Royal Dutch Shell plc 3rd Quarter 2011 Unaudited Results
THE HAGUE, The Netherlands, October 27, 2011 /PRNewswire/ --
Royal Dutch Shell's (NYSE:RDS.A)(NYSE:RDS.B) third quarter 2011 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $7.2 billion compared with $3.5 billion the same quarter a year ago. Basic CCS earnings per share increased by 104% versus the third quarter of 2010.
Third quarter 2011 CCS earnings, excluding identified items (see page 5), were $7.0 billion compared with $4.9 billion in the third quarter 2010, an increase of 42%. Basic CCS earnings per share excluding identified items increased by 40% versus the same quarter a year ago.
Cash flow from operating activities for the third quarter 2011 was $11.6 billion. Excluding net working capital movements, cash flow from operating activities in the third quarter 2011 was $10.6 billion, compared with $8.1 billion in the same quarter last year.
Net capital investment (see Note 1) for the quarter was $6.1 billion. Total dividends distributed in the quarter were $2.6 billion of which $0.7 billion were settled under the Scrip Dividend Programme. Some 25.3 million shares, equivalent to $0.8 billion, were bought back for cancellation during the quarter under our share buyback programme.
Gearing at the end of the third quarter 2011 was 10.8%
A third quarter 2011 dividend has been announced of $0.42 per ordinary share and $0.84 per American Depositary Share (ADS), unchanged from the US dollar dividend per share and per ADS for the same period in 2010.
Summary OF unaudited results
Quarters $ million Nine months
Q3 Q2
2011 2011 Q3 2010 %[1] 2011 2010 %
Income attributable to
6,976 8,662 3,463 +101 shareholders 24,418 13,337 +83
Current cost of supplies
(CCS) adjustment for
270 (667) 58 Downstream (2,252) (390)
7,246 7,995 3,521 +106 CCS earnings 22,166 12,947 +71
245 1,443 (1,412) Less: Identified items[2] 2,325 (1,016)
CCS earnings excluding
7,001 6,552 4,933 +42 identified items 19,841 13,963 +42
Of which:
5,435 5,420 3,437 Upstream 15,493 11,002
1,818 1,081 1,453 Downstream 4,552 3,391
Corporate and
(252) 51 43 Non-controlling interest (204) (430)
Cash flow from operating
11,645 10,040 9,016 +29 activities 30,306 21,894 +38
Basic CCS earnings per
1.16 1.29 0.57 +104 share ($) 3.57 2.11 +69
Basic CCS earnings per ADS
2.32 2.58 1.14 ($) 7.14 4.22
Basic CCS earnings per
share excl. identified
1.12 1.05 0.80 +40 items ($) 3.20 2.28 +40
Basic CCS earnings per ADS
2.24 2.10 1.60 excl. identified items ($) 6.40 4.56
0.42 0.42 0.42 - Dividend per share ($) 1.26 1.26 -
0.84 0.84 0.84 Dividend per ADS ($) 2.52 2.52
[1] Q3 on Q3 change.
[2] See page 5.
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
"We continue to make good progress with our strategy; improving our competitive performance, delivering a new wave of production growth, and maturing the next generation of growth options for shareholders.
Our profits pay for Shell's substantial investments in new energy projects, to ensure low-cost, reliable energy supplies for our customers and to create value for our shareholders. Our third quarter results were higher than year-ago levels, driven by higher oil prices and Shell's performance.
In Upstream, our oil and gas production excluding divestments grew by 2% from year-ago levels, driven by the continued ramp-up of our growth projects, mainly in Qatar and Canada. Shell's LNG sales volumes increased by 12%, with continued robust demand for gas. Our Downstream results were supported by increased Chemicals earnings, with a resilient performance from Oil Products, despite the more difficult economic environment. We have resumed our share buyback programme, with $0.8 billion of buybacks during the quarter, at a time when financial markets have been weak.
Disposal of non-core assets is an important part of our drive to improve Shell's competitive position and capital efficiency. We completed $6.2 billion of asset sales this year, with $1.8 billion in the third quarter 2011, including a refinery in the United Kingdom and non-core upstream assets in the Americas. We have delivered on our target for $5 billion of disposals this year, ahead of schedule. Asset sales from non-core positions will continue.
We are delivering on our growth strategy, with the build-up of production from new projects. The Athabasca Oil Sands Project Expansion 1 in Canada and the Pearl Gas-to-Liquids (GTL) Train 1 in Qatar have ramped up and production should stabilise at plateau rates shortly. We expect to start up Train 2 of Pearl GTL before the end of 2011, as planned. These projects in Qatar and Canada are part of a series of over 20 new upstream start-ups planned for 2011-14, as we deliver on our plans for sustainable growth, driving Shell's financial and operating targets for 2012.
We continue to mature new investment options for medium-term growth, taking final investment decision on the Clair Phase 2 development in the United Kingdom, and the Wheatstone LNG project in Australia, confirming a new oil discovery in French Guiana, and also building new acreage positions for exploration drilling in the future.
Voser concluded: "We are making good progress against our targets, to deliver a more competitive performance."
THIRD QUARTER 2011 portfolio developmentS
Upstream
In Australia, Arrow Energy Holdings Pty Ltd ("Arrow"), a joint venture (Shell share 50%) between Shell and PetroChina, announced the front-end engineering and design (FEED) for the Arrow Liquefied Natural Gas (LNG) project on Curtis Island.
Arrow also confirmed that it has entered into a Scheme Implementation Agreement ("SIA") with coal bed methane company Bow Energy Ltd ("Bow") under which Arrow has agreed to acquire all of the shares in Bow. The offer values Bow at some $0.5 billion. The acquisition of Bow contributes to Arrow's opportunity to expand each of the two trains of its proposed LNG project on Curtis Island from 4.0 million tonnes per annum (mtpa) currently planned. The transaction is expected to be implemented in January 2012, subject to Bow shareholder approvals.
Also in Australia, final investment decision was taken on the Wheatstone LNG foundation project (Shell share 6.4%). The foundation project includes two LNG trains with a combined capacity of 8.9 mtpa.
In Canada, Shell announced investment in a LNG-for-transport project Green Corridor (Shell share 100%). The Green Corridor project includes a 0.3 mtpa capacity LNG production facility and downstream infrastructure.
In Mexico, Shell completed the sale of the LNG import and regasification terminal in Altamira for a total consideration of $0.2 billion.
In Norway, Shell agreed to sell its interests in the natural gas transport infrastructure joint venture Gassled for some $0.7 billion. The transaction is subject to regulatory approval and to consent of joint venture partners.
During the third quarter of 2011, Shell participated in two exploration discoveries including the frontier deepwater oil discovery Zaedyus (Shell share 45%) offshore French Guiana, which has the potential to open up an entirely new oil play for the industry, and a gas discovery at Acme West (Shell share 33%) offshore Australia. Also during the quarter, as part of our global exploration programme, Shell built new acreage positions onshore in the Americas and the Ukraine as well as offshore New Zealand and Tanzania.
On October 13, in the United Kingdom, Shell announced the final investment decision for the offshore project Claire Phase 2 (Shell share 28%), with an expected peak production of 120 thousand barrels of oil equivalent per day (boe/d).
Downstream
In the United Kingdom, Shell completed the sale of the Stanlow refinery for a total consideration of some $1.2 billion (including some $0.9 billion for working capital).
Key features of the Third quarter 2011
- Third quarter 2011 CCS earnings (see Note 1) were $7,246 million, 106% higher than in the same quarter a year ago.
- Third quarter 2011 CCS earnings, excluding identified items (see page 5), were $7,001 million compared with $4,933 million in the third quarter 2010.
- Basic CCS earnings per share increased by 104% versus the same quarter a year ago.
- Basic CCS earnings per share excluding identified items increased by 40% versus the same quarter a year ago.
- Cash flow from operating activities for the third quarter 2011 was $11.6 billion, compared with $9.0 billion in the same quarter last year. Excluding net working capital movements, cash flow from operating activities in the third quarter 2011 was $10.6 billion, compared with $8.1 billion in the same quarter last year.
- Total cash dividends paid to shareholders during the third quarter 2011 were $1.9 billion. During the third quarter 2011, some 22.3 million Class A shares, equivalent to $0.7 billion, were issued under the Scrip Dividend Programme for the second quarter 2011. Some 25.3 million Class B shares, equivalent to $0.8 billion, were bought back for cancellation during the quarter under our share buyback programme commenced to offset dilution created by shares issued under the Scrip Dividend Programme.
- Net capital investment (see Note 1) for the third quarter 2011 was $6.1 billion. Capital investment for the third quarter 2011 was $7.9 billion.
- Return on average capital employed (ROACE) (see Note 6) at the end of the third quarter 2011, on a reported income basis, was 16.4%.
- Gearing was 10.8% at the end of the third quarter 2011 versus 19.0% at the end of the third quarter 2010.
Upstream
- Liquids and natural gas production for the third quarter 2011 was 3,012 thousand boe/d, 2% lower than in the third quarter 2010. Production for the third quarter 2011 excluding the impact of divestments of some 100 thousand boe/d was 2% higher than in the same quarter last year.
- New field start-ups and the continuing ramp-up of fields contributed some 270 thousand boe/d to production in the third quarter 2011, which more than offset the impact of field declines.
- LNG sales volumes of 4.76 million tonnes in the third quarter 2011 were 12% higher than in the same quarter a year ago.
Downstream
- Oil Products sales volumes for the third quarter 2011 were in line with the third quarter 2010. Excluding the impact of divestments and the effects of the formation of the Raízen joint venture, of some 110 thousand b/d, sales volumes were 2% higher than in the same period last year. Chemical product sales volumes in the third quarter 2011 decreased by 9% compared with the third quarter 2010.
- Oil Products refinery availability in the third quarter 2011 was 94%, compared with 93% in the third quarter 2010. Chemicals manufacturing plant availability was 90%, compared with 94% in the same period last year.
Supplementary financial and operational disclosure for the third quarter 2011 is available at www.shell.com/investor.
Summary of identified items
CCS earnings in the third quarter 2011 reflected the following items, which in aggregate amounted to a net gain of $245 million (compared with a net charge of $1,412 million in the third quarter 2010), as summarised in the table below:
- Upstream earnings included a net gain of $636 million, reflecting gains related to the estimated fair value accounting of commodity derivatives (see Note 5), divestment gains and net tax credits. These items were partly offset by asset impairments and decommissioning provisions. Earnings for the third quarter 2010 included a net charge of $284 million.
- Downstream earnings included a net charge of $338 million, reflecting an asset impairment as well as redundancy and decommissioning provisions. These items were partly offset by a gain related to the estimated fair value accounting of commodity derivatives (see Note 5) and divestment gains. Earnings for the third quarter 2010 included a net charge of $1,128 million.
- Corporate and Non-controlling interest earnings included a net charge of $53 million, reflecting a tax charge.
Summary OF IDENTIFIED ITEMS
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 2011 2010
Identified items:
636 641 (284) Upstream 2,397 (164)
(338) 802 (1,128) Downstream (19) (852)
Corporate and Non-controlling
(53) - - interest (53) -
245 1,443 (1,412) CCS earnings impact 2,325 (1,016)
These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's CCS earnings and are shown to provide additional insight into segment earnings and income attributable to shareholders. Further comments on the business segments are provided in the section 'Earnings by Business Segment' on pages 6 to 8.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 %[1] 2011 2010 %
Upstream earnings excluding
5,435 5,420 3,437 +58 identified items 15,493 11,002 +41
6,071 6,061 3,153 +93 Upstream earnings 17,890 10,838 +65
Upstream cash flow from
8,520 8,902 6,139 +39 operating activities 24,094 19,276 +25
Upstream net capital
5,944 4,049 9,554 -38 investment 11,720 20,700 -43
Liquids production
available for sale
1,676 1,668 1,709 -2 (thousand b/d) 1,674 1,699 -1
Natural gas production
available for sale (million
7,749 7,996 7,823 -1 scf/d) 8,769 9,008 -3
Barrels of oil equivalent
3,012 3,046 3,058 -2 (thousand boe/d) 3,186 3,252 -2
LNG sales volumes (million
4.76 4.81 4.26 +12 tonnes) 13.99 12.37 +13
[1] Q3 on Q3 change
Third quarter Upstream earnings excluding identified items were $5,435 million compared with $3,437 million a year ago. Identified items were a net gain of $636 million, compared with a net charge of $284 million in the third quarter 2010 (see page 5).
Upstream earnings excluding identified items increased compared with the third quarter 2010. Earnings reflected higher liquids and natural gas realisations. The earnings also reflected higher LNG realisations, sales volumes and trading contributions. These items were partly offset by increased taxes and higher operating expenses, reflecting the start-up of new projects and increased maintenance activities.
Global liquids realisations were 48% higher than in the third quarter 2010. Global natural gas realisations were 31% higher than in the same quarter a year ago. Natural gas realisations in the Americas increased by 1%, whereas natural gas realisations outside the Americas increased by 40%.
Third quarter 2011 production was 3,012 thousand boe/d compared with 3,058 thousand boe/d a year ago. Liquids production decreased by 2% and natural gas production decreased by 1% compared with the third quarter 2010. Excluding the impact of divestments of some 100 thousand boe/d, third quarter 2011 production was 2% higher than in the same period last year.
New field start-ups and the continuing ramp-up of fields contributed some 270 thousand boe/d to production in the third quarter 2011, in particular from Pearl GTL and Qatargas 4 LNG in Qatar as well as AOSP Expansion 1 in Canada and Gbaran Ubie in Nigeria, which more than offset the impact of field declines.
LNG sales volumes of 4.76 million tonnes were 12% higher than in the same quarter a year ago, mainly reflecting the contribution of Qatargas 4 LNG.
DOWNSTREAM
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 %[1] 2011 2010 %
Downstream CCS earnings
1,818 1,081 1,453 +25 excluding identified items 4,552 3,391 +34
1,480 1,883 325 +355 Downstream CCS earnings 4,533 2,539 +79
Downstream cash flow from
2,069 2,077 1,953 +6 operating activities 4,597 2,309 +99
Downstream net capital
149 1,949 701 -79 investment 1,980 1,367 +45
Refinery processing intake
2,854 2,834 3,292 -13 (thousand boe/d) 2,905 3,196 -9
Oil products sales volumes
6,374 6,088 6,385 - (thousand b/d) 6,210 6,389 -3
Chemicals sales volumes
4,832 4,549 5,333 -9 (thousand tonnes) 14,391 15,356 -6
[1] Q3 on Q3 change
Third quarter Downstream earnings excluding identified items were $1,818 million compared with $1,453 million in the third quarter 2010. Identified items were a net charge of $338 million, compared with a net charge of $1,128 million in the third quarter 2010 (see page 5).
Downstream earnings excluding identified items increased compared with the third quarter 2010. Earnings reflected higher Chemicals earnings while Oil Products earnings were in line with the same period a year ago.
Oil Products marketing earnings were in line with the third quarter 2010. Earnings reflected higher contributions from trading as well as earnings from the Raízen joint venture in Brazil. These items were offset by lower contributions from retail, B2B and lubricants as a result of the weakening global economic environment, as well as portfolio divestments.
Oil products sales volumes were in line with the same period a year ago. Excluding the impact of divestments and the effects of the formation of the Raízen joint venture, of some 110 thousand b/d, sales volumes were 2% higher than in the same period last year.
Oil Products refining results were in line with the third quarter 2010 and reflected increased refining realisations and higher contributions from equity-accounted investments, despite a weaker global refining environment. These items were offset by unfavourable currency exchange rate effects.
Refinery intake volumes decreased by 13% compared with the third quarter of 2010, mainly as a result of divestments and a refinery closure. Excluding portfolio impacts, refinery intake volumes were 1% lower than in the same period a year ago. Refinery availability increased to 94% compared with 93% in the third quarter 2010.
Chemicals earnings excluding identified items increased to $674 million compared with $315 million in the third quarter 2010. Higher realised chemicals margins and higher income from equity-accounted investments reflected favourable market conditions in the USA and Europe.
Chemicals sales volumes decreased by 9% compared with the same quarter last year. Chemicals manufacturing plant availability decreased to 90% compared with 94% in the third quarter 2010, as a result of increased maintenance activities.
CORPORATE AND Non-controlling Interest
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 2011 2010
Corporate and Non-controlling
(252) 51 43 interest excl. identified items (204) (430)
Of which:
(201) 141 148 Corporate 39 (140)
(51) (90) (105) Non-controlling interest (243) (290)
Corporate and Non-controlling
(305) 51 43 interest (257) (430)
Third quarter Corporate results and Non-controlling interest excluding identified items (see page 5) were a loss of $252 million compared with a gain of $43 million in the same period last year. Identified items in the third quarter 2011 were a net charge of $53 million (see page 5).
Corporate results excluding identified items were lower compared with the third quarter 2010, mainly as a result of unfavourable currency exchange rate effects of some $270 million in the third quarter 2011. Results also reflected higher net interest expense.
FORTHCOMING EVENTS
Fourth quarter 2011 results and fourth quarter 2011 dividend are scheduled to be announced on February 2, 2012. First quarter 2012 results and first quarter 2012 dividend are scheduled to be announced on April 26, 2012. Second quarter 2012 results and second quarter 2012 dividend are scheduled to be announced on July 26, 2012. Third quarter 2012 results and third quarter 2012 dividend are scheduled to be announced on November 1, 2012.
Unaudited Condensed Consolidated Interim Financial Statements
CONSOLIDATED Statement of income
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 %[1] 2011 2010 %
123,412 121,261 90,712 Revenue 354,596 267,342
Share of profit of
equity-accounted
2,041 2,126 1,020 investments 6,504 3,974
504 1,175 1,010 Interest and other income 4,261 1,311
Total revenue and other
125,957 124,562 92,742 income 365,361 272,627
98,094 95,275 70,278 Purchases 278,179 205,038
Production and
6,761 6,791 6,052 manufacturing expenses 19,465 17,164
Selling, distribution and
3,516 3,749 3,701 administrative expenses 10,629 11,227
253 249 203 Research and development 721 597
661 379 610 Exploration 1,441 1,390
Depreciation, depletion
3,803 2,865 6,196 and amortisation 9,985 12,359
331 360 317 Interest expense 1,086 769
12,538 14,894 5,385 +133 Income before taxation 43,855 24,083 +82
5,505 6,135 1,820 Taxation 19,138 10,465
7,033 8,759 3,565 +97 Income for the period 24,717 13,618 +82
Income attributable to
57 97 102 non-controlling interest 299 281
Income attributable to
Royal Dutch Shell plc
6,976 8,662 3,463 +101 shareholders 24,418 13,337 +83
Current cost of supplies
(CCS) adjustment for
270 (667) 58 Downstream (2,252) (390)
7,246 7,995 3,521 +106 CCS earnings 22,166 12,947 +71
245 1,443 (1,412) Less: Identified items 2,325 (1,016)
CCS earnings excluding
7,001 6,552 4,933 +42 identified items 19,841 13,963 +42
Basic earnings per share
Quarters Nine months
Q3 2011 Q2 2011 Q3 2010 $ 2011 2010
1.12 1.39 0.56 Earnings per share 3.93 2.18
1.16 1.29 0.57 CCS earnings per share 3.57 2.11
CCS earnings per share excl.
1.12 1.05 0.80 identified items 3.20 2.28
Diluted earnings per share
Quarters Nine months
Q3 2011 Q2 2011 Q3 2010 $ 2011 2010
1.12 1.39 0.56 Earnings per share 3.93 2.17
1.16 1.28 0.57 CCS earnings per share 3.57 2.11
CCS earnings per share excl.
1.12 1.05 0.80 identified items 3.19 2.28
SHARES[2]
Quarters Millions Nine months
Q3 2011 Q2 2011 Q3 2010 2011 2010
Weighted average number of shares
as the basis for:
6,238.1 6,216.5 6,132.6 Basic earnings per share 6,206.2 6,131.1
6,247.1 6,227.2 6,138.3 Diluted earnings per share 6,216.2 6,137.1
Shares outstanding at the end of
6,236.5 6,241.8 6,132.0 the period 6,236.5 6,132.0
[1] Q3 on Q3 change.
[2] Royal Dutch Shell plc ordinary shares of EUR0.07 each.
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
Consolidated Statement of Comprehensive Income
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 2011 2010
7,033 8,759 3,565 Income for the period 24,717 13,618
Other comprehensive income, net of
tax:
(4,642) 490 4,500 Currency translation differences (2,018) (118)
Unrealised gains/(losses) on
23 9 (136)securities 13 (116)
(130) 19 2 Cash flow hedging gains/(losses) (89) 14
Share of other comprehensive
income/(loss) of equity-accounted
29 (29) 35 investments 99 6
Other comprehensive income/(loss)
(4,720) 489 4,401 for the period (1,995) (214)
2,313 9,248 7,966 Comprehensive income for the period 22,722 13,404
Comprehensive income/(loss)
attributable to non-controlling
(46) 128 200 interest 255 338
Comprehensive income attributable
to Royal Dutch Shell plc
2,359 9,120 7,766 shareholders 22,467 13,066
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch
Shell plc shareholders
Ordinary
share Shares
capital held in Other Retained
$ million trust reserves earnings Total
At January 1,
2011 529 (2,789) 10,094 140,179 148,013
Comprehensive
income for the
period - - (1,951) 24,418 22,467
Capital
contributions
from and other
changes in
non-controlling
interest - - - 48 48
Dividends paid - - - (7,816) (7,816)
Scrip
dividends[1] 9 - (9) 2,627 2,627
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 961 - 99 1,060
Share
repurchases for
cancellation[2] (3) - 3 (1,501) (1,501)
Share-based
compensation - - (230) (67) (297)
At September
30, 2011 535 (1,828) 7,907 157,987 164,601
(continued)
Non-controlling Total
$ million interest equity
At January 1,
2011 1,767 149,780
Comprehensive
income for the
period 255 22,722
Capital
contributions
from and other
changes in
non-controlling
interest (46) 2
Dividends paid (374) (8,190)
Scrip
dividends[1] - 2,627
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 1,060
Share
repurchases for
cancellation[2] - (1,501)
Share-based
compensation - (297)
At September
30, 2011 1,602 166,203
[1] During the first nine months of 2011 some 77.3 million Class A shares,
equivalent to $2.6 billion, were issued under the Scrip Dividend
Programme. The fair value of the shares issued in connection with the
Scrip Dividend Programme is reflected in retained earnings.
[2] Includes shares repurchased during the period, and at September 30,
2011, shares committed to repurchase and repurchases subject to
settlement.
Equity attributable to Royal Dutch
Shell plc shareholders
Ordinary
share Shares
capital held in Other Retained
$ million trust reserves earnings Total
At January 1,
2010 527 (1,711) 9,982 127,633 136,431
Comprehensive
income for the
period - - (271) 13,337 13,066
Capital
contributions
from and other
changes in
non-controlling
interest - - - 294 294
Dividends paid - - - (7,586) (7,586)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 368 - - 368
Share-based
compensation - - (52) 223 171
At September
30, 2010 527 (1,343) 9,659 133,901 142,744
(continued)
Equity attributable to Royal Dutch
Shell plc shareholders
Non-controlling Total
$ million interest equity
At January 1,
2010 1,704 138,135
Comprehensive
income for the
period 338 13,404
Capital
contributions
from and other
changes in
non-controlling
interest 16 310
Dividends paid (357) (7,943)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 368
Share-based
compensation - 171
At September
30, 2010 1,701 144,445
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED balance sheet
$ million
Sept 30, Sept 30,
2011 Jun 30, 2011 2010
Assets
Non-current assets:
Intangible assets 4,500 4,668 5,171
Property, plant and equipment 147,027 148,057 139,863
Equity-accounted investments 38,321 39,033 34,015
Investments in securities 3,915 3,920 3,968
Deferred tax 5,512 5,612 5,372
Prepaid pension costs 11,132 11,171 10,383
Trade and other receivables 9,040 9,450 8,909
219,447 221,911 207,681
Current assets:
Inventories 30,250 33,955 28,922
Trade and other receivables 78,529 75,493 62,769
Cash and cash equivalents 19,256 19,465 11,282
128,035 128,913 102,973
Total assets 347,482 350,824 310,654
Liabilities
Non-current liabilities:
Debt 31,092 31,477 35,148
Trade and other payables 5,415 5,335 4,696
Deferred tax 15,814 16,626 13,179
Retirement benefit obligations 5,988 6,126 6,048
Decommissioning and other
provisions 15,442 15,063 14,352
73,751 74,627 73,423
Current liabilities:
Debt 8,268 11,022 9,932
Trade and other payables 80,357 79,344 65,980
Taxes payable 15,305 14,798 13,431
Retirement benefit obligations 374 395 397
Decommissioning and other
provisions 3,224 3,322 3,046
107,528 108,881 92,786
Total liabilities 181,279 183,508 166,209
Equity attributable to Royal Dutch
Shell plc shareholders 164,601 165,487 142,744
Non-controlling interest 1,602 1,829 1,701
Total equity 166,203 167,316 144,445
Total liabilities and equity 347,482 350,824 310,654
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
CONDENSED CONSOLIDATED statement of cash flows
Quarters $ million Nine months
Q3 2011 Q2 2011 Q3 2010 2011 2010
Cash flow from operating
activities:
7,033 8,759 3,565 Income for the period 24,717 13,618
Adjustment for:
5,746 5,546 3,545 - Current taxation 17,193 11,869
249 284 264 - Interest expense (net) 889 656
- Depreciation, depletion and
3,803 2,866 6,196 amortisation 9,985 12,359
- Net (gains)/losses on sale
(347) (796) (681) of assets (3,335) (932)
- Decrease/(increase) in net
1,011 (2,283) 937 working capital (5,783) (5,175)
- Share of profit of
(2,041) (2,126) (1,020) equity-accounted investments (6,504) (3,974)
- Dividends received from
equity-accounted
2,402 2,560 1,486 investments 6,485 4,455
- Deferred taxation and other
(204) 553 (1,941) provisions 1,927 (1,466)
(540) (72) (86) - Other (399) 686
Net cash from operating
17,112 15,291 12,265 activities (pre-tax) 45,175 32,096
(5,467) (5,251) (3,249) Taxation paid (14,869) (10,202)
Net cash from operating
11,645 10,040 9,016 activities 30,306 21,894
Cash flow from investing
activities:
(7,261) (4,980) (9,609) Capital expenditure (16,387) (21,369)
Investments in
(199) (669) (1,179) equity-accounted investments (1,571) (1,940)
1,594 1,110 666 Proceeds from sale of assets 5,815 2,039
Proceeds from sale of
200 172 44 equity-accounted investments 425 211
(Additions to)/proceeds from
6 - (37) sale of securities 7 (18)
75 73 51 Interest received 185 102
Net cash used in investing
(5,585) (4,294)(10,064) activities (11,526) (20,975)
Cash flow from
financing
activities:
Net (decrease)/increase in
debt with maturity period
(365) 119 3,232 within three months (2,883) 4,399
477 286 199 Other debt: New borrowings 1,244 7,729
(2,529) (1,299) (491) Repayments (4,064) (2,852)
(173) (522) (307) Interest paid (1,195) (1,204)
Change in non-controlling
(3) (9) (3) interest (3) 315
Dividends paid to:
- Royal Dutch Shell plc
(1,865) (1,766) (2,583) shareholders (5,189) (7,586)
(175) (128) (168) - Non-controlling interest (374) (357)
(817) - - Repurchase of shares (817) -
Shares held in trust: net
sales/(purchases) and
10 259 (34) dividends received 413 170
Net cash from/(used in)
(5,440) (3,060) (155) financing activities (12,868) 614
Currency translation
differences relating to cash
and
(829) 171 477 cash equivalents (100) 30
(Decrease)/increase in cash
(209) 2,857 (726) and cash equivalents 5,812 1,563
Cash and cash equivalents at
19,465 16,608 12,008 beginning of period 13,444 9,719
Cash and cash equivalents at
19,256 19,465 11,282 end of period 19,256 11,282
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc and its subsidiaries (collectively "Shell") are prepared on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report / Form 20-F for the year ended December 31, 2010 (pages 102 to 107) as filed with the US Securities and Exchange Commission.
The financial information presented in the Interim Statements does not comprise statutory accounts for the purposes of section 435 of the Companies Act 2006. Statutory accounts for the year ended December 31, 2010 were published in Shell's Annual Report / Form 20-F, copies of which were delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006.
The Interim Statements are unaudited; however, in the opinion of management, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim period.
Segment information
Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the period is based on the estimated current cost of supplies during the same period after making allowance for the estimated tax effect. CCS earnings thus exclude the effect of changes in the oil price on inventory carrying amounts. Net capital investment information is presented as measured based on capital expenditure as reported in the Condensed Consolidated Statement of Cash Flows, adjusted for: proceeds from divestments; exploration expenses excluding exploration wells written off; investments in equity-accounted investments; and leases and other items.
CCS earnings and net capital investment information are the dominant measures used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance.
2. Information by business segment
Quarters $ million Nine months
Q3 2011 Q3 2010 2011 2010
Third-party revenue
10,888 7,417 Upstream 30,659 24,083
112,516 83,286 Downstream 323,907 243,212
8 9 Corporate 30 47
123,412 90,712 Total third-party revenue 354,596 267,342
Inter-segment revenue
12,929 9,040 Upstream 37,304 25,866
125 96 Downstream 545 249
- - Corporate - -
Segment earnings
6,071 3,153 Upstream 17,890 10,838
1,480 325 Downstream 4,533 2,539
(254) 148 Corporate (14) (140)
7,297 3,626 Total segment earnings 22,409 13,237
Quarters $ million Nine months
Q3 2011 Q3 2010 2011 2010
7,297 3,626 Total segment earnings 22,409 13,237
Current cost of supplies adjustment:
(260) (44)Purchases 2,787 556
75 12 Taxation (794) (170)
Share of profit of equity-accounted
(79) (29)investments 315 (5)
7,033 3,565 Income for the period 24,717 13,618
3. Ordinary share capital
Issued and fully paid
shares of GBP1
shares of EUR0.07 each each
Sterling
Number of shares Class A Class B deferred
At January 1, 2011 3,563,952,539 2,695,808,103 50,000
Scrip dividends 77,320,884 - -
Shares bought back for
cancellation - (25,289,589) -
At September 30, 2011 3,641,273,423 2,670,518,514 50,000
Nominal value
$ million Class A Class B Total
At January 1, 2011 302 227 529
Scrip dividends 9 - 9
Shares bought back for
cancellation - (3) (3)
At September 30, 2011 311 224 535
The total nominal value of sterling deferred shares is less than $1
million.
At Royal Dutch Shell plc's Annual General Meeting held on May 17, 2011, the Board was authorised to allot shares in Royal Dutch Shell plc, to grant rights to subscribe for or to convert any security into shares in Royal Dutch Shell plc, in either case up to a nominal amount of €146 million. This authority expires at the earlier of August 17, 2012, and the conclusion of the Annual General Meeting held in 2012, unless previously revoked or varied by Royal Dutch Shell plc in a General Meeting of Shareholders.
4. Other reserves
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve[1] reserve[1] reserve[2] reserve income Total
At January 1,
2011 3,442 154 57 1,483 4,958 10,094
Other
comprehensive
income/(loss)
attributable
to Royal
Dutch Shell
plc
shareholders - - - - (1,951) (1,951)
Scrip
dividends (9) - - - - (9)
Share
repurchases 3 3
Share-based
compensation - - - (230) - (230)
At September
30, 2011 3,433 154 60 1,253 3,007 7,907
At January
1, 2010 3,444 154 57 1,373 4,954 9,982
Other comprehensive
income/(loss)
attributable to Royal
Dutch Shell plc
shareholders - - - - (271) (271)
Share-based
compensation - - - (52) - (52)
At September
30, 2010 3,444 154 57 1,321 4,683 9,659
[1] The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent company of Royal Dutch Petroleum Company and of The Shell Transport and Trading Company Limited in 2005.
[2] The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc.
5. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply or purchase oil and gas products, and also enters into derivative contracts to mitigate resulting economic exposures (generally price exposure). Derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes are, by contrast, recognised when the transaction occurs (see also below); furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period; or (b) the inventory is measured on a different basis.
In addition, certain UK gas contracts held by the Upstream business are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes.
The accounting impacts of the aforementioned are reported as identified items in the quarterly results.
6. Return on average capital employed (ROACE)
ROACE measures the efficiency of Shell's utilisation of the capital that it employs. In this calculation, ROACE is defined as the sum of income for the current and previous three quarters adjusted for after-tax interest expense as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt.
LIQUIDITY AND CAPITAL RESOURCES
Third quarter Net cash from operating activities in the third quarter 2011 was $11.6 billion compared with $9.0 billion for the same period last year.
Total current and non-current debt decreased to $39.4 billion at September 30, 2011 from $42.5 billion at June 30, 2011 while cash and cash equivalents decreased to $19.3 billion at September 30, 2011, from $19.5 billion at June 30, 2011. During the third quarter 2011 no new debt was issued under the US shelf registration programme.
Net capital investment in the third quarter 2011 was $6.1 billion, of which $5.9 billion was invested in Upstream and $0.2 billion in Downstream. Net capital investment in the same period of 2010 was $10.3 billion, of which $9.6 billion was invested in Upstream and $0.7 billion in Downstream.
Dividends of $0.42 per share are declared on October 27, 2011 in respect of the third quarter. These dividends are payable on December 16, 2011. In the case of the Class B shares, the dividends will be payable through the dividend access mechanism and are expected to be treated as UK-source rather than Dutch-source. See the Annual Report / Form 20-F for the year ended December 31, 2010 for additional information on the dividend access mechanism.
Shell provides shareholders with a choice to receive dividends in cash or in shares via a Scrip Dividend Programme. Under the Scrip Dividend Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends. Only new Class A shares will be issued under the Programme, including to shareholders who currently hold Class B shares.
Nine months Net cash from operating activities in the first nine months 2011 was $30.3 billion compared with $21.9 billion for the same period last year.
Total current and non-current debt decreased to $39.4 billion at September 30, 2011 from $44.3 billion at December 31, 2010 while cash and cash equivalents increased to $19.3 billion at September 30, 2011, from $13.4 billion at December 31, 2010. During the first nine months 2011 no new debt was issued under the US shelf registration programme.
Net capital investment in the first nine months 2011 was $13.8 billion, of which $11.7 billion was invested in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate. Net capital investment in the same period of 2010 was $22.1 billion, of which $20.7 billion was invested in Upstream and $1.4 billion in Downstream.
CAUTIONARY STATEMENT
All amounts shown throughout this report are unaudited.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this report "Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. '‘Subsidiaries'’, "Shell subsidiaries" and "Shell companies" as used in this report refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this report, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 24% shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This report contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as '‘anticipate'’, '‘believe'’, '‘could'’, '‘estimate'’, '‘expect'’, '‘goals'’, '‘intend'’, '‘may'’, '‘objectives'’, '‘outlook'’, '‘plan'’, '‘probably'’, '‘project'’, '‘risks'’, "scheduled", '‘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 report, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this report are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Royal Dutch Shell's Annual Report / Form 20-F for the year ended December 31, 2010 (available at http://www.shell.com/investor and http://www.sec.gov). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this report, October 27, 2011. Neither Royal Dutch Shell nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this report.
October 27, 2011
Contacts:
- Investor Relations: Europe: +31(0)70-377-4540; USA: +1-713-241-1042
- Media: Europe: +31(0)70-377-3600; USA +1-713-241-4544
SOURCE Royal Dutch Shell plc
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