ROYAL DUTCH SHELL PLC
1ST QUARTER 2018 UNAUDITED RESULTS
|
| SUMMARY OF
UNAUDITED RESULTS |
| $
million |
Quarters |
|
Definition |
Q1 2018 |
Q4 2017 |
Q1 2017 |
%1 |
| Income/(loss)
attributable to shareholders |
|
5,899 |
3,807 |
3,538 |
+67 |
|
| CCS earnings
attributable to shareholders |
Note 2 |
5,703 |
3,082 |
3,381 |
+69 |
|
| Of which: Identified
items |
A |
381 |
(1,221) |
(373) |
|
|
| CCS earnings
attributable to shareholders excluding identified items |
|
5,322 |
4,303 |
3,754 |
+42 |
|
| Add: CCS earnings
attributable to non-controlling interest |
|
121 |
94 |
109 |
|
|
| CCS earnings excluding
identified items |
|
5,443 |
4,397 |
3,863 |
+41 |
|
| Of which: |
|
|
|
|
|
|
| Integrated Gas |
|
2,439 |
1,636 |
1,181 |
|
|
| Upstream |
|
1,551 |
1,650 |
540 |
|
|
| Downstream |
|
1,687 |
1,396 |
2,489 |
|
|
| Corporate |
|
(234) |
(285) |
(347) |
|
|
| Cash flow from
operating activities |
|
9,427 |
7,275 |
9,508 |
-1 |
|
| Cash flow from
investing activities |
|
(4,249) |
(665) |
(4,324) |
|
|
| Free cash flow |
H |
5,178 |
6,610 |
5,184 |
|
|
| Basic earnings per
share ($) |
|
0.71 |
0.46 |
0.43 |
+65 |
|
| Basic CCS earnings per
share ($) |
B |
0.69 |
0.37 |
0.41 |
+68 |
|
| Basic CCS earnings per
share excl. identified items ($) |
|
0.64 |
0.52 |
0.46 |
+39 |
|
| Dividend per share
($) |
|
0.47 |
0.47 |
0.47 |
- |
|
- Q1 on Q1 change.
|
Compared with the first quarter 2017, CCS earnings attributable
to shareholders excluding identified items increased by
$1.6 billion, mainly driven by higher
contributions from Integrated Gas and Upstream, partly offset by
lower earnings in Downstream.
Cash flow from operating activities for the first quarter 2018
was $9.4 billion, which included
negative working capital movements of $0.9
billion, compared with $9.5
billion in the first quarter 2017, which included negative
working capital movements of $1.6
billion[i].
Total dividends distributed to shareholders in the quarter were
$4.0 billion.
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented: “Shell’s strong
earnings this quarter were underpinned by higher oil and gas
prices, the continued growth and very good performance of our
Integrated Gas business, and improved profitability in our Upstream
business. Less favourable refining market conditions and lower
contributions from trading impacted the earnings of our Downstream
business.
We continue to upgrade our portfolio through performance
improvement, new projects, divestments and the development of new
businesses. Competitiveness and resilience – now and through the
energy transition – are key features of our world-class investment
case.
We have a strong financial framework. Our commitment to capital
discipline is unchanged, we are making good progress with our
$30 billion divestment programme and
our outlook for free cash flow – which covered our cash dividend
and interest this quarter and over the last year – is consistent
with our intent to buy back at least $25
billion of our shares over the period 2018-2020.”
[i] Revised from negative working
capital movements of $1.8 billion.
See Note 7 and Definition I.
|
| ADDITIONAL
PERFORMANCE MEASURES |
| $
million |
Quarters |
|
Definition |
Q1 2018 |
Q4 2017 |
Q1 2017 |
%1 |
| Capital
investment |
C |
5,183 |
6,778 |
4,720 |
|
| Divestments |
D |
1,288 |
6,474 |
29 |
|
| Total production
available for sale (thousand boe/d) |
|
3,839 |
3,756 |
3,752 |
+2 |
| Global liquids
realised price ($/b) |
|
60.66 |
55.28 |
48.36 |
+25 |
| Global natural gas
realised price ($/thousand scf) |
|
4.86 |
4.40 |
4.29 |
+13 |
| Operating
expenses |
G |
9,719 |
9,776 |
9,282 |
+5 |
| Underlying operating
expenses |
G |
9,786 |
9,839 |
9,181 |
+7 |
| ROACE |
E |
6.4% |
5.8% |
4.0% |
|
| ROACE (CCS basis
excluding identified items) |
E |
6.0% |
5.6% |
3.3% |
|
| Gearing2 |
F |
24.7% |
25.0% |
28.3% |
|
- Q1 on Q1 change.
- With effect from 2018, the net debt calculation has been
amended (see Definition F). Gearing as previously published at
December 31, 2017, and at March 31, 2017, was 24.8% and 27.2%
respectively.
|
Changes to the Interim Financial Statements are described in
Notes 1, 6 and 7, while revised definitions are explained in
Definitions A, F and I.
Supplementary financial and operational disclosure for this
quarter is available at www.shell.com/investor.
FIRST QUARTER 2018 PORTFOLIO DEVELOPMENTS
Integrated Gas
During the quarter, Shell announced the sale of its shares in
Shell entities in New Zealand to
OMV for $578 million.
Upstream
During the quarter, Shell announced one of its largest US Gulf
of Mexico exploration finds in the past decade from the Whale
deep-water well (Shell share 60%). The discovery is under
evaluation.
In the deep-water bid round in Mexico in January for the Gulf of Mexico, Shell won four exploration
blocks on its own, four with its partner Qatar Petroleum and one
with its partner Pemex Exploración y Producción. Shell will be the
operator of all nine blocks.
Shell won four additional deep-water exploration blocks in
Brazil, one block on its own, and
three in joint bids with Chevron, Petrobras and Galp. Shell will be
the operator of two blocks.
In March, the Dutch cabinet decided to reduce NAM’s production
(Shell interest 50%) from the Groningen field to zero by 2030. It
is expected that this decision, if fully implemented, will reduce
Shell’s proved reserves by an estimated 0.5 to 0.65 billion boe in
2018.
In March, Shell completed the sale of its 19.6% interest in the
West Qurna 1 oil field in Iraq to
Itochu Corporation. Divestments completed in the quarter totalled
$574 million.
In April, Shell announced a final investment decision to develop
the Vito deep-water field in the US Gulf of Mexico. Vito (Shell
interest 63.1%) is expected to reach an average peak production of
100 thousand boe/d.
Downstream
During the quarter, Shell Midstream Partners, L.P., sold
approximately 36 million common units for total gross proceeds of
$980 million. Gross proceeds from the
public offering were $680 million
with $300 million from a private
offering with Shell Midstream LP Holdings LLC.
In April, Shell signed an agreement to sell its Downstream
business in Argentina to Raízen.
The sale includes the Buenos Aires
refinery, around 645 retail stations, the global commercial
businesses, as well as supply and distribution activities in the
country. The businesses acquired by Raízen will continue the
relationship with Shell through various commercial agreements.
PERFORMANCE BY SEGMENT
|
| INTEGRATED
GAS |
| $ million |
Quarters |
|
Q1
2018 |
Q4 2017 |
Q1 2017 |
%1 |
| Segment earnings |
2,391 |
848 |
1,822 |
+31 |
| Of which: Identified
items (Definition A) |
(48) |
(788) |
641 |
|
| Earnings excluding
identified items |
2,439 |
1,636 |
1,181 |
+107 |
| Cash flow from
operating activities |
2,561 |
823 |
1,951 |
+31 |
| Capital investment
(Definition C) |
1,311 |
1,043 |
805 |
+63 |
| Liquids production
available for sale (thousand b/d) |
212 |
229 |
169 |
+25 |
| Natural gas production
available for sale (million scf/d) |
4,407 |
4,364 |
3,317 |
+33 |
| Total production
available for sale (thousand boe/d) |
972 |
981 |
741 |
+31 |
| LNG liquefaction
volumes (million tonnes) |
8.90 |
8.52 |
8.18 |
+9 |
| LNG sales volumes
(million tonnes) |
18.58 |
17.15 |
15.84 |
+17 |
- Q1 on Q1 change.
|
First quarter identified items primarily reflected an impairment
charge of $50 million, a loss on fair
value accounting of commodity derivatives of $30 million, and a charge of $26 million related to the impact of the
weakening of the Australian dollar on a deferred tax position.
Identified items also included a gain of $54
million from a deferred tax adjustment.
Compared with the first quarter 2017, Integrated Gas earnings
excluding identified items benefited from increased contributions
from trading, higher volumes and higher realised oil, gas and LNG
prices. This more than offset the impact of higher operating
expenses.
Cash flow from operating activities increased compared with the
same quarter a year ago as a result of higher earnings, partly
offset by increased cash margining on derivatives. Cash flow from
operating activities included negative working capital movements of
$384 million, compared with negative
movements of $405 million[ii] in the
same quarter a year ago.
Compared with the first quarter 2017, total production increased
by 31%, mainly due to higher volumes from Pearl GTL and Gorgon.
Despite the Woodside divestment that was completed in the fourth
quarter 2017, LNG liquefaction volumes increased by 9% compared
with the first quarter 2017, mainly due to higher volumes from
Gorgon and increased feedgas supply across the portfolio.
[ii] Revised from negative working
capital movements of $590 million.
See Note 7 and Definition I.
|
|
UPSTREAM |
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
%1 |
| Segment earnings |
1,854 |
2,050 |
(530) |
+450 |
| Of which: Identified
items (Definition A) |
303 |
400 |
(1,070) |
|
| Earnings excluding
identified items |
1,551 |
1,650 |
540 |
+187 |
| Cash flow from
operating activities |
3,556 |
3,765 |
3,849 |
-8 |
| Capital investment
(Definition C) |
2,479 |
3,485 |
2,854 |
-13 |
| Liquids production
available for sale (thousand b/d) |
1,573 |
1,542 |
1,697 |
-7 |
| Natural gas production
available for sale (million scf/d) |
7,505 |
7,154 |
7,618 |
-1 |
| Total production
available for sale (thousand boe/d) |
2,867 |
2,775 |
3,011 |
-5 |
- Q1 on Q1 change.
|
First quarter identified items primarily reflected a total net
gain on sale of assets of $606
million, mainly related to the divestments of Shell’s
interests in the West Qurna 1 field in Iraq and North
Sabah in Malaysia. In
addition, as a result of the Dutch cabinet’s decision to reduce
production from the Groningen field to zero by 2030, Shell’s joint
venture NAM impaired the Groningen asset. Consequently, Shell’s
share of results of the NAM joint venture for the first quarter
included an impairment of $244
million, resulting in Shell’s net investment in NAM now
being fully written down to zero. Other impairments totalled
$70 million.
Compared with the first quarter 2017, Upstream earnings
excluding identified items benefited from higher realised oil and
gas prices as well as lower depreciation. This more than offset the
impact of lower volumes.
Despite higher earnings, cash flow from operating activities
decreased as a result of higher tax payments, portfolio impacts and
lower dividends received compared with the same quarter a year ago.
Cash flow from operating activities included negative working
capital movements of $830 million,
compared with negative movements of $671
million[iii] in the first quarter 2017.
First quarter production decreased by 5%, compared with the same
quarter a year ago, mainly due to the divestments of a package of
assets in the UK North Sea, oil sands interests in Canada and onshore assets in Gabon, partly offset by new fields ramping-up.
Excluding portfolio impacts, production was 4% higher than in the
same quarter a year ago.
[iii] Revised from negative working
capital movements of $803 million.
See Note 7 and Definition I.
|
|
DOWNSTREAM |
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
%1 |
| Segment earnings2 |
1,806 |
1,116 |
2,580 |
-30 |
| Of which: Identified
items (Definition A) |
119 |
(280) |
91 |
|
| Earnings excluding
identified items2 |
1,687 |
1,396 |
2,489 |
-32 |
| Of which: |
|
|
|
|
| Oil Products |
1,002 |
884 |
1,653 |
-39 |
| Refining
& Trading |
62 |
96 |
715 |
-91 |
|
Marketing |
940 |
788 |
938 |
- |
| Chemicals |
685 |
512 |
836 |
-18 |
| Cash flow from
operating activities |
3,107 |
2,649 |
3,705 |
-16 |
| Capital investment
(Definition C) |
1,369 |
2,208 |
1,046 |
+31 |
| Refinery processing
intake (thousand b/d) |
2,637 |
2,589 |
2,630 |
- |
| Oil products sales
volumes (thousand b/d) |
6,785 |
6,861 |
6,508 |
+4 |
| Chemicals sales
volumes (thousand tonnes) |
4,514 |
4,688 |
4,546 |
-1 |
- Q1 on Q1 change.
- Earnings are presented on a CCS basis (See Note 2).
|
First quarter identified items primarily reflected a gain on
fair value accounting of commodity derivatives of $66 million, as well as a gain of $57 million related to deferred tax
remeasurements in non-operated ventures, partly offset by
impairments of $37 million.
Compared with the first quarter 2017, Downstream earnings
excluding identified items reflected lower contributions from
trading, adverse exchange rate effects, as well as weaker refining
industry conditions.
Cash flow from operating activities reflected decreased earnings
and included negative working capital movements of $29 million, compared with negative movements of
$368 million[iv] in the same quarter
a year ago.
Oil Products
Refining & Trading earnings excluding identified items
reflected lower contributions from trading and weaker refining
industry conditions, compared with the first quarter 2017. Earnings
also decreased as a result of portfolio impacts.
Refinery availability decreased to 92% compared with 94% in the
first quarter 2017, mainly due to additional planned
maintenance.
Marketing earnings excluding identified items were at the same
level as in the first quarter 2017.
Compared with the first quarter 2017, Oil Products sales volumes
were higher due to increased trading volumes.
Chemicals
Chemicals earnings excluding identified items reflected less
favourable industry conditions, higher operating expenses and
adverse exchange rate effects.
Chemicals manufacturing plant availability increased to 94% from
93% in the first quarter 2017, mainly reflecting lower planned
maintenance.
[iv] Revised from negative working
capital movements of $221 million.
See Note 7 and Definition I.
|
|
CORPORATE |
| $ million |
|
|
Quarters |
|
|
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
| Segment earnings |
|
(227) |
(838) |
(410) |
| Of which: Identified
items (Definition A) |
|
7 |
(553) |
(63) |
| Earnings excluding
identified items |
|
(234) |
(285) |
(347) |
| Cash flow from
operating activities |
|
203 |
38 |
3 |
|
First quarter identified items mainly reflected a small tax
credit related to the impact of the weakening Brazilian real on
deferred tax positions related to financing of the Upstream
business.
Compared with the first quarter 2017, Corporate earnings
excluding identified items benefited from lower net interest
expense, partly offset by lower currency exchange gains.
OUTLOOK FOR THE SECOND QUARTER 2018
Compared with the second quarter 2017, Integrated Gas production
is expected to be 140 to 160 thousand boe/d higher. This is mainly
due to lower maintenance. LNG liquefaction volumes are expected to
be at a similar level.
Compared with the second quarter 2017, Upstream production is
expected to be 230 to 260 thousand boe/d lower. This is mainly due
to portfolio impacts, higher maintenance, lower production at NAM
in the Netherlands and field
decline more than offsetting project start-ups.
Refinery availability is expected to decrease in the second
quarter 2018 compared with the same period a year ago as a result
of higher maintenance.
Oil products sales volumes are expected to increase by some 70
thousand boe/d compared with the same period a year ago as a result
of the separation of Motiva assets, partly offset by completed
divestments.
Chemicals availability is expected to increase in the second
quarter 2018 as a result of lower maintenance compared with the
same period a year ago.
Corporate earnings excluding identified items are expected to be
a net charge of $300 – 350 million in
the second quarter and a net charge of around $1.4 – 1.6 billion for the full year 2018. This
excludes the impact of currency exchange rate effects and interest
rate movements.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
|
|
CONSOLIDATED STATEMENT OF INCOME |
| $ million |
|
|
Quarters |
|
|
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
| Revenue1 |
|
89,235 |
85,422 |
71,796 |
| Share of profit of
joint ventures and associates |
|
1,039 |
1,034 |
1,198 |
| Interest and other
income |
|
840 |
1,668 |
317 |
| Total revenue and
other income |
|
91,114 |
88,124 |
73,311 |
| Purchases |
|
66,528 |
64,095 |
51,266 |
| Production and
manufacturing expenses |
|
6,923 |
6,563 |
6,658 |
| Selling, distribution
and administrative expenses |
|
2,588 |
2,953 |
2,412 |
| Research and
development |
|
208 |
260 |
212 |
| Exploration |
|
230 |
921 |
443 |
| Depreciation,
depletion and amortisation |
|
5,334 |
5,796 |
7,838 |
| Interest expense |
|
936 |
984 |
1,112 |
| Total expenditure |
|
82,747 |
81,572 |
69,941 |
| Income/(loss) before
taxation |
|
8,367 |
6,552 |
3,370 |
| Taxation
charge/(credit)2 |
|
2,336 |
2,615 |
(274) |
| Income/(loss) for the
period1 |
|
6,031 |
3,937 |
3,644 |
| Income/(loss)
attributable to non-controlling interest |
|
132 |
130 |
106 |
| Income/(loss)
attributable to Royal Dutch Shell plc shareholders |
|
5,899 |
3,807 |
3,538 |
| Basic earnings per
share ($)3 |
|
0.71 |
0.46 |
0.43 |
| Diluted earnings per
share ($)3 |
|
0.70 |
0.46 |
0.43 |
- See Note 2 “Segment information”.
- Fourth quarter 2017 included a charge of $2,014 million
primarily related to a remeasurement of deferred tax positions
following the US tax reform legislation.
- See Note 3 “Earnings per share”.
|
|
|
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME |
| $
million |
|
Quarters |
|
|
Q1 2018 |
Q4
2017 |
Q1
2017 |
|
Income/(loss) for the period |
6,031 |
3,937 |
3,644 |
| Other
comprehensive income/(loss) net of tax: |
|
|
|
| Items that
may be reclassified to income in later periods: |
|
|
|
| - Currency
translation differences |
464 |
355 |
1,222 |
| -
Unrealised gains/(losses) on securities1 |
- |
258 |
129 |
| - Debt
instruments remeasurements1 |
(12) |
- |
- |
| - Cash
flow hedging gains/(losses) |
(68) |
(484) |
88 |
| - Deferred
cost of hedging1 |
(93) |
- |
- |
| - Share of
other comprehensive income/(loss) of joint ventures and
associates |
22 |
46 |
60 |
| Total |
313 |
175 |
1,499 |
| Items that
are not reclassified to income in later periods: |
|
|
|
| -
Retirement benefits remeasurements |
1,282 |
(2,056) |
1,753 |
| - Equity
instruments remeasurements1 |
(418) |
- |
- |
| - Share of
other comprehensive income/(loss) of joint ventures and
associates |
1 |
- |
- |
| Total |
865 |
(2,056) |
1,753 |
| Other
comprehensive income/(loss) for the period |
1,178 |
(1,881) |
3,252 |
|
Comprehensive income/(loss) for the period |
7,209 |
2,056 |
6,896 |
|
Comprehensive income/(loss) attributable to non-controlling
interest |
93 |
133 |
116 |
|
Comprehensive income/(loss) attributable to Royal Dutch Shell plc
shareholders |
7,116 |
1,923 |
6,780 |
- See Note 1 “Basis of preparation” regarding IFRS 9 Financial
Instruments.
|
|
|
|
|
| CONDENSED
CONSOLIDATED BALANCE SHEET |
| $ million |
|
|
Mar 31,
2018 |
Dec 31,
2017 |
|
| Assets |
|
|
|
| Non-current
assets |
|
|
|
| Intangible assets |
24,312 |
24,180 |
|
| Property, plant and
equipment |
226,328 |
226,380 |
|
| Joint ventures and
associates |
28,852 |
27,927 |
|
| Investments in
securities |
7,023 |
7,222 |
|
| Deferred tax |
13,247 |
13,791 |
|
| Retirement
benefits |
3,256 |
2,799 |
|
| Trade and other
receivables |
8,371 |
8,475 |
|
| Derivative financial
instruments1 |
1,284 |
919 |
|
|
312,673 |
311,693 |
|
| Current assets |
|
|
|
| Inventories |
25,014 |
25,223 |
|
| Trade and other
receivables |
45,071 |
44,565 |
|
| Derivative financial
instruments1 |
6,034 |
5,304 |
|
| Cash and cash
equivalents |
21,927 |
20,312 |
|
|
98,046 |
95,404 |
|
| Total assets |
410,719 |
407,097 |
|
| Liabilities |
|
|
|
| Non-current
liabilities |
|
|
|
| Debt |
73,630 |
73,870 |
|
| Trade and other
payables |
3,131 |
3,447 |
|
| Derivative financial
instruments1 |
883 |
981 |
|
| Deferred tax |
13,131 |
13,007 |
|
| Retirement
benefits |
12,319 |
13,247 |
|
| Decommissioning and
other provisions |
24,723 |
24,966 |
|
|
127,817 |
129,518 |
|
| Current
liabilities |
|
|
|
| Debt |
14,392 |
11,795 |
|
| Trade and other
payables |
49,405 |
51,410 |
|
| Derivative financial
instruments1 |
5,283 |
5,253 |
|
| Taxes payable |
8,657 |
7,250 |
|
| Retirement
benefits |
454 |
594 |
|
| Decommissioning and
other provisions |
3,398 |
3,465 |
|
|
81,589 |
79,767 |
|
| Total liabilities |
209,406 |
209,285 |
|
| Equity attributable to
Royal Dutch Shell plc shareholders |
197,331 |
194,356 |
|
| Non-controlling
interest |
3,982 |
3,456 |
|
| Total equity |
201,313 |
197,812 |
|
| Total liabilities and
equity |
410,719 |
407,097 |
|
- 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, 2018 (as
previously published) |
696 |
(917) |
16,932 |
177,645 |
194,356 |
3,456 |
197,812 |
|
| Impact of IFRS 9
3 |
- |
- |
(138) |
88 |
(50) |
- |
(50) |
|
| At January 1, 2018 (as
revised) |
696 |
(917) |
16,794 |
177,733 |
194,306 |
3,456 |
197,762 |
|
Comprehensive
income/(loss)
for the period |
- |
- |
1,217 |
5,899 |
7,116 |
93 |
7,209 |
|
| Transfer from other
comprehensive income |
- |
- |
(37) |
37 |
- |
- |
- |
|
| Dividends |
- |
- |
- |
(3,971) |
(3,971) |
(208) |
(4,179) |
|
| Share-based
compensation4 |
- |
(119) |
(238) |
191 |
(166) |
- |
(166) |
|
Other
changes in
non-controlling interest |
- |
- |
- |
46 |
46 |
641 |
687 |
|
| At March 31, 2018 |
696 |
(1,036) |
17,736 |
179,935 |
197,331 |
3,982 |
201,313 |
|
| At January 1,
2017 |
683 |
(901) |
11,298 |
175,566 |
186,646 |
1,865 |
188,511 |
|
Comprehensive income/(loss)
for the period |
- |
- |
3,242 |
3,538 |
6,780 |
116 |
6,896 |
|
| Dividends |
- |
- |
- |
(3,903) |
(3,903) |
(31) |
(3,934) |
|
| Scrip dividends |
4 |
- |
(4) |
1,249 |
1,249 |
- |
1,249 |
|
| Share-based
compensation |
- |
557 |
(510) |
(1) |
46 |
- |
46 |
|
Other
changes in
non-controlling interest |
- |
- |
- |
(1) |
(1) |
(14) |
(15) |
|
| At March 31, 2017 |
687 |
(344) |
14,026 |
176,448 |
190,817 |
1,936 |
192,753 |
|
- See Note 4 “Share capital”.
- See Note 5 “Other reserves”.
- See Note 1 “Basis of preparation”.
- The amendments to IFRS 2 Share-based Payment became effective
January 1, 2018. Following adoption of the amendments, components
of share-based payments that were previously classified as
cash-settled are now classified as equity-settled. This resulted in
an increase of $172 million in the share plan reserve within other
reserves and a net increase of $125 million in retained
earnings.
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS |
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
| Income/(loss) for the
period |
6,031 |
3,937 |
3,644 |
| Adjustment for: |
|
|
|
| - Current tax |
2,169 |
1,467 |
1,882 |
| - Interest expense
(net) |
737 |
817 |
952 |
| - Depreciation,
depletion and amortisation |
5,334 |
5,796 |
7,838 |
| - Exploration well
write-offs1 |
109 |
541 |
284 |
| - Net (gains)/losses
on sale and revaluation of non-current assets and businesses |
(607) |
(1,319) |
70 |
| - Share of
(profit)/loss of joint ventures and associates |
(1,039) |
(1,034) |
(1,198) |
| - Dividends received
from joint ventures and associates |
750 |
1,647 |
776 |
| - (Increase)/decrease
in inventories |
281 |
(1,368) |
266 |
| - (Increase)/decrease
in current receivables1 |
(683) |
(2,544) |
721 |
| - Increase/(decrease)
in current payables1 |
(484) |
2,040 |
(2,552) |
| - Derivative financial
instruments1 |
(763) |
(140) |
49 |
| - Deferred tax,
retirement benefits, decommissioning and other provisions1 |
(51) |
167 |
(2,143) |
| - Other1 |
12 |
(367) |
9 |
| Tax paid |
(2,369) |
(2,365) |
(1,090) |
| Cash flow from
operating activities |
9,427 |
7,275 |
9,508 |
| Capital
expenditure |
(4,789) |
(5,861) |
(4,306) |
| Investments in joint
ventures and associates |
(415) |
(202) |
(194) |
| Proceeds from sale of
property, plant and equipment and businesses |
747 |
2,866 |
122 |
| Proceeds from sale of
joint ventures and associates |
21 |
221 |
1 |
| Interest received |
156 |
157 |
123 |
| Other |
31 |
2,154 |
(70) |
| Cash flow from
investing activities |
(4,249) |
(665) |
(4,324) |
Net
increase/(decrease) in debt with maturity period
within three months |
2,707 |
543 |
(290) |
| Other debt: |
|
|
|
| - New borrowings |
241 |
120 |
364 |
| - Repayments |
(1,390) |
(4,103) |
(1,322) |
| Interest paid |
(889) |
(840) |
(850) |
| Change in
non-controlling interest |
674 |
6 |
2 |
| Cash dividends paid
to: |
|
|
|
| - Royal Dutch Shell
plc shareholders |
(3,971) |
(2,266) |
(2,654) |
| - Non-controlling
interest |
(124) |
(97) |
(31) |
| Repurchases of
shares |
- |
- |
- |
| Shares held in trust:
net sales/(purchases) and dividends received |
(894) |
(443) |
(60) |
| Cash flow from
financing activities |
(3,646) |
(7,080) |
(4,841) |
Currency
translation differences relating to cash and
cash equivalents |
83 |
83 |
122 |
| Increase/(decrease) in
cash and cash equivalents |
1,615 |
(387) |
465 |
| Cash and cash
equivalents at beginning of period |
20,312 |
20,699 |
19,130 |
| Cash and cash
equivalents at end of period |
21,927 |
20,312 |
19,595 |
|
|
|
|
|
- Prior period comparatives within Cash flow from operating
activities have been revised to conform with current year
presentation. Overall, the revisions do not have an impact on the
previously published Cash flow from operating activities. See Note
7 “Change in presentation of Consolidated Statement of Cash
Flows”.
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 and as adopted by the European Union, and 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, 2017 (pages 142 to 148) as filed
with the U.S. Securities and Exchange Commission, except for the
adoption of IFRS 9 Financial Instruments and IFRS 15 Revenue from
Contracts with Customers on January 1,
2018, and should be read in conjunction with that
filing.
IFRS 9 sets out the requirements for recognising and measuring
financial assets, financial liabilities and certain contracts to
buy or sell non-financial items. Furthermore, the standard
facilitates use of hedge accounting and also results in different
income recognition upon the sale of certain investments in
securities. The adoption of IFRS 9 resulted in a decrease of
$83 million in equity at January 1, 2018, mainly representing the
recognition of additional provisions for impairment of receivables
under the expected loss model. In addition, changing the
measurement basis from amortised cost to fair value for certain
financial assets resulted in an increase of $33 million in equity at January 1, 2018. Furthermore, a reclassification
within equity between other reserves and retained earnings,
primarily representing deferred cost of hedging, was
recognised.
IFRS 15 provides a single model of accounting for revenue
arising from contracts with customers based on the identification
and satisfaction of performance obligations, and revenue from
contracts with customers that is distinguished from other sources.
Shell has adopted IFRS 15 with effect from January 1, 2018, and has elected to apply the
modified retrospective transition approach. Although IFRS 15 does
not generally represent a change from Shell’s current practice, the
accounting for certain contracts, such as those with provisional
pricing or take-or-pay arrangements, and underlifts and overlifts,
has been identified as an area of change. However, these do not
have a significant effect on Shell’s accounting or disclosures, and
therefore no transition adjustment is presented.
The financial information presented in the 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,
2017 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.
|
|
|
INFORMATION BY SEGMENT |
|
| $
million |
Quarters |
|
|
Q1
2018 |
Q4 2017 |
Q1
2017 |
|
|
Third-party revenue |
|
|
|
|
| Integrated
Gas |
10,721 |
8,205 |
8,419 |
|
|
Upstream |
2,572 |
2,644 |
1,609 |
|
|
Downstream |
75,926 |
74,561 |
61,752 |
|
|
Corporate |
16 |
12 |
16 |
|
| Total
third-party revenue1 |
89,235 |
85,422 |
71,796 |
|
|
Inter-segment revenue |
|
|
|
|
| Integrated
Gas |
1,088 |
1,199 |
805 |
|
|
Upstream |
8,904 |
8,258 |
8,661 |
|
|
Downstream |
794 |
1,281 |
726 |
|
|
Corporate |
- |
- |
- |
|
| CCS
earnings |
|
|
|
|
| Integrated
Gas |
2,391 |
848 |
1,822 |
|
|
Upstream |
1,854 |
2,050 |
(530) |
|
|
Downstream |
1,806 |
1,116 |
2,580 |
|
|
Corporate |
(227) |
(838) |
(410) |
|
| Total |
5,824 |
3,176 |
3,462 |
|
- First quarter 2018 includes $ 534 million of revenue from
sources other than from contracts with customers.
|
|
|
|
|
RECONCILIATION OF INCOME FOR THE PERIOD to CCS EARNINGS |
|
| $
million |
Quarters |
|
|
|
Q1 2018 |
Q4
2017 |
Q1
2017 |
|
|
Income/(loss) attributable to Royal Dutch Shell plc
shareholders |
5,899 |
3,807 |
3,538 |
|
|
Income/(loss) attributable to non-controlling interest |
132 |
130 |
106 |
|
|
Income/(loss) for the period |
6,031 |
3,937 |
3,644 |
|
|
Current
cost of supplies adjustment: |
|
|
|
|
|
Purchases |
(274) |
(1,022) |
(217) |
|
|
Taxation |
67 |
287 |
60 |
|
|
Share of
profit/(loss) of joint ventures and associates |
- |
(26) |
(25) |
|
|
Current
cost of supplies adjustment1 |
(207) |
(761) |
(182) |
|
|
CCS
earnings |
5,824 |
3,176 |
3,462 |
|
|
of
which: |
|
|
|
|
|
CCS
earnings attributable to Royal Dutch Shell plc shareholders |
5,703 |
3,082 |
3,381 |
|
|
CCS
earnings attributable to non-controlling interest |
121 |
94 |
109 |
|
|
- The adjustment attributable to Royal Dutch Shell plc
shareholders is a negative $196 million in the first quarter 2018
(Q4 2017: negative $725 million; Q1 2017: negative $157
million).
|
|
|
|
|
|
|
|
|
|
|
|
|
3. Earnings per share
|
|
| EARNINGS
PER SHARE |
|
|
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
Income/(loss) attributable to Royal Dutch Shell plc
shareholders
($ million) |
5,899 |
3,807 |
3,538 |
| Weighted average
number of shares used as the basis for determining: |
|
|
|
| Basic earnings per
share (million) |
8,304.6 |
8,274.6 |
8,154.8 |
| Diluted earnings per
share (million) |
8,377.2 |
8,354.5 |
8,222.9 |
|
|
|
|
|
|
|
|
|
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,
2018 |
4,597,136,050 |
3,745,486,731 |
387 |
309 |
696 |
| At March 31, 2018 |
4,597,136,050 |
3,745,486,731 |
387 |
309 |
696 |
|
|
|
|
|
|
| At January 1,
2017 |
4,428,903,813 |
3,745,486,731 |
374 |
309 |
683 |
| Scrip dividends |
47,791,678 |
- |
4 |
- |
4 |
| At March 31, 2017 |
4,476,695,491 |
3,745,486,731 |
378 |
309 |
687 |
- Share capital at March 31, 2018 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 23, 2017, 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 2,714 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 23, 2018, and
the end of the Annual General Meeting to be held in 2018, 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, 2018 (as
previously published) |
37,298 |
154 |
84 |
1,440 |
(22,044) |
16,932 |
| Impact of IFRS 9 |
- |
- |
- |
- |
(138) |
(138) |
| At January 1, 2018 (as
revised) |
37,298 |
154 |
84 |
1,440 |
(22,182) |
16,794 |
| Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
1,217 |
1,217 |
| Transfer from other
comprehensive income |
- |
- |
- |
- |
(37) |
(37) |
| Share-based
compensation |
- |
- |
- |
(238) |
- |
(238) |
| At March 31, 2018 |
37,298 |
154 |
84 |
1,202 |
(21,002) |
17,736 |
| At January 1,
2017 |
37,311 |
154 |
84 |
1,644 |
(27,895) |
11,298 |
| Other comprehensive
income/(loss) attributable to Royal Dutch Shell plc
shareholders |
- |
- |
- |
- |
3,242 |
3,242 |
| Scrip dividends |
(4) |
- |
- |
- |
- |
(4) |
| Share-based
compensation |
- |
- |
- |
(510) |
- |
(510) |
| At March 31, 2017 |
37,307 |
154 |
84 |
1,134 |
(24,653) |
14,026 |
|
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 finance
lease liabilities
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2017,
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 March 31, 2018 are consistent with those used in
the year ended December 31, 2017, and
the carrying amounts of derivative financial instruments measured
using predominantly unobservable inputs have not changed materially
since that date.
With effect from 2018, current and non-current derivative assets
and liabilities are no longer presented as part of “Trade and other
receivables” and “Trade and other payables”, but separately
disclosed on the Balance Sheet to provide more insight.
The table below provides the comparison of the fair value with
the carrying amount of debt excluding finance lease liabilities,
disclosed in accordance with IFRS 7 Financial Instruments:
Disclosures.
|
| DEBT
EXCLUDING FINANCE LEASE LIABILITIES |
| $ million |
Mar 31, 2018 |
Dec 31, 2017 |
|
| Carrying amount |
73,350 |
70,140 |
|
| Fair value1 |
76,581 |
74,650 |
|
- Mainly determined from the prices quoted for these
securities.
|
|
7. Change in presentation of Consolidated Statement of Cash
Flows
With effect from 2018, the reconciliation from “Income for the
period” to “Cash flow from operating activities” has been revised
to provide more insight and improve correlation with the Balance
Sheet and Statement of Income. “Cash flow from operating
activities” itself remains unchanged.
Exploration well write-offs, previously presented under “Other”,
are shown separately. Changes in current and non-current derivative
financial instruments, previously presented under
“Decrease/(increase) in working capital” and “Other”, are presented
under a new line item “Derivative financial instruments”. Changes
in current retirement benefits and decommissioning provisions,
previously included in “Increase/(decrease) in payables”, are
presented under “Deferred tax, retirement benefits, decommissioning
and other provisions”, together with changes in non-current
balances. The impact of these changes is presented below.
|
|
|
| $
million |
|
Quarters |
|
Q1 2017 |
Q2 2017 |
Q3 2017 |
Q4 2017 |
Full year 2017 |
| Working
capital movements (as previously published) |
(1,828) |
2,258 |
(2,467) |
(1,121) |
(3,158) |
| Impact of
working capital definition changes on: |
|
|
|
|
|
| -
(Increase)/decrease in current receivables |
(1,087) |
(238) |
1,018 |
(585) |
(892) |
| -
Increase/(decrease) in current payables |
1,350 |
444 |
172 |
(166) |
1,800 |
| Working
capital movements (as revised) (I) |
(1,565) |
2,464 |
(1,277) |
(1,872) |
(2,250) |
|
|
|
|
|
|
| Cash flow
from operating activities excluding working capital movements (as
previously published) |
11,336 |
9,027 |
10,049 |
8,396 |
38,808 |
| Impact of
working capital definition changes on: |
|
|
|
|
|
| -
Exploration well write-offs |
284 |
25 |
47 |
541 |
897 |
| -
Derivative financial instruments |
49 |
128 |
(1,076) |
(140) |
(1,039) |
| - Deferred
tax, retirement benefits, decommissioning and other provisions |
(104) |
(129) |
(161) |
12 |
(382) |
| -
Other |
(492) |
(230) |
- |
338 |
(384) |
| Cash flow
from operating activities excluding working capital movements (as
revised) (II) |
11,073 |
8,821 |
8,859 |
9,147 |
37,900 |
| Cash flow
from operating activities (unchanged) (I + II) |
9,508 |
11,285 |
7,582 |
7,275 |
35,650 |
|
|
|
|
|
|
|
|
|
|
DEFINITIONS
A. 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 below.
|
|
|
|
IDENTIFIED
ITEMS |
|
|
$ million |
Quarters |
|
|
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
|
|
Identified items
before tax |
|
|
|
|
|
- Divestment
gains/(losses) |
625 |
1,220 |
(70) |
|
|
- Impairments |
(417) |
(426) |
(2,444) |
|
|
- Fair value
accounting of commodity derivatives and certain gas contracts |
66 |
(652) |
573 |
|
|
- Redundancy and
restructuring |
63 |
(135) |
(76) |
|
|
- Other |
53 |
356 |
(89) |
|
|
Total identified items
before tax |
390 |
363 |
(2,106) |
|
|
Tax impact |
|
|
|
|
|
- Divestment
gains/(losses) |
(10) |
55 |
267 |
|
|
- Impairments |
16 |
105 |
919 |
|
|
- Fair value
accounting of commodity derivatives and certain gas contracts |
(8) |
111 |
(69) |
|
|
- Redundancy and
restructuring |
(16) |
28 |
31 |
|
|
- Impact of exchange
rate movements on tax balances |
(45) |
(111) |
535 |
|
|
- Other |
54 |
(1,772) |
22 |
|
|
Total tax impact |
(9) |
(1,584) |
1,705 |
|
|
Identified items after
tax |
|
|
|
|
|
- Divestment
gains/(losses) |
615 |
1,275 |
197 |
|
|
- Impairments |
(401) |
(321) |
(1,525) |
|
|
- Fair value
accounting of commodity derivatives and certain gas contracts |
58 |
(541) |
504 |
|
|
- Redundancy and
restructuring |
47 |
(107) |
(45) |
|
|
- Impact of exchange
rate movements on tax balances |
(45) |
(111) |
535 |
|
|
- Other |
107 |
(1,416) |
(67) |
|
|
Impact on CCS
earnings |
381 |
(1,221) |
(401) |
|
|
Of which: |
|
|
|
|
|
Integrated Gas |
(48) |
(788) |
641 |
|
|
Upstream |
303 |
400 |
(1,070) |
|
|
Downstream |
119 |
(280) |
91 |
|
|
Corporate |
7 |
(553) |
(63) |
|
|
Impact on CCS earnings
attributable to non-controlling interest |
- |
- |
(28) |
|
|
Impact on CCS earnings
attributable to shareholders |
381 |
(1,221) |
(373) |
|
|
|
|
|
|
|
|
|
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”
on 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”
(Definition 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. 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 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 Integrated Gas and Upstream 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 the US tax
reform 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. Capital investment
Capital investment is a measure used to make decisions about
allocating resources and assessing performance. It comprises
capital expenditure, new investments in joint ventures and
associates, exploration expense excluding well write-offs, new
finance leases and investments in Integrated Gas, Upstream and
Downstream equity securities, all of which on an accruals
basis.
The reconciliation of “Capital expenditure” to “Capital
investment” is as follows.
|
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
| Capital
expenditure |
4,789 |
5,861 |
4,306 |
| Investments in joint
ventures and associates |
415 |
202 |
194 |
| Exploration expense,
excluding exploration wells written off |
122 |
380 |
157 |
| Finance leases |
182 |
330 |
41 |
| Other1 |
(325) |
5 |
22 |
| Capital
investment |
5,183 |
6,778 |
4,720 |
| Of which: |
|
|
|
| Integrated Gas |
1,311 |
1,043 |
805 |
| Upstream |
2,479 |
3,485 |
2,854 |
| Downstream |
1,369 |
2,208 |
1,046 |
| Corporate |
24 |
42 |
15 |
- First quarter 2018 includes a payment of $380 million related
to a payable position that formed part of the acquisition of
Marathon Oil Canada Corporation in Canada in the second quarter
2017.
|
|
|
|
|
|
D. Divestments
Divestments is a measure used to monitor the progress of Shell’s
divestment programme. This measure comprises proceeds from sale of
property, plant and equipment and businesses, joint ventures and
associates, and other Integrated Gas, Upstream and Downstream
investments in equity securities, reported in “Cash flow from
investing activities”, adjusted onto an accruals basis and for any
share consideration received or contingent consideration initially
recognised upon the related divestment, as well as proceeds from
the sale of interests in entities while retaining control (for
example, proceeds from sale of interest in Shell Midstream
Partners, L.P.), which are included in “Change in non-controlling
interest” within “Cash flow from financing activities”.
In future periods, the proceeds from any disposal of shares
received as divestment consideration, and proceeds from realisation
of contingent consideration, will be included in “Cash flow from
investing activities”.
The reconciliation of “Proceeds from sale of property, plant and
equipment and businesses” to “Divestments” is as follows.
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
| Proceeds from sale of
property, plant and equipment and businesses |
747 |
2,866 |
122 |
| Proceeds from sale of
joint ventures and associates |
21 |
221 |
1 |
| Share and contingent
consideration1 |
- |
217 |
- |
| Proceeds from sale of
interests in entities while retaining control |
673 |
- |
- |
| Other2 |
(153) |
3,170 |
(94) |
| Divestments |
1,288 |
6,474 |
29 |
| Of which: |
|
|
|
| Integrated Gas |
14 |
3,021 |
12 |
| Upstream |
574 |
3,254 |
17 |
| Downstream |
700 |
199 |
- |
| Corporate |
- |
- |
- |
- This is valued at the date of the related divestment, instead
of when these shares are disposed of or the contingent
consideration is realised.
- Fourth quarter 2017 includes proceeds of $2,635 million from
the sale of shares in Woodside Petroleum Limited.
|
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.
In this calculation, ROACE is defined as income for the current and
previous three quarters, adjusted for after-tax interest expense,
as a percentage of the average capital employed for the same
period. Capital employed consists of total equity, current debt and
non-current debt.
|
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
| Income for current and
previous three quarters |
15,822 |
13,435 |
7,966 |
| Interest expense after
tax |
2,645 |
2,995 |
3,268 |
| Income before interest
expense |
18,467 |
16,430 |
11,234 |
| Capital employed –
opening |
284,382 |
280,988 |
278,887 |
| Capital employed –
closing |
289,335 |
283,477 |
284,382 |
| Capital employed –
average |
286,859 |
282,233 |
281,635 |
| ROACE |
6.4% |
5.8% |
4.0% |
|
|
|
|
|
|
Return on average capital employed on a CCS basis excluding
identified items is defined as the sum of CCS earnings attributable
to shareholders excluding identified items for the current and
previous three quarters, as a percentage of the average capital
employed for the same period.
|
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1
2017 |
| CCS earnings excluding
identified items |
17,332 |
15,764 |
9,386 |
| Capital employed –
average |
286,859 |
282,233 |
281,635 |
| ROACE on a CCS basis
excluding identified items |
6.0% |
5.6% |
3.3% |
|
|
|
|
|
F. Gearing
Gearing is a key measure of Shell’s capital structure and is
defined as net debt as a percentage of total capital. With effect
from 2018, the net debt calculation includes the fair value of
derivative financial instruments used to hedge foreign exchange and
interest rate risks relating to debt, and associated collateral
balances. Management believes this amendment is 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.
Prior period comparatives have been revised to reflect the change
in net debt calculation.
|
|
| $
million |
Quarters |
|
Mar 31,
2018 |
Dec 31, 2017 |
Mar 31, 2017 |
|
| Current debt |
14,392 |
11,795 |
8,620 |
|
| Non-current debt |
73,630 |
73,870 |
83,009 |
|
| Total debt1 |
88,022 |
85,665 |
91,629 |
|
| Add: Debt-related
derivative financial instruments: net liability/(asset) 2 |
42 |
591 |
3,892 |
|
| Less: Cash and cash
equivalents |
(21,927) |
(20,312) |
(19,595) |
|
| Net debt |
66,137 |
65,944 |
75,926 |
|
| Add: Total equity |
201,313 |
197,812 |
192,753 |
|
| Total capital |
267,450 |
263,756 |
268,679 |
|
| Gearing3 |
24.7% |
25.0% |
28.3% |
|
- Includes finance lease liabilities of $14,672 million at March
31, 2018, $15,524 million at December 31, 2017, and $14,704 million
at March 31, 2017.
- There were no collateral balances in the quarters
presented.
- Gearing as previously published at December 31, 2017, and at
March 31, 2017, was 24.8% and 27.2% respectively. Gearing as
previously published at December 31, 2016, was 28.0% (29.1% as per
revised net debt calculation).
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
| $ million |
Quarters |
|
Q1 2018 |
Q4 2017 |
Q1 2017 |
| Production and
manufacturing expenses |
6,923 |
6,563 |
6,658 |
| Selling, distribution
and administrative expenses |
2,588 |
2,953 |
2,412 |
| Research and
development |
208 |
260 |
212 |
| Operating
expenses |
9,719 |
9,776 |
9,282 |
| Less identified
items: |
|
|
|
| Redundancy and
restructuring charges/(reversal) |
67 |
(152) |
(73) |
|
Provisions/(reversal) |
- |
215 |
(28) |
|
67 |
63 |
(101) |
| Underlying operating
expenses |
9,786 |
9,839 |
9,181 |
|
|
H. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments, after investment in
maintaining and growing our business. It is defined as the sum of
“Cash flow from operating activities” and “Cash flow from investing
activities” as shown on page 1.
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.
|
| $ million |
Q1 2018 |
Q4 2017 |
Q1 2017 |
| Cash flow from
operating activities |
9,427 |
7,275 |
9,508 |
| -
(Increase)/decrease in inventories |
281 |
(1,368) |
266 |
| - (Increase)/decrease
in current receivables1 |
(683) |
(2,544) |
721 |
| - Increase/(decrease)
in current payables1 |
(484) |
2,040 |
(2,552) |
| (Increase)/decrease in
working capital2 |
(886) |
(1,872) |
(1,565) |
| Cash flow from
operating activities excluding working capital movements2 |
10,313 |
9,147 |
11,073 |
- See Note 7 “Change in presentation of Consolidated Statement of
Cash Flows”.
- As previously published, working capital increased by $1,121
million in the fourth quarter 2017, and by $1,828 million in the
first quarter 2017. Cash flow from operating activities excluding
working capital movements, as previously published, was $8,396
million in the fourth quarter 2017, and $11,336 million in the
first quarter 2017.
|
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited.
All peak production figures in Portfolio Developments are quoted at
100% expected production.
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 U.S. 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, 2017 (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 26, 2018. 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. U.S. 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 26, 2018
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 Szymanski, 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