ROYAL DUTCH SHELL PLC 4th QUARTER 2019 AND FULL YEAR UNAUDITED
RESULTS |
|
|
|
|
|
SUMMARY OF UNAUDITED RESULTS |
Quarters |
$
million |
|
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
%² |
|
Reference |
2019¹ |
2018 |
% |
965 |
|
5,879 |
|
5,590 |
|
-83 |
Income/(loss) attributable to
shareholders |
|
15,843 |
|
23,352 |
|
-32 |
871 |
|
6,081 |
|
7,334 |
|
-88 |
CCS earnings attributable to
shareholders |
Note
2 |
15,270 |
|
23,833 |
|
-36 |
(2,060 |
) |
1,313 |
|
1,646 |
|
|
Of which: Identified items |
A |
(1,192 |
) |
2,429 |
|
|
2,931 |
|
4,767 |
|
5,688 |
|
-48 |
CCS earnings
attributable to shareholders excluding identified items |
|
16,462 |
|
21,404 |
|
-23 |
125 |
|
149 |
|
120 |
|
|
Add: CCS
earnings attributable to non-controlling interest |
|
535 |
|
531 |
|
|
3,056 |
|
4,917 |
|
5,808 |
|
-47 |
CCS earnings excluding identified
items |
|
16,997 |
|
21,935 |
|
-23 |
|
|
|
|
Of which: |
|
|
|
|
1,986 |
|
2,674 |
|
2,363 |
|
|
Integrated Gas |
|
8,955 |
|
9,399 |
|
|
778 |
|
907 |
|
1,881 |
|
|
Upstream |
|
4,744 |
|
6,775 |
|
|
1,368 |
|
2,153 |
|
2,131 |
|
|
Downstream |
|
6,680 |
|
7,567 |
|
|
(1,075 |
) |
(817 |
) |
(567 |
) |
|
Corporate |
|
(3,383 |
) |
(1,806 |
) |
|
10,267 |
|
12,252 |
|
22,021 |
|
-53 |
Cash flow from operating activities |
|
42,179 |
|
53,085 |
|
-21 |
(4,862 |
) |
(2,130 |
) |
(5,312 |
) |
|
Cash flow from investing activities |
|
(15,779 |
) |
(13,659 |
) |
|
5,405 |
|
10,122 |
|
16,709 |
|
|
Free cash
flow |
H |
26,400 |
|
39,426 |
|
|
0.12 |
|
0.73 |
|
0.68 |
|
-82 |
Basic earnings per share ($) |
|
1.97 |
|
2.82 |
|
-30 |
0.11 |
|
0.76 |
|
0.89 |
|
-88 |
Basic CCS earnings per share ($) |
B |
1.89 |
|
2.88 |
|
-34 |
0.37 |
|
0.59 |
|
0.69 |
|
-46 |
Basic CCS
earnings per share excl. identified items ($) |
|
2.04 |
|
2.58 |
|
-21 |
0.47 |
|
0.47 |
|
0.47 |
|
— |
Dividend
per share ($) |
|
1.88 |
|
1.88 |
|
— |
1. IFRS 16 Leases (IFRS 16) was adopted
with effect from January 1, 2019. See Note 8 “Adoption of IFRS 16
Leases”.
2. Q4 on Q4 change.
CCS earnings attributable to shareholders excluding
identified items at $2.9 billion reflected lower realised oil, gas
and LNG prices, weaker realised refining and chemicals margins as
well as negative movements in deferred tax positions, compared with
the fourth quarter 2018. This was partly offset by stronger
contributions from LNG trading and optimisation.
Cash flow from operating activities excluding working capital
movements at $12.3 billion reflected lower inflows related to
commodity derivatives and lower cash earnings, partly offset by
lower tax payments, compared with the fourth quarter 2018.
Total dividends distributed to shareholders in the quarter were
$3.7 billion. Today, Shell launches the next tranche of the share
buyback programme, with a maximum aggregate consideration of $1
billion in the period up to and including April 27, 2020. Since the
launch of the programme, Shell has bought back almost $15 billion
in shares for cancellation.
Royal Dutch Shell Chief Executive
Officer Ben van Beurden commented: "The
strength of Shell’s strategy and portfolio has enabled delivery of
competitive cash flow performance in 2019 despite challenging
macroeconomic conditions in refining and chemicals, as well as
lower oil and gas prices. We generated $47 billion in cash flow
from operating activities excluding working capital movements and
distributed over $25 billion in dividends and share buybacks to our
shareholders.
We remain committed to prudent capital
discipline supported by world-class project delivery and are
looking to further strengthen our balance sheet while we continue
with share buybacks. Our intention to complete the $25 billion
share buyback programme is unchanged, but the pace remains subject
to macro conditions and further debt reduction."
|
ADDITIONAL PERFORMANCE
MEASURES |
Quarters |
$ million |
|
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
%¹ |
|
Reference |
2019 |
2018 |
% |
6,883 |
6,098 |
7,430 |
|
Cash
capital expenditure² |
C |
23,919 |
24,078 |
|
8,003 |
7,759 |
7,879 |
|
Capital investment³ |
C |
28,788 |
24,878 |
|
3,763 |
3,563 |
3,788 |
-1 |
Total
production available for sale (thousand boe/d) |
|
3,665 |
3,666 |
— |
56.60 |
55.99 |
59.89 |
-5 |
Global liquids realised price
($/b) |
|
57.76 |
63.85 |
-10 |
4.42 |
4.19 |
5.75 |
-23 |
Global
natural gas realised price ($/thousand scf) |
|
4.57 |
5.13 |
-11 |
10,384 |
8,650 |
10,279 |
+1 |
Operating expenses |
G |
37,893 |
39,316 |
-4 |
9,993 |
8,657 |
10,147 |
-2 |
Underlying operating expenses |
G |
36,993 |
39,025 |
-5 |
6.7 |
% |
8.6 |
% |
9.4 |
% |
|
ROACE (Net income basis) |
E |
6.7 |
% |
9.4 |
% |
|
6.9 |
% |
8.1 |
% |
8.7 |
% |
|
ROACE
(CCS basis excluding identified items)⁴ |
E |
6.9 |
% |
8.7 |
% |
|
29.3 |
% |
27.9 |
% |
20.3 |
% |
|
Gearing |
F |
29.3 |
% |
20.3 |
% |
|
1. Q4 on Q4 change.2. With
effect from 2019, Cash capital expenditure has been introduced as a
capital spent performance measure (see Reference
C).3. With effect from 2019, the definition has
been amended (see Reference C). Comparative information has been
revised.4. With effect from 2019, the definition
has been amended (see Reference E). Comparative information has
been revised.
Supplementary financial and operational disclosure for this
quarter is available at www.shell.com/investor.
The IFRS 16 impact on net debt in 2019 was an increase of
$15,657 million. Fourth quarter 2019 reported Gearing was 29.3% on
an IFRS 16 basis, comparable with 25.0% on an IAS 17 basis.
The impact of IFRS 16 is presented in Note 8 “Adoption of IFRS
16 Leases” and is not addressed in the performance analysis
sections of this results announcement.
FOURTH QUARTER 2019 PORTFOLIO
DEVELOPMENTS
Upstream
During the quarter, Shell and its Consortium partners announced
the start of oil and gas production at P-68 FPSO, located at
BM-S-11-A concession (Shell pre-unitisation interest 25%) in
Berbigão, Sururu, and West Atapu, which can process up to 150
thousand barrels of oil and 6 million cubic metres of natural gas
daily.
PERFORMANCE BY SEGMENT
|
INTEGRATED GAS |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
%² |
|
2019¹ |
2018 |
% |
1,897 |
|
2,597 |
|
3,579 |
|
-47 |
Segment earnings |
8,628 |
|
11,444 |
|
-25 |
(89 |
) |
(77 |
) |
1,216 |
|
|
Of which: Identified items (Reference A) |
(326 |
) |
2,045 |
|
|
1,986 |
|
2,674 |
|
2,363 |
|
-16 |
Earnings excluding identified items |
8,955 |
|
9,399 |
|
-5 |
3,457 |
|
4,224 |
|
5,786 |
|
-40 |
Cash
flow from operating activities |
15,311 |
|
14,617 |
|
+5 |
4,017 |
|
4,271 |
|
6,597 |
|
-39 |
Cash
flow from operating activities excluding working capital movements
(Reference I) |
14,828 |
|
16,281 |
|
-9 |
1,323 |
|
894 |
|
1,262 |
|
|
Cash
capital expenditure (Reference C)³ |
4,299 |
|
3,819 |
|
|
1,602 |
|
2,303 |
|
1,350 |
|
|
Capital investment (Reference C)⁴ |
6,706 |
|
4,259 |
|
|
161 |
|
166 |
|
213 |
|
-25 |
Liquids production available for sale
(thousand b/d) |
156 |
|
214 |
|
-27 |
4,578 |
|
4,586 |
|
4,442 |
|
+3 |
Natural gas production available for sale (million scf/d) |
4,442 |
|
4,311 |
|
+3 |
950 |
|
957 |
|
979 |
|
-3 |
Total production available for sale
(thousand boe/d) |
922 |
|
957 |
|
-4 |
9.21 |
|
8.95 |
|
8.78 |
|
+5 |
LNG
liquefaction volumes (million tonnes) |
35.55 |
|
34.32 |
|
+4 |
20.09 |
|
18.90 |
|
17.39 |
|
+16 |
LNG
sales volumes (million tonnes) |
74.45 |
|
71.21 |
|
+5 |
1. IFRS 16 was adopted with effect from
January 1, 2019. See Note 8 “Adoption of IFRS 16 Leases”.
2. Q4 on Q4 change. 3. With
effect from 2019, Cash capital expenditure has been introduced as a
capital spent performance measure (see Reference C).
4. With effect from 2019, the definition has been
amended (see Reference C). Comparative information has been
revised.
Fourth quarter identified items primarily reflected a charge of
$508 million related to impairments and negative movements in
deferred tax positions of $292 million, both mainly in Australia,
partly offset by gains of $718 million related to the fair value
accounting of commodity derivatives.
Compared with the fourth quarter 2018, Integrated Gas earnings
excluding identified items primarily reflected lower realised LNG,
oil and gas prices as well as higher operating expenses and
depreciation, partly offset by stronger contributions from LNG, gas
and power trading and optimisation.
Compared with the fourth quarter 2018, total production
decreased mainly due to the transfer of the Salym asset into the
Upstream segment and divestments, largely offset by field ramp-ups
in Australia and Trinidad and Tobago. LNG liquefaction volumes
increased mainly as a result of additional capacity from the
Prelude floating LNG facility and the Elba LNG facility compared
with the fourth quarter 2018.
Compared with the fourth quarter 2018, cash flow from operating
activities excluding working capital movements mainly reflected
lower cash inflows related to commodity derivatives as well as
lower cash earnings.
Full year identified items included impairments and write-offs
of $1,021 million, mainly in Australia and Trinidad and Tobago, as
well as negative movements in deferred tax positions of $282
million in Australia. These were partly offset by gains of $787
million related to the fair value accounting of commodity
derivatives and a gain of $203 million on a sale of assets in
Australia.
Compared with the full year 2018, Integrated Gas earnings
excluding identified items were impacted by lower realised oil, LNG
and gas prices, higher operating expenses, and lower liquids
production volumes, partly offset by significantly stronger
contributions from LNG trading and optimisation.
Compared with the full year 2018, total production was impacted
by divestments and the transfer of the Salym asset into the
Upstream segment, partly offset by production from field ramp-ups
in Australia and Trinidad and Tobago. LNG liquefaction volumes were
higher in comparison with the full year 2018 because of the
additional volumes due to increased feedgas availability and new
LNG capacity from the Prelude floating LNG facility and Elba LNG,
partly offset by divestments.
Compared with the full year 2018, cash flow from operating
activities excluding working capital movements decreased mainly due
to lower cash inflows related to commodity derivatives as well as
lower cash earnings.
|
UPSTREAM |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
%² |
|
2019¹ |
2018 |
% |
(787 |
) |
1,722 |
|
1,601 |
|
-149 |
Segment earnings |
4,195 |
|
6,798 |
|
-38 |
(1,564 |
) |
815 |
|
(280 |
) |
|
Of which: Identified items (Reference A) |
(549 |
) |
23 |
|
|
778 |
|
907 |
|
1,881 |
|
-59 |
Earnings excluding identified items |
4,744 |
|
6,775 |
|
-30 |
4,185 |
|
4,448 |
|
6,869 |
|
-39 |
Cash
flow from operating activities |
19,528 |
|
22,661 |
|
-14 |
4,998 |
|
4,722 |
|
5,149 |
|
-3 |
Cash
flow from operating activities excluding working capital movements
(Reference I) |
20,488 |
|
21,917 |
|
-7 |
2,795 |
|
2,639 |
|
3,636 |
|
|
Cash
capital expenditure (Reference C)³ |
10,277 |
|
12,582 |
|
|
3,186 |
|
2,452 |
|
3,986 |
|
|
Capital investment (Reference C)⁴ |
11,075 |
|
12,785 |
|
|
1,773 |
|
1,705 |
|
1,672 |
|
+6 |
Liquids production available for sale
(thousand b/d) |
1,720 |
|
1,589 |
|
+8 |
6,027 |
|
5,224 |
|
6,593 |
|
-9 |
Natural gas production available for sale (million scf/d) |
5,935 |
|
6,494 |
|
-9 |
2,813 |
|
2,606 |
|
2,809 |
|
— |
Total
production available for sale (thousand boe/d) |
2,743 |
|
2,709 |
|
+1 |
1. IFRS 16 was adopted with effect from
January 1, 2019. See Note 8 “Adoption of IFRS 16 Leases”.
2. Q4 on Q4 change. 3. With
effect from 2019, Cash capital expenditure has been introduced as a
capital spent performance measure (see Reference C).
4. With effect from 2019, the definition has been
amended (see Reference C). Comparative information has been
revised.
Fourth quarter identified items primarily reflected a charge of
$1,647 million related to impairments, mainly in unconventional gas
assets in the US.
Compared with the fourth quarter 2018, Upstream earnings
excluding identified items included negative movements in deferred
tax positions, higher provisions related to restoration and
decommissioning obligations, lower realised oil and gas prices, as
well as higher well write-offs, mainly in Albania. These were
partly offset by higher sales volumes associated with the timing of
liftings.
Compared with the fourth quarter 2018, total production remained
largely unchanged, mainly as field ramp-ups in the Permian, Gulf of
Mexico and Santos basin were offset by the impact of divestments
and field decline. Excluding portfolio impacts, production was 3%
higher than in the same quarter a year ago.
Compared with the fourth quarter 2018, cash flow from operating
activities excluding working capital movements mainly reflected
lower cash earnings, largely offset by lower tax
payments.
Full year identified items reflected a charge of $1,930 million
related to impairments, primarily in unconventional gas assets in
the US and a drilling rig joint venture, partly offset by a gain of
$1,609 million on sale of assets, mainly in Denmark and the US Gulf
of Mexico.
Compared with the full year 2018, Upstream earnings excluding
identified items reflected lower realised oil and gas prices,
higher depreciation as well as higher well write-offs, partly
offset by higher sales volumes associated with the timing of
liftings.
Compared with the full year 2018, total production increased by
1%, mainly due to field ramp-ups in North America and Brazil as
well as the transfer of the Salym asset from the Integrated Gas
segment, partly offset by field decline and divestments.
Compared with the full year 2018, cash flow from operating
activities excluding working capital movements reflected mainly
lower cash earnings, partly offset by lower tax payments.
|
DOWNSTREAM |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
%² |
|
2019¹ |
2018 |
% |
1,037 |
|
2,574 |
|
2,918 |
|
-64 |
Segment earnings³ |
6,277 |
|
7,601 |
|
-17 |
(331 |
) |
421 |
|
787 |
|
|
Of which: Identified items (Reference A) |
(404 |
) |
34 |
|
|
1,368 |
|
2,153 |
|
2,131 |
|
-36 |
Earnings excluding identified
items³ |
6,680 |
|
7,567 |
|
-12 |
|
|
|
|
Of which: |
|
|
|
1,433 |
|
1,929 |
|
1,835 |
|
-22 |
Oil Products |
5,939 |
|
5,491 |
|
+8 |
462 |
|
448 |
|
834 |
|
-45 |
Refining & Trading |
1,234 |
|
1,513 |
|
-18 |
971 |
|
1,481 |
|
1,001 |
|
-3 |
Marketing |
4,705 |
|
3,978 |
|
+18 |
(65 |
) |
224 |
|
296 |
|
-122 |
Chemicals |
741 |
|
2,076 |
|
-64 |
2,304 |
|
3,205 |
|
8,794 |
|
-74 |
Cash
flow from operating activities |
7,296 |
|
13,928 |
|
-48 |
3,294 |
|
3,169 |
|
1,224 |
|
+169 |
Cash
flow from operating activities excluding working capital movements
(Reference I) |
11,916 |
|
10,764 |
|
+11 |
2,624 |
|
2,454 |
|
2,418 |
|
|
Cash
capital expenditure (Reference C)⁴ |
8,926 |
|
7,408 |
|
|
3,071 |
|
2,870 |
|
2,429 |
|
|
Capital investment (Reference C)⁵ |
10,542 |
|
7,565 |
|
|
2,438 |
|
2,522 |
|
2,723 |
|
-10 |
Refinery processing intake (thousand b/d) |
2,564 |
|
2,648 |
|
-3 |
6,435 |
|
6,731 |
|
6,906 |
|
-7 |
Oil
Products sales volumes (thousand b/d) |
6,561 |
|
6,783 |
|
-3 |
3,454 |
|
3,845 |
|
4,110 |
|
-16 |
Chemicals sales volumes (thousand tonnes) |
15,223 |
|
17,644 |
|
-14 |
1. IFRS 16 was adopted with effect from
January 1, 2019. See Note 8 “Adoption of IFRS 16
Leases”.2. Q4 on Q4 change. 3.
Earnings are presented on a CCS basis (See Note
2).4. With effect from 2019, Cash capital
expenditure has been introduced as a capital spent performance
measure (see Reference C). 5. With effect from
2019, the definition has been amended (see Reference C).
Comparative information has been revised.
Fourth quarter identified items primarily reflected a loss of
$217 million related to the fair value accounting of commodity
derivatives as well as a charge of $85 million related mainly to
impairments in Singapore and the US.
Compared with the fourth quarter 2018, Downstream earnings
excluding identified items reflected weaker realised refining,
chemicals and marketing margins, partly offset by lower operating
expenses and tax charges.
Compared with the fourth quarter 2018, cash flow from operating
activities excluding working capital movements benefited mainly
from higher cash earnings and lower tax payments.
Oil Products
- Refining & Trading earnings excluding
identified items reflected lower realised refining margins and
lower contributions from crude trading and optimisation. This is
partly offset by stronger contribution from oil products trading
and optimisation, mainly fuel oil, as well as lower operating
expenses and depreciation, compared with the fourth quarter
2018.
Refinery availability was 93% compared with 94% in the fourth
quarter 2018, mainly due to higher planned downtime.
- Marketing earnings excluding identified items
reflected lower realised retail margins, partly offset by lower
operating expenses, compared with the fourth quarter 2018.
Compared with the fourth quarter 2018, Oil Products sales
volumes were 7% lower, mainly due to lower refining and trading
volumes.
Chemicals
- Chemicals earnings excluding identified items
reflected lower realised chemicals margins as well as lower
volumes.
Chemicals manufacturing plant availability decreased to 85% from
93% in the fourth quarter 2018, mainly reflecting higher
maintenance activities.
Full year identified items primarily reflected a charge of $341
million related to impairments as well as a charge of $237 million
related to legal provisions in Chemicals, partly offset by a gain
of $319 million on the sale of assets.
Compared with the full year 2018, Downstream earnings excluding
identified items reflected lower realised base chemicals,
intermediates and refining margins, partly offset by stronger
contributions from oil products trading and optimisation, mainly
fuel oil, as well as lower operating expenses.
Compared with the full year 2018, cash flow from operating
activities excluding working capital movements mainly reflected
lower cash earnings, partly offset by lower tax charges.
Oil Products
- Refining & Trading earnings excluding
identified items reflected lower realised refining margins, partly
offset by stronger contributions from oil products trading and
optimisation, mainly fuel oil, as well as lower operating expenses,
compared with the full year 2018.
Refinery availability was 91%, at a similar level as in the full
year 2018.
- Marketing earnings excluding identified items
reflected lower operating expenses as well as higher realised
retail and lubricants margins, compared with the full year 2018.
Compared with the full year 2018, Oil Products sales volumes
decreased by 3%, mainly reflecting lower refining and trading
volumes.
Chemicals
- Chemicals earnings excluding identified items
reflected lower realised base chemicals and intermediate margins,
partly offset by lower operating expenses, compared with the full
year 2018.
Chemicals manufacturing plant availability decreased to 89% from
93% in the full year 2018, mainly reflecting higher maintenance
activities.
|
CORPORATE |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
|
2019¹ |
2018 |
(1,151 |
) |
(663 |
) |
(644 |
) |
Segment earnings |
(3,273 |
) |
(1,479 |
) |
(76 |
) |
154 |
|
(77 |
) |
Of which: Identified items (Reference A) |
109 |
|
327 |
|
(1,075 |
) |
(817 |
) |
(567 |
) |
Earnings excluding identified items |
(3,383 |
) |
(1,806 |
) |
321 |
|
375 |
|
572 |
|
Cash flow from operating activities |
44 |
|
1,879 |
|
(9 |
) |
(80 |
) |
(50 |
) |
Cash flow from operating activities excluding working capital
movements (Reference I) |
(274 |
) |
681 |
|
1. IFRS 16 was adopted with effect from
January 1, 2019. See Note 2 “Segment information”.
Fourth quarter identified items primarily reflected a tax charge
of $74 million related to the impact of the strengthening Brazilian
real on financing positions.
Compared with the fourth quarter 2018, Corporate earnings
excluding identified items reflected lower tax credits as well as
adverse currency exchange rate effects. Earnings also included a
negative impact of $161 million related to the implementation of
IFRS 16.
Full year identified items mainly reflected a gain of $55
million related to the impact of the weakening Brazilian real on
financing positions and a gain of $51 million on the sale of
assets.
Compared with the full year 2018, Corporate earnings excluding
identified items reflected lower tax credits and higher net
interest expense. Earnings also included a negative impact of $707
million related to the implementation of IFRS 16.
PRELIMINARY RESERVES UPDATE
When final volumes are reported in the 2019 Annual Report and
Form 20-F, Shell expects that SEC proved oil and gas reserves
additions before taking into account production will be
approximately 0.9 billion boe, and that 2019 production will be
approximately 1.4 billion boe. As a result, total proved reserves
on an SEC basis are expected to be approximately 11.1 billion boe.
Acquisitions and divestments of 2019 reserves are expected to
account for a net reduction of approximately 0.2 billion boe.
The proved Reserves Replacement Ratio on an SEC basis is
expected to be 65% for the year and 48% for the 3-year average.
Excluding the impact of acquisitions and divestments, the proved
Reserves Replacement Ratio is expected to be 76% for the year and
90% for the 3-year average.
Further information will be provided in the 2019 Annual Report
and 2019 Form 20-F, which are expected to be filed in March
2020.
OUTLOOK FOR THE FIRST QUARTER 2020
Integrated Gas production is expected to be 950 - 980 thousand
boe/d. LNG liquefaction volumes are expected to be 9.0 - 9.5
million tonnes.
Upstream production is expected to be 2,625 - 2,775 thousand
boe/d.
Refinery availability is expected to be 90% - 94%.
Oil Products sales volumes are expected to be 6,400 - 7,000
thousand b/d.
Chemicals manufacturing plant availability is expected to be 91%
- 95%.
Corporate segment earnings excluding identified items are
expected to be a net charge of $800 - 875 million in the first
quarter 2020 and a net charge of $3,200 – 3,500 million for the
full year 2020. This excludes the impact of currency exchange rate
effects.
As of the first quarter 2020, the Egypt offshore assets will be
transferred from the Upstream segment to the Integrated Gas
segment, and Oil Sands will be transferred from the Upstream
segment to the Refining and Trading sub-segment. The outlook
numbers incorporate these changes.
Cash capital expenditure for 2020 is expected to be at the lower
end of the $24 - 29 billion range.
Divestments are expected to amount to more than $10 billion over
the 2019 - 2020 period.
FORTHCOMING EVENTS
The LNG Outlook will be held on February 20, 2020 in London.
The Annual General Meeting is scheduled to be held on May 19,
2020.
First quarter 2020 results and dividends are scheduled to be
announced on April 30, 2020. Second quarter 2020 results and
dividends are scheduled to be announced on July 30, 2020. Third
quarter 2020 results and dividends are scheduled to be announced on
October 29, 2020.
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
CONSOLIDATED STATEMENT
OF INCOME |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
|
2019 |
2018 |
84,006 |
|
86,592 |
|
102,228 |
|
Revenue² |
344,877 |
|
388,379 |
|
719 |
|
769 |
|
1,351 |
|
Share of profit of joint ventures and
associates |
3,604 |
|
4,106 |
|
340 |
|
2,180 |
|
1,047 |
|
Interest and other income |
3,625 |
|
4,071 |
|
85,066 |
|
89,541 |
|
104,626 |
|
Total revenue and other income |
352,107 |
|
396,556 |
|
60,570 |
|
63,900 |
|
78,680 |
|
Purchases |
252,983 |
|
294,399 |
|
7,247 |
|
6,002 |
|
6,803 |
|
Production and manufacturing expenses |
26,438 |
|
26,970 |
|
2,831 |
|
2,429 |
|
3,162 |
|
Selling, distribution and administrative
expenses |
10,493 |
|
11,360 |
|
306 |
|
219 |
|
314 |
|
Research and development |
962 |
|
986 |
|
965 |
|
644 |
|
545 |
|
Exploration |
2,354 |
|
1,340 |
|
9,238 |
|
6,815 |
|
6,244 |
|
Depreciation, depletion and
amortisation |
28,701 |
|
22,135 |
|
1,118 |
|
1,161 |
|
971 |
|
Interest expense |
4,690 |
|
3,745 |
|
82,275 |
|
81,169 |
|
96,719 |
|
Total expenditure |
326,621 |
|
360,935 |
|
2,791 |
|
8,372 |
|
7,907 |
|
Income/(loss) before taxation |
25,486 |
|
35,621 |
|
1,702 |
|
2,348 |
|
2,261 |
|
Taxation
charge/(credit) |
9,053 |
|
11,715 |
|
1,089 |
|
6,024 |
|
5,646 |
|
Income/(loss) for the period² |
16,433 |
|
23,906 |
|
124 |
|
145 |
|
56 |
|
Income/(loss) attributable to
non-controlling interest |
590 |
|
554 |
|
965 |
|
5,879 |
|
5,590 |
|
Income/(loss) attributable to Royal Dutch Shell plc
shareholders |
15,843 |
|
23,352 |
|
0.12 |
|
0.73 |
|
0.68 |
|
Basic earnings per share ($)³ |
1.97 |
|
2.82 |
|
0.12 |
|
0.73 |
|
0.67 |
|
Diluted
earnings per share ($)³ |
1.95 |
|
2.80 |
|
1. See Note 8 “Adoption of IFRS 16
Leases”.2. See Note 2 “Segment
information”.3. See Note 3 “Earnings per
share”.
|
CONSOLIDATED STATEMENT
OF COMPREHENSIVE INCOME |
Quarters |
$
million |
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2018 |
1,089 |
|
6,024 |
|
5,646 |
|
Income/(loss) for the period |
16,433 |
|
23,906 |
|
|
|
|
Other comprehensive income/(loss) net
of tax: |
|
|
|
|
|
Items that may be reclassified to income in later periods: |
|
|
1,467 |
|
(1,514 |
) |
(354 |
) |
- Currency translation differences |
344 |
|
(3,172 |
) |
(2 |
) |
2 |
|
— |
|
- Debt instruments remeasurements |
29 |
|
(15 |
) |
(135 |
) |
213 |
|
1,499 |
|
- Cash flow and net investment hedging gains / (losses) |
(267 |
) |
730 |
|
(45 |
) |
5 |
|
(61 |
) |
- Deferred cost of hedging |
66 |
|
(209 |
) |
24 |
|
(45 |
) |
17 |
|
- Share of other comprehensive income/(loss) of joint
ventures and associates |
(76 |
) |
(10 |
) |
1,310 |
|
(1,339 |
) |
1,101 |
|
Total |
95 |
|
(2,676 |
) |
|
|
|
Items that are not reclassified to income in later periods: |
|
|
2,553 |
|
(2,010 |
) |
426 |
|
- Retirement benefits remeasurements |
(2,102 |
) |
3,588 |
|
(5 |
) |
(53 |
) |
50 |
|
- Equity instruments remeasurements |
(28 |
) |
(153 |
) |
6 |
|
1 |
|
194 |
|
- Share of other comprehensive income/(loss) of joint
ventures and associates |
1 |
|
193 |
|
2,554 |
|
(2,062 |
) |
670 |
|
Total |
(2,129 |
) |
3,628 |
|
3,863 |
|
(3,401 |
) |
1,771 |
|
Other
comprehensive income/(loss) for the period |
(2,033 |
) |
952 |
|
4,952 |
|
2,624 |
|
7,417 |
|
Comprehensive income/(loss) for the
period |
14,399 |
|
24,858 |
|
143 |
|
124 |
|
34 |
|
Comprehensive income/(loss) attributable to non-controlling
interest |
625 |
|
383 |
|
4,809 |
|
2,499 |
|
7,383 |
|
Comprehensive income/(loss) attributable to Royal Dutch Shell plc
shareholders |
13,774 |
|
24,475 |
|
|
CONDENSED CONSOLIDATED
BALANCE SHEET |
$ million |
|
|
|
December 31, 2019¹ |
December 31, 2018 |
Assets |
|
|
Non-current assets |
|
|
Intangible assets |
23,486 |
|
23,586 |
|
Property, plant and equipment |
238,349 |
|
223,175 |
|
Joint ventures and associates |
22,808 |
|
25,329 |
|
Investments in securities |
2,989 |
|
3,074 |
|
Deferred tax |
10,524 |
|
12,097 |
|
Retirement benefits |
4,717 |
|
6,051 |
|
Trade and other receivables |
8,085 |
|
7,826 |
|
Derivative financial instruments² |
689 |
|
574 |
|
|
311,648 |
|
301,712 |
|
Current assets |
|
|
Inventories |
24,071 |
|
21,117 |
|
Trade and other receivables |
43,414 |
|
42,431 |
|
Derivative financial instruments² |
7,149 |
|
7,193 |
|
Cash and cash equivalents |
18,054 |
|
26,741 |
|
|
92,689 |
|
97,482 |
|
Total assets |
404,336 |
|
399,194 |
|
Liabilities |
|
|
Non-current liabilities |
|
|
Debt |
81,360 |
|
66,690 |
|
Trade and other payables |
2,342 |
|
2,735 |
|
Derivative financial instruments² |
1,209 |
|
1,399 |
|
Deferred tax |
14,522 |
|
14,837 |
|
Retirement benefits |
13,017 |
|
11,653 |
|
Decommissioning and other provisions |
21,799 |
|
21,533 |
|
|
134,249 |
|
118,847 |
|
Current liabilities |
|
|
Debt |
15,064 |
|
10,134 |
|
Trade and other payables |
49,208 |
|
48,888 |
|
Derivative financial instruments² |
5,429 |
|
7,184 |
|
Taxes payable |
6,693 |
|
7,497 |
|
Retirement benefits |
419 |
|
451 |
|
Decommissioning and other provisions |
2,811 |
|
3,659 |
|
|
79,625 |
|
77,813 |
|
Total liabilities |
213,873 |
|
196,660 |
|
Equity attributable to Royal Dutch Shell plc shareholders |
186,476 |
|
198,646 |
|
Non-controlling interest |
3,987 |
|
3,888 |
|
Total equity |
190,463 |
|
202,534 |
|
Total liabilities and equity |
404,336 |
|
399,194 |
|
1. See Note 8 “Adoption of IFRS
Leases”.2. See Note 6 “Derivative financial
instruments and debt excluding finance lease liabilities”.
|
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY |
|
Equity attributable to Royal Dutch Shell plc
shareholders |
|
|
$ million |
Share capital¹ |
Shares held in trust |
Other reserves² |
Retained earnings |
Total |
Non-controlling interest |
Total equity |
At January 1, 2019 (as previously published) |
685 |
|
(1,260 |
) |
16,615 |
|
182,606 |
|
198,646 |
|
3,888 |
|
202,534 |
|
Impact of IFRS 16³ |
— |
|
— |
|
— |
|
4 |
|
4 |
|
— |
|
4 |
|
At January 1, 2019 (as revised) |
685 |
|
(1,260 |
) |
16,615 |
|
182,610 |
|
198,650 |
|
3,888 |
|
202,538 |
|
Comprehensive income/(loss) for the period |
— |
|
— |
|
(2,069 |
) |
15,843 |
|
13,774 |
|
625 |
|
14,399 |
|
Transfer from other comprehensive income |
— |
|
— |
|
(74 |
) |
74 |
|
— |
|
— |
|
— |
|
Dividends |
— |
|
— |
|
— |
|
(15,199 |
) |
(15,199 |
) |
(537 |
) |
(15,735 |
) |
Repurchases of shares |
(28 |
) |
— |
|
28 |
|
(10,286 |
) |
(10,286 |
) |
— |
|
(10,286 |
) |
Share-based compensation |
— |
|
197 |
|
(49 |
) |
(613 |
) |
(465 |
) |
— |
|
(465 |
) |
Other changes in non-controlling interest |
— |
|
— |
|
— |
|
2 |
|
2 |
|
11 |
|
12 |
|
At December 31, 2019 |
657 |
|
(1,063 |
) |
14,451 |
|
172,431 |
|
186,476 |
|
3,987 |
|
190,463 |
|
At January 1, 2018 |
696 |
|
(917 |
) |
16,794 |
|
177,733 |
|
194,306 |
|
3,456 |
|
197,762 |
|
Comprehensive income/(loss) for the period |
— |
|
— |
|
1,123 |
|
23,352 |
|
24,475 |
|
383 |
|
24,858 |
|
Transfer from other comprehensive income |
— |
|
— |
|
(971 |
) |
971 |
|
— |
|
— |
|
— |
|
Dividends |
— |
|
— |
|
— |
|
(15,675 |
) |
(15,675 |
) |
(586 |
) |
(16,261 |
) |
Repurchases of shares |
(11 |
) |
— |
|
11 |
|
(4,519 |
) |
(4,519 |
) |
— |
|
(4,519 |
) |
Share-based compensation |
— |
|
(343 |
) |
(342 |
) |
693 |
|
8 |
|
— |
|
8 |
|
Other changes in non-controlling interest |
— |
|
— |
|
— |
|
51 |
|
51 |
|
635 |
|
686 |
|
At December 31, 2018 |
685 |
|
(1,260 |
) |
16,615 |
|
182,606 |
|
198,646 |
|
3,888 |
|
202,534 |
|
1. See Note 4 “Share
capital”.2. See Note 5 “Other
reserves”.3. See Note 8 “Adoption of IFRS 16
Leases”.
|
CONSOLIDATED STATEMENT
OF CASH FLOWS |
Quarters |
$
million |
Full year |
Q4 2019¹ |
Q3 2019¹ |
Q4 2018 |
|
2019¹ |
2018 |
2,791 |
|
8,372 |
|
7,907 |
|
Income before
taxation for the period² |
25,486 |
|
35,621 |
|
|
|
|
Adjustment
for: |
|
|
859 |
|
921 |
|
717 |
|
- Interest
expense (net) |
3,705 |
|
2,878 |
|
9,238 |
|
6,815 |
|
6,244 |
|
- Depreciation,
depletion and amortisation |
28,701 |
|
22,135 |
|
496 |
|
402 |
|
145 |
|
- Exploration
well write-offs |
1,218 |
|
449 |
|
(36 |
) |
(2,039 |
) |
(927 |
) |
- Net (gains)/losses on sale and
revaluation of non-current assets and businesses |
(2,519 |
) |
(3,265 |
) |
(719 |
) |
(769 |
) |
(1,351 |
) |
- Share of
(profit)/loss of joint ventures and associates |
(3,604 |
) |
(4,106 |
) |
1,318 |
|
859 |
|
1,535 |
|
- Dividends
received from joint ventures and associates |
4,139 |
|
4,903 |
|
(546 |
) |
813 |
|
7,694 |
|
-
(Increase)/decrease in inventories |
(2,635 |
) |
2,823 |
|
(2,448 |
) |
2,644 |
|
8,421 |
|
-
(Increase)/decrease in current receivables |
(921 |
) |
1,955 |
|
961 |
|
(3,289 |
) |
(7,014 |
) |
-
Increase/(decrease) in current payables |
(1,223 |
) |
(1,336 |
) |
254 |
|
(149 |
) |
1,626 |
|
- Retirement
benefits² |
(1,484 |
) |
799 |
|
217 |
|
(634 |
) |
158 |
|
- Decommissioning
and other provisions² |
(365 |
) |
390 |
|
(141 |
) |
(250 |
) |
(781 |
) |
- Other² |
(686 |
) |
(1,754 |
) |
(82 |
) |
67 |
|
545 |
|
- Derivative
financial instruments |
(28 |
) |
1,264 |
|
(1,894 |
) |
(1,511 |
) |
(2,898 |
) |
Tax paid |
(7,605 |
) |
(9,671 |
) |
10,267 |
|
12,252 |
|
22,021 |
|
Cash flow from operating activities |
42,179 |
|
53,085 |
|
(6,707 |
) |
(5,992 |
) |
(7,147 |
) |
Capital
expenditure |
(22,971 |
) |
(23,011 |
) |
(112 |
) |
(30 |
) |
(208 |
) |
Investments in
joint ventures and associates |
(743 |
) |
(880 |
) |
(65 |
) |
(76 |
) |
(75 |
) |
Investments in
equity securities² |
(205 |
) |
(187 |
) |
1,049 |
|
2,932 |
|
1,966 |
|
Proceeds from
sale of property, plant and equipment and businesses |
4,803 |
|
4,366 |
|
1,032 |
|
922 |
|
475 |
|
Proceeds from
sale of joint ventures and associates |
2,599 |
|
1,594 |
|
55 |
|
126 |
|
97 |
|
Proceeds from
sale of equity securities² |
469 |
|
4,505 |
|
224 |
|
229 |
|
221 |
|
Interest
received |
911 |
|
823 |
|
918 |
|
732 |
|
74 |
|
Other investing
cash inflows² |
2,921 |
|
1,373 |
|
(1,255 |
) |
(973 |
) |
(715 |
) |
Other investing
cash outflows² |
(3,563 |
) |
(2,242 |
) |
(4,862 |
) |
(2,130 |
) |
(5,312 |
) |
Cash flow from investing activities |
(15,779 |
) |
(13,659 |
) |
(406 |
) |
44 |
|
20 |
|
Net
increase/(decrease) in debt with maturity period within three
months³ |
(308 |
) |
(396 |
) |
|
|
|
Other debt: |
|
|
8,758 |
|
2,107 |
|
3,189 |
|
- New
borrowings³ |
11,185 |
|
3,977 |
|
(2,731 |
) |
(7,180 |
) |
(4,680 |
) |
- Repayments |
(14,292 |
) |
(11,912 |
) |
(1,232 |
) |
(1,088 |
) |
(926 |
) |
Interest
paid |
(4,649 |
) |
(3,574 |
) |
(124 |
) |
76 |
|
— |
|
Derivative
financial instruments² |
(48 |
) |
— |
|
2 |
|
— |
|
5 |
|
Change in
non-controlling interest |
— |
|
678 |
|
|
|
|
Cash dividends
paid to: |
|
|
(3,725 |
) |
(3,773 |
) |
(3,869 |
) |
- Royal Dutch
Shell plc shareholders |
(15,198 |
) |
(15,675 |
) |
(133 |
) |
(133 |
) |
(98 |
) |
- Non-controlling
interest |
(537 |
) |
(584 |
) |
(2,848 |
) |
(2,944 |
) |
(2,533 |
) |
Repurchases of
shares |
(10,188 |
) |
(3,947 |
) |
(618 |
) |
(94 |
) |
(27 |
) |
Shares held in
trust: net sales/(purchases) and dividends received |
(1,174 |
) |
(1,115 |
) |
(3,057 |
) |
(12,985 |
) |
(8,919 |
) |
Cash flow from financing activities |
(35,211 |
) |
(32,548 |
) |
289 |
|
(190 |
) |
(161 |
) |
Currency
translation differences relating to cash and cash equivalents |
124 |
|
(449 |
) |
2,637 |
|
(3,054 |
) |
7,629 |
|
Increase/(decrease) in cash and cash equivalents |
(8,687 |
) |
6,429 |
|
15,417 |
|
18,470 |
|
19,112 |
|
Cash and cash equivalents at beginning of period |
26,741 |
|
20,312 |
|
18,054 |
|
15,417 |
|
26,741 |
|
Cash and cash equivalents at end of period |
18,054 |
|
26,741 |
|
1. See Note 8 “Adoption of IFRS 16
Leases”.2. See Note 7 “Change in presentation of
Consolidated Statement of Cash Flows”.3. Q3 2019
has been revised to amend for commercial paper with maturity dates
greater than 3 months, which was previously reported in "Net
(decrease)/increase in debt with maturity period within three
months". The amount previously reported as “Net increase /
(decrease) in debt with maturity period within three months” was
$2,009 million. The amount previously reported as "New borrowings"
was $142 million.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of
Royal Dutch Shell plc (“the Company”) and its subsidiaries
(collectively referred to as “Shell”) have been prepared on the
basis of the same accounting principles as those used in the Annual
Report and Form 20-F for the year ended December 31, 2018
(pages 167 to 214) as filed with the US Securities and Exchange
Commission, except for the adoption of IFRS 16 Leases on January 1,
2019, and should be read in conjunction with that filing.
Under IFRS 16, all lease contracts, with limited exceptions, are
recognised in financial statements by way of right-of-use assets
and corresponding lease liabilities. Shell applied the modified
retrospective transition method without restating comparative
information. Further information in respect of the implementation
of IFRS 16 is included in Note 8.
In March 2019, the IFRS Interpretations Committee (IFRIC) made
its agenda decision regarding “Physical settlement of contracts to
buy or sell a non-financial item (IFRS 9)”. The impact of this
decision is under review.
The financial information presented in the unaudited Condensed
Consolidated Financial 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, 2018 were published in Shell’s Annual Report and
Form 20-F and a copy was delivered to the Registrar of Companies
for England and Wales. 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.
2. Segment information
Segment earnings are presented on a current cost of supplies
basis (CCS earnings), which is the earnings measure used by the
Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance. On this basis, the
purchase price of volumes sold during the period is based on the
current cost of supplies during the same period after making
allowance for the tax effect. CCS earnings therefore exclude the
effect of changes in the oil price on inventory carrying amounts.
Sales between segments are based on prices generally equivalent to
commercially available prices.
With the adoption of IFRS 16, the interest expense on leases
formerly classified as operating leases is reported under the
Corporate segment, while depreciation related to the respective
right-of-use assets is reported in the segments making use of the
assets. This treatment is consistent with the existing treatment
for leases formerly classified as finance leases.
|
INFORMATION BY SEGMENT |
Quarters |
$
million |
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2018 |
|
|
|
Third-party revenue |
|
|
11,006 |
|
9,735 |
|
11,902 |
|
Integrated Gas |
41,323 |
|
43,764 |
|
2,728 |
|
2,347 |
|
3,205 |
|
Upstream |
9,965 |
|
9,892 |
|
70,263 |
|
74,499 |
|
87,117 |
|
Downstream |
293,545 |
|
334,680 |
|
9 |
|
12 |
|
4 |
|
Corporate |
45 |
|
43 |
|
84,006 |
|
86,592 |
|
102,228 |
|
Total
third-party revenue¹ |
344,877 |
|
388,379 |
|
|
|
|
Inter-segment revenue² |
|
|
1,117 |
|
1,025 |
|
1,326 |
|
Integrated Gas |
4,279 |
|
5,031 |
|
9,609 |
|
8,144 |
|
8,917 |
|
Upstream |
36,448 |
|
37,841 |
|
293 |
|
267 |
|
155 |
|
Downstream |
1,132 |
|
917 |
|
— |
|
— |
|
— |
|
Corporate |
— |
|
— |
|
|
|
|
CCS earnings |
|
|
1,897 |
|
2,597 |
|
3,579 |
|
Integrated Gas |
8,628 |
|
11,444 |
|
(787 |
) |
1,722 |
|
1,601 |
|
Upstream |
4,195 |
|
6,798 |
|
1,037 |
|
2,574 |
|
2,918 |
|
Downstream |
6,277 |
|
7,601 |
|
(1,151 |
) |
(663 |
) |
(644 |
) |
Corporate |
(3,273 |
) |
(1,479 |
) |
996 |
|
6,230 |
|
7,454 |
|
Total |
15,827 |
|
24,364 |
|
1. Includes revenue from sources other
than from contracts with customers, which mainly comprises the
impact of fair value accounting of commodity derivatives. Fourth
quarter 2019 included income of $594 million (Q3 2019: $1,460
million income; full year 2019: $3,760 million income). 2.
Inter-segment revenue has been revised to amend for
transactions within certain segments that were previously reported
as inter-segment revenue and vice versa. Comparative information
has been revised. The amounts previously reported as inter-segment
revenue for Integrated Gas were Q4 2018: $1,252 million and full
year 2018 $4,853 million. The amounts previously reported as
inter-segment revenue for Downstream were Q4 2018: $1,078 million
and full year 2018: $5,358 million.
|
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS |
Quarters |
$
million |
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2018 |
965 |
|
5,879 |
|
5,590 |
|
Income/(loss) attributable to Royal Dutch
Shell plc shareholders |
15,843 |
|
23,352 |
|
124 |
|
145 |
|
56 |
|
Income/(loss) attributable to non-controlling interest |
590 |
|
554 |
|
1,089 |
|
6,024 |
|
5,646 |
|
Income/(loss) for the period |
16,433 |
|
23,906 |
|
|
|
|
Current cost of supplies adjustment: |
|
|
(69 |
) |
240 |
|
2,319 |
|
Purchases |
(784 |
) |
559 |
|
13 |
|
(56 |
) |
(551 |
) |
Taxation |
194 |
|
(116 |
) |
(37 |
) |
22 |
|
40 |
|
Share of
profit/(loss) of joint ventures and associates |
(16 |
) |
15 |
|
(93 |
) |
206 |
|
1,808 |
|
Current cost of supplies adjustment¹ |
(606 |
) |
458 |
|
996 |
|
6,230 |
|
7,454 |
|
CCS earnings |
15,827 |
|
24,364 |
|
|
|
|
of which: |
|
|
871 |
|
6,081 |
|
7,334 |
|
CCS earnings attributable to Royal Dutch
Shell plc shareholders |
15,270 |
|
23,833 |
|
125 |
|
149 |
|
120 |
|
CCS
earnings attributable to non-controlling interest |
557 |
|
531 |
|
1. The adjustment attributable to Royal
Dutch Shell plc shareholders is a negative $94 million in the
fourth quarter 2019 (Q3 2019: positive $202 million; Q4 2018:
positive $1,744 million; full year 2019: negative $573 million;
full year 2018: positive $481 million).
3. Earnings per share
|
EARNINGS PER
SHARE |
Quarters |
|
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2018 |
965 |
|
5,879 |
|
5,590 |
|
Income/(loss) attributable to Royal Dutch
Shell plc shareholders ($ million) |
15,843 |
|
23,352 |
|
|
|
|
Weighted average number of shares used as
the basis for determining: |
|
|
7,907.2 |
|
8,017.5 |
|
8,227.8 |
|
Basic earnings per share (million) |
8,058.3 |
|
8,282.8 |
|
7,962.5 |
|
8,067.6 |
|
8,289.4 |
|
Diluted earnings per share (million) |
8,112.5 |
|
8,348.7 |
|
4. Share capital
|
ISSUED AND FULLY PAID ORDINARY SHARES OF €0.07 EACH1 |
|
Number of shares |
Nominal value ($ million) |
|
A |
B |
A |
B |
Total |
At January 1, 2019 |
4,471,889,296 |
|
3,745,486,731 |
|
376 |
309 |
685 |
|
Repurchases of shares |
(320,101,779 |
) |
(16,079,624 |
) |
(27) |
(1) |
(28 |
) |
At December 31, 2019 |
4,151,787,517 |
|
3,729,407,107 |
|
350 |
308 |
658 |
|
At January 1, 2018 |
4,597,136,050 |
|
3,745,486,731 |
|
387 |
309 |
696 |
|
Repurchases of shares |
(125,246,754 |
) |
— |
|
(11) |
— |
(11 |
) |
At December 31, 2018 |
4,471,889,296 |
|
3,745,486,731 |
|
376 |
309 |
685 |
|
1. Share capital at December 31,
2019 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 21,
2019, 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 €190 million
(representing 2,720 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 21, 2020,
and the end of the Annual General Meeting to be held in 2020,
unless previously renewed, revoked or varied by Royal Dutch Shell
plc in a general meeting.
5. Other reserves
|
OTHER RESERVES |
$ million |
Merger reserve |
Share premium reserve |
Capital redemption reserve |
Share plan reserve |
Accumulated other comprehensive income |
Total |
At January 1, 2019 |
37,298 |
|
154 |
|
95 |
|
1,098 |
|
(22,030 |
) |
16,615 |
|
Other comprehensive income/(loss)
attributable to Royal Dutch Shell plc shareholders |
— |
|
— |
|
— |
|
— |
|
(2,069 |
) |
(2,069 |
) |
Transfer from other comprehensive
income |
— |
|
— |
|
— |
|
— |
|
(74 |
) |
(74 |
) |
Repurchases of shares |
— |
|
— |
|
28 |
|
— |
|
— |
|
28 |
|
Share-based compensation |
— |
|
— |
|
— |
|
(49 |
) |
— |
|
(49 |
) |
At December 31, 2019 |
37,298 |
|
154 |
|
123 |
|
1,049 |
|
(24,173 |
) |
14,451 |
|
At January 1, 2018 |
37,298 |
|
154 |
|
84 |
|
1,440 |
|
(22,182 |
) |
16,794 |
|
Other comprehensive income/(loss)
attributable to Royal Dutch Shell plc shareholders |
— |
|
— |
|
— |
|
— |
|
1,123 |
|
1,123 |
|
Transfer from other comprehensive
income |
— |
|
— |
|
— |
|
— |
|
(971 |
) |
(971 |
) |
Repurchases of shares |
— |
|
— |
|
11 |
|
— |
|
— |
|
11 |
|
Share-based compensation |
— |
|
— |
|
— |
|
(342 |
) |
— |
|
(342 |
) |
At December 31, 2018 |
37,298 |
|
154 |
|
95 |
|
1,098 |
|
(22,030 |
) |
16,615 |
|
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, 2018, presented in the Annual Report
and Form 20-F for that year, Shell is exposed to the risks of
changes in fair value of its financial assets and liabilities. The
fair values of the financial assets and liabilities are defined as
the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Methods and assumptions used
to estimate the fair values at December 31, 2019 are
consistent with those used in the year ended December 31,
2018, 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 |
$ million |
December 31, 2019 |
December 31, 2018 |
Carrying amount |
65,887 |
|
62,798 |
|
Fair
value¹ |
71,163 |
|
64,708 |
|
1. Mainly determined from the prices
quoted for these securities.
7. Change in presentation of Consolidated Statement
of Cash Flows
With effect from January 1, 2019, the starting point for
the Consolidated Statement of Cash Flows is ‘Income before
taxation’ (previously: Income). Furthermore, to improve
transparency, “Retirement benefits” and “Decommissioning and other
provisions” have been separately disclosed. The “Other” component
of cash flow from investing activities has been expanded to
distinguish between cash inflows and outflows. Prior period
comparatives for these line items have been revised to conform with
current year presentation. In addition, a new line item,
“Derivative financial instruments”, has been introduced to cash
flow from financing activities. Overall, the revisions do not have
an impact on cash flow from operating activities, cash flow from
investing activities or cash flow from financing activities, as
previously published.
8. Adoption of IFRS 16 Leases
IFRS 16 was adopted with effect from January 1, 2019. Under
the new standard, all lease contracts, with limited exceptions, are
recognised in the financial statements by way of right-of-use
assets and corresponding lease liabilities. Shell applied the
modified retrospective transition method, and consequently
comparative information is not restated. As a practical expedient,
no reassessment was performed of contracts that were previously
identified as leases, and contracts that were not previously
identified as containing a lease applying IAS 17 Leases and IFRIC 4
Determining whether an Arrangement contains a Lease. At
January 1, 2019, additional lease liabilities were recognised
for leases previously classified as operating leases applying IAS
17. These lease liabilities were measured at the present value of
the remaining lease payments, discounted using entity-specific
incremental borrowing rates at January 1, 2019. In general, a
corresponding right-of-use asset was recognised for an amount equal
to each lease liability, adjusted by the amount of any prepaid or
accrued lease payment relating to the specific lease contract, as
recognised on the balance sheet at December 31, 2018.
Provisions for onerous lease contracts at December 31, 2018
were adjusted to the respective right-of-use assets recognised at
January 1, 2019.
The reconciliation of differences between the operating lease
commitments disclosed under the prior standard and the additional
lease liabilities recognised on the balance sheet at
January 1, 2019 is as follows:
|
|
LEASE LIABILITIES
RECONCILIATION |
|
$
million |
Undiscounted future minimum lease payments under operating
leases at December 31, 2018 |
24,219 |
|
Impact of discounting1 |
(5,167 |
) |
Leases not yet commenced at January 1, 2019 |
(2,586 |
) |
Short-term leases2 |
(277 |
) |
Long-term leases expiring before December 31, 20192 |
(192 |
) |
Other reconciling items (net) |
40 |
|
Additional lease liability at January 1, 2019 |
16,037 |
|
Finance lease liability at December 31, 2018 |
14,026 |
|
Total lease liability at January 1, 2019 |
30,063 |
|
1. Under the modified retrospective
transition method, lease payments were discounted at
January 1, 2019 using an incremental borrowing rate
representing the rate of interest that the entity within Shell that
entered into the lease would have to pay to borrow over a similar
term, and with a similar security, the funds necessary to obtain an
asset of a similar value to the right-of-use asset in a similar
economic environment. The incremental borrowing rate applied to
each lease was determined taking into account the risk-free rate,
adjusted for factors such as the credit rating of the contracting
entity and the terms and conditions of the lease. The weighted
average incremental borrowing rate applied by Shell upon transition
was 7.2%. 2. Shell has applied the practical
expedient to classify leases for which the lease term ends within
12 months of the date of initial application of IFRS 16 as
short-term leases. Shell has also applied the recognition exemption
for short-term leases.
Compared with the previous accounting for operating leases under
IAS 17, the application of the new standard has a significant
impact on the classification of expenditures and cash flows. It
also impacts the timing of expenses recognised in the statement of
income.
With effect from 2019, expenses related to leases previously
classified as operating leases are presented under Depreciation,
depletion and amortisation and Interest expense (in 2018 these were
mainly reported in Purchases, Production and manufacturing
expenses, and Selling, distribution and administrative
expenses).
With effect from 2019, payments related to leases previously
classified as operating leases are presented under Cash flow from
financing activities (in 2018 these were reported in Cash flow from
operating activities and Cash flow from investing activities).
The adoption of the new standard had an accumulated impact of $4
million in equity following the recognition of lease liabilities of
$16,037 million and additional right-of-use assets of $15,558
million and reclassifications mainly related to pre-paid leases and
onerous contracts previously recognised. The detailed impact on the
balance sheet at January 1, 2019, is as follows:
|
CONDENSED CONSOLIDATED
BALANCE SHEET |
$ million |
|
|
|
|
December 31, 2018 |
IFRS 16 impact |
January 1, 2019 |
Assets |
|
|
|
Non-current assets |
|
|
|
Intangible assets |
23,586 |
|
|
23,586 |
|
Property, plant and equipment |
223,175 |
|
15,558 |
|
238,733 |
|
Joint ventures and associates |
25,329 |
|
|
25,329 |
|
Investments in securities |
3,074 |
|
|
3,074 |
|
Deferred tax |
12,097 |
|
|
12,097 |
|
Retirement benefits |
6,051 |
|
|
6,051 |
|
Trade and other receivables¹ |
7,826 |
|
(814 |
) |
7,012 |
|
Derivative financial instruments⁴ |
574 |
|
|
574 |
|
|
301,712 |
|
14,744 |
|
316,456 |
|
Current assets |
|
|
|
Inventories |
21,117 |
|
|
21,117 |
|
Trade and other receivables |
42,431 |
|
69 |
|
42,500 |
|
Derivative financial instruments⁴ |
7,193 |
|
|
7,193 |
|
Cash and cash equivalents |
26,741 |
|
|
26,741 |
|
|
97,482 |
|
69 |
|
97,551 |
|
Total assets |
399,194 |
|
14,813 |
|
414,007 |
|
Liabilities |
|
|
|
Non-current liabilities |
|
|
|
Debt |
66,690 |
|
13,125 |
|
79,815 |
|
Trade and other payables² |
2,735 |
|
(540 |
) |
2,195 |
|
Derivative financial instruments⁴ |
1,399 |
|
|
1,399 |
|
Deferred tax |
14,837 |
|
|
14,837 |
|
Retirement benefits |
11,653 |
|
|
11,653 |
|
Decommissioning and other provisions³ |
21,533 |
|
(347 |
) |
21,186 |
|
|
118,847 |
|
12,238 |
|
131,085 |
|
Current liabilities |
|
|
|
Debt |
10,134 |
|
2,912 |
|
13,046 |
|
Trade and other payables |
48,888 |
|
(23 |
) |
48,865 |
|
Derivative financial instruments⁴ |
7,184 |
|
|
7,184 |
|
Taxes payable |
7,497 |
|
|
7,497 |
|
Retirement benefits |
451 |
|
|
451 |
|
Decommissioning and other provisions³ |
3,659 |
|
(318 |
) |
3,341 |
|
|
77,813 |
|
2,571 |
|
80,384 |
|
Total liabilities |
196,660 |
|
14,809 |
|
211,469 |
|
Equity attributable to Royal Dutch Shell plc shareholders |
198,646 |
|
4 |
|
198,650 |
|
Non-controlling interest |
3,888 |
|
|
3,888 |
|
Total equity |
202,534 |
|
4 |
|
202,538 |
|
Total liabilities and equity |
399,194 |
|
14,813 |
|
414,007 |
|
1. Mainly in respect of pre-paid leases.
2. Mainly related to operating lease contracts
that were measured at fair value under IFRS 3 Business Combinations
following the acquisition of BG in 2016. 3.
Mainly in respect of onerous contracts.4. See
Note 6 “Derivative financial instruments and debt excluding lease
liabilities”.
ALTERNATIVE PERFORMANCE (NON-GAAP)
MEASURES
Impact of IFRS 16 Leases
IFRS 16 Leases primarily impacts the following key measures of
Shell’s financial performance: Segment earnings; Cash flow from
operating activities; Cash flow from operating activities excluding
working capital movements; Free cash flow; Capital investment and
Cash capital expenditure; Operating expenses; Gearing; and Return
on average capital employed.
As explained in Note 8 “Adoption of IFRS 16 Leases”, in
accordance with Shell’s use of the modified retrospective
transition method, comparative information for prior years is not
restated, and continues to be presented as reported under IAS
17.
Additional information is provided in this section of the report
to provide indicative impacts of Shell’s transition from IAS 17 to
IFRS 16. In addition to the IFRS 16 reported basis, impacted
Alternative Performance Measures are presented on an IAS 17 basis,
to enable like-for-like comparisons between 2019 and 2018. For
2019, information on an IAS17 basis represents estimates for the
purpose of transition.
- Identified items
Identified 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. These items, either individually or collectively, can cause
volatility to net income, in some cases driven by external factors,
which may hinder the comparative understanding of Shell’s financial
results from period to period. The impact of identified items on
Shell’s CCS earnings is shown as follows:
|
IDENTIFIED
ITEMS |
Quarters |
$
million |
Full year |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2018 |
|
|
|
Identified items before tax |
|
|
128 |
|
2,039 |
|
927 |
|
Divestment gains/(losses) |
2,611 |
|
3,283 |
|
(2,941 |
) |
(509 |
) |
(438 |
) |
Impairments |
(4,155 |
) |
(1,020 |
) |
616 |
|
47 |
|
1,639 |
|
Fair value accounting of commodity
derivatives and certain gas contracts |
602 |
|
1,145 |
|
(59 |
) |
6 |
|
(32 |
) |
Redundancy and restructuring |
(132 |
) |
(203 |
) |
(333 |
) |
— |
|
(167 |
) |
Other |
(770 |
) |
(116 |
) |
(2,589 |
) |
1,584 |
|
1,929 |
|
Total identified items before tax |
(1,844 |
) |
3,089 |
|
|
|
|
Tax impact |
|
|
(16 |
) |
(283 |
) |
(12 |
) |
Divestment gains/(losses) |
(441 |
) |
(219 |
) |
700 |
|
79 |
|
22 |
|
Impairments |
993 |
|
(92 |
) |
(90 |
) |
44 |
|
(472 |
) |
Fair value accounting of commodity
derivatives and certain gas contracts |
48 |
|
(282 |
) |
13 |
|
(4 |
) |
(4 |
) |
Redundancy and restructuring |
44 |
|
53 |
|
29 |
|
(106 |
) |
19 |
|
Impact of exchange rate movements on tax
balances |
(69 |
) |
(338 |
) |
(108 |
) |
— |
|
164 |
|
Other |
100 |
|
218 |
|
529 |
|
(271 |
) |
(283 |
) |
Total tax impact |
674 |
|
(660 |
) |
|
|
|
Identified items after tax |
|
|
111 |
|
1,756 |
|
915 |
|
Divestment gains/(losses) |
2,170 |
|
3,064 |
|
(2,240 |
) |
(430 |
) |
(416 |
) |
Impairments |
(3,162 |
) |
(1,112 |
) |
526 |
|
91 |
|
1,167 |
|
Fair value accounting of commodity
derivatives and certain gas contracts |
650 |
|
863 |
|
(46 |
) |
2 |
|
(36 |
) |
Redundancy and restructuring |
(89 |
) |
(150 |
) |
29 |
|
(106 |
) |
19 |
|
Impact of exchange rate movements on tax
balances |
(69 |
) |
(338 |
) |
(441 |
) |
— |
|
(3 |
) |
Other |
(670 |
) |
102 |
|
(2,060 |
) |
1,313 |
|
1,646 |
|
Impact on CCS earnings |
(1,170 |
) |
2,429 |
|
|
|
|
Of which: |
|
|
(89 |
) |
(77 |
) |
1,216 |
|
Integrated Gas |
(326 |
) |
2,045 |
|
(1,564 |
) |
815 |
|
(280 |
) |
Upstream |
(549 |
) |
23 |
|
(331 |
) |
421 |
|
787 |
|
Downstream |
(404 |
) |
34 |
|
(76 |
) |
154 |
|
(77 |
) |
Corporate |
109 |
|
327 |
|
— |
|
— |
|
— |
|
Impact on
CCS earnings attributable to non-controlling interest |
22 |
|
— |
|
(2,060 |
) |
1,313 |
|
1,646 |
|
Impact on CCS earnings attributable to shareholders |
(1,192 |
) |
2,429 |
|
The reconciliation from income attributable to RDS plc
shareholders to CCS earnings attributable to RDS plc shareholders
excluding identified items is shown on page 1.
The categories above represent the nature of the items
identified irrespective of whether the items relate to Shell
subsidiaries or joint ventures and associates. The after-tax impact
of identified items of joint ventures and associates is 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 G).
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 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 Shell’s management assesses should be excluded to
provide additional insight, such as the impact arising from changes
in tax legislation and certain provisions for onerous contracts or
litigation. Q4 2019 reflects a charge associated with an update of
an Australian deferred tax asset and 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.
Capital investment and Cash capital
expenditure
Capital investment is a measure used to make decisions about
allocating resources and assessing performance. It comprises
Capital expenditure, Investments in joint ventures and associates
and Investments in equity securities, exploration expense excluding
well write-offs, leases recognised in the period and other
adjustments.
The definition reflects two changes with effect from
January 1, 2019, for simplicity reasons. Firstly, “Investments
in equity securities” now includes investments under the Corporate
segment and is aligned with the line introduced in the Consolidated
Statement of Cash Flows from January 1, 2019. Secondly, the
adjustments previously made to bring the Capital investment measure
onto an accruals basis no longer apply. Comparative information has
been revised.
“Cash capital expenditure” is introduced with effect from
January 1, 2019, to monitor investing activities on a cash
basis, excluding items such as lease additions which do not
necessarily result in cash outflows in the period. The measure
comprises the following lines from the Consolidated Statement of
Cash flows: Capital expenditure, Investments in joint ventures and
associates and Investments in equity securities.
The reconciliation of “Capital expenditure” to “Cash capital
expenditure” and “Capital investment” is as follows. Information
for 2019 is also presented on an “IAS 17 basis” to enable
like-for-like performance comparisons with 2018.
|
Quarters |
$
million |
Full year |
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2019 |
2018 |
As reported |
IAS 17 basis |
As reported |
As revised |
|
As reported |
IAS 17 basis |
As revised |
6,707 |
|
6,936 |
|
5,992 |
|
7,147 |
|
Capital expenditure |
22,971 |
|
23,624 |
|
23,011 |
|
112 |
|
112 |
|
30 |
|
208 |
|
Investments in joint ventures and
associates |
743 |
|
743 |
|
880 |
|
65 |
|
65 |
|
76 |
|
75 |
|
Investments in equity securities |
205 |
|
205 |
|
187 |
|
6,883 |
|
7,113 |
|
6,098 |
|
7,430 |
|
Cash capital expenditure |
23,919 |
|
24,572 |
|
24,078 |
|
|
|
|
|
Of which: |
|
|
|
1,323 |
|
1,331 |
|
894 |
|
1,262 |
|
Integrated Gas |
4,299 |
|
4,310 |
|
3,819 |
|
2,795 |
|
3,016 |
|
2,639 |
|
3,636 |
|
Upstream |
10,277 |
|
10,916 |
|
12,582 |
|
2,624 |
|
2,624 |
|
2,454 |
|
2,418 |
|
Downstream |
8,926 |
|
8,928 |
|
7,408 |
|
141 |
|
141 |
|
111 |
|
114 |
|
Corporate |
418 |
|
418 |
|
269 |
|
469 |
|
469 |
|
244 |
|
400 |
|
Exploration expense, excluding exploration wells written off |
1,137 |
|
1,136 |
|
889 |
|
860 |
|
83 |
|
1,902 |
|
49 |
|
Leases recognised in the period |
4,494 |
|
1,594 |
|
452 |
|
(209 |
) |
(209 |
) |
(484 |
) |
— |
|
Other
adjustments |
(762 |
) |
(762 |
) |
(541 |
) |
8,003 |
|
7,456 |
|
7,759 |
|
7,879 |
|
Capital investment |
28,788 |
|
26,542 |
|
24,878 |
|
|
|
|
|
Of which: |
|
|
|
1,602 |
|
1,473 |
|
2,303 |
|
1,350 |
|
Integrated Gas |
6,706 |
|
6,030 |
|
4,259 |
|
3,186 |
|
3,218 |
|
2,452 |
|
3,986 |
|
Upstream |
11,075 |
|
11,138 |
|
12,785 |
|
3,071 |
|
2,624 |
|
2,870 |
|
2,429 |
|
Downstream |
10,542 |
|
8,956 |
|
7,565 |
|
143 |
|
141 |
|
134 |
|
114 |
|
Corporate |
465 |
|
418 |
|
269 |
|
D.
Divestments
Following completion of the $30 billion divestment programme for
2016-18, the Divestments measure was discontinued with effect from
January 1, 2019.
E.
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.
Both measures refer to Capital employed which consists of total
equity, current debt and non-current debt. Information for 2019 is
also presented on an “IAS 17 basis” to enable like-for-like
performance comparisons with 2018.
ROACE on a Net income basisIn 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. The
after-tax interest expense is calculated using the effective tax
rate for the same period.
|
$
million |
Quarters |
|
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
As reported |
IAS 17 basis |
As reported |
As reported |
Income - current and previous three quarters |
16,433 |
16,645 |
20,989 |
23,906 |
Interest expense after tax - current and previous three
quarters |
3,024 |
2,441 |
3,115 |
2,513 |
Income before interest expense - current and previous three
quarters |
19,457 |
19,086 |
24,105 |
26,419 |
Capital employed – opening |
295,398 |
279,357 |
279,864 |
283,477 |
Capital employed – closing |
286,887 |
271,226 |
281,505 |
279,358 |
Capital employed – average |
291,142 |
275,292 |
280,684 |
281,417 |
ROACE on a Net income basis |
6.7 |
% |
6.9 |
% |
8.6 |
% |
9.4 |
% |
|
|
|
|
|
|
|
|
|
ROACE on a CCS basis excluding identified
itemsIn 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.
The after-tax interest expense is calculated using the effective
tax rate for the same period.
This definition reflects two changes with effect from
January 1, 2019. Firstly, the calculation considers “CCS
earnings excluding identified items” instead of “CCS earnings
attributable to Royal Dutch Shell plc shareholders excluding
identified items” used under the previous definition. This change
ensures consistency with the basis for average capital employed.
Secondly, the calculation adds back the after-tax interest expense.
This change is made for consistency with peers. Comparative
information has been revised.
|
$ million |
Quarters |
|
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
As reported |
IAS 17 basis |
As reported |
As revised |
CCS earnings - current and previous three quarters |
15,827 |
16,039 |
22,284 |
24,364 |
Identified items - current and previous three quarters |
(1,170) |
(1,170) |
2,536 |
2,429 |
Interest expense after tax – current and previous three
quarters |
3,024 |
2,441 |
3,115 |
2,513 |
CCS earnings excluding identified items before interest expense
- current and previous three quarters |
20,021 |
19,650 |
22,864 |
24,448 |
Capital employed – average |
291,142 |
275,292 |
280,684 |
281,417 |
ROACE on a CCS basis excluding identified items |
6.9 |
% |
7.1 |
% |
8.1 |
% |
8.7 |
% |
|
|
|
|
|
|
|
|
|
F.
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.
Information for 2019 is also presented on an “IAS 17 basis” to
enable like-for-like performance comparisons with 2018.
|
$
million |
Quarters |
|
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
As reported |
IAS 17 basis |
As reported |
As reported |
Current debt |
15,064 |
11,803 |
12,812 |
10,134 |
Non-current debt |
81,360 |
68,964 |
76,112 |
66,690 |
Total debt¹ |
96,424 |
80,767 |
88,924 |
76,824 |
Add: Debt-related derivative financial instruments: net
liability/(asset) |
701 |
701 |
1,013 |
1,273 |
Add: Collateral on debt-related derivatives: net
liability/(asset) |
23 |
23 |
148 |
72 |
Less: Cash and cash equivalents |
(18,054) |
(18,054) |
(15,417) |
(26,741) |
Net debt |
79,094 |
63,437 |
74,668 |
51,428 |
Add: Total equity |
190,463 |
190,459 |
192,580 |
202,534 |
Total capital |
269,557 |
253,896 |
267,249 |
253,962 |
Gearing |
29.3 |
% |
25.0 |
% |
27.9 |
% |
20.3 |
% |
|
|
|
|
|
|
|
|
|
1. Includes lease liabilities of $30,537
million at December 31, 2019, $31,085 million at September 30,
2019, and finance lease liabilities of $14,026 million at
December 31, 2018
G.
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 measures
Shell’s total operating expenses performance excluding identified
items.
Information for 2019 is also presented on an “IAS 17 basis” to
enable like-for-like performance comparisons with 2018.
|
Quarters |
$
million |
Full year |
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2019 |
2018 |
As reported |
IAS 17 basis |
As reported |
As reported |
|
As reported |
IAS 17 basis |
As reported |
7,247 |
|
|
6,002 |
|
6,803 |
|
Production and manufacturing
expenses |
26,438 |
|
|
26,970 |
|
2,831 |
|
|
2,429 |
|
3,162 |
|
Selling, distribution and
administrative expenses |
10,493 |
|
|
11,360 |
|
306 |
|
|
219 |
|
314 |
|
Research and development |
962 |
|
|
986 |
|
10,384 |
|
10,920 |
|
8,650 |
|
10,279 |
|
Operating expenses |
37,893 |
|
39,791 |
|
39,316 |
|
|
|
|
|
Of which identified items: |
|
|
|
(58 |
) |
(58 |
) |
7 |
|
(28 |
) |
(Redundancy and restructuring charges)/reversal |
(130 |
) |
(130 |
) |
(187 |
) |
(333 |
) |
(333 |
) |
— |
|
(104 |
) |
(Provisions)/reversal |
(639 |
) |
(639 |
) |
(104 |
) |
— |
|
— |
|
— |
|
— |
|
Other |
(131 |
) |
(131 |
) |
— |
|
(391 |
) |
(391 |
) |
7 |
|
(132 |
) |
|
(900 |
) |
(900 |
) |
(291 |
) |
9,993 |
|
10,529 |
|
8,657 |
|
10,147 |
|
Underlying operating expenses |
36,993 |
|
38,891 |
|
39,025 |
|
H.
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.
Information for 2019 is also presented on an “IAS 17 basis” to
enable like-for-like performance comparisons with 2018.
|
Quarters |
$
million |
Full year |
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2019 |
2018 |
As reported |
IAS 17 basis |
As reported |
As reported |
|
As reported |
IAS 17 basis |
As reported |
10,267 |
|
8,720 |
|
12,252 |
|
22,021 |
|
Cash flow from operating
activities |
42,179 |
|
37,807 |
|
53,085 |
|
(4,862 |
) |
(4,718 |
) |
(2,130 |
) |
(5,312 |
) |
Cash flow from investing
activities |
(15,779 |
) |
(16,059 |
) |
(13,659 |
) |
5,405 |
|
4,002 |
|
10,122 |
|
16,709 |
|
Free cash flow |
26,400 |
|
21,748 |
|
39,426 |
|
2,135 |
|
2,135 |
|
3,979 |
|
2,538 |
|
Less:
Cash inflows related to divestments1 |
7,871 |
|
7,871 |
|
10,465 |
|
106 |
|
106 |
|
4 |
|
437 |
|
Add:
Tax paid on divestments (reported under "Other investing cash
outflows") |
187 |
|
187 |
|
482 |
|
551 |
|
551 |
|
484 |
|
71 |
|
Add:
Cash outflows related to inorganic capital expenditure2 |
1,400 |
|
1,400 |
|
1,740 |
|
3,928 |
|
2,525 |
|
6,630 |
|
14,679 |
|
Organic free cash flow3 |
20,116 |
|
15,464 |
|
31,183 |
|
|
|
|
|
|
- Cash inflows related to divestments includes Proceeds from sale
of property, plant and equipment and businesses, Proceeds from sale
of joint ventures and associates, and Proceeds from sale of equity
securities as reported in the Consolidated Statement of Cash
Flows.
- 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.
- Free cash flow less inflows related to divestments, adding back
outflows related to inorganic expenditure.
I.
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.
Information for 2019 is also presented on an “IAS 17 basis” to
enable like-for-like performance comparisons with 2018.
|
Quarters |
$
million |
Full year |
Q4 2019 |
Q4 2019 |
Q3 2019 |
Q4 2018 |
|
2019 |
2019 |
2018 |
As reported |
IAS 17 basis |
As reported |
As reported |
|
As reported |
IAS 17 basis |
As reported |
10,267 |
|
8,720 |
|
12,252 |
|
22,021 |
|
Cash flow from operating activities |
42,179 |
|
37,807 |
|
53,085 |
|
|
|
|
|
Of which: |
|
|
|
3,457 |
|
3,064 |
|
4,224 |
|
5,786 |
|
Integrated Gas |
15,311 |
|
14,079 |
|
14,617 |
|
4,185 |
|
3,968 |
|
4,448 |
|
6,869 |
|
Upstream |
19,528 |
|
18,715 |
|
22,661 |
|
2,304 |
|
1,373 |
|
3,205 |
|
8,794 |
|
Downstream |
7,296 |
|
4,975 |
|
13,928 |
|
321 |
|
315 |
|
375 |
|
572 |
|
Corporate |
44 |
|
38 |
|
1,879 |
|
(546 |
) |
(546 |
) |
813 |
|
7,694 |
|
(Increase)/decrease in inventories |
(2,635 |
) |
(2,635 |
) |
2,823 |
|
(2,448 |
) |
(2,448 |
) |
2,644 |
|
8,421 |
|
(Increase)/decrease in current
receivables |
(921 |
) |
(921 |
) |
1,955 |
|
961 |
|
961 |
|
(3,289 |
) |
(7,014 |
) |
Increase/(decrease) in current payables |
(1,223 |
) |
(1,223 |
) |
(1,336 |
) |
(2,033 |
) |
(2,033 |
) |
168 |
|
9,101 |
|
(Increase)/decrease in working capital |
(4,779 |
) |
(4,779 |
) |
3,442 |
|
12,300 |
|
10,753 |
|
12,083 |
|
12,920 |
|
Cash flow from operating activities excluding working capital
movements |
46,958 |
|
42,586 |
|
49,643 |
|
|
|
|
|
Of which: |
|
|
|
4,017 |
|
3,624 |
|
4,271 |
|
6,597 |
|
Integrated Gas |
14,828 |
|
13,597 |
|
16,281 |
|
4,998 |
|
4,781 |
|
4,722 |
|
5,149 |
|
Upstream |
20,488 |
|
19,674 |
|
21,917 |
|
3,294 |
|
2,363 |
|
3,169 |
|
1,224 |
|
Downstream |
11,916 |
|
9,595 |
|
10,764 |
|
(9 |
) |
(15 |
) |
(80 |
) |
(50 |
) |
Corporate |
(274 |
) |
(280 |
) |
681 |
|
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 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; and
(m) 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 Form 20-F for the year ended
December 31, 2018 (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,
January 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 Report contains references to Shell’s website. These
references are for the readers’ convenience only. Shell is not
incorporating by reference any information posted on
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. US 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.
January 30, 2020
The information in this Report reflects the unaudited consolidated
financial position and results of Royal Dutch Shell plc. Company
No. 4366849, Registered Office: Shell Centre, London, SE1 7NA,
England, UK. |
Contacts:
- Linda M. Coulter, Company Secretary- Investor Relations:
International + 31 (0) 70 377 4540; North America +1 832 337 2034-
Media: International +44 (0) 207 934 5550; USA +1 832 337 4355
LEI number of Royal Dutch Shell plc:
21380068P1DRHMJ8KU70Classification: Inside Information
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