Good Morning Shell shareholders. Or rather bad morning. Shell’s results are out and it’s deja vu. Earnings are down from $6.2bn to $4.2bn. The shares opened 4% down. At the time of writing this article they are down 5%. Shell once again appears to be in breach of DTR 2 (Disclosure and control of insider information).
By John Donovan
Good Morning Shell shareholders.
Or rather bad morning. Shell’s results are out and it’s deja vu. Earnings are down from $6.2bn to $4.2bn. The shares opened 4% down. At the time of writing this article they are down 5%.
Shell once again appears to be in breach of DTR 2 (Disclosure and control of insider information). There can be no doubt that this fall in profit has been insider information for several weeks now, if only with Simon Henry and Peter Voser, and 5% is a significant fall in share price. So the market disagrees with Shell’s apparent opinion that a Profit Warning under DTR 2 was not required.
It is important to note that this is the second quarter results running, where they have failed to issue a profit warning. I was amazed that Shell did not issue a profits warning prior to their announcement of the Q2 2013 results, as I believe they should have done under DTR 2.
As far as I know, Shell does not have a dispensation regarding DTR2 and profit warnings?
EXTRACT FROM A RELATED POSTING BY “LONDONLAD” ON OUR SHELL BLOG: Submitted on 2013/10/31 at 12:04
Lower 3rd Q profits at RDS have been known / predicted for more than a week – e.g. Telegraph and Express have stated as such in their Business sections. “There can be no doubt that this fall in profit has been insider information for several weeks now” – of course it has been known for a number of weeks at RDS board level, as it should have been. Inferring that this is something illegal or unusual is yet again tabloid titillation from this website. Actually their results, albeit disappointing, were better than a number of analysts had forecast.
COMMENT RECEIVED FROM “Anonymous”
Dear Mr Donovan,
Do you know why there was not a profit warning from Shell? Over the last 2-3 weeks Shell shares have increased by about 5%, which surely would not have been the case had the company issued a profit warning. It means a lot of investors have paid over the top for their shares.
Can’t be right, can it?
COMMENT FROM “POOR SAM”
Sorry to disagree with the London Lad. The UKLA has rules and regulations about inside information and transparency. If the FCA ignores the conduct of the big boys, then shareholders will have to rely on the press for profit warnings. This would be wrong and you might as well wrap up the the FCA, which is already restricted by undisclosed privacy/confidentiality agreements.
DTR 2 seems very clear to me. Namely, if the Directors have inside information which, if made public, would have a such a large effect on share price that it would influence an ordinary investor’s investment decision, then it must be declared. The share price decreased by 5%, when this insider knowledge became public this morning. So, the market’s opinion seems to be different from that of the London Lad.
Certainly, all those investors who bought shares in the last couple of weeks could have done so at up to 5% less than they did, if a profit warning had been given. That’s a lot of lolly!