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ROYAL DUTCH SHELL PLC 2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

30 Jul 2020 07:00

ROYAL DUTCH SHELL PLC 2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
              
    
SUMMARY OF UNAUDITED RESULTS 
Quarters$ million Half year
Q2 2020 Q1 2020 Q2 2019  Reference2020 2019 %
(18,131)(24)2,998 -705Income/(loss) attributable to shareholders (18,155)8,999 -302
(18,377)2,756 3,025 -707CCS earnings attributable to shareholdersNote 2(15,620)8,318 -288
638 2,860 3,462 -82Adjusted Earnings²A3,498 8,763 -60
2,563 14,851 11,031 -77Cash flow from operating activities 17,415 19,661 -11
(2,320)(2,718)(4,166) Cash flow from investing activities (5,039)(8,788) 
243 12,133 6,865  Free cash flowG12,376 10,873  
3,617 4,970 5,337  Cash capital expenditureC8,587 10,938  
7,504 8,600 9,477 -21Underlying operating expensesF16,105 18,343 -12
(2.9)% 4.6% 8.4%  ROACE (Net income basis)D(2.9)% 8.4%  
5.3% 6.1% 8.2%  ROACE (CCS basis excluding identified items)D5.3% 8.2%  
32.7% 28.9% 27.6%  GearingE32.7% 27.6%  
3,379 3,719 3,583 -6Total production available for sale (thousand boe/d) 3,549 3,667 -3
(2.33)0.00 0.37 -730Basic earnings per share ($) (2.33)1.11 -310
0.16 0.16 0.47 -66Dividend per share ($) 0.32 0.94 -66

 

  
1. Q2 on Q2 change.

 

  
2.Adjusted Earnings is defined as income/(loss) attributable to shareholders plus cost of supplies adjustment (see Note 2) and excluding identified items (see Reference A).

 Income attributable to Royal Dutch Shell plc shareholders was a loss of $18.1 billion for the second quarter 2020, which included an impairment charge of $16.8 billion post-tax ($22.3 billion pre-tax), as a result of revised medium- and long-term price and refining margin outlook assumptions in response to the COVID-19 pandemic and macroeconomic conditions as well as energy market demand and supply fundamentals. Second quarter 2020 results reflected lower realised prices for oil, LNG and gas, lower realised refining margins, Oil Products sales volumes and higher well write-offs, compared with the second quarter 2019. This was partly offset by very strong crude and oil products trading and optimisation results as well as lower operating expenses. Adjusted Earnings were $0.6 billion for the second quarter 2020, reflecting lower realised prices for oil, LNG and gas, lower realised refining margins, Oil Products sales volumes and higher well write-offs, compared with the second quarter 2019. This was partly offset by very strong crude and oil products trading and optimisation results as well as lower operating expenses. Cash flow from operating activities for the second quarter 2020 was $2.6 billion, which included negative working capital movements of $4 billion. Cash flow from investing activities for the quarter was an outflow of $2.3 billion, driven mainly by capital expenditure, partly offset by proceeds from divestments. Gearing was 32.7% at the end of the second quarter 2020, compared with 28.9% at the end of the first quarter 2020, mainly driven by the impact of impairments and pension remeasurement, due to actuarial assumption changes mainly caused by falling credit spreads and increasing market estimates of future inflation, as well as a net debt increase in the quarter. Total dividends distributed to Royal Dutch Shell plc shareholders in the quarter were $1.2 billion. Supplementary financial and operational disclosure and a separate press release for this quarter are available at www.shell.com/investor1. 1. Not incorporated by reference. Page 2

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 SECOND QUARTER 2020 PORTFOLIO DEVELOPMENTS Integrated GasDuring the quarter, all conditions were met for the Final Investment Decision (FID) and contracts were awarded on a new LNG processing unit, known as Train 7, at Nigeria LNG (Shell interest 25.6%), which will add 8 million tonnes per annum (mtpa) of capacity to the Bonny Island facility. Upstream During the quarter, Shell reached an agreement to sell its Appalachia shale gas position for $541 million, subject to closing adjustments, with an effective date of January 1, 2020, and expected to close in the third quarter 2020. Page 3

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 PERFORMANCE BY SEGMENT 

 
             
    
INTEGRATED GAS   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 %
(7,959)1,812 1,340 -694Segment earnings(6,147)4,134 -249
(8,321)(331)(386) Of which: Identified items (Reference A)(8,652)(160) 
362 2,143 1,726 -79Adjusted Earnings2,506 4,294 -42
2,663 3,986 3,403 -22Cash flow from operating activities6,649 7,630 -13
2,871 3,352 2,824 +2Cash flow from operating activities excluding working capital movements (Reference H)6,224 6,540 -5
736 882 738  Cash capital expenditure (Reference C)1,618 2,081  
151 162 159 -5Liquids production available for sale (thousand b/d)157 148 +6
4,369 4,596 4,456 -2Natural gas production available for sale (million scf/d)4,482 4,300 +4
904 955 927 -2Total production available for sale (thousand boe/d)930 889 +5
8.36 8.88 8.66 -3LNG liquefaction volumes (million tonnes)17.23 17.39 -1
16.65 19.00 17.95 -7LNG sales volumes (million tonnes)35.65 35.46 +1

 

  
1. Q2 on Q2 change.

 Second quarter segment earnings were a loss of $7,959 million. This included a post-tax impairment charge of $8,151 million mainly related to the Queensland Curtis LNG and Prelude floating LNG operations in Australia. Also included was a net charge of $265 million due to the fair value accounting of commodity derivatives. These net charges are part of identified items (see Reference A). Compared with the second quarter 2019, Integrated Gas Adjusted Earnings of $362 million primarily reflected lower realised prices for oil, LNG and gas, unfavourable movements in deferred tax positions and a charge of $403 million reflecting well write-offs for the second quarter, partly offset by lower operating expenses and higher contributions from trading and optimisation. Cash flow from operating activities for the quarter was $2,663 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, well write-offs and deferred tax charges. Compared with the second quarter 2019, total production decreased by 2% mainly due to more maintenance activities in Australia and lower demand, partly offset by the transfer of the Rashpetco operations in Egypt from the Upstream segment. LNG liquefaction volumes decreased mainly as a result of cargo timing. Half year segment earnings were a loss of $6,147 million. This included a post-tax impairment charge of $8,210 million mainly related to the Queensland Curtis LNG and Prelude floating LNG operations in Australia. Also included was a net charge of $419 million due to the fair value accounting of commodity derivatives. These net charges are part of identified items (see Reference A). Compared with the first half 2019, Integrated Gas Adjusted Earnings of $2,506 million primarily reflected lower realised prices for oil, LNG and gas, higher well write-offs and higher depreciation, partly offset by higher volumes and lower operating expenses. Cash flow from operating activities for the first half 2020 was $6,649 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation and well write-offs. Compared with the first half 2019, total production increased by 5% mainly due to less maintenance activities, new fields and field ramp-ups, as well as the transfer of the Rashpetco operations in Egypt from the Upstream segment. LNG liquefaction volumes decreased mainly as a result of cargo timing and lower feedgas availability, partly offset by less maintenance activities and new capacity. Page 4

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
             
    
UPSTREAM    
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 %
(6,721)(863)1,435 -568Segment earnings(7,584)3,059 -348
(5,209)(1,154)172  Of which: Identified items (Reference A)(6,364)149  
(1,512)291 1,263 -220Adjusted Earnings(1,220)2,910 -142
319 5,607 5,478 -94Cash flow from operating activities5,926 10,756 -45
548 3,718 5,251 -90Cash flow from operating activities excluding working capital movements (Reference H)4,265 10,515 -59
1,876 2,521 2,321  Cash capital expenditure (Reference C)4,397 4,812  
1,609 1,730 1,636 -2Liquids production available for sale (thousand b/d)1,670 1,651 +1
4,673 5,680 5,640 -17Natural gas production available for sale (million scf/d)5,176 6,249 -17
2,415 2,710 2,609 -7Total production available for sale (thousand boe/d)2,562 2,729 -6

 

  
1. Q2 on Q2 change.

 Second quarter segment earnings were a loss of $6,721 million. This included a post-tax impairment charge of $4,658 million mainly related to unconventional assets in North America, assets offshore in Brazil and Europe, a project in Nigeria (OPL245), and an asset in the US Gulf of Mexico. Also included were a net charge of $187 million mainly related to a reduction in discount rate used for provisions, as well as redundancy and restructuring costs of $183 million. These net charges are part of identified items (see Reference A).Compared with the second quarter 2019, Upstream Adjusted Earnings were a loss of $1,512 million primarily reflecting lower realised oil and gas prices. Cash flow from operating activities for the second quarter 2020 was $319 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as the cash impact of the settlement for the Lula unitisation in Brazil and cash effect of tax. Compared with the second quarter 2019, total production decreased by 7%, mainly due to the challenging macroeconomic environment (which included OPEC+ restrictions and COVID-19-related restrictions), the impact of divestments and lower production in the NAM joint venture. Field ramp-ups in the Santos Basin, Brazil, the US Gulf of Mexico and Permian, USA more than offset field decline. Lower production volumes were offset by favourable timing of entitlement liftings. Half year segment earnings were a loss of $7,584 million. This included a post-tax impairment charge of $5,074 million mainly related to unconventional assets in North America, assets offshore in Brazil and Europe, a project in Nigeria (OPL245), and an asset in the US Gulf of Mexico. Also included were a net charge of $916 million related to the impact of the weakening Brazilian real on a deferred tax position, and redundancy and restructuring costs of $191 million. These net charges are part of identified items (see Reference A).Compared with the first half 2019, Upstream Adjusted Earnings were a loss of $1,220 million primarily reflecting lower realised oil and gas prices and lower gas volumes. Cash flow from operating activities for the first half 2020 was $5,926 million, primarily driven by Adjusted Earnings before non-cash expenses including depreciation, as well as positive working capital movements, cash effect of tax and the settlement for the Lula unitisation in Brazil. Compared with the first half 2019, total production decreased by 6%, mainly due to the impact of divestments, lower production in the NAM joint venture and the challenging macroeconomic environment (which included OPEC+ restrictions and COVID-19-related restrictions). Field ramp-ups in the Santos Basin, Brazil, the US Gulf of Mexico and Permian, USA, more than offset field decline. Page 5

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
             
    
OIL PRODUCTS   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 %
(3,023)2,211 1,299 -333Segment earnings²(811)2,523 -132
(5,433)849 20  Of which: Identified items (Reference A)(4,585)(205) 
2,411 1,363 1,278 +89Adjusted Earnings²3,774 2,727 +38
    Of which:   
1,500 158 52 +2,763Refining & Trading1,658 473 +251
911 1,205 1,225 -26Marketing2,116 2,254 -6
(362)4,878 1,268 -129Cash flow from operating activities4,516 670 +574
2,430 353 2,081 +17Cash flow from operating activities excluding working capital movements (Reference H)2,783 4,670 -40
606 580 1,118  Cash capital expenditure (Reference C)1,186 1,971  
1,944 2,397 2,632 -26Refinery processing intake (thousand b/d)2,170 2,649 -18
4,041³5,278³6,608 -39Oil Products sales volumes (thousand b/d)4,659³6,538 -29

 

  
1. Q2 on Q2 change.

 

  
2. Earnings are presented on a CCS basis (See Note 2).

 

  
3. With effect from the first quarter 2020, the reporting of Oil Products sales volumes has changed (See Note 2). Sales volumes would be 4,742 thousand b/d in the second quarter 2020 on a comparable basis with 2019.

 Second quarter segment earnings were a loss of $3,023 million. This included a post-tax impairment charge of $4,027 million, as a result of revised medium- and long-term price outlook assumptions in response to the energy market demand and supply fundamentals as well as the COVID-19 pandemic and macroeconomic conditions. Also included were a net charge of $1,257 million due to the fair value accounting of commodity derivatives, and redundancy and restructuring costs of $118 million. These net charges are part of identified items (see Reference A). Compared with the second quarter 2019, Oil Products Adjusted Earnings of $2,411 million for the quarter reflected very strong contributions from crude and oil products trading and optimisation as well as lower operating expenses. This was partly offset by lower realised refining margins and lower marketing sales volumes due to the weak macroeconomic environment and COVID-19 pandemic. Cash flow from operating activities for the second quarter 2020 was an outflow of $362 million, primarily driven by Adjusted Earnings before depreciation, as well as negative working capital movements and cash outflows from commodity derivatives. With effect from the first quarter 2020, certain Oil Products contracts are no longer included in sales volumes (see Note 2). Excluding this impact, Oil Products sales volumes decreased due to lower refining & trading and marketing sales volumes, compared with the second quarter 2019.

  
Refining & Trading Adjusted Earnings reflected very strong contributions from crude and oil products trading and optimisation as well as lower operating expenses. This was partly offset by lower realised refining margins, compared with the second quarter 2019.

With effect from the first quarter 2020, Shell discloses utilisation instead of availability to improve transparency on refinery production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Refinery utilisation was 70% compared with 76% in the second quarter 2019, mainly due to lower demand and economic optimisation.

  
Marketing Adjusted Earnings reflected lower sales volumes, partly offset by lower operating expenses, compared with the second quarter 2019.

 Half year segment earnings were a loss of $811 million. This included a post-tax impairment charge of $4,088 million, as a result of revised medium- and long-term price outlook assumptions in response to the energy market demand and supply fundamentals as well as the COVID-19 pandemic and macroeconomic conditions. Also included were a net charge of $291 million due to the fair value accounting of commodity derivatives, and redundancy and restructuring costs of $117 million. These net charges are part of identified items (see Reference A). Page 6

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 Compared with the first half 2019, Oil Products Adjusted Earnings of $3,774 million reflected very strong contributions from crude and oil products trading and optimisation as well as lower operating expenses. This was partly offset by lower realised refining margins and lower marketing sales volumes due to the weak macroeconomic environment and COVID-19 pandemic. Cash flow from operating activities for the first half 2020 was $4,516 million, primarily driven by Adjusted Earnings before depreciation, and positive working capital movements. This was partly offset by cost-of-sales adjustments for the first half 2020. With effect from the first quarter 2020, certain Oil Products contracts are no longer included in sales volumes (see Note 2). Excluding this impact, Oil Products sales volumes decreased due to lower refining & trading and marketing sales volumes, compared with the first half 2019.

  
Refining & Trading Adjusted Earnings reflected very strong contributions from crude and oil products trading and optimisation as well as lower operating expenses. This was partly offset by lower realised refining margins, compared with the first half 2019.

 With effect from the first quarter 2020, Shell discloses utilisation instead of availability to improve transparency on refinery production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Refinery utilisation was 75% compared with 78% in the first half 2019, mainly due to lower demand and economic optimisation.

  
Marketing Adjusted Earnings reflected lower sales volumes, partly offset by lower operating expenses and higher realised global commercial and retail margins, compared with the first half 2019.

Page 7

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
             
    
CHEMICALS   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 %
164 146 (107)+253Segment earnings²311 345 -10
(41)(2)(239) Of which: Identified items (Reference A)(43)(237) 
206 148 132 +56Adjusted Earnings²354 582 -39
734 (178)1,268 -42Cash flow from operating activities556 1,257 -56
304 189 508 -40Cash flow from operating activities excluding working capital movements (Reference H)492 1,037 -52
369 846 1,079  Cash capital expenditure (Reference C)1,215 1,907  
3,623 3,871 3,787 -4Chemicals sales volumes (thousand tonnes)7,494 7,924 -5

 

  
1. Q2 on Q2 change.

 

  
2. Earnings are presented on a CCS basis (See Note 2).

 Second quarter segment earnings were $164 million. This included redundancy and restructuring costs of $30 million, which are part of identified items (see Reference A). Compared with the second quarter 2019, Chemicals Adjusted Earnings of $206 million reflected lower operating expenses, partly offset by lower realised margins due to chemicals downcycle conditions compounded by COVID-19 pandemic. Cash flow from operating activities for the quarter was $734 million, primarily driven by Adjusted Earnings before depreciation, as well as positive working capital movements due to positive movements in receivables and payables. This was partly offset by higher cost-of-sales adjustments for the quarter. With effect from the first quarter 2020, Shell discloses utilisation instead of availability to improve transparency on chemicals production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Chemicals manufacturing plant utilisation was 78% compared with 73% in the second quarter 2019, mainly due to higher maintenance activities in Asia and Europe in 2019, as well as the impact of strike actions in the Netherlands last year. Half year segment earnings were $311 million. This included redundancy and restructuring costs of $31 million, which are part of identified items (see Reference A). Compared with the first half 2019, Chemicals Adjusted Earnings of $354 million reflected lower realised margins due to chemicals downcycle conditions compounded by COVID-19. Cash flow from operating activities was an inflow of $556 million, primarily driven by Adjusted Earnings before depreciation. This is partly offset by cost-of-sales adjustments for the first half 2020. With effect from the first quarter 2020, Shell discloses utilisation instead of availability to improve transparency on chemicals production volumes. Utilisation is defined as the actual usage of the plants as a percentage of the rated capacity. Chemicals manufacturing plant utilisation was 81% compared with 78% in the first half 2019, mainly due to higher maintenance activities in Asia and Europe in 2019, including the impact of strike actions in the Netherlands last year. Page 8

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
           
   
CORPORATE  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(805)(453)(789)Segment earnings(1,258)(1,460)
(9)535 18 Of which: Identified items (Reference A)526 31 
(796)(989)(806)Adjusted Earnings(1,784)(1,490)
(791)559 (385)Cash flow from operating activities(232)(651)
390 (239)(202)Cash flow from operating activities excluding working capital movements (Reference H)151 (185)

Second quarter segment earnings were an expense of $805 million. This included a post-tax impairment charge of $5 million, as a result of macroeconomic conditions. This net charge is part of identified items (see Reference A). Adjusted Earnings were an expense of $796 million, reflecting lower net interest expense, largely offset by adverse currency exchange rate effects and reduced tax credits, compared with the second quarter 2019. Half year segment earnings were an expense of $1,258 million. This included a gain of $530 million from the impact of the weakening Brazilian real on financing positions, which is part of identified items (see Reference A). Adjusted Earnings were an expense of $1,784 million, reflecting adverse currency exchange rate effects, compared with the first half 2019. OUTLOOK FOR THE THIRD QUARTER 2020 As a result of COVID-19, there continues to be significant uncertainty in the macroeconomic conditions with an expected negative impact on demand for oil, gas and related products. Furthermore, recent global developments and uncertainty in oil supply have caused further volatility in commodity markets. The third quarter 2020 outlook provides ranges for operational and financial metrics based on current expectations, but these are subject to change in the light of current evolving market conditions. Due to demand or regulatory requirements and/or constraints in infrastructure, Shell may need to take measures to curtail or reduce oil and/or gas production, LNG liquefaction as well as utilisation of refining and chemicals plants and similarly sales volumes could be impacted. Such measures will likely have a variety of impacts on our operational and financial metrics. Integrated Gas production is expected to be approximately 820 - 880 thousand boe/d. LNG liquefaction volumes are expected to be approximately 7.6 - 8.2 million tonnes. Due to price-lag in oil-linked LNG term contracts, the impact of low oil prices is expected to become more significant in the third quarter. Upstream production is expected to be approximately 2,100 - 2,400 thousand boe/d. Refinery utilisation is expected to be approximately 68% - 76%. Oil Products sales volumes are expected to be approximately 4,000 - 5,000 thousand b/d. Chemicals manufacturing plant utilisation is expected to be approximately 78% - 88%. Chemicals sales volumes are expected to be approximately 3,600 - 3,900 thousand tonnes. Corporate Adjusted Earnings are expected to be a net expense of approximately $800 - 875 million in the third quarter 2020 and a net expense of approximately $3,200 - 3,500 million for the full year 2020. This excludes the impact of currency exchange rate effects. Page 9

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 

 
           
   
CONSOLIDATED STATEMENT OF INCOME  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
32,504 60,029 90,544 Revenue¹92,533 174,278 
(161)854 632 Share of profit of joint ventures and associates693 2,116 
148 76 662 Interest and other income224 1,105 
32,491 60,959 91,838 Total revenue and other income93,450 177,499 
18,093 43,213 68,590 Purchases61,306 128,513 
5,822 5,982 6,835 Production and manufacturing expenses11,803 13,189 
2,370 2,393 2,881 Selling, distribution and administrative expenses4,763 5,233 
232 243 225 Research and development475 437 
723 294 439 Exploration1,018 745 
28,089 7,093 6,699 Depreciation, depletion and amortisation²35,182 12,649 
1,070 1,118 1,252 Interest expense2,188 2,411 
56,398 60,336 86,920 Total expenditure116,735 163,176 
(23,907)623 4,917 Income/(loss) before taxation(23,284)14,323 
(5,806)646 1,755 Taxation charge/(credit)(5,160)5,003 
(18,101)(23)3,162 Income/(loss) for the period¹(18,124)9,319 
30 1 164 Income/(loss) attributable to non-controlling interest31 320 
(18,131)(24)2,998 Income/(loss) attributable to Royal Dutch Shell plc shareholders(18,155)8,999 
(2.33)0.00 0.37 Basic earnings per share ($)³(2.33)1.11 
(2.33)0.00 0.37 Diluted earnings per share ($)³(2.33)1.10 

 

  
1. See Note 2 “Segment information”.

 

  
2. Includes impairment charges of $21,780 million (Q1 2020: $749 million; half year 2020: $22,529 million) mainly triggered by revision of Shell's mid- and long-term commodity price and refining margin outlook. See Notes 1 and 7.

 

  
3. See Note 3 “Earnings per share”.

 

 
           
   
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(18,101)(23)3,162 Income/(loss) for the period(18,124)9,319 
   Other comprehensive income/(loss) net of tax:    
   Items that may be reclassified to income in later periods:    
1,588 (3,935)215 – Currency translation differences(2,347)391 
43 (28)18 – Debt instruments remeasurements15 29 
(137)(152)109 – Cash flow hedging gains/(losses)(289)(348)
(99) (8)– Net investment hedging gains/(losses)(99)2 
55 101 79 – Deferred cost of hedging156 105 
30 (60)(1)– Share of other comprehensive income/(loss) of joint ventures and associates(30)(56)
1,481 (4,074)413 Total(2,593)125 
   Items that are not reclassified to income in later periods:    
(4,924)1,756 (1,172)– Retirement benefits remeasurements(3,167)(2,646)
77 (137)(73)– Equity instruments remeasurements(60)30 
19 48 (6)– Share of other comprehensive income/(loss) of joint ventures and associates67 (5)
(4,828)1,667 (1,251)Total(3,160)(2,621)
(3,347)(2,407)(839)Other comprehensive income/(loss) for the period(5,753)(2,496)
(21,448)(2,430)2,323 Comprehensive income/(loss) for the period(23,877)6,823 
43 (123)180 Comprehensive income/(loss) attributable to non-controlling interest(80)358 
(21,490)(2,307)2,143 Comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders(23,797)6,465 

 Page 10

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
     
 
CONDENSED CONSOLIDATED BALANCE SHEET
$ million  
 June 30, 2020 December 31, 2019 
Assets  
Non-current assets  
Intangible assets23,163 23,486 
Property, plant and equipment213,100 238,349 
Joint ventures and associates21,771 22,808 
Investments in securities3,144 2,989 
Deferred tax15,573 10,524 
Retirement benefits¹3,135 4,717 
Trade and other receivables7,681 8,085 
Derivative financial instruments²1,331 689 
 288,898 311,647 
Current assets  
Inventories17,726 24,071 
Trade and other receivables32,375 43,414 
Derivative financial instruments²8,161 7,149 
Cash and cash equivalents27,939 18,055 
 86,201 92,689 
Total assets375,098 404,336 
Liabilities  
Non-current liabilities  
Debt87,460 81,360 
Trade and other payables2,731 2,342 
Derivative financial instruments²1,452 1,209 
Deferred tax11,743 14,522 
Retirement benefits¹15,881 13,017 
Decommissioning and other provisions³25,993 21,799 
 145,260 134,249 
Current liabilities  
Debt17,530 15,064 
Trade and other payables34,615 49,208 
Derivative financial instruments²7,217 5,429 
Taxes payable6,479 6,693 
Retirement benefits391 419 
Decommissioning and other provisions3,160 2,811 
 69,393 79,624 
Total liabilities214,653 213,873 
Equity attributable to Royal Dutch Shell plc shareholders157,156 186,476 
Non-controlling interest⁴3,289 3,987 
Total equity160,445 190,463 
Total liabilities and equity375,098 404,336 

 

  
1. The change is mainly driven by a decrease in the weighted average discount rate applied caused by falling credit spreads and increasing market estimates of future inflation. See Note 1.

 

  
2. See Note 6 “Derivative financial instruments and debt excluding lease liabilities”.

 

  
3. The discount rate applied at June 30, 2020 was 1.75% (December 31, 2019: 3.0%). Compared with December 31, 2019, non-current decommissioning and restoration provisions increased by $3,999 million as a result of the change in the discount rate, to $25,993 million at June 30, 2020.

 

  
4. The change is mainly related to the non-controlling interest in Shell Midstream Partners, L.P. (“SHLX”) following the completion of the sale of Shell's 79% interest in the Mattox Pipeline Company LLC and certain logistics assets at the Shell Norco Manufacturing Complex to SHLX.

Page 11

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
               
 
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 Equity attributable to Royal Dutch Shell plc shareholders  
$ millionShare capital¹Shares held in trustOther reserves²Retained earningsTotalNon-controlling interestTotal equity
At January 1, 2020657 (1,063)14,451 172,431 186,476 3,987 190,463 
Comprehensive income/(loss) for the period  (5,642)(18,155)(23,797)(80)(23,877)
Transfer from other comprehensive income  17 (17)   
Dividends³   (4,718)(4,718)(178)(4,896)
Repurchases of shares(6) 6 (1,214)(1,214) (1,214)
Share-based compensation 539 (324)(231)(16) (16)
Other changes in non-controlling interest   426 426 (440)(14)
At June 30, 2020651 (524)8,508 148,521 157,156 3,289 160,445 
At January 1, 2019685 (1,260)16,615 182,610 198,650 3,888 202,538 
Comprehensive income/(loss) for the period  (2,534)8,999 6,465 358 6,823 
Transfer from other comprehensive income  (102)102    
Dividends   (7,699)(7,699)(270)(7,969)
Repurchases of shares(12) 12 (5,021)(5,021) (5,021)
Share-based compensation 842 (276)(683)(118) (118)
Other changes in non-controlling interest   1 1 1 2 
At June 30, 2019674 (419)13,715 178,308 192,278 3,977 196,254 

 

  
1. See Note 4 “Share capital”.

 

  
2. See Note 5 “Other reserves”.

 

  
3. The amount charged to retained earnings is based on prevailing exchange rates on payment date.

 Page 12

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
           
   
CONSOLIDATED STATEMENT OF CASH FLOWS  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(23,907)623 4,917 Income before taxation for the period(23,284)14,323 
   Adjustment for:    
889 897 1,030 - Interest expense (net)1,786 1,926 
28,089 7,093 6,699 - Depreciation, depletion and amortisation35,182 12,649 
518 83 202 - Exploration well write-offs601 321 
(128)106 (379)- Net (gains)/losses on sale and revaluation of non-current assets and businesses(21)(444)
161 (854)(632)- Share of (profit)/loss of joint ventures and associates(693)(2,116)
610 531 1,217 - Dividends received from joint ventures and associates1,141 1,961 
(3,713)9,594 (61)- (Increase)/decrease in inventories5,881 (2,902)
3,959 6,314 308 - (Increase)/decrease in current receivables10,273 (1,117)
(4,226)(8,430)321 - Increase/(decrease) in current payables(12,655)1,104 
837 (171)(480)- Derivative financial instruments665 (1,589)
293 (91)30 - Retirement benefits203 52 
392 (102)8 - Decommissioning and other provisions290 (294)
(480)579 (39)- Other98 (13)
(730)(1,321)(2,110)Tax paid(2,051)(4,199)
2,563 14,851 11,031 Cash flow from operating activities17,415 19,661 
(3,436)(4,263)(5,150)Capital expenditure(7,699)(10,272)
(161)(559)(160)Investments in joint ventures and associates(720)(601)
(20)(147)(26)Investments in equity securities(167)(65)
211 1,613 644 Proceeds from sale of property, plant and equipment and businesses1,824 822 
423 547 102 Proceeds from sale of joint ventures and associates970 646 
62 73 17 Proceeds from sale of equity securities135 288 
118 192 220 Interest received310 457 
1,174 855 592 Other investing cash inflows2,029 1,272 
(691)(1,028)(404)Other investing cash outflows(1,719)(1,335)
(2,320)(2,718)(4,166)Cash flow from investing activities(5,039)(8,788)
90 321 145 Net increase/(decrease) in debt with maturity period within three months412 55 
   Other debt:    
15,238 1,003 180 - New borrowings16,241 320 
(7,113)(2,723)(2,848)- Repayments(9,836)(4,381)
(1,088)(1,033)(1,214)Interest paid(2,121)(2,329)
324 (81)45 Derivative financial instruments243  
(32)(8) Change in non-controlling interest(40)(2)
   Cash dividends paid to:    
(1,397)(3,483)(3,825)– Royal Dutch Shell plc shareholders¹(4,880)(7,700)
(68)(110)(203)– Non-controlling interest(178)(271)
(216)(1,486)(2,142)Repurchases of shares(1,702)(4,396)
(18)(182)(7)Shares held in trust: net sales/(purchases) and dividends received(199)(463)
5,721 (7,781)(9,868)Cash flow from financing activities(2,060)(19,168)
164 (595)4 Currency translation differences relating to cash and cash equivalents(431)24 
6,128 3,756 (3,000)Increase/(decrease) in cash and cash equivalents9,884 (8,271)
21,811 18,055 21,470 Cash and cash equivalents at beginning of period18,055 26,741 
27,939 21,811 18,470 Cash and cash equivalents at end of period27,939 18,470 

 

  
1.Cash dividends paid represents the payment of net dividends (after deduction of withholding taxes where applicable) and payment of withholding taxes on dividends paid in the previous quarter. Cash dividends paid during the second quarter 2020 is the total of the net dividend paid relating to the first quarter 2020 gross dividend and withholding taxes paid in relation to the fourth quarter 2019 gross dividend.

 Page 13

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS 1. Basis of preparation These unaudited Condensed Consolidated Interim Financial Statements ("Interim Statements") of Royal Dutch Shell plc (“the Company”) and its subsidiaries (collectively referred to as “Shell”) have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union, and on the basis of the same accounting principles as those used in the Annual Report and Accounts (pages 190 to 238) and Form 20-F (pages 142 to 189) for the year ended December 31, 2019 as filed with the Registrar for Companies for England and Wales and the US Securities and Exchange Commission, respectively, and should be read in conjunction with these filings. Going concern These unaudited Interim Statements have been prepared on the going concern basis of accounting. In assessing the appropriateness of the going concern assumption, management have stressed Shell’s most recent financial projections to incorporate a range of potential future outcomes by considering Shell’s principal risks, further potential downside pressures on commodity prices and cash preservation measures, including reduced future operating costs, capital expenditure and dividend distributions. This assessment confirmed that Shell has adequate resources to continue its operations for at least 12 months from the approval of the unaudited Condensed Consolidated Interim Financial Statements. Therefore, the Directors consider it appropriate to continue to adopt the going concern basis of accounting in preparing these unaudited Condensed Consolidated Interim Financial Statements. The financial information presented in the unaudited Interim Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 (“the Act”). Statutory accounts for the year ended December 31, 2019 were published in Shell’s Annual Report and Accounts, a copy of which was delivered to the Registrar of Companies for England and Wales, and in Shell's Form 20-F. The auditor’s report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or 498(3) of the Act.Key accounting considerations related to COVID-19 and the macroeconomic environment. Significant estimatesFuture commodity price assumptions and management's view on the future development of refining margins represent a significant estimate and both were subject to change in the second quarter 2020, resulting in the recognition of impairments. The tax impact of impairments in the second quarter 2020 has been fully recognised in deferred tax positions as of June 30, 2020. See Note 7. After finalisation of the operating plan later in 2020 the overall deferred tax position will be reviewed. The retirement benefits remeasurements, recognised in the Consolidated Statement of Comprehensive Income, reflect the decrease in the weighted average discount rate applied caused by falling credit spreads and increasing market estimates of future inflation. The discount rate applied to provisions is reviewed on a regular basis. Following the significant decrease in capital markets rates in 2020 the discount rate was reviewed and adjusted in the second quarter 2020. See footnote 3 to the Condensed Consolidated Balance Sheet. 2. Segment information With effect from 2020, Shell's reporting segments consist of Integrated Gas, Upstream, Oil Products, Chemicals and Corporate, reflecting the way Shell reviews and assesses its performance. Oil Products and Chemicals businesses were previously reported under the Downstream segment. Oil sands mining activities, previously included in the Upstream segment, are reported under Oil Products. Comparative information has been reclassified. Segment earnings are presented on a current cost of supplies basis (CCS earnings), which is the earnings measure used by the Chief Executive Officer for the purposes of making decisions about allocating resources and assessing performance. On this basis, the purchase price of volumes sold during the period is based on the current cost of supplies during the same period after making allowance for the tax effect. CCS earnings therefore exclude the effect of changes in the oil price on inventory carrying amounts. Sales between segments are based on prices generally equivalent to commercially available prices. Page 14

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 With effect from January 1, 2020, additional contracts are classified as held for trading purposes and consequently revenue is reported on a net rather than gross basis. The effect on revenue for the second quarter 2020 is a reduction of $8,028 million (Q1 2020: $16,313 million).

 
           
   
INFORMATION BY SEGMENT  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
   Third-party revenue    
7,436 10,157 8,942 Integrated Gas17,593 20,582 
1,177 2,344 2,346 Upstream3,521 4,647 
21,596 44,297 75,837 Oil Products65,893 141,888 
2,283 3,221 3,406 Chemicals5,504 7,138 
12 11 13 Corporate22 24 
32,504 60,029 90,544 Total third-party revenue¹92,533 174,278 
   Inter-segment revenue²    
558 891 1,045 Integrated Gas1,449 2,137 
4,117 6,476 8,827 Upstream10,592 18,359 
1,082 1,851 1,950 Oil Products2,933 4,130 
475 875 1,088 Chemicals1,350 2,054 
   Corporate  
   CCS earnings    
(7,959)1,812 1,340 Integrated Gas(6,147)4,134 
(6,721)(863)1,435 Upstream(7,584)3,059 
(3,023)2,211 1,299 Oil Products(811)2,523 
164 146 (107)Chemicals311 345 
(805)(453)(789)Corporate(1,258)(1,460)
(18,343)2,854 3,177 Total(15,490)8,601 

 

  
1. Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Second quarter 2020 included income of $1,405 million (Q1 2020: $6,686 million income; half year 2020: $8,091 million income). This amount includes both the reversal of prior gains of $686 million (Q1 2020: $317 million) related to sales contracts and prior losses of $507 million (Q1 2020: $76 million) related to purchase contracts that were previously recognised and where physical settlement has taken place in the second quarter 2020.

 

  
2. Comparative information for inter-segment revenue for Upstream, Oil Products and Chemicals has been revised to conform with reporting segment changes applicable from 2020. Inter-segment revenue for Integrated Gas for the half year 2019 has been revised from $1,989 million to amend for certain intra-segment transactions previously reported as inter-segment revenue.

 

 
           
   
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(18,131)(24)2,998 Income/(loss) attributable to Royal Dutch Shell plc shareholders(18,155)8,999 
30 1 164 Income/(loss) attributable to non-controlling interest31 320 
(18,101)(23)3,162 Income/(loss) for the period(18,124)9,319 
   Current cost of supplies adjustment:    
(432)3,774 30 Purchases3,342 (955)
98 (916)1 Taxation(819)237 
92 19 (16)Share of profit/(loss) of joint ventures and associates111  
(242)2,876 15 Current cost of supplies adjustment2,634 (719)
   of which:  
(246)2,780 27 Attributable to Royal Dutch Shell plc shareholders2,535 (681) 
4 96 (12) Attributable to non-controlling interest100 (38) 
(18,343)2,854 3,177 CCS earnings(15,490)8,601 
   of which:    
(18,377)2,756 3,025 CCS earnings attributable to Royal Dutch Shell plc shareholders(15,620)8,318 
34 97 152 CCS earnings attributable to non-controlling interest131 282 

Page 15

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

3. Earnings per share

 
           
   
EARNINGS PER SHARE  
Quarters Half year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(18,131)(24)2,998 Income/(loss) attributable to Royal Dutch Shell plc shareholders ($ million)(18,155)8,999 
   Weighted average number of shares used as the basis for determining:    
7,789.8 7,819.8 8,100.8 Basic earnings per share (million)7,804.8 8,126.3 
7,789.8 7,819.8 8,153.7 Diluted earnings per share (million)7,804.8 8,182.1 

 4. Share capital

 
        
 
ISSUED AND FULLY PAID ORDINARY SHARES OF €0.07 EACH1
 Number of sharesNominal value ($ million)
 ABABTotal
At January 1, 20204,151,787,517 3,729,407,107 349308657
Repurchases of shares(50,548,018) (23,223,271) (4)(2)(6)
At June 30, 20204,101,239,499 3,706,183,836 345306651
At January 1, 20194,471,889,296 3,745,486,731 376309685
Repurchases of shares(139,414,447)  (12)(12)
At June 30, 20194,332,474,849 3,745,486,731 365309674

 

  
1. Share capital at June 30, 2020 also included 50,000 issued and fully paid sterling deferred shares of £1 each.

At Royal Dutch Shell plc’s Annual General Meeting on May 19, 2020 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 €182.7 million (representing 2,611 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, 2021, and the end of the Annual General Meeting to be held in 2021, unless previously renewed, revoked or varied by Royal Dutch Shell plc in a general meeting. 5. Other reserves

 
             
 
OTHER RESERVES
$ millionMerger reserveShare premium reserveCapital redemption reserveShare plan reserveAccumulated other comprehensive incomeTotal
At January 1, 202037,298 154 123 1,049 (24,173)14,451 
Other comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders    (5,642)(5,642)
Transfer from other comprehensive income    17 17 
Repurchases of shares  6   6 
Share-based compensation   (324) (324)
At June 30, 202037,298 154 129 725 (29,798)8,508 
At January 1, 201937,298 154 95 1,098 (22,030)16,615 
Other comprehensive income/(loss) attributable to Royal Dutch Shell plc shareholders    (2,534)(2,534)
Transfer from other comprehensive income    (102)(102)
Repurchases of shares  12   12 
Share-based compensation   (276) (276)
At June 30, 201937,298 154 107 821 (24,664)13,715 

 Page 16

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 The merger reserve and share premium reserve were established as a consequence of Royal Dutch Shell plc becoming the single parent company of Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company, p.l.c., now The Shell Transport and Trading Company Limited, in 2005. The merger reserve increased in 2016 following the issuance of shares for the acquisition of BG Group plc. The capital redemption reserve was established in connection with repurchases of shares of Royal Dutch Shell plc. The share plan reserve is in respect of equity-settled share-based compensation plans. 6. Derivative financial instruments and debt excluding lease liabilities As disclosed in the Consolidated Financial Statements for the year ended December 31, 2019, presented in the Annual Report and Accounts and Form 20-F for that year, Shell is exposed to the risks of changes in fair value of its financial assets and liabilities. The fair values of the financial assets and liabilities are defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Methods and assumptions used to estimate the fair values at June 30, 2020, are consistent with those used in the year ended December 31, 2019, though the carrying amounts of derivative financial instruments measured using predominantly unobservable inputs have changed since that date. The table below provides the comparison of the fair value with the carrying amount of debt excluding lease liabilities, disclosed in accordance with IFRS 7 Financial Instruments: Disclosures.

 
     
 
DEBT EXCLUDING LEASE LIABILITIES
$ millionJune 30, 2020 December 31, 2019 
Carrying amount75,918 65,887 
Fair value¹82,369 71,163 

 

  
1. Mainly determined from the prices quoted for these securities.

 Page 17

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 7. Impairments The impairment loss in the second quarter 2020 was mainly triggered by revision of Shell's mid- and long-term commodity price and refining margin outlook reflecting the expected effects of the COVID-19 pandemic and related macroeconomic as well as energy market demand and supply fundamentals. Impairments losses of $16,842 million post-tax ($22,332 million pre-tax, of which $21,780 million recognised in depreciation, depletion and amortisation and $552 million recognised in share of profit of joint ventures and associates) mainly related to Integrated Gas for $8,151 million post-tax ($11,191 million pre-tax), mainly relating to the QGC Integrated Gas asset and Prelude floating LNG both in Australia, to Upstream for $4,658 million post-tax ($6,281 million pre-tax) mainly related to two unconventional assets in North America, a project in Nigeria (OPL245), two offshore projects in Brazil, four offshore projects in Europe and an asset in the US Gulf of Mexico, to Oil Products for $4,027 million post-tax ($4,851 million pre-tax) mainly relating to three refineries in Europe and North America, and to Corporate for $5 million post-tax ($9 million pre-tax). For impairment testing purposes, the respective carrying amounts of property, plant and equipment and intangible assets were compared with their value in use. Cash flow projections used in the determination of value in use were made using management’s forecasts of commodity prices, market supply and demand, potential costs associated with operational GHG emissions, product margins including forecast refining margins and expected production volumes. These cash flows were adjusted for the risks specific to the assets, and therefore these risks were not included in the determination of the discount rate applied. The nominal pre-tax rate applied in the second quarter 2020 was 6% (2019: 6%). Oil and gas price assumptions applied for impairment testing in Integrated Gas and Upstream are reviewed and, where necessary, adjusted on a periodic basis. Reviews include comparison with available market data and forecasts that reflect developments in demand such as global economic growth, technology efficiency, policy measures. Factors impacting supply include consideration of investment and resource potential, cost of development of new supply, and behaviour of major resource holders. The near-term commodity price assumptions applied in impairment testing in the second quarter 2020 were as follows:

 
         
   
Commodity price assumptions [A]2020 2021 2022 2023 
Brent crude oil ($/b)35 40 50 60 
Henry Hub natural gas ($/MMBtu)1.75 2.50 2.50 2.75 

[A] Money of the day. The long-term price assumptions applied were $60 per barrel (/b) for Brent crude oil and $3.00 per million British thermal units (/MMBtu) for Henry Hub natural gas, both at real term 2020. Until 2019 management’s estimate of longer-term refining margins in Oil Products was based on the reversion to mean methodology, unless a fundamental shift in markets had been identified, over the life of the refineries. Under this approach, it is assumed that refining margins would revert to historical averages over time. As from second quarter 2020, a different price methodology has been applied, based on Shell management's understanding and interpretation of demand and supply fundamentals in the near term and taking into account various other factors such as industry rationalisation and energy transition in the long term. This resulted in a downward revision of average long-term refining margins by around 30% from previous assumptions applied. Approximately 50% of the combined “Property, Plant and Equipment, Joint Ventures and Associates as well as Intangible Assets” carrying amount was tested for impairment in the second quarter 2020. The main sensitivity in the impairment test is the long term Brent price assumption. For sensitivity purposes, a decrease from 2024 of the long-term Brent price assumption to $55/b (real term 2020), would ceteris paribus result in some additional $6 - $7 billion pre-tax impairment at June 30, 2020. Page 18

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES

  
A.Adjusted Earnings

The “Adjusted Earnings” measure aims to facilitate a comparative understanding of Shell’s financial performance from period to period by removing the effects of oil price changes on inventory carrying amounts and removing the effects of identified items. These items are in some cases driven by external factors and may, either individually or collectively, hinder the comparative understanding of Shell’s financial results from period to period. This measure excludes earnings attributable to non-controlling interest. This measure was previously referred to as “CCS earnings attributable to shareholders excluding identified items” and was renamed for simplicity with effect from the second quarter 2020.

 
           
   
ADJUSTED EARNINGS  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
(18,131)(24)2,998 Income/(loss) attributable to Royal Dutch Shell plc shareholders(18,155)8,999 
(246)2,780 27 Add: Current cost of supplies adjustment attributable to Royal Dutch Shell plc shareholders (Note 2)2,535 (681)
(19,015)(104)(437)Less: Identified items attributable to Royal Dutch Shell plc shareholders(19,118)(445)
638 2,860 3,462 Adjusted Earnings3,498 8,763 

 Identified itemsIdentified items comprise: divestment gains and losses, impairments, fair value accounting of commodity derivatives and certain gas contracts, redundancy and restructuring, the impact of exchange rate movements on certain deferred tax balances, and other items.

 
           
   
IDENTIFIED ITEMS  
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
   Identified items before tax  
128 (76)379 Divestment gains/(losses)51 444 
(22,332)(749)(672)Impairments(23,082)(706)
(1,884)968 12 Fair value accounting of commodity derivatives and certain gas contracts(916)(61)
(518)(18)(27)Redundancy and restructuring(536)(80)
(427) (437)Other(427)(437)
(25,033)125 (746)Total identified items before tax(24,908)(839)
6,018 (228)331 Total tax impact of identified items5,790 416 
   Identified items after tax  
10 (32)256 Divestment gains/(losses)(22)302 
(16,842)(536)(446)Impairments(17,378)(491)
(1,540)838 1 Fair value accounting of commodity derivatives and certain gas contracts(702)33 
(375)(7)(13)Redundancy and restructuring(382)(46)
(44)(366)16 Impact of exchange rate movements on tax balances(410)8 
(224) (229)Other(224)(229)
(19,015)(104)(415)Impact on CCS earnings(19,118)(423)
   Of which:  
(8,321)(331)(386)Integrated Gas(8,652)(160)
(5,209)(1,154)172 Upstream(6,364)149 
(5,433)849 20 Oil Products(4,585)(205)
(41)(2)(239)Chemicals(43)(237)
(9)535 18 Corporate526 31 
(19,015)(104)(437)Impact on CCS earnings attributable to shareholders(19,118)(445)
  22 Impact on CCS earnings attributable to non-controlling interest 22 

Page 19

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 The identified items categories above may include after-tax impacts of identified items of joint ventures and associates which are fully reported within "Share of profit of joint ventures and associates" in the Consolidated Statement of Income, and fully reported as identified items before tax in the table above. Identified items related to subsidiaries are consolidated and reported across appropriate lines of the Consolidated Statement of Income. Only pre-tax identified items reported by subsidiaries are taken into account in the calculation of underlying operating expenses (Reference F). Fair value accounting of commodity derivatives and certain gas contracts: In the ordinary course of business, Shell enters into contracts to supply or purchase oil and gas products, as well as power and environmental products. Shell also enters into contracts for tolling, pipeline and storage capacity. Derivative contracts are entered into for mitigation of resulting economic exposures (generally price exposure) and these derivative contracts are carried at period-end market price (fair value), with movements in fair value recognised in income for the period. Supply and purchase contracts entered into for operational purposes, as well as contracts for tolling, pipeline and storage capacity, are, by contrast, recognised when the transaction occurs; furthermore, inventory is carried at historical cost or net realisable value, whichever is lower. As a consequence, accounting mismatches occur because: (a) the supply or purchase transaction is recognised in a different period, or (b) the inventory is measured on a different basis. In addition, certain contracts are, due to pricing or delivery conditions, deemed to contain embedded derivatives or written options and are also required to be carried at fair value even though they are entered into for operational purposes. The accounting impacts are reported as identified items. Impacts of exchange rate movements on tax balances represent the impact on tax balances of exchange rate movements arising on (a) the conversion to dollars of the local currency tax base of non-monetary assets and liabilities, as well as losses (this primarily impacts the Upstream and Integrated Gas segments) and (b) the conversion of dollar-denominated inter-segment loans to local currency, leading to taxable exchange rate gains or losses (this primarily impacts the Corporate segment). Other identified items represent other credits or charges that based on Shell management's assessment hinder the comparative understanding of Shell's financial results from period to period, such as the impact arising from changes in tax legislation and certain provisions for onerous contracts or litigation. The second quarter 2020 reflects the impact of a reduction in the discount rate used for provisions. B. Basic CCS earnings per share Basic CCS earnings per share is calculated as CCS earnings attributable to Royal Dutch Shell plc shareholders (see Note 2), divided by the weighted average number of shares used as the basis for basic earnings per share (see Note 3). C. Cash capital expenditure Cash capital expenditure represents cash spent on maintaining and developing assets as well as on investments in the period. Management regularly monitors this measure as a key lever to delivering sustainable cash flows. Cash capital expenditure is the sum of the following lines from the Consolidated Statement of Cash flows: Capital expenditure, Investments in joint ventures and associates and Investments in equity securities.With effect from the first quarter 2020, “Capital investment” is no longer presented in this announcement since Cash capital expenditure is considered to be more closely aligned with management’s focus on free cash flow generation.

 
           
   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
3,436 4,263 5,150 Capital expenditure7,699 10,272 
161 559 160 Investments in joint ventures and associates720 601 
20 147 26 Investments in equity securities167 65 
3,617 4,970 5,337 Cash capital expenditure8,587 10,938 
   Of which:  
736 882 738 Integrated Gas1,618 2,081 
1,876 2,521 2,321 Upstream4,397 4,812 
606 580 1,118 Oil Products1,186 1,971 
369 846 1,079 Chemicals1,215 1,907 
30 141 81 Corporate171 166 

D. Return on average capital employed Return on average capital employed (ROACE) measures the efficiency of Shell’s utilisation of the capital that it employs. Shell uses two ROACE measures: ROACE on a Net income basis and ROACE on a CCS basis excluding identified items, Page 20

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 both adjusted for after-tax interest expense. With effect from the second quarter 2020, the after-tax interest expense adjustment is calculated using an applicable blended statutory tax rate. This change is implemented to eliminate the distorting volatility effects of the effective tax rate. There is no significant impact on prior periods comparatives, which therefore have not been revised.Both measures refer to Capital employed which consists of total equity, current debt and non-current debt. ROACE on a Net income basis In this calculation, the sum of income for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period.

 
      
 
$ millionQuarters
 Q2 2020Q1 2020 Q2 2019 
Income - current and previous three quarters(11,011)10,252 21,006 
Interest expense after tax - current and previous three quarters3,0142,854 2,819 
Income before interest expense - current and previous three quarters(7,997)13,106 23,825 
Capital employed – opening288,900292,797 281,711 
Capital employed – closing265,435278,444 288,900 
Capital employed – average277,168285,620 285,306 
ROACE on a Net income basis(2.9)%4.6%8.4%

ROACE on a CCS basis excluding identified items In this calculation, the sum of CCS earnings excluding identified items for the current and previous three quarters, adjusted for after-tax interest expense, is expressed as a percentage of the average capital employed for the same period.

 
       
 
$ millionQuarters
 Q2 2020 Q1 2020 Q2 2019 
CCS earnings - current and previous three quarters(8,264) 13,256 21,794 
Identified items - current and previous three quarters(19,865) (1,266)1,169 
Interest expense after tax – current and previous three quarters3,014 2,854 2,819 
CCS earnings excluding identified items before interest expense - current and previous three quarters14,616 17,376 23,444 
Capital employed – average277,168 285,620 285,306 
ROACE on a CCS basis excluding identified items5.3%6.1%8.2%

E. Gearing Gearing is a key measure of Shell’s capital structure and is defined as net debt as a percentage of total capital. Net debt is defined as the sum of current and non-current debt, less cash and cash equivalents, adjusted for the fair value of derivative financial instruments used to hedge foreign exchange and interest rate risks relating to debt, and associated collateral balances. Management considers this adjustment useful because it reduces the volatility of net debt caused by fluctuations in foreign exchange and interest rates, and eliminates the potential impact of related collateral payments or receipts. Debt-related derivative financial instruments are a subset of the derivative financial instrument assets and liabilities presented on the balance sheet. Collateral balances are reported under “Trade and other receivables” or “Trade and other payables” as appropriate. Page 21

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
       
 
$ millionQuarters
 June 30, 2020 March 31, 2020 June 30, 2019 
Current debt17,530 15,767 16,617 
Non-current debt87,460 79,298 76,029 
Total debt¹104,990 95,065 92,646 
Add: Debt-related derivative financial instruments: net liability/(asset)525 1,218 634 
Add: Collateral on debt-related derivatives: net liability/(asset)266 (58) 78 
Less: Cash and cash equivalents(27,939) (21,811) (18,470) 
Net debt77,843 74,413 74,887 
Add: Total equity160,445 183,379 196,254 
Total capital238,288 257,792 271,142 
Gearing32.7%28.9%27.6%

 

  
1. Includes lease liabilities of $29,073 million at June 30, 2020 and $29,290 million at March 31, 2020, and $30,758 million at June 30, 2019.

F. Operating expenses Operating expenses is a measure of Shell’s cost management performance, comprising the following items from the Consolidated Statement of Income: production and manufacturing expenses; selling, distribution and administrative expenses; and research and development expenses. Underlying operating expenses is a measure aimed at facilitating a comparative understanding of performance from period to period by removing the effects of identified items, which either individually or collectively, can cause volatility, in some cases driven by external factors.

 
           
   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
5,822 5,982 6,835 Production and manufacturing expenses11,803 13,189 
2,370 2,393 2,881 Selling, distribution and administrative expenses4,763 5,233 
232 243 225 Research and development475 437 
8,423 8,618 9,941 Operating expenses17,042 18,859 
   Of which identified items:  
(508)(18)(27)Redundancy and restructuring (charges)/reversal(526)(79)
(411) (306)(Provisions)/reversal(411)(306)
  (131)Other (131)
(919)(18)(464) (937)(516)
7,504 8,600 9,477 Underlying operating expenses16,105 18,343 

G. Free cash flow Free cash flow is used to evaluate cash available for financing activities, including dividend payments and debt servicing, after investment in maintaining and growing the business. It is defined as the sum of “Cash flow from operating activities” and “Cash flow from investing activities”. Cash flows from acquisition and divestment activities are removed from Free cash flow to arrive at the Organic free cash flow, a measure used by management to evaluate the generation of free cash flow without these activities. Page 22

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 

 
           
   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
2,563 14,851 11,031 Cash flow from operating activities17,415 19,661 
(2,320)(2,718)(4,166)Cash flow from investing activities(5,039)(8,788)
243 12,133 6,865 Free cash flow12,376 10,873 
696 2,233 763 Less: Divestment proceeds (Reference I)2,929 1,756 
  77 Add: Tax paid on divestments (reported under "Other investing cash outflows") 77 
199 404 7 Add: Cash outflows related to inorganic capital expenditure1602 365 
(254)10,304 6,186 Organic free cash flow210,050 9,559 

 

  
1. Cash outflows related to inorganic capital expenditure includes portfolio actions which expand Shell's activities through acquisitions and restructuring activities as reported in capital expenditure lines in the Consolidated Statement of Cash Flows.

 

  
2. Free cash flow less divestment proceeds, adding back outflows related to inorganic expenditure.

H. Cash flow from operating activities excluding working capital movements Working capital movements are defined as the sum of the following items in the Consolidated Statement of Cash Flows: (i) (increase)/decrease in inventories, (ii) (increase)/decrease in current receivables, and (iii) increase/(decrease) in current payables. Cash flow from operating activities excluding working capital movements is a measure used by Shell to analyse its operating cash generation over time excluding the timing effects of changes in inventories and operating receivables and payables from period to period.

 
           
   
Quarters$ millionHalf year
Q2 2020 Q1 2020 Q2 2019  2020 2019 
2,563 14,851 11,031 Cash flow from operating activities17,415 19,661 
(3,713)9,594 (61)(Increase)/decrease in inventories5,881 (2,902)
3,959 6,314 308 (Increase)/decrease in current receivables10,273 (1,117)
(4,226)(8,430)321 Increase/(decrease) in current payables(12,655)1,104 
(3,980)7,478 569 (Increase)/decrease in working capital3,499 (2,914)
6,543 7,373 10,462 Cash flow from operating activities excluding working capital movements13,916 22,575 
   Of which:  
2,871 3,352 2,824 Integrated Gas6,224 6,540 
548 3,718 5,251 Upstream4,265 10,515 
2,430 353 2,081 Oil Products2,783 4,670 
304 189 508 Chemicals492 1,037 
390 (239)(202)Corporate151 (185)

I. Divestment proceedsDivestment proceeds represent cash received from divestment activities in the period. Management regularly monitors this measure as a key lever to deliver sustainable cash flow.

 
       
   
Quarters$ millionHalf year
Q2 2020 Q1 2020Q2 2019 20202019
211 1,613644Proceeds from sale of property, plant and equipment and businesses1,824822
423 547102Proceeds from sale of joint ventures and associates970646
62 7317Proceeds from sale of equity securities135288
696 2,233763Divestment proceeds2,9291,756

Page 23

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 PRINCIPAL RISKS AND UNCERTAINTIES The principal risks and uncertainties affecting Shell are described in the Risk Factors section of the Annual Report and Accounts (pages 27 to 36) and Form 20-F (pages 11 to 15) for the year ended December 31, 2019 and are summarised below. There are no material changes in those Risk Factors for the remaining 6 months of the financial year.

  
We are exposed to macroeconomic risks including fluctuating prices of crude oil, natural gas, oil products and chemicals.

 

  
Our ability to deliver competitive returns and pursue commercial opportunities depends in part on the accuracy of our price assumptions.

 

  
Our ability to achieve strategic objectives depends on how we react to competitive forces.

 

  
We seek to execute divestments in the pursuit of our strategy. We may not be able to successfully divest these assets in line with our strategy.

 

  
Our future hydrocarbon production depends on the delivery of large and integrated projects, as well as on our ability to replace proved oil and gas reserves.

 

  
The estimation of proved oil and gas reserves involves subjective judgements based on available information and the application of complex rules; therefore, subsequent downward adjustments are possible.

 

  
Rising climate change concerns have led and could lead to additional legal and/or regulatory measures which could result in project delays or cancellations, a decrease in demand for fossil fuels, potential litigation and additional compliance obligations.

 

  
Our business exposes us to risks of social instability, criminality, civil unrest, terrorism, piracy, cyber-disruption, acts of war and pandemic diseases, such as the COVID-19 (coronavirus) outbreak, that could have a material adverse effect on our operations.

 

  
We operate in more than 70 countries that have differing degrees of political, legal and fiscal stability. This exposes us to a wide range of political developments that could result in changes to contractual terms, laws and regulations. In addition, we and our joint arrangements and associates face the risk of litigation and disputes worldwide.

 

  
The nature of our operations exposes us, and the communities in which we work, to a wide range of health, safety, security and environment risks.

 

  
A further erosion of the business and operating environment in Nigeria could have a material adverse effect on us.

 

  
Production from the Groningen field in the Netherlands causes earthquakes that affect local communities.

 

  
Our future performance depends on the successful development and deployment of new technologies and new products.

 

  
We are exposed to treasury and trading risks, including liquidity risk, interest rate risk, foreign exchange risk and credit risk. We are affected by the global macroeconomic environment as well as financial and commodity market conditions.

 

  
We are exposed to commodity trading risks, including market and operational risks.

 

  
We have substantial pension commitments, funding of which is subject to capital market risks and other factors.

 

  
We mainly self-insure our risk exposure. We could incur significant losses from different types of risks that are not covered by insurance from third-party insurers.

 

  
An erosion of our business reputation could have a material adverse effect on our brand, our ability to secure new resources or access capital markets, and on our licence to operate.

 

  
Many of our major projects and operations are conducted in joint arrangements or associates. This could reduce our degree of control, as well as our ability to identify and manage risks.

 

  
We rely heavily on information technology systems for our operations.

 

  
Violations of antitrust and competition laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.

 

  
Violations of anti-bribery, tax evasion and anti-money laundering laws carry fines and expose us and/or our employees to criminal sanctions, civil suits and ancillary consequences (such as debarment and the revocation of licences).

 

  
Violations of data protection laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.

 

  
Violations of trade compliance laws and regulations, including sanctions, carry fines and expose us and our employees to criminal sanctions and civil suits.

 

  
The Company’s Articles of Association determine the jurisdiction for shareholder disputes. This could limit shareholder remedies.

 Page 24

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 FIRST QUARTER 2020 PORTFOLIO DEVELOPMENTS Integrated Gas During the quarter, Shell announced that it will not proceed with the proposed Lake Charles LNG project due to the current market conditions. Accordingly, Energy Transfer will take over as the project developer. In April, Shell took the Final Investment Decision to develop the first phase of Arrow Energy's (Shell interest 50%) Surat Gas Project in Queensland, Australia, which will bring up to 90 billion cubic feet per year of new gas to market at peak production. Oil Products During the quarter, Shell completed the sale of the Martinez refinery in the USA to PBF Energy for $1.2 billion, which includes the refinery and inventory. RESPONSIBILITY STATEMENTIt is confirmed that to the best of our knowledge: (a) the Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union; (b) the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rule (DTR) 4.2.7R (indication of important events during the first six months of the financial year, and their impact on the Condensed Consolidated Interim Financial Statements, and description of principal risks and uncertainties for the remaining six months of the financial year); and (c) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties transactions and changes thereto).The Directors of Royal Dutch Shell plc are shown on pages 104-110 in the Annual Report and Accounts and on pages 68 to 73 in the Form 20-F for the year ended December 31, 2019 save for the following changes: Dick Boer: appointed Non-executive Director with effect from May 20, 2020.Martina Hund-Mejean: appointed Non-executive Director with effect from May 20, 2020.Gerard Kleisterlee: stepped down with effect from May 19, 2020.Roberto Setubal: stepped down with effect from May 19, 2020.Linda G. Stuntz: stepped down with effect from May 19, 2020. On behalf of the Board

 
     
Ben van Beurden Jessica Uhl  
Chief Executive Officer Chief Financial Officer  
July 30, 2020 July 30, 2020  

Page 25

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 INDEPENDENT REVIEW REPORT TO ROYAL DUTCH SHELL PLCIntroductionWe have been engaged by Royal Dutch Shell plc to review the Condensed Consolidated Interim Financial Statements in the half-yearly financial report for the six months ended June 30, 2020, which comprise the Consolidated Statement of Income, the Consolidated Statement of Comprehensive Income, the Condensed Consolidated Balance Sheet, the Consolidated Statement of Changes in Equity, the Condensed Consolidated Statement of Cash Flows and Notes 1 to 7. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.This report is made solely to Royal Dutch Shell plc in accordance with guidance contained in the International Standard on Review Engagements 2410 (UK and Ireland) “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than Royal Dutch Shell plc, for our work, for this report, or for the conclusions we have formed.Directors’ responsibilitiesThe half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority.The annual Consolidated Financial Statements of Royal Dutch Shell plc and its subsidiaries are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and as adopted by the European Union (EU). The condensed set of financial statements included in the half-yearly financial report has been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting, as issued by the IASB and as adopted by the EU.Our responsibilityOur responsibility is to express to Royal Dutch Shell plc a conclusion on the Condensed Consolidated Interim Financial Statements in the half-yearly financial report based on our review. Scope of reviewWe conducted our review in accordance with International Standard on Review Engagements 2410 (UK and Ireland), “Review of Interim Financial Information Performed by the Independent Auditor of the Entity” issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.ConclusionBased on our review, nothing has come to our attention that causes us to believe that the Condensed Consolidated Interim Financial Statements in the half-yearly financial report for the six months ended June 30, 2020 are not prepared, in all material respects, in accordance with International Accounting Standard 34 as issued by the IASB and as adopted by the EU and the Disclosure Guidance and Transparency Rules of the United Kingdom’s Financial Conduct Authority. Ernst & Young LLPLondonJuly 30, 2020 Page 26

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 The maintenance and integrity of the Royal Dutch Shell plc website (www.shell.com) are the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the Condensed Consolidated Interim Financial Statements since they were initially presented on the website.Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Page 27

 
 
 
ROYAL DUTCH SHELL PLC2ND QUARTER 2020 AND HALF YEAR UNAUDITED RESULTS

 CAUTIONARY STATEMENT All amounts shown throughout this announcement are unaudited. All peak production figures in Portfolio Developments are quoted at 100% expected production. The numbers presented throughout this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures, due to rounding.The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this announcement “Shell”, “Shell Group” and “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 Royal Dutch Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Royal Dutch Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest. This announcement contains forward-looking statements (within the meaning of the US Private Securities Litigation Reform Act of 1995) 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 Royal Dutch Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as “aim”, “ambition”, “anticipate”, “believe”, “could”, “estimate”, “expect”, “goals”, “intend”, “may”, “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; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell’s Annual Report and Accounts and Form 20-F for the year ended December 31, 2019 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, July 30, 2020. 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 announcement contains references to Shell’s website. These references are for the readers’ convenience only. Shell is not incorporating by reference any information posted on 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. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. This announcement contains inside information. July 30, 2020

 
 
The information in this announcement reflects the unaudited consolidated financial position and results of Royal Dutch Shell plc. Company No. 4366849, Registered Office: Shell Centre, London, SE1 7NA, England, UK.

 Contacts: - Linda M. Coulter, Company Secretary - Media: International +44 (0) 207 934 5550; USA +1 832 337 4355 LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70 Classification: Inside Information Page 28

 

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