RDS 4th Quarter and Full Year 2012 Unaudited Results
THE HAGUE, The Netherlands, January 31, 2013 /PRNewswire/ --
Royal Dutch Shell's (NYSE:RDS.A)(NYSE:RDS.B) fourth quarter 2012 earnings, on a current cost of supplies (CCS) basis (see Note 1), were $7.3 billion compared with $6.5 billion in the same quarter a year ago. Full year 2012 CCS earnings were $27.0 billion compared with $28.6 billion in 2011.
Fourth quarter 2012 CCS earnings, excluding identified items (see page 4), were $5.6 billion compared with $4.8 billion in the fourth quarter 2011, an increase of 15%. Full year 2012 CCS earnings excluding identified items were $25.1 billion compared with $24.7 billion in 2011, an increase of 2%.
Basic CCS earnings per share excluding identified items increased by 14% versus the same quarter a year ago. Basic CCS earnings per share excluding identified items for the full year 2012 increased by 1% versus 2011.
Cash flow from operating activities was $9.9 billion in the fourth quarter 2012 and $46.1 billion for the full year. Excluding movements in working capital, cash flow from operating activities was $8.9 billion in the fourth quarter 2012 and $42.7 billion for the full year.
Gearing at the end of 2012 was 9.2% versus 13.1% at the end of 2011.
A fourth quarter 2012 dividend has been announced of $0.43 per ordinary share and $0.86 per American Depositary Share (ADS), an increase of 2.4% compared with the fourth quarter 2011.
The first quarter 2013 dividend is expected to be declared at $0.45 per share and $0.90 per ADS, an increase of 4.7% compared with the first quarter 2012.
Summary of unaudited results
Quarters $ million Full year
Q4
Q4 2012 Q3 2012 2011 %[1] 2012 2011 %
Income attributable to
6,671 7,139 6,500 +3 shareholders 26,592 30,918 -14
Current cost of supplies
(CCS) adjustment for
623 (1,012) (41) Downstream 452 (2,293)
7,294 6,127 6,459 +13 CCS earnings 27,044 28,625 -6
1,712 (432) 1,613 Less: Identified items[2] 1,905 3,938
CCS earnings excluding
5,582 6,559 4,846 +15 identified items 25,139 24,687 +2
Of which:
4,377 4,888 5,107 Upstream 20,025 20,600
1,163 1,731 (278) Downstream 5,311 4,274
Corporate and
42 (60) 17 Non-controlling interest (197) (187)
Cash flow from operating
9,913 9,483 6,465 +53 activities 46,140 36,771 +25
Basic CCS earnings per
1.16 0.98 1.04 +12 share ($) 4.32 4.61 -6
Basic CCS earnings per ADS
2.32 1.96 2.08 ($) 8.64 9.22
Basic CCS earnings per
share excl. identified
0.89 1.05 0.78 +14 items ($) 4.02 3.97 +1
Basic CCS earnings per ADS
1.78 2.10 1.56 excl. identified items ($) 8.04 7.94
0.43 0.43 0.42 +2 Dividend per share ($) 1.72 1.68 +2
0.86 0.86 0.84 Dividend per ADS ($) 3.44 3.36
[1] Q4 on Q4 change.
[2] See page 4.
Royal Dutch Shell Chief Executive Officer Peter Voser commented:
"With the first year of our 2012-2015 growth targets completed, Shell is on track for plans we set out in early 2012, despite headwinds last year.
"Shell is competitive and innovative. We are delivering a strategy that others can't easily repeat, with unique skills in technology and integration and a worldwide set of opportunities for new investment."
FOURTH QUARTER 2012 portfolio developments
Upstream
In Australia, Shell completed the acquisition of Chevron's 16.7% interest in East Browse and Chevron's 20% interest in West Browse in exchange for Shell's 33.3% interest in Clio-Acme and cash.
Also in Australia, Shell acquired an additional 2% interest in the Crux gas and condensate field from Nexus Energy, increasing Shell's interest to 82%.
Front-end engineering and design contracts were awarded for the 2.5 million tonnes per annum capacity floating LNG facility and the major subsurface production facilities for the development of the Abadi LNG project (Shell share 30%) in Indonesia.
In Malaysia, Shell took the final investment decision for the development of the deep-water oil field Malikai, part of the Block G production-sharing contract (Shell share 35%), offshore Sabah. The Shell-operated project is expected to produce some 60 thousand barrels of oil equivalent per day ("boe/d") at peak production.
Also in Malaysia, the Shell-operated deep-water Gumusut-Kakap field (Shell share 33%) commenced early oil production via a tie-back of two production wells to the nearby Kikeh production facility. This interim measure is expected to produce some 25 thousand barrels per day of oil until the Gumusut-Kakap floating production system is on stream.
In Qatar, Shell completed the ramp-up of the Pearl GTL project.
In the United Kingdom, Shell agreed to acquire 75% of Hess Corporation's interests in the Beryl area fields and SAGE infrastructure. This transaction was completed in January 2013, lifting Shell's production in the Beryl area fields from 9 thousand boe/d to 20 thousand boe/d.
Also in the United Kingdom, Shell agreed to acquire an additional 5.9% interest in the offshore Schiehallion field from Murphy Schiehallion Limited. Following completion of this transaction, expected in 2013, Shell's interest in the field will be 55%.
Upstream divestment proceeds totalled some $1.7 billion in the fourth quarter 2012. Divestments mainly included Shell's 30% interest in Oil Mining Lease 30 (Shell share of production 11 thousand boe/d) in the Niger Delta, Shell's 50% interest in the Holstein field (Shell share of production 5 thousand boe/d) in the Gulf of Mexico and Shell's interest in the Seal area (Shell share of production 2 thousand boe/d) within the Peace River oil sands of Alberta, Canada.
During the fourth quarter 2012, Shell participated in the Arnhem-1, Pinhoe-1 (Shell share 50%) gas discoveries in the outer Exmouth and the Satyr-4 (Shell share 25%) gas discovery in the Gorgon area offshore Australia and the Zabazaba-3 oil discovery (Shell share 50%) offshore Nigeria. Shell also had successful drilling programmes in liquids-rich shales in North America and coal bed methane in Australia.
As part of its global exploration programme Shell added new acreage positions during the fourth quarter 2012, including the Zitong tight-gas block onshore China, deep-water positions in the Gulf of Mexico and offshore New Zealand. New acreage positions were also added offshore Canada, Colombia and Malaysia, onshore Egypt, Russia and in liquids-rich shales in North America.
Downstream
In Poland, Shell agreed to acquire Neste Oil Corporation's network of 105 retail sites. The transaction, which is subject to regulatory approvals, is expected to be completed in 2013.
Downstream divestment proceeds totalled some $0.2 billion. Divestments mainly included Shell's LPG business in Malaysia and the majority of Shell's shareholding in its downstream businesses in Botswana, Kenya and Namibia.
Key features of the Fourth quarter AND FULL YEAR 2012
- Fourth quarter 2012 CCS earnings (see Note 1) were $7,294 million, 13% higher than in the same quarter a year ago. Full year 2012 CCS earnings were $27,044 million, 6% lower than in 2011.
- Fourth quarter 2012 CCS earnings excluding identified items (see page 4) were $5,582 million compared with $4,846 million in the fourth quarter 2011, an increase of 15%. Full year 2012 CCS earnings excluding identified items were $25,139 million, 2% higher than in 2011.
- Basic CCS earnings per share increased by 12% versus the same quarter a year ago. Full year 2012 basic CCS earnings per share decreased by 6% compared with 2011.
- Basic CCS earnings per share excluding identified items increased by 14% versus the same quarter a year ago. Full year 2012 basic CCS earnings per share excluding identified items increased by 1% compared with 2011.
- Cash flow from operating activities for the fourth quarter 2012 was $9.9 billion, compared with $6.5 billion in the same quarter last year. Excluding movements in working capital, cash flow from operating activities in the fourth quarter 2012 was $8.9 billion, compared with $7.2 billion in the same quarter last year.
- Full year 2012 cash flow from operating activities was $46.1 billion, compared with $36.8 billion in 2011. Excluding movements in working capital, cash flow from operating activities in 2012 was $42.7 billion, compared with $43.2 billion in 2011.
- Net capital investment (see Note 1) for the fourth quarter 2012 was $10.9 billion, bringing the full year 2012 total to $29.8 billion. Capital investment was $12.8 billion for the fourth quarter 2012 and $36.8 billion for the full year. Proceeds from divestments were $1.9 billion for the fourth quarter 2012 and $7.0 billion for the full year.
- Return on average capital employed (see Note 3) for 2012 on a reported income basis was 12.7%.
- Gearing was 9.2% at the end of 2012 versus 13.1% at the end of 2011.
- Total dividends distributed in the fourth quarter 2012 were $2.8 billion, of which some $1.1 billion were settled by issuing some 34.2 million Class A shares under the Scrip Dividend Programme for the third quarter 2012. Under our share buyback programme some 13.0 million Class B shares were bought back for cancellation during the quarter for a consideration of $0.5 billion.
- Total dividends distributed in the full year 2012 were $11.0 billion, of which some $3.6 billion were settled by issuing some 103.8 million Class A shares under the Scrip Dividend Programme. Some 43.7 million Class B shares were bought back for cancellation during 2012 for a consideration of $1.5 billion.
- When final volumes are reported in the 2012 Annual Report and Form 20-F, Shell expects that proved oil and gas reserves additions before taking into account production on an SEC basis will be around 0.5 billion boe.
With 2012 production of some 1.2 billion boe, our headline proved Reserves Replacement Ratio for the year on an SEC basis is expected to be around 44%. Our Organic Reserves Replacement Ratio, which excludes the impact of oil and gas price movements in the year (mainly due to low gas prices in North America), acquisitions and divestments, is expected to be around 85%.
At the end of 2012, total proved reserves on an SEC basis are expected to be around 13.6 billion boe, after taking into account 2012 production.
The 3 year average headline proved Reserves Replacement Ratio on an SEC basis is expected to be around 84%. Our 3 year average Organic Reserves Replacement Ratio, which excludes the impact of oil and gas price movements in the year, acquisitions and divestments, is expected to be around 115%.
Further information will be provided in our Annual Report and Form 20-F, which is expected to be filed in March 2013.
- Supplementary financial and operational disclosure for the fourth quarter 2012 is available at http://www.shell.com/investor.
Summary of identified items
Earnings in the fourth quarter 2012 reflected the following items, which in aggregate amounted to a net gain of $1,712 million (compared with a net gain of $1,613 million in the fourth quarter 2011), as summarised in the table below:
- Upstream earnings included a net gain of $1,801 million, reflecting gains of $1,756 million mainly related to divestments, and the mark-to-market valuation of certain gas contracts (see Note 2). Upstream earnings for the fourth quarter 2011 included a net gain of $1,458 million.
- Downstream earnings included a net charge of $89 million, reflecting losses related to divestments, partly offset by a tax credit. Downstream earnings for the fourth quarter 2011 included a net gain of $34 million.
- Corporate results and Non-controlling interest did not include any identified items in the fourth quarter of 2012. Corporate results and Non-controlling interest for the fourth quarter 2011 included a net gain of $121 million.
Summary of Identified Items
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
Segment earnings impact of
identified items:
1,801 (298) 1,458 Upstream 2,137 3,855
(89) (134) 34 Downstream 39 15
Corporate and Non-controlling
- - 121 interest (271) 68
1,712 (432) 1,613 Earnings impact 1,905 3,938
These identified items generally relate to events with an impact of more than $50 million on Royal Dutch Shell's CCS earnings and are shown to provide additional insight into segment earnings and income attributable to shareholders. Further comments on the business segments are provided in the section 'Earnings by Business Segment' on pages 5 to 7.
Earnings BY BUSINESS segment
Upstream
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 %[1] 2012 2011 %
Upstream earnings excluding
4,377 4,888 5,107 -14 identified items 20,025 20,600 -3
6,178 4,590 6,565 -6 Upstream earnings 22,162 24,455 -9
Upstream cash flow from
6,165 8,278 6,485 -5 operating activities 33,061 30,579 +8
Upstream net capital
9,323 6,932 7,363 +27 investment 25,320 19,083 +33
Liquids production
available for sale
1,640 1,599 1,644 - (thousand b/d) 1,633 1,666 -2
Natural gas production
available for sale (million
10,288 8,022 9,633 +7 scf/d) 9,449 8,986 +5
Total production available
3,414 2,982 3,305 +3 for sale (thousand boe/d) 3,262 3,215 +1
Equity LNG sales volumes
5.49 4.97 4.84 +13 (million tonnes) 20.20 18.83 +7
[1] Q4 on Q4 change
Fourth quarter Upstream earnings excluding identified items were $4,377 million compared with $5,107 million a year ago. Identified items were a net gain of $1,801 million, compared with a net gain of $1,458 million in the fourth quarter 2011 (see page 4).
Compared with the fourth quarter 2011, Upstream earnings excluding identified items benefited from the contribution of Integrated Gas, reflecting the ramp-up of Pearl GTL in Qatar, higher equity LNG sales volumes and realisations as well as increased LNG trading contributions. Earnings were lower than in the fourth quarter 2011 mainly due to increased operating expenses, higher depreciation and higher exploration expenses. Earnings were also impacted by lower liquids and synthetic crude oil realisations in the Americas, which incurred a loss.
Global liquids realisations were 1% lower than in the fourth quarter 2011. In Canada, synthetic crude oil realisations were 19% lower than in the same period last year. Global natural gas realisations were 3% higher than in the same quarter a year ago, with a 4% decrease in the Americas and a 3% increase outside the Americas.
Fourth quarter 2012 production was 3,414 thousand boe/d compared with 3,305 thousand boe/d a year ago, an increase of 3%. Liquids production was in line with the fourth quarter 2011, while natural gas production increased by 7%.
New field start-ups and the continuing ramp-up of fields, in particular Pearl GTL in Qatar and Pluto LNG in Australia, contributed some 235 thousand boe/d to production in the fourth quarter 2012, which more than offset the impact of field declines.
Equity LNG sales volumes of 5.49 million tonnes were 13% higher than in the same quarter a year ago. Equity LNG sales volumes reflected the contribution from Pluto LNG and higher volumes from Qatargas 4 LNG.
Full year Upstream earnings excluding identified items were $20,025 million compared with $20,600 million in 2011. Identified items were a net gain of $2,137 million, compared with a net gain of $3,855 million in 2011.
Compared with 2011, Upstream earnings excluding identified items benefited from the contribution of Integrated Gas, reflecting the ramp-up of Pearl GTL in Qatar, higher LNG realisations as well as increased LNG trading contributions and equity LNG sales volumes. Earnings also reflected higher gas realisations outside the Americas. These items were more than offset by reduced contributions of the Americas, mainly as a result of higher depreciation, increased operating expenses, higher exploration expenses and lower gas realisations.
Global liquids realisations were 1% higher than in 2011. In Canada, synthetic crude oil realisations were 11% lower than in 2011. Global natural gas realisations were 1% higher than in 2011, with a 31% decrease in the Americas and a 9% increase outside the Americas.
Full year 2012 production was 3,262 thousand boe/d compared with 3,215 thousand boe/d for 2011. Liquids production was down 2% and natural gas production increased by 5% compared with 2011. Excluding the impact of divestments and exits, production volumes in 2012 were 3% higher than in 2011.
New field start-ups and the continuing ramp-up of fields, in particular the ramp-up of Pearl GTL in Qatar and Pluto LNG in Australia, contributed some 225 thousand boe/d to production in 2012, which more than offset the impact of field declines.
Equity LNG sales volumes of 20.20 million tonnes were 7% higher than in 2011, mainly reflecting the successful ramp-up of Qatargas 4 LNG in Qatar and the start-up of Pluto LNG in Australia.
DOWNSTREAM
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 %[1] 2012 2011 %
Downstream CCS earnings
1,163 1,731 (278) - excluding identified items 5,311 4,274 +24
1,074 1,597 (244) - Downstream CCS earnings 5,350 4,289 +25
Downstream cash flow from
4,303 335 324 - operating activities 11,111 4,921 +126
Downstream net capital
1,471 1,051 2,362 -38 investment 4,275 4,342 -2
Refinery processing intake
2,804 2,880 2,666 +5 (thousand b/d) 2,819 2,845 -1
Oil products sales volumes
6,367 6,290 6,155 +3 (thousand b/d) 6,235 6,196 +1
Chemicals sales volumes
4,620 4,699 4,440 +4 (thousand tonnes) 18,669 18,831 -1
[1] Q4 on Q4 change
Fourth quarter Downstream earnings excluding identified items were $1,163 million compared with a loss of $278 million in the fourth quarter 2011. Identified items were a net charge of $89 million, compared with a net gain of $34 million in the fourth quarter 2011 (see page 4).
Compared with the fourth quarter 2011, Downstream earnings excluding identified items benefited from higher realised refining margins and Shell's improved operating performance, as well as increased contributions from marketing and trading. Chemicals earnings were lower, mainly as a result of higher operating expenses and, in the United States, supply constraints of advantaged feedstock.
Oil products sales volumes were 3% higher compared with the same period a year ago, mainly as a result of increased trading volumes.
Chemicals sales volumes increased by 4% compared with the same quarter last year, due to improved operating performance and demand. Chemicals manufacturing plant availability was 91% compared with 86% in the fourth quarter 2011, mainly due to lower planned maintenance activities.
Refinery intake volumes were 5% higher compared with the fourth quarter 2011. Excluding portfolio impacts, refinery intake volumes were 8% higher than in the same period a year ago. Refinery availability was 92%, in line with the fourth quarter 2011.
In the United States, the crude distillation unit at the expansion of Motiva's refinery (Shell share 50%) in Port Arthur, Texas was restarted in January 2013 and is expected to ramp-up during early 2013.
Full year Downstream earnings excluding identified items were $5,311 million compared with $4,274 million in 2011. Identified items were a net gain of $39 million, compared with a net gain of $15 million in 2011.
Compared with 2011, Downstream earnings excluding identified items reflected higher realised refining margins and lower operating expenses, mainly as a result of favourable currency exchange rate effects. Trading contributions were lower, while marketing contributions were broadly in line with 2011. Chemicals earnings were lower, mainly as a result of the impact of the global economic slowdown and, in the United States, supply constraints of advantaged feedstock and the impact of hurricane Isaac on operations.
Oil products sales volumes were 1% higher compared with 2011. Lower marketing volumes, mainly as a result of portfolio divestments, were more than offset by higher trading volumes. Excluding the impact of divestments and the effect of the formation of the Raízen joint venture, sales volumes were 3% higher than in 2011.
Chemicals sales volumes were 1% lower compared with 2011, as reductions in European manufacturing capacity and rationalisation of the contract portfolio were largely offset by improved operating performance. Chemicals manufacturing plant availability increased to 91% compared with 89% in 2011.
Refinery intake volumes were 1% lower compared with 2012. Excluding portfolio impacts, refinery intake volumes were 4% higher than in 2011. Refinery availability increased to 93% compared with 92% in 2011.
Corporate and Non-controlling Interest
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
Corporate and Non-controlling interest
42 (60) 17 excl. identified items (197) (187)
Of which:
76 15 24 Corporate 25 63
(34) (75) (7) Non-controlling interest (222) (250)
42 (60) 138 Corporate and Non-controlling interest (468) (119)
Fourth quarter Corporate results and Non-controlling interest excluding identified items were $42 million compared with $17 million in the same period of 2011. Identified items in the fourth quarter 2011 were a net gain of $121 million (see page 4).
Corporate results excluding identified items compared with the fourth quarter 2011 mainly reflected favourable currency exchange rate effects and higher tax credits, partly offset by higher net interest expense.
Full year Corporate results and Non-controlling interest excluding identified items were a loss of $197 million compared with a loss of $187 million in 2011. Identified items were a net charge of $271 million, compared with a net gain of $68 million in 2011.
Corporate results excluding identified items compared with 2011 mainly reflected higher net interest expense and increased operating expenses, which were largely offset by higher tax credits and favourable currency exchange rate effects.
FORTHCOMING EVENTS
First quarter 2013 results and first quarter 2013 dividend are scheduled to be announced on May 2, 2013. Second quarter 2013 results and second quarter 2013 dividend are scheduled to be announced on August 1, 2013. Third quarter 2013 results and third quarter 2013 dividend are scheduled to be announced on October 31, 2013.
Unaudited Condensed Consolidated Financial Statements
Consolidated Statement of income
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 %[1] 2012 2011 %
118,047 112,118 115,575 Revenue 467,153 470,171
Share of profit of
equity-accounted
2,127 2,367 2,233 investments 8,948 8,737
2,437 944 1,320 Interest and other income 5,599 5,581
Total revenue and other
122,611 115,429 119,128 income 481,700 484,489
93,350 87,265 91,865 Purchases 369,725 370,044
Production and
7,339 6,513 6,993 manufacturing expenses 26,280 26,458
Selling, distribution and
3,759 3,709 3,706 administrative expenses 14,616 14,335
419 311 404 Research and development 1,314 1,125
1,167 713 825 Exploration 3,104 2,266
Depreciation, depletion
3,835 3,875 3,243 and amortisation 14,615 13,228
379 415 287 Interest expense 1,757 1,373
12,363 12,628 11,805 +5 Income before taxation 50,289 55,660 -10
5,664 5,389 5,337 Taxation 23,449 24,475
6,699 7,239 6,468 +4 Income for the period 26,840 31,185 -14
Income attributable to
28 100 (32) non-controlling interest 248 267
Income attributable to
Royal Dutch Shell plc
6,671 7,139 6,500 +3 shareholders 26,592 30,918 -14
[1] Q4 on Q4 change.
Earnings per share
Quarters $ Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
1.06 1.14 1.04 Basic earnings per share 4.25 4.98
1.06 1.14 1.04 Diluted earnings per share 4.24 4.97
SHARES[1]
Quarters Million Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
Weighted average number of shares
as the basis for:
6,282.8 6,266.3 6,231.3 Basic earnings per share 6,261.2 6,212.5
6,289.2 6,273.9 6,241.0 Diluted earnings per share 6,267.8 6,221.7
Shares outstanding at the end of
6,305.9 6,284.8 6,220.1 the period 6,305.9 6,220.1
[1] Royal Dutch Shell plc ordinary shares of EUR0.07 each.
Consolidated Statement of Comprehensive Income
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
6,699 7,239 6,468 Income for the period 26,840 31,185
Other comprehensive income, net of
tax:
140 2,424 (1,310) Currency translation differences 1,644 (3,328)
Unrealised gains/(losses) on
(683) (97) 1,671 securities (815) 1,684
101 (187) (133) Cash flow hedging gains/(losses) 31 (222)
Share of other comprehensive
income/(loss) of
(179) 27 (39) equity-accounted investments (222) 60
Other comprehensive income/(loss)
(621) 2,167 189 for the period 638 (1,806)
6,078 9,406 6,657 Comprehensive income for the period 27,478 29,379
Comprehensive income/(loss)
attributable to
46 132 (603) non-controlling interest 300 (348)
Comprehensive income attributable
to
6,032 9,274 7,260 Royal Dutch Shell plc shareholders 27,178 29,727
Consolidated Statement of Changes in Equity
Equity attributable to Royal Dutch
Shell plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2012 536 (2,990) 8,984 162,987 169,517 1,486 171,003
Comprehensive
income for the
period - - 586 26,592 27,178 300 27,478
Capital
contributions
from, and other
changes in,
non-controlling
interest - - - 39 39 (61) (22)
Dividends paid - - - (10,955) (10,955) (292) (11,247)
Scrip
dividends[1] 9 - (9) 3,565 3,565 - 3,565
Repurchases of
shares[2] (3) - 3 (1,728) (1,728) - (1,728)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - 703 - 150 853 - 853
Share-based
compensation - - 457 (432) 25 - 25
At December 31,
2012 542 (2,287) 10,021 180,218 188,494 1,433 189,927
[1] During 2012 some 103.8 million Class A shares, equivalent to $3.6
billion, were issued under the Scrip Dividend Programme.
[2] Includes shares committed to repurchase at December 31, 2012.
Equity attributable to Royal Dutch
Shell plc shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital trust reserves earnings Total interest equity
At January 1,
2011 529 (2,789) 10,094 140,179 148,013 1,767 149,780
Comprehensive
income for the
period - - (1,191) 30,918 29,727 (348) 29,379
Capital
contributions
from, and other
changes in,
non-controlling
interest - - - 41 41 505 546
Dividends paid - - - (10,457) (10,457) (438) (10,895)
Scrip
dividends[1] 10 - (10) 3,580 3,580 - 3,580
Repurchases of
shares (3) - 3 (1,106) (1,106) - (1,106)
Shares held in
trust: net
sales/
(purchases) and
dividends
received - (201) - 142 (59) - (59)
Share-based
compensation - - 88 (310) (222) - (222)
At December 31,
2011 536 (2,990) 8,984 162,987 169,517 1,486 171,003
[1] During 2011 some 104.6 million Class A shares, equivalent to $3.6
billion, were issued under the Scrip Dividend Programme.
Condensed Consolidated balance sheet
$ million
Sept 30,
Dec 31, 2012 2012 Dec 31, 2011
Assets
Non-current assets:
Intangible assets 4,470 4,478 4,521
Property, plant and equipment 172,293 162,401 152,081
Equity-accounted investments 38,350 39,033 37,990
Investments in securities 4,867 5,492 5,492
Deferred tax 4,045 4,246 4,732
Retirement benefits 12,575 12,461 11,408
Trade and other receivables 8,991 10,070 9,256
245,591 238,181 225,480
Current assets:
Inventories 30,781 32,358 28,976
Trade and other receivables 65,403 70,972 79,509
Cash and cash equivalents 18,550 18,839 11,292
114,734 122,169 119,777
Total assets 360,325 360,350 345,257
Liabilities
Non-current liabilities:
Debt 29,921 28,078 30,463
Trade and other payables 4,175 4,322 4,921
Deferred tax 15,590 16,107 14,649
Retirement benefits 6,298 6,169 5,931
Decommissioning and other
provisions 17,435 16,262 15,631
73,419 70,938 71,595
Current liabilities:
Debt 7,833 8,280 6,712
Trade and other payables 72,839 77,550 81,846
Taxes payable 12,684 14,869 10,606
Retirement benefits 402 399 387
Decommissioning and other
provisions 3,221 3,131 3,108
96,979 104,229 102,659
Total liabilities 170,398 175,167 174,254
Equity attributable to Royal Dutch
Shell plc shareholders 188,494 183,785 169,517
Non-controlling interest 1,433 1,398 1,486
Total equity 189,927 185,183 171,003
Total liabilities and equity 360,325 360,350 345,257
Condensed consolidated statement of cash flows
Quarters $ million Full year
Q4 2012 Q3 2012 Q4 2011 2012 2011
Cash flow from operating
activities
6,699 7,239 6,468 Income for the period 26,840 31,185
Adjustment for:
5,966 5,385 5,816 - Current taxation 22,722 23,009
324 362 275 - Interest expense (net) 1,543 1,164
- Depreciation, depletion and
3,835 3,875 3,243 amortisation 14,615 13,228
(2,083) (428) (1,150)- Net gain on sales of assets (4,228) (4,485)
- Decrease/(increase) in net
994 (2,209) (688) working capital 3,391 (6,471)
- Share of profit of
(2,127) (2,367) (2,233) equity-accounted investments (8,948) (8,737)
- Dividends received from
equity-accounted
2,655 2,537 3,196 investments 10,573 9,681
- Deferred taxation and
decommissioning and
(365) (75) (159)other provisions 461 1,768
553 (205) (550)- Other 201 (949)
Net cash from operating
16,451 14,114 14,218 activities (pre-tax) 67,170 59,393
(6,538) (4,631) (7,753)Taxation paid (21,030) (22,622)
Net cash from operating
9,913 9,483 6,465 activities 46,140 36,771
Cash flow from investing
activities
(10,674) (8,413) (9,914) Capital expenditure (32,576) (26,301)
Investments in
(217) (789) (315) equity-accounted investments (3,028) (1,886)
1,513 786 1,175 Proceeds from sales of assets 6,346 6,990
Proceeds from sales of
415 56 43 equity-accounted investments 698 468
Proceeds from
sales/(purchases) of
(30) (26) 83 securities (net) (86) 90
53 47 11 Interest received 193 196
Net cash used in investing
(8,940) (8,339) (8,917)activities (28,453) (20,443)
Cash flow from
financing activities
Net (decrease)/increase in
debt with maturity period
(467) 507 (841)within three months (165) (3,724)
1,813 2,551 5 Other debt: New borrowings 5,108 1,249
(278) (182) (585) Repayments (4,960) (4,649)
(283) (352) (470) Interest paid (1,428) (1,665)
Change in non-controlling
25 (10) 11 interest 23 8
Cash dividends paid to:
- Royal Dutch Shell plc
(1,634) (1,973) (1,688)shareholders (7,390) (6,877)
(26) (164) (64)- Non-controlling interest (292) (438)
(453) (149) (289)Repurchases of shares (1,492) (1,106)
Shares held in trust: net
sales/(purchases) and
(43) (93) (1,342)dividends received (34) (929)
Net cash used in financing
(1,346) 135 (5,263)activities (10,630) (18,131)
Currency translation
differences relating to cash
and
84 278 (249)cash equivalents 201 (349)
Increase/(decrease) in cash
(289) 1,557 (7,964)and cash equivalents 7,258 (2,152)
Cash and cash equivalents at
18,839 17,282 19,256 beginning of period 11,292 13,444
Cash and cash equivalents at
18,550 18,839 11,292 end of period 18,550 11,292
EXPLANATORY Notes
1. Basis of preparation
The unaudited quarterly and full year financial report and tables of Royal Dutch Shell plc and its subsidiaries (collectively known as Shell) are prepared on the basis of the same accounting principles as, and should be read in conjunction with, the Annual Report and Form 20-F for the year ended December 31, 2011 (pages 105 to 110) as filed with the U.S. Securities and Exchange Commission.
The financial information presented 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, 2011 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 (3) of the Companies Act 2006.
Segment information
Segment earnings are presented on a current cost of supplies basis (CCS earnings). On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings thus exclude the effect of changes in the oil price on inventory carrying amounts. Net capital investment information is presented as measured based on capital expenditure as reported in the Condensed Consolidated Statement of Cash Flows, adjusted for: proceeds from divestments; exploration expenses excluding exploration wells written off; investments in equity-accounted investments; and leases and other items.
CCS earnings and net capital investment information are the dominant measures used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance.
2. Impacts of accounting for derivatives
In the ordinary course of business Shell enters into contracts to supply or purchase oil and gas products, and also enters into derivative contracts to mitigate resulting economic exposures (generally price exposure). Derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes are, by contrast, recognised when the transaction occurs (see also below); furthermore, inventory is carried at historical cost or net realisable value, whichever is lower.
As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period; or (b) the inventory is measured on a different basis.
In addition, certain UK gas contracts held by 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 the quarterly results.
3. Return on average capital employed
Return on average capital employed measures the efficiency of Shell's utilisation of the capital that it employs and is a common measure of business performance. In this calculation, return on average capital employed is defined as the income for the year adjusted for after-tax interest expense as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. The tax rate is derived from calculations at the published segment level.
CAUTIONARY STATEMENT
All amounts shown throughout this Report are unaudited.
The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this document "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 document refer to companies in which Royal Dutch Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this document, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.
This document contains forward-looking statements concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Shell 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", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Shell Group and could cause those results to differ materially from those expressed in the forward-looking statements included in this document, 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 document are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Shell's Annual Report and Form 20-F for the year ended December 31, 2011 (available at http://www.shell.com/investor and http://www.sec.gov ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this document, January 31, 2013. Neither Shell nor any of its subsidiaries nor the Shell Group 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 document.
We may have used certain terms, such as "Organic Reserves Replacement Ratio", in this report that 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 these forms from the SEC by calling 1-800-SEC-0330.
January 31, 2013
Contacts:
Investor Relations International + 31(0)70-377-4540; North America +1-713-241-1042
Media International: +44(0)207-934-5550; USA +1-713-241-4544
SOURCE Royal Dutch Shell plc
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