REG-Royal Dutch Shell: 2ND QUARTER UNAUDITED RESULTS - Part 2

- Part 2: For the preceeding part double click [ID:nPRrV9CF2a]

administrative expenses 8,413 7,898

408 325 450 Exploration 733 722

Share of profit of
2,671 2,425 2,138 equity-accounted investments 5,096 3,946

Net finance costs and other
(140) (53) (477) (income)/expense (193) (1,378)

20,117 15,706 14,226 +41 Income before taxation 35,823 25,699 +39

8,363 6,505 5,415 Taxation 14,868 9,447

11,754 9,201 8,811 +33 Income for the period 20,955 16,252 +29

Income attributable to minority
198 118 144 interest 316 304

Income attributable to
shareholders of Royal Dutch
11,556 9,083 8,667 +33 Shell plc 20,639 15,948 +29

1 Q2 on Q2 change

2 Revenue is stated after deducting sales taxes, excise duties and similar
levies of $25,462 million in Q2 2008, $22,920 million in Q1 2008, $18,993
million in Q2 2007 and $17,305 million in Q1 2007.

BASIC EARNINGS PER SHARE (SEE NOTES 1, 2 AND 7)

Quarters Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

1.87 1.47 1.38 Earnings per share ($) 3.34 2.54

1.28 1.26 1.20 CCS earnings per share ($) 2.54 2.31

DILUTED EARNINGS PER SHARE (SEE NOTES 1, 2 AND 7)

Quarters Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

1.87 1.46 1.38 Earnings per share ($) 3.33 2.53

1.28 1.25 1.20 CCS earnings per share ($) 2.53 2.30

EARNINGS BY BUSINESS SEGMENT (SEE NOTES 2 AND 4)

Quarters $ million Six Months

Q2 Q1 Q2
2008 2008 2007 %1 2008 2007 %

Exploration & Production2:

3,952 3,540 2,183 +81 - World outside USA 7,492 4,724 +59

1,929 1,603 916 +111 - USA 3,532 1,768 +100

5,881 5,143 3,099 +90 11,024 6,492 +70

Gas & Power:

788 933 494 +60 - World outside USA 1,721 1,176 +46

(163) 15 285 - - USA (148) 406 -

625 948 779 -20 1,573 1,582 -1

351 249 202 +74 Oil Sands2: 600 317 +89

Oil Products (CCS basis):

765 978 1,827 -58 - World outside USA 1,743 2,985 -42

310 216 1,109 -72 - USA 526 1,439 -63

1,075 1,194 2,936 -63 2,269 4,424 -49

Chemicals (CCS basis):

112 304 454 -75 - World outside USA 416 923 -55

(254) (103) 40 - USA (357) 51 -

(142) 201 494 - 59 974 -94

7,790 7,735 7,510 +4 Total operating segments 15,525 13,789 +13

Corporate:

- Interest and investment income
81 110 158 /(expense) 191 741

- Currency exchange gains/
27 (62) 20 (losses) (35) 66

93 98 (1) - Other - including taxation 191 171

201 146 177 347 978

(89) (105) (131) Minority interest (194) (279)

7,902 7,776 7,556 +5 CCS earnings 15,678 14,488 +8

Estimated CCS adjustment for Oil
3,654 1,307 1,111 Products and Chemicals 4,961 1,460

Income attributable to
shareholders of Royal Dutch
11,556 9,083 8,667 +33 Shell plc 20,639 15,948 +29

1 Q2 on Q2 change

2 As from the fourth quarter 2007, the earnings of the Oil Sands operations,
which were previously reported as part of the Exploration & Production segment,
are disclosed as a separate business segment. For comparison purposes, the
Exploration & Production earnings up to the third quarter 2007 have been
reclassified by the amounts reported under the Oil Sands segment.

SUMMARISED BALANCE SHEET (SEE NOTES 1 AND 6)

$ million

Jun 30, 2008 Mar 31, 2008 Jun 30, 2007

Assets

Non-current assets:

Intangible assets 5,336 5,282 5,126

Property, plant and equipment 109,191 105,806 90,584

Investments:

- equity-accounted investments 32,514 31,198 27,185

- financial assets 2,975 3,333 2,954

Deferred tax 4,089 3,409 3,108

Pre-paid pension costs 6,215 5,878 4,772

Other 6,504 6,406 5,548

166,824 161,312 139,277

Current assets:

Inventories 39,624 32,184 26,497

Accounts receivable 127,241 87,507 60,649

Cash and cash equivalents 8,990 14,417 15,117

175,855 134,108 102,263

Total assets 342,679 295,420 241,540

Liabilities

Non-current liabilities:

Debt 11,072 11,378 12,236

Deferred tax 13,994 13,473 13,159

Retirement benefit obligations 6,162 6,304 6,282

Other provisions 14,086 14,016 10,877

Other 4,857 4,189 3,784

50,171 49,360 46,338

Current liabilities:

Debt 5,352 5,684 5,266

Accounts payable and accrued liabilities 126,246 89,531 61,978

Taxes payable 15,895 14,412 11,214

Retirement benefit obligations 419 455 324

Other provisions 2,687 2,815 2,076

150,599 112,897 80,858

Total liabilities 200,770 162,257 127,196

Equity attributable to shareholders of
Royal Dutch Shell plc 139,809 131,130 112,621

Minority interest 2,100 2,033 1,723

Total equity 141,909 133,163 114,344

Total liabilities and equity 342,679 295,420 241,540

SUMMARISED STATEMENT OF CASH FLOWS (SEE NOTE 1)

Quarters $ million Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

Cash flow from operating
activities:

11,754 9,201 8,811 Income for the period 20,955 16,252

Adjustment for:

8,701 6,405 5,460 - Current taxation 15,106 9,727

269 178 130 - Interest (income)/expense 447 328

- Depreciation, depletion and
3,439 3,146 3,238 amortisation 6,585 6,498

(757) (281) (1,133) - (Profit)/loss on sale of assets (1,038) (1,495)

- Decrease/(increase) in net
(11,751) 2,784 (1,704) working capital (8,967) (2,103)

- Share of profit of
(2,671) (2,425) (2,138) equity-accounted investments (5,096) (3,946)

- Dividends received from
2,447 1,752 1,519 equity-accounted investments 4,199 3,106

- Deferred taxation and other
(152) 322 214 provisions 170 62

10 94 (676) - Other 104 (1,123)

Cash flow from operating
11,289 21,176 13,721 activities (pre-tax) 32,465 27,306

(7,121) (4,314) (4,873) Taxation paid (11,435) (7,277)

Cash flow from operating
4,168 16,862 8,848 activities 21,030 20,029

Cash flow from investing
activities:

(7,352) (7,429) (5,652) Capital expenditure (14,781) (11,013)

Investments in equity-accounted
(521) (616) (319) investments (1,137) (689)

2,026 445 6,270 Proceeds from sale of assets 2,471 6,650

Proceeds from sale of
272 61 279 equity-accounted investments 333 394

Proceeds from sale of /(additions
275 10 585 to) financial assets 285 1,140

269 285 295 Interest received 554 580

Cash flow from investing
(5,031) (7,244) 1,458 activities (12,275) (2,938)

Cash flow from financing
activities:

Net increase/(decrease) in debt
with maturity period

839 (863) (1,185) within three months (24) (844)

131 185 1,634 Other debt: New borrowings 316 4,396

(1,479) (664) (274) Repayments (2,143) (1,887)

(369) (298) (290) Interest paid (667) (641)

34 (7) (3,585) Change in minority interest 27 (6,695)

(1,350) (1,073) (900) Net issue/(repurchase) of shares (2,423) (1,386)

Dividends paid to:

- Shareholders of Royal Dutch
(2,489) (2,329) (2,300) Shell plc (4,818) (4,400)

(115) (51) (77) - Minority interest (166) (119)

Treasury shares:

- Net sales/(purchases) and
242 200 568 dividends received 442 552

Cash flow from financing
(4,556) (4,900) (6,409) activities (9,456) (11,024)

Currency translation differences
relating to cash and

(8) 43 36 cash equivalents 35 48

Increase/(decrease) in cash and
(5,427) 4,761 3,933 cash equivalents (666) 6,115

Cash and cash equivalents at
14,417 9,656 11,184 beginning of period 9,656 9,002

Cash and cash equivalents at end
8,990 14,417 15,117 of period 8,990 15,117

CAPITAL INVESTMENT

Quarters $ million Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

Capital expenditure:

Exploration & Production1:

3,038 2,202 2,281 - World outside USA 5,240 5,153

916 2,530 774 - USA 3,446 1,361

3,954 4,732 3,055 8,686 6,514

Gas & Power:

1,006 823 711 - World outside USA 1,829 1,368

3 1 2 - USA 4 3

1,009 824 713 1,833 1,371

761 711 421 Oil Sands1 1,472 789

Oil Products:

862 456 640 - World outside USA 1,318 1,114

68 61 132 - USA 129 327

930 517 772 1,447 1,441

Chemicals:

399 374 184 - World outside USA 773 337

34 34 96 - USA 68 179

433 408 280 841 516

83 37 75 Corporate 120 120

7,170 7,229 5,316 Total capital expenditure 14,399 10,751

Exploration expense

218 135 143 - World outside USA 353 270

86 80 46 - USA 166 88

304 215 189 519 358

New equity in equity-accounted
investments

347 365 308 - World outside USA 712 555

41 5 3 - USA 46 20

388 370 311 758 575

New loans to equity-accounted
133 246 8 investments 379 114

7,995 8,060 5,824 Total capital investment* 16,055 11,798

*Comprising:

4,621 5,439 3,463 - Exploration & Production1 10,060 7,355

1,156 925 808 - Gas & Power 2,081 1,540

761 711 421 - Oil Sands1 1,472 789

934 536 777 - Oil Products 1,470 1,476

439 412 280 - Chemicals 851 518

84 37 75 - Corporate 121 120

7,995 8,060 5,824 16,055 11,798

1 As from the fourth quarter 2007, the results of the Oil Sands operations,
which were previously reported as part of the Exploration & Production
segment, are disclosed as a separate business segment. For comparison
purposes, the Exploration & Production results up to the third quarter 2007
have been reclassified by the amounts reported under the Oil Sands segment.

ADDITIONAL SEGMENTAL INFORMATION1

Quarters $ million Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

Exploration & Production3

5,881 5,143 3,099 Segment earnings 11,024 6,492

Including:

408 325 450 - Exploration 733 722

- Depreciation, depletion &
2,228 2,165 2,311 amortisation 4,393 4,599

- Share of profit of
1,103 1,212 659 equity-accounted investments 2,315 1,572

8,659 10,329 7,031 Cash flow from operations 18,988 13,141

Less: Net working capital
(374) 923 1,469 movements2 549 383

Cash flow from operations
excluding net working capital
9,033 9,406 5,562 movements 18,439 12,758

49,185 47,927 42,207 Capital employed 49,185 42,207

Gas & Power

625 948 779 Segment earnings 1,573 1,582

Including:

- Depreciation, depletion &
85 81 77 amortisation 166 151

- Share of profit of
620 584 428 equity-accounted investments 1,204 848

149 1,917 210 Cash flow from operations 2,066 797

Less: Net working capital
(845) 902 76 movements2 57 (93)

Cash flow from operations
excluding net working capital
994 1,015 134 movements 2,009 890

21,010 19,305 16,133 Capital employed 21,010 16,133

Oil Sands3

351 249 202 Segment earnings 600 317

Including:

- Depreciation, depletion &
45 44 43 amortisation 89 82

645 298 421 Cash flow from operations 943 907

Less: Net working capital
66 (102) 113 movements2 (36) 524

Cash flow from operations
excluding net working capital
579 400 308 movements 979 383

5,881 5,292 3,672 Capital employed 5,881 3,672

1 Corporate segment information has not been included in the table shown.
Please refer to the Earnings by Business segment section for additional
information. The above data does not consider minority interest impacts on the
segments.

2 Excluding working capital movements related to taxation.

3 As from the fourth quarter 2007, the results of the Oil Sands operations,
which were previously reported as part of the Exploration & Production
segment, are disclosed as a separate business segment. For comparison
purposes, the Exploration & Production results up to the third quarter 2007
have been reclassified by the amounts reported under the Oil Sands segment.

ADDITIONAL SEGMENTAL INFORMATION1 (continued)

Quarters $ million Six Months

Q2 2008 Q1 2008 Q2 2007 2008 2007

Oil Products

1,075 1,194 2,936 Segment CCS earnings 2,269 4,424

Including:

- Depreciation, depletion &
609 608 571 amortisation 1,217 1,227

- Share of profit of
441 267 721 equity-accounted investments 708 1,001

(4,148) 2,362 1,464 Cash flow from operations (1,786) 3,587

Less: Net working capital
(9,439) (435) (2,220) movements2 (9,874) (2,539)

Cash flow from operations
excluding net working capital
5,291 2,797 3,684 movements 8,088 6,126

63,298 55,768 46,546 Capital employed 63,298 46,546

Chemicals

(142) 201 494 Segment CCS earnings 59 974

Including:

- Depreciation, depletion &
356 162 150 amortisation 518 305

- Share of profit of
92 158 167 equity-accounted investments 250 355

361 386 451 Cash flow from operations 747 567

Less: Net working capital
(216) (9) (230) movements2 (225) (744)

Cash flow from operations
excluding net working capital
577 395 681 movements 972 1,311

11,328 11,233 9,888 Capital employed 11,328 9,888

1 Corporate segment information has not been included in the table shown.
Please refer to the Earnings by Business segment section for additional
information. The above data does not consider minority interest impacts on the
segments.

2 Excluding working capital movements related to taxation.

NOTES

1. Accounting policies and basis of presentation

The quarterly financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) and are also in accordance
with IFRS as adopted by the European Union.

The Oil Sands operations, which were previously reported within the Exploration
& Production segment, are reported as a separate business segment with effect
from the fourth quarter 2007. Prior period financial statements have been
reclassified accordingly.

The accounting policies are unchanged from those set out in Note 2 to the
Consolidated Financial Statements of Royal Dutch Shell plc in the Annual Report
and Form 20-F for the year ended December 31, 2007 on pages 117 to 121.

2. Earnings on an estimated current cost of supplies (CCS) basis

To facilitate a better understanding of underlying business performance, the
financial results are also analysed on an estimated current cost of supplies
(CCS) basis as applied for the Oil Products and Chemicals segment earnings.
Earnings on an estimated current cost of supplies basis provides useful
information concerning the effect of changes in the cost of supplies on Royal
Dutch Shell's results of operations and is a measure to manage the performance
of the Oil Products and Chemicals segments but is not a measure of financial
performance under IFRS.

On this basis, Oil Products and Chemicals segment cost of sales of the volumes
sold during the period are based on the cost of supplies during the same period
after making allowance for the estimated tax effect, instead of the first-in,
first-out (FIFO) method of inventory accounting. Earnings calculated on this
basis do not represent an application of the last-in, first-out (LIFO)
inventory basis and do not reflect any inventory drawdown effects.

3. Return on average capital employed (ROACE)

ROACE is defined as the sum of the current and previous three quarters' income
adjusted for interest expense, after tax, divided by the average capital
employed for the period.

Components of the calculation are:

$ million Q2 2008 Q2 2007

Income (four quarters) 36,628 28,020

Interest expense after tax 752 665

ROACE numerator 37,380 28,685

Capital employed - opening 131,846 122,818

Capital employed - closing 158,333 131,846

Capital employed - average 145,090 127,332

ROACE 25.8% 22.5%

ROACE up to the fourth quarter 2007 has been shown on a Shell share basis. As a
consequence of the significant reduction of minority interest during 2007,
ROACE calculations are now presented on a 100%-basis. Prior period ROACE
calculations have been adjusted for comparison purposes.

4. Earnings by business segment

Operating segment results are presented before deduction of minority interest
and also exclude interest and other income of a non-operational nature,
interest expense, non-trading currency exchange effects and tax on these items,
which are included in the Corporate results. Operating segment results are
after tax and include equity-accounted investments.

5. Gearing

The numerator and denominator in the gearing calculation, as demonstrated
below, used by Shell are calculated by adding to reported debt and equity
certain off-balance sheet obligations as at the beginning of the year such as
operating lease commitments and unfunded retirement benefits (if applicable)
which Shell believes to be in the nature of incremental debt, and deducting
cash and cash equivalents judged to be in excess of amounts required for
operational purposes.

$ million Jun 30, 2008 Jun 30, 2007

Non-current debt 11,072 12,236

Current debt 5,352 5,266

Total debt 16,424 17,502

Add: Net present value of operating lease
obligations1 14,387 11,319

Unfunded retirement benefit obligations (after
tax)1 - -

Less: Cash and cash equivalents in excess of
operational requirements 6,690 13,217

Adjusted debt 24,121 15,604

Total equity 141,909 114,344

Total capital 166,030 129,948

Gearing ratio (adjusted debt as a percentage of
total capital) 14.5% 12.0%

1 As of December 31, 2007 and 2006, respectively.

6. Equity

Total equity comprises equity attributable to shareholders of Royal Dutch Shell
and to the minority interest. Other reserves comprise the capital redemption
reserve, share premium reserve, merger reserve, share plan reserve, currency
translation differences, unrealised gains/(losses) on securities and unrealised
gains/(losses) on cash flow hedges.

Ordinary
share
capital
Treasury Other Retained Minority Total
$ million shares reserves earnings Total interest equity

At December 31,
2007 536 (2,392) 14,148 111,668 123,960 2,008 125,968

Income for the
period - - - 20,639 20,639 316 20,955

Income/(expense)
recognised directly
in equity - - 1,853 - 1,853 (110) 1,743

Capital
contributions/
(repayments) from/
to minority
shareholders - - - - - 27 27

Changes in minority
interest - - - 59 59 25 84

Dividends paid - - - (4,818) (4,818) (166) (4,984)

Treasury shares:
net sales/
(purchases) and
dividends received - 442 - - 442 - 442

Shares repurchased
for cancellation (5) - 5 (2,237) (2,237) - (2,237)

Share-based
compensation - - (107) 18 (89) - (89)

At June 30, 2008 531 (1,950) 15,899 125,329 139,809 2,100 141,909

Ordinary
share Treasury Other Retained Minority Total
$ million capital shares reserves earnings Total interest equity

At December 31,
2006 545 (3,316) 8,820 99,677 105,726 9,219 114,945

Income for the
period - - - 15,948 15,948 304 16,252

Income/(expense)
recognised directly
in equity - - 1,397 - 1,397 (101) 1,296

Capital
contributions/
(repayments) from/
to minority
shareholders - - - - - 819 819

Acquisition of
Shell Canada - - - (5,445) (5,445) (1,639) (7,084)

Sakhalin partial
divestment - - - - - (6,711) (6,711)

Other changes in
minority interest - - - 7 7 (49) (42)

Dividends paid - - - (4,400) (4,400) (119) (4,519)

Treasury shares:
net sales/
(purchases) and
dividends received - 552 - - 552 - 552

Shares repurchased
for cancellation (3) - 3 (1,386) (1,386) - (1,386)

Share-based
compensation - - 222 - 222 - 222

At June 30, 2007 542 (2,764) 10,442 104,401 112,621 1,723 114,344

7. Basis for Royal Dutch Shell earnings per ordinary share

The total number of Royal Dutch Shell ordinary shares in issue at the end of
the period was 6,279 million. Royal Dutch Shell reports earnings per share on a
basic and on a diluted basis, based on the weighted average number of Royal
Dutch Shell (combined A and B) ordinary shares outstanding. Shares held in
respect of share options and other incentive compensation plans are excluded in
determining basic earnings per share.

Basic earnings per share calculations are based on the following weighted
average number of shares:

Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary shares of euro
0.07 each 6,170.3 6,195.5 6,281.7

Diluted earnings per share calculations are based on the following weighted
average number of shares. This adjusts the basic number of shares for all share
options currently in-the-money.

Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary shares of euro
0.07 each 6,189.1 6,211.4 6,303.1

Basic shares outstanding at the end of the following periods are:

Millions Q2 2008 Q1 2008 Q2 2007

Royal Dutch Shell ordinary shares of euro
0.07 each 6,159.1 6,187.0 6,276.8

One American Depository Receipt (ADR) is equal to two Royal Dutch Shell shares.

8. Accounting for Derivatives

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