Shell expects the impact of the transaction to be neutral to group return on average capital employed in 2018 at $60 oil prices, and accretive thereafter at similar oil prices (note 7).
These estimates (note 8) reflect the significant potential for creation of value for shareholders in the combination.
Expected timetable of principal events
Publication of prospectus and circular 22 December 2015
Publication of Shell update on fourth quarter 2015 and full year
unaudited results 20 January 2016
Publication of BG operational and trading update 20 January 2016
Shell General Meeting 27 January 2016
BG General Meeting 28 January 2016
Shell Q4 2015 and full year results 4 February 2016
BG Q4 2015 and full year results 5 February 2016
Scheme court hearing 11 February 2016
Effective date 15 February 2016
These dates and times are indicative only and are based on current expectations and are subject to change. If any of the times and/or dates change, the revised times and/or dates will be announced via a Regulatory Information Service.
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1 The issue of Shell B shares is subject to the continuing applicability of the Dutch Revenue Service’s confirmation of the Dutch tax treatment of the Shell B shares, such confirmation being conditional on the combination being implemented pursuant to a scheme of arrangement. If Shell were to implement the combination by way of a takeover offer in the specific circumstances set out in the prospectus, the share component of the consideration would comprise Shell A shares only and BG shareholders would be entitled to receive 0.4454 Shell A shares and 383 pence in cash per BG share.
2 Based on a closing price of 1,469 pence per Shell B share on 18 December 2015.
3 Based on the fully diluted share capital of BG as set out in the prospectus. For the value stated in US dollars, an exchange rate of £1.00/US$1.4908 has been used, which was derived from data provided by Bloomberg as at 4.30 p.m. London Time on 18 December 2015.
4 The quantified estimated synergies which are referred to in this announcement are subject to the bases of belief, principal assumptions and sources of information set out in the Appendix to Shell’s management day announcement on 3 November 2015 providing investors with a strategic update (and which are contained in Appendix 2 of the BG scheme document). Shell’s modelling of the combination includes additional synergies, that cannot be quantified and reported on under the Takeover Code.
5 Free cash flow per share is calculated as the net of cash flow from operations less cash flow from investing activities, divided by share count. The 2016 statement reflects accretion without taking into account any asset sales resulting from the combination.
6 If the combination completes, an annual non-cash post-tax charge to the Shell group’s income statement is expected through a step up in annual depreciation charges of approximately $1.0 billion, which has been included in this statement.
7 For the purpose of this announcement, Shell defines return on average capital employed as income for the relevant period on a current cost of supply (“CCS”) basis, excluding identified items, as a percentage of the average capital employed for the period. Forward looking assessments of the impact of the combination on Shell’s return on average capital employed have been compiled by Shell management.
8 The statements that the combination is expected to be accretive to cash flow from operations per share, free cash flow per share, earnings per share, or the effect on return on average capital employed, should not be construed as profit forecasts and are therefore not subject to the requirements of Rule 28 of the Takeover Code. Calculated as at 18 December 2015, being the last practicable date before publication of the circular and the prospectus.
This announcement is not intended to and does not constitute or form part of any offer to sell or subscribe for or any invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction pursuant to the recommended combination of Royal Dutch Shell plc (“Shell”) and BG Group plc (“BG”) (the “Combination”) or otherwise nor shall there be any sale, issuance or transfer of securities of Shell or BG pursuant to the Combination in any jurisdiction in contravention of applicable laws.
Statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. For the purposes of Rule 28 of the Takeover Code, the quantified financial benefits statement contained in this announcement is the responsibility of Shell and the Shell directors. Neither this statement nor any other statement in this announcement, including accretion statements or statements as to the effect of the Combination on return on average capital employed, should be construed as a profit forecast or estimate for any period and are therefore not subject to the requirements of Rule 28 of the Takeover Code.
No statement should be interpreted to mean that the combined group's earnings, earnings per share, income, cash flow from operations or free cash flow for the current or future financial periods, would necessarily match or be greater than or be less than those of Shell or BG for the relevant preceding financial period or any other period.
All amounts shown throughout this announcement are unaudited.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement “Shell”, “Shell group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. ‘‘Subsidiaries’’, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to companies over which Royal Dutch Shell plc either directly or indirectly has control. Companies over which Shell has joint control are generally referred to as “joint ventures” and companies over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect
ownership interest held by Shell in a venture, partnership or company, after exclusion of all third party interest. The term “BG” is sometimes used to mean BG Group plc and sometimes BG Group plc and its subsidiaries.
This announcement contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell and of the Combination. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell, BG and the combined group to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions, including as to future potential cost savings, synergies, earnings, cash flow, return on average capital employed, production and prospects. These forward-looking statements are identified by their use of terms and phrases such as ‘‘anticipate’’, ‘‘believe’’, ‘‘could’’, ‘‘estimate’’, ‘‘expect’’, ‘‘goals’’, ‘‘intend’’, ‘‘may’’, ‘‘objectives’’, ‘‘outlook’’, ‘‘plan’’, ‘‘probably’’, ‘‘project’’, ‘‘risks’’, “schedule”, ‘‘seek’’, ‘‘should’’, ‘‘target’’, ‘‘will’’ and similar terms and phrases.
There are a number of factors that could affect the future operations of Royal Dutch Shell, the BG group and the combined group 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, BG group’s or the combined group’s products? (c) currency fluctuations? (d) drilling and production results? (e) reserves estimates? (f) loss of market share and industry competition? (g) environmental and physical risks? (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions? (i) the risk of doing business in developing countries and countries subject to international sanctions? (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change? (k) economic and financial market conditions in various countries and regions? (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs? and (m) changes in trading conditions.
All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Form 20F for the year ended December 31, 2014 (available at www.shell.com/investor and www.sec.gov) and in the prospectus. These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader.
For a discussion of important factors which could cause actual results to differ from forward looking statements relating to BG and the BG group, refer to BG’s annual report and accounts for the financial year ended 31 December 2014.
Each forward-looking statement speaks only as of the date of this announcement. 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. There can be no assurance that dividend payments will match or exceed those set out in this announcement in the future, or that they will be made at all.
No statement (including any statement of estimated synergies) is intended as a profit forecast or estimate for any period. Accretion statements or statements as to return on capital employed should not be construed as profit forecasts and are, therefore, not subject to the requirements of Rule 28 of the Takeover Code.
In accordance with Rule 26.1 of the Code, a copy of this announcement is also available on the website of Shell at: www.shell.com.For the avoidance of doubt, the contents of the website referred to in this announcement are not incorporated into and do not form part of this announcement.
Notice to BG shareholders resident in France
A copy of the prospectus approved by the UK Listing Authority and the certificate of approval have been or will be served on the Autorité des marchés financiers (“AMF”). A copy of the French translation of the summary of the prospectus has been or will be made available free of charge at www.amf-france.org.
Notice to BG shareholders resident in India