These identified items are shown to provide additional insight into segment earnings and income attributable to shareholders. They include the full impact on Shell's CCS earnings of the following items:
- Divestment gains and losses
- Impairments
- Fair value accounting of commodity derivatives and certain gas contracts (see Note [A])
- Redundancy and restructuring
Further items may be identified in addition to the above.
EARNINGS BY BUSINESS SEGMENT
UPSTREAM
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 %[1] 2015 2014 %
Upstream earnings
excluding identified
493 (425) 1,730 -72 items 1,780 16,505 -89
(333) (8,643) 2,645 -113 Upstream earnings (5,663) 15,841 -136
Upstream cash flow from
2,916 4,044 4,991 -42 operating activities 13,181 31,839 -59
Upstream capital
5,820 5,848 7,511 -23 investment 23,527 31,293 -25
Liquids production
available for sale
1,532 1,528 1,526 - (thousand b/d) 1,509 1,484 +2
Natural gas production
available for sale
8,741 7,837 9,782 -11 (million scf/d) 8,380 9,259 -9
Total production
available for sale
3,039 2,880 3,213 -5 (thousand boe/d) 2,954 3,080 -4
Equity sales of LNG
5.68 5.31 6.20 -8 (million tonnes) 22.62 23.97 -6
[1] Q4 on Q4 change
Fourth quarter Upstream earnings excluding identified items were $493 million compared with $1,730 million a year ago. Identified items were a net charge of $826 million compared with a net gain of $915 million for the fourth quarter 2014 (see page 5).
Compared with the fourth quarter 2014, earnings excluding identified items were impacted by the significant decline in oil and gas prices. This was partly offset by decreased costs and lower exploration expenses, including lower well write-offs, and lower taxation.
Compared with the fourth quarter 2014, earnings benefited from the impact of the strengthening of the Australian dollar and Brazilian real on deferred tax positions, which increased earnings by $553 million and $135 million respectively. The benefit of these deferred tax movements in the fourth quarter 2015 was $257 million after tax, compared with a negative impact of some $431 million after tax in the same period a year ago.
Upstream
Americas
excluding identified items incurred a loss.
Global liquids realisations were 46% lower than for the fourth quarter 2014. Global natural gas realisations were 33% lower than for the same quarter a year ago, with a 44% decrease in the
Americas
and a 31% decrease outside the
Americas
.
Fourth quarter 2015 production was 3,039 thousand boe/d compared with 3,213 thousand boe/d a year ago. Liquids production was in line with the same period a year ago and natural gas production decreased by 11% compared with the fourth quarter 2014. Fourth quarter 2015 production was in line with the same period last year excluding the impact of divestments, curtailment and underground storage reinjection at NAM in
the Netherlands
, a Malaysia PSC expiry, PSC price effects, and security impacts in
Nigeria
.
The continuing ramp-up of existing fields, in particular Cardamom and Mars B in the
Americas
, Bonga Main in
Nigeria
and Gumusut-Kakap in
Malaysia
, contributed some 88 thousand boe/d to production compared with the fourth quarter 2014.
Equity LNG sales volumes of 5.68 million tonnes decreased by 8% compared with the same quarter a year ago, mainly reflecting the expiry of the Malaysia LNG Dua JVA.
Full year Upstream earnings excluding identified items were $1,780 million compared with $16,505 million in 2014. Identified items were a net charge of $7,443 million, compared with a net charge of $664 million in 2014 (see page 5).
Compared with 2014, Upstream earnings excluding identified items were impacted by the significant decline in oil and gas prices. Earnings benefited from lower costs including favourable exchange rate effects and divestments, and decreased depreciation.
Compared with 2014, the impact of the weakening of the Australian dollar and Brazilian real on deferred tax positions reduced earnings by $131 million and $311 million respectively. The impact of these deferred tax movements in the full year 2015 was $1,022 million after tax, compared with an impact of $580 million after tax in 2014.
Global liquids realisations were 48% lower than in 2014. Global natural gas realisations were 27% lower than in 2014, with a 47% decrease in the
Americas
and a 24% decrease outside the
Americas
.
Full year 2015 production was 2,954 thousand boe/d compared with 3,080 thousand boe/d in 2014. Liquids production increased by 2% and natural gas production decreased by 9% compared with 2014. Production volumes in 2015 increased by 1%, compared with 2014, excluding the impact of divestments, curtailment and underground storage reinjection at NAM in
the Netherlands
,
Abu Dhabi
license and Malaysia PSC expiries, PSC price effects, and security impacts in
Nigeria
.
New field start-ups and the continuing ramp-up of existing fields, in particular Cardamom and Mars B in the
Americas
and Bonga NW in
Nigeria
, contributed some 117 thousand boe/d to production in 2015, which more than offset the impact of field declines.
Equity LNG sales volumes of 22.62 million tonnes were 6% lower than in 2014, mainly reflecting the expiry of the Malaysia LNG Dua JVA, the Woodside divestment and increased maintenance activities.
DOWNSTREAM
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 %[1] 2015 2014 %
Downstream CCS earnings
excluding identified
1,524 2,617 1,550 -2 items 9,748 6,265 +56
2,502 2,481 1,544 +62 Downstream CCS earnings 10,243 3,411 +200
Downstream cash flow from
2,101 6,605 4,698 -55 operating activities 14,076 11,292 +25
Downstream capital
1,974 1,211 2,098 -6 investment 5,119 5,910 -13
Refinery processing
2,630 2,776 2,718 -3 intake (thousand b/d) 2,805 2,903 -3
Oil products sales
6,297 6,586 6,392 -1 volumes (thousand b/d) 6,432 6,365 +1
Chemicals sales volumes
4,178 4,452 3,895 +7 (thousand tonnes) 17,148 17,008 +1
[1] Q4 on Q4 change
Fourth quarter Downstream earnings excluding identified items were $1,524 million compared with $1,550 million for the fourth quarter 2014. Identified items were a net gain of $978 million, compared with a net charge of $6 million for the fourth quarter 2014 (see page 5).
Compared with the fourth quarter 2014, Downstream earnings excluding identified items benefited from improved refining industry conditions. Earnings also benefited from lower costs including favourable exchange rate effects, and lower taxation. Earnings were impacted by lower results from marketing, largely as a result of negative exchange rate effects, and decreased contributions from trading and supply. Contributions from Chemicals decreased mainly as a result of weaker base chemicals and intermediates industry conditions.
Refinery intake volumes were 3% lower compared with the same quarter last year. Refinery availability was 83%, compared with 95% for the fourth quarter 2014, mainly as a result of increased maintenance.
Oil products sales volumes decreased by 1% compared with the same period a year ago, mainly reflecting lower trading volumes.
Chemicals sales volumes increased by 7% compared with the same quarter last year. Chemicals manufacturing plant availability increased to 81% from 65% for the fourth quarter 2014, reflecting recovery at the Moerdijk chemical site in
the Netherlands
, partly offset by increased maintenance activities.
Full year Downstream earnings excluding identified items were $9,748 million compared with $6,265 million in 2014. Identified items were a net gain of $495 million, compared with a net charge of $2,854 million in 2014 (see page 5).
Compared with 2014, Downstream earnings excluding identified items benefited from higher realised refining margins, reflecting the industry environment, lower costs including the impact of favourable exchange rate effects and divestments, and lower taxation. Contributions from marketing were impacted by negative exchange rate effects, with strong underlying performance. Contributions from Chemicals increased, reflecting improved industry conditions for intermediates and for base chemicals in
Asia
, partly offset by unit shut-downs at the Moerdijk chemical site in
the Netherlands
.
Refinery intake volumes were 3% lower compared with 2014. Excluding portfolio impacts, refinery intake volumes were 1% lower than in 2014. Refinery availability was 90%, compared with 93% in 2014.
Oil products sales volumes increased by 1% compared with 2014, mainly reflecting higher trading volumes.
Chemicals sales volumes increased by 1% compared with 2014, primarily driven by increased demand in
Asia
and overall improved intermediates market conditions. Chemicals manufacturing plant availability was 85%, in line with 2014.
CORPORATE AND NON-CONTROLLING INTEREST
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
Corporate and Non-controlling
interest excl. identified
(192) (422) (18) items (852) (208)
Of which:
(158) (355) (24) Corporate (536) (153)
(34) (67) 6 Non-controlling interest (316) (55)
Corporate and Non-controlling
(329) 42 (26) interest (738) (211)
Fourth quarter Corporate results and Non-controlling interest excluding identified items were a loss of $192 million, compared with a loss of $18 million for the same period last year. Identified items for the fourth quarter 2015 were a net charge of $137 million, whereas earnings for the fourth quarter 2014 included a net charge of $8 million (see page 5).
Compared with the fourth quarter 2014, Corporate results excluding identified items mainly reflected lower tax credits and higher net interest expense, partly offset by favourable exchange rate effects.
Compared with the fourth quarter 2014, earnings were negatively impacted by the strengthening Brazilian real on deferred tax positions related to financing of the Upstream business by $84 million. The impact of this on the fourth quarter 2015 earnings excluding identified items was a charge of $4 million after tax, compared with an $80 million gain in the same period a year ago.
Full year Corporate results and Non-controlling interest excluding identified items were a loss of $852 million compared with a loss of $208 million in 2014. Identified items for 2015 were a net gain of $114 million, whereas earnings for 2014 included a net charge of $3 million (see page 5).
Compared with 2014, Corporate results excluding identified items mainly reflected adverse currency exchange rate effects, partly offset by higher tax credits.
Compared with 2014, earnings benefited from the impact of the weakening Brazilian real on deferred tax positions related to financing of the Upstream business by $160 million. The impact of this on the full year 2015 earnings excluding identified items was a gain of $252 million after tax, compared with a gain of $92 million in 2014.
OPERATIONAL OUTLOOK FOR THE FIRST QUARTER 2016
The following information reflects Shell's asset base as of December 31, 2015.
Compared with the first quarter 2015, Upstream earnings are expected to be impacted by some 40 thousand boe/d associated with the impact of curtailment and underground storage utilisation at NAM, some 20 thousand boe/d related to a Malaysia PSC expiry, and some 15 thousand boe/d as a result of divestments. The impact of maintenance is expected to be lower by some 30 thousand boe/d. In
Qatar
, the Pearl GTL plant will undergo planned maintenance starting in March and continuing into the second quarter 2016.
Refinery availability is expected to decline in the first quarter 2016 as a result of higher turnaround activity and increased maintenance compared with the same period a year ago. Unit shutdowns at the Bukom chemical site in
Singapore
are expected to result in similar Chemicals manufacturing plant availability as in the first quarter 2015, which was heavily impacted by unit shutdowns at the Moerdijk chemical site in
the Netherlands
.
Upon the successful completion of the recommended combination with BG which it is expected on February 15, 2016, Shell's consolidated financial results will include BG's financial performance and the fair values of its assets and liabilities.
FORTHCOMING EVENTS
First quarter 2016 results and first quarter 2016 dividend are scheduled to be announced on May 4, 2016. Second quarter 2016 results and second quarter 2016 dividend are scheduled to be announced on July 28, 2016. Third quarter 2016 results and third quarter 2016 dividend are scheduled to be announced on October 27, 2016.
Shell's Capital Markets Day will be held on June 7, 2016 in
London, United Kingdom
.
PROFIT ESTIMATES
Certain statements set out in the update on fourth quarter 2015 and full year unaudited results and related supplementary prospectus published by Shell on January 20, 2016 represented profit estimates under the
UK
City Code on Takeovers and Mergers. The profit estimates relating to the fourth quarter ended December 31, 2015 have been confirmed by the fourth quarter results set out in this announcement and the profit estimates relating to the full year ended December 31, 2015 have been superseded by the publication of the unaudited full year results set out in this announcement.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 %[1] 2015 2014 %
58,146 68,706 92,374 Revenue 264,960 421,105
Share of profit of
joint ventures and
793 193 818 associates 3,527 6,116
Interest and other
1,237 285 974 income 3,669 4,123
Total revenue and other
60,176 69,184 94,166 income 272,156 431,344
43,166 51,612 73,640 Purchases 194,644 327,278
Production and
7,515 7,419 7,465 manufacturing expenses 28,095 30,038
Selling, distribution
and administrative
3,090 2,896 3,426 expenses 11,956 13,965
Research and
297 291 363 development 1,093 1,222
549 3,406 1,323 Exploration 5,719 4,224
Depreciation, depletion
5,281 12,156 4,991 and amortisation 26,714 24,499
519 527 430 Interest expense 1,888 1,804
Income/(loss) before
(241) (9,123) 2,528 -110 taxation 2,047 28,314 -93
(1,183) (1,730) 2,110 Taxation (153) 13,584
Income/(loss) for the
942 (7,393) 418 +125 period 2,200 14,730 -85
Income/(loss)
attributable to
non-controlling
3 23 (177) interest 261 (144)
Income/(loss)
attributable to Royal
Dutch Shell plc
939 (7,416) 595 +58 shareholders 1,939 14,874 -87
[1] Q4 on Q4 change
EARNINGS PER SHARE
Quarters $ Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
0.15 (1.17) 0.09 Basic earnings per share 0.31 2.36
0.15 (1.16) 0.09 Diluted earnings per share 0.30 2.36
SHARES[1]
Quarters Millions Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
Weighted average number of
shares as the basis for:
6,356.0 6,327.7 6,301.0 Basic earnings per share 6,320.3 6,311.5
6,416.1 6,396.9 6,301.1 Diluted earnings per share 6,393.8 6,311.6
Shares outstanding at the
6,397.5 6,348.4 6,295.0 end of the period 6,397.5 6,295.0
[1] Royal Dutch Shell plc ordinary shares of EUR0.07 each
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
Income/(loss) for the
942 (7,393) 418 period 2,200 14,730
Other comprehensive income
net of tax:
Items that may be
reclassified to income in
later periods:
- Currency translation
(1,249) (3,341) (2,398) differences (7,121) (5,321)
- Unrealised gains/(losses)
(119) (324) (560) on securities (707) (797)
- Cash flow hedging
(202) 139 537 gains/(losses) 61 528
- Share of other
comprehensive income/(loss)
of joint ventures and
(41) 19 (86) associates (40) (156)
(1,611) (3,507) (2,507) Total (7,807) (5,746)
Items that are not
reclassified to income in
later periods:
- Retirement benefits
3,140 (2,369) (3,011) remeasurements 4,951 (6,482)
Other comprehensive
income/(loss) for the
1,529 (5,876) (5,518) period (2,856) (12,228)
Comprehensive income/(loss)
2,471 (13,269) (5,100) for the period (656) 2,502
Comprehensive income/(loss)
attributable to
(16) (53) (163) non-controlling interest 155 (190)
Comprehensive income/(loss)
attributable to Royal Dutch
2,487 (13,216) (4,937) Shell plc shareholders (811) 2,692
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
Dec 31, 2015 Sep 30, 2015 Dec 31, 2014
Assets
Non-current assets:
Intangible assets 6,283 6,300 7,076
Property, plant and equipment 182,838 181,681 192,472
Joint ventures and associates 30,150 30,940 31,558
Investments in securities 3,416 3,573 4,115
Deferred tax[1] 11,033 10,258 8,131
Retirement benefits 4,362 2,366 1,682
Trade and other receivables 8,717 8,331 8,304
246,799 243,449 253,338
Current assets:
Inventories 15,822 19,276 19,701
Trade and other receivables 45,784 49,130 58,470
Cash and cash equivalents 31,752 31,846 21,607
93,358 100,252 99,778
Total assets 340,157 343,701 353,116
Liabilities
Non-current liabilities:
Debt 52,849 50,438 38,332
Trade and other payables 4,528 4,510 3,582
Deferred tax[1] 8,976 9,935 12,052
Retirement benefits 12,587 14,557 16,318
Decommissioning and other
provisions 26,148 25,110 23,834
105,088 104,550 94,118
Current liabilities:
Debt 5,530 5,149 7,208
Trade and other payables 52,770 55,230 64,864
Taxes payable 8,233 10,378 9,797
Retirement benefits 350 359 377
Decommissioning and other
provisions 4,065 5,553 3,966
70,948 76,669 86,212
Total liabilities 176,036 181,219 180,330
Equity attributable to Royal Dutch
Shell plc shareholders 162,876 161,348 171,966
Non-controlling interest 1,245 1,134 820
Total equity 164,121 162,482 172,786
Total liabilities and equity 340,157 343,701 353,116
[1] Deferred tax assets increased and deferred tax liabilities decreased in 2015 primarily as a result of the impairments described in Note 2.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated Financial Statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch Shell plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2015 540 (1,190) (14,365) 186,981 171,966 820 172,786
Comprehensive
income/(loss)
for the
period - - (2,750) 1,939 (811) 155 (656)
Capital
contributions
from, and
other changes
in,
non-controlli
ng interest - - - 501 501 387 888
Dividends
paid - - - (11,972) (11,972) (117) (12,089)
Scrip
dividends[1] 7 - (7) 2,602 2,602 - 2,602
Repurchases
of shares[2] (1) - 1 1 1 - 1
Shares held
in trust:
net sales and
dividends
received - 606 - 70 676 - 676
Share-based
compensation - - (65) (22) (87) - (87)
At December
31, 2015 546 (584) (17,186) 180,100 162,876 1,245 164,121
At January 1,
2014 542 (1,932) (2,037) 183,474 180,047 1,101 181,148
Comprehensive
income/(loss)
for the
period - - (12,182) 14,874 2,692 (190) 2,502
Capital
contributions
from, and
other changes
in,
non-controlli
ng interest - - - 727 727 25 752
Dividends
paid - - - (11,843) (11,843) (116) (11,959)
Scrip
dividends[1] 6 - (6) 2,399 2,399 - 2,399
Repurchases
of shares (8) - 8 (2,787) (2,787) - (2,787)
Shares held
in trust:
net sales and
dividends
received - 742 - 107 849 - 849
Share-based
compensation - - (148) 30 (118) - (118)
At December
31, 2014 540 (1,190) (14,365) 186,981 171,966 820 172,786
[1] Under the Scrip Dividend Programme some 96.3 million A shares, equivalent to $2.6 billion, were issued during 2015 and some 64.6 million A shares, equivalent to $2.4 billion, were issued during 2014.
[2] Share repurchases in January 2015 were offset by repurchase commitments accrued at December 31, 2014. The share buyback programme was suspended in February 2015.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Full year
Q4 2015 Q3 2015 Q4 2014 2015 2014
Cash flow from operating activities
942 (7,393) 418 Income/(loss) for the period 2,200 14,730
Adjustment for:
1,212 1,146 2,330 - Current taxation 7,058 13,757
405 426 375 - Interest expense (net) 1,529 1,598
- Depreciation, depletion and
5,281 12,156 4,991 amortisation 26,714 24,499
- Net losses/(gains) on sale of
(1,108) (493) (972) non-current assets and businesses (3,460) (3,212)
- Decrease/(increase) in working
1,598 5,883 6,124 capital 5,521 6,405
- Share of loss/(profit) of joint
(793) (193) (818) ventures and associates (3,527) (6,116)
- Dividends received from joint
1,440 1,039 1,531 ventures and associates 4,627 6,902
- Deferred taxation, retirement
benefits, decommissioning
(1,827) (2,407) (1,705) and other provisions (5,827) (1,720)
(3) 2,302 1,000 - Other[1] 2,648 2,500
Net cash from operating activities
7,147 12,466 13,274 (pre-tax) 37,483 59,343
(1,724) (1,235) (3,666) Taxation paid (7,673) (14,299)
5,423 11,231 9,608 Net cash from operating activities 29,810 45,044
Cash flow from investing activities
(7,299) (6,412) (8,831) Capital expenditure[2] (26,131) (31,676)
Investments in joint ventures and
(5) (274) 107 associates (896) (1,426)
Proceeds from sale of property, plant
1,398 913 2,245 and equipment and businesses 4,720 9,873
Proceeds from sale of joint ventures
26 81 279 and associates 276 4,163
91 82 56 Interest received 288 174
(397) (108) (536) Other[2] (664) (765)
(6,186) (5,718) (6,680) Net cash used in investing activities (22,407) (19,657)
Cash flow from financing activities
Net increase/(decrease) in debt with
(9) (1,394) (173) maturity period within three months (586) (3,332)
5,213 5,490 4,001 Other debt: New borrowings 21,500 7,778
(1,818) (1,387) (571) Repayments (6,023) (4,089)
(484) (532) (310) Interest paid (1,742) (1,480)
177 2 1,002 Change in non-controlling interest 598 989
Cash dividends paid to:
(1,782) (2,362) (2,987) - Royal Dutch Shell plc shareholders (9,370) (9,444)
(45) (27) (39) - Non-controlling interest (117) (116)
- - (971) Repurchases of shares (409) (3,328)
Shares held in trust: net
sales/(purchases) and dividends
7 (1) (29) received (39) 232
1,259 (211) (77) Net cash used in financing activities 3,812 (12,790)
Currency translation differences
relating to cash and
(590) (437) (271) cash equivalents (1,070) (686)
Increase/(decrease) in cash and cash
(94) 4,865 2,580 equivalents 10,145 11,911
Cash and cash equivalents at beginning
31,846 26,981 19,027 of period 21,607 9,696
Cash and cash equivalents at end of
31,752 31,846 21,607 period 31,752 21,607
[1] In 2015, this mainly related to well write-offs.
[2] Reflects a minor change to definition with effect from 2015 which has no overall impact on net cash used in investing activities. Comparative information has been reclassified.
Notes 1 to 6 are an integral part of these unaudited Condensed Consolidated Financial Statements.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of Royal Dutch Shell plc and its subsidiaries (collectively referred to as Shell) have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union and as issued by the International Accounting Standards Board and on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report and Form 20-F for the year ended December 31, 2014 (pages 111 to 116) as filed with the U.S. Securities and Exchange Commission.
The financial information presented in these Condensed Consolidated Financial Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006. Statutory accounts for the year ended December 31, 2014 were published in Shell's Annual Report and a copy was delivered to the Registrar of Companies in
England
and
Wales
. The auditors' report on those accounts was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or 498(3) of the Companies Act 2006.
2. Segment information
Segment earnings are presented on a current cost of supplies basis (CCS earnings), 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.
Information by business segment:
Quarters $ million Full year
Q4 2015 Q4 2014 2015 2014
Third-party revenue
6,712 11,251 Upstream 28,480 45,240
51,410 81,093 Downstream 236,384 375,752
24 30 Corporate 96 113
58,146 92,374 Total third-party revenue 264,960 421,105
Inter-segment revenue
5,512 9,429 Upstream 25,447 47,059
386 596 Downstream 1,362 2,294
- - Corporate - -
CCS earnings
(333) 2,645 Upstream[1] (5,663) 15,841
2,502 1,544 Downstream[2] 10,243 3,411
(295) (32) Corporate (425) (156)
1,874 4,157 Total CCS earnings 4,155 19,096
Quarters $ million Full year
Q4 2015 Q4 2014 2015 2014
1,874 4,157 Total CCS earnings 4,155 19,096
Current cost of supplies adjustment:
(1,122) (4,336) Purchases (2,278) (5,087)
320 1,251 Taxation 646 1,454
Share of profit/(loss) of joint ventures and
(130) (654) associates (323) (733)
942 418 Income/(loss) for the period 2,200 14,730
1 Third quarter 2015 Upstream earnings include impairment charges of $3,689 million after taxation, primarily related to
North America
shale gas properties, and the impact of the decisions to cease
Alaska
drilling activities for the foreseeable future and to cease the Carmon Creek project (
$2,584 million and
$2,032 million after taxation respectively). Second quarter 2014 Upstream earnings included an impairment charge of
$1,943 million after taxation, partly offset by divestment gains of
$1,230 million after taxation.
2 First quarter 2014 Downstream earnings included an impairment charge of $2,284 million related to refineries in
Asia
and
Europe
.
3. Share capital
Issued and fully paid
Sterling deferred
Ordinary shares of EUR0.07 each shares
Number of shares A B of GBP1 each
At January 1, 2015 3,907,302,393 2,440,410,614 50,000
Scrip dividends 96,336,688 - -
Repurchases of shares (12,717,512) - -
At December 31, 2015 3,990,921,569 2,440,410,614 50,000
At January 1, 2014 3,898,011,213 2,472,839,187 50,000
Scrip dividends 64,568,758 - -
Repurchases of shares (55,277,578) (32,428,573) -
At December 31, 2014 3,907,302,393 2,440,410,614 50,000
Nominal value
Ordinary shares of EUR0.07 each
$ million A B Total
At January 1, 2015 334 206 540
Scrip dividends 7 - 7
Repurchases of shares (1) - (1)
At December 31, 2015 340 206 546
At January 1, 2014 333 209 542
Scrip dividends 6 - 6
Repurchases of shares (5) (3) (8)
At December 31, 2014 334 206 540
The total nominal value of sterling deferred shares is less than $1 million.
At Royal Dutch Shell plc’s Annual General Meeting on May 19, 2015, the Board was authorised to allot ordinary shares in Royal Dutch Shell plc, and to grant rights to subscribe for or to convert any security into ordinary shares in Royal Dutch Shell plc, up to an aggregate nominal amount of €147 million (representing 2,100 million ordinary shares of €0.07 each), and to list such shares or rights on any stock exchange. This authority expires at the earlier of the close of business on August 19, 2016, and the end of the Annual General Meeting to be held in 2016, unless previously renewed, revoked or varied by Royal Dutch Shell plc in a general meeting.
4. Other reserves
Share Accumulated
premium Capital other
Merger reserve redemption Share plan comprehensi
$ million reserve[1] [1] reserve[2] reserve ve income Total
At January 1, 2015 3,405 154 83 1,723 (19,730) (14,365)
Other comprehensive
income/(loss)
attributable to Royal
Dutch Shell plc
shareholders - - - - (2,750) (2,750)
Scrip dividends (7) - - - - (7)
Repurchases of shares - - 1 - - 1
Share-based
compensation - - - (65) - (65)
At December 31, 2015 3,398 154 84 1,658 (22,480) (17,186)
At January 1, 2014 3,411 154 75 1,871 (7,548) (2,037)
Other comprehensive
income/(loss)
attributable to Royal
Dutch Shell plc
shareholders - - - - (12,182) (12,182)
Scrip dividends (6) - - - - (6)
Repurchases of shares - - 8 - - 8
Share-based
compensation - - - (148) - (148)
At December 31, 2014 3,405 154 83 1,723 (19,730) (14,365)
[1] The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent company of Royal Dutch Petroleum Company and The "Shell" Transport and Trading Company, p.l.c., now The Shell Transport and Trading Company Limited, in 2005.
[2] The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc.
5. Derivative contracts
The table below provides the carrying amounts of derivatives contracts held, disclosed in accordance with IFRS 13 Fair Value Measurement.
$ million Dec 31, 2015 Sep 30, 2015 Dec 31, 2014
Included within:
Trade and other receivables – non-current 744 885 703
Trade and other receivables – current 13,114 12,433 14,037
Trade and other payables – non-current 1,687 1,407 520
Trade and other payables – current 10,757 9,892 11,554
As disclosed in the Consolidated Financial Statements for the year ended December 31, 2014, presented in the Annual Report and Form 20-F for that year, Shell is exposed to the risks of changes in fair value of its financial assets and liabilities. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values at December 31, 2015 are consistent with those used in the year ended December 31, 2014, and the carrying amounts of derivative contracts measured using predominantly unobservable inputs have not changed materially since that date.
The fair value of debt excluding finance lease liabilities at December 31, 2015, was $53,480 million (September 30, 2015: $50,744 million; December 31, 2014: $41,120 million). Fair value is determined from the prices quoted for those securities.
6. Recommended cash and share offer for BG Group plc by Royal Dutch Shell plc
On April 8, 2015, the Boards of Royal Dutch Shell plc and BG Group plc announced that they had reached agreement on the terms of a recommended cash and share offer to be made by Royal Dutch Shell plc for the entire issued and to be issued share capital of BG Group plc.
The shareholders of Royal Dutch Shell plc and BG Group plc voted to approve the transaction at meetings on January 27, 2016 and January 28, 2016 respectively. The transaction is expected to complete on February 15, 2016, subject to the satisfaction or waiver of certain customary conditions, including the sanction of the scheme arrangement to implement the combination by the High Court of Justice.
Under certain circumstances occurring on or prior to July 31, 2016, Royal Dutch Shell plc has agreed to pay BG Group plc £750 million by way of compensation for any loss suffered by BG Group plc in connection with the preparation and negotiation of the transaction.
ADDITIONAL NOTES FOR INFORMATION
A. Impacts of accounting for derivatives
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. 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 are, by contrast, recognised when the transaction occurs (see also below); furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period; or (b) the inventory is measured on a different basis.
In addition, certain
UK
gas contracts held by Upstream are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes.
The accounting impacts of the aforementioned are reported as identified items in this Report.
B. Capital investment
Capital investment is a measure used to make decisions about allocating resources and assessing performance. It is defined as the sum of capital expenditure, exploration expense (excluding well write-offs), new investments in joint ventures and associates, new finance leases and other adjustments.
C. Divestments
Divestment proceeds comprise proceeds from sale of property, plant and equipment and businesses, joint ventures and associates, and other Upstream and Downstream investments, adjusted onto an accruals basis.
The term "Divestments" comprises both divestment proceeds as defined above and proceeds from sale of interests in Shell Midstream Partners, L.P. ("SMP"). Proceeds from sale of interests in SMP are included within "Change in non-controlling interest" in the Condensed Consolidated Statement of Cash Flows.
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 and is a common measure of business performance. In this calculation, ROACE is defined as the sum of income for the current and previous three quarters, adjusted for after-tax interest expense, as a percentage of the average capital employed for the same period. The tax rate used is Shell's effective tax rate for the period. Capital employed consists of total equity, current debt and non-current debt.
E. Gearing
Gearing, calculated as net debt (total debt less cash and cash equivalents) as a percentage of total capital (net debt plus total equity), is a key measure of Shell's capital structure.
F. Operating costs
Operating costs comprise production and manufacturing expenses; selling, distribution and administrative expenses; and research and development expenses.
G. Liquidity and capital resources
Fourth quarter net cash from operating activities was $5.4 billion compared with $9.6 billion for the same period last year.
Total current and non-current debt increased to $58.4 billion at December 31, 2015 from $55.6 billion at September 30, 2015 while cash and cash equivalents were $31.8 billion at December 31, 2015, in line with the position at September 30, 2015. During the fourth quarter 2015, Shell issued $5.0 billion of debt under the US shelf registration. No new debt was issued under the European medium-term note programme.
Capital investment for the fourth quarter 2015 was $7.9 billion, of which $5.8 billion in Upstream, $2.0 billion in Downstream and $0.1 billion in Corporate. Capital investment for the same period last year was $9.7 billion, including $7.5 billion in Upstream and $2.1 billion in Downstream.
Dividends of $0.47 per share are announced on February 4, 2016 in respect of the fourth quarter. These dividends are payable on March 29, 2016. In the case of B shares, the dividends will be payable through the dividend access mechanism and are expected to be treated as
UK
-source rather than Dutch-source. See the Annual Report and Form 20-F for the year ended December 31, 2014 for additional information on the dividend access mechanism.
Under the Scrip Dividend Programme shareholders can increase their shareholding in Shell by choosing to receive new shares instead of cash dividends. Only new A shares will be issued under the Programme, including to shareholders who currently hold B shares.
Full year net cash from operating activities was $29.8 billion compared with $45.0 billion last year.
Total current and non-current debt increased to $58.4 billion at December 31, 2015 from $45.5 billion at December 31, 2014 while cash and cash equivalents increased to $31.8 billion at December 31, 2015 from $21.6 billion at December 31, 2014. During 2015 Shell issued $15.0 billion of debt under the US shelf registration, and $5.2 billion of debt under the European medium-term note programme.
Capital investment for 2015 was $28.9 billion, of which $23.6 billion in Upstream, $5.1 billion in Downstream and $0.2 billion in Corporate. Capital investment for 2014 was $37.3 billion, of which $31.3 billion in Upstream, $5.9 billion in Downstream and $0.1 billion in Corporate.
CAUTIONARY STATEMENT
The release, presentation, publication or distribution of this announcement in jurisdictions other than the
United Kingdom
may be restricted by law and therefore any persons who are subject to the laws of any jurisdiction other than the
United Kingdom
should inform themselves about and observe any applicable requirements. Any failure to comply with applicable requirements may constitute a violation of the laws and/or regulations of any such jurisdiction.
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.
All amounts shown throughout this announcement are unaudited. All peak production figures in Portfolio Developments are quoted at 100% expected production.
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.
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. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "schedule", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this 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; 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 20-F for the year ended December 31, 2014 (available at http://www.shell.com/investor and http://www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, February 4, 2016. 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.
This Report contains references to Shell's website. These references are for the readers' convenience only. Shell is not incorporating by reference any information posted on http://www.shell.com
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. U.S. investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov. You can also obtain this form from the SEC by calling 1-800-SEC-0330.
February 4, 2016
The information in this Report 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:
- Investor Relations: International +31-(0)70-377-4540;
North America
+1-832-337-2034
- Media: International +44-(0)207-934-5550;
USA
+1-713-241-4544
