TIDMRDSA TIDMRDSB
ROYAL DUTCH SHELL PLC
1(ST) QUARTER 2020 UNAUDITED RESULTS
-------------------------------------
SUMMARY OF UNAUDITED RESULTS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019 %(1) Reference
--------- --------- --------- ---- ------------------------------------------------- ---------
(24 ) 965 6,001 -100 Income/(loss) attributable to shareholders
Note
2,756 871 5,293 -48 CCS earnings attributable to shareholders 2
(104 ) (2,060) (8 ) Of which: Identified items A
------ ------ ------ ---------
CCS earnings attributable to shareholders
2,860 2,931 5,301 -46 excluding identified items
Add: CCS earnings attributable to non-controlling
97 125 131 interest
------ ------ ------
2,957 3,056 5,432 -46 CCS earnings excluding identified items
Of which:
2,143 1,986 2,569 Integrated Gas
291 709 1,648 Upstream
1,363 1,501 1,448 Oil Products
148 (65 ) 451 Chemicals
(989 ) (1,075) (684 ) Corporate
------ ------ ------ -------------------------------------------------
14,851 10,267 8,630 +72 Cash flow from operating activities
(2,718) (4,862) (4,622) Cash flow from investing activities
12,133 5,405 4,008 Free cash flow G
------ ------ ------ ---------
0.00 0.12 0.74 -100 Basic earnings per share ($)
0.35 0.11 0.65 -46 Basic CCS earnings per share ($) B
Basic CCS earnings per share excl. identified
0.37 0.37 0.65 -43 items ($)
------ ------ ------ ----
0.16 0.47 0.47 -66 Dividend per share ($)
------ ------ ------ ----
(1.) Q1 on Q1 change.
CCS earnings attributable to shareholders excluding identified items
were $2.9 billion, reflecting lower realised oil, gas and LNG prices,
weaker realised refining and chemicals margins as well as lower sales
volumes, compared with the first quarter 2019. This was partly offset by
favourable movements in deferred tax positions and lower operating
expenses.
Cash flow from operating activities excluding working capital movements
was $7.4 billion, reflecting lower earnings and higher cost-of-sales
adjustment, partly offset by higher cash inflows related to commodity
derivatives and lower tax payments, compared with the first quarter
2019.
Total dividends distributed to shareholders in the quarter were $3.5
billion. During the quarter, Shell completed another tranche of the
share buyback programme. Since the launch of the programme, Shell has
bought back almost $16 billion in shares for cancellation.
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
"Under extremely challenging conditions, Shell is stepping up to protect
our people and support communities around the globe while delivering
strong safety and operational performance across our business. Our
Integrated Gas and Marketing businesses continued to achieve robust
results this quarter, bringing resilience to our cash flows. In March,
we took decisive actions to reduce our spending, increase our liquidity
and position our business to manage the deteriorating macroeconomic and
commodity price outlook. Our integrated business model, the high quality
of our assets and the resourcefulness of our people have allowed us to
respond swiftly.
Given the continued deterioration in the macroeconomic outlook and the
significant mid and long-term uncertainty, we are taking further prudent
steps to bolster our resilience, underpin the strength of our balance
sheet and support the long-term value creation of Shell. Starting this
quarter, the Board has decided to reduce our quarterly dividend to 16 US
cents per share."
Chair of the Board of Royal Dutch Shell Chad Holliday commented:
"Shareholder returns are a fundamental part of Shell's financial
framework. However, given the risk of a prolonged period of economic
uncertainty, weaker commodity prices, higher volatility and uncertain
demand outlook, the Board believes that maintaining the current level of
shareholder distributions is not prudent. Following the announcement not
to continue with the next tranche of the share buyback programme, the
Board has also decided to reduce the first quarter 2020 dividend and
reset to 16 US cents per share.
As conditions allow, the Board will continue to evaluate our capital
allocation priorities between ongoing investment in our business,
maintaining a strong balance sheet and increasing returns to
shareholders which remains our ambition"
ADDITIONAL PERFORMANCE MEASURES
Quarters $ million
Q1 2020 Q4 2019 Q1 2019 %(1) Reference
-------- -------- -------- ---- --------------------------------------------- ---------
4,970 6,883 5,601 Cash capital expenditure C
-------- -------- -------- ---------
Total production available for sale (thousand
3,719 3,763 3,752 -1 boe/d)
-------- -------- -------- ----
46.53 56.60 57.42 -19 Global liquids realised price ($/b)
Global natural gas realised price ($/thousand
4.31 4.42 5.37 -20 scf)
-------- -------- -------- ----
8,618 10,384 8,917 -3 Operating expenses F
8,600 9,993 8,865 -3 Underlying operating expenses F
-------- -------- -------- ---- ---------
4.6 % 6.7 % 9.2 % ROACE (Net income basis) D
6.1 % 6.9 % 8.4 % ROACE (CCS basis excluding identified items) D
---- ---- ---- ---------
28.9% 29.3% 26.5% Gearing E
---- ---- ---- ---------
(1.) Q1 on Q1 change.
Supplementary financial and operational disclosure for this quarter is
available at www.shell.com/investor.
FIRST QUARTER 2020 PORTFOLIO DEVELOPMENTS
Integrated Gas
During the quarter, Shell announced that it will not proceed with the
proposed Lake Charles LNG project due to the current market conditions.
Accordingly, Energy Transfer will take over as the project developer.
In April, Shell took the final investment decision to develop the first
phase of Arrow Energy's (Shell interest 50%) Surat Gas Project in
Queensland, Australia, which will bring up to 90 billion cubic feet per
year of new gas to market at peak production.
Oil Products
During the quarter, Shell completed the sale of the Martinez refinery in
the USA to PBF Energy for $1.2 billion, which includes the refinery and
inventory.
PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019 %(1)
-------- -------- ------- ---- --------------------------------------------------
1,812 1,897 2,795 -35 Segment earnings
(331 ) (89 ) 226 Of which: Identified items (Reference A)
2,143 1,986 2,569 -17 Earnings excluding identified items
----- ----- ----- ----
3,986 3,457 4,227 -6 Cash flow from operating activities
----- ----- ----- ----
Cash flow from operating activities excluding
3,352 4,017 3,715 -10 working capital movements (Reference H)
----- ----- ----- ----
882 1,323 1,344 Cash capital expenditure (Reference C)
----- ----- -----
Liquids production available for sale (thousand
162 161 137 +19 b/d)
Natural gas production available for sale (million
4,596 4,578 4,143 +11 scf/d)
----- ----- ----- ----
Total production available for sale (thousand
955 950 851 +12 boe/d)
8.88 9.21 8.74 +2 LNG liquefaction volumes (million tonnes)
----- ----- ----- ----
19.00 20.09 17.51 +9 LNG sales volumes (million tonnes)
----- ----- ----- ----
(1.) Q1 on Q1 change.
First quarter identified items primarily reflected losses of $154
million related to the fair value accounting of commodity derivatives
and a charge of $121 million related to the impact of the weakening
Australian dollar on a deferred tax position.
Compared with the first quarter 2019, Integrated Gas earnings excluding
identified items primarily reflected lower realised LNG, oil and gas
prices as well as lower contributions from trading and optimisation and
higher depreciation, partly offset by favourable movements in deferred
tax positions and higher LNG sales volumes.
Compared with the first quarter 2019, total production increased by 12%
mainly due to lower maintenance activities and field ramp-ups in
Trinidad and Tobago and Australia. LNG liquefaction volumes increased
mainly as a result of lower maintenance activities and new LNG capacity,
partly offset by lower feedgas availability compared with the first
quarter 2019.
Compared with the first quarter 2019, cash flow from operating
activities excluding working capital movements mainly reflected lower
cash earnings, partly offset by higher cash inflows related to commodity
derivatives.
UPSTREAM
Quarters $ million
Q1 2020 Q4 2019 Q1 2019 %(1)
--------- --------- -------- ----- --------------------------------------------------
(863 ) (855 ) 1,624 -153 Segment earnings
(1,154) (1,564) (23 ) Of which: Identified items (Reference A)
291 709 1,648 -82 Earnings excluding identified items
------ ------ ----- -----
5,607 3,995 5,278 6 Cash flow from operating activities
------ ------ ----- -----
Cash flow from operating activities excluding
3,718 4,834 5,263 -29 working capital movements (Reference H)
------ ------ ----- -----
2,521 2,768 2,491 Cash capital expenditure (Reference C)
------ ------ -----
1,730 1,716 1,667 +4 Liquids production available for sale (thousand
b/d)
5,680 6,027 6,864 -17 Natural gas production available for sale (million
scf/d)
------ ------ ----- -----
2,710 2,755 2,850 -5 Total production available for sale (thousand
boe/d)
------ ------ ----- -----
(1.) Q1 on Q1 change.
First quarter identified items primarily reflected a charge of $776
million related to the impact of the weakening Brazilian real on a
deferred tax position and a charge of $416 million related to
impairments, mainly in Brazil and the USA.
Compared with the first quarter 2019, Upstream earnings excluding
identified items reflected lower realised oil and gas prices as well as
lower total production volumes. Earnings were also negatively impacted
by lower sales volumes associated with the timing of liftings.
Compared with the first quarter 2019, total production was 5% lower,
mainly due to divestments, field decline and lower production in the NAM
joint venture, partly offset by field ramp-ups in the Santos Basin, Gulf
of Mexico and Permian. Excluding portfolio impacts, production was in
line with the same quarter a year ago.
Compared with the first quarter 2019, cash flow from operating
activities excluding working capital movements mainly reflected lower
cash earnings, partly offset by lower tax payments.
OIL PRODUCTS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019 %(1)
---------- -------- -------- ---- ---------------------------------------------
2,211 1,183 1,224 +81 Segment earnings(2)
849 (318 ) (225 ) Of which: Identified items (Reference A)
1,363 1,501 1,448 -6 Earnings excluding identified items(2)
Of which:
158 531 420 -62 Refining & Trading
1,205 971 1,029 +17 Marketing
4,878 2,538 (598 ) +915 Cash flow from operating activities
----- --- ----- ----- ---- ---------------------------------------------
Cash flow from operating activities excluding
353 3,120 2,589 -86 working capital movements (Reference H)
----- ----- ----- ----
580 1,628 853 Cash capital expenditure (Reference C)
----- ----- -----
2,397 2,438 2,666 -10 Refinery processing intake (thousand b/d)
----- ----- ----- ----
5,278 (3) 6,435 6,467 -18 Oil Products sales volumes (thousand b/d)
----- ----- ----- ----
(1.) Q1 on Q1 change.
(2.) Earnings are presented on a CCS basis (See Note 2).
(3.) With effect from the first quarter 2020, the reporting of Oil
Products sales volumes has changed (See Note 2). Sales volumes would be
5,937 thousand b/d in the first quarter 2020 on a comparable basis with
2019.
First quarter identified items primarily reflected gains of $966 million
related to the fair value accounting of commodity derivatives.
Compared with the first quarter 2019, Oil Products earnings excluding
identified items reflected weaker realised refining margins and lower
contributions from crude oil trading and optimisation as well as
unfavourable movements in deferred tax positions. This was partly offset
by higher realised marketing margins and lower operating expenses.
Cash flow from operating activities excluding working capital movements
reflected lower earnings and higher cost-of-sales adjustment, partly
offset by increased cash inflows from commodity derivatives, compared
with the first quarter 2019.
The COVID-19 outbreak had a relatively minor impact on Marketing volumes
in the first two months of the first quarter 2020. The estimated impact
in March is a decrease of approximately 15% in Marketing volumes. The
expected impact in the second quarter 2020 is reflected in the outlook
section.
With effect from the first quarter 2020, Oil Products sales volumes
reporting has changed. Excluding this impact, Oil Products sales volumes
decreased due to lower refining, trading and marketing sales volumes
compared with the first quarter 2019.
-- Refining & Trading earnings excluding identified items reflected lower
realised refining margins and lower contributions from crude oil trading
and optimisation, partly offset by lower operating expenses, compared
with the first quarter 2019.
With effect from the first quarter 2020, Shell discloses utilisation
instead of availability to improve transparency on refinery production
volumes. Utilisation is defined as the actual usage of the plants as a
percentage of the rated capacity. Refinery utilisation was 81% compared
with 79% in the first quarter 2019, mainly due to lower planned
downtime.
-- Marketing earnings excluding identified items reflected higher realised
global commercial and retail margins as well as lower operating expenses,
partly offset by lower retail and aviation sales volumes, compared with
the first quarter 2019.
CHEMICALS
Quarters $ million
-----------------------------------------------------
Q1 2020 Q4 2019 Q1 2019 %(1)
-------- -------- -------- -------
146 (78 ) 452 -68 Segment earnings(2)
(2 ) (13 ) 2 Of which: Identified items (Reference A)
148 (65 ) 451 -67 Earnings excluding identified items(2)
----- ----- ----- -------
(178 ) (44 ) (11 ) (1,474) Cash flow from operating activities
----- ----- ----- -------
Cash flow from operating activities excluding working
189 338 528 capital movements (Reference H)
----- ----- -----
846 1,023 828 Cash capital expenditure (Reference C)
----- ----- -----
3,871 3,454 4,137 -6 Chemicals sales volumes (thousand tonnes)
----- ----- ----- -------
(1.) Q1 on Q1 change.
(2.) Earnings are presented on a CCS basis (See Note 2).
Compared with the first quarter 2019, Chemicals earnings excluding
identified items reflected weaker realised base chemicals and
intermediates margins as well as higher operating expenses.
Cash flow from operating activities excluding working capital movements
reflected lower earnings and higher cost-of-sales adjustment, partly
offset by higher dividends received compared with the first quarter
2019.
With effect from the first quarter 2020, Shell discloses utilisation
instead of availability to improve transparency on chemicals production
volumes. Utilisation is defined as the actual usage of the plants as a
percentage of the rated capacity. Chemicals manufacturing plant
utilisation was 84%, at a similar level as in the first quarter 2019.
CORPORATE
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
------- --------- ------- -----------------------------------------------------
(453) (1,151) (671) Segment earnings
535 (76 ) 13 Of which: Identified items (Reference A)
(989) (1,075) (684) Earnings excluding identified items
559 321 (266) Cash flow from operating activities
---- ------ ----
(239 ) (9 ) 17 Cash flow from operating activities excluding working
capital movements (Reference H)
---- ------ ----
First quarter identified items primarily reflected a gain related to the
impact of the weakening Brazilian real on financing positions.
Compared with the first quarter 2019, Corporate earnings excluding
identified items reflected adverse currency exchange rate effects,
partly offset by higher tax credits.
OUTLOOK FOR THE SECOND QUARTER 2020
As a result of COVID-19, there is significant uncertainty in the
expected macroeconomic conditions with an expected negative impact on
demand for oil, gas and related products. Furthermore, recent global
developments and uncertainty in oil supply have caused further
volatility in commodity markets. The second quarter 2020 outlook
provides ranges for operational and financial metrics based on current
expectations, but these are subject to change in the light of current
evolving market conditions. Due to demand or regulatory requirements
and/or constraints in infrastructure, Shell may need to take measures to
curtail or reduce oil and/or gas production, LNG liquefaction as well as
utilisation of refining and chemicals plants and similarly sales volumes
could be impacted. These measures would likely have negative impacts on
Shell's operational and financial metrics.
Integrated Gas production is expected to be approximately 840 - 890
thousand boe/d. LNG liquefaction volumes are expected to be
approximately 7.4 - 8.2 million tonnes. More than 90% of the term
contracts for LNG sales are oil price linked with a price lag of
typically 3 - 6 months.
Upstream production is expected to be approximately 1,750 - 2,250
thousand boe/d.
Refinery utilisation is expected to be approximately 60% - 70%.
Oil Products sales volumes are expected to be approximately 3,000 -
4,000 thousand b/d.
Chemicals manufacturing plant utilisation is expected to be
approximately 70% - 80%.
Chemicals sales volumes are expected to be approximately 3,500 - 4,100
thousand tonnes.
Corporate segment earnings excluding identified items are expected to be
a net expense of approximately $800 - 875 million in the second quarter
2020 and a net expense of approximately $3,200 - 3,500 million for the
full year 2020. This excludes the impact of currency exchange rate
effects.
Shell announced a series of operational and financial initiatives that
are expected to result in reduction of underlying operating expenses by
$3-4 billion per annum over the next 12 months compared with 2019
levels; reduction of cash capital expenditure to $20 billion or below
for 2020 from a planned level of around $25 billion; and material
reductions in working capital. In addition, Shell has decided not to
continue with the next tranche of the share buyback programme following
the completion of the most recent tranche.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- -------- -------- ---------------------------------------------------
60,029 84,006 83,735 Revenue(1)
854 719 1,484 Share of profit of joint ventures and associates
76 340 443 Interest and other income
60,959 85,066 85,662 Total revenue and other income
------ ------ ------ ---------------------------------------------------
43,213 60,570 59,923 Purchases
5,982 7,247 6,354 Production and manufacturing expenses
2,393 2,831 2,352 Selling, distribution and administrative expenses
243 306 212 Research and development
294 965 306 Exploration
7,093 9,238 5,950 Depreciation, depletion and amortisation(2)
1,118 1,118 1,159 Interest expense
60,336 82,275 76,256 Total expenditure
------ ------ ------ ---------------------------------------------------
623 2,791 9,406 Income/(loss) before taxation
646 1,702 3,248 Taxation charge/(credit)
------ ------ ------
(23 ) 1,089 6,157 Income/(loss) for the period(1)
Income/(loss) attributable to non-controlling
1 124 156 interest
Income/(loss) attributable to Royal Dutch Shell plc
(24 ) 965 6,001 shareholders
------ ------ ------ ---------------------------------------------------
0.00 0.12 0.74 Basic earnings per share ($)(3)
0.00 0.12 0.73 Diluted earnings per share ($)(3)
------ ------ ------
(1.) See Note 2 "Segment information".
(2.) Includes impairment charges of $749 million (Q4 2019: $2,941
million; Q1 2019: $33 million) mainly due to changes to oil price
outlook for 2020. See Note 1.
(3.) See Note 3 "Earnings per share".
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- -------- --------- -----------------------------------------------------------
(23 ) 1,089 6,157 Income/(loss) for the period
Other comprehensive income/(loss) net of tax:
Items that may be reclassified to income in later
periods:
(3,935) 1,467 176 - Currency translation differences
(28 ) (2 ) 11 - Debt instruments remeasurements
(152 ) (135 ) (446 ) - Cash flow and net investment hedging gains/(losses)
101 (45 ) 26 - Deferred cost of hedging
- Share of other comprehensive income/(loss) of joint
(60 ) 24 (55 ) ventures and associates
------ ----- ------ -----------------------------------------------------------
(4,074) 1,310 (288 ) Total
Items that are not reclassified to income in later
periods:
1,756 2,553 (1,474) - Retirement benefits remeasurements
(137 ) (5 ) 103 - Equity instruments remeasurements
- Share of other comprehensive income/(loss) of joint
48 6 1 ventures and associates
------ ----- ------ -----------------------------------------------------------
1,667 2,554 (1,370) Total
------ ----- ------ -----------------------------------------------------------
(2,407 ) 3,863 (1,658 ) Other comprehensive income/(loss) for the period
------ ----- ------
(2,430 ) 4,952 4,500 Comprehensive income/(loss) for the period
(123 ) 143 177 Comprehensive income/(loss) attributable to non-controlling
interest
------ ----- ------
(2,307 ) 4,809 4,322 Comprehensive income/(loss) attributable to Royal Dutch
Shell plc shareholders
------ ----- ------
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
March 31, December 31,
2020 2019
----------------------------------------------- ----------- --------------
Assets
Non-current assets
Intangible assets 23,218 23,486
Property, plant and equipment 232,099 238,349
Joint ventures and associates 22,646 22,808
Investments in securities 2,884 2,989
Deferred tax 10,706 10,524
Retirement benefits 8,352 4,717
Trade and other receivables 7,871 8,085
Derivative financial instruments(1) 1,212 689
308,988 311,647
----------------------------------------------- ----------- ------------
Current assets
Inventories(2) 13,897 24,071
Trade and other receivables 36,798 43,414
Derivative financial instruments(1) 12,467 7,149
Cash and cash equivalents 21,811 18,055
84,973 92,689
Total assets 393,961 404,336
----------------------------------------------- ----------- ------------
Liabilities
Non-current liabilities
Debt 79,298 81,360
Trade and other payables 2,705 2,342
Derivative financial instruments(1) 1,807 1,209
Deferred tax 15,084 14,522
Retirement benefits 13,884 13,017
Decommissioning and other provisions 21,562 21,799
134,339 134,249
----------------------------------------------- ----------- ------------
Current liabilities
Debt 15,767 15,064
Trade and other payables 39,441 49,208
Derivative financial instruments(1) 10,785 5,429
Taxes payable 7,079 6,693
Retirement benefits 402 419
Decommissioning and other provisions 2,769 2,811
76,243 79,624
Total liabilities 210,582 213,873
----------------------------------------------- ----------- ------------
Equity attributable to Royal Dutch Shell plc
shareholders 179,639 186,476
Non-controlling interest 3,740 3,987
Total equity 183,379 190,463
Total liabilities and equity 393,961 404,336
----------------------------------------------- ----------- ------------
(1.) See Note 6 "Derivative financial instruments and debt excluding
lease liabilities".
(2.) Includes write-downs of $3,726 million to net realisable value at
March 31, 2020. See Note 1.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal
Dutch Shell plc shareholders
Shares
Share held Other Retained Non-controlling Total
$ million capital(1) in trust reserves(2) earnings Total interest equity
------------------------------------ ------------- ----------- -------------- --------- -------- ----------------- ----------
At January 1, 2020 657 (1,063) 14,451 172,431 186,476 3,987 190,463
Comprehensive income/(loss)
for the period -- -- (2,283) (24) (2,307) (123) (2,430)
Transfer from other comprehensive
income -- -- (6) 6 -- -- --
Dividends(3) -- -- -- (3,482) (3,482) (110) (3,591)
Repurchases of shares (5) -- 5 (1,006) (1,006) -- (1,006)
Share-based compensation -- 585 (374) (253) (43) -- (43)
Other changes in non-controlling
interest -- -- -- 1 1 (14) (14)
At March 31, 2020 652 (479) 11,794 167,672 179,639 3,740 183,379
------------------------------------ ------ ----- ------- -------- ---- -------- ------- ----------- ---- -------
At January 1, 2019 685 (1,260) 16,615 182,610 198,650 3,888 202,538
Comprehensive income/(loss)
for the period -- -- (1,679) 6,001 4,322 177 4,499
Transfer from other comprehensive
income -- -- (89) 89 -- -- --
Dividends -- -- -- (3,875) (3,875) (119) (3,994)
Repurchases of shares (6) -- 6 (2,513) (2,513) -- (2,513)
Share-based compensation -- 849 (384) (724) (259) -- (259)
Other changes in non-controlling
interest -- -- -- -- -- (16) (16)
At March 31, 2019 680 (411) 14,468 181,588 196,325 3,931 200,256
------------------------------------ ------ ----- ------- -------- ---- -------- ------- ----------- ---- -------
(1.) See Note 4 "Share capital".
(2.) See Note 5 "Other reserves".
(3.) The amount charged to retained earnings is based on prevailing
exchange rates on payment date.
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- -----------------------------------------------------------
623 2,791 9,406 Income before taxation for the period
Adjustment for:
897 859 896 - Interest expense (net)
7,093 9,238 5,950 - Depreciation, depletion and amortisation
83 496 119 - Exploration well write-offs
- Net (gains)/losses on sale and revaluation of non-current
106 (36 ) (65 ) assets and businesses
(854 ) (719 ) (1,484) - Share of (profit)/loss of joint ventures and associates
531 1,318 744 - Dividends received from joint ventures and associates
9,594 (546 ) (2,841) - (Increase)/decrease in inventories
6,314 (2,448) (1,425) - (Increase)/decrease in current receivables
(8,430) 961 783 - Increase/(decrease) in current payables
(171 ) 254 (1,109) - Derivative financial instruments
(91 ) 217 22 - Retirement benefits
(102 ) (141 ) (302 ) - Decommissioning and other provisions
579 (82 ) 26 - Other
(1,321) (1,894) (2,089) Tax paid
14,851 10,267 8,630 Cash flow from operating activities
------ ------ ------ -----------------------------------------------------------
(4,263) (6,707) (5,121) Capital expenditure
(559 ) (112 ) (441 ) Investments in joint ventures and associates
(147 ) (65 ) (39 ) Investments in equity securities
Proceeds from sale of property, plant and equipment
1,613 1,049 178 and businesses
547 1,032 544 Proceeds from sale of joint ventures and associates
73 55 271 Proceeds from sale of equity securities
192 224 237 Interest received
855 918 680 Other investing cash inflows
(1,028) (1,255) (931 ) Other investing cash outflows
(2,718) (4,862) (4,622) Cash flow from investing activities
------ ------ ------ -----------------------------------------------------------
Net increase/(decrease) in debt with maturity period
321 (406 ) (91 ) within three months
Other debt:
1,003 8,758 140 - New borrowings
(2,723) (2,731) (1,533) - Repayments
(1,033) (1,232) (1,115) Interest paid
(81 ) (124 ) (45 ) Derivative financial instruments
(8 ) 2 (2 ) Change in non-controlling interest
Cash dividends paid to:
(3,483) (3,725) (3,875) - Royal Dutch Shell plc shareholders
(110 ) (133 ) (68 ) - Non-controlling interest
(1,486) (2,848) (2,255) Repurchases of shares
Shares held in trust: net sales/(purchases) and dividends
(182 ) (618 ) (456 ) received
(7,781) (3,057) (9,300) Cash flow from financing activities
------ ------ ------ -----------------------------------------------------------
(595 ) 289 21 Currency translation differences relating to cash and
cash equivalents
3,756 2,637 (5,271 ) Increase/(decrease) in cash and cash equivalents
18,055 15,417 26,741 Cash and cash equivalents at beginning of period
21,811 18,055 21,470 Cash and cash equivalents at end of period
------ ------ ------ -----------------------------------------------------------
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial Statements
("Interim Statements") of Royal Dutch Shell plc ("the Company") and its
subsidiaries (collectively referred to as "Shell") have been prepared in
accordance with IAS 34 Interim Financial Reporting as issued by the
International Accounting Standards Board (IASB) and as adopted by the
European Union, and on the basis of the same accounting principles as
those used in the Annual Report and Accounts (pages 190 to 238) and Form
20-F (pages 142 to 189) for the year ended December 31, 2019 as filed
with the Registrar for Companies for England and Wales and the US
Securities and Exchange Commission, respectively, and should be read in
conjunction with these filings.
The financial information presented in the unaudited Interim Statements
does not constitute statutory accounts within the meaning of section
434(3) of the Companies Act 2006 ("the Act"). Statutory accounts for the
year ended December 31, 2019 were published in Shell's Annual Report and
Accounts, a copy of which was delivered to the Registrar of Companies
for England and Wales, and in Shell's Form 20-F. The auditor's report on
those accounts was unqualified, did not include a reference to any
matters to which the auditor drew attention by way of emphasis without
qualifying the report and did not contain a statement under sections
498(2) or 498(3) of the Act.
Key accounting considerations related to COVID-19 and the macroeconomic
environment
Impairment
As a result of COVID-19 and the significant oil price drop in the first
quarter 2020, oil and gas price assumptions applied for impairment
testing were reviewed. On that basis, Shell has lowered its short-term
price outlook for the remainder of 2020, which was the basis for
impairment in the first quarter 2020.
Because of COVID-19 and OPEC+ actions there remains significant demand
and supply uncertainties and accordingly, the medium and long-term price
outlook also remain uncertain. As per normal process outlined in the
2019 Annual Report and Accounts and Form 20-F, these price assumptions
are subject to review later this year.
For the impairments in the first quarter 2020, see footnote 2 on the
Consolidated Statement of Income on page 8.
Inventories
As per accounting policies disclosed in Shell's 2019 Annual Report and
Accounts and Form 20-F, inventories are stated at cost or net realisable
value ('NRV'), whichever is lower.
For the write-downs to NRV at March 31, 2020 see footnote 2 on the
Condensed Consolidated Balance Sheet on page 9.
2. Segment information
With effect from 2020, Shell's reporting segments consist of Integrated
Gas, Upstream, Oil Products, Chemicals and Corporate, reflecting the way
Shell reviews and assesses its performance. Oil Products and Chemicals
businesses were previously reported under the Downstream segment. Oil
sands mining activities, previously included in the Upstream segment,
are reported under Oil Products. Comparative information has been
reclassified.
Segment earnings are presented on a current cost of supplies basis (CCS
earnings), which is the earnings measure used by the Chief Executive
Officer for the purposes of making decisions about allocating resources
and assessing performance. On this basis, the purchase price of volumes
sold during the period is based on the current cost of supplies during
the same period after making allowance for the tax effect. CCS earnings
therefore exclude the effect of changes in the oil price on inventory
carrying amounts. Sales between segments are based on prices generally
equivalent to commercially available prices.
With effect from January 1, 2020, additional contracts are classified as
held for trading purposes and consequently revenue is reported on a net
rather than gross basis. The effect on revenue for the first quarter
2020 is a reduction of $16,313 million.
INFORMATION BY SEGMENT
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- ----------------------------
Third-party revenue
10,157 11,006 11,639 Integrated Gas
2,344 2,604 2,301 Upstream
44,297 67,354 66,051 Oil Products
3,221 3,033 3,733 Chemicals
11 9 11 Corporate
60,029 84,006 83,735 Total third-party revenue(1)
------ ------ ------
Inter-segment revenue(2)
891 1,117 1,092 Integrated Gas
6,476 9,416 9,532 Upstream
1,851 1,629 2,180 Oil Products
875 854 966 Chemicals
-- -- -- Corporate
------ ------ ------ ----------------------------
CCS earnings
1,812 1,897 2,795 Integrated Gas
(863 ) (855 ) 1,624 Upstream
2,211 1,183 1,224 Oil Products
146 (78 ) 452 Chemicals
(453 ) (1,151) (671 ) Corporate
2,854 996 5,424 Total
------ ------ ------
(1.) Includes revenue from sources other than from contracts with
customers, which mainly comprises the impact of fair value accounting of
commodity derivatives. First quarter 2020 included income of $6,686
million (Q4 2019: $594 million income; Q1 2019: $737 million income).
This amount includes both the reversal of prior gains of $317 million
related to sales contracts and prior losses of $76 million related to
purchase contracts that were previously recognised and where physical
settlement has taken place in the first quarter 2020. This disclosure
reflects the application of IFRIC agenda decision 'Physical settlement
of contracts to buy or sell a non-financial item (IFRS 9)'.
(2.) Comparative information for inter-segment revenue for Upstream, Oil
Products and Chemicals has been revised to conform with reporting
segment changes applicable from 2020. Inter-segment revenue for
Integrated Gas for the first quarter 2019 has been revised from $984
million to amend for certain intra-segment transactions previously
reported as inter-segment revenue.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
-------- -------- -------- ---------------------------------------------------
Income/(loss) attributable to Royal Dutch Shell plc
(24 ) 965 6,001 shareholders
Income/(loss) attributable to non-controlling
1 124 156 interest
----- ----- -----
(23 ) 1,089 6,157 Income/(loss) for the period
Current cost of supplies adjustment:
3,774 (69 ) (985 ) Purchases
(916 ) 13 236 Taxation
Share of profit/(loss) of joint ventures and
19 (37 ) 16 associates
----- -----
2,876 (93 ) (733 ) Current cost of supplies adjustment(1)
----- ----- -----
2,854 996 5,424 CCS earnings
of which:
2,756 871 5,293 CCS earnings attributable to Royal Dutch Shell plc
shareholders
97 125 131 CCS earnings attributable to non-controlling
interest
----- ----- -----
(1.) The adjustment attributable to Royal Dutch Shell plc shareholders
is a positive $2,780 million in the first quarter 2020 (Q4 2019:
negative $94 million; Q1 2019: negative $708 million)
3. Earnings per share
EARNINGS PER SHARE
Quarters
Q1 2020 Q4 2019 Q1 2019
---------- --------- --------- ---------------------------------------------------
Income/(loss) attributable to Royal Dutch Shell plc
(24 ) 965 6,001 shareholders ($ million)
Weighted average number of shares used as the basis
for determining:
7,819.8 7,907.2 8,152.2 Basic earnings per share (million)
7,819.8 7,962.5 8,210.7 Diluted earnings per share (million)
------- ------- ------- ---------------------------------------------------
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH(1)
Number of shares Nominal value ($ million)
A B A B Total
------------- ------------- ------------- ------- ------- -----------
At January 1,
2020 4,151,787,517 3,729,407,107 349 308 657
Repurchases
of shares (46,143,892) (15,422,859) (4) (1) (5)
-------------
At March 31,
2020 4,105,643,625 3,713,984,248 345 307 652
------------- ------------- ------------- ------- ------- -----------
At January 1,
2019 4,471,889,296 3,745,486,731 376 309 685
Repurchases
of shares (72,531,119) -- (6) -- (6)
At March 31,
2019 4,399,358,177 3,745,486,731 371 309 680
------------- ------------- ------------- ------- ------- -----------
(1.) Share capital at March 31, 2020 also included 50,000 issued and
fully paid sterling deferred shares of GBP1 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 EUR190 million (representing 2,720 million ordinary shares of
EUR0.07 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
Share Capital Accumulated
Merger premium redemption Share other comprehensive
$ million reserve reserve reserve plan reserve income Total
---------------------------------- -------- -------- ----------- --------------- ---------------------- ---------
At January 1, 2020 37,298 154 123 1,049 (24,173) 14,451
Other comprehensive income/(loss)
attributable to Royal Dutch
Shell plc shareholders -- -- -- -- (2,283) (2,283)
Transfer from other comprehensive
income -- -- -- -- (6) (6)
Repurchases of shares -- -- 5 -- -- 5
Share-based compensation -- -- -- (374) -- (374)
At March 31, 2020 37,298 154 128 675 (26,462) 11,794
---------------------------------- -------- -------- ----------- -------- ----- ------------ ------- ------
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 -- -- -- -- (1,679) (1,679)
Transfer from other comprehensive
income -- -- -- -- (89) (89)
Repurchases of shares -- -- 6 -- -- 6
Share-based compensation -- -- -- (384) -- (384)
At March 31, 2019 37,298 154 101 713 (23,797) 14,468
---------------------------------- -------- -------- ----------- -------- ----- ------------ ------- ------
The merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent company
of Royal Dutch Petroleum Company and The "Shell" Transport and Trading
Company, p.l.c., now The Shell Transport and Trading Company Limited, in
2005. The merger reserve increased in 2016 following the issuance of
shares for the acquisition of BG Group plc. The capital redemption
reserve was established in connection with repurchases of shares of
Royal Dutch Shell plc. The share plan reserve is in respect of
equity-settled share-based compensation plans.
6. Derivative financial instruments and debt excluding lease liabilities
As disclosed in the Consolidated Financial Statements for the year ended
December 31, 2019, presented in the Annual Report and Accounts and Form
20-F for that year, Shell is exposed to the risks of changes in fair
value of its financial assets and liabilities. The fair values of the
financial assets and liabilities are defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Methods
and assumptions used to estimate the fair values at March 31, 2020, are
consistent with those used in the year ended December 31, 2019, though
the carrying amounts of derivative financial instruments measured using
predominantly unobservable inputs have changed since that date.
The table below provides the comparison of the fair value with the
carrying amount of debt excluding lease liabilities, disclosed in
accordance with IFRS 7 Financial Instruments: Disclosures.
DEBT EXCLUDING LEASE LIABILITIES
December 31,
$ million March 31, 2020 2019
------------------- -------------- --------------
Carrying amount 65,775 65,887
Fair value(1) 68,770 71,163
-------------- ------------
(1.) Mainly determined from the prices quoted for these securities.
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
1. 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 as follows:
IDENTIFIED ITEMS
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- ------- ------------------------------------------------------
Identified items before tax
(76 ) 128 65 Divestment gains/(losses)
(749 ) (2,941) (33 ) Impairments
Fair value accounting of commodity derivatives and
968 616 (72 ) certain gas contracts
(18 ) (59 ) (53 ) Redundancy and restructuring
-- (333 ) -- Other
125 (2,589) (93 ) Total identified items before tax
------ ------ ----
Tax impact
44 (16 ) (19 ) Divestment gains/(losses)
213 700 (12 ) Impairments
Fair value accounting of commodity derivatives and
(131 ) (90 ) 104 certain gas contracts
11 13 20 Redundancy and restructuring
(366 ) 29 (8 ) Impact of exchange rate movements on tax balances
-- (108 ) -- Other
(228 ) 529 86 Total tax impact
------ ------ ---- ------------------------------------------------------
Identified items after tax
(32 ) 111 46 Divestment gains/(losses)
(536 ) (2,240) (45 ) Impairments
Fair value accounting of commodity derivatives and
838 526 32 certain gas contracts
(7 ) (46 ) (33 ) Redundancy and restructuring
(366 ) 29 (8 ) Impact of exchange rate movements on tax balances
-- (441 ) -- Other
(104 ) (2,060) (8 ) Impact on CCS earnings
------ ------ ---- ------------------------------------------------------
Of which:
(331 ) (89 ) 226 Integrated Gas
(1,154) (1,564) (23 ) Upstream
849 (318 ) (225) Oil Products
(2 ) (13 ) 2 Chemicals
535 (76 ) 13 Corporate
------
-- -- -- Impact on CCS earnings attributable to non-controlling
interest
------
(104 ) (2,060 ) (8 ) Impact on CCS earnings attributable to shareholders
------ ------ ---- ------------------------------------------------------
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 F).
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as power
and environmental products. Shell also enters into contracts for tolling,
pipeline and storage capacity. Derivative contracts are entered into for
mitigation of resulting economic exposures (generally price exposure)
and these derivative contracts are carried at period-end market price
(fair value), with movements in fair value recognised in income for the
period. Supply and purchase contracts entered into for operational
purposes, as well as contracts for tolling, pipeline and storage
capacity, are, by contrast, recognised when the transaction occurs;
furthermore, inventory is carried at historical cost or net realisable
value, whichever is lower. As a consequence, accounting mismatches occur
because: (a) the supply or purchase transaction is recognised in a
different period, or (b) the inventory is measured on a different basis.
In addition, certain contracts are, due to pricing or delivery
conditions, deemed to contain embedded derivatives or written options
and are also required to be carried at fair value even though they are
entered into for operational purposes. The accounting impacts are
reported as identified items.
Impacts of exchange rate movements on tax balances represent the impact
on tax balances of exchange rate movements arising on (a) the conversion
to dollars of the local currency tax base of non-monetary assets and
liabilities, as well as losses (this primarily impacts the Upstream and
Integrated Gas segments) and (b) the conversion of dollar-denominated
inter-segment loans to local currency, leading to taxable exchange rate
gains or losses (this primarily impacts the Corporate segment).
Other identified items represent other credits or charges 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.
B. Basic CCS earnings per share
Basic CCS earnings per share is calculated as CCS earnings attributable
to Royal Dutch Shell plc shareholders (see Note 2), divided by the
weighted average number of shares used as the basis for basic earnings
per share (see Note 3).
C. Cash capital expenditure
Cash capital expenditure represents cash spent on maintaining and
developing assets in the period. Management regularly monitors this
measure as a key lever to delivering sustainable cash flows. Cash
capital expenditure is the sum of the following lines from the
Consolidated Statement of Cash flows: Capital expenditure, Investments
in joint ventures and associates and Investments in equity securities.
With effect from the first quarter 2020, "Capital investment" is no
longer presented in this announcement since Cash capital expenditure is
considered to be more closely aligned with management's focus on free
cash flow generation.
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- --------------------------------------------
4,263 6,707 5,121 Capital expenditure
559 112 441 Investments in joint ventures and associates
147 65 39 Investments in equity securities
------- ------- -------
4,970 6,883 5,601 Cash capital expenditure
Of which:
882 1,323 1,344 Integrated Gas
2,521 2,768 2,491 Upstream
580 1,628 853 Oil Products
846 1,023 828 Chemicals
141 141 86 Corporate
------- ------- ------- --------------------------------------------
D. Return on average capital employed
Return on average capital employed (ROACE) measures the efficiency of
Shell's utilisation of the capital that it employs. Shell uses two ROACE
measures: ROACE on a Net income basis and ROACE on a CCS basis excluding
identified items.
Both measures refer to Capital employed which consists of total equity,
current debt and non-current debt.
ROACE on a Net income basis
In this calculation, the sum of income for the current and previous
three quarters, adjusted for after-tax interest expense, is expressed as
a percentage of the average capital employed for the same period. The
after-tax interest expense is calculated using the effective tax rate
for the same period.
$ million Quarters
Q1 2020 Q4 2019 Q1 2019
--------- --------- ---------
Income - current and previous three quarters 10,252 16,432 24,033
Interest expense after tax - current and previous
three quarters 2,854 3,024 2,601
Income before interest expense - current and previous
three quarters 13,106 19,457 26,634
-------------------------------------------------------- --------- --------- ---------
Capital employed -- opening 292,797 295,398 289,335
Capital employed -- closing 278,444 286,887 292,797
Capital employed -- average 285,620 291,142 291,066
--------- ---------
ROACE on a Net income basis 4.6% 6.7% 9.2%
-------------------------------------------------------- ----- ----- -----
ROACE on a CCS basis excluding identified items
In this calculation, the sum of CCS earnings excluding identified items
for the current and previous three quarters, adjusted for after-tax
interest expense, is expressed as a percentage of the average capital
employed for the same period. The after-tax interest expense is
calculated using the effective tax rate for the same period.
$ million Quarters
Q1 2020 Q4 2019 Q1 2019
--------- ---------- ---------
CCS earnings - current and previous three quarters 13,256 15,827 23,964
---------------------------------------------------------- --------- ---------- ---------
Identified items - current and previous three quarters (1,266) (1,170) 2,119
Interest expense after tax -- current and previous
three quarters 2,854 3,024 2,601
---------------------------------------------------------- --------- ---------- ---------
CCS earnings excluding identified items before interest
expense - current and previous three quarters 17,376 20,021 24,446
---------------------------------------------------------- --------- ---------- ---------
Capital employed -- average 285,620 291,142 291,066
---------------------------------------------------------- --------- ---------- ---------
ROACE on a CCS basis excluding identified items 6.1% 6.9% 8.4%
---------------------------------------------------------- ----- ------ -----
E. Gearing
Gearing is a key measure of Shell's capital structure and is defined as
net debt as a percentage of total capital. Net debt is defined as the
sum of current and non-current debt, less cash and cash equivalents,
adjusted for the fair value of derivative financial instruments used to
hedge foreign exchange and interest rate risks relating to debt, and
associated collateral balances. Management considers this adjustment
useful because it reduces the volatility of net debt caused by
fluctuations in foreign exchange and interest rates, and eliminates the
potential impact of related collateral payments or receipts.
Debt-related derivative financial instruments are a subset of the
derivative financial instrument assets and liabilities presented on the
balance sheet. Collateral balances are reported under "Trade and other
receivables" or "Trade and other payables" as appropriate.
$ million Quarters
March 31, December March 31,
2020 31, 2019 2019
----------- ----------- -----------
Current debt 15,767 15,064 15,381
Non-current debt 79,298 81,360 77,160
----------------------------------------------- ----------- ----------- -----------
Total debt(1) 95,065 96,424 92,541
----------------------------------------------- ----------- ----------- -----------
Add: Debt-related derivative financial
instruments: net liability/(asset) 1,218 701 1,158
----------------------------------------------- ----------- ----------- -----------
Add: Collateral on debt-related derivatives:
net liability/(asset) (58) 23 27
----------------------------------------------- ----------- ----------- -----------
Less: Cash and cash equivalents (21,811) (18,055) (21,470)
----------------------------------------------- ----------- ----------- -----------
Net debt 74,413 79,093 72,256
----------------------------------------------- ----------- ----------- -----------
Add: Total equity 183,379 190,463 200,256
----------------------------------------------- ----------- ----------- -----------
Total capital 257,792 269,557 272,512
----------------------------------------------- ----------- ----------- -----------
Gearing 28.9% 29.3% 26.5%
----------------------------------------------- ----- --- ----- --- ------
(1.) Includes lease liabilities of $29,290 million at March 31, 2020 and
$30,537 million at December 31, 2019.
F. Operating expenses
Operating expenses is a measure of Shell's cost management performance,
comprising the following items from the Consolidated Statement of
Income: production and manufacturing expenses; selling, distribution and
administrative expenses; and research and development expenses.
Underlying operating expenses measures Shell's total operating expenses
performance excluding identified items.
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- ---------------------------------------------
5,982 7,247 6,354 Production and manufacturing expenses
Selling, distribution and administrative
2,393 2,831 2,352 expenses
243 306 212 Research and development
8,618 10,384 8,917 Operating expenses
------ ------ ------ ---------------------------------------------
Of which identified items:
(Redundancy and restructuring
(18 ) (58 ) (52 ) charges)/reversal
-- (333 ) -- (Provisions)/reversal
-- -- -- Other
(18 ) (391 ) (52 )
8,600 9,993 8,865 Underlying operating expenses
------ ------ ------ ---------------------------------------------
G. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the business. It is defined as the
sum of "Cash flow from operating activities" and "Cash flow from
investing activities".
Cash flows from acquisition and divestment activities are removed from
Free cash flow to arrive at the Organic free cash flow, a measure used
by management to evaluate the generation of free cash flow without these
activities.
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- ---------------------------------------------------
14,851 10,267 8,630 Cash flow from operating activities
(2,718) (4,862) (4,622) Cash flow from investing activities
12,133 5,405 4,008 Free cash flow
------ ------ ------ ---------------------------------------------------
2,233 2,135 993 Less: Divestment proceeds (Reference I)
------ ------ ------
Add: Tax paid on divestments (reported under "Other
-- 106 -- investing cash outflows")
------ ------ ------
Add: Cash outflows related to inorganic capital
404 551 358 expenditure(1)
------ ------ ------
10,304 3,928 3,373 Organic free cash flow(2)
------ ------ ------
1. Cash outflows related to inorganic capital expenditure includes portfolio
actions which expand Shell's activities through acquisitions and
restructuring activities as reported in capital expenditure lines in the
Consolidated Statement of Cash Flows.
2. Free cash flow less divestment proceeds, adding back outflows related to
inorganic expenditure.
H. Cash flow from operating activities excluding working capital
movements
Working capital movements are defined as the sum of the following items
in the Consolidated Statement of Cash Flows: (i)
(increase)/decrease in inventories, (ii) (increase)/decrease in current
receivables, and (iii) increase/(decrease) in current payables.
Cash flow from operating activities excluding working capital movements
is a measure used by Shell to analyse its operating cash generation over
time excluding the timing effects of changes in inventories and
operating receivables and payables from period to period.
Quarters $ million
Q1 2020 Q4 2019 Q1 2019
--------- --------- --------- -----------------------------------------------------
14,851 10,267 8,630 Cash flow from operating activities
------ ------ ------
Of which:
3,986 3,457 4,227 Integrated Gas
5,607 3,995 5,278 Upstream
4,878 2,538 (598 ) Oil Products
(178 ) (44 ) (11) Chemicals
559 321 (266 ) Corporate
------ ------ ------ -----------------------------------------------------
9,594 (546 ) (2,841) (Increase)/decrease in inventories
6,314 (2,448) (1,425) (Increase)/decrease in current receivables
(8,430) 961 783 Increase/(decrease) in current payables
------ ------ ------
7,478 (2,033) (3,483) (Increase)/decrease in working capital
------ ------ ------
Cash flow from operating activities excluding working
7,373 12,300 12,113 capital movements
------ ------ ------
Of which:
3,352 4,017 3,715 Integrated Gas
3,718 4,834 5,263 Upstream
353 3,120 2,589 Oil Products
189 338 528 Chemicals
(239 ) (9 ) 17 Corporate
------ ------ ------ -----------------------------------------------------
I. Divestment proceeds
Divestment proceeds represent cash received from divestment activities
in the period. Management regularly monitors this measure as a key lever
to deliver sustainable cash flow.
Quarters $ million
Q4
Q1 2020 2019 Q1 2019
-------- ------ ------- ---------------------------------------------------
Proceeds from sale of property, plant and equipment
1,613 1,049 178 and businesses
547 1,032 544 Proceeds from sale of joint ventures and associates
73 55 271 Proceeds from sale of equity securities
------
2,233 2,135 993 Divestment proceeds
------ ------ -------
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited. All peak
production figures in Portfolio Developments are quoted at 100% expected
production. The numbers presented throughout this announcement may not
sum precisely to the totals provided and percentages may not precisely
reflect the absolute figures, due to rounding.
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate legal entities. In this announcement
"Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our" are
also used to refer to Royal Dutch Shell plc and its subsidiaries in
general or to those who work for them. These terms are also used where
no useful purpose is served by identifying the particular entity or
entities. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as
used in this announcement refer to entities over which Royal Dutch Shell
plc either directly or indirectly has control. Entities and
unincorporated arrangements over which Shell has joint control are
generally referred to as "joint ventures" and "joint operations",
respectively. Entities over which Shell has significant influence but
neither control nor joint control are referred to as "associates". The
term "Shell interest" is used for convenience to indicate the direct
and/or indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all third-party
interest.
This announcement contains forward-looking statements (within the
meaning of the US Private Securities Litigation Reform Act of 1995)
concerning the financial condition, results of operations and businesses
of Royal Dutch Shell. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations that
are based on management's current expectations and assumptions and
involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those
expressed or implied in these statements. Forward-looking statements
include, among other things, statements concerning the potential
exposure of Royal Dutch Shell to market risks and statements expressing
management's expectations, beliefs, estimates, forecasts, projections
and assumptions. These forward-looking statements are identified by
their use of terms and phrases such as "aim", "ambition", "anticipate",
"believe", "could", "estimate", "expect", "goals", "intend", "may",
"objectives", "outlook", "plan", "probably", "project", "risks",
"schedule", "seek", "should", "target", "will" and similar terms and
phrases. There are a number of factors that could affect the future
operations of Royal Dutch Shell and could cause those results to differ
materially from those expressed in the forward-looking statements
included in this announcement, including (without limitation):
(a) price fluctuations in crude oil and natural gas; (b) changes in
demand for Shell's products; (c) currency fluctuations; (d)
drilling and production results; (e) reserves estimates; (f) loss of
market share and industry competition; (g) environmental and physical
risks; (h) risks associated with the identification of suitable
potential acquisition properties and targets, and successful negotiation
and completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international sanctions;
(j) legislative, fiscal and regulatory developments including regulatory
measures addressing climate change; (k) economic and financial market
conditions in various countries and regions; (l) political risks,
including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the
approval of projects and delays in the reimbursement for shared costs;
(m) risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or exceed
previous dividend payments. All forward-looking statements contained in
this announcement are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. Readers
should not place undue reliance on forward-looking statements.
Additional risk factors that may affect future results are contained in
Royal Dutch Shell's Form 20-F for the year ended December 31, 2019
(available at www.shell.com/investor and www.sec.gov). These risk
factors also expressly qualify all forward-looking statements contained
in this announcement and should be considered by the reader. Each
forward-looking statement speaks only as of the date of this
announcement, April 30, 2020. Neither Royal Dutch Shell plc nor any of
its subsidiaries undertake any obligation to publicly update or revise
any forward-looking statement as a result of new information, future
events or other information. In light of these risks, results could
differ materially from those stated, implied or inferred from the
forward-looking statements contained in this announcement.
This announcement contains references to Shell's website. These
references are for the readers' convenience only. Shell is not
incorporating by reference any information posted on www.shell.com.
We may have used certain terms, such as resources, in this announcement
that the United States Securities and Exchange Commission (SEC) strictly
prohibits us from including in our filings with the SEC. Investors are
urged to consider closely the disclosure in our Form 20-F, File No
1-32575, available on the SEC website www.sec.gov.
This announcement contains inside information.
April 30, 2020
The information in this announcement reflects the unaudited consolidated
financial position and results of Royal Dutch Shell plc. Company No. 4366849,
Registered Office: Shell Centre, London, SE1 7NA, England, UK.
------------------------------------------------------------------------------
Contacts:
- Linda M. Coulter, Company Secretary
- 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: 21380068P1DRHMJ8KU70
Classification: Inside Information
(END) Dow Jones Newswires
April 30, 2020 02:00 ET (06:00 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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