggregate amounted to a net gain of $380 million reflecting divestment gains, which were partly offset by a tax provision, a charge related to a true-up of employee compensation and the fair value accounting for commodity derivatives (see Note 5), as summarised in the table below. Earnings in the first quarter 2011 included a net gain of $637 million.

 

•

Upstream earnings included a net gain of $453 million, mainly reflecting gains related to divestments. Earnings for the first quarter 2011 included a net gain of $1,120 million.

 

•

Downstream earnings included a net gain of $198 million, mainly reflecting gains related to divestments. Earnings for the first quarter 2011 included a net charge of $483 million.

 

•

Corporate and Non-controlling interest earnings included a net charge of $271 million, mainly reflecting a tax provision.

SUMMARY OF IDENTIFIED ITEMS

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011
Segment earnings impact of identified items:
Upstream			453				1,458				1,120
Downstream			198				34				(483	)
Corporate and Non-controlling interest			(271	)			121				—
Earnings impact			380				1,613				637

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 pages 11 to 13 and onwards.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 10

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EARNINGS BY BUSINESS SEGMENT

UPSTREAM

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011				%1
Upstream earnings excluding identified items			6,253				5,107				4,638				+35
Upstream earnings			6,706				6,565				5,758				+16
Upstream cash flow from operating activities			8,788				6,485				6,672				+32
Upstream net capital investment			3,772				7,363				1,727				+118
Liquids production available for sale (thousand b/d)			1,682				1,644				1,678				—
Natural gas production available for sale (million scf/d)			10,844				9,633				10,593				+2
Barrels of oil equivalent (thousand boe/d)			3,552				3,305				3,504				+1
LNG sales volumes (million tonnes)			5.17				4.84				4.42				+17

 

1	Q1 on Q1 change

First quarter Upstream earnings excluding identified items were $6,253 million compared with $4,638 million a year ago. Identified items were a net gain of $453 million, compared with a net gain of $1,120 million in the first quarter 2011 (see page 10).

Upstream earnings excluding identified items increased compared with the first quarter 2011. Earnings benefited from increased liquids sales volumes, mainly as a result of the ramp-up of Pearl GTL, and higher liquids realisations. Earnings also reflected increased LNG realisations, LNG sales volumes and trading contributions. These items were partly offset by higher depreciation, increased operating expenses and lower gas realisations in North America.

Global liquids realisations were 15% higher than in the first quarter 2011. Global natural gas realisations were 8% higher than in the same quarter a year ago. Natural gas realisations in the Americas decreased by 32%, whereas natural gas realisations outside the Americas increased by 20%.

First quarter 2012 production was 3,552 thousand boe/d compared with 3,504 thousand boe/d a year ago. Liquids production was in line and natural gas production increased by 2% compared with the first quarter 2011. Excluding the impact of divestments, exits and PSC price effects, first quarter 2012 production was 4% higher than in the same period last year.

New field start-ups and the continuing ramp-up of fields contributed some 290 thousand boe/d to production in the first quarter 2012, in particular from Pearl GTL and Qatargas 4 LNG in Qatar, which more than offset the impact of field declines.

LNG sales volumes of 5.17 million tonnes were 17% higher than in the same quarter a year ago, reflecting the contribution from the Qatargas 4 project as well as higher volumes from Nigeria LNG.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 11

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DOWNSTREAM

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011				%1
Downstream CCS earnings excluding identified items			1,121				(278	)			1,653				-32
Downstream CCS earnings			1,319				(244	)			1,170				+13
Downstream cash flow from operating activities			3,208				324				451				+611
Downstream net capital investment			786				2,362				(118	)			—
Refinery processing intake (thousand boe/d)			2,782				2,666				3,030				-8
Oil products sales volumes (thousand b/d)			5,960				6,155				6,167				-3
Chemicals sales volumes (thousand tonnes)			4,679				4,440				5,010				-7

 

1	Q1 on Q1 change

First quarter Downstream earnings excluding identified items were $1,121 million compared with $1,653 million in the first quarter 2011. Identified items were a net gain of $198 million, compared with a net charge of $483 million in the first quarter 2011 (see page 10).

Downstream earnings excluding identified items decreased compared with the first quarter 2011. Earnings benefited from the Raízen joint venture in Brazil and lower operating expenses. These items were more than offset by lower realised refining margins, reflecting the weaker global refining environment, and lower marketing contributions mainly as a result of a reduced portfolio following divestments. Chemicals earnings were in line with the first quarter 2011.

Oil products sales volumes decreased by 3% compared with the same period a year ago, mainly as a result of portfolio divestments. Excluding the impact of divestments and the effects of the formation of the Raízen joint venture, totalling some 190 thousand b/d, sales volumes were in line with the same period last year.

Chemicals sales volumes decreased by 7% compared with the same quarter last year, mainly due to reductions in European capacity and rationalisation of the contract portfolio. Chemicals manufacturing plant availability increased to 94% compared with 92% in the first quarter 2011.

Refinery intake volumes decreased by 8% compared with the first quarter 2011. Excluding portfolio impacts, refinery intake volumes were 1% lower than in the same period a year ago. Refinery availability increased to 94% compared with 92% in the first quarter 2011.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 12

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CORPORATE AND NON-CONTROLLING INTEREST

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011
Corporate and Non-controlling interest excluding identified items			(95	)			17				(3	)
Of which:
Corporate			(30	)			24				99
Non-controlling interest			(65	)			(7	)			(102	)
Corporate and Non-controlling interest			(366	)			138				(3	)

First quarter Corporate results and Non-controlling interest excluding identified items were a loss of $95 million, compared with a loss of $3 million in the same period last year. Identified items in the first quarter of 2012 were a net charge of $271 million (see page 10).

Corporate results excluding identified items decreased compared with the first quarter 2011. Results mainly reflected increased net interest expense which was partly offset by currency exchange gains.

FORTHCOMING EVENTS

Second quarter 2012 results and second quarter 2012 dividend are scheduled to be announced on July 26, 2012. Third quarter 2012 results and third quarter 2012 dividend are scheduled to be announced on November 1, 2012. The Annual General Meeting will be held on May 22, 2012.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 13

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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

CONSOLIDATED STATEMENT OF INCOME

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011				%1
Revenue			119,920				115,575				109,923
Share of profit of equity-accounted investments			2,940				2,233				2,337
Interest and other income			914				1,320				2,582
Total revenue and other income			123,774				119,128				114,842
Purchases			94,069				91,865				84,810
Production and manufacturing expenses			6,049				6,993				5,913
Selling, distribution and administrative expenses			3,689				3,706				3,364
Research and development			295				404				219
Exploration			362				825				401
Depreciation, depletion and amortisation			3,402				3,243				3,317
Interest expense			552				287				395
Income before taxation			15,356				11,805				16,423				-6
Taxation			6,522				5,337				7,498
Income for the period			8,834				6,468				8,925				-1
Income attributable to non-controlling interest			115				(32	)			145
Income attributable to Royal Dutch Shell plc shareholders			8,719				6,500				8,780				-1

EARNINGS PER SHARE

 

$		Quarters
		Q1 2012				Q4 2011				Q1 2011
Basic earnings per share			1.40				1.04				1.42
Diluted earnings per share			1.40				1.04				1.42

SHARES²

 

Millions		Quarters
		Q1 2012				Q4 2011				Q1 2011
Weighted average number of shares as the basis for:
Basic earnings per share			6,229.4				6,231.3				6,163.3
Diluted earnings per share			6,239.1				6,241.0				6,174.0
Shares outstanding at the end of the period			6,273.8				6,220.1				6,207.4

 

1	Q1 on Q1 change.

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 14

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011
Income for the period			8,834				6,468				8,925
Other comprehensive income, net of tax:
Currency translation differences			1,885				(1,310	)			2,134
Unrealised gains/(losses) on securities			(105	)			1,671				(19	)
Cash flow hedging gains/(losses)			(450	)			(133	)			22
Share of other comprehensive income/(loss) of equity-accounted investments			(109	)			(39	)			99
Other comprehensive income for the period			1,221				189				2,236
Comprehensive income for the period			10,055				6,657				11,161
Comprehensive income/(loss) attributable to non-controlling interest			158				(603	)			173
Comprehensive income attributable to Royal Dutch Shell plc shareholders			9,897				7,260				10,988

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			—				—				1,178				8,719				9,897				158				10,055
Capital contributions from and other changes in non-controlling interest			—				—				—				48				48				(75)				(27)
Dividends paid			—				—				—				(2,670)				(2,670)				(24)				(2,694)
Scrip dividends1			3				—				(3)				999				999				—				999
Repurchases of shares2			—				—				—				(627)				(627)				—				(627)
Shares held in trust: net sales/ (purchases) and dividends received			—				1,013				—				44				1,057				—				1,057
Share-based compensation			—				—				(135)				(439)				(574)				—				(574)
At March 31, 2012			539				(1,977)				10,024				169,061				177,647				1,545				179,192

 

1	During the first quarter of 2012 some 27.5 million Class A shares, equivalent to $1.0 billion, were issued under the Scrip Dividend Programme.

2	Includes shares committed to repurchase and repurchases subject to settlement at March 31, 2012.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 15

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		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			—				—				2,208				8,780				10,988				173				11,161
Capital contributions from and other changes in non-controlling interest			—				—				—				—				—				9				9
Dividends paid			—				—				—				(2,626	)			(2,626	)			(71	)			(2,697	)
Scrip dividends1			3				—				(3	)			1,068				1,068				—				1,068
Shares held in trust: net sales/ (purchases) and dividends received			—				603				—				42				645				—				645
Share-based compensation			—				—				(307	)			24				(283	)			—				(283	)
At March 31, 2011			532				(2,186	)			11,992				147,467				157,805				1,878				159,683

 

1	During the first quarter 2011 some 31.1 million Class A shares, equivalent to $1.1 billion, were issued under the Scrip Dividend Programme.

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

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CONDENSED CONSOLIDATED BALANCE SHEET

 

		$ million
		March 31, 2012				Dec 31, 2011				March 31, 2011
Assets
Non-current assets:
Intangible assets			4,545				4,521				4,725
Property, plant and equipment			155,239				152,081				144,835
Equity-accounted investments			39,534				37,990				35,558
Investments in securities			5,454				5,492				3,971
Deferred tax			4,666				4,732				5,661
Prepaid pension costs			11,816				11,408				10,874
Trade and other receivables			10,061				9,256				9,360
			231,315				225,480				214,984
Current assets:
Inventories			34,163				28,976				33,632
Trade and other receivables			78,798				79,509				78,103
Cash and cash equivalents			15,024				11,292				16,608
			127,985				119,777				128,343
Total assets			359,300				345,257				343,327
Liabilities
Non-current liabilities:
Debt			29,116				30,463				31,788
Trade and other payables			4,542				4,921				4,417
Deferred tax			15,887				14,649				15,573
Retirement benefit obligations			6,064				5,931				6,105
Decommissioning and other provisions			16,010				15,631				14,321
			71,619				71,595				72,204
Current liabilities:
Debt			5,657				6,712				10,839
Trade and other payables			85,360				81,846				82,270
Taxes payable			14,113				10,606				14,794
Retirement benefit obligations			408				387				393
Decommissioning and other provisions			2,951				3,108				3,144
			108,489				102,659				111,440
Total liabilities			180,108				174,254				183,644
Equity attributable to Royal Dutch Shell plc shareholders			177,647				169,517				157,805
Non-controlling interest			1,545				1,486				1,878
Total equity			179,192				171,003				159,683
Total liabilities and equity			359,300				345,257				343,327

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

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CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 

$ million		Quarters
		Q1 2012				Q4 2011				Q1 2011
Cash flow from operating activities
Income for the period			8,834				6,468				8,925
Adjustment for:
- Current taxation			5,479				5,816				5,901
- Interest expense (net)			499				275				356
- Depreciation, depletion and amortisation			3,402				3,243				3,316
- Net (gains)/losses on sale of assets			(524	)			(1,150	)			(2,192	)
- Decrease/(increase) in net working capital			770				(688	)			(4,511	)
- Share of profit of equity-accounted investments			(2,940	)			(2,233	)			(2,337	)
- Dividends received from equity-accounted investments			2,582				3,196				1,523
- Deferred taxation and decommissioning and other provisions			971				(159	)			1,578
- Other			(408	)			(550	)			213
Net cash from operating activities (pre-tax)			18,665				14,218				12,772
Taxation paid			(5,226	)			(7,753	)			(4,151	)
Net cash from operating activities			13,439				6,465				8,621
Cash flow from investing activities
Capital expenditure			(6,456	)			(9,914	)			(4,146	)
Investments in equity-accounted investments			(1,298	)			(315	)			(703	)
Proceeds from sales of assets			2,372				1,175				3,111
Proceeds from sales of equity-accounted investments			57				43				53
Proceeds from sales/(purchases) of securities (net)			(40	)			83				1
Interest received			48				11				37
Net cash used in investing activities			(5,317	)			(8,917	)			(1,647	)
Cash flow from financing activities
Net (decrease)/increase in debt with maturity period within three months			(453	)			(841	)			(2,637	)
Other debt: New borrowings			610				5				481
Repayments			(2,967	)			(585	)			(236	)
Interest paid			(454	)			(470	)			(500	)
Change in non-controlling interest			10				11				9
Cash dividends paid to:
- Royal Dutch Shell plc shareholders			(1,671	)			(1,688	)			(1,558	)
- Non-controlling interest			(24	)			(64	)			(71	)
Repurchases of shares			—				(289	)			—
Shares held in trust: net sales/(purchases) and dividends received			205				(1,342	)			144
Net cash used in financing activities			(4,744	)			(5,263	)			(4,368	)
Currency translation differences relating to cash and cash equivalents			354				(249	)			558
Increase/(decrease) in cash and cash equivalents			3,732				(7,964	)			3,164
Cash and cash equivalents at beginning of period			11,292				19,256				13,444
Cash and cash equivalents at end of period			15,024				11,292				16,608

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

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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 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 U.S. Securities and Exchange Commission.

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, 2011 were published in Shell’s Annual Report and 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 current cost of supplies during the same period after making allowance for the tax effect. CCS earnings therefore exclude the effect of changes in the oil price on inventory carrying amounts. 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 expense 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

 

$ million		Quarters
		Q1 2012				Q1 2011
Third-party revenue
Upstream			11,990				9,652
Downstream			107,918				100,259
Corporate			12				12
Total third-party revenue			119,920				109,923
Inter-segment revenue
Upstream			13,451				11,998
Downstream			212				180
Corporate			—				—
Segment earnings
Upstream			6,706				5,758
Downstream			1,319				1,170
Corporate			(264	)			99
Total segment earnings			7,761				7,027

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 19

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$ million		Quarters
		Q1 2012				Q1 2011
Total segment earnings			7,761				7,027
Current cost of supplies adjustment:
Purchases			1,195				2,223
Taxation			(342	)			(633	)
Share of profit of equity-accounted investments			220				308
Income for the period			8,834				8,925

3. Share capital

Issued and fully paid

 

		Ordinary shares of €0.07 each								Sterling deferred shares of £1 each
Number of shares		Class A				Class B
At January 1, 2012			3,668,550,437				2,661,403,172				50,000
Scrip dividends			27,498,073				—				—
At March 31, 2012			3,696,048,510				2,661,403,172				50,000

Nominal value

 

$ million		Class A				Class B				Total
At January 1, 2012			312				224				536
Scrip dividends			3				—				3
At March 31, 2012			315				224				539
The total nominal value of sterling deferred shares is less than $1 million.

At Royal Dutch Shell’s Annual General Meeting on May 17, 2011, the Board was authorised to allot shares and grant rights to subscribe for or convert any securities into shares of Royal Dutch Shell plc up to a total nominal amount of €146 million (representing 2,086 million ordinary shares of €0.07 each). 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 in a General Meeting of Shareholders.

4. Other reserves

 

$ million		Merger reserve1				Share premium reserve1				Capital redemption reserve2				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			—				—				—				—				1,178				1,178
Scrip dividends			(3	)			—				—				—				—				(3	)
Share-based compensation			—				—				—				(135	)			—				(135	)
At March 31, 2012			3,429				154				60				1,436				4,945				10,024
At January 1, 2011			3,442				154				57				1,483				4,958				10,094
Other comprehensive income attributable to Royal Dutch Shell plc shareholders			—				—				—				—				2,208				2,208
Scrip dividends			(3	)			—				—				—				—				(3	)
Share-based compensation			—				—				—				(307	)			—				(307	)
At March 31, 2011			3,439				154				57				1,176				7,166				11,992

 

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 20

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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 (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.

LIQUIDITY AND CAPITAL RESOURCES

Net cash from operating activities in the first quarter 2012 was $13.4 billion compared with $8.6 billion for the same period last year.

Total current and non-current debt decreased to $34.8 billion at March 31, 2012 from $42.6 billion at March 31, 2011 while cash and cash equivalents decreased to $15.0 billion at March 31, 2012 from $16.6 billion at March 31, 2011. No new debt was issued under the US shelf registration programme or under the euro medium-term note programme during the first quarter of 2012.

Net capital investment in the first quarter 2012 was $4.6 billion, of which $3.8 billion was invested in Upstream and $0.8 billion in Downstream. Net capital investment in the same period of 2011 was $1.7 billion, of which $1.7 billion was invested in Upstream and $0.1 billion in Corporate whereas there were net receipts in Downstream of $0.1 billion.

Dividends of $0.43 per share are announced on April 26, 2012 in respect of the first quarter. These dividends are payable on June 21, 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.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 21

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APPENDIX

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
		Three months ended
		March 31, 2012				March 31, 2011
Net capital investment:
Upstream			3,772				1,727
Downstream			786				(118	)
Corporate			46				96
Total			4,604				1,705
Proceeds from divestments			2,389				3,165
Capital investment			6,993				4,870
Exploration expenses excluding exploration wells written off			(331	)			(290	)
Investments in equity-accounted investments			(1,298	)			(703	)
Leases and other items			1,092				269
Capital expenditure			6,456				4,146

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
		March 31, 2012				March 31, 2011
Income for current and previous three quarters			31,094				23,834
Interest expense after tax			872				644
Income before interest expense			31,966				24,478
Capital employed—opening			202,310				177,048
Capital employed—closing			213,965				202,310
Capital employed—average			208,138				189,679
ROACE			15.4	%			12.9	%

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 March 31, 2012. The measurement period for the shares granted is three years.

 

PSPs

Class A shares

Class B shares

Class A ADSs

Outstanding at March 31, 2012 (thousands)

27,299

10,507

8,599

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 22

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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.

The following table presents the number of shares and ADSs in the Company under option as at March 31, 2012, and the range of expiration dates.

 

Share option plans

Class A shares

Class B shares

Class A ADSs

Under option at March 31, 2012 (thousands)

23,900

6,264

5,587

Range of expiration dates

May 2012 – Aug 2016

May 2012 – Nov 2014

May 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 three months ended March 31, 2012, the consolidated unaudited ratio of earnings to fixed charges of Shell. With effect from 2011, accretion expense is excluded from interest expensed and fixed charges. The comparative annual information is presented consistently.

 

		Three months ended March  31,				$ million Years ending December 31,
			2012				2011				2010				2009				2008				2007
Pre-tax income from continuing operations before income from equity investees			12,416				46,923				29,391				16,044				43,374				42,342
Total fixed charges1			550				1,608				1,684				1,669				2,009				1,840
Distributed income from equity investees			2,582				9,681				6,519				4,903				9,325				6,955
Less: interest capitalised			150				674				969				1,088				870				667
Total earnings			15,398				57,538				36,625				21,528				53,838				50,470
Interest expensed and capitalised1			487				1,209				1,218				902				1,371				1,235
Interest within rental expense			63				399				466				767				638				605
Total fixed charges			550				1,608				1,684				1,669				2,009				1,840
Ratio earnings/fixed charges			28.00				35.78				21.75				12.90				26.80				27.43

 

1	With effect from 2011, accretion expense is excluded from interest expensed and fixed charges. Comparative information is presented consistently.

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 March 31, 2012. This information is derived from the Condensed Consolidated Interim Financial Statements.

 

		$ million
		March 31, 2012
Equity attributable to Royal Dutch Shell plc shareholders			177,647
Current debt[A]			5,657
Non-current debt[A]			29,116
Total debt[B] [C]			34,773
Total capitalisation			212,420

 

[A]	Includes a combined total of $2.2 billion of certain tolling commitments.

[B]	Of total debt, $30.1 billion was unsecured and $4.7 billion was secured.

[C]

Includes, as at March 31, 2012, $26.2 billion of debt 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 (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 March 31, 2012, Shell also had outstanding guarantees of $3.4 billion, of which $2.2 billion related to debt of equity-accounted investments.

 

		Royal Dutch Shell plc Unaudited Condensed Interim Financial     Report 23