TIDMRDSA TIDMRDSB
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF
YEAR UNAUDITED RESULTS
-----------------------------------------------------
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 %(1) Reference 2021 2020 %
3,428 5,660 (18,131) -39 Income/(loss) attributable to shareholders 9,087 (18,155) +150
2,634 4,345 (18,377) -39 CCS earnings attributable to shareholders Note 2 6,980 (15,620) +145
5,534 3,234 638 +71 Adjusted Earnings(2) A 8,768 3,498 +151
13,507 11,490 8,491 Adjusted EBITDA (CCS basis) A 24,997 20,031
12,617 8,294 2,563 +52 Cash flow from operating activities 20,910 17,415 +20
(2,946) (590) (2,320) Cash flow from investing activities (3,535) (5,039)
9,671 7,704 243 Free cash flow G 17,375 12,376
4,383 3,974 3,617 Cash capital expenditure C 8,357 8,587
8,470 9,436 8,423 -10 Operating expenses F 17,905 17,042 +5
8,505 8,724 7,504 -3 Underlying operating expenses F 17,228 16,105 +7
3.2% (4.7)% (2.9)% ROACE (Net income basis) D 3.2% (2.9)%
ROACE on an Adjusted Earnings plus Non-controlling
4.9% 3.0% 5.3% interest (NCI) basis D 4.9% 5.3%
65,735 71,252 77,843 Net debt E 65,735 77,843
27.7% 29.9% 32.7% Gearing E 27.7% 32.7%
3,254 3,489 3,379 -7 Total production available for sale (thousand boe/d) 3,371 3,549 -5
0.44 0.73 (2.33) -40 Basic earnings per share ($) 1.17 (2.33) +150
0.71 0.42 0.08 +69 Adjusted Earnings per share ($) B 1.13 0.45 +151
0.24 0.1735 0.16 +38 Dividend per share ($) 0.4135 0.32 +29
--------- -------- ---------- -------- ------------------------------------------------------ ------------- --------- ---------- --------
1. Q2 on Q1 change.
2. Adjusted Earnings is defined as income/(loss) attributable to shareholders plus cost of supplies adjustment (see Note 2) and excluding identified items (see Reference A).
Second quarter 2021 income attributable to Royal Dutch Shell plc
shareholders was $3.4 billion, which included post-tax impairment
charges of $1.8 billion and charges of $1.2 billion due to the fair
value accounting of commodity derivatives.
Adjusted Earnings for the quarter were $5.5 billion. Cost of
supplies adjustment attributable to Royal Dutch Shell plc
shareholders for the second quarter 2021 was negative $0.8
billion.
Cash flow from operating activities for the second quarter 2021
was $12.6 billion, which included negative working capital
movements of $1.6 billion. Cash flow from investing activities for
the quarter was an outflow of $2.9 billion, mainly driven by
capital expenditure and partly offset by proceeds from sale of
property, plant and equipment and businesses.
Compared with the first quarter 2021, current quarter Adjusted
Earnings reflected higher realised oil prices, one-off favourable
tax impacts, higher marketing margins and lower operating expenses.
This was partly offset by lower contributions from trading and
optimisation.
At the end of the second quarter 2021, net debt was $65.7
billion, compared with $71.3 billion at the end of the first
quarter 2021, mainly driven by free cash flow generation in the
quarter. Gearing was 27.7% at the end of the second quarter 2021,
compared with 29.9% at the end of the first quarter 2021, mainly
driven by net debt reduction and improved earnings.
Dividends declared to Royal Dutch Shell plc shareholders for the
quarter amount to $0.24 per share. Share buybacks of $2 billion
launched today which is targeted to be completed by the end of
2021.
This announcement, together with supplementary financial and
operational disclosure and a separate press release for this
quarter, is available at www.shell.com/investors1.
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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1. Not incorporated by reference.
SECOND QUARTER 2021 PORTFOLIO DEVELOPMENTS
Integrated Gas
In June 2021, the New Jersey Board of Public Utilities issued an
order giving Atlantic Shores Offshore Wind (Atlantic Shores), the
50-50 joint venture between EDF Renewables North America and Shell
New Energies US LLC (Shell), the right to provide clean offshore
wind energy to power the state of New Jersey. Through a rigorous
bid and selection process, Atlantic Shores won the rights to
provide 1.5 gigawatts (GW) of renewable offshore energy, which is
enough energy to power over 700,000 homes.
In July 2021, Shell Gas & Power Developments BV (Shell) and
T-Systems International GmbH (T-Systems), Deutsche Telekom's
corporate customers arm, have signed a memorandum of understanding
(MOU) to advance digital innovation as both companies accelerate
their transitions to net-zero emissions. The MOU builds on an
existing technological relationship between Shell and T-Systems.
Under the terms of the agreement the two companies will pursue the
net-zero goals of both companies, their supply chains and
customers; collaborate on innovations and services to accelerate
Shell's digital transformation; and work together to identify
opportunities to co-invest and participate in new business models
focused on the decarbonisation of society.
In July 2021, Shell Trinidad and Tobago (through BG
International, a subsidiary of Royal Dutch Shell plc) announced
that production has started on Block 5C in the East Coast Marine
Area (ECMA) in Trinidad and Tobago. This marks a significant
milestone in the delivery of gas both domestically and
internationally through Atlantic LNG, where Shell's equity in the
Atlantic plant ranges from 46% to 57.5% in each of the four trains
at the facility.
Upstream
In May 2021, Shell Petroleum N.V. signed an agreement with
Malampaya Energy XP Pte Ltd (a subsidiary of Udenna Corporation)
for the sale of its 100% shareholding in Shell Philippines
Exploration B.V. (SPEX). SPEX holds a 45% operating interest in
Service Contract 38 (SC38), which includes the producing Malampaya
gas field. The base consideration for the sale is $380 million,
with additional payments of up to $80 million between 2022 to 2024
contingent on asset performance and commodity prices. Subject to
partner and regulatory approval, the transaction is targeted to
complete by the end of 2021.
In July 2021, Shell Offshore Inc. announced the final investment
decision for Whale, a deep-water development in the US Gulf of
Mexico that features a 99% replicated hull and an 80% replication
of the topsides from the Vito project.
Oil Products
In May 2021, Shell Oil Company reached an agreement for the sale
of its interest in Deer Park Refining Limited Partnership, a 50-50
joint venture between Shell Oil Company and P.M.I. Norteamerica,
S.A. De C.V. (a subsidiary of Petroleos Mexicanos, or Pemex). The
transaction will transfer Shell's interest in the partnership, and
therefore full ownership of the refinery, to Pemex, subject to
regulatory approvals. The transaction is expected to complete by
the end of 2021. Shell Chemical L.P. will continue to operate its
100% owned Deer Park Chemicals facility located adjacent to the
site.
In July 2021, Shell announced the start-up of Europe's largest
polymer electrolyte membrane hydrogen electrolyser at its Energy
and Chemicals Park Rheinland, producing green hydrogen. The
project, backed by a European consortium, will accelerate hydrogen
production and contribute to Europe's goal to achieve climate
neutrality. As part of the Refhyne European consortium and with
European Commission funding through the Fuel Cells and Hydrogen
Joint Undertaking, the fully operational plant is the first to use
this technology at such a large scale in a refinery.
In July 2021, Shell Deutschland reached an agreement with
Alcmene GmbH (part of the Liwathon Group) for the sale of its
non-operated 37.5% shareholding in the Germany PCK Schwedt
Refinery. The transaction is expected to close in the second half
of 2021, subject to partner rights and regulatory approval.
The agreements for the sale of interests in Deer Park Refining
Limited Partnership, the PCK Schwedt Refinery, Puget Sound Refinery
and the Mobile Refinery (Chemicals), as well as completion of the
sale of the Fredericia Refinery, reflect ongoing portfolio
management activities as part of the Powering Progress
strategy.
Page 2
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 %(1) Reference 2021 2020 %
422 2,527 (7,959) -83 Segment earnings 2,949 (6,147) +148
(1,187) 1,112 (8,321) Of which: Identified items A (75) (8,652)
1,609 1,415 362 +14 Adjusted Earnings A 3,025 2,506 +21
3,364 3,206 2,767 Adjusted EBITDA (CCS basis) A 6,571 6,650
3,761 2,491 2,663 +51 Cash flow from operating activities 6,252 6,649 -6
Cash flow from operating activities excluding working
4,350 3,653 2,871 +19 capital movements H 8,003 6,224 +29
880 1,015 736 Cash capital expenditure C 1,895 1,618
162 170 151 -5 Liquids production available for sale (thousand b/d) 166 157 +6
Natural gas production available for sale (million
4,502 4,621 4,369 -3 scf/d) 4,561 4,482 +2
938 967 904 -3 Total production available for sale (thousand boe/d) 952 930 +2
7.49 8.16 8.36 -8 LNG liquefaction volumes (million tonnes) 15.65 17.23 -9
15.92 16.38 17.38 -3 LNG sales volumes (million tonnes)2 32.30 37.10 -13
--------- ------- --------- -------- --------------------------------------------------------- ------------- ------- --------- --------
1.Q2 on Q1 change.
2.Prior period comparatives have been revised, and had been
previously reported as Q1 2021: 15.80 million tonnes, Q2 2020:
16.65 million tonnes and half year 2020: 35.65 million tonnes.
Second quarter segment earnings were $422 million. This included
losses of $781 million due to the fair value accounting of
commodity derivatives and post-tax impairment charges of $494
million (see Note 7). These losses are part of identified items
(see Reference A). Adjusted Earnings for the quarter were $1,609
million.
Cash flow from operating activities for the quarter was $3,761
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation, as well as cash inflows from
commodity derivatives in gas and power trading. This was partly
offset by negative working capital movements.
Compared with the first quarter 2021, Integrated Gas Adjusted
Earnings primarily reflected higher realised prices for LNG, oil
and gas, lower comparative operating expenses due to credit
provisions in the first quarter 2021 and favourable deferred tax
movements. This was partly offset by lower contributions from
trading and optimisation.
Compared with the first quarter 2021, total oil and gas
production decreased by 3% mainly due to higher maintenance
activities and field decline, partly offset by production sharing
contract effects. LNG liquefaction volumes decreased by 8% due to
higher maintenance activities and feedgas constraints.
Half year segment earnings were $2,949 million. This included
gains on sale of assets of $1,097 million offset by post-tax
impairment charges of $586 million and losses of $518 million due
to the fair value accounting of commodity derivatives. These gains
and losses are part of identified items (see Reference A). Adjusted
Earnings for the half year were $3,025 million.
Cash flow from operating activities for the half year was $6,252
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation, as well as cash inflows from
commodity derivatives. This was partly offset by negative working
capital movements.
Compared with the first half 2020, Integrated Gas Adjusted
Earnings primarily reflected higher realised prices for oil, gas
and LNG as well as favourable deferred tax movements. This was
partly offset by lower contributions from trading and optimisation
as well as higher operating expenses related to credit
provisions.
Compared with the first half 2020, total oil and gas production
increased by 2% mainly due to the restart of production at the
Prelude floating LNG operations in Australia, increased demand, new
fields, production sharing contract effects and lower maintenance
activities. LNG liquefaction volumes decreased by 9% due to feedgas
constraints and higher maintenance activities, partly offset by the
restart of production at the Prelude floating LNG operations in
Australia.
Page 3
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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UPSTREAM
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 %(1) Reference 2021 2020 %
2,415 1,096 (6,721) +120 Segment earnings 3,511 (7,584) +146
(53) 133 (5,209) Of which: Identified items A 80 (6,364)
2,469 963 (1,512) +156 Adjusted Earnings A 3,432 (1,220) +381
6,714 5,387 1,674 Adjusted EBITDA (CCS basis) A 12,100 6,510
5,056 4,108 319 +23 Cash flow from operating activities 9,163 5,926 +55
Cash flow from operating activities excluding working
5,444 4,702 548 +16 capital movements H 10,146 4,265 +138
1,696 1,534 1,876 Cash capital expenditure C 3,229 4,397
1,558 1,579 1,609 -1 Liquids production available for sale (thousand b/d) 1,568 1,670 -6
4,082 5,126 4,673 -20 Natural gas production available for sale (million 4,601 5,176 -11
scf/d)
2,262 2,462 2,415 -8 Total production available for sale (thousand boe/d) 2,362 2,562 -8
------- ------- --------- -------- --------------------------------------------------------- ------------- -------- --------- --------
1. Q2 on Q1 change.
Second quarter segment earnings were $2,415 million. This
included a net charge of $164 million related to the sale of
assets, losses of $129 million due to the fair value accounting of
commodity derivatives and post-tax impairment charges of $91
million, partly offset by a gain of $325 million related to the
impact of the strengthening Brazilian real on a deferred tax
position. These net losses are part of identified items (see
Reference A). Adjusted Earnings were $2,469 million.
Cash flow from operating activities for the quarter was $5,056
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation, partly offset by negative working
capital movements.
Compared with the first quarter 2021, Upstream Adjusted Earnings
reflected higher realised oil prices, and the one-off release of a
tax provision in Nigeria of $628 million.
Compared with the first quarter 2021, total production decreased
by 8%, mainly due to unfavourable seasonal effects and higher
maintenance activities.
Half year segment earnings were $3,511 million. This included a
net gain of $247 million related to the sale of assets, and losses
of $197 million due to the fair value accounting of commodity
derivatives. These net gains are part of identified items (see
Reference A). Adjusted Earnings were $3,432 million.
Cash flow from operating activities for the half year was $9,163
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation, partly offset by negative working
capital movements.
Compared with the first half 2020, Upstream Adjusted Earnings
reflected higher realised oil and gas prices, the one-off release
of a tax provision in Nigeria and lower depreciation.
Compared with the first half 2020, total production decreased by
8%, mainly due to higher maintenance activities and the impact of
divestments.
Page 4
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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OIL PRODUCTS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 %(1) Reference 2021 2020 %
33 650 (3,023) -95 Segment earnings(2) 682 (811) +184
(1,267) (227) (5,433) Of which: Identified items A (1,494) (4,585)
1,299 877 2,411 +48 Adjusted Earnings(2) A 2,176 3,774 -42
Of which:
112 (105) 1,500 +207 Refining & Trading(3) 7 1,658 -100
1,187 982 911 +21 Marketing(3) 2,169 2,116 +3
2,608 2,112 3,747 Adjusted EBITDA (CCS basis) A 4,720 6,614
Of which:
676 467 2,267 Refining & Trading(3) 1,143 3,197
1,932 1,646 1,479 Marketing(3) 3,577 3,417
2,213 893 (362) +148 Cash flow from operating activities 3,106 4,516 -31
Cash flow from operating activities excluding working
3,365 3,313 2,430 +2 capital movements H 6,678 2,783 +140
882 668 606 Cash capital expenditure C 1,550 1,186
1,833 1,751 1,944 +5 Refinery processing intake (thousand b/d) 1,792 2,170 -17
4,552 4,164 4,041 +9 Oil Products sales volumes (thousand b/d) 4,359 4,659 -6
--------- ------- --------- -------- --------------------------------------------------------- ------------- --------- --------- --------
1. Q2 on Q1 change.
2. Earnings are presented on a CCS basis (see Note 2).
3. With effect from Q1 2021, changes are made in the cost and activity allocation between Marketing and Refining & Trading. This resulted in a net Q2 2021 charge of $45 million (half year 2021: $219 million) to Refining & Trading, with an offsetting amount in Marketing. This change does not impact consolidated Oil Products Adjusted Earnings.
Second quarter segment earnings were $33 million. This included
post-tax impairment charges of $1,021 million, mainly related to
refining assets classified as held for sale in the USA, and losses
of $275 million due to the fair value accounting of commodity
derivatives. These net losses are part of identified items (see
Reference A). Adjusted Earnings were $1,299 million.
Cash flow from operating activities for the second quarter 2021
was $2,213 million, primarily driven by Adjusted Earnings before
non-cash expenses including depreciation and cost-of-sales
adjustments, partly offset by negative working capital movements
and cash outflows for commodity derivatives.
Compared with the first quarter 2021, Oil Products Adjusted
Earnings reflected higher Retail margins, and higher contributions
from trading and optimisation, partly offset by higher operating
expenses driven by recovery in sales volumes.
Oil Products sales volumes increased due to higher demand and
favourable seasonal effects.
--Refining & Trading Adjusted Earnings reflected higher
realised refining margins (while Refining Adjusted Earnings still
being negative), higher contributions from trading and optimisation
and lower depreciation.
--Marketing Adjusted Earnings reflected higher Retail margins
partly offset by higher operating expenses driven by recovery in
sales volumes.
Refinery utilisation was 76% compared with 72% in the first
quarter 2021, with higher demand and lower unplanned downtime in
the second quarter 2021.
Half year segment earnings were $682 million. This included
post-tax impairment charges of $1,130 million, redundancy and
restructuring costs of $244 million, and losses of $105 million due
to the fair value accounting of commodity derivatives. These net
losses are part of identified items (see Reference A). Adjusted
Earnings were $2,176 million.
Cash flow from operating activities for the half year was $3,106
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation and cost-of-sales adjustments,
partly offset by negative working capital movements and cash
outflows for commodity derivatives.
Page 5
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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Compared with the first half 2020, Oil Products Adjusted
Earnings reflected lower contributions from trading and
optimisation, lower realised refining margins, and higher operating
expenses. These were partly offset by higher marketing margins.
Oil Products sales volumes increased due to higher demand
compared with the first half 2020.
--Refining & Trading Adjusted Earnings reflected lower
contributions from trading and optimisation, lower refining
margins, and higher operating expenses. These were partly offset by
higher Oil Sands margins and lower depreciation.
--Marketing Adjusted Earnings reflected higher sales volumes in
Lubricants and Retail, partly offset by higher operating
expenses.
Refinery utilisation was 74% compared with 75% in the first half
2020, with higher planned and unplanned downtime in the first
quarter 2021.
Page 6
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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CHEMICALS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 %(1) Reference 2021 2020 %
462 689 164 -33 Segment earnings(2) 1,152 311 +271
(208) (41) (41) Of which: Identified items A (248) (43)
670 730 206 -8 Adjusted Earnings(2) A 1,400 354 +295
1,036 1,041 507 Adjusted EBITDA (CCS basis) A 2,077 973
1,133 324 734 +249 Cash flow from operating activities 1,457 556 +162
Cash flow from operating activities excluding working
1,225 1,045 304 +17 capital movements H 2,270 492 +361
895 730 369 Cash capital expenditure C 1,625 1,215
3,609 3,583 3,623 +1 Chemicals sales volumes (thousand tonnes) 7,192 7,494 -4
------- ------- ------- -------- --------------------------------------------------------- ------------- ------- ------- --------
1. Q2 on Q1 change.
2. Earnings are presented on a CCS basis (see Note 2).
Second quarter segment earnings were $462 million. This included
post-tax impairment charges of $180 million, which are part of
identified items (see Reference A). Adjusted earnings were $670
million.
Cash flow from operating activities for the quarter was $1,133
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation, the timing impact of dividends
from Joint Ventures and Associates, partly offset by negative
working capital movements.
Compared with the first quarter 2021, Chemicals Adjusted
Earnings reflected higher base chemicals margins, partly offset by
lower intermediate margins, and higher operating expenses due to
maintenance phasing.
Chemicals manufacturing plant utilisation was 82% compared with
79% in the first quarter 2021, due to lower unplanned downtime.
Half year segment earnings were $1,152 million. This included
post-tax impairment charges of $208 million, which are part of
identified items (see Reference A). Adjusted earnings were $1,400
million.
Cash flow from operating activities for the half year was $1,457
million, primarily driven by Adjusted Earnings before non-cash
expenses including depreciation and cost-of-sales adjustments,
partly offset by negative working capital movements.
Compared with the first half 2020, Chemicals Adjusted Earnings
reflected higher realised margins in base chemicals and
intermediates from a stronger price environment.
Chemicals manufacturing plant utilisation remained at 81%
compared with the first half 2020.
Page 7
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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CORPORATE
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 Reference 2021 2020
(592) (531) (805) Segment earnings (1,124) (1,258)
(193) 134 (9) Of which: Identified items A (59) 526
(399) (666) (796) Adjusted Earnings A (1,065) (1,784)
(101) (172) (171) Adjusted EBITDA (CCS basis) A (273) (587)
454 478 (791) Cash flow from operating activities 932 (232)
Cash flow from operating activities excluding working
(208) (30) 390 capital movements H (238) 151
------- ------- ------- ----------------------------------------------------------- ------------- --------- ---------
Second quarter segment earnings were an expense of $592 million.
This included a loss of $193 million from the deferred tax impact
of the strengthening Brazilian real on financing positions, which
is part of identified items (see Reference A). Adjusted Earnings
were a net expense of $399 million.
Compared with the first quarter 2021, Adjusted Earnings
reflected favourable movements in tax credits and favourable
currency exchange rate effects, partly offset by higher net
interest expense.
Half year segment earnings were an expense of $1,124 million.
This included a loss of $59 million from the deferred tax impact of
the strengthening Brazilian real on financing positions, which is
part of identified items (see Reference A). Adjusted Earnings were
a net expense of $1,065 million.
Compared with the first half 2020, Adjusted Earnings reflected
favourable currency exchange rate effects, lower net interest
expense and favourable movements in tax credits.
OUTLOOK FOR THE THIRD QUARTER 2021
As a result of the COVID-19 pandemic, there continues to be
significant uncertainty surrounding how quickly macroeconomic
conditions will recover, and the associated impacts on demand for
oil, gas and related products. The third quarter 2021 outlook
provides ranges for operational and financial metrics based on
current expectations, but these are subject to change in the light
of evolving market conditions. Due to demand or regulatory
requirements and/or constraints in infrastructure, Shell may need
to take measures to curtail or reduce oil and/or gas production,
LNG liquefaction as well as utilisation of refining and chemicals
plants and similarly sales volumes could be impacted. Such measures
will likely have a variety of impacts on our operational and
financial metrics.
Due to the impact of maintenance activities, Integrated Gas
production is expected to be approximately 870 - 920 thousand boe/d
and LNG liquefaction volumes are expected to be approximately 7.4 -
8.0 million tonnes.
Upstream production is expected to be approximately 2,100 -
2,250 thousand boe/d.
Refinery utilisation is expected to be approximately 73% -
81%.
Oil Products sales volumes are expected to be approximately
4,300 - 5,300 thousand b/d.
Chemicals manufacturing plant utilisation is expected to be
approximately 77% - 85%.
Chemicals sales volumes are expected to be approximately 3,600 -
3,900 thousand tonnes.
Corporate Adjusted Earnings are expected to be a net expense of
approximately $600 - $700 million in the third quarter 2021 and a
net expense of approximately $2,300 - $2,600 million for the full
year 2021. This excludes the impact of currency exchange rate
effects.
Page 8
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
60,515 55,665 32,504 Revenue(1) 116,181 92,533
1,114 995 (161) Share of profit of joint ventures and associates 2,108 693
134 2,455 148 Interest and other income(2) 2,590 224
61,764 59,115 32,491 Total revenue and other income 120,879 93,450
39,717 34,369 18,093 Purchases 74,086 61,306
5,162 6,808 5,822 Production and manufacturing expenses 11,970 11,803
3,107 2,462 2,370 Selling, distribution and administrative expenses 5,569 4,763
201 166 232 Research and development 366 475
332 285 723 Exploration 617 1,018
8,223 5,896 28,089 Depreciation, depletion and amortisation(2) 14,119 35,182
893 892 1,070 Interest expense 1,784 2,188
57,634 50,878 56,398 Total expenditure 108,512 116,735
4,130 8,237 (23,907) Income/(loss) before taxation 12,367 (23,284)
571 2,453 (5,806) Taxation charge/(credit)(2) 3,024 (5,160)
3,559 5,784 (18,101) Income/(loss) for the period(1) 9,343 (18,124)
131 124 30 Income/(loss) attributable to non-controlling interest 255 31
Income/(loss) attributable to Royal Dutch Shell plc
3,428 5,660 (18,131) shareholders 9,087 (18,155)
0.44 0.73 (2.33) Basic earnings per share ($)(3) 1.17 (2.33)
0.44 0.72 (2.33) Diluted earnings per share ($)(3) 1.16 (2.33)
-------- -------- ---------- ------------------------------------------------------- --------- ----------
1. See Note 2 "Segment information".
2. See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
3. See Note 3 "Earnings per share".
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
3,559 5,784 (18,101) Income/(loss) for the period 9,343 (18,124)
Other comprehensive income/(loss) net of tax:
Items that may be reclassified to income in later
periods:
575 (852) 1,588 -- Currency translation differences (277) (2,347)
(2) (14) 43 -- Debt instruments remeasurements (16) 15
(84) 132 (137) -- Cash flow hedging gains/(losses) 48 (289)
(51) 171 (99) -- Net investment hedging gains/(losses) 120 (99)
(20) (34) 55 -- Deferred cost of hedging (54) 156
-- Share of other comprehensive income/(loss) of joint
(7) (56) 30 ventures and associates (63) (30)
410 (652) 1,481 Total (242) (2,593)
Items that are not reclassified to income in later
periods:
1,675 4,628 (4,924) -- Retirement benefits remeasurements 6,303 (3,167)
10 40 77 -- Equity instruments remeasurements 50 (60)
-- Share of other comprehensive income/(loss) of joint
(42) (25) 19 ventures and associates (67) 67
1,643 4,643 (4,828) Total 6,285 (3,160)
2,053 3,991 (3,347) Other comprehensive income/(loss) for the period 6,044 (5,753)
5,612 9,775 (21,448) Comprehensive income/(loss) for the period 15,386 (23,877)
145 121 43 Comprehensive income/(loss) attributable to non-controlling 266 (80)
interest
5,467 9,653 (21,490) Comprehensive income/(loss) attributable to Royal 15,121 (23,797)
Dutch Shell plc shareholders
------- ------- ---------- --------------------------------------------------------------- -------- ----------
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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CONDENSED CONSOLIDATED BALANCE SHEET
$ million
June 30, 2021 December 31, 2020
Assets
Non-current assets
Intangible assets 22,462 22,822
Property, plant and equipment 205,272 210,847
Joint ventures and associates 23,248 22,451
Investments in securities 3,554 3,222
Deferred tax 14,392 16,311
Retirement benefits(1) 7,941 2,474
Trade and other receivables 7,798 7,641
Derivative financial
instruments(2) 1,508 2,805
286,175 288,573
Current assets
Inventories 25,097 19,457
Trade and other receivables 43,694 33,625
Derivative financial
instruments(2) 8,787 5,783
Cash and cash equivalents 34,104 31,830
111,682 90,695
Total assets 397,857 379,268
Liabilities
Non-current liabilities
Debt 87,034 91,115
Trade and other payables 2,885 2,304
Derivative financial
instruments(2) 385 420
Deferred tax 11,717 10,463
Retirement benefits1,3 12,435 15,605
Decommissioning and other
provisions 27,657 27,310
142,112 147,217
Current liabilities
Debt 13,042 16,899
Trade and other payables(3) 54,948 44,572
Derivative financial
instruments(2) 10,385 5,308
Income taxes payable(3) 2,837 3,111
Decommissioning and other
provisions 3,290 3,624
84,502 73,514
Total liabilities 226,614 220,731
Equity attributable to Royal
Dutch Shell plc shareholders 167,999 155,310
Non-controlling interest 3,244 3,227
Total equity 171,243 158,537
Total liabilities and equity 397,857 379,268
-------------------------------- ------------- -----------------
1. See Note 7 "Other notes to the unaudited Condensed Consolidated Interim Financial Statements".
2. See Note 6 "Derivative financial instruments and debt excluding lease liabilities".
3. As from January 1, 2021 the 'Retirement benefits' liability
has been classified under non-current liabilities (previously
partly presented within current liabilities) and taxes payable not
related to income tax are presented within 'Trade and other
payables' (previously 'Taxes payable'). Prior period comparatives
have been revised to conform with current year presentation. See
Note 7.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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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(1) trust reserves(2) earnings Total interest equity
At January 1, 2021 651 (709) 12,752 142,616 155,310 3,227 158,537
Comprehensive
income/(loss) for
the period -- -- 6,033 9,087 15,121 266 15,386
Transfer from
other
comprehensive
income -- -- (15) 15 -- -- --
Dividends(3) -- -- -- (2,620) (2,620) (265) (2,886)
Share-based
compensation -- 350 (219) 59 190 -- 190
Other changes in
non-controlling
interest -- -- -- (2) (2) 16 15
At June 30, 2021 651 (358) 18,552 149,155 167,999 3,244 171,243
At January 1, 2020 657 (1,063) 14,451 172,431 186,476 3,987 190,463
Comprehensive
income/(loss) for
the period -- -- (5,642) (18,155) (23,797) (80) (23,877)
Transfer from
other
comprehensive
income -- -- 17 (17) -- -- --
Dividends3 -- -- -- (4,718) (4,718) (178) (4,896)
Repurchases of
shares (6) -- 6 (1,214) (1,214) -- (1,214)
Share-based
compensation -- 539 (324) (231) (16) -- (16)
Other changes in
non-controlling
interest -- -- -- 426 426 (440) (14)
At June 30, 2020 651 (524) 8,508 148,521 157,156 3,289 160,445
------------------ ---------- ------- ----------- -------- -------- --------------- --------
1. See Note 4 "Share capital".
2. See Note 5 "Other reserves".
3. The amount charged to retained earnings is based on prevailing exchange rates on payment date.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
4,130 8,237 (23,907) Income before taxation for the period 12,367 (23,284)
Adjustment for:
797 757 889 -- Interest expense (net) 1,554 1,786
8,223 5,896 28,089 -- Depreciation, depletion and amortisation 14,119 35,182
108 136 518 -- Exploration well write-offs 244 601
-- Net (gains)/losses on sale and revaluation of non-current
55 (2,073) (128) assets and businesses (2,018) (21)
(1,114) (995) 161 -- Share of (profit)/loss of joint ventures and associates (2,108) (693)
782 580 610 -- Dividends received from joint ventures and associates 1,361 1,141
(2,495) (3,426) (3,713) -- (Increase)/decrease in inventories (5,921) 5,881
(4,080) (6,829) 3,959 -- (Increase)/decrease in current receivables (10,909) 10,273
5,016 5,865 (4,226) -- Increase/(decrease) in current payables 10,881 (12,655)
2,173 185 837 -- Derivative financial instruments 2,358 665
47 109 293 -- Retirement benefits 156 203
(124) 77 392 -- Decommissioning and other provisions (46) 290
561 583 (480) -- Other 1,145 98
(1,465) (809) (730) Tax paid (2,274) (2,051)
12,617 8,294 2,563 Cash flow from operating activities 20,910 17,415
(4,232) (3,885) (3,436) Capital expenditure (8,117) (7,699)
(115) (69) (161) Investments in joint ventures and associates (184) (720)
(36) (21) (20) Investments in equity securities (57) (167)
Proceeds from sale of property, plant and equipment
1,162 3,106 211 and businesses 4,268 1,824
Proceeds from joint ventures and associates from sale,
4 275 423 capital reduction and repayment of long-term loans(2) 279 970
108 31 62 Proceeds from sale of equity securities 139 135
110 98 118 Interest received 209 310
799 711 1,174 Other investing cash inflows 1,510 2,029
(746) (837) (691) Other investing cash outflows (1,583) (1,719)
(2,946) (590) (2,320) Cash flow from investing activities (3,535) (5,039)
Net increase/(decrease) in debt with maturity period
(34) 113 90 within three months 79 412
Other debt:
57 109 15,238 -- New borrowings 166 16,241
(3,901) (5,707) (7,113) -- Repayments (9,607) (9,836)
(1,162) (806) (1,088) Interest paid (1,968) (2,121)
(57) (449) 324 Derivative financial instruments (506) 243
-- 15 (32) Change in non-controlling interest 15 (40)
Cash dividends paid to:
(1,310) (1,292) (1,397) -- Royal Dutch Shell plc shareholders(1) (2,602) (4,880)
(140) (125) (68) -- Non-controlling interest (265) (178)
-- (216) (216) Repurchases of shares3 (216) (1,702)
Shares held in trust: net sales/(purchases) and dividends
(2) (63) (18) received (65) (199)
(6,550) (8,420) 5,721 Cash flow from financing activities (14,970) (2,060)
(2) (128) 164 Effects of exchange rate changes on cash and cash (130) (431)
equivalents
3,119 (844) 6,128 Increase/(decrease) in cash and cash equivalents 2,275 9,884
30,985 31,830 21,811 Cash and cash equivalents at beginning of period 31,830 18,055
34,104 30,985 27,939 Cash and cash equivalents at end of period 34,104 27,939
--------- --------- ---------- -------------------------------------------------------------------- ---------- ----------
1. Cash dividends paid represents the payment of net dividends
(after deduction of withholding taxes where applicable) and payment
of withholding taxes on dividends paid in the previous quarter.
2. As from 2021 renamed from 'Proceeds from sale of joint
ventures and associates'.
3. The amount in Q1 2021 represents a payment of withholding
taxes related to repurchases of shares in Q1 2020.
Page 12
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial
Statements ("Interim Statements") of Royal Dutch Shell plc ("the
Company") and its subsidiaries (collectively referred to as
"Shell") have been prepared in accordance with IAS 34 Interim
Financial Reporting as issued by the International Accounting
Standards Board ("IASB") and as adopted by the UK. For periods
beginning on or after January 1, 2021, Shell's (interim) financial
statements are prepared in accordance with UK-adopted international
accounting standards which were established as a result of the UK's
exit from the European Union. As applied to Shell there are no
material differences from International Financial Reporting
Standards as issued by the IASB. Except for the application of
UK-adopted international accounting standards these Interim
Statements have been prepared on the basis of the same accounting
principles as those used in the Annual Report and Accounts (pages
216 to 264) and Form 20-F (pages 164 to 211) for the year ended
December 31, 2020 as filed with the Registrar of Companies for
England and Wales and the US Securities and Exchange Commission,
respectively, and should be read in conjunction with these
filings.
The financial information presented in the unaudited Interim
Statements does not constitute statutory accounts within the
meaning of section 434(3) of the Companies Act 2006 ("the Act").
Statutory accounts for the year ended December 31, 2020 were
published in Shell's Annual Report and Accounts, a copy of which
was delivered to the Registrar of Companies for England and Wales,
and in Shell's Form 20-F. The auditor's report on those accounts
was unqualified, did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Act.
Going concern
These unaudited Interim Statements have been prepared on the
going concern basis of accounting. In assessing the appropriateness
of the going concern assumption over the period to December 31,
2022 (the "going concern period"), management have stress tested
Shell's most recent financial projections to incorporate a range of
potential future outcomes by considering Shell's principal risks,
further potential downside pressures on commodity prices and cash
preservation measures, including reduced future operating costs,
capital expenditure, shareholder distributions and increased
divestments. This assessment confirmed that Shell has adequate
cash, other liquid resources and undrawn credit facilities to
enable it to meet its obligations as they fall due in order to
continue its operations during the going concern period. Therefore,
the Directors consider it appropriate to continue to adopt the
going concern basis of accounting in preparing these unaudited
Interim Statements.
Key accounting considerations, significant judgements and
estimates
Future commodity price assumptions and management's view on the
future development of refining margins represent a significant
estimate and both were subject to change in 2020, resulting in the
recognition of impairments in 2020. These assumptions continue to
apply for impairment testing purposes in the second quarter
2021.
2. Segment information
Segment earnings are presented on a current cost of supplies
basis (CCS earnings), which is the earnings measure used by the
Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance. On this basis, the
purchase price of volumes sold during the period is based on the
current cost of supplies during the same period after making
allowance for the tax effect. CCS earnings therefore exclude the
effect of changes in the oil price on inventory carrying amounts.
Sales between segments are based on prices generally equivalent to
commercially available prices.
Page 13
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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INFORMATION BY SEGMENT
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Third-party
revenue
9,247 11,258 7,436 Integrated Gas 20,505 17,593
2,242 1,941 1,177 Upstream 4,183 3,521
44,570 38,382 21,596 Oil Products 82,952 65,893
4,444 4,070 2,283 Chemicals 8,514 5,504
12 14 12 Corporate 26 22
Total third-party
60,515 55,665 32,504 revenue(1) 116,181 92,533
Inter-segment
revenue
1,794 1,351 558 Integrated Gas 3,145 1,449
8,924 7,254 4,117 Upstream 16,178 10,592
3,017 2,457 1,082 Oil Products 5,473 2,933
1,633 1,187 475 Chemicals 2,820 1,350
-- -- -- Corporate -- --
CCS earnings
422 2,527 (7,959) Integrated Gas 2,949 (6,147)
2,415 1,096 (6,721) Upstream 3,511 (7,584)
33 650 (3,023) Oil Products 682 (811)
462 689 164 Chemicals 1,152 311
(592) (531) (805) Corporate (1,124) (1,258)
Total CCS
2,741 4,430 (18,343) earnings 7,171 (15,490)
--------- --------- ---------- ----------------- --------- ----------
1. Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Second quarter 2021 included losses of $340 million (Q1 2021: $1,211 million income; Q2 2020: $1,405 million income). This amount includes both the reversal of prior losses of $374 million (Q1 2021: $385 million losses; Q2 2020: $686 million gains) related to sales contracts and prior gains of $434 million (Q1 2021: $465 million gains; Q2 2020: $507 million losses) related to purchase contracts that were previously recognised and where physical settlement took place in the second quarter 2021.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Income/(loss) attributable to Royal Dutch Shell plc
3,428 5,660 (18,131) shareholders 9,087 (18,155)
131 124 30 Income/(loss) attributable to non-controlling interest 255 31
3,559 5,784 (18,101) Income/(loss) for the period 9,343 (18,124)
Current cost of supplies adjustment:
(994) (1,631) (432) Purchases (2,625) 3,342
208 353 98 Taxation 562 (819)
(33) (76) 92 Share of profit/(loss) of joint ventures and associates (108) 111
(818) (1,354) (242) Current cost of supplies adjustment (2,172) 2,634
of which:
(793) (1,314) (246) Attributable to Royal Dutch Shell plc shareholders (2,108) 2,535
(25) (39) 4 Attributable to non-controlling interest (64) 100
2,741 4,430 (18,343) CCS earnings 7,171 (15,490)
of which:
2,634 4,345 (18,377) CCS earnings attributable to Royal Dutch Shell plc 6,980 (15,620)
shareholders
106 85 34 CCS earnings attributable to non-controlling interest 191 131
------- --------- ---------- ------------------------------------------------------- --------- ----------
Page 14
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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3. Earnings per share
EARNINGS PER SHARE
Quarters Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Income/(loss) attributable to Royal Dutch Shell plc
3,428 5,660 (18,131) shareholders ($ million) 9,087 (18,155)
Weighted average number of shares used as the basis
for determining:
7,790.1 7,782.1 7,789.8 Basic earnings per share (million) 7,786.1 7,804.8
7,835.9 7,832.3 7,789.8 Diluted earnings per share (million) 7,834.2 7,804.8
--------- --------- ---------- ------------------------------------------------------- --------- ----------
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH1
Nominal value ($
Number of shares million)
A B A B Total
At January 1,
2021 4,101,239,499 3,706,183,836 345 306 651
At June 30,
2021 4,101,239,499 3,706,183,836 345 306 651
At January 1,
2020 4,151,787,517 3,729,407,107 349 308 657
Repurchases of
shares (50,548,018) (23,223,271) (4) (2) (6)
At June 30,
2020 4,101,239,499 3,706,183,836 345 306 651
-------------- ------------- ------------- -------- --- -----
1. Share capital at June 30, 2021 also included 50,000 issued and fully paid sterling deferred shares of GBP1 each.
At Royal Dutch Shell plc's Annual General Meeting on May 18,
2021, 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 EUR182.1 million
(representing 2,602 million ordinary shares of EUR0.07 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 18, 2022,
and the end of the Annual General Meeting to be held in 2022,
unless previously renewed, revoked or varied by Royal Dutch Shell
plc in a general meeting.
5. Other reserves
OTHER RESERVES
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve reserve reserve reserve income Total
At January 1, 2021 37,298 154 129 906 (25,735) 12,752
Other comprehensive income/(loss) attributable to
Royal Dutch Shell plc shareholders -- -- -- -- 6,033 6,033
Transfer from other comprehensive income -- -- -- -- (15) (15)
Share-based compensation -- -- -- (219) -- (219)
At June 30, 2021 37,298 154 129 687 (19,717) 18,552
At January 1, 2020 37,298 154 123 1,049 (24,173) 14,451
Other comprehensive income/(loss) attributable to
Royal Dutch Shell plc shareholders -- -- -- -- (5,642) (5,642)
Transfer from other comprehensive income -- -- -- -- 17 17
Repurchases of shares -- -- 6 -- -- 6
Share-based compensation -- -- -- (324) -- (324)
At June 30, 2020 37,298 154 129 725 (29,798) 8,508
---------------------------------------------------- ------- ------- ---------- ------- ------------- -------
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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The merger reserve and share premium reserve were established as
a consequence of Royal Dutch Shell plc becoming the single parent
company of Royal Dutch Petroleum Company and The "Shell" Transport
and Trading Company, p.l.c., now The Shell Transport and Trading
Company Limited, in 2005. The merger reserve increased in 2016
following the issuance of shares for the acquisition of BG Group
plc. The capital redemption reserve was established in connection
with repurchases of shares of Royal Dutch Shell plc. The share plan
reserve is in respect of equity-settled share-based compensation
plans.
6. Derivative financial instruments and debt excluding lease
liabilities
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2020, presented in the Annual Report and
Accounts 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, 2021, are consistent with
those used in the year ended December 31, 2020, though the carrying
amounts of derivative financial instruments measured using
predominantly unobservable inputs have changed since that date.
The table below provides the comparison of the fair value with
the carrying amount of debt excluding lease liabilities, disclosed
in accordance with IFRS 7 Financial Instruments: Disclosures.
DEBT EXCLUDING LEASE LIABILITIES
$ million June 30, 2021 December 31, 2020
Carrying amount 71,736 79,594
Fair value(1) 78,216 88,294
-------------------------------- ------------- -----------------
1. Mainly determined from the prices quoted for these securities.
7. Other notes to the unaudited Condensed Consolidated Interim
Financial Statements
Consolidated Statement of Income
Interest and other income
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
134 2,455 148 Interest and other income 2,590 224
of which:
95 134 158 Interest income 230 357
Dividend income (from investments in equity
34 1 14 securities) 35 16
Net gains on sales and revaluation of non-current
(55) 2,073 128 assets and businesses 2,018 21
Net foreign exchange (losses)/gains on financing
4 85 (124) activities 90 (206)
56 161 (27) Other 217 36
------- ------- ------- ----------------------------------------------------- ------- -------
Depreciation, depletion and amortisation
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Depreciation,
depletion and
8,223 5,896 28,089 amortisation 14,119 35,182
---------- --------- --------- ----------------- ---------- --------
Depreciation, depletion and amortisation in Q2 2021 includes
$2,333 million pre-tax (Q1 2021:$84 million; Q2 2020:$21,780
million) of impairments mainly related to two refineries in the USA
within Oil Products classified as held for sale ($1,207 million),
one site in the USA within Chemicals classified as held for sale
($177 million) and an exploration and evaluation asset within
Integrated Gas ($600 million).
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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Taxation charge/(credit)
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Taxation
571 2,453 (5,806) charge/(credit) 3,024 (5,160)
---------- --------- --------- ------------------- ---------- ---------
The taxation charge for Q2 2021 includes a one-off release of a
tax provision in Nigeria of $628 million.
Condensed Consolidated Balance Sheet
Retirement benefits
$ million
June 30, 2021 December 31, 2020
Non-current assets
Retirement benefits 7,941 2,474
Non-current liabilities
Retirement benefits(1) 12,435 15,605
Deficit 4,494 13,131
-------------------------- ------------- -----------------
1.As from January 1, 2021 the 'Retirement benefits' liability
has been classified under non-current liabilities (previously
partly presented within current liabilities). Prior period
comparatives have been revised by $437 million to conform with
current year presentation.
The decrease in the net retirement benefit liability is mainly
driven by an increase of the market yield on high-quality corporate
bonds in the USA, the UK and Eurozone and positive returns on plan
assets, partly offset by an increase in expected inflation in the
UK and Eurozone. Amounts recognised in the balance sheet in
relation to defined benefit plans include both plan assets and
obligations that are presented on a net basis on a plan-by-plan
basis.
Income taxes payable
$ million
June 30, 2021 December 31, 2020
Income taxes payable 2,837 3,111
As from January 1, 2021 taxes payable not related to income tax
are presented within 'Trade and other payables' (previously within
'Taxes payable') and 'Taxes payable' has been renamed into 'Income
taxes payable'. Prior period comparatives have been revised by
$2,895 million to conform with current year presentation.
8. Climate case ruling
In May 2021 the District Court in The Hague delivered its ruling
in the climate change case filed against Royal Dutch Shell plc
("Shell") by Milieudefensie (Friends of the Earth Netherlands),
other NGOs and a group of private individuals. The court ruled that
Shell must reduce the CO2 emissions of Shell group operations and
energy-carrying products sold by 45% (net) by the end of 2030
compared to its emissions in 2019. Shell will appeal this decision
in the Dutch Court of Appeal, which may take between two and three
years. This case does not have a financial impact on the unaudited
Interim Statements.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings and Adjusted earnings before interest,
taxes, depreciation and amortisation (EBITDA)
The "Adjusted Earnings" measure aims to facilitate a comparative
understanding of Shell's financial performance from period to
period by removing the effects of oil price changes on inventory
carrying amounts and removing the effects of identified items.
These items are in some cases driven by external factors and may,
either individually or collectively, hinder the comparative
understanding of Shell's financial results from period to period.
This measure excludes earnings attributable to non-controlling
interest.
The "Adjusted EBITDA (FIFO basis)" and "Adjusted EBITDA (CCS
basis)" measures are introduced with effect from January 1, 2021.
Management uses both measures to evaluate Shell's performance in
the period and over time.
We define "Adjusted EBITDA (FIFO basis)" as "Income/(loss)
attributable to Royal Dutch Shell plc shareholders" adjusted for
identified items; tax charge/(credit); depreciation, amortisation
and depletion; exploration well write-offs and net interest
expense. We also use "Adjusted EBITDA" on a CCS basis as the
current cost of supplies adjustment aims to remove the impact of
price changes on our inventories in our Oil Products and Chemicals
segments, therefore enabling comparisons over time.
Page 18
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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ADJUSTED EARNINGS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Income/(loss) attributable to Royal Dutch Shell plc
3,428 5,660 (18,131) shareholders 9,087 (18,155)
Add: Current cost of supplies adjustment attributable
(793) (1,314) (246) to Royal Dutch Shell plc shareholders (Note 2) (2,108) 2,535
Less: Identified items attributable to Royal Dutch
(2,899) 1,112 (19,015) Shell plc shareholders (1,788) (19,118)
5,534 3,234 638 Adjusted Earnings 8,768 3,498
Of which:
1,609 1,415 362 Integrated Gas 3,025 2,506
2,469 963 (1,512) Upstream 3,432 (1,220)
1,299 877 2,411 Oil Products 2,176 3,774
112 (105) 1,500 Refining and Trading 7 1,658
1,187 982 911 Marketing 2,169 2,116
670 730 206 Chemicals 1,400 354
(399) (666) (796) Corporate (1,065) (1,784)
115 85 34 Less: Non-controlling interest 199 131
Add: Taxation charge/(credit) excluding tax impact
1,178 1,550 114 of identified items 2,728 1,447
Add: Depreciation, depletion and amortisation excluding
5,890 5,812 6,308 impairments 11,702 12,652
108 136 518 Add: Exploration well write-offs 244 601
893 892 1,070 Add: Interest expense excluding identified items 1,784 2,188
95 134 158 Less: Interest income 230 357
13,507 11,490 8,491 Adjusted EBITDA (CCS basis) 24,997 20,031
Of which:
3,364 3,206 2,767 Integrated Gas 6,571 6,650
6,714 5,387 1,674 Upstream 12,100 6,510
2,608 2,112 3,747 Oil Products 4,720 6,614
676 467 2,267 Refining and Trading 1,143 3,197
1,932 1,646 1,479 Marketing 3,577 3,417
1,036 1,041 507 Chemicals 2,077 973
(101) (172) (171) Corporate (273) (587)
115 85 34 Less: Non-controlling interest 199 131
Less: Current cost of supplies adjustment attributable
(793) (1,314) (246) to Royal Dutch Shell plc shareholders (Note 2) (2,108) 2,535
Add: Current cost of supplies adjustment to taxation
208 353 98 charge/(credit) (Note 2) 562 (819)
14,508 13,157 8,835 Adjusted EBITDA (FIFO basis) 27,666 16,678
Of which:
3,364 3,206 2,767 Integrated Gas 6,571 6,650
6,714 5,387 1,674 Upstream 12,100 6,510
3,553 3,586 4,217 Oil Products 7,139 3,615
1,370 1,715 2,889 Refining and Trading 3,085 439
2,182 1,872 1,328 Marketing 4,054 3,177
1,117 1,274 376 Chemicals 2,392 518
(101) (172) (171) Corporate (273) (587)
139 124 30 Less: Non-controlling interest 264 31
--------- --------- ---------- ----------------------------------------------------------- --------- ----------
Identified items
Identified items comprise: divestment gains and losses,
impairments, redundancy and restructuring, provisions for onerous
contracts, fair value accounting of commodity derivatives and
certain gas contracts and the impact of exchange rate movements on
certain deferred tax balances, and other items.
Page 19
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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IDENTIFIED ITEMS
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Identified items before tax
(55) 2,073 128 Divestment gains/(losses) 2,018 51
(2,333) (84) (22,332) Impairments (2,417) (23,082)
68 (748) (518) Redundancy and restructuring (679) (536)
-- -- -- Provisions for onerous contracts -- --
Fair value accounting of commodity derivatives and
(1,373) 388 (1,884) certain gas contracts (985) (916)
(29) 31 (427) Other 2 (427)
(3,722) 1,661 (25,033) Total identified items before tax (2,062) (24,908)
815 (549) 6,018 Total tax impact of identified items 265 5,790
Identified items after tax
(83) 1,410 10 Divestment gains/(losses) 1,328 (22)
(1,787) (94) (16,842) Impairments (1,881) (17,378)
45 (486) (375) Redundancy and restructuring (441) (382)
-- -- -- Provisions for onerous contracts -- --
Fair value accounting of commodity derivatives and
(1,181) 365 (1,540) certain gas contracts (816) (702)
121 (110) (44) Impact of exchange rate movements on tax balances 11 (410)
(23) 25 (224) Other 2 (224)
(2,908) 1,112 (19,015) Impact on CCS earnings (1,796) (19,118)
Of which:
(1,187) 1,112 (8,321) Integrated Gas (75) (8,652)
(53) 133 (5,209) Upstream 80 (6,364)
(1,267) (227) (5,433) Oil Products (1,494) (4,585)
(208) (41) (41) Chemicals (248) (43)
(193) 134 (9) Corporate (59) 526
(2,899) 1,112 (19,015) Impact on CCS earnings attributable to shareholders (1,788) (19,118)
(8) -- -- Impact on CCS earnings attributable to non-controlling (8) --
interest
--------- -------- ---------- ----------------------------------------------------------- --------- ----------
The identified items categories above may include after-tax
impacts of identified items of joint ventures and associates which
are fully reported within "Share of profit of joint ventures and
associates" in the Consolidated Statement of Income, and fully
reported as identified items before tax in the table above.
Identified items related to subsidiaries are consolidated and
reported across appropriate lines of the Consolidated Statement of
Income. Only pre-tax identified items reported by subsidiaries are
taken into account in the calculation of underlying operating
expenses (Reference F).
Provisions for onerous contracts: Provisions for onerous
contracts that relate to businesses that Shell has exited or to
redundant assets or assets that cannot be used.
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as
power and environmental products. Shell also enters into contracts
for tolling, pipeline and storage capacity. Derivative contracts
are entered into for mitigation of resulting economic exposures
(generally price exposure) and these derivative contracts are
carried at period-end market price (fair value), with movements in
fair value recognised in income for the period. Supply and purchase
contracts entered into for operational purposes, as well as
contracts for tolling, pipeline and storage capacity, are, by
contrast, recognised when the transaction occurs; 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 contracts 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 are reported as identified items.
Impacts of exchange rate movements on tax balances represent the
impact on tax balances of exchange rate movements arising on (a)
the conversion to dollars of the local currency tax base of
non-monetary assets and liabilities, as well as losses (this
primarily impacts the Upstream and Integrated Gas segments) and (b)
the conversion of dollar-
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UNAUDITED RESULTS
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denominated inter-segment loans to local currency, leading to
taxable exchange rate gains or losses (this primarily impacts the
Corporate segment).
Other identified items represent other credits or charges that
based on Shell management's assessment hinder the comparative
understanding of Shell's financial results from period to
period.
B. Adjusted Earnings per share
Adjusted Earnings per share is calculated as Adjusted Earnings
(see Reference A), divided by the weighted average number of shares
used as the basis for basic earnings per share (see Note 3).
C. Cash capital expenditure
Cash capital expenditure represents cash spent on maintaining
and developing assets as well as on investments in the period.
Management regularly monitors this measure as a key lever to
delivering sustainable cash flows. Cash capital expenditure is the
sum of the following lines from the Consolidated Statement of Cash
flows: Capital expenditure, Investments in joint ventures and
associates and Investments in equity securities.
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
4,232 3,885 3,436 Capital expenditure 8,117 7,699
Investments in joint
ventures and
115 69 161 associates 184 720
Investments in
36 21 20 equity securities 57 167
Cash capital
4,383 3,974 3,617 expenditure 8,357 8,587
Of which:
880 1,015 736 Integrated Gas 1,895 1,618
1,696 1,534 1,876 Upstream 3,229 4,397
882 668 606 Oil Products 1,550 1,186
895 730 369 Chemicals 1,625 1,215
30 28 30 Corporate 58 171
---------- --------- --------- -------------------- ----------- -------
D. Return on average capital employed
Return on average capital employed ("ROACE") measures the
efficiency of Shell's utilisation of the capital that it employs.
Shell uses two ROACE measures: ROACE on a Net income basis and
ROACE on an Adjusted Earnings plus Non-controlling interest (NCI)
basis, both adjusted for after-tax interest expense.
Both measures refer to Capital employed which consists of total
equity, current debt and non-current debt.
ROACE on a Net income basis
In this calculation, the sum of income for the current and
previous three quarters, adjusted for after-tax interest expense,
is expressed as a percentage of the average capital employed for
the same period.
$ million Quarters
Q2 2021 Q1 2021 Q2 2020
Income - current and previous three quarters 5,933 (15,727) (11,011)
Interest expense after tax - current and previous
three quarters 2,668 2,728 3,014
Income before interest expense - current and previous
three quarters 8,601 (12,999) (7,997)
Capital employed -- opening 265,435 278,444 288,900
Capital employed -- closing 271,319 269,323 265,435
Capital employed -- average 268,377 273,883 277,168
ROACE on a Net income basis 3.2% (4.7)% (2.9)%
-------------------------------------------------------- -------- -------- --------
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ROACE on an Adjusted Earnings plus Non-controlling interest
(NCI) basis
In this calculation, the sum of Adjusted Earnings (see Reference
A) plus non-controlling interest (NCI) excluding identified items
for the current and previous three quarters, adjusted for after-tax
interest expense, is expressed as a percentage of the average
capital employed for the same period. This measure was previously
referred to as "ROACE on a CCS basis excluding identified items"
and was renamed to improve clarity with effect from the second
quarter 2021. There is no change to the calculation outcome as
result of this nomenclature update.
$ million Quarters
Q2 2021 Q1 2021 Q2 2020
Adjusted Earnings - current and previous three quarters
(Reference A) 10,115 5,220 11,196
Add: Income/(loss) attributable to NCI - current and
previous three quarters 371 269 300
Add: Current cost of supplies adjustment attributable
to NCI - current and previous three quarters (90) (62) 105
Less: Identified items attributable to NCI (Reference
A) - current and previous three quarters (18) (10) --
Adjusted Earnings plus NCI excluding identified items
- current and previous three quarters 10,414 5,437 11,602
Add: Interest expense after tax - current and previous
three quarters 2,668 2,728 3,014
Adjusted Earnings plus NCI excluding identified items
before interest expense - current and previous three
quarters 13,081 8,165 14,616
Capital employed - average 268,377 273,883 277,168
ROACE on an Adjusted Earnings plus NCI basis 4.9% 3.0% 5.3%
---------------------------------------------------------- -------- ------- -------
E. Gearing
Gearing is a measure of Shell's capital structure and is defined
as net debt as a percentage of total capital. Net debt is defined
as the sum of current and non-current debt, less cash and cash
equivalents, adjusted for the fair value of derivative financial
instruments used to hedge foreign exchange and interest rate risks
relating to debt, and associated collateral balances. Management
considers this adjustment useful because it reduces the volatility
of net debt caused by fluctuations in foreign exchange and interest
rates, and eliminates the potential impact of related collateral
payments or receipts. Debt-related derivative financial instruments
are a subset of the derivative financial instrument assets and
liabilities presented on the balance sheet. Collateral balances are
reported under "Trade and other receivables" or "Trade and other
payables" as appropriate.
$ million Quarters
June 30, 2021 March 31, 2021 June 30, 2020
Current debt 13,042 14,541 17,530
Non-current debt 87,034 87,828 87,460
Total debt 100,076 102,369 104,990
Of which lease liabilities 28,340 28,177 29,073
Add: Debt-related derivative financial instruments:
net liability/(asset) (912) (864) 525
Add: Collateral on debt-related derivatives: net
liability/(asset) 675 732 266
Less: Cash and cash equivalents (34,104) (30,985) (27,939)
Net debt 65,735 71,252 77,843
Add: Total equity 171,243 166,953 160,445
Total capital 236,978 238,205 238,288
Gearing 27.7% 29.9% 32.7%
------------------------------------------------------ -------- --- -------- --- -------- ---
F. Operating expenses
Operating expenses is a measure of Shell's cost management
performance, comprising the following items from the Consolidated
Statement of Income: production and manufacturing expenses;
selling, distribution and administrative expenses; and research and
development expenses.
Underlying operating expenses is a measure aimed at facilitating
a comparative understanding of performance from period to period by
removing the effects of identified items, which, either
individually or collectively, can cause volatility, in some cases
driven by external factors.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
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Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Production and manufacturing
5,162 6,808 5,822 expenses 11,970 11,803
Selling, distribution and
3,107 2,462 2,370 administrative expenses 5,569 4,763
201 166 232 Research and development 366 475
8,470 9,436 8,423 Operating expenses 17,905 17,042
Of which identified items:
Redundancy and
restructuring
68 (747) (508) (charges)/reversal (679) (526)
(31) -- (411) (Provisions)/reversal (31) (411)
(2) 35 -- Other 33 --
35 (712) (919) (677) (937)
8,505 8,724 7,504 Underlying operating expenses 17,228 16,105
--------- --------- --------- ------------------------------- --------- --------
G. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the business. It is defined
as the sum of "Cash flow from operating activities" and "Cash flow
from investing activities".
Cash flows from acquisition and divestment activities are
removed from Free cash flow to arrive at the Organic free cash
flow, a measure used by management to evaluate the generation of
free cash flow without these activities.
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
12,617 8,294 2,563 Cash flow from operating activities 20,910 17,415
(2,946) (590) (2,320) Cash flow from investing activities (3,535) (5,039)
9,671 7,704 243 Free cash flow 17,375 12,376
1,274 3,412 696 Less: Divestment proceeds (Reference I) 4,686 2,929
Add: Tax paid on divestments (reported under "Other
24 -- -- investing cash outflows") 24 --
Add: Cash outflows related to inorganic capital
2 89 199 expenditure1 92 602
8,424 4,381 (254) Organic free cash flow2 12,805 10,050
--------- ------- --------- ------------------------------------------------------- --------- ---------
1.Cash outflows related to inorganic capital expenditure
includes portfolio actions which expand Shell's activities through
acquisitions and restructuring activities as reported in capital
expenditure lines in the Consolidated Statement of Cash Flows.
2.Free cash flow less divestment proceeds, adding back outflows
related to inorganic expenditure.
H. Cash flow from operating activities excluding working capital movements
Working capital movements are defined as the sum of the
following items
in the Consolidated Statement of Cash Flows: (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current receivables, and (iii) increase/(decrease) in current payables.
Cash flow from operating activities excluding working capital
movements is a measure used by Shell to analyse its operating cash
generation over time excluding the timing effects of changes in
inventories and operating receivables and payables from period to
period.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
12,617 8,294 2,563 Cash flow from operating activities 20,910 17,415
(2,495) (3,426) (3,713) (Increase)/decrease in inventories (5,921) 5,881
(4,080) (6,829) 3,959 (Increase)/decrease in current receivables (10,909) 10,273
5,016 5,865 (4,226) Increase/(decrease) in current payables 10,881 (12,655)
(1,559) (4,390) (3,980) (Increase)/decrease in working capital (5,949) 3,499
Cash flow from operating activities excluding working
14,176 12,683 6,543 capital movements 26,859 13,916
Of which:
4,350 3,653 2,871 Integrated Gas 8,003 6,224
5,444 4,702 548 Upstream 10,146 4,265
3,365 3,313 2,430 Oil Products 6,678 2,783
1,225 1,045 304 Chemicals 2,270 492
(208) (30) 390 Corporate (238) 151
--------- --------- --------- --------------------------------------------------------- ---------- ----------
I. Divestment proceeds
Divestment proceeds represent cash received from divestment
activities in the period. Management regularly monitors this
measure as a key lever to deliver sustainable cash flow.
Quarters $ million Half year
Q2 2021 Q1 2021 Q2 2020 2021 2020
Proceeds from sale of property, plant and equipment
1,162 3,106 211 and businesses 4,268 1,824
Proceeds from joint ventures and associates from sale,
4 275 423 capital reduction and repayment of long-term loans(1) 279 970
108 31 62 Proceeds from sale of equity securities 139 135
1,274 3,412 696 Divestment proceeds 4,686 2,929
------- --------- ---------- ---------------------------------------------------------- --------- ---------
1.As from 2021 renamed from 'Proceeds from sale of joint
ventures and associates'.
Page 24
ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting Shell are
described in the Risk Factors section of the Annual Report and
Accounts (pages 28 to 37) and Form 20-F (pages 18 to 22) for the
year ended December 31, 2020 and are summarised below. There are no
material changes in those Risk Factors for the remaining 6 months
of the financial year.
STRATEGIC RISKS
--We are exposed to macroeconomic risks including fluctuating
prices of crude oil, natural gas, oil products and chemicals.
--Our ability to deliver competitive returns and pursue
commercial opportunities depends in part on the accuracy of our
price assumptions.
--Our ability to achieve our strategic objectives depends on how
we react to competitive forces.
--If we fail to stay in step with the pace and extent of
society's demands with regard to the energy transition to a
low-carbon future, we could fail in sustaining and growing our
business.
--Rising climate change concerns and the effects of the energy
transition have led and could lead to a decrease in demand and
potentially affect prices for fossil fuels. This may also lead to
additional legal and/or regulatory measures which could result in
project delays or cancellations, potential litigation, operational
restrictions and additional compliance obligations.
--We seek to execute divestments in pursuing our strategy. We
may be unable to divest these assets successfully in line with our
strategy.
--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 contractual terms, laws and regulations. We and our
joint arrangements and associates also face the risk of litigation
and disputes worldwide.
OPERATIONAL RISKS
--Our future hydrocarbon production depends on the delivery of
large and integrated projects, and our ability to replace proved
oil and gas reserves.
--The estimation of proved oil and gas reserves involves
subjective judgements based on available information and the
application of complex rules. This means subsequent downward
adjustments are possible.
--The nature of our operations exposes us, and the communities
in which we work, to a wide range of health, safety, security and
environment risks.
--A further erosion of the business and operating environment in
Nigeria could have a material adverse effect on us.
--An erosion of our business reputation could have a material
adverse effect on our brand, our ability to secure new resources or
access capital markets, and on our licence to operate.
--We rely heavily on Operational Technology (OT) and Information
Technology (IT) systems in our operations. This exposes OT and IT
infrastructure to both internal and external cybersecurity risks,
cyber-disruptions and legal and regulatory measures.
--Our business exposes us to risks of social instability,
criminality, civil unrest, terrorism, piracy, cyber-disruption and
acts of war that could have a material adverse effect on our
operations.
--Production from the Groningen field in the Netherlands causes
earthquakes that affect local communities.
--We are exposed to treasury and trading risks, including
liquidity risk, interest rate risk, foreign exchange risk and
credit risk. We are affected by the global macroeconomic
environment and the conditions of financial and commodity
markets.
--Our future performance depends on the successful development
and deployment of new technologies and new products.
--We have substantial pension commitments, the funding of which
is subject to capital market risks and other factors.
--We mainly self-insure our risk exposure. We could incur
significant losses from different types of risks that are not
covered by insurance from third-party insurers.
--Many of our major projects and operations are conducted in
joint arrangements or with associates. This could reduce our degree
of control and our ability to identify and manage risks.
CONDUCT RISKS
--We are exposed to commodity trading risks, including market
and operational risks.
--Violations of antitrust and competition laws carry fines and
expose us and/or our employees to criminal sanctions and civil
suits.
--Violations of anti-bribery, tax-evasion and anti-money
laundering laws carry fines and expose us and/or our employees to
criminal sanctions, civil suits and ancillary consequences (such as
debarment and the revocation of licences).
--Violations of data protection laws carry fines and expose us
and/or our employees to criminal sanctions and civil suits.
--Violations of trade compliance laws and regulations, including
sanctions, carry fines and expose us and our employees to criminal
sanctions and civil suits.
OTHER (generally applicable to an investment in securities)
--The Company's Articles of Association determine the
jurisdiction for shareholder disputes. This could limit shareholder
remedies.
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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FIRST QUARTER 2021 PORTFOLIO DEVELOPMENTS
Integrated Gas
In March 2021, QGC Common Facilities Company Pty Ltd, a
wholly-owned subsidiary of Shell, completed the sale of a 26.25%
interest in the Queensland Curtis LNG (QCLNG) Common Facilities to
Global Infrastructure Partners Australia for $2.5 billion,
following the receipt of regulatory approval.
Upstream
In January 2021, Shell completed the sale of its 30% interest in
Oil Mining Lease 17 in the Eastern Niger Delta, and associated
infrastructure, to TNOG Oil and Gas Limited, a related company of
Heirs Holdings Limited and Transnational Corporation of Nigeria
Plc, for a consideration of $533 million. A total of $453 million
was paid by completion with the balance to be paid over an agreed
period.
In February 2021, an agreement was reached with publicly listed
Canadian energy company Crescent Point Energy Corp. to sell the
Duvernay shale light oil position in Alberta, Canada. The
transaction completed on April 1, 2021. The consideration received
consisted of $533 million in cash and 50 million shares in Crescent
Point Energy common stock (TSX: CPG) valued at $208 million based
on the closing price on March 31, 2021.
In March 2021, Shell Egypt and one of its affiliates signed an
agreement with a consortium made up of subsidiaries of Cheiron
Petroleum Corporation and Cairn Energy plc to acquire Shell's
upstream assets in Egypt's Western Desert for a base consideration
of $646 million and additional payments of up to $280 million
between 2021 and 2024, contingent on the oil price and the results
of further exploration. The transaction is subject to government
and regulatory approvals and is expected to complete in the second
half of 2021.
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
issued by the International Accounting Standards Board ("IASB") and
as adopted by the UK; (b) the interim management report includes a
fair review of the information required by Disclosure Guidance 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 shown on pages
114-120 in the Annual Report and Accounts and on pages 89 to 94 in
the Form 20-F for the year ended December 31, 2020 save for the
following changes:
Sir Andrew Mackenzie: appointed Company Chair with effect from
the conclusion of the 2021 Annual General Meeting, held on May 18,
2021.
Jane Lute: appointed Non-executive Director with effect from May
19, 2021.
Charles O. Holliday: stepped down following the conclusion of
the 2021 Annual General Meeting, held on May 18, 2021.
Sir Nigel Sheinwald: stepped down following the conclusion of
the 2021 Annual General Meeting, held on May 18, 2021.
On behalf of the Board
Ben van Beurden Jessica Uhl
Chief Executive Officer Chief Financial Officer
July 29, 2021 July 29, 2021
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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INDEPENT REVIEW REPORT TO ROYAL DUTCH SHELL PLC
Conclusion
We have been engaged by Royal Dutch Shell plc to review the
Condensed Consolidated Interim Financial Statements in the
half-yearly financial report for the six months ended June 30,
2021, which comprise the Consolidated Statement of Income, the
Consolidated Statement of Comprehensive Income, the Condensed
Consolidated Balance Sheet, the Consolidated Statement of Changes
in Equity, the Consolidated Statement of Cash Flows and Notes 1 to
8. 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 set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the Condensed Consolidated Interim
Financial Statements in the half-yearly financial report for the
six months ended June 30, 2021 are not prepared, in all material
respects, in accordance with UK adopted International Accounting
Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK and Ireland), "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Auditing Practices Board. 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
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.
From 2021 the annual Consolidated Financial Statements of Royal
Dutch Shell plc and its subsidiaries are prepared in accordance
with UK adopted international accounting standards. The condensed
set of financial statements included in the half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting, as issued by
the International Accounting Standards Board and as adopted by the
UK.
Directors' responsibilities
The half-yearly financial report 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 Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility
In reviewing the half-yearly financial report, we are
responsible for expressing to Royal Dutch Shell plc a conclusion on
the condensed set of financial statements in the half-yearly
financial report. Our conclusion, based on procedures that are less
extensive than audit procedures, as described in the Basis for
Conclusion paragraph of this report.
Use of our report
This report is made solely to Royal Dutch Shell plc in
accordance with guidance contained in the International Standard on
Review Engagements 2410 (UK and Ireland) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than Royal Dutch Shell plc, for our work, for this
report, or for the conclusions we have formed.
Ernst & Young LLP
London
July 29, 2021
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ROYAL DUTCH SHELL PLC 2ND QUARTER 2021 AND HALF YEAR
UNAUDITED RESULTS
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CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
All peak production figures in Portfolio Developments are quoted at
100% expected production. The numbers presented throughout this
announcement may not sum precisely to the totals provided and
percentages may not precisely reflect the absolute figures, due to
rounding.
The companies in which Royal Dutch Shell plc directly and
indirectly owns investments are separate legal entities. In this
announcement "Shell", "Shell Group" and "Group" 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 Royal Dutch Shell plc and its
subsidiaries in general or to those who work for them. These terms
are also used where no useful purpose is served by identifying the
particular entity or entities. "Subsidiaries", "Shell subsidiaries"
and "Shell companies" as used in this announcement refer to
entities over which Royal Dutch Shell plc either directly or
indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
"joint ventures" and "joint operations", respectively. Entities
over which Shell has significant influence but neither control nor
joint control are referred to as "associates". The term "Shell
interest" is used for convenience to indicate the direct and/or
indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all
third-party interest.
This announcement contains forward-looking statements (within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995) concerning the financial condition, results of operations and
businesses of 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 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 "aim", "ambition", "anticipate", "believe",
"could", "estimate", "expect", "goals", "intend", "may",
"milestones", "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 Shell and could cause those
results to differ materially from those expressed in the
forward-looking statements included in this announcement, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell's products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, fiscal and regulatory developments
including regulatory measures addressing climate change; (k)
economic and financial market conditions in various countries and
regions; (l) political risks, including the risks of expropriation
and renegotiation of the terms of contracts with governmental
entities, delays or advancements in the approval of projects and
delays in the reimbursement for shared costs; (m) risks associated
with the impact of pandemics, such as the COVID-19 (coronavirus)
outbreak; and (n) changes in trading conditions. No assurance is
provided that future dividend payments will match or exceed
previous dividend payments. All forward-looking statements
contained in this announcement are expressly qualified in their
entirety by the cautionary statements contained or referred to in
this section. Readers should not place undue reliance on
forward-looking statements. Additional risk factors that may affect
future results are contained in Royal Dutch Shell plc's Form 20-F
for the year ended December 31, 2020 (available at
www.shell.com/investor and www.sec.gov). These risk factors also
expressly qualify all forward-looking statements contained in this
announcement and should be considered by the reader. Each
forward-looking statement speaks only as of the date of this
announcement, July 29, 2021. Neither Royal Dutch Shell plc nor any
of its subsidiaries undertake any obligation to publicly update or
revise any forward-looking statement as a result of new
information, future events or other information. In light of these
risks, results could differ materially from those stated, implied
or inferred from the forward-looking statements contained in this
announcement.
The content of websites referred to in this announcement does
not form part of this announcement.
We may have used certain terms, such as resources, in this
announcement that the United States Securities and Exchange
Commission (SEC) strictly prohibits us from including in our
filings with the SEC. Investors are urged to consider closely the
disclosure in our Form 20-F, File No 1-32575, available on the SEC
website www.sec.gov.
This announcement contains inside information.
July 29, 2021
The information in this announcement reflects the unaudited
consolidated financial position and results of Royal Dutch
Shell plc. Company No. 4366849, Registered Office: Shell
Centre, London, SE1 7NA, England, UK.
--------------------------------------------------------------
Contacts:
- Linda M. Coulter, Company Secretary
- Media: International +44 (0) 207 934 5550; USA +1 832 337
4355
LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
Classification: Inside Information
Page 28
(END) Dow Jones Newswires
July 29, 2021 02:00 ET (06:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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