26th Apr 2012 07:00
1ST QUARTER 2012 UNAUDITED RESULTS
* Royal Dutch Shell's first quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $7.7 billion compared with $6.9 billion in the same quarter a year ago. * First quarter 2012 CCS earnings excluding identified items (see page 5)
were $7.3 billion compared with $6.3 billion in the first quarter 2011, an
increase of 16%. * Basic CCS earnings per share excluding identified items for the first quarter 2012 increased by 15% versus the same quarter a year ago.
* Cash flow from operating activities for the first quarter 2012 was $13.4
billion. Excluding net working capital movements, cash flow from operating
activities in the first quarter 2012 was $12.7 billion.
* Capital investment for the first quarter 2012 was $7.0 billion. Net capital
investment (see Note 1) for the quarter was $4.6 billion. Total dividends
distributed in the quarter were $2.7 billion, of which $1.0 billion were
settled under the Scrip Dividend Programme. * Gearing at the end of the first quarter 2012 was 9.9%. * A first quarter 2012 dividend has been announced of $0.43 per ordinary
share and $0.86 per American Depositary Share (ADS), an increase of 2.4%
compared with the first quarter 2011 US dollar dividend.
SUMMARY OF UNAUDITED RESULTS $ million Quarters Q1 2012 Q4 2011 Q1 2011 %1
Income attributable to shareholders 8,719 6,500 8,780 -1
Current cost of supplies (CCS) adjustment
for Downstream (1,060) (41) (1,855) CCS earnings 7,659 6,459 6,925 +11 Less: Identified items2 380 1,613 637 CCS earnings excluding identified items 7,279 4,846 6,288 +16 Of which: Upstream 6,253 5,107 4,638 Downstream 1,121 (278) 1,653
Corporate and Non-controlling interest (95) 17 (3)
Cash flow from operating activities 13,439 6,465 8,621 +56
Basic CCS earnings per share ($) 1.23 1.04 1.12
+10
Basic CCS earnings per ADS ($) 2.46 2.08 2.24 Basic CCS earnings per share excl.
identified items ($) 1.17 0.78 1.02 +15
Basic CCS earnings per ADS excl. identified
items ($) 2.34 1.56 2.04 Dividend per share ($) 0.43 0.42 0.42 +2 Dividend per ADS ($) 0.86 0.84 0.84 1 Q1 on Q1 change 2 See page 5
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
"We are making good progress against our targets to deliver a more competitiveperformance. Our profits pay for Shell's dividends and substantial investmentsin new energy projects, to ensure affordable, reliable energy supplies for ourcustomers, which create value for our shareholders.Shell's first quarter 2012 earnings increased from year-ago levels, through acombination of improved operating performance, increased upstream volumes andstrong oil prices. Energy demand fundamentals are robust, but with near-termvolatility in energy prices as a result of economic and political events. Indownstream and North American natural gas we see continued challenges for ourindustry.""We are implementing our strategy by improving near-term performance,delivering a new wave of production growth and maturing the next generation ofgrowth options for shareholders. Shell sold $2.4 billion of upstream anddownstream positions during the quarter, enhancing our financial flexibilityand capital efficiency, and unlocking new growth potential. Asset sales for2012 are likely to be over $4 billion, compared with our earlier guidance of$2-3 billion.""During the quarter, production commenced at the Caesar/Tonga project in theGulf of Mexico and the Pluto LNG project in Australia reachedready-for-start-up status. These two non-operated positions are expected to adda total of some 40 thousand barrels of oil equivalent per day ("boe/d") at peakfor Shell and 0.9 million tonnes per annum ("mtpa") of LNG capacity. Theramp-up of Shell's flagship Pearl GTL project in Qatar continued during thequarter, and the project is on track to reach full capacity in the middle of2012. In the last few weeks, crude oil processing commenced at the Port Arthurrefinery expansion project, creating one of the largest refineries in theUnited States."
"This is all part of a portfolio of 26 projects that Shell is developing worldwide today," Voser continued. "This industry-leading project line-up, combined with a focus on innovation and competitive performance across the company, will drive Shell to the clear targets we have set out for shareholders, namely around $175-200 billion of cash flow from operations in total for 2012-15, and a production potential of some 4 million boe/d in 2017-18."1
Voser added: "We continue to mature new investment options for medium-termgrowth, including new exploration acreage and positive results from theon-going appraisal of the Appomattox oil discovery in the Gulf of Mexico, wherewe see scope for some 500 million boe of resources with further upsidepotential. I am also very pleased to welcome new strategic partners intoShell's Prelude Floating LNG project in Australia, as we continue to developnew international natural gas resources and markets.""The resumption of measured, affordable dividend growth we have confirmed todayreflects the improving financial position of the company and delivery of ourstrategy," concluded Voser.1Production outlook at $80 per barrel oil price, after ~250 thousand boe/d ofexpected asset sales and licence expiries. Cash flow from operations outlook at$80-$100 per barrel Brent oil price and improved North American natural gasprices and downstream margins relative to 2011. Cash flow from operationsexcludes working capital movements.
FIRST QUARTER 2012 PORTFOLIO DEVELOPMENTS
Upstream
In Australia, first gas entered the 4.3 mtpa capacity Pluto LNG project (Shellindirect share 21%). The project is expected to produce some 140 thousand boe/dat peak production.
Shell signed a binding agreement for the long-term supply of 2 mtpa of LNG to CPC Corporation, Taiwan ("CPC") for 20 years from 2016.
In the United States, first production was achieved at the Caesar/Tonga deepwater project (Shell share 22.5%) in the Gulf of Mexico. At peak the project is expected to produce some 40 thousand boe/d.
Shell continued to divest Upstream positions during the first quarter of 2012,with proceeds totalling some $2.1 billion, including among others its 40%participating interest in the oil and gas exploration block BS-4 in the SantosBasin offshore Brazil and the proceeds from the sale of Shell's interests inthe natural gas transport infrastructure joint venture Gassled in Norway.Also, in Australia, Shell agreed to sell a combined 32.5% participatinginterest in the Prelude Floating LNG project under separate agreements to Inpex(17.5%), Kogas (10%) and CPC (5%), with divestment proceeds expected later in2012. The completion of these transactions is subject to conditions precedentincluding regulatory approvals. The combined 32.5% participating interestrepresents a net book value of some $0.5 billion at the end of the firstquarter 2012.During the first quarter of 2012, Shell had a successful appraisal at theAppomattox discovery (Shell share 80%) in the Gulf of Mexico. This prospect isnow believed to hold around 500 million boe of potential resources, doublingthe previous estimates, with further upside potential.As part of its global exploration programme, Shell spent some $0.6 billion on new acreage positions during the quarter, totalling some 77,000 squarekilometres. New offshore positions include Nova Scotia in Canada, Malaysia,Tanzania, and United Kingdom North Sea as well as exploration rights in theOrange Basin, South Africa. Onshore positions were added in Albania, Argentina,Canada, China and the United States.In April, Cove Energy plc's ("Cove Energy") management has recommended Shell'sintended cash offer of £2.20 per share for the entire issued and to be issuedshare capital of Cove Energy. Cove Energy has a 8.5% stake in the MozambiqueRovuma Offshore Area 1 Block, a 10% stake in an onshore block in Mozambique andvarious stakes in 7 offshore blocks in Kenya. The offer values Cove Energy
atsome $1.8 billion.Downstream
Shell continued to divest Downstream positions during the first quarter of 2012with proceeds totalling some $0.3 billion. Divestments included retail stationsin North America and an LPG business in Asia Pacific. Shell also completed thesale of the majority of its shareholding of its downstream businesses in C´ted'Ivoire, Burkina Faso and Guinea. This represents the second stage of thedivestment of the majority of Shell's shareholding in most of its downstreambusinesses in Africa as announced in February 2011, with the remainder expectedto be completed later in 2012.In April, crude oil processing commenced at the Port Arthur refinery expansionproject of Motiva Enterprises (Shell share 50%) in the United States. Followingthis expansion of 325 thousand barrels per day ("b/d"), total capacity of thePort Arthur refinery is some 600 thousand b/d, making it one of the largestrefineries in the country.
KEY FEATURES OF THE FIRST QUARTER 2012
* First quarter 2012 CCS earnings (see Note 1) were $7,659 million, 11% higher than in the same quarter a year ago. * First quarter 2012 CCS earnings excluding identified items (see page 5)
were $7,279 million compared with $6,288 million in the first quarter 2011.
* Basic CCS earnings per share increased by 10% versus the same quarter a
year ago.
* Basic CCS earnings per share excluding identified items increased by 15%
versus the same quarter a year ago.
* Cash flow from operating activities for the first quarter 2012 was $13.4
billion, compared with $8.6 billion in the same quarter last year.
Excluding net working capital movements, cash flow from operating
activities in the first quarter 2012 was $12.7 billion, compared with $13.1
billion in the same quarter last year.
* Net capital investment (see Note 1) for the first quarter 2012 was $4.6
billion. Capital investment for the first quarter 2012 was $7.0 billion and
proceeds from divestments were $2.4 billion.
* Total dividends distributed in the first quarter 2012 were $2.7 billion of
which $1.0 billion were settled by issuing some 27.5 million Class A shares
under the Scrip Dividend Programme for the fourth quarter 2011. * Return on average capital employed (see Note 6) at the end of the first quarter 2012 on a reported income basis was 15.4%.
* Gearing was 9.9% at the end of the first quarter 2012 versus 14.0% at the
end of the first quarter 2011.
* Oil and gas production for the first quarter 2012 was 3,552 thousand boe/d.
Excluding the impact of divestments, exits and PSC price effects, first
quarter 2012 production was 4% higher than in the same period last year.
* LNG sales volumes of 5.17 million tonnes in the first quarter 2012 were 17%
higher than in the same quarter a year ago.
* Oil products sales volumes were 3% lower than in the first quarter 2011.
Chemicals product sales volumes in the first quarter 2012 decreased by 7%
compared with the same quarter a year ago.
* Supplementary financial and operational disclosure for the first quarter
2012 is available at www.shell.com/investor .
SUMMARY OF IDENTIFIED ITEMS
Earnings in the first quarter 2012 reflected the following items, which inaggregate amounted to a net gain of $380 million reflecting divestment gains,which were partly offset by a tax provision, a charge related to a true-up ofemployee compensation and the fair value accounting for commodity derivatives(see Note 5), as summarised in the table below. Earnings in the first quarter2011 included a net gain of $637 million.
* Upstream earnings included a net gain of $453 million, mainly reflecting
gains related to divestments. Earnings for the first quarter 2011 included
a net gain of $1,120 million.
* Downstream earnings included a net gain of $198 million, mainly reflecting
gains related to divestments. Earnings for the first quarter 2011 included
a net charge of $483 million.
* Corporate and Non-controlling interest earnings included a net charge of
$271 million, mainly reflecting a tax provision.
SUMMARY OF IDENTIFIED ITEMS $ million Quarters Q1 2012 Q4 2011 Q1 2011
Segment earnings impact of identified items:
Upstream 453 1,458 1,120 Downstream 198 34 (483)
Corporate and Non-controlling interest (271) 121 -
Earnings impact 380 1,613 637
These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's CCS earnings and are shown to provide additional insight into segment earnings and income attributable to shareholders. Further comments on the business segments are provided in the section 'Earnings by Business Segment' on pages 6 to 8 and onwards.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM $ million Quarters Q1 2012 Q4 2011 Q1 2011 %1 Upstream earnings excluding identified items 6,253 5,107 4,638 +35 Upstream earnings 6,706 6,565 5,758 +16
Upstream cash flow from operating activities 8,788 6,485 6,672 +32
Upstream net capital investment 3,772 7,363 1,727
+118
Liquids production available for sale (thousand
b/d) 1,682 1,644 1,678 -
Natural gas production available for sale
(million scf/d) 10,844 9,633 10,593 +2
Barrels of oil equivalent (thousand boe/d) 3,552 3,305 3,504 +1
LNG sales volumes (million tonnes) 5.17 4.84 4.42
+17 1 Q1 on Q1 change First quarter Upstream earnings excluding identified items were $6,253 millioncompared with $4,638 million a year ago. Identified items were a net gain of$453 million, compared with a net gain of $1,120 million in the first quarter2011 (see page 5).Upstream earnings excluding identified items increased compared with the firstquarter 2011. Earnings benefited from increased liquids sales volumes, mainlyas a result of the ramp-up of Pearl GTL, and higher liquids realisations.Earnings also reflected increased LNG realisations, LNG sales volumes andtrading contributions. These items were partly offset by higher depreciation,increased operating expenses and lower gas realisations in North America.Global liquids realisations were 15% higher than in the first quarter 2011.Global natural gas realisations were 8% higher than in the same quarter a yearago. Natural gas realisations in the Americas decreased by 32%, whereas naturalgas realisations outside the Americas increased by 20%.
First quarter 2012 production was 3,552 thousand boe/d compared with 3,504 thousand boe/d a year ago. Liquids production was in line and natural gas production increased by 2% compared with the first quarter 2011. Excluding the impact of divestments, exits and PSC price effects, first quarter 2012 production was 4% higher than in the same period last year.
New field start-ups and the continuing ramp-up of fields contributed some 290 thousand boe/d to production in the first quarter 2012, in particular from Pearl GTL and Qatargas 4 LNG in Qatar, which more than offset the impact of field declines.
LNG sales volumes of 5.17 million tonnes were 17% higher than in the same quarter a year ago, reflecting the contribution from the Qatargas 4 project as well as higher volumes from Nigeria LNG.
DOWNSTREAM $ million Quarters Q1 2012 Q4 2011 Q1 2011 %1
Downstream CCS earnings excluding identified
items 1,121 (278) 1,653 -32 Downstream CCS earnings 1,319 (244) 1,170 +13
Downstream cash flow from operating activities 3,208 324 451 +611
Downstream net capital investment 786 2,362 (118)
-
Refinery processing intake (thousand boe/d) 2,782 2,666 3,030 -8
Oil products sales volumes (thousand b/d) 5,960 6,155 6,167 -3
Chemicals sales volumes (thousand tonnes) 4,679 4,440 5,010 -7 1 Q1 on Q1 change
First quarter Downstream earnings excluding identified items were $1,121 million compared with $1,653 million in the first quarter 2011. Identified items were a net gain of $198 million, compared with a net charge of $483 million in the first quarter 2011 (see page 5).
Downstream earnings excluding identified items decreased compared with thefirst quarter 2011. Earnings benefited from the Razen joint venture in Braziland lower operating expenses. These items were more than offset by lowerrealised refining margins, reflecting the weaker global refining environment,and lower marketing contributions mainly as a result of a reduced portfoliofollowing divestments. Chemicals earnings were in line with the first quarter2011.
Oil products sales volumes decreased by 3% compared with the same period a year ago, mainly as a result of portfolio divestments. Excluding the impact of divestments and the effects of the formation of the Razen joint venture, totalling some 190 thousand b/d, sales volumes were in line with the same period last year.
Chemicals sales volumes decreased by 7% compared with the same quarter lastyear, mainly due to reductions in European capacity and rationalisation of thecontract portfolio. Chemicals manufacturing plant availability increased to 94%compared with 92% in the first quarter 2011.Refinery intake volumes decreased by 8% compared with the first quarter 2011.Excluding portfolio impacts, refinery intake volumes were 1% lower than in thesame period a year ago. Refinery availability increased to 94% compared with92% in the first quarter 2011.CORPORATE AND NON-CONTROLLING INTEREST
$ million Quarters Q1 2012 Q4 2011 Q1 2011
Corporate and Non-controlling interest excluding
identified items (95) 17 (3) Of which: Corporate (30) 24 99 Non-controlling interest (65) (7) (102)
Corporate and Non-controlling interest (366) 138 (3)
First quarter Corporate results and Non-controlling interest excluding identified items were a loss of $95 million, compared with a loss of $3 million in the same period last year. Identified items in the first quarter of 2012 were a net charge of $271 million (see page 5).
Corporate results excluding identified items decreased compared with the firstquarter 2011. Results mainly reflected increased net interest expense which waspartly offset by currency exchange gains.
FORTHCOMING EVENTS
Second quarter 2012 results and second quarter 2012 dividend are scheduled to be announced on July 26, 2012. Third quarter 2012 results and third quarter 2012 dividend are scheduled to be announced on November 1, 2012. The Annual General Meeting will be held on May 22, 2012.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
$ million Quarters Q1 2012 Q4 2011 Q1 2011 %1 Revenue 119,920 115,575 109,923
Share of profit of equity-accounted investments 2,940 2,233 2,337
Interest and other income 914 1,320 2,582
Total revenue and other income 123,774 119,128 114,842
Purchases 94,069 91,865 84,810
Production and manufacturing expenses 6,049 6,993 5,913 Selling, distribution and administrative
expenses 3,689 3,706 3,364 Research and development 295 404 219 Exploration 362 825 401
Depreciation, depletion and amortisation 3,402 3,243 3,317
Interest expense 552 287 395 Income before taxation 15,356 11,805 16,423 -6 Taxation 6,522 5,337 7,498 Income for the period 8,834 6,468 8,925 -1
Income attributable to non-controlling interest 115 (32) 145 Income attributable to Royal Dutch Shell plc
shareholders 8,719 6,500 8,780 -1
Current cost of supplies (CCS) adjustment for
Downstream (1,060) (41) (1,855) CCS earnings 7,659 6,459 6,925 +11 Less: Identified items 380 1,613 637 CCS earnings excluding identified items 7,279 4,846 6,288 +16 BASIC EARNINGS PER SHARE $ Quarters Q1 2012 Q4 2011 Q1 2011 Earnings per share 1.40 1.04 1.42 CCS earnings per share 1.23 1.04 1.12
CCS earnings per share excluding identified
items 1.17 0.78 1.02 DILUTED EARNINGS PER SHARE $ Quarters Q1 2012 Q4 2011 Q1 2011 Earnings per share 1.40 1.04 1.42 CCS earnings per share 1.23 1.03 1.12
CCS earnings per share excluding identified
items 1.17 0.78 1.02 SHARES2 Millions Quarters Q1 2012 Q4 2011 Q1 2011
Weighted average number of shares as the basis
for: Basic earnings per share 6,229.4 6,231.3
6,163.3
Diluted earnings per share 6,239.1 6,241.0
6,174.0
Shares outstanding at the end of the period 6,273.8 6,220.1 6,207.4 1 Q1 on Q1 change.
2 Royal Dutch Shell plc ordinary shares of euro 0.07 each.
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim
Financial Statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
$ million Quarters Q1 2012 Q4 2011 Q1 2011 Income for the period 8,834 6,468 8,925
Other comprehensive income, net of tax: Currency translation differences 1,885 (1,310)
2,134
Unrealised gains/(losses) on securities (105) 1,671 (19) Cash flow hedging gains/(losses) (450) (133) 22 Share of other comprehensive income/(loss) of equity-accounted investments (109) (39) 99
Other comprehensive income for the period 1,221 189 2,236
Comprehensive income for the period 10,055 6,657
11,161
Comprehensive income/(loss) attributable to
non-controlling interest 158 (603) 173
Comprehensive income attributable to Royal Dutch
Shell plc shareholders 9,897 7,260 10,988
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch Shell plc shareholders Shares Share held in Other Retained Non-controlling Total $ million capital trust reserves earnings Total interest
equity At January 1, 2012 536 (2,990) 8,984 162,987 169,517 1,486 171,003 Comprehensive income for the period - - 1,178 8,719 9,897 158 10,055 Capital contributions from and other changes in non-controlling interest - - - 48 48 (75) (27) Dividends paid - - - (2,670) (2,670) (24) (2,694) Scrip dividends1 3 - (3) 999 999 - 999 Repurchases of shares2 - - - (627) (627) - (627) Shares held in trust: net sales/ (purchases) and dividends received - 1,013 - 44 1,057 - 1,057 Share-based compensation - - (135) (439) (574) - (574) At March 31, 2012 539 (1,977) 10,024 169,061 177,647 1,545 179,192
1 During the first quarter of 2012 some 27.5 million Class A shares, equivalent to $1.0 billion, were issued under the Scrip Dividend Programme.
2 Includes shares committed to repurchase and repurchases subject to settlement at March 31, 2012. 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, 2011 529 (2,789) 10,094 140,179 148,013 1,767 149,780 Comprehensive income for the period - - 2,208 8,780 10,988 173 11,161 Capital contributions from and other changes in non-controlling interest - - - - - 9 9 Dividends paid - - - (2,626) (2,626) (71) (2,697) Scrip dividends1 3 - (3) 1,068 1,068 - 1,068 Shares held in trust: net sales/ (purchases) and dividends received - 603 - 42 645 - 645 Share-based compensation - - (307) 24 (283) - (283) At March 31, 2011 532 (2,186) 11,992 147,467 157,805 1,878 159,683
1 During the first quarter 2011 some 31.1 million Class A shares, equivalent to $1.1 billion, were issued under the Scrip Dividend Programme.
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim
Financial Statements CONDENSED CONSOLIDATED BALANCE SHEET
$ million March 31, March 31, 2012 Dec 31, 2011 2011 Assets Non-current assets: Intangible assets 4,545 4,521 4,725
Property, plant and equipment 155,239 152,081 144,835 Equity-accounted investments 39,534 37,990 35,558
Investments in securities 5,454 5,492 3,971 Deferred tax 4,666 4,732 5,661 Prepaid pension costs 11,816 11,408 10,874
Trade and other receivables 10,061 9,256 9,360
231,315 225,480 214,984 Current assets: Inventories 34,163 28,976 33,632
Trade and other receivables 78,798 79,509 78,103
Cash and cash equivalents 15,024 11,292 16,608 127,985 119,777 128,343 Total assets 359,300 345,257 343,327 Liabilities Non-current liabilities: Debt 29,116 30,463 31,788 Trade and other payables 4,542 4,921 4,417 Deferred tax 15,887 14,649 15,573
Retirement benefit obligations 6,064 5,931 6,105 Decommissioning and other provisions 16,010 15,631 14,321
71,619 71,595 72,204 Current liabilities: Debt 5,657 6,712 10,839 Trade and other payables 85,360 81,846 82,270 Taxes payable 14,113 10,606 14,794
Retirement benefit obligations 408 387 393 Decommissioning and other provisions 2,951 3,108 3,144
108,489 102,659 111,440 Total liabilities 180,108 174,254 183,644
Equity attributable to Royal Dutch Shell
plc shareholders 177,647 169,517 157,805 Non-controlling interest 1,545 1,486 1,878 Total equity 179,192 171,003 159,683 Total liabilities and equity 359,300 345,257 343,327
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim
Financial Statements CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
$ million Quarters Q1 2012 Q4 2011 Q1 2011
Cash flow from operating activities
Income for the period 8,834 6,468 8,925 Adjustment for: - Current taxation 5,479 5,816 5,901 - Interest expense (net) 499 275 356
- Depreciation, depletion and amortisation 3,402 3,243 3,316
- Net (gains)/losses on sale of assets (524) (1,150) (2,192)
- Decrease/(increase) in net working capital 770 (688) (4,511)
- Share of profit of equity-accounted
investments (2,940) (2,233) (2,337)
- Dividends received from equity-accounted
investments 2,582 3,196 1,523
- Deferred taxation and decommissioning and
other provisions 971 (159) 1,578 - Other (408) (550) 213
Net cash from operating activities (pre-tax) 18,665 14,218 12,772
Taxation paid (5,226) (7,753) (4,151)
Net cash from operating activities 13,439 6,465 8,621 Cash flow from investing activities
Capital expenditure (6,456) (9,914) (4,146)
Investments in equity-accounted investments (1,298) (315) (703)
Proceeds from sales of assets 2,372 1,175 3,111
Proceeds from sales of equity-accounted
investments 57 43 53
Proceeds from sales/(purchases) of
securities (net) (40) 83 1 Interest received 48 11 37
Net cash used in investing activities (5,317) (8,917) (1,647)
Cash flow from financing activities Net (decrease)/increase in debt with
maturity period within three months (453) (841) (2,637) Other debt: New borrowings 610 5 481 Repayments (2,967) (585) (236) Interest paid (454) (470) (500)
Change in non-controlling interest 10 11 9
Cash dividends paid to: - Royal Dutch Shell plc shareholders (1,671) (1,688) (1,558) - Non-controlling interest (24) (64) (71) Repurchases of shares - (289) -
Shares held in trust: net sales/(purchases)
and dividends received 205 (1,342) 144
Net cash used in financing activities (4,744) (5,263) (4,368)
Currency translation differences relating to
cash and cash equivalents 354 (249) 558
Increase/(decrease) in cash and cash
equivalents 3,732 (7,964) 3,164
Cash and cash equivalents at beginning of
period 11,292 19,256 13,444
Cash and cash equivalents at end of period 15,024 11,292 16,608
Notes 1 to 6 are an integral part of these Condensed Consolidated Interim Financial Statements
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc and its subsidiaries (collectively "Shell") are prepared on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report and Form 20-F for the year ended December 31, 2011 (pages 105 to 110) as filed with the U.S. Securities and Exchange Commission.
The financial information presented in the Interim Statements does not comprisestatutory accounts for the purposes of section 435 of the Companies Act 2006.Statutory accounts for the year ended December 31, 2011 were published inShell's Annual Report and delivered to the Registrar of Companies. The reportof the auditors on those accounts was unqualified, did not include a referenceto any matters to which the auditors drew attention by way of emphasis withoutqualifying 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 recurringadjustments, necessary for a fair statement of the results for the interimperiod.
Segment information
Segment earnings are presented on a current cost of supplies basis (CCSearnings). On this basis, the purchase price of volumes sold during the periodis based on the current cost of supplies during the same period after makingallowance for the tax effect. CCS earnings therefore exclude the effect ofchanges in the oil price on inventory carrying amounts. Net capital investmentinformation is presented as measured based on capital expenditure as reportedin the Condensed Consolidated Statement of Cash Flows, adjusted for: proceedsfrom divestments; exploration expense excluding exploration wells written off;investments in equity-accounted investments; and leases and other items.CCS earnings and net capital investment information are the dominant measuresused by the Chief Executive Officer for the purposes of making decisions aboutallocating resources and assessing performance.
2. Information by business segment
$ million Quarters Q1 2012 Q1 2011 Third-party revenue Upstream 11,990 9,652 Downstream 107,918 100,259 Corporate 12 12 Total third-party revenue 119,920 109,923 Inter-segment revenue Upstream 13,451 11,998 Downstream 212 180 Corporate - - Segment earnings Upstream 6,706 5,758 Downstream 1,319 1,170 Corporate (264) 99 Total segment earnings 7,761 7,027 $ million Quarters Q1 2012 Q1 2011 Total segment earnings 7,761 7,027
Current cost of supplies adjustment: Purchases 1,195 2,223 Taxation (342) (633) Share of profit of equity-accounted investments 220 308 Income for the period 8,834 8,925 3. Share capitalIssued and fully paid Sterling deferred Ordinary shares of euro 0.07 each shares Number of shares Class A Class B of £1 each At January 1, 2012 3,668,550,437 2,661,403,172 50,000 Scrip dividends 27,498,073 - - At March 31, 2012 3,696,048,510 2,661,403,172 50,000 Nominal value$ million Class A Class B Total At January 1, 2012 312 224 536 Scrip dividends 3 - 3 At March 31, 2012 315 224 539 The total nominal value of sterling deferred shares is less than $1 million. At Royal Dutch Shell's Annual General Meeting on May 17, 2011, the Board wasauthorised to allot shares and grant rights to subscribe for or convert anysecurities into shares of Royal Dutch Shell plc up to a total nominal amount ofeuro 146 million (representing 2,086 million ordinary shares of euro 0.07each). This authority expires at the earlier of August 17, 2012, and theconclusion of the Annual General Meeting held in 2012, unless previouslyrevoked or varied in a General Meeting of Shareholders.4. Other reserves Accumulated Share Capital Share other Merger premium redemption plan comprehensive $ million reserve1 reserve1 reserve2 reserve income Total At January 1, 2012 3,432 154 60 1,571 3,767 8,984 Other comprehensive income attributable to Royal Dutch Shell plc shareholders - - - - 1,178 1,178 Scrip dividends (3) - - - - (3) Share-based compensation - - - (135) - (135)
At March 31, 2012 3,429 154 60 1,436 4,945 10,024
At January 1, 2011 3,442 154 57 1,483 4,958 10,094 Other comprehensive income attributable to Royal Dutch Shell plc shareholders - - - - 2,208 2,208 Scrip dividends (3) - - - - (3) Share-based compensation - - - (307) - (307) At March 31, 2011 3,439 154 57 1,176 7,166 11,992 1 The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent company of
Royal Dutch Petroleum Company and of The "Shell" Transport and Trading Company plc, now The Shell Transport and Trading Company Limited, in 2005.
2 The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc.
5. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply orpurchase oil and gas products, and also enters into derivative contracts tomitigate resulting economic exposures (generally price exposure). Derivativecontracts are carried at period-end market price (fair value), with movementsin fair value recognised in income for the period. Supply and purchasecontracts entered into for operational purposes are, by contrast, recognisedwhen the transaction occurs (see also below); furthermore, inventory is carriedat 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 ordelivery conditions, deemed to contain embedded derivatives or written optionsand are also required to be carried at fair value even though they are enteredinto for operational purposes.
The accounting impacts of the aforementioned are reported as identified items in the quarterly results.
6. Return on average capital employed
Return on average capital employed measures the efficiency of Shell'sutilisation of the capital that it employs. In this calculation, return onaverage capital employed is defined as the sum of income for the current andprevious three quarters adjusted for after-tax interest expense as a percentageof the average capital employed for the same period. Capital employed consistsof total equity, current debt and non-current debt. The tax rate is derivedfrom calculations at the published segment level.
LIQUIDITY AND CAPITAL RESOURCES
Net cash from operating activities in the first quarter 2012 was $13.4 billion compared with $8.6 billion for the same period last year.
Total current and non-current debt decreased to $34.8 billion at March 31, 2012from $42.6 billion at March 31, 2011 while cash and cash equivalents decreasedto $15.0 billion at March 31, 2012 from $16.6 billion at March 31, 2011. No newdebt was issued under the US shelf registration programme or under the euromedium-term note programme during the first quarter of 2012.Net capital investment in the first quarter 2012 was $4.6 billion, of which$3.8 billion was invested in Upstream and $0.8 billion in Downstream. Netcapital investment in the same period of 2011 was $1.7 billion, of which $1.7billion was invested in Upstream and $0.1 billion in Corporate whereas therewere net receipts in Downstream of $0.1 billion.Dividends of $0.43 per share are announced on April 26, 2012 in respect of thefirst quarter. These dividends are payable on June 21, 2012. In the case of theClass B shares, the dividends will be payable through the dividend accessmechanism and are expected to be treated as UK-source rather than Dutch-source.See the Annual Report and Form 20-F for the year ended December 31, 2011 foradditional information on the dividend access mechanism.Shell provides shareholders with a choice to receive dividends in cash or inshares via a Scrip Dividend Programme. Under the Scrip Dividend Programmeshareholders can increase their shareholding in Shell by choosing to receivenew shares instead of cash dividends. Only new Class A shares will be issuedunder the Programme, including to shareholders who currently hold Class Bshares.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
We may have used certain terms, such as resources, in this report that UnitedStates Securities and Exchange Commission (SEC) strictly prohibits us fromincluding in our filings with the SEC. U.S. Investors are urged to considerclosely the disclosure in our Form 20-F, File No 1-32575, available on the SECwebsite www.sec.gov. You can also obtain these forms from the SEC by calling1-800-SEC-0330.The companies in which Royal Dutch Shell plc directly and indirectly ownsinvestments are separate entities. In this document "Shell", "Shell Group" and"Royal Dutch Shell" are sometimes used for convenience where references aremade to Royal Dutch Shell plc and its subsidiaries in general. Likewise, thewords "we", "us" and "our" are also used to refer to subsidiaries in general orto those who work for them. These expressions are also used where no usefulpurpose is served by identifying the particular company or companies."Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in thisdocument refer to companies in which Royal Dutch Shell either directly orindirectly has control, by having either a majority of the voting rights or theright to exercise a controlling influence. The companies in which Shell hassignificant influence but not control are referred to as "associated companies"or "associates" and companies in which Shell has joint control are referred toas "jointly controlled entities". In this document, associates and jointlycontrolled entities are also referred to as "equity-accounted investments". Theterm "Shell interest" is used for convenience to indicate the direct and/orindirect (for example, through our 23 per cent shareholding in WoodsidePetroleum Ltd.) ownership interest held by Shell in a venture, partnership orcompany, after exclusion of all third-party interest.This document contains forward looking statements concerning the financialcondition, results of operations and businesses of Royal Dutch Shell. Allstatements other than statements of historical fact are, or may be deemed tobe, forward-looking statements. Forward-looking statements are statements offuture expectations that are based on management's current expectations andassumptions and involve known and unknown risks and uncertainties that couldcause actual results, performance or events to differ materially from thoseexpressed or implied in these statements. Forward-looking statements include,among other things, statements concerning the potential exposure of Shell andthe Shell Group to market risks and statements expressing management'sexpectations, beliefs, estimates, forecasts, projections and assumptions. Theseforward looking statements are identified by their use of terms and phrasessuch as "anticipate", "believe", "could", "estimate", "expect", "goals","intend", "may", "objectives", "outlook", "plan", "probably", "project","risks", "seek", "should", "target", "will" and similar terms and phrases.There are a number of factors that could affect the future operations of Shelland the Shell Group and could cause those results to differ materially fromthose expressed in the forward looking statements included in this document,including (without limitation): (a) price fluctuations in crude oil and naturalgas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d)drilling and production results; (e) reserves estimates; (f) loss of marketshare and industry competition; (g) environmental and physical risks; (h) risksassociated with the identification of suitable potential acquisition propertiesand targets, and successful negotiation and completion of such transactions;(i) the risk of doing business in developing countries and countries subject tointernational sanctions; (j) legislative, fiscal and regulatory developmentsincluding regulatory measures addressing climate change; (k) economic andfinancial market conditions in various countries and regions; (l) politicalrisks, including the risks of expropriation and renegotiation of the terms ofcontracts with governmental entities, delays or advancements in the approval ofprojects and delays in the reimbursement for shared costs; and (m) changes intrading conditions. All forward looking statements contained in this documentare expressly qualified in their entirety by the cautionary statementscontained or referred to in this section. Readers should not place unduereliance on forward looking statements. Additional factors that may affectfuture results are contained in Shell's Annual Report and Form 20-F for theyear ended December 31, 2011 (available at www.shell.com/investor andwww.sec.gov ). These factors also should be considered by the reader. Eachforward looking statement speaks only as of the date of this document, April26, 2012. Neither Shell nor any of its subsidiaries nor the Shell Groupundertake any obligation to publicly update or revise any forward lookingstatement 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 thisdocument.April 26, 2012Contacts: * Investor Relations: Europe: + 31 (0)70 377 4540; USA: +1 713 241 1042 * Media: Europe: + 31 (0)70 377 3600
The information in these quarterly results reflects the consolidated financial position and results of Royal Dutch Shell plc (“Royal Dutch Shellâ€). All amounts shown throughout this report are unaudited. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK.
XLONRelated Shares:
RDSA.LRDSB.L