Royal Dutch Shell's (NYSE:RDS.A)(NYSE:RDS.B) second quarter
2014 earnings, on a current cost of supplies (CCS) basis (see Note
2), were $5.1 billion compared with
$2.4 billion for the same quarter a
year ago. Earnings included an identified net charge of
$1.0 billion after tax, mainly
reflecting impairments which were partly offset by divestment gains
(see page 6).
Compared with the second quarter 2013, CCS earnings excluding
identified items benefited from higher liquids production volumes
and prices, the impact of the strengthening Australian dollar on a
deferred tax liability, and higher contributions from
Manufacturing. These items were partly offset by increased
depreciation, higher costs, and the phasing of a dividend from an
LNG venture into the third quarter of 2014.
Basic CCS earnings per share excluding identified items
increased by 33% versus the same quarter last year.
Gearing at the end of the second quarter 2014 was 13.4%.
"We are making progress with the priorities I set out at the
start of 2014: to balance growth and returns by focusing on better
financial performance, enhanced capital efficiency, and continued
strong project delivery.
Shell's strategy is founded on technological expertise,
disciplined capital investment, integrated operations, and large
scale. This is underpinned by an unrelenting focus on safety. We
aim to grow cash flow through the cycle and deliver competitive
shareholder returns.
I am determined to get a tighter grip on business performance
management in the company, and improve the balance between growth
and returns.
Our financial performance for the second quarter of 2014 was
more robust than year-ago levels but I want to see stronger, more
competitive results right across the company, particularly in Oil
Products and North America
resources plays. Improvement of financial performance in these two
parts of the business will take time, but I see early momentum,
which we must maintain.
Sharper accountability in the company means that we are
targeting our growth investment more effectively, focusing on areas
of the business where performance improvement is most needed, and
driving asset sales in non-strategic positions.
The impairments we have announced today in Upstream Americas
reflect the restructuring of Shell's resources plays portfolio. We
see attractive growth opportunities there such as natural gas
integration and liquids-rich shales.
We are taking firm actions to improve Shell's capital efficiency
by selling selected assets and making tougher project decisions.
We have completed some $8
billion of asset sales so far in 2014. This represents good
progress towards our targets to focus the portfolio, and to
maintain the financial framework in robust health.
Our dividend for the second quarter of 2014 is 4% up from
year-ago levels. We are expecting some $7 -
$8 billion of share buybacks for 2014 and 2015 combined, of
which $1.6 billion were completed in
the first half of this year. These expected buybacks and dividend
distributions are expected to exceed $30
billion over the two-year period. All of this underlines the
company's recent improved performance and future potential."
Shell continued to divest non-strategic Upstream positions
during the second quarter of 2014 with divestment proceeds
totalling some $6.5 billion.
During the quarter Shell completed a sell-down of 78.27 million
shares in Woodside Petroleum Limited ("Woodside") in
Australia for a
consideration of $3 billion, reducing
Shell's interest from 23% to approximately 14%.
Shell also agreed to sell its interest in a portion of its dry
gas Deep Basin assets in Canada
(current production of some seven thousand boe/d) to Mapan Energy
Ltd. for a consideration of some $0.1
billion, subject to closing.
During the quarter, in Shell's heartlands exploration programme
Shell announced an oil discovery in the Norphlet play in the deep
waters of the Gulf of Mexico with
the successful Rydberg exploration well (Shell interest 57.2%). As
previously reported, Shell participated in the non-operated
Rosmari-1 discovery (Shell interest 85%) offshore Malaysia during the quarter, adding new gas
resources.
Shell had continued success with near-field exploration
discoveries in a number of countries.
In July, Shell signed an agreement to become the first customer
of new, dedicated LNG for transport infrastructure planned at the
Port of Rotterdam in the
Netherlands. Shell has
committed to buy capacity from the Gate terminal, which has enabled
investment in the terminal expansion. This agreement is expected to
increase availability of LNG as a transport fuel for vessels in
northwest Europe.
Compared with the second quarter 2013, CCS earnings excluding
identified items benefited from higher liquids production volumes
and prices, the impact of the strengthening Australian dollar on a
deferred tax liability, and higher contributions from
Manufacturing. These items were partly offset by increased
depreciation, higher costs, and the phasing of a dividend from an
LNG venture into the third quarter of 2014.
Basic CCS earnings per share increased by 113% versus the same
quarter a year ago.
Basic CCS earnings per share excluding identified items
increased by 33% versus the same quarter a year ago.
Under our share buyback programme some 8.6 million A shares were
bought back for cancellation during the second quarter 2014 for a
consideration of $0.3 billion.
Return on average capital employed on a reported income basis
(see Note 8) was 7.9% at the end of the second quarter 2014, versus
12.1% at the end of the second quarter 2013.
Gearing was 13.4% at the end of the second quarter 2014 versus
10.3% at the end of the second quarter 2013.
Oil and gas production for the second quarter 2014 was 3,077
thousand boe/d, in line with the second quarter 2013. Excluding the
impact of divestments, Abu Dhabi
license expiry, PSC price effects, and security impacts in
Nigeria, second quarter 2014
production was 4% higher than for the same period last year.
Equity sales of LNG of 6.00 million tonnes for the second
quarter 2014 were 28% higher than for the same quarter a year
ago.
Oil products sales volumes for the second quarter 2014 were 4%
higher than for the second quarter 2013. Chemicals sales volumes
for the second quarter 2014 increased by 4% compared with the same
quarter a year ago.
Supplementary financial and operational disclosure for the
second quarter 2014 is available at
http://www.shell.com/investor.
Earnings for the second quarter 2014 reflected the following
items, which in aggregate amounted to a net charge of $979 million (compared with a net charge of
$2,206 million for the second quarter
2013), as summarised in the table below:
Downstream earnings included a net charge of $76 million,
reflecting a net charge on fair value accounting of commodity and
derivatives of $50 million, a net
impairment charge of $35 million, and
a net charge of $119 million for
other items, mainly related to a prior-year sale obligation. These
items were partly offset by gains on divestments of $128 million. Downstream earnings for the second
quarter 2013 included a net charge of $365
million.
These 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 Note 7)
- Redundancy and restructuring
Further items may be identified in addition to the
above.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 %[1] 2014 2013 %
Upstream earnings excluding
4,722 5,710 3,526 +34 identified items 10,432 9,174 +14
3,820 5,427 1,681 +127 Upstream earnings 9,247 7,502 +23
Upstream cash flow from operating
8,919 9,075 8,143 +10 activities 17,994 17,848 +1
562 9,340 9,549 -94 Upstream net capital investment 9,902 16,919 -41
Liquids production available for
1,499 1,481 1,502 0 sale (thousand b/d) 1,490 1,570 -5
Natural gas production available
9,153 10,227 9,050 +1 for sale (million scf/d) 9,687 10,085 -4
Total production available for sale
3,077 3,245 3,062 0 (thousand boe/d) 3,160 3,309 -5
Equity sales of LNG (million
6.00 6.09 4.68 +28 tonnes) 12.09 9.83 +23
[1] Q2 on Q2 change
Second quarter Upstream earnings excluding identified items were
$4,722 million compared with
$3,526 million a year ago. Identified
items were a net charge of $902
million, compared with a net charge of $1,845 million for the second quarter 2013 (see
page 6).
Compared with the second quarter 2013, earnings excluding
identified items benefited from higher liquids production volumes
and prices, including contributions from Deepwater in the Americas,
Iraq, and Integrated Gas, as well
as the impact of the strengthening Australian dollar on a deferred
tax liability. These items were partly offset by increased
depreciation, higher costs, and the phasing of a dividend from an
LNG venture into the third quarter of 2014.
Global liquids realisations were 3% higher than for the second
quarter 2013. Global natural gas realisations were 8% lower than
for the same quarter a year ago, with a 16% increase in the
Americas and a 15% decrease outside the Americas.
Second quarter 2014 production was 3,077 thousand boe/d compared
with 3,062 thousand boe/d a year ago. Liquids production was in
line with the second quarter 2013 and natural gas production
increased by 1%. Excluding the impact of divestments, Abu Dhabi license expiry, PSC price effects,
and security impacts in Nigeria,
second quarter 2014 production was 4% higher than for the same
period last year.
The continuing ramp-up of fields and new field start-ups, in
particular Majnoon in Iraq and
Mars B in the Gulf of Mexico,
contributed some 140 thousand boe/d to production for the second
quarter 2014, more than offsetting the impact of field declines.
Production also benefited from a number of new wells in existing
fields and improved well performance in the Gulf of Mexico.
Equity sales of LNG of 6.00 million tonnes increased by 28%
compared to the same quarter a year ago, mainly reflecting the
contribution from the acquisition of Repsol's LNG business and
decreased feedgas disruptions in Nigeria.
Half year Upstream earnings excluding identified items were
$10,432 million compared with
$9,174 million for the first half
year 2013. Identified items were a net charge of $1,185 million, compared with a net charge of
$1,672 million for the first half
year 2013 (see page 6).
Compared with the first half year 2013, Upstream earnings
excluding identified items reflected increased liquids production
volumes and prices, including contributions from Iraq, Deepwater in the Americas, and
Integrated Gas, gas trading results as well as the strengthening
Australian dollar on a deferred tax liability. Earnings were
impacted by increased depreciation, higher costs and well
write-offs.
Global liquids realisations were in line with the first half
year 2013. Global natural gas realisations were 2% lower than for
the first half year 2013, with a 32% increase in the Americas and a
9% decrease outside the Americas.
Half year 2014 production was 3,160 thousand boe/d compared with
3,309 thousand boe/d for the same period a year ago. Liquids
production was down 5% and natural gas production decreased by 4%
compared with the first half year 2013. Excluding the impact of
divestments, Abu Dhabi license
expiry, PSC price effects, security impacts in Nigeria and the NAM curtailment, first half
year 2014 production was in line with the same period last
year.
Equity sales of LNG of 12.09 million tonnes were 23% higher than
for the first half year 2013, reflecting the contribution from the
acquisition of Repsol's LNG business and decreased feedgas
disruptions in Nigeria, partly
offset by higher planned maintenance at some LNG plants.
DOWNSTREAM
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 %[1] 2014 2013 %
Downstream CCS earnings excluding
1,347 1,575 1,168 +15 identified items 2,922 3,016 -3
1,271 (1,005) 803 +58 Downstream CCS earnings 266 2,491 -89
Downstream cash flow from
262 3,145 3,761 -93 operating activities 3,407 4,126 -17
543 776 1,328 -59 Downstream net capital investment 1,319 2,148 -39
Refinery processing intake
3,034 2,965 2,914 +4 (thousand b/d) 3,000 2,902 +3
Oil products sales volumes
6,453 6,319 6,212 +4 (thousand b/d) 6,386 6,109 +5
Chemicals sales volumes (thousand
4,387 4,285 4,211 +4 tonnes) 8,672 8,354 +4
[1] Q2 on Q2 change
Second quarter Downstream earnings excluding identified items
were $1,347 million compared with
$1,168 million for the second quarter
2013. Identified items were a net charge of $76 million, compared with a net charge of
$365 million for the second quarter
2013 (see page 6).
Compared with the second quarter 2013, Downstream earnings
excluding identified items benefited from higher contributions from
Manufacturing. This was despite weaker refining industry
conditions, in particular in Asia
and Europe. Earnings were impacted
by increased costs resulting from one-off provisions, and lower
contributions from trading and supply activities. Contributions
from Chemicals were higher as a result of improved base chemicals
industry conditions mainly in North
America as well as lower planned maintenance, partly offset
by weaker intermediates industry conditions.
Downstream cash flow from operating activities was impacted by
negative working capital movements in Oil Products primarily driven
by inventory effects.
Refinery intake volumes were 4% higher compared with the same
quarter last year, mainly as a result of improved operational
performance. Refinery availability increased to 94% compared with
92% in the second quarter 2013.
Oil products sales volumes increased by 4% compared with the
same period a year ago reflecting higher trading volumes partly
offset by lower marketing volumes.
Chemicals sales volumes increased by 4% compared with the same
quarter last year, mainly as a result of higher utilisation.
Chemicals manufacturing plant availability increased to 90% from
88% for the second quarter 2013, as a result of lower planned
maintenance, partly offset by higher unplanned maintenance.
Half year Downstream earnings excluding identified items were
$2,922 million compared with
$3,016 million for the first half
year 2013. Identified items were a net charge of $2,656 million, compared with a net charge of
$525 million for the first half year
2013 (see page 6).
Compared with the first half year 2013, Downstream earnings
excluding identified items were impacted by lower contributions
from trading and supply and weaker refining industry conditions in
Asia and Europe. These items were partly offset by a
stronger refining margin environment in the United States Gulf Coast and improved
refining operational performance. Contributions from Chemicals were
higher as a result of improved base chemicals industry conditions
primarily in North America as well
as lower planned maintenance, partly offset by weaker intermediates
industry conditions.
Refinery intake volumes were 3% higher compared with the first
half year 2013, mainly as a result of improved operational
performance. Refinery availability increased to 93% from 92% for
the same period a year ago.
Oil products sales volumes increased by 5% compared with the
same period a year ago, mainly as a result of higher trading
volumes partly offset by lower marketing volumes.
Chemicals sales volumes increased by 4% compared with the first
half year 2013, mainly as a result of higher utilisation. Chemicals
manufacturing plant availability increased to 93% from 90% for the
first half year 2013, as a result of lower planned maintenance,
partly offset by higher unplanned maintenance.
Corporate and Non-controlling Interest
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 2014 2013
Corporate and Non-controlling interest
57 42 (94) excl. identified items 99 (70)
Of which:
101 76 (77) Corporate 177 11
(44) (34) (17) Non-controlling interest (78) (81)
56 43 (90) Corporate and Non-controlling interest 99 352
Second quarter Corporate results and Non-controlling interest
excluding identified items were a gain of $57 million, compared
with a loss of $94 million for the
same period last year. Identified items for the second quarter 2014
were a net charge of $1 million, whereas earnings for the second
quarter 2013 included a net gain of $4
million (see page 6).
Compared with the second quarter 2013, Corporate results
excluding identified items mainly reflected favourable currency
exchange rate effects, higher tax credits, and lower costs, partly
offset by increased net interest expense.
Half year Corporate results and Non-controlling interest
excluding identified items were a gain of $99 million compared with a loss of $70 million for the first half year 2013.
Identified items for the first half year 2014 offset to nil,
compared with a net gain of $422
million for the first half year 2013 (see page 6).
Compared with the first half year 2013, Corporate results
excluding identified items mainly reflected favourable currency
exchange rate effects and lower costs, partly offset by higher net
interest expense.
FORTHCOMING EVENTS
On September 5, 2014 an Investor
Day will be held in New York,
United States.
Third quarter 2014 results and third quarter 2014 dividend are
scheduled to be announced on October 30,
2014.
Unaudited Condensed Consolidated Interim Financial
Statements
Consolidated Statement of income
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 %[1] 2014 2013 %
111,222 109,658 112,669 Revenue 220,880 225,479
Share of profit of joint
1,716 2,070 1,433 ventures and associates 3,786 3,736
2,336 351 246 Interest and other income 2,687 647
Total revenue and other
115,274 112,079 114,348 income 227,353 229,862
85,296 83,835 88,901 Purchases 169,131 175,504
Production and manufacturing
7,839 7,179 7,000 expenses 15,018 13,458
Selling, distribution and
3,755 3,434 3,661 administrative expenses 7,189 7,248
274 283 305 Research and development 557 599
1,128 927 1,228 Exploration 2,055 1,876
Depreciation, depletion and
7,354 7,424 7,502 amortisation 14,778 11,727
505 452 379 Interest expense 957 780
9,123 8,545 5,372 +70 Income before taxation 17,668 18,670 -5
3,778 4,003 3,631 Taxation 7,781 8,703
5,345 4,542 1,741 +207 Income for the period 9,887 9,967 -1
Income attributable to
38 33 4 non-controlling interest 71 54
Income attributable to Royal
5,307 4,509 1,737 +206 Dutch Shell plc shareholders 9,816 9,913 -1
[1] Q2 on Q2 change
Earnings per share
Quarters $ Half year
Q2 2014 Q1 2014 Q2 2013 2014 2013
0.84 0.72 0.28 Basic earnings per share 1.56 1.57
0.84 0.72 0.27 Diluted earnings per share 1.56 1.57
SHARES[1]
Quarters Millions Half year
Q2 2014 Q1 2014 Q2 2013 2014 2013
Weighted average number of shares
as the basis for:
6,323.0 6,287.8 6,313.7 Basic earnings per share 6,305.5 6,311.3
6,323.4 6,288.9 6,316.9 Diluted earnings per share 6,305.8 6,314.6
Shares outstanding at the end of
6,341.7 6,321.8 6,296.0 the period 6,341.7 6,296.0
[1] Royal Dutch Shell plc ordinary shares of EUR0.07 each
Notes 1 to 6 are an integral part of these unaudited Condensed
Consolidated Interim Financial Statements.
Consolidated Statement of Comprehensive Income
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 2014 2013
5,345 4,542 1,741 Income for the period 9,887 9,967
Other comprehensive income net of
tax:
Items that may be reclassified to
income in later periods:
591 (551) (1,024) - Currency translation differences 40 (2,676)
- Unrealised (losses)/gains on
(182) 28 (71) securities (154) (40)
(18) 19 142 - Cash flow hedging (losses)/gains 1 155
- Share of other comprehensive
income/(loss) of joint ventures and
5 (7) (29) associates (2) (85)
396 (511) (982) Total (115) (2,646)
Items that are not reclassified to
income in later periods:
(253) (546) 584 - Retirement benefits remeasurements (799) 2,020
(253) (546) 584 Total (799) 2,020
Other comprehensive income/(loss)
143 (1,057) (398) for the period (914) (626)
5,488 3,485 1,343 Comprehensive income for the period 8,973 9,341
Comprehensive income/(loss)
attributable to non-controlling
48 29 (22) interest 77 3
Comprehensive income attributable to
5,440 3,456 1,365 Royal Dutch Shell plc shareholders 8,896 9,338
Notes 1 to 6 are an integral part of these unaudited Condensed
Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
Jun 30, 2014 Mar 31, 2014 Dec 31, 2013
Assets
Non-current assets:
Intangible assets[1] 7,423 7,482 4,394
Property, plant and equipment 193,069 194,608 191,897
Joint ventures and associates 34,455 35,909 34,613
Investments in securities 4,647 4,761 4,715
Deferred tax 6,557 6,177 5,785
Retirement benefits 3,439 3,197 3,574
Trade and other receivables 9,121 10,036 9,191
258,711 262,170 254,169
Current assets:
Inventories 31,361 28,829 30,009
Trade and other receivables 65,225 63,670 63,638
Cash and cash equivalents[1] 15,419 11,924 9,696
112,005 104,423 103,343
Total assets 370,716 366,593 357,512
Liabilities
Non-current liabilities:
Debt[1] 38,901 41,236 36,218
Trade and other payables 4,167 4,281 4,065
Deferred tax 11,950 11,882 11,943
Retirement benefits 11,967 11,385 11,182
Decommissioning and other provisions 22,714 22,298 19,698
89,699 91,082 83,106
Current liabilities:
Debt[1] 5,221 4,493 8,344
Trade and other payables 72,495 70,738 70,112
Taxes payable 13,542 13,488 11,173
Retirement benefits 389 387 382
Decommissioning and other provisions 3,257 3,275 3,247
94,904 92,381 93,258
Total liabilities 184,603 183,463 176,364
Equity attributable to Royal Dutch Shell
plc shareholders 185,015 182,028 180,047
Non-controlling interest 1,098 1,102 1,101
Total equity 186,113 183,130 181,148
Total liabilities and equity 370,716 366,593 357,512
[1] See Note 6
Notes 1 to 6 are an integral part of these unaudited Condensed
Consolidated Interim Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch Shell
plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2014 542 (1,932) (2,037) 183,474 180,047 1,101 181,148
Comprehensive
income
for the period - - (920) 9,816 8,896 77 8,973
Capital
contributions
from, and other
changes
in,
non-controlling
interest - - - 3 3 (7) (4)
Dividends paid - - - (5,862) (5,862) (73) (5,935)
Scrip
dividends[1] 6 - (6) 2,399 2,399 - 2,399
Repurchases of
shares[2] (4) - 4 (1,028) (1,028) - (1,028)
Shares held in
trust:
net
sales/(purchases)
and dividends
received - 809 - 56 865 - 865
Share-based
compensation - - (305) - (305) - (305)
At June 30, 2014 544 (1,123) (3,264) 188,858 185,015 1,098 186,113
At January 1,
2013 542 (2,287) (3,752) 180,246 174,749 1,433 176,182
Comprehensive
income for the
period - - (575) 9,913 9,338 3 9,341
Capital
contributions
from, and other
changes
in,
non-controlling
interest - - - - - (2) (2)
Dividends paid - - - (5,598) (5,598) (80) (5,678)
Scrip
dividends[1] 4 - (4) 1,647 1,647 - 1,647
Repurchases of
shares[2] (6) - - 6 (3,077) (3,077) - (3,077)
Shares held in
trust:
net
sales/(purchases)
and dividends
received - 559 - 59 618 - 618
Share-based
compensation - - (430) (380) (810) - (810)
At June 30, 2013 540 (1,728) (4,755) 182,810 176,867 1,354 178,221
[1] Under the Scrip Dividend Programme some 64.6 million A shares, equivalent to
$2.4 billion, were issued during the first half year 2014 and some 49.2 million
A shares, equivalent to $1.6 billion, were issued during the first half year
2013. On May 22, 2014, Shell announced the cancellation of its Scrip Dividend
Programme with effect from the second quarter 2014 interim dividend onwards.
[2] Includes shares committed to repurchase and repurchases subject to
settlement at the end of the quarter
Notes 1 to 6 are an integral part of these unaudited Condensed
Consolidated Interim Financial Statements.
Condensed consolidated statement of cash flows
Quarters $ million Half year
Q2 2014 Q1 2014 Q2 2013 2014 2013
Cash flow from operating activities
5,345 4,542 1,741 Income for the period 9,887 9,967
Adjustment for:
4,336 4,400 4,048 - Current taxation 8,736 8,940
468 378 301 - Interest expense (net) 846 658
7,355 7,424 7,502 - Depreciation, depletion and amortisation 14,779 11,727
(2,203) 41 (44) - Net (gains)/losses on sale of assets (2,162) (257)
(2,335) 875 4,085 - (Increase)/decrease in working capital (1,460) 4,119
- Share of profit of joint venture and
(1,716) (2,070) (1,433) associates (3,786) (3,736)
- Dividends received from joint ventures
1,768 1,507 2,703 and associates 3,275 3,945
- Deferred taxation, retirement benefits,
decommissioning
(396) (308) (845) and other provisions (704) (856)
399 529 784 - Other 928 811
Net cash from operating activities
13,021 17,318 18,842 (pre-tax) 30,339 35,318
(4,380) (3,334) (6,398) Taxation paid (7,714) (11,315)
8,641 13,984 12,444 Net cash from operating activities 22,625 24,003
Cash flow from investing activities
(7,872) (7,397) (8,987) Capital expenditure[1] (15,269) (16,849)
Investments in joint ventures and
(493) (889) (291) associates (1,382) (663)
3,539 306 319 Proceeds from sales of assets 3,845 701
Proceeds from sales of joint ventures and
3,671 56 63 associates 3,727 217
188 152 (347) Other investments (net) 340 (327)
31 58 71 Interest received 89 107
(936) (7,714) (9,172) Net cash used in investing activities (8,650) (16,814)
Cash flow from financing
activities
Net decrease in debt with maturity period
(1,397) (1,297) (370) within three months (2,694) (237)
140 3,195 198 Other debt: New borrowings 3,335 378
(251) (2,933) (3,556) Repayments (3,184) (5,741)
(398) (368) (176) Interest paid (766) (334)
(13) - 8 Change in non-controlling interest (13) 1
Cash dividends paid to:
(1,964) (1,499) (2,043) - Royal Dutch Shell plc shareholders (3,463) (3,951)
(45) (28) (59) - Non-controlling interest (73) (80)
(346) (1,241) (1,934) Repurchases of shares (1,587) (2,479)
Shares held in trust: net (purchases)/sales
90 123 (432) and dividends received 213 (442)
(4,184) (4,048) (8,364) Net cash used in financing activities (8,232) (12,885)
Currency translation differences relating
to cash and
(26) 6 18 cash equivalents (20) (314)
Increase/(decrease) in cash and cash
3,495 2,228 (5,074) equivalents 5,723 (6,010)
Cash and cash equivalents at beginning of
11,924 9,696 17,614 period 9,696 18,550
15,419 11,924 12,540 Cash and cash equivalents at end of period 15,419 12,540
[1] See Note 6
Notes 1 to 6 are an integral part of these unaudited Condensed
Consolidated Interim Financial Statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial
Statements ("Interim Statements") of Royal Dutch Shell plc and its
subsidiaries (collectively referred to as Shell) have been prepared
in accordance with IAS 34 Interim Financial Reporting as
adopted by the European Union and as issued by the International
Accounting Standards Board 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, 2013 (pages 105 to 110) as filed
with the U.S. Securities and Exchange Commission.
Shell's operating plan for the foreseeable future demonstrates
its ability to operate its cash-generating activities, selling
products to a diversified customer base. These activities are
expected to generate sufficient cash to enable Shell to service its
financing requirements, pay dividends and fund its investing
activities. As a result, the Directors have a reasonable
expectation that Shell has adequate resources to continue in
operational existence for the foreseeable future and continue to
adopt the going concern basis of accounting in preparing the
financial statements contained in this Report.
The financial information presented in the Interim Statements
does not constitute statutory accounts within the meaning of
section 434(3) of the Companies Act 2006. Statutory accounts for
the year ended December 31, 2013 were
published in Shell's Annual Report and a copy was delivered to the
Registrar of Companies in England
and Wales. The auditors' report on
those accounts was unqualified, did not include a reference to any
matters to which the auditors drew attention by way of emphasis
without qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Companies Act 2006.
2. Segment information
Segment earnings are presented on a current cost of supplies
basis (CCS earnings). 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 (see Note 9) is defined as capital
expenditure as reported in the Condensed Consolidated Statement of
Cash Flows, adjusted for: proceeds from disposals (excluding other
investments (net) in the Corporate segment); exploration expense
excluding exploration wells written off; investments in joint
ventures and associates; 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.
Information by business segment:
Quarters $ million Half year
Q2 2014 Q2 2013 2014 2013
Third-party revenue
10,658 12,085 Upstream 23,671 24,461
100,548 100,534 Downstream 197,151 200,943
16 50 Corporate 58 75
111,222 112,669 Total third-party revenue 220,880 225,479
Inter-segment revenue
12,621 10,353 Upstream 24,872 22,495
463 158 Downstream 1,071 401
- - Corporate - -
Segment earnings
3,820 1,681 Upstream[1] 9,247 7,502
1,271 803 Downstream[2] 266 2,491
100 (73) Corporate 177 418
5,191 2,411 Total segment earnings 9,690 10,411
[1] Second quarter 2014 Upstream earnings included an impairment
charge of $1,943 million after taxation, partly offset by
divestment gains of $1,230 million after taxation. Second
quarter 2013 Upstream earnings included an impairment charge
of $2,071 million after taxation.
[2] First quarter 2014 Downstream earnings included an
impairment charge of $2,284 million related to refineries in
Asia and Europe.
Quarters $ million Half year
Q2 2014 Q2 2013 2014 2013
5,191 2,411 Total segment earnings 9,690 10,411
Current cost of supplies adjustment:
151 (794) Purchases 143 (681)
(42) 218 Taxation (43) 190
Share of profit of joint ventures and
45 (94) associates 97 47
5,345 1,741 Income for the period 9,887 9,967
3. Share capital
Issued and fully paid
Sterling deferred
Ordinary shares of EUR0.07 each shares
Number of shares A B of GBP1 each
At January 1, 2014 3,898,011,213 2,472,839,187 50,000
Scrip dividends 64,568,758 - -
Repurchases of shares (8,620,000) (32,428,573) -
At June 30, 2014 3,953,959,971 2,440,410,614 50,000
At January 1, 2013 3,772,388,687 2,617,715,189 50,000
Scrip dividends 49,223,025 - -
Repurchases of shares - (72,247,018) -
At June 30, 2013 3,821,611,712 2,545,468,171 50,000
Nominal value
Ordinary shares of EUR0.07 each
$ million A B Total
At January 1, 2014 333 209 542
Scrip dividends 6 - 6
Repurchases of shares (1) (3) (4)
At June 30, 2014 338 206 544
At January 1, 2013 321 221 542
Scrip dividends 4 - 4
Repurchases of shares - (6) (6)
At June 30, 2013 325 215 540
The total nominal value of sterling deferred shares is less than $1 million.
At Royal Dutch Shell plc's Annual General Meeting on
May 20, 2014, 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 20, 2015, and
the end of the Annual General Meeting to be held in 2015, unless
previously renewed, revoked or varied by Royal Dutch Shell plc in a
general meeting.
4. Other reserves
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve[1] reserve[1] reserve[2] reserve income Total
At January 1, 2014 3,411 154 75 1,871 (7,548) (2,037)
Other comprehensive
loss attributable to
Royal Dutch Shell plc
shareholders - - - - (920) (920)
Scrip dividends (6) - - - - (6)
Repurchases of shares - - 4 - - 4
Share-based
compensation - - - (305) - (305)
At June 30, 2014 3,405 154 79 1,566 (8,468) (3,264)
At January 1, 2013 3,423 154 63 2,028 (9,420) (3,752)
Other comprehensive
loss attributable to
Royal Dutch Shell plc
shareholders - - - - (575) (575)
Scrip dividends (4) - - - - (4)
Repurchases of shares - - 6 - - 6
Share-based
compensation - - - (430) - (430)
At June 30, 2013 3,419 154 69 1,598 (9,995) (4,755)
[1] The merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent company of Royal
Dutch Petroleum Company and The "Shell" Transport and Trading Company, plc, now
The Shell Transport and Trading Company Limited, in 2005.
[2] The capital redemption reserve was established in connection with
repurchases of shares of Royal Dutch Shell plc.
5. Derivative contracts
The table below provides the carrying amounts of derivatives
contracts held, disclosed in accordance with IFRS 13 Fair Value
Measurement.
$ million Jun 30, 2014 Mar 31, 2014 Dec 31, 2013
Included within:
Trade and other receivables - non-current 1,587 1,761 1,772
Trade and other receivables - current 8,393 7,577 6,445
Trade and other payables - non-current 497 569 587
Trade and other payables - current 8,949 7,944 6,474
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2013,
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 June 30, 2014 are consistent with those used in
the year ended December 31, 2013, and
the carrying amounts of derivative contracts measured using
predominantly unobservable inputs has not changed materially since
that date.
The fair value of debt excluding finance lease liabilities at
June 30, 2014, was $39,047 million (March 31,
2014: $39,967 million;
December 31, 2013: $40,569 million). Fair value is determined from
the prices quoted for those securities.
6. Acquisition of Repsol LNG businesses
On January 1, 2014, Shell
completed the acquisition from Repsol S.A. of its LNG operations
located in Trinidad and Tobago and
Peru and related shipping and
marketing activities, as reported in the Annual Report and Form
20-F for the year ended December 31,
2013 (page 139).
Cash consideration was $4.1
billion, of which $3.4 billion
was transferred on December 31, 2013
and $0.7 billion on January 2, 2014. After taking account of cash
balances of $0.3 billion in the
entities acquired, the impact on capital expenditure in the
Condensed Consolidated Statement of Cash Flows was $3.4 billion and $0.4
billion in the fourth quarter 2013 and the first quarter
2014 respectively. The impact on net capital investment, which also
reflected the inclusion of finance lease liabilities assumed on
January 1, 2014, was $3.4 billion and $2.0
billion in the fourth quarter 2013 and the first quarter
2014 respectively.
The updated fair values of the net assets acquired at
January 1, 2014 and the fair value of
the consideration paid were as follows:
$ million
Fair value[1]
Net assets acquired:
Intangible assets 3,273
Property, plant and equipment 1,198
Joint ventures and associates 531
Cash and cash equivalents 329
Other assets 424
Debt (1,601)
Other liabilities (39)
Consideration paid 4,115
[1] The determination of the fair values of the net assets
acquired is provisional and will be subject to further review
during the 12 months from the acquisition date.
7. 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 this Report.
8. 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. Capital employed consists of total equity, current
debt and non-current debt.
9. Liquidity and capital resources
Second quarter net cash from operating activities was
$8.6 billion compared with
$12.4 billion for the same period
last year.
Total current and non-current debt decreased to $44.1 billion at June 30,
2014 from $45.7 billion at
March 31, 2014 while cash and cash
equivalents increased to $15.4
billion at June 30, 2014 from
$11.9 billion at March 31, 2014. No new debt was issued under the
US shelf registration or under the euro medium-term note programme
during the second quarter of 2014.
Net capital investment for the second quarter 2014 was
$1.1 billion, of which $0.6 billion in Upstream and $0.5 billion in Downstream. Net capital
investment for the same period of 2013 was $10.9 billion, of which $9.5 billion in Upstream, $1.3 billion in Downstream and $0.1 billion in Corporate.
Dividends of $0.47 per share are
announced on July 31, 2014 in respect
of the second quarter. These dividends are payable on September 25, 2014. In the case of B shares, the
dividends will be payable through the dividend access mechanism and
are expected to be treated as UK-source rather than Dutch-source.
See the Annual Report and Form 20-F for the year ended December 31, 2013 for additional information on
the dividend access mechanism.
On May 22, 2014, Shell announced
the cancellation of its Scrip Dividend Programme with effect from
the second quarter 2014 interim dividend onwards.
Half year net cash from operating activities was
$22.6 billion compared with
$24.0 billion for the same period
last year.
Total current and non-current debt decreased to $44.1 billion at June 30,
2014 from $44.6 billion at
December 31, 2013 while cash and cash
equivalents increased to $15.4
billion at June 30, 2014 from
$9.7 billion at December 31, 2013. New debt was issued under the
euro medium-term note programme during the first half 2014.
Net capital investment for the first half 2014 was $11.3 billion, of which $9.9 billion in Upstream, $1.3 billion in Downstream and $0.1 billion in Corporate. Net capital investment
for the same period of 2013 was $19.1
billion, of which $16.9
billion in Upstream, $2.1
billion in Downstream and $0.1
billion in Corporate.
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting Shell are
described in the Risk Factors section of the Annual Report and Form
20-F for the year ended December 31,
2013 (pages 11 to 14) and are summarised below. There are no
material changes in those Risk Factors for the remaining 6 months
of the financial year.
We are exposed to fluctuating prices of crude oil, natural gas,
oil products and chemicals.
Our ability to achieve strategic objectives depends on how we
react to competitive forces.
As our business model involves treasury and trading risks, we
are affected by the global macroeconomic environment as well as
financial and commodity market conditions.
Our future hydrocarbon production depends on the delivery of
large and complex projects, as well as on our ability to replace
proved oil and gas reserves.
An erosion of our business reputation would have a negative
impact on our brand, our ability to secure new resources and our
licence to operate.
Our future performance depends on the successful development and
deployment of new technologies.
Rising climate change concerns could lead to additional
regulatory measures that may result in project delays and higher
costs.
The nature of our operations exposes us to a wide range of
health, safety, security and environment risks.
Shell mainly self-insures its risk exposures.
A further erosion of the business and operating environment in
Nigeria would adversely impact
Shell.
We operate in more than 70 countries that have differing degrees
of political, legal and fiscal stability. This exposes us to a wide
range of political developments that could result in changes to
laws and regulations. In addition, Shell and its joint ventures and
associates face the risk of litigation and disputes worldwide.
Our operations expose us to social instability, civil unrest,
terrorism, acts of war, piracy and government sanctions that could
have an adverse impact on our business.
We rely heavily on information technology systems for our
operations.
We have substantial pension commitments, whose funding is
subject to capital market risks.
The estimation of proved oil and gas reserves involves
subjective judgements based on available information and the
application of complex rules, so subsequent downward adjustments
are possible.
Many of our major projects and operations are conducted in joint
arrangements or associates. This may reduce our degree of control,
as well as our ability to identify and manage risks.
Violations of antitrust and competition law carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
Violations of anti-bribery and corruption law carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
Violations of data protection laws carry fines and expose us
and/or our employees to criminal sanctions and civil suits.
The Company's Articles of Association determine the jurisdiction
for shareholder disputes. This might limit shareholder
remedies.
FIRST QUARTER 2014 PORTFOLIO DEVELOPMENTS
Upstream
In Brazil, Shell announced an
agreement to sell a 23% interest in the Shell-operated deep-water
project BC-10 to Qatar Petroleum International for a consideration
of some $1 billion. Subject to
regulatory approval, the transaction is expected to close in
2014.
In Brunei, final investment
decision ("FID") was taken on the Maharaja Lela South ("ML South")
development (Shell interest 35%). The development is expected to
deliver peak production of 35 thousand barrels of oil equivalent
per day ("boe/d").
Shell successfully commenced export of its first crude from the
Majnoon oil field in Iraq, where
production exceeded the 175,000 barrels per day (b/d) First
Commercial Production target which initiated the commencement of
cost recovery.
In the United Kingdom, Shell
entered into an agreement with the government to progress the
Peterhead Carbon Capture and Storage ("CCS") project to the next
phase of front-end engineering and design ("FEED"). The project
aims to capture and store 10 million tonnes of CO2 over 10 years.
If successful, the project could represent the first
industrial-scale application of CCS technology at a gas-fired power
station anywhere in the world.
In the United States, Shell
announced first production from the Mars B deep-water development
(Shell interest 71.5%) in the Gulf of
Mexico. The Olympus platform was completed and installed
more than six months ahead of schedule, allowing for early
production. Olympus is Shell's seventh, and largest, floating
deep-water platform in the Gulf of
Mexico and extends the life of the overall Mars basin to
around 2050. It is expected that the project will ramp up to a peak
production of 100 thousand boe/d in 2016.
Also in the United States,
Shell reached an agreement to sell its 50% interest in
approximately 312,000 acres in the Niobrara and Sandwash basins for
a consideration of some $90 million.
Subject to regulatory approval, the deal is expected to close in
May, 2014.
Shell commenced FEED on the Appomattox deep-water development
project (Shell interest 80%) in the Gulf
of Mexico, United States.
Including the Vicksburg A discovery (Shell interest 75%), the
resources associated with this development are estimated to be
greater than 600 million barrels of oil equivalent ("boe").
The project is expected to deliver peak production of 150
thousand boe/d.
The Siakap North-Petai development (Shell interest 21%) offshore
Malaysia commenced production. The
development is expected to deliver peak production of around 30
thousand boe/d.
During the quarter, in Shell's heartlands exploration programme,
a Shell-operated oil discovery at the Limbayong prospect (Shell
interest 35%) offshore Malaysia
was announced. Shell participated in the non-operated Lympstone gas
discovery (Shell interest 50%) offshore Australia, and in April in the Rosmari-1
discovery (Shell interest 85%) offshore Malaysia, adding new gas resources. In
addition during the quarter, we had a successful appraisal of the
Pegaga gas discovery (Shell interest 20%) offshore Malaysia.
Shell had continued success with near-field exploration
discoveries in a number of countries.
As part of its global exploration programme, Shell added new
acreage positions following successful bidding results in
Namibia, Norway, and Russia.
Upstream divestment proceeds totalled some $0.3 billion for the first quarter 2014 and
included among others proceeds from the completed sale of Shell's
interest in Mississippi Lime acreage in Kansas, United
States.
In April, Shell approved to move into FEED for an LNG facility
in Canada. The facility is
expected to have capacity of approximately 12 million tonnes per
annum ("mtpa") with expansion potential to approximately 24
mtpa.
In Upstream Americas resources plays (shale oil and gas),
insights from ongoing exploration and appraisal drilling results
and production information, and Shell's ongoing restructuring of
this portfolio, could potentially lead to future asset sales and/or
impairments.
Downstream
In Australia, Shell announced a
binding agreement to sell its Downstream businesses (excluding
Aviation) to Vitol for a total transaction value of approximately
$2.6 billion. The sale covers Shell's
Geelong Refinery and 870-site Retail business, along with its Bulk
Fuels, Bitumen, Chemicals and part of its Lubricants businesses. It
also includes a brand licence arrangement and an exclusive
distributor arrangement in Australia for Shell Lubricants. The deal is
subject to regulatory approvals and is expected to close in
2014.
In Italy, Shell reached an
agreement with Kuwait Petroleum International for the sale of its
Retail, Supply & Distribution Logistics and Aviation
businesses. Under this agreement, Shell's Retail network will be
re-branded to Q8 in the country. The sale is subject to regulatory
approvals and is expected to close in 2014.
Consistent with Shell's strategic intent to concentrate its
Downstream global footprint and businesses where it can be most
competitive, Shell announced the intent to sell its Downstream
Refining and Marketing businesses in Denmark.
Shell is also considering the sale of certain of its Marketing
assets in Norway.
Downstream divestment proceeds totalled some $0.2 billion for the first quarter 2014 and
included among others proceeds from the divestment of Shell's 16.3%
interest in Ceska Rafinerska in the Czech
Republic.
FIRST QUARTER 2014 SUMMARY OF IDENTIFIED ITEMS
Earnings for the first quarter 2014 reflected the following
items, which in aggregate amounted to a net charge
of $2,862 million (compared with a
net gain of $431 million in the first
quarter 2013), as summarised in the table below:
- Upstream earnings included a net charge of $283 million, mainly reflecting charges related
to asset impairments of $168 million.
Identified items also included net charges related to the fair
value accounting of commodity derivatives and certain gas
contracts, the impact of a reduction in the discount rate used for
provisions, and divestments. Earnings for the first quarter 2013
included a net gain of $173
million.
- Downstream earnings included a net charge of $2,580 million, including impairments of
$2,284 million related to refineries
in Asia and Europe. The refining-related impairments,
equivalent to 14% of Shell's refinery asset base, reflect the
latest insight into margins based on feedstock supply and product
demand outlook. This charge includes the write-off of the Bukom oil
refinery, at Shell's integrated refinery and chemicals facility in
Singapore, and excludes the Bukom
chemicals plant. The company has initiatives underway to improve
the profitability of the integrated facilities at Bukom. Earnings
for the first quarter 2013 included a net charge of $160 million.
- Corporate and Non-controlling interest earnings included a
net gain of $1 million. Earnings for
the first quarter 2013 included a net gain of $418 million.
RESPONSIBILITY STATEMENT
It is confirmed that to the best of our knowledge: (a) the
Condensed Consolidated Interim Financial Statements have been
prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the European Union; (b) the interim management report
includes a fair review of the information required by Disclosure
and Transparency Rule (DTR) 4.2.7R (indication of important events
during the first six months of the financial year, and their impact
on the Condensed Consolidated Interim Financial Statements, and
description of principal risks and uncertainties for the remaining
six months of the financial year); and (c) the interim management
report includes a fair review of the information required by DTR
4.2.8R (disclosure of related parties transactions and changes
thereto).
The Directors of Royal Dutch Shell plc are as shown on pages
58-59 in the Annual Report and Form 20-F for the year ended
December 31, 2013 except that
Josef Ackermann stepped down as a
Director on May 20, 2014, and
Patricia A. Woertz was appointed a
Director with effect from June 1,
2014.
On behalf of the Board
Ben van Beurden Simon Henry
Chief Executive Officer Chief Financial Officer
July 31, 2014 July 31, 2014
INDEPENDENT REVIEW REPORT TO ROYAL DUTCH SHELL PLC
Report on the Condensed Consolidated Interim Financial
Statements
Our conclusion
We have reviewed the Condensed Consolidated Interim Financial
Statements, defined below, in the half-yearly financial report of
Royal Dutch Shell plc for the six months ended June 30, 2014. Based on our review, nothing has
come to our attention that causes us to believe that the Condensed
Consolidated Interim Financial Statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34 as adopted by the European Union and the Disclosure and
Transparency Rules of the United
Kingdom's Financial Conduct Authority. This conclusion is to
be read in the context of what we say in the remainder of this
report.
What we have reviewed
The Condensed Consolidated Interim Financial Statements, which
are prepared by Royal Dutch Shell plc, comprise:
- the Consolidated Statement of Income and Consolidated Statement
of Comprehensive Income for the six months ended June 30, 2014;
- the Condensed Consolidated Balance Sheet as at June 30, 2014;
- the Consolidated Statement of Changes in Equity and Condensed
Consolidated Statement of Cash Flows for the six months ended
June 30, 2014; and
- the explanatory notes to the Condensed Consolidated Interim
Financial Statements.
The annual financial statements of Royal Dutch Shell plc are
prepared in accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European
Union. The Condensed Consolidated Interim Financial Statements
included in this half-yearly financial report have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure and Transparency Rules of the United Kingdom's Financial Conduct
Authority.
What a review of the Condensed Consolidated Financial Statements
involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial
Information Performed by the Independent Auditor of the Entity'
issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially
less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and, consequently, does not enable us
to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion. We have read the other information
contained in the half-yearly financial report and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the Condensed Consolidated
Interim Financial Statements.
Responsibilities for the Condensed Consolidated Interim
Financial Statements and the review
Our responsibilities and those of the directors
The half-yearly financial report, including the Condensed
Consolidated Interim Financial Statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the half-yearly financial report in
accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct
Authority. Our responsibility is to express to the company a
conclusion on the Condensed Consolidated Interim Financial
Statements in the half-yearly financial report based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure and Transparency Rules of the Financial Conduct
Authority and for no other purpose. We do not, in giving this
conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent
in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
July 31, 2014
- The maintenance and integrity of the Royal Dutch Shell plc
website (http://www.shell.com) are the responsibility of the
directors; the work carried out by the auditors does not involve
consideration of these matters and, accordingly, the auditors
accept no responsibility for any changes that may have occurred to
the Condensed Consolidated Interim Financial Statements since they
were initially presented on the website.
- Legislation in the United
Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other
jurisdictions.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate entities. In this document
"Shell", "Shell group" and "Royal Dutch Shell" are sometimes used
for convenience where references are made to Royal Dutch Shell plc
and its subsidiaries in general. Likewise, the words "we", "us" and
"our" are also used to refer to subsidiaries in general or to those
who work for them. These expressions are also used where no useful
purpose is served by identifying the particular company or
companies. ''Subsidiaries'', "Shell subsidiaries" and "Shell
companies" as used in this document refer to companies over which
Royal Dutch Shell plc either directly or indirectly has control.
Companies over which Shell has joint control are generally referred
to as "joint ventures" and companies over which Shell has
significant influence but neither control nor joint control are
referred to as "associates". The term "Shell interest" is used for
convenience to indicate the direct and/or indirect ownership
interest held by Shell in a venture, partnership or company, after
exclusion of all third-party interest.
This document contains forward-looking statements concerning the
financial condition, results of operations and businesses of Royal
Dutch Shell. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations
that are based on management's current expectations and assumptions
and involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in these statements.
Forward-looking statements include, among other things, statements
concerning the potential exposure of 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 document, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell's products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, fiscal and regulatory developments
including regulatory measures addressing climate change; (k)
economic and financial market conditions in various countries and
regions; (l) political risks, including the risks of expropriation
and renegotiation of the terms of contracts with governmental
entities, delays or advancements in the approval of projects and
delays in the reimbursement for shared costs; and (m) changes in
trading conditions. All forward-looking statements contained in
this document are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section.
Readers should not place undue reliance on forward-looking
statements. Additional risk factors that may affect future results
are contained in Royal Dutch Shell's Form 20-F for the year ended
December 31, 2013 (available at http://www.shell.com/investor and
http://www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this document and should be
considered by the reader. Each forward-looking statement
speaks only as of the date of this document, July 31, 2014. 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 document.
We may have used certain terms, such as resources, in this
document 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
http://www.sec.gov. You can also obtain this form from the SEC by
calling 1-800-SEC-0330.
July 31, 2014
The information in this Report reflects the unaudited
consolidated financial position and results of Royal Dutch Shell
plc. The information in this Report also represents Royal Dutch
Shell plc's half-yearly financial report for the purposes of the
Disclosure and Transparency Rules of the UK Financial Conduct
Authority. As such: (1) the interim management report can be found
on pages 3 to 9 and 18 to 21; (2) the condensed set of financial
statements on pages 10 to 17; and (3) the directors' responsibility
statement on page 22 and the auditors' independent review on page
23. Company No. 4366849, Registered Office: Shell Centre,
London, SE1 7NA, England, UK.
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