ROYAL DUTCH SHELL PLC
1ST QUARTER 2016 UNAUDITED RESULTS
- Following completion of the acquisition on February 15, 2016, BG Group plc (“BG”) has been
consolidated within Royal Dutch Shell’s results. For practical
purposes, this includes February and March
2016, as the impact for the first half of February is deemed
immaterial.
- Royal Dutch Shell’s first quarter 2016 CCS earnings
attributable to shareholders (see Note 3) were $0.8 billion compared with $4.8 billion for the same quarter a year
ago.
- First quarter 2016 CCS earnings attributable to shareholders
excluding identified items (see page 6) were $1.6 billion compared with $3.7 billion for the first quarter 2015, a
decrease of 58%.
- Compared with the first quarter 2015, CCS earnings attributable
to shareholders excluding identified items were impacted by the
decline in oil, gas and LNG prices and weaker refining industry
conditions. Earnings benefited from lower operating expenses, as
steps taken by Shell to reduce costs more than offset the increase
in operating expenses associated with BG.
- First quarter 2016 basic CCS earnings per share excluding
identified items decreased by 63% versus the first quarter
2015.
- Cash flow from operating activities for the first quarter 2016
was $0.7 billion, which included
negative working capital movements of $3.9
billion.
- Total dividends distributed to shareholders in the quarter were
$3.7 billion, of which $1.5 billion were settled by issuing 65.7 million
A shares under the Scrip Dividend Programme.
- Gearing at the end of the first quarter 2016 was 26.1% versus
12.4% at the end of the first quarter 2015. This increase mainly
reflects the impact of the acquisition of BG.
- A first quarter 2016 dividend has been announced of
$0.47 per ordinary share and
$0.94 per American Depositary Share
(“ADS”).
|
SUMMARY OF
UNAUDITED RESULTS |
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
%1 |
Income attributable to
shareholders |
484 |
939 |
4,430 |
-89 |
Current cost of
supplies (CCS) adjustment for Downstream2 |
330 |
901 |
331 |
|
CCS earnings
attributable to shareholders |
814 |
1,840 |
4,761 |
-83 |
Identified
items2,3 |
(739) |
268 |
1,023 |
|
CCS earnings
attributable to shareholders excluding identified items |
1,553 |
1,572 |
3,738 |
-58 |
Of which: |
|
|
|
|
Integrated Gas |
994 |
1,245 |
1,491 |
|
Upstream |
(1,437) |
(1,009) |
(195) |
|
Downstream |
2,010 |
1,524 |
2,646 |
|
Corporate and
Non-controlling interest |
(14) |
(188) |
(204) |
|
Cash flow from
operating activities |
661 |
5,423 |
7,106 |
-91 |
Basic CCS earnings per
share ($) |
0.11 |
0.29 |
0.76 |
-86 |
Basic CCS earnings per
ADS ($) |
0.22 |
0.58 |
1.52 |
|
Basic CCS earnings per
share excl. identified items3 ($) |
0.22 |
0.25 |
0.59 |
-63 |
Basic CCS earnings per
ADS excl. identified items3 ($) |
0.44 |
0.50 |
1.18 |
|
Dividend per share
($) |
0.47 |
0.47 |
0.47 |
- |
Dividend per ADS
($) |
0.94 |
0.94 |
0.94 |
- |
- Q1 on Q1 change
- Attributable to shareholders
- See page 6. Comparative information has been restated.
|
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
“Shell's integrated activities differentiate us, with our
Downstream and Integrated Gas businesses delivering strong results
and underpinning our financial performance despite continued low
oil and gas prices.
We continue to reduce our spending levels, to capture cost
opportunities and manage the financial framework in today’s lower
oil price environment. The combination with BG is off to a strong
start, as a result of detailed forward planning before the
completion of the transaction. This will likely result in
accelerated delivery of the synergies from the acquisition, and at
a lower cost than we originally set out.
Putting all of this together, capital investment in 2016 is
clearly trending toward $30 billion,
compared to previous guidance of $33
billion, and some 36% lower than combined Shell and BG
investment in 2014.
Annual operating expenses excluding identified items are
trending towards a run rate of $40
billion compared with 2014 combined spend of around
$53 billion.
In practice, we expect to absorb BG’s capital investment and
operating expenses during 2016, with no net increase overall,
compared with Shell stand alone in 2015.
We will continue to manage spend, through dynamic
decision-making across the organisation, taking advantage of
opportunities from both the deflating market and the two companies
coming together.
The completion of the BG deal has reinforced our strategy and
strength against the backdrop of hugely challenging times for our
industry. For Shell and our shareholders, this is a unique
opportunity to reshape and simplify the company.”
|
SUMMARY OF
CCS EARNINGS EXCLUDING IDENTIFIED ITEMS |
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
%1 |
CCS earnings
attributable to shareholders |
814 |
1,840 |
4,761 |
-83 |
Of which: |
|
|
|
|
Integrated Gas |
905 |
1,125 |
1,139 |
-21 |
Upstream |
(1,350) |
(1,458) |
1,400 |
-196 |
Downstream |
1,700 |
2,502 |
2,514 |
-32 |
Oil
Products |
1,294 |
2,324 |
2,114 |
-39 |
Chemicals |
406 |
178 |
400 |
+2 |
Corporate and
Non-controlling interest |
(441) |
(329) |
(292) |
-51 |
Identified
items2 |
(739) |
268 |
1,023 |
|
Of which: |
|
|
|
|
Integrated Gas |
(89) |
(120) |
(352) |
|
Upstream |
87 |
(449) |
1,595 |
|
Downstream |
(310) |
978 |
(132) |
|
Oil
Products |
(339) |
982 |
(123) |
|
Chemicals |
29 |
(4) |
(9) |
|
Corporate and
Non-controlling interest |
(427) |
(141) |
(88) |
|
CCS earnings
attributable to shareholders excluding identified items |
1,553 |
1,572 |
3,738 |
-58 |
Of which: |
|
|
|
|
Integrated Gas |
994 |
1,245 |
1,491 |
-33 |
Upstream |
(1,437) |
(1,009) |
(195) |
-637 |
Downstream |
2,010 |
1,524 |
2,646 |
-24 |
Oil
Products |
1,633 |
1,342 |
2,237 |
-27 |
Chemicals |
377 |
182 |
409 |
-8 |
Corporate and
Non-controlling interest |
(14) |
(188) |
(204) |
+93 |
- Q1 on Q1 change
- See page 6. Comparative information has been restated.
|
FIRST QUARTER 2016 PORTFOLIO DEVELOPMENTS
During the quarter, Shell completed the acquisition of BG for a
purchase consideration of $54,034
million. This includes cash of $19,036 million, and the fair value ($34,050 million) of 1,523.8 million shares issued
in exchange for all BG shares. Following completion of the
acquisition on February 15, 2016, BG
was consolidated within Shell’s results. For practical purposes,
this includes February and March
2016, as the impact for the first half of February is deemed
immaterial.
The consolidation of BG resulted in an increase to first quarter
2016 cash flow from operating activities of $0.8 billion and an increase to CCS earnings
attributable to shareholders excluding identified items of
$0.2 billion.
Goodwill of $9,024 million was
recognised on the acquisition, being the excess of the purchase
consideration over the fair value of net assets acquired (see Note
2).
Shell completed the United
Kingdom office footprint review announced during the final
stages of the BG combination. The outcomes of the review are
subject to appropriate engagement with employees and employee
representatives. The review recommended a consolidation of all
Shell’s London and South East
based operations into Central
London with the intention to close the Thames Valley Park
office in Reading by the end of 2016. The review also recommended
that all Aberdeen-based onshore
operations move to the Shell Aberdeen Tullos office, with BG’s
offices at Albyn Place closing by 2016 and the closure of Shell’s
Brabazon House office in Manchester by the end of 2017.
Integrated Gas
During the quarter, first LNG production was achieved at the
non-operated Gorgon project (Shell interest 25%) on Barrow Island,
offshore Australia. Subsequent to
first LNG cargo delivery, LNG production was temporarily halted due
to mechanical issues with the propane refrigerant compressor on
Train 1.
In Australia, the Browse Joint
Venture participants (Shell interest 27%) decided not to progress
with the development concept being studied for the resource as it
did not meet commercial requirements for a positive final
investment decision (“FID”), considering the current economic and
market environment.
In Indonesia, INPEX as operator
of the Abadi field (Shell interest 35%) received a notification
from the Indonesian government authorities instructing to
re-propose a plan of development based on onshore LNG for the Abadi
LNG project. Shell and INPEX remain committed to work together with
the Government of Indonesia to
ensure that the Abadi project moves forward to optimally develop
the Abadi gas reserves in a manner that benefits all.
Upstream
In Brazil, Shell announced the
start of oil production from the third phase of the deep-water
Parque das Conchas BC-10 development (Shell interest 50%) in the
Campos basin.
Also in Brazil, the seventh
non-operated FPSO, Cidade de Marciá, (Shell interest 25%) reached
first oil in the BM-S-11 block of the Santos Basin, offshore
Brazil. The FPSO has a production
capacity of 150 thousand barrels per day.
Shell announced that it has decided to exit the joint
development of the Bab sour gas reservoirs (Shell interest 40%)
with ADNOC in the emirate of Abu Dhabi,
United Arab Emirates, and to stop further joint work on the
project. This reflects the economic climate prevailing in the
energy industry.
In the United Kingdom, Shell
has agreed to sell its 7.59% interest in the Maclure oil and gas
field in the North Sea for a purchase consideration of some
$24 million. Completion is subject to
necessary approvals.
Shell had continued success in its exploration programme with 10
discoveries and appraisals in Brunei, Egypt, Malaysia, Nigeria, Oman, and the United
States. This included a notable oil discovery in
the United States with the
non-operated Kepler North well (Shell interest 50%) in the
Gulf of Mexico, and a notable gas
discovery with the non-operated Jerun-1 well (Shell interest 30%)
in Malaysia.
Upstream divestments totalled some $38
million for the first quarter 2016 and reflected, among
others, the first tranche of the sale proceeds of the Anasuria
development in the North Sea.
Downstream
During the quarter, Shell announced a conditional agreement for
the sale of its 51% shareholding in the Shell Refining Company in
Malaysia for $66 million. The transaction is expected to
complete in 2016, subject to regulatory approval.
In the United States, Shell
announced that it has signed a non-binding Letter of Intent to
divide the assets of Motiva Enterprises LLC. The Motiva joint
venture was formed in 1998 and has operated as a 50/50 refining and
marketing joint venture between Saudi Arabian Oil Company and Shell
since 2002. In the proposed division of assets, Shell will assume
sole ownership of the Norco,
Louisiana refinery (where Shell operates a chemicals plant),
the Convent, Louisiana refinery,
nine distribution terminals, and Shell branded markets in
Florida, Louisiana, and the Northeastern region. Saudi
Refining Inc. will retain the Motiva name, assume sole ownership of
the Port Arthur refinery in
Texas, retain 26 distribution
terminals, and have an exclusive license to use the Shell brand for
gasoline and diesel sales in Texas, and in the majority of the Mississippi
Valley, the Southeast and Mid-Atlantic markets.
Also in the United States,
Shell completed the sale of an additional 4.66% interest in Shell
Midstream Partners, L.P. to public investors via the issuance of an
additional 13,400,000 LP units for net proceeds of $421 million.
Shell announced FID on a project to expand China National
Offshore Oil Corporation (“CNOOC”) and Shell Petrochemical
Company’s (“CSPC”) existing 50/50 joint venture in Huizhou, Guangdong
Province, China. Subject to
regulatory approvals, Shell and CNOOC have agreed that CSPC will
take over CNOOC’s ongoing project to build additional chemical
facilities next to CSPC’s petrochemical complex. The project
includes the ongoing construction of a new ethylene cracker and
ethylene derivatives units, which will increase ethylene capacity
by more than 1 million tonnes per year, about double the current
capacity. It will also include a styrene monomer and propylene
oxide plant.
In May, Shell announced that it completed the sale of Dansk
Fuels in Denmark for a
consideration of $0.3 billion. Dansk
Fuels comprises retail, commercial fuels, commercial fleet and
aviation businesses, and products trading and supply activities
associated with those businesses.
KEY FEATURES OF THE FIRST QUARTER 2016
- First quarter 2016 CCS earnings attributable to shareholders
(see Note 3) were $814 million, 83%
lower than for the same quarter a year ago.
- First quarter 2016 CCS earnings attributable to shareholders
excluding identified items (see page 6) were $1,553 million compared with $3,738 million for the first quarter 2015, a
decrease of 58%.
- Basic CCS earnings per share for the first quarter 2016
decreased by 86% versus the same quarter a year ago.
- Basic CCS earnings per share excluding identified items for the
first quarter 2016 decreased by 63% versus the same quarter a year
ago.
- Cash flow from operating activities for the first quarter 2016
was $0.7 billion, compared with
$7.1 billion for the same quarter
last year.
- Capital investment (see Definition B) for the first quarter
2016 was $59.0 billion, this included
$52.9 billion related to the
acquisition of BG. Organic capital investment for the full year
2016 is trending towards $30 billion,
compared with combined capital investment of $47 billion in 2014, and a further reduction of
$3 billion from earlier guidance in
2016.
- Divestments (see Definition C) for the first quarter 2016 were
$0.5 billion.
- Operating expenses (see Definition F) for the first quarter
2016 increased by $0.3 billion versus
the same quarter a year ago. Compared with the first quarter 2015,
operating expenses excluding identified items reduced by
$0.7 billion, before the increase of
$0.6 billion due to the consolidation
of BG. Operating expenses for the full year 2016 are trending
towards a run rate of $40 billion,
compared with 2014 combined spending of $53
billion.
- Total dividends distributed to shareholders in the first
quarter 2016 were $3.7 billion, of
which $1.5 billion were settled by
issuing 65.7 million A shares under the Scrip Dividend
Programme.
- Return on average capital employed on a reported income basis
(see Definition D) was negative 0.4% at the end of the first
quarter 2016 compared with 7.1% at the end of the first quarter
2015. Return on average capital employed on a CCS basis excluding
identified items was 3.8% at the end of the first quarter 2016
compared with 8.9% at the end of the first quarter 2015.
- Gearing (see Definition E) was 26.1% at the end of the first
quarter 2016 versus 12.4% at the end of the first quarter 2015.
This increase mainly reflects the impact of the BG acquisition
including 1.6% related to the recognition of associated finance
leases.
- Oil and gas production for the first quarter 2016 was 3,661
thousand boe/d, an increase of 16% compared with the first quarter
2015. The impact of BG on the first quarter 2016 production was an
increase of 522 thousand boe/d. This reflects Shell’s ownership of
BG since acquisition date averaged over the full quarter. Excluding
the impact of divestments, curtailment and underground storage
utilisation at NAM in the
Netherlands, a Malaysia PSC expiry, PSC price effects, and
security impacts in Nigeria, first
quarter 2016 production increased by 19% compared with the same
period last year. BG assets produced some 796 thousand boe/d in the
first quarter 2016, an increase of around 25% compared with the
first quarter 2015 and around 31% compared with the full year
2014.
- LNG liquefaction volumes of 7.04 million tonnes for the first
quarter 2016 were 14% higher than for the same quarter a year ago,
of which BG contributed some 1.58 million tonnes.
- LNG sales volumes of 12.29 million tonnes for the first quarter
2016 were 25% higher than for the same quarter a year ago, mainly
reflecting the impact of the acquisition of BG.
- Oil products sales volumes for the first quarter 2016 were 1%
lower than for the first quarter 2015.
- Chemicals sales volumes for the first quarter 2016 decreased by
3% compared with the same quarter a year ago.
- Supplementary financial and operational disclosure for the
first quarter 2015 is available at www.shell.com/investor.
SUMMARY OF IDENTIFIED ITEMS
With effect from 2016, identified items include the impact of
exchange rate movements on certain deferred tax balances, as set
out in Definition A. The comparative information in this Report has
been restated following this change.
CCS earnings attributable to shareholders for the first quarter
2016 reflected the following items, which in aggregate amounted to
a net charge of $739 million
(compared with a net gain of $1,023
million for the first quarter 2015), as summarised
below:
- Integrated Gas earnings included a net charge of $89 million, primarily reflecting a gain of some
$400 million related to the impact of
the strengthening Australian dollar on a deferred tax position,
offset by a net charge on fair value accounting of certain
commodity derivatives and gas contracts of some $170 million, asset impairments of some
$130 million, and other items
including a litigation provision. Integrated Gas earnings for the
first quarter 2015 included a net charge of $352 million.
- Upstream earnings included a net gain of $87 million, primarily reflecting a gain of some
$360 million related to the impact of
the strengthening Brazilian real on a deferred tax position, partly
offset by asset impairments of some $300
million. Upstream earnings for the first quarter 2015
included a net gain of $1,595
million.
- Downstream earnings included a net charge of $310 million, primarily reflecting the net impact
of fair value accounting of commodity derivatives of some
$240 million and impairments of some
$190 million, partly offset by gains
on divestments of some $130 million.
Downstream earnings for the first quarter 2015 included a net
charge of $132 million.
- Corporate results and Non-controlling interest included a net
charge of $427 million, mainly
reflecting a charge of $266 million
related to the payment of stamp duty in the United Kingdom for the acquisition of BG, and
a charge of some $190 million related
to the impact of the strengthening Brazilian real on deferred tax
positions related to financing of the Upstream business, partly
offset by $100 million for the
non-controlling interest share of an impairment of a Downstream
asset. Earnings for the first quarter 2015 included a net charge of
$88 million.
EARNINGS BY SEGMENT
|
INTEGRATED
GAS |
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
%1 |
Integrated Gas
earnings excluding identified items |
994 |
1,245 |
1,491 |
-33 |
Integrated Gas
earnings |
905 |
1,125 |
1,139 |
-21 |
Integrated Gas cash
flow from operating activities |
2,657 |
1,929 |
2,534 |
+5 |
Integrated Gas capital
investment excluding BG acquisition impact |
1,051 |
1,357 |
1,301 |
-19 |
Integrated Gas
BG-related capital investment |
21,773 |
- |
- |
|
Liquids production
available for sale (thousand b/d) |
224 |
201 |
201 |
+11 |
Natural gas production
available for sale (million scf/d) |
3,532 |
2,486 |
2,447 |
+44 |
Total production
available for sale (thousand boe/d) |
833 |
633 |
622 |
+34 |
LNG liquefaction
volumes (million tonnes) |
7.04 |
5.68 |
6.17 |
+14 |
LNG sales volumes
(million tonnes) |
12.29 |
10.14 |
9.81 |
+25 |
- Q1 on Q1 change
|
First quarter Integrated Gas earnings excluding identified items
were $994 million compared with
$1,491 million a year ago. Identified
items were a net charge of $89
million, compared with a net charge of $352 million for the first quarter 2015 (see page
6).
Compared with the first quarter 2015, earnings excluding
identified items were impacted by the decline in oil and gas
prices, and LNG price, and the Malaysia LNG Dua JVA expiry. This
was partly offset by the contribution from BG, increased
contributions from trading and lower well write-offs.
Integrated Gas cash flow from operating activities was
$2,657 million, which included
positive working capital movements of $1,628
million. The working capital movement mainly reflects an
inter-segment allocation which had a nil impact on a consolidated
basis.
First quarter 2016 production was 833 thousand boe/d compared
with 622 thousand boe/d a year ago. Liquids production was 11%
higher in than the same period a year ago and natural gas
production increased by 44% compared with the first quarter
2015.
LNG liquefaction volumes of 7.04 million tonnes increased by 14%
compared with the same quarter a year ago, mainly reflecting the
impact of the acquisition of BG, including an increase associated
with the ramp-up of Queensland Curtis LNG in Australia, partly offset by the expiry of the
Malaysia LNG Dua JVA.
LNG sales volumes of 12.29 million tonnes increased by 25%
compared with the same quarter a year ago, mainly reflecting the
impact of the acquisition of BG.
|
UPSTREAM |
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
%1 |
Upstream earnings
excluding identified items |
(1,437) |
(1,009) |
(195) |
-637 |
Upstream earnings |
(1,350) |
(1,458) |
1,400 |
-196 |
Upstream cash flow
from operating activities |
448 |
987 |
1,595 |
-72 |
Upstream capital
investment excluding BG acquisition impact |
3,907 |
4,463 |
4,642 |
-16 |
Upstream BG-related
capital investment |
31,131 |
- |
- |
|
Liquids production
available for sale (thousand b/d) |
1,557 |
1,331 |
1,341 |
+16 |
Natural gas production
available for sale (million scf/d) |
7,373 |
6,255 |
6,974 |
+6 |
Total production
available for sale (thousand boe/d) |
2,828 |
2,406 |
2,544 |
+11 |
- Q1 on Q1 change
|
First quarter Upstream earnings excluding identified items were
a loss of $1,437 million compared
with a loss of $195 million a year
ago. Identified items were a net gain of $87
million compared with a net gain of $1,595 million for the first quarter 2015 (see
page 6).
Compared with the first quarter 2015, earnings excluding
identified items were impacted by the decline in oil and gas prices
and increased depreciation. This was partly offset by lower
operating expenses, as steps taken by the company to reduce costs
more than offset the increase in operating expenses due to the
consolidation of BG. Earnings also benefited from lower exploration
expense and increased liquids production volumes from improved
operating performance.
Realisations for Shell’s total production were 36% lower for
liquids and 36% lower for natural gas than for the same quarter a
year ago.
First quarter 2016 production was 2,828 thousand boe/d compared
with 2,544 thousand boe/d a year ago. Liquids production was 16%
higher than in the same period a year ago and natural gas
production increased by 6% compared with the first quarter
2015.
New field start-ups and the continuing ramp-up of existing
fields, in particular North American shales, Erha North ph2 in
Nigeria and the Corrib gas field
in Ireland, contributed some 62
thousand boe/d to production compared with the first quarter
2015.
|
DOWNSTREAM |
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
%1 |
Downstream earnings
excluding identified items2 |
2,010 |
1,524 |
2,646 |
-24 |
Of which: |
|
|
|
|
Oil
Products |
1,633 |
1,342 |
2,237 |
-27 |
Chemicals |
377 |
182 |
409 |
-8 |
Downstream
earnings2 |
1,700 |
2,502 |
2,514 |
-32 |
Downstream cash flow
from operating activities |
(1,434) |
2,101 |
1,554 |
-192 |
Downstream capital
investment |
1,092 |
1,974 |
849 |
+29 |
Refinery processing
intake (thousand b/d) |
2,645 |
2,630 |
2,871 |
-8 |
Oil products sales
volumes (thousand b/d) |
6,225 |
6,297 |
6,313 |
-1 |
Chemicals sales
volumes (thousand tonnes) |
4,050 |
4,178 |
4,192 |
-3 |
- Q1 on Q1 change
- Earnings are presented on a CCS basis
|
First quarter Downstream earnings excluding identified items
were $2,010 million compared with
$2,646 million for the first quarter
2015. Identified items were a net charge of $310 million, compared with a net charge of
$132 million for the first quarter
2015 (see page 6).
Compared with the first quarter 2015, Downstream earnings
excluding identified items were mainly impacted by weaker refining
industry conditions. Contributions from marketing were lower,
driven by the negative impact of exchange rate effects and
divestments, despite stronger underlying performance. Downstream
earnings benefited from lower costs, including the impact of
favourable exchange rate effects and divestments.
Downstream cash flow from operating activities was a negative
$1,434 million, which included
negative working capital movements of $3,582
million. The negative working capital movement included the
settlement of a previously Generally Embargoed Country payable of
$1,942 million, increased trading
inventory, and an inter-segment allocation which had a nil impact
on a consolidated basis.
Oil Products
- Refining & Trading earnings excluding
identified items were $662 million in
the first quarter 2016 compared with $1,262
million for the same period last year. First quarter 2016
earnings were impacted by lower realised refining margins,
reflecting the weaker global refining industry conditions due to
oversupply and high inventory levels, and operating
performance.
Refinery intake volumes were 8% lower compared with the same
quarter last year. Excluding portfolio impacts, refinery intake
volumes were 6% lower compared with the same period a year ago.
Refinery availability decreased to 90% compared with 95% in the
first quarter 2015, mainly as a result of increased
maintenance.
- Marketing earnings excluding identified items
were $971 million in the first
quarter 2016 compared with $975
million for the same period a year ago. First quarter 2016
earnings benefited from stronger underlying unit margins and lower
costs, offsetting the impact of adverse exchange rate effects and
divestments.
Oil products sales volumes decreased by 1% compared with the
same period a year ago, reflecting lower trading volumes partly
offset by higher marketing volumes.
Chemicals
- Chemicals earnings excluding identified items were $377 million in the first quarter 2016 compared
with $409 million for the same period
last year. First quarter 2016 earnings were primarily impacted by
lower realised base chemicals margins in the United States. Earnings benefited from
lower costs and from recovery at the Moerdijk chemical site in
the Netherlands, which more than
offset the impact of unit shutdowns at the Bukom chemical site in
Singapore.
Chemicals sales volumes decreased by 3% compared with the same
quarter last year, mainly as a result of reduced availability
driven by unit shutdowns at Bukom, partly offset by recovery at
Moerdijk. Chemicals manufacturing plant availability increased to
88% from 84% in the first quarter 2015, mainly reflecting recovery
at Moerdijk, partly offset by unit shutdowns at Bukom.
|
CORPORATE
AND NON-CONTROLLING INTEREST |
$
million |
|
|
Quarters |
|
|
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
Corporate and
Non-controlling interest earnings excl. identified items |
|
(14) |
(188) |
(204) |
Of which: |
|
|
|
|
Corporate |
|
69 |
(154) |
(83) |
Non-controlling
interest |
|
(83) |
(34) |
(121) |
Corporate and
Non-controlling interest earnings |
|
(441) |
(329) |
(292) |
|
First quarter Corporate results and Non-controlling interest
excluding identified items were a loss of $14 million, compared with a loss of $204 million for the same period last year.
Identified items for the first quarter 2016 were a net charge of
$427 million, whereas earnings for
the first quarter 2015 included a net charge of $88 million (see page 6).
Compared with the first quarter 2015, Corporate results
excluding identified items mainly reflected favourable exchange
rate effects and lower net interest expense, partly offset by lower
tax credits.
OUTLOOK FOR THE SECOND QUARTER 2016
Compared with the second quarter 2015, Integrated Gas earnings
are expected to be negatively impacted by a reduction of some 30
thousand boe/d associated with the impact of maintenance, including
some 25 thousand boe/d associated with continued planned
maintenance at the Pearl GTL plant in Qatar.
Upstream earnings are expected to be negatively impacted by a
reduction of some 25 thousand boe/d related to a Malaysia PSC
expiry, and some 10 thousand boe/d as a result of divestments.
Upstream earnings are expected to be positively impacted by lower
levels of curtailment and underground storage utilisation at NAM in
the Netherlands, and maintenance
of some 60 thousand boe/d.
Refinery availability is expected to decline in the second
quarter 2016 as a result of higher planned maintenance compared
with the same period a year ago. Unit shutdowns at the Bukom
chemical site in Singapore are
expected to result in similar Chemicals manufacturing plant
availability as in the second quarter 2015, which was heavily
impacted by unit shutdowns at the Moerdijk chemical site in
the Netherlands.
There are expected divestment tax payments related to 2015
divestments of some $830 million in
the second quarter 2016 impacting cash flow from operating
activities.
There are expected to be substantial redundancy and
restructuring charges, which will be included as identified items,
in the second quarter 2016.
BG will be consolidated within Shell’s results for the full
second quarter. Compared with the second quarter 2015, the BG
purchase price allocation is expected to increase depreciation by
approximately $0.3 billion.
Given the significant decline in oil and gas prices in the first
quarter 2016, second quarter earnings are expected to be negatively
impacted by the price-lag effect in our LNG contracts.
FORTHCOMING EVENTS
The Annual General Meeting will be held on May 24, 2016.
Second quarter 2016 results and second quarter 2016 dividend are
scheduled to be announced on July 28,
2016. Third quarter 2016 results and third quarter 2016
dividend are scheduled to be announced on October 27, 2016.
Shell’s Capital Markets Day will be held on June 7, 2016 in London,
United Kingdom.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
|
CONSOLIDATED STATEMENT OF INCOME |
$
million |
|
|
Quarters |
|
|
|
Q1
2016 |
Q4
2015 |
Q1
2015 |
Revenue1,2 |
|
48,554 |
58,146 |
65,706 |
Share of profit of
joint ventures and associates |
|
789 |
793 |
1,405 |
Interest and other
income |
|
389 |
1,237 |
1,735 |
Total revenue and
other income |
|
49,732 |
60,176 |
68,846 |
Purchases |
|
33,286 |
43,166 |
47,425 |
Production and
manufacturing expenses |
|
6,765 |
7,515 |
6,655 |
Selling, distribution
and administrative expenses |
|
3,106 |
3,090 |
2,894 |
Research and
development |
|
243 |
297 |
253 |
Exploration |
|
457 |
549 |
800 |
Depreciation,
depletion and amortisation |
|
6,147 |
5,281 |
4,604 |
Interest expense |
|
370 |
519 |
376 |
Total expenditure |
|
50,374 |
60,417 |
63,007 |
Income/(loss) before
taxation |
|
(642) |
(241) |
5,839 |
Taxation
charge/(credit) |
|
(1,097) |
(1,183) |
1,302 |
Income/(loss) for the
period1,2 |
|
455 |
942 |
4,537 |
Income/(loss)
attributable to non-controlling interest |
|
(29) |
3 |
107 |
Income/(loss)
attributable to Royal Dutch Shell plc shareholders |
|
484 |
939 |
4,430 |
Basic earnings per
share3 |
|
0.07 |
0.15 |
0.70 |
Diluted earnings per
share3 |
|
0.07 |
0.15 |
0.69 |
- See Note 2 “Acquisition of BG Group plc”
- See Note 3 “Segment information”
- See Note 4 “Earnings per share”
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
$ million |
|
|
Quarters |
|
|
|
Q1 2016 |
Q4
2015 |
Q1 2015 |
Income/(loss) for the period |
|
455 |
942 |
4,537 |
Other
comprehensive income net of tax: |
|
|
|
|
Items that
may be reclassified to income in later periods: |
|
|
|
|
- Currency translation differences
|
|
2,319 |
(1,249) |
(4,199) |
- Unrealised gains/(losses) on securities
|
|
(12) |
(119) |
(135) |
- Cash flow hedging gains/(losses)
|
|
324 |
(202) |
(9) |
- Net investment hedging gains/(losses)1
|
|
136 |
- |
- |
- Share of other comprehensive income/(loss) of joint ventures
and associates
|
|
8 |
(41) |
7 |
Total |
|
2,775 |
(1,611) |
(4,336) |
Items that
are not reclassified to income in later periods: |
|
|
|
|
- Retirement benefits remeasurements
|
|
(1,634) |
3,140 |
(1,316) |
Other
comprehensive income/(loss) for the period |
|
1,141 |
1,529 |
(5,652) |
Comprehensive income/(loss) for the period |
|
1,596 |
2,471 |
(1,115) |
Comprehensive income/(loss) attributable to non-controlling
interest |
|
4 |
(16) |
63 |
Comprehensive income/(loss) attributable to Royal Dutch Shell plc
shareholders |
|
1,592 |
2,487 |
(1,178) |
- See Note 1 “Basis of preparation”
|
|
|
CONDENSED
CONSOLIDATED BALANCE SHEET |
|
|
$ million |
|
|
Mar
31, 20161 |
Dec 31, 2015 |
Mar 31, 2015 |
|
Assets |
|
|
|
|
Non-current
assets |
|
|
|
|
Intangible assets |
21,327 |
6,283 |
6,852 |
|
Property, plant and
equipment |
245,133 |
182,838 |
189,263 |
|
Joint ventures and
associates |
35,654 |
30,150 |
31,643 |
|
Investments in
securities |
3,474 |
3,416 |
3,952 |
|
Deferred tax |
15,311 |
11,033 |
8,439 |
|
Retirement
benefits |
3,108 |
4,362 |
1,912 |
|
Trade and other
receivables2 |
11,047 |
8,717 |
8,240 |
|
|
335,054 |
246,799 |
250,301 |
|
Current
assets |
|
|
|
|
Inventories |
17,396 |
15,822 |
19,968 |
|
Trade and other
receivables2 |
52,835 |
45,784 |
51,696 |
|
Cash and cash
equivalents |
11,019 |
31,752 |
19,867 |
|
|
81,250 |
93,358 |
91,531 |
|
Total
assets |
416,304 |
340,157 |
341,832 |
|
Liabilities |
|
|
|
|
Non-current
liabilities |
|
|
|
|
Debt |
73,005 |
52,849 |
35,703 |
|
Trade and other
payables2 |
3,917 |
4,528 |
4,769 |
|
Deferred tax |
16,677 |
8,976 |
10,240 |
|
Retirement
benefits |
13,516 |
12,587 |
17,642 |
|
Decommissioning and
other provisions |
32,710 |
26,148 |
25,154 |
|
|
139,825 |
105,088 |
93,508 |
|
Current
liabilities |
|
|
|
|
Debt |
7,868 |
5,530 |
8,137 |
|
Trade and other
payables2 |
56,032 |
52,770 |
55,761 |
|
Taxes payable |
10,387 |
8,233 |
11,705 |
|
Retirement
benefits |
401 |
350 |
361 |
|
Decommissioning and
other provisions |
3,777 |
4,065 |
3,538 |
|
|
78,465 |
70,948 |
79,502 |
|
Total
liabilities |
218,290 |
176,036 |
173,010 |
|
Equity attributable
to Royal Dutch Shell plc shareholders |
196,521 |
162,876 |
167,960 |
|
Non-controlling
interest |
1,493 |
1,245 |
862 |
|
Total
equity |
198,014 |
164,121 |
168,822 |
|
Total liabilities
and equity |
416,304 |
340,157 |
341,832 |
|
- See Note 2 “Acquisition of BG Group plc”
- See Note 7 “Derivative contracts”
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
|
Equity attributable to Royal Dutch Shell plc
shareholders |
|
$
million |
Share
capital1 |
Shares
held in
trust |
Other
reserves2 |
Retained earnings |
Total |
Non-
controlling
interest |
Total
equity |
|
At January 1,
2016 |
546 |
(584) |
(17,186) |
180,100 |
162,876 |
1,245 |
164,121 |
|
Comprehensive
income/(loss)
for the period |
- |
- |
1,108 |
484 |
1,592 |
4 |
1,596 |
|
Dividends paid |
- |
- |
- |
(3,734) |
(3,734) |
(35) |
(3,769) |
|
Scrip dividends |
5 |
- |
(5) |
1,476 |
1,476 |
- |
1,476 |
|
Shares issued for the
acquisition of BG Group plc3 |
120 |
- |
33,930 |
- |
34,050 |
- |
34,050 |
|
Repurchases of
shares |
- |
- |
- |
- |
- |
- |
- |
|
Shares held in
trust:
net sales and dividends received |
- |
369 |
- |
15 |
384 |
- |
384 |
|
Capital
contributions
from, and other changes
in, non-controlling interest |
- |
- |
- |
150 |
150 |
279 |
429 |
|
Share-based
compensation |
- |
- |
(381) |
108 |
(273) |
- |
(273) |
|
At March 31,
2016 |
671 |
(215) |
17,466 |
178,599 |
196,521 |
1,493 |
198,014 |
|
At January 1,
2015 |
540 |
(1,190) |
(14,365) |
186,981 |
171,966 |
820 |
172,786 |
|
Comprehensive
income/(loss) for the period |
- |
- |
(5,608) |
4,430 |
(1,178) |
63 |
(1,115) |
|
Dividends paid |
- |
- |
- |
(2,932) |
(2,932) |
(18) |
(2,950) |
|
Scrip dividends |
- |
- |
- |
- |
- |
- |
- |
|
Repurchases of
shares |
(1) |
- |
1 |
1 |
1 |
- |
1 |
|
Shares held in
trust:
net sales and dividends received |
- |
650 |
- |
24 |
674 |
- |
674 |
|
Capital
contributions
from, and other changes
in, non-controlling interest |
- |
- |
- |
(1) |
(1) |
(3) |
(4) |
|
Share-based
compensation |
- |
- |
(549) |
(21) |
(570) |
- |
(570) |
|
At March 31,
2015 |
539 |
(540) |
(20,521) |
188,482 |
167,960 |
862 |
168,822 |
|
- See Note 5 “Share capital”
- See Note 6 “Other reserves”
- See Note 2 “Acquisition of BG Group plc”
|
|
|
CONDENSED
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1 2015 |
Cash flow from
operating activities |
|
|
|
Income/(loss) for the
period |
455 |
942 |
4,537 |
Adjustment for: |
|
|
|
- Current tax |
753 |
1,212 |
2,947 |
- Interest expense
(net) |
272 |
405 |
303 |
- Depreciation,
depletion and amortisation |
6,147 |
5,281 |
4,604 |
- Net (gains)/losses
on sale of non-current assets and businesses |
(175) |
(1,108) |
(1,612) |
- Decrease/(increase)
in working capital |
(3,909) |
1,598 |
(372) |
- Share of
(profit)/loss of joint ventures and associates |
(789) |
(793) |
(1,405) |
- Dividends received
from joint ventures and associates |
688 |
1,440 |
1,077 |
-
Deferred tax, retirement benefits, decommissioning
and other provisions |
(1,755) |
(1,827) |
(1,503) |
- Other |
(292) |
(3) |
94 |
Net cash from
operating activities (pre-tax) |
1,395 |
7,147 |
8,670 |
Tax paid |
(734) |
(1,724) |
(1,564) |
Net cash from
operating activities |
661 |
5,423 |
7,106 |
Cash flow from
investing activities |
|
|
|
Capital
expenditure |
(5,324) |
(7,299) |
(6,215) |
Acquisition of BG
Group plc, net of cash and cash equivalents
acquired1 |
(11,421) |
- |
- |
Investments in joint
ventures and associates |
(332) |
(5) |
(409) |
Proceeds from sale of
property, plant and equipment and businesses |
46 |
1,398 |
2,203 |
Proceeds from sale of
joint ventures and associates |
16 |
26 |
4 |
Interest received |
136 |
91 |
56 |
Other |
(37) |
(397) |
(79) |
Net cash used in
investing activities |
(16,916) |
(6,186) |
(4,440) |
Cash flow from
financing activities |
|
|
|
Net
increase/(decrease) in debt with maturity period
within three months |
873 |
(9) |
(255) |
Other debt: |
|
|
|
- New borrowings |
264 |
5,213 |
752 |
- Repayments |
(1,969) |
(1,818) |
(630) |
Interest paid |
(534) |
(484) |
(409) |
Change in
non-controlling interest |
422 |
177 |
(5) |
Cash dividends paid
to: |
|
|
|
- Royal Dutch Shell
plc shareholders |
(2,258) |
(1,782) |
(2,932) |
- Non-controlling
interest |
(35) |
(45) |
(18) |
Repurchases of
shares |
- |
- |
(409) |
Shares held in trust:
net sales/(purchases) and dividends received |
(4) |
7 |
(40) |
Net cash from/(used
in) financing activities |
(3,241) |
1,259 |
(3,946) |
Currency
translation differences relating to cash and
cash equivalents |
(1,237) |
(590) |
(460) |
Increase/(decrease)
in cash and cash equivalents |
(20,733) |
(94) |
(1,740) |
Cash and cash
equivalents at beginning of period |
31,752 |
31,846 |
21,607 |
Cash and cash
equivalents at end of period |
11,019 |
31,752 |
19,867 |
- See Note 2 “Acquisition of BG Group plc”
|
|
|
|
|
|
|
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial
Statements (“Interim Statements”) of Royal Dutch Shell plc (“the
Company”) and its subsidiaries (collectively referred to as
“Shell”) have been prepared in accordance with IAS 34 Interim
Financial Reporting as issued by the International Accounting
Standards Board and 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, 2015 (pages 120 to
125) as filed with the U.S. Securities and Exchange Commission. In
addition to those accounting policies, following the acquisition of
BG Group plc, Shell accounts for net investment hedges where the
effective portion of gains and losses arising on hedging
instruments that are used to hedge net investments in foreign
operations are recognised in other comprehensive income until the
related investment is disposed of.
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 (“the Act”). Statutory
accounts for the year ended December 31,
2015 were published in Shell’s Annual Report and a copy was
delivered to the Registrar of Companies in England and Wales. The auditors’ report on those accounts
was unqualified, did not include a reference to any matters to
which the auditors drew attention by way of emphasis without
qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Act.
2. Acquisition of BG Group plc
On February 15, 2016, the Company
acquired all the voting rights in BG by means of a Scheme of
Arrangement under Part 26 of the Act for a purchase consideration
of $54,034 million. This included
cash of $19,036 million and the fair
value ($34,050 million) of 218.7
million A shares and 1,305.1 million B shares issued in exchange
for all BG shares. The fair value of the shares issued was
calculated using the market price of the Company’s A and B shares
of 1,545.0 and 1,538.5 pence
respectively on the London Stock Exchange at its opening of
business on February 15, 2016.
Following completion of the acquisition on February 15, 2016, BG Group plc (“BG”) has been
consolidated within Royal Dutch Shell’s results. For practical
purposes, this includes February and March
2016, as the impact for the first half of February is deemed
immaterial.
BG’s activities mainly comprise exploration, development,
production, liquefaction and marketing of hydrocarbons, the
development and use of LNG import facilities, and the purchase,
shipping and sale of LNG and regasified natural gas. The
acquisition is expected to accelerate Shell’s growth strategy in
global LNG and deep water. It is expected to add material proved
oil and gas reserves and production volumes, and provides Shell
with enhanced positions in competitive new oil and gas projects,
particularly in Australia LNG and
Brazil deep water.
Goodwill of $9,024 million was
recognised on the acquisition, being the excess of the purchase
consideration over the fair value of net assets acquired as set out
below. The net asset value, in line with accounting standards, is
determined by reference to oil and gas prices, as reflected in the
prevailing market view on the day of completion. Oil and gas prices
are based on the forward price curve for the first two years, and
subsequent years based on the market consensus price view.
The fair values of the net assets, and therefore the resultant
goodwill, are provisional because of the limited period since the
acquisition date when access was obtained to information required
to assess the market participant value to be assigned to individual
assets acquired and liabilities assumed at that date.
|
FAIR VALUE
OF NET ASSETS ACQUIRED (PROVISIONAL) |
|
|
|
$
million |
Assets |
|
|
|
Non-current
assets |
|
|
|
Intangible assets |
|
|
6,178 |
Property, plant and
equipment |
|
|
58,444 |
Joint ventures and
associates |
|
|
4,702 |
Deferred tax |
|
|
2,432 |
Other |
|
|
2,181 |
|
|
|
73,937 |
Current
assets |
|
|
|
Inventories |
|
|
417 |
Trade and other
receivables |
|
|
4,202 |
Cash and cash
equivalents |
|
|
6,803 |
|
|
|
11,422 |
Total
assets |
|
|
85,359 |
Liabilities |
|
|
|
Non-current
liabilities |
|
|
|
Debt |
|
|
18,949 |
Deferred tax |
|
|
8,393 |
Decommissioning and
other provisions |
|
|
6,401 |
Other |
|
|
665 |
|
|
|
34,408 |
Current
liabilities |
|
|
|
Debt |
|
|
1,345 |
Trade and other
payables |
|
|
3,926 |
Other |
|
|
670 |
|
|
|
5,941 |
Total
liabilities |
|
|
40,349 |
Total |
|
|
45,010 |
Acquisition costs of $391 million
were recognised in the Consolidated Statement of Income in
production and manufacturing and selling, distribution and
administrative expenses, of which $47
million in 2015 and $344
million in the first quarter 2016.
The acquired activities have contributed third-party revenue and
income since the date of acquisition, included in the Consolidated
Statement of Income for the first quarter 2016, of $2,272 million and $455
million respectively.
3. Segment information
Segmental reporting has been changed with effect from 2016, in
line with a change in the way Shell’s businesses are managed. Shell
now reports its business through the segments Integrated Gas
(previously part of Upstream), Upstream, Downstream and Corporate.
Comparative information has been reclassified.
Integrated Gas is engaged in the liquefaction and transportation
of gas, and the conversion of natural gas to liquids to provide
fuels and other products, as well as projects with an integrated
activity from producing to commercialising gas. Upstream combines
the operating segments Upstream, which is engaged in the
exploration for and extraction of crude oil, natural gas and
natural gas liquids, the transportation of oil and wind energy, and
Oil Sands, which is engaged in the extraction of bitumen from oil
sands that is converted into synthetic crude oil. These operating
segments have similar economic characteristics because their
earnings are significantly dependent on crude oil and natural gas
prices and production volumes, and because their projects generally
require significant investment, are complex and generate revenues
for many years.
Segment earnings are presented on a current cost of supplies
basis (CCS earnings), which is the earnings measure used by the
Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance. On this basis, the
purchase price of volumes sold during the period is based on the
current cost of supplies during the same period after making
allowance for the tax effect. CCS earnings therefore exclude the
effect of changes in the oil price on inventory carrying amounts.
Sales between segments are based on prices generally equivalent to
commercially available prices.
|
|
INFORMATION BY SEGMENT |
|
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1 2015 |
Third-party
revenue |
|
|
|
Integrated Gas |
5,679 |
5,210 |
5,949 |
Upstream |
1,922 |
1,502 |
1,817 |
Downstream |
40,929 |
51,410 |
57,916 |
Corporate |
24 |
24 |
24 |
Total third-party
revenue |
48,554 |
58,146 |
65,706 |
Inter-segment
revenue |
|
|
|
Integrated Gas |
788 |
917 |
977 |
Upstream |
4,145 |
5,955 |
6,793 |
Downstream |
1,455 |
386 |
362 |
Corporate |
- |
- |
- |
CCS
earnings |
|
|
|
Integrated Gas |
905 |
1,125 |
1,139 |
Upstream |
(1,350) |
(1,458) |
1,400 |
Downstream |
1,700 |
2,502 |
2,514 |
Corporate |
(456) |
(295) |
(171) |
Total CCS
earnings |
799 |
1,874 |
4,882 |
|
|
|
|
|
|
|
RECONCILIATION OF CCS EARNINGS TO INCOME FOR THE PERIOD |
|
$
million |
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1 2015 |
Total CCS
earnings |
799 |
1,874 |
4,882 |
Current cost of
supplies adjustment: |
|
|
|
Purchases |
(398) |
(1,122) |
(352) |
Taxation |
120 |
320 |
102 |
Share of profit/(loss)
of joint ventures and associates |
(66) |
(130) |
(95) |
Income/(loss) for
the period |
455 |
942 |
4,537 |
|
|
|
|
|
|
|
CCS
EARNINGS ATTRIBUTABLE TO ROYAL DUTCH SHELL PLC SHAREHOLDERS |
|
$ million |
Quarters |
|
|
|
Q1
2016 |
Q4
2015 |
Q1 2015 |
|
CCS
earnings |
799 |
1,874 |
4,882 |
|
Attributable to non-controlling interest |
(15) |
(34) |
(121) |
|
CCS
earnings attributable to Royal Dutch Shell plc shareholders |
814 |
1,840 |
4,761 |
|
|
|
|
|
|
|
|
4. Earnings per share
|
|
EARNINGS
PER SHARE |
|
|
Quarters |
|
Q1
2016 |
Q4
2015 |
Q1 2015 |
Income attributable to
Royal Dutch Shell plc shareholders ($ million) |
484 |
939 |
4,430 |
Weighted average
number of shares as the basis for: |
|
|
|
Basic earnings per
share (million) |
7,173.4 |
6,356.0 |
6,292.2 |
Diluted earnings per
share (million) |
7,230.4 |
6,416.1 |
6,377.0 |
|
|
|
|
|
|
|
|
|
5. Share capital
|
ISSUED AND
FULLY PAID |
|
Ordinary shares of €0.07 each |
Sterling deferred shares |
Number of shares |
A |
B |
of
£1 each |
At January 1,
2016 |
3,990,921,569 |
2,440,410,614 |
50,000 |
Scrip dividends |
65,704,048 |
0 |
0 |
Shares issued for the
acquisition of BG Group plc1 |
218,728,308 |
1,305,076,117 |
0 |
Repurchases of
shares |
0 |
0 |
0 |
At March 31,
2016 |
4,275,353,925 |
3,745,486,731 |
50,000 |
|
|
|
|
At January 1,
2015 |
3,907,302,393 |
2,440,410,614 |
50,000 |
Scrip dividends |
0 |
0 |
0 |
Repurchases of
shares |
(12,717,512) |
0 |
0 |
At March 31,
2015 |
3,894,584,881 |
2,440,410,614 |
50,000 |
- See Note 2 “Acquisition of BG Group plc”
|
|
|
NOMINAL
VALUE |
|
Ordinary shares of €0.07 each |
$
million |
A |
B |
Total |
At January 1,
2016 |
340 |
206 |
546 |
Scrip dividends |
5 |
- |
5 |
Shares issued for the
acquisition of BG Group plc1 |
17 |
103 |
120 |
Repurchases of
shares |
- |
- |
- |
At March 31,
2016 |
362 |
309 |
671 |
|
|
|
|
At January 1,
2015 |
334 |
206 |
540 |
Scrip dividends |
- |
- |
- |
Repurchases of
shares |
(1) |
- |
(1) |
At March 31,
2015 |
333 |
206 |
539 |
- See Note 2 “Acquisition of BG Group plc”
|
The total nominal value of sterling deferred shares is less than
$1 million.
At Royal Dutch Shell plc’s Annual General Meeting on
May 19, 2015, the Board was
authorised to allot ordinary shares in Royal Dutch Shell plc, and
to grant rights to subscribe for or to convert any security into
ordinary shares in Royal Dutch Shell plc, up to an aggregate
nominal amount of €147 million (representing 2,100 million ordinary
shares of €0.07 each), and to list such shares or rights on any
stock exchange. This authority expires at the earlier of the close
of business on August 19, 2016, and
the end of the Annual General Meeting to be held in 2016, unless
previously renewed, revoked or varied by Royal Dutch Shell plc in a
general meeting.
6. Other reserves
|
OTHER
RESERVES |
$
million |
Merger
reserve |
Share
premium reserve |
Capital redemption reserve |
Share
plan reserve |
Accumulated other comprehensive income |
Total |
At January 1,
2016 |
3,398 |
154 |
84 |
1,658 |
(22,480) |
(17,186) |
Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
1,108 |
1,108 |
Scrip dividends |
(5) |
- |
- |
- |
- |
(5) |
Shares issued for the
acquisition of BG Group plc1 |
33,930 |
- |
- |
- |
- |
33,930 |
Repurchases of
shares |
- |
- |
- |
- |
- |
- |
Share-based
compensation |
- |
- |
- |
(381) |
- |
(381) |
At March 31,
2016 |
37,323 |
154 |
84 |
1,277 |
(21,372) |
17,466 |
At January 1,
2015 |
3,405 |
154 |
83 |
1,723 |
(19,730) |
(14,365) |
Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
(5,608) |
(5,608) |
Scrip dividends |
- |
- |
- |
- |
- |
- |
Repurchases of
shares |
- |
- |
1 |
- |
- |
1 |
Share-based
compensation |
- |
- |
- |
(549) |
- |
(549) |
At March 31,
2015 |
3,405 |
154 |
84 |
1,174 |
(25,338) |
(20,521) |
- See Note 2 “Acquisition of BG Group plc”
|
The merger reserve and share premium reserve were established as
a consequence of Royal Dutch Shell plc becoming the single parent
company of Royal Dutch Petroleum Company and The “Shell” Transport
and Trading Company, p.l.c., now The Shell Transport and Trading
Company Limited, in 2005. The increase in the merger reserve in the
first quarter 2016 in respect of the shares issued for the
acquisition of BG represents the difference between the fair value
(after deducting issue costs) and the nominal value of the shares.
The capital redemption reserve was established in connection with
repurchases of shares of Royal Dutch Shell plc. The share plan
reserve is in respect of equity-settled share-based compensation
plans.
7. Derivative contracts
The table below provides the carrying amounts of derivatives
contracts held, disclosed in accordance with
IFRS 13 Fair Value Measurement.
|
DERIVATIVE
CONTRACTS |
$
million |
Mar
31, 2016 |
Dec
31, 2015 |
Mar
31, 2015 |
Included within: |
|
|
|
Trade and other
receivables – non-current |
1,250 |
744 |
799 |
Trade and other
receivables – current |
17,260 |
13,114 |
11,378 |
|
|
|
|
Trade and other
payables – non-current |
1,369 |
1,687 |
1,643 |
Trade and other
payables – current |
15,989 |
10,757 |
9,644 |
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2015,
presented in the Annual Report and Form 20-F for that year, Shell
is exposed to the risks of changes in fair value of its financial
assets and liabilities. The fair values of the financial assets and
liabilities are defined as the price that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. Methods and
assumptions used to estimate the fair values at March 31, 2016 are consistent with those used in
the year ended December 31, 2015, and
the carrying amounts of derivative contracts measured using
predominantly unobservable inputs have not changed materially since
that date.
The fair value of debt excluding finance lease liabilities at
March 31, 2016 was $71,903 million (December
31, 2015: $53,480 million;
March 31, 2015: $39,753 million). Fair value is determined from
the prices quoted for those securities.
DEFINITIONS
A. Identified items
Identified items are shown to provide additional insight into
segment earnings and income attributable to shareholders. They
include the full impact on Shell’s CCS earnings of the following
items: Divestment gains and losses, impairments, fair value
accounting of commodity derivatives and certain gas contracts (see
below), and redundancy and restructuring. Further items may be
identified in addition to the above.
Impacts of accounting for
derivatives
In the ordinary course of business Shell enters into contracts
to supply or purchase oil and gas products as well as power and
environmental products. Derivative contracts are entered into for
mitigation of resulting economic exposures (generally price
exposure) and these derivative contracts are carried at period-end
market price (fair value), with movements in fair value recognised
in income for the period. Supply and purchase contracts entered
into for operational purposes are, by contrast, recognised when the
transaction occurs (see also below); furthermore, inventory is
carried at historical cost or net realisable value, whichever is
lower.
As a consequence, accounting mismatches occur because: (a) the
supply or purchase transaction is recognised in a different period;
or (b) the inventory is measured on a different basis.
In addition, certain UK gas contracts held by Upstream are, due
to pricing or delivery conditions, deemed to contain embedded
derivatives or written options and are also required to be carried
at fair value even though they are entered into for operational
purposes.
The accounting impacts of the aforementioned are reported as
identified items in this Report.
Impacts of exchange rate movements on
deferred tax balances
With effect from 2016, identified items include the impact on
deferred tax balances of exchange rate movements arising on:
The conversion to dollars of the local currency tax base of
non-monetary assets and liabilities, as well as losses. This
primarily impacts the Integrated Gas and Upstream segments.
The conversion of dollar-denominated inter-segment loans to
local currency. This primarily impacts the Corporate segment.
The comparative information presented in this Report has been
restated for this definition change. The following table sets out
the impact of the definition change on the identified items for the
year 2015.
|
|
RESTATED
IDENTIFIED ITEMS BY SEGMENT |
|
$
million |
Quarters |
|
Q1
2015 |
Q2
2015 |
Q3
2015 |
Q4 2015 |
Identified items as
previously reported |
|
|
|
|
Integrated Gas |
15 |
(117) |
(878) |
(347) |
Upstream |
1,849 |
(146) |
(7,340) |
(479) |
Downstream |
(132) |
(215) |
(136) |
978 |
Corporate and
Non-controlling interest |
(217) |
4 |
464 |
(137) |
Impact of
definition change |
|
|
|
|
Integrated Gas |
(367) |
50 |
(469) |
227 |
Upstream |
(254) |
53 |
(292) |
30 |
Downstream |
- |
- |
- |
- |
Corporate and
Non-controlling interest |
129 |
(28) |
155 |
(4) |
Identified items as
restated |
|
|
|
|
Integrated Gas |
(352) |
(67) |
(1,347) |
(120) |
Upstream |
1,595 |
(93) |
(7,632) |
(449) |
Downstream |
(132) |
(215) |
(136) |
978 |
Corporate and
Non-controlling interest |
(88) |
(24) |
619 |
(141) |
|
|
|
|
|
|
B. Capital investment
Capital investment is a measure used to make decisions about
allocating resources and assessing performance. It is defined as
the sum of capital expenditure, acquisition of BG, exploration
expense (excluding well write-offs), new investments in joint
ventures and associates, new finance leases and other
adjustments.
C. Divestments
“Divestments” is a measure used to monitor the progress of
Shell’s divestment programme. This measure comprises proceeds from
sale of property, plant and equipment and businesses, joint
ventures and associates, and other Integrated Gas, Upstream and
Downstream investments, adjusted onto an accruals basis, and
proceeds from sale of interests in an entity while retaining
control (for example, proceeds from sale of interest in Shell
Midstream Partners, L.P.)
D. Return on average capital employed
Return on average capital employed (ROACE) measures the
efficiency of Shell’s utilisation of the capital that it employs
and is a common measure of business performance. In this
calculation, ROACE is defined as the sum of income for the current
and previous three quarters, adjusted for after-tax interest
expense, as a percentage of the average capital employed for the
same period. The tax rate used is Shell’s effective tax rate for
the period. Capital employed consists of total equity, current debt
and non-current debt.
Return on average capital employed on a CCS basis excluding
identified items is defined as the sum of CCS earnings attributable
to shareholders excluding identified items for the current and
previous three quarters, as a percentage of the average capital
employed for the same period.
E. Gearing
Gearing, calculated as net debt (total debt less cash and cash
equivalents) as a percentage of total capital (net debt plus total
equity), is a key measure of Shell’s capital structure.
F. Operating expenses
Operating expenses comprise production and manufacturing
expenses; selling, distribution and administrative expenses; and
research and development expenses.
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
All peak production figures in Portfolio Developments are quoted at
100% expected production.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate legal entities. In this
announcement “Shell”, “Shell group” and “Royal Dutch Shell” are
sometimes used for convenience where references are made to Royal
Dutch Shell plc and its subsidiaries in general. Likewise, the
words “we”, “us” and “our” are also used to refer to subsidiaries
in general or to those who work for them. These expressions are
also used where no useful purpose is served by identifying the
particular company or companies. ‘‘Subsidiaries’’, “Shell
subsidiaries” and “Shell companies” as used in this announcement
refer to companies over which Royal Dutch Shell plc either directly
or indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
“joint ventures” and “joint operations” respectively. Entities over
which Shell has significant influence but neither control nor joint
control are referred to as “associates”. The term “Shell interest”
is used for convenience to indicate the direct and/or indirect
ownership interest held by Shell in a venture, partnership or
company, after exclusion of all third-party interest.
This announcement contains forward-looking statements concerning
the financial condition, results of operations and businesses of
Royal Dutch Shell. All statements other than statements of
historical fact are, or may be deemed to be, forward-looking
statements. Forward-looking statements are statements of future
expectations that are based on management’s current expectations
and assumptions and involve known and unknown risks and
uncertainties that could cause actual results, performance or
events to differ materially from those expressed or implied in
these statements. Forward-looking statements include, among other
things, statements concerning the potential exposure of Royal Dutch
Shell to market risks and statements expressing management’s
expectations, beliefs, estimates, forecasts, projections and
assumptions. These forward-looking statements are identified by
their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’,
‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’,
‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’,
‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’,
‘‘target’’, ‘‘will’’ and similar terms and phrases. There are a
number of factors that could affect the future operations of Royal
Dutch Shell and could cause those results to differ materially from
those expressed in the forward-looking statements included in this
announcement, including (without limitation): (a) price
fluctuations in crude oil and natural gas; (b) changes in demand
for Shell’s products; (c) currency fluctuations; (d) drilling and
production results; (e) reserves estimates; (f) loss of market
share and industry competition; (g) environmental and physical
risks; (h) risks associated with the identification of suitable
potential acquisition properties and targets, and successful
negotiation and completion of such transactions; (i) the risk of
doing business in developing countries and countries subject to
international sanctions; (j) legislative, fiscal and regulatory
developments including regulatory measures addressing climate
change; (k) economic and financial market conditions in various
countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with
governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; and (m)
changes in trading conditions. All forward-looking statements
contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in
this section. Readers should not place undue reliance on
forward-looking statements. Additional risk factors that may affect
future results are contained in Royal Dutch Shell’s Form 20-F for
the year ended December 31, 2015 (available at
www.shell.com/investor and www.sec.gov). These risk factors also
expressly qualify all forward-looking statements contained in this
announcement and should be considered by the reader. Each
forward-looking statement speaks only as of the date of this
announcement, May 4, 2016. Neither Royal Dutch Shell plc nor any of
its subsidiaries undertake any obligation to publicly update or
revise any forward-looking statement as a result of new
information, future events or other information. In light of these
risks, results could differ materially from those stated, implied
or inferred from the forward-looking statements contained in this
announcement.
This Report contains references to Shell’s website. These
references are for the readers’ convenience only. Shell is not
incorporating by reference any information posted on
www.shell.com
We may have used certain terms, such as resources, in this
announcement that the United States Securities and Exchange
Commission (SEC) strictly prohibits us from including in our
filings with the SEC. U.S. investors are urged to consider closely
the disclosure in our Form 20-F, File No 1-32575, available on the
SEC website www.sec.gov. You can also obtain this form from the SEC
by calling 1-800-SEC-0330.
May 4, 2016
The information in this Report reflects the unaudited
consolidated financial position and results of Royal Dutch Shell
plc. Company No. 4366849, Registered Office: Shell Centre,
London, SE1 7NA, England, UK.
Contacts:
- Investor Relations: International + 31 (0) 70 377 4540;
North America +1 832 337 2034
- Media: International +44 (0) 207 934 5550; USA +1 713 241 4544