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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Shell Plc | LSE:SHEL | London | Ordinary Share | GB00BP6MXD84 | ORD EUR0.07 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 34.50 | 1.51% | 2,326.00 | 2,330.00 | 2,331.00 | 2,498.00 | 2,330.50 | 2,478.00 | 9,915,744 | 16:35:05 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Crude Petroleum & Natural Gs | 284.31B | 16.09B | 2.6459 | 8.81 | 139.38B |
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SUMMARY OF UNAUDITED RESULTS
Quarters $ million Nine months
----------------------------------- --------------------------------- ----------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 %(2) Reference 2019(1) 2018 %
--------- ------- --------- ---- --------- -------- -------
Income/(loss) attributable
5,879 2,998 5,839 +1 to shareholders 14,878 17,762 -16
CCS earnings attributable Note
6,081 3,025 5,570 +9 to shareholders 2 14,399 16,499 -13
1,313 (437) (54) Of which: Identified items A 868 783
--------- ------- --------- --------- -------- -------
CCS earnings attributable
to shareholders excluding
4,767 3,462 5,624 -15 identified items 13,530 15,716 -14
Add: CCS earnings attributable
149 130 169 to non-controlling interest 410 411
--------- ------- --------- ---- --------- -------- ------- ---
CCS earnings excluding identified
4,917 3,592 5,793 -15 items 13,940 16,127 -14
Of which:
2,674 1,726 2,292 Integrated Gas 6,968 7,036
907 1,335 1,886 Upstream 3,967 4,894
2,153 1,338 2,010 Downstream 5,313 5,436
(817) (806) (395) Corporate (2,307) (1,239)
--------- ------- --------- ---- --------------------------------- --------- -------- ------- ---
Cash flow from operating
12,252 11,031 12,092 +1 activities 31,913 31,064 +3
Cash flow from investing
(2,130) (4,166) (4,082) activities (10,918) (8,347)
10,122 6,865 8,010 Free cash flow H 20,995 22,717
--------- ------- --------- --------- -------- -------
Basic earnings per share
0.73 0.37 0.70 +4 ($) 1.84 2.14 -14
Basic CCS earnings per share
0.76 0.37 0.67 +13 ($) B 1.78 1.99 -11
Basic CCS earnings per share
0.59 0.43 0.68 -13 excl. identified items ($) 1.67 1.89 -12
--------- ------- --------- ---- -------- ------- ---
0.47 0.47 0.47 - Dividend per share ($) 1.41 1.41 -
--------- ------- --------- ---- -------- -------
1. IFRS 16 Leases (IFRS 16) was adopted with effect from
January 1, 2019. See Note 8 "Adoption of IFRS 16
Leases".
2. Q3 on Q3 change.
Compared with the third quarter 2018, CCS earnings attributable to
shareholders excluding identified items were $4.8 billion, reflecting
lower realised oil, LNG and gas prices, as well as weaker realised
refining and chemicals margins. This was partly offset by significantly
stronger contributions from LNG and oil products trading and
optimisation as well as higher realised margins in retail and global
commercial.
Compared with the third quarter 2018, cash flow from operating
activities excluding working capital movements was $12.1 billion,
reflecting lower earnings, higher pension contributions and lower
dividends received.
Total dividends distributed to shareholders in the quarter were $3.8
billion. Today, Shell launches the next tranche of the share buyback
programme, with a maximum aggregate consideration of $2.75 billion in
the period up to and including January 27, 2020. Since the launch of the
programme, Shell has bought back $12 billion in shares for cancellation.
Royal Dutch Shell Chief Executive Officer Ben van Beurden commented:
"This quarter we continued to deliver strong cash flow and earnings,
despite sustained lower oil and gas prices, and chemicals margins. Our
earnings reflect the resilience of our market-facing businesses and
their ability to capitalise on market conditions, including very strong
trading and optimisation results this quarter.
Our intention to buy back $25 billion in shares and reduce net debt
remains unchanged. The prevailing weak macroeconomic conditions and
challenging outlook inevitably create uncertainty about the pace of
reducing gearing to 25% and completing the share buyback programme
within the 2020 timeframe."
ADDITIONAL PERFORMANCE MEASURES
Quarters $ million Nine months
---------------------------- ----------- ----------------------------------
Q3 Q2
2019 2019 Q3 2018 %(1) Reference 2019 2018 %
-------- ----- --------- ----------- ----------- --------- ------ ---
6,098 5,337 5,902 Cash capital expenditure(2) C 17,036 16,648
7,759 6,341 5,717 Capital investment(3) C 20,785 16,999
Total production available
3,563 3,583 3,596 -1 for sale (thousand boe/d) 3,632 3,625 -
-------- ----- --------- ----------- ------------------------------- ----------- --------- ------ ---
Global liquids realised price
55.99 61.26 68.21 -18 ($/b) 58.18 65.13 -11
Global natural gas realised
4.19 4.21 4.92 -15 price ($/thousand scf) 4.63 4.91 -6
-------- ----- --------- ----------- ----------- --------- ------ ----
8,650 9,941 9,312 -7 Operating expenses G 27,509 29,037 -5
8,657 9,477 9,248 -6 Underlying operating expenses G 27,000 28,878 -7
-------- ----- --------- ----------- ----------- --------- ------ ----
8.6% 8.4% 8.7% ROACE (Net income basis) E 8.6% 8.7%
ROACE (CCS basis excluding
8.1% 8.2% 8.1% identified items)(4) E 8.1% 8.1%
-------- ----- --------- ----------- ----------- --------- ------ ----
27.9% 27.6% 23.1% Gearing F 27.9% 23.1%
1. Q3 on Q3 change.
2. With effect from 2019, Cash capital expenditure has
been introduced as a capital spent performance
measure (see Reference C).
3. With effect from 2019, the definition has been
amended (see Reference C). Comparative information
has been revised.
4. With effect from 2019, the definition has been
amended (see Reference E). Comparative information
has been revised.
Supplementary financial and operational disclosure for this quarter is
available at
https://www.globenewswire.com/Tracker?data=o8bmuFXSz9TATqQyQPreSV8AMNsh-IunTmp5cMOjbRHm5gkOWvG1cO4xJkCtQ0BNgVU6DFS3CPdsRu-CyiGiESBLZSCslq6k2pl7Cqo3tOw=
www.shell.com/investor.
The IFRS 16 impact on net debt in the third quarter 2019 was an increase
of $15,566 million. Third quarter 2019 reported Gearing was 27.9% on an
IFRS 16 basis, comparable with 23.5% on an IAS 17 basis.
The impact of IFRS 16 is presented in Note 8 "Adoption of IFRS 16
Leases" and not addressed in the performance analysis sections of this
results announcement.
THIRD QUARTER 2019 PORTFOLIO DEVELOPMENTS
Upstream
During the quarter, Shell completed the sale of its shares in Shell
Olie-og Gasudvinding Danmark B.V., which held a 36.8% non-operating
interest in the Danish Underground Consortium, to Norwegian Energy
Company ASA for $1.9 billion.
During the quarter, Shell took the final investment decision for the
PowerNap deep-water project, a subsea tie-back to the Shell-operated
Olympus production hub, in the US Gulf of Mexico (Shell interest 100%).
Downstream
During the quarter, Shell completed the divestment of its 50% interest
in the SASREF joint venture in the Kingdom of Saudi Arabia to Saudi
Aramco for $631 million.
PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Nine months
----------------------------------- --------------------------------------- -------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 %(2) 2019(1) 2018 %
--------- ------- --------- ---- ------- -----
2,597 1,340 2,116 +23 Segment earnings 6,731 7,865 -14
Of which: Identified items (Reference
(77) (386) (176) A) (237) 829
Earnings excluding identified
2,674 1,726 2,292 +17 items 6,968 7,036 -1
--------- ------- --------- ---- ------- ----- ---
4,224 3,403 3,320 +27 Cash flow from operating activities 11,854 8,831 +34
--------- ------- --------- ---- ------- ----- ---
894 738 688 Cash capital expenditure(3) 2,976 2,558
--------- ------- --------- ------- -----
2,303 836 864 Capital investment(4) 5,103 2,908
--------- ------- --------- ------- -----
Liquids production available
166 159 208 -20 for sale (thousand b/d) 154 214 -28
Natural gas production available
4,586 4,456 4,156 +10 for sale (million scf/d) 4,397 4,267 +3
--------- ------- --------- ---- ------- ----- ---
Total production available for
957 927 924 +4 sale (thousand boe/d) 912 950 -4
LNG liquefaction volumes (million
8.95 8.66 8.18 +9 tonnes) 26.34 25.54 +3
--------- ------- --------- ---- ------- ----- ---
18.90 17.95 17.27 +9 LNG sales volumes (million tonnes) 54.36 53.82 +1
--------- ------- --------- ---- ------- ----- ---
1. IFRS 16 was adopted with effect from January 1, 2019.
See Note 8 "Adoption of IFRS 16 Leases".
2. Q3 on Q3 change.
3. With effect from 2019, Cash capital expenditure has
been introduced as a capital spent performance
measure (see Reference C).
4. With effect from 2019, the definition has been
amended (see Reference C). Comparative information
has been revised.
Third quarter identified items primarily reflected losses related to the
fair value accounting of commodity derivatives.
Compared with the third quarter 2018, Integrated Gas earnings excluding
identified items primarily reflected significantly stronger
contributions from LNG trading and optimisation as well as higher
volumes, partly offset by lower realised LNG, oil and gas prices.
Compared with the third quarter 2018, production increased mainly due to
field ramp-ups in Australia and Trinidad and Tobago. LNG liquefaction
volumes increased mainly as a result of new LNG capacity from the
Prelude floating LNG facility as well as increased feedgas availability
compared with the third quarter 2018.
Compared with the third quarter 2018, cash flow from operating
activities excluding working capital movements mainly reflected higher
earnings, partly offset by increased cash outflows related to commodity
derivatives.
UPSTREAM
Quarters $ million Nine months
----------------------------------- -------------------------------- --------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 %(2) 2019(1) 2018 %
--------- ------- --------- ---- ------- ------
1,722 1,554 2,249 -23 Segment earnings 4,982 5,197 -4
Of which: Identified items
815 219 363 (Reference A) 1,015 303
Earnings excluding identified
907 1,335 1,886 -52 items 3,967 4,894 -19
--------- ------- --------- ---- ------- ------ ---
Cash flow from operating
4,448 5,616 6,663 -33 activities 15,343 15,792 -3
--------- ------- --------- ---- ------- ------ ---
2,639 2,342 3,323 Cash capital expenditure(3) 7,482 8,946
--------- ------- --------- ------- ------
2,452 2,700 2,918 Capital investment(4) 7,889 8,799
--------- ------- --------- ------- ------
Liquids production available
1,705 1,683 1,602 +6 for sale (thousand b/d) 1,702 1,561 +9
Natural gas production available
5,224 5,640 6,206 -16 for sale (million scf/d) 5,904 6,461 -9
--------- ------- --------- ---- ------- ------ ---
Total production available
2,606 2,656 2,672 -2 for sale (thousand boe/d) 2,720 2,675 +2
1. IFRS 16 was adopted with effect from January 1, 2019.
See Note 8 "Adoption of IFRS 16 Leases".
2. Q3 on Q3 change.
3. With effect from 2019, Cash capital expenditure has
been introduced as a capital spent performance
measure (see Reference C).
4. With effect from 2019, the definition has been
amended (see Reference C). Comparative information
has been revised.
Third quarter identified items primarily reflected a gain on sale of
assets of $1,465 million, partly offset by impairments of $344 million
and a charge of $261 million related to the impact of the weakening
Brazilian real on a deferred tax position.
Compared with the third quarter 2018, Upstream earnings excluding
identified items reflected lower realised oil, gas and NGL prices, well
write-offs in Kazakhstan as well as lower gas production. These were
partly offset by lower provisions, as well as positive movements in
deferred tax positions in contrast with the same period a year ago.
Compared with the third quarter 2018, production decreased mainly due to
divestments, weaker operational performance and higher maintenance
activities, largely offset by field ramp-ups. Excluding portfolio
impacts, production was 2% higher than in the same quarter a year ago.
Compared with the third quarter 2018, cash flow from operating
activities excluding working capital movements mainly reflected lower
cash earnings.
DOWNSTREAM
Quarters $ million Nine months
----------------------------------- --------------------------------------- --------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 %(2) 2019(1) 2018 %
--------- ------- --------- ---- ------- ------
2,574 1,072 1,709 +51 Segment earnings(3) 5,240 4,683 +12
Of which: Identified items (Reference
421 (266) (301) A) (73) (753)
Earnings excluding identified
2,153 1,338 2,010 +7 items(3) 5,313 5,436 -2
Of which:
1,929 1,206 1,473 +31 Oil Products 4,506 3,656 +23
448 (20) 424 +6 Refining & Trading 771 679 +14
1,481 1,225 1,049 +41 Marketing 3,735 2,977 +25
224 132 537 -58 Chemicals 806 1,780 -55
--------- ------- --------- ---- --------------------------------------- ------- ------ ---
3,205 2,398 1,037 +209 Cash flow from operating activities 4,992 5,134 -3
2,454 2,176 1,817 Cash capital expenditure(4) 6,301 4,990
2,870 2,731 1,859 Capital investment(5) 7,471 5,136
Refinery processing intake (thousand
2,522 2,632 2,675 -6 b/d) 2,606 2,623 -1
Oil Products sales volumes (thousand
6,731 6,608 6,697 +1 b/d) 6,603 6,742 -2
Chemicals sales volumes (thousand
3,845 3,787 4,145 -7 tonnes) 11,769 13,534 -13
1. IFRS 16 was adopted with effect from January 1, 2019.
See Note 8 "Adoption of IFRS 16 Leases".
2. Q3 on Q3 change.
3. Earnings are presented on a CCS basis (See Note 2).
4. With effect from 2019, Cash capital expenditure has
been introduced as a capital spent performance
measure (see Reference C).
5. With effect from 2019, the definition has been
amended (see Reference C). Comparative information
has been revised.
Third quarter identified items primarily reflected a gain on sale of
assets of $282 million and a gain of $192 million related to the fair
value accounting of commodity derivatives, partly offset by a net charge
of $52 million related to impairments.
Compared with the third quarter 2018, Downstream earnings excluding
identified items benefited from stronger contributions from oil products
trading and optimisation and higher retail and global commercial
margins. These were partly offset by lower realised refining, base
chemicals and intermediates margins.
Compared with the third quarter 2018, cash flow from operating
activities excluding working capital movements mainly reflected lower
cash earnings and lower dividends received.
Oil Products
--
-- Refining & Trading earnings excluding identified items reflected
stronger contributions from oil products trading and optimisation,
mainly fuel oil, partly offset by lower realised refining margins,
compared with the third quarter 2018.
Refinery availability was 92%, at a similar level as in the third
quarter 2018.
--
-- Marketing earnings excluding identified items reflected increased
retail, lubricants and aviation margins, as well as favourable
currency exchange rate effects, compared with the third quarter
2018.
Compared with the third quarter 2018, Oil Products sales volumes were at
a similar level.
Chemicals
--
-- Chemicals earnings excluding identified items reflected lower
realised intermediates and base chemicals margins mainly in Europe
and Asia as well as lower volumes.
Chemicals manufacturing plant availability decreased to 91% from 93% in
the third quarter 2018, mainly reflecting higher maintenance activities
in Europe.
CORPORATE
Quarters $ million Nine months
--------------------------- ----------------------------------------- ----------------
Q3 Q2
2019(1) 2019(1) Q3 2018 2019(1) 2018
--------- ------- ------- ------- -------
(663) (789) (335) Segment earnings (2,122) (835)
Of which: Identified items (Reference
154 18 60 A) 185 404
(817) (806) (395) Earnings excluding identified items (2,307) (1,239)
--------- ------- ------- ----------------------------------------- ------- -------
375 (385) 1,072 Cash flow from operating activities (276) 1,307
--------- ------- ------- ----------------------------------------- ------- -------
1. IFRS 16 was adopted with effect from January 1, 2019.
See Note 8 "Adoption of IFRS 16 Leases".
Third quarter identified items mainly reflected a gain related to the
impact of the weakening Brazilian real on a deferred tax position.
Compared with the third quarter 2018, Corporate earnings excluding
identified items reflected adverse currency exchange rate effects as
well as lower tax credits.
OUTLOOK FOR THE FOURTH QUARTER 2019
Integrated Gas production is expected to be 920 -- 970 thousand boe/d.
LNG liquefaction volumes are expected to be 8.8 -- 9.4 million tonnes.
Upstream production is expected to be 2,650 -- 2,800 thousand boe/d.
Refinery availability is expected to be 87% -- 92%.
Oil Products sales volumes are expected to be 6,650 -- 7,050 thousand
boe/d.
Chemicals manufacturing plant availability is expected to be 81% -- 86%.
Corporate segment earnings excluding identified items are expected to be
a net expense of $2,900 -- 3,200 million for the full year 2019. This
excludes the impact of currency exchange rate effects.
Full year 2019 Cash capital expenditure is expected to be around the
lower end of the $24 -- 29 billion range.
FORTHCOMING EVENTS
The Shell Project & Technology Open House for the investor community is
scheduled to take place on November 26, 2019 in Amsterdam.
Fourth quarter 2019 and full year results and dividends are scheduled to
be announced on January 30, 2020. First quarter 2020 results and
dividends are scheduled to be announced on April 30, 2020. Second
quarter 2020 and half year results and dividends are scheduled to be
announced on July 30, 2020. Third quarter 2020 results and dividends are
scheduled to be announced on October 29, 2020.
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Nine months
-------------------------- --------------------------------------------------------- -------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 2019(1) 2018
------- ------- -------- ------- ----------
86,592 90,544 100,151 Revenue(2) 260,871 286,151
Share of profit of joint ventures
769 632 1,000 and associates 2,885 2,755
2,180 662 397 Interest and other income(4) 3,285 3,024
------- ------- -------- ------- ----------
89,541 91,838 101,548 Total revenue and other income 267,041 291,930
------- ------- -------- ------- ----------
63,900 68,590 76,070 Purchases 192,413 215,719
6,002 6,835 6,256 Production and manufacturing expenses 19,191 20,167
Selling, distribution and administrative
2,429 2,881 2,829 expenses 7,662 8,198
219 225 227 Research and development 656 672
644 439 322 Exploration 1,389 795
6,815 6,699 5,198 Depreciation, depletion and amortisation 19,464 15,891
1,161 1,252 909 Interest expense 3,572 2,774
------- ------- -------- ------- ----------
81,169 86,920 91,811 Total expenditure 244,346 264,216
------- ------- -------- ------- ----------
8,372 4,917 9,737 Income/(loss) before taxation 22,695 27,714
2,348 1,755 3,696 Taxation charge/(credit) 7,351 9,454
------- ------- -------- ------- ----------
6,024 3,162 6,041 Income/(loss) for the period(2) 15,344 18,260
Income/(loss) attributable to non-controlling
145 164 202 interest 466 498
------- ------- -------- ------- ----------
Income/(loss) attributable to Royal
5,879 2,998 5,839 Dutch Shell plc shareholders 14,878 17,762
------- ------- -------- ------- ----------
0.73 0.37 0.70 Basic earnings per share ($)(3) 1.84 2.14
0.73 0.37 0.70 Diluted earnings per share ($)(3) 1.83 2.12
------- ------- -------- ------- ----------
1. See Note 8 "Adoption of IFRS 16 Leases".
2. See Note 2 "Segment information".
3. See Note 3 "Earnings per share".
4. Third quarter 2019 included a gain on divestments
including Upstream Denmark, Caesar Tonga and the
SASREF joint venture in Saudi Arabia.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Nine months
-------------------------- --------------------------------------------------------- ----------------
Q3 2019 Q2 2019 Q3 2018 2019 2018
------- ------- -------- ------- -------
6,024 3,162 6,041 Income/(loss) for the period 15,344 18,260
Other comprehensive income/(loss)
net of tax:
Items that may be reclassified to
income in later periods:
(1,514) 215 (500) -- Currency translation differences (1,123) (2,818)
2 18 (1) -- Debt instruments remeasurements 31 (15)
213 101 (69) -- Cash flow and net investment hedging gains/(losses) (132) (769)
5 79 43 -- Deferred cost of hedging 111 (148)
-- Share of other comprehensive income/(loss) of joint
(45) (1) 8 ventures and associates (101) (27)
------- ------- -------- ------- -------
(1,339) 413 (519) Total (1,214) (3,777)
Items that are not reclassified to
income in later periods:
(2,010) (1,172) 615 -- Retirement benefits remeasurements (4,655) 3,162
(53) (73) 84 -- Equity instruments remeasurements (23) (203)
-- Share of other comprehensive income/(loss) of joint
1 (6) (2) ventures and associates (4) (1)
------- ------- -------- ------- -------
(2,062) (1,251) 697 Total (4,683) 2,958
------- ------- -------- ------- -------
Other comprehensive income/(loss)
(3,401) (839) 178 for the period (5,897) (819)
------- ------- -------- ------- -------
Comprehensive income/(loss) for the
2,624 2,323 6,219 period 9,447 17,441
Comprehensive income/(loss) attributable
124 180 173 to non-controlling interest 482 349
------- ------- -------- ------- -------
Comprehensive income/(loss) attributable
2,499 2,143 6,046 to Royal Dutch Shell plc shareholders 8,965 17,092
------- ------- -------- ------- -------
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
---------------------------
September 30, December 31,
2019(1) 2018
--------------------------------------------------------- ----------------
Assets
Non-current assets
Intangible assets 23,116 23,586
Property, plant and
equipment 236,921 223,175
Joint ventures and
associates 24,096 25,329
Investments in securities 3,048 3,074
Deferred tax 11,287 12,097
Retirement benefits 2,708 6,051
Trade and other receivables 7,558 7,826
Derivative financial
instruments(2) 853 574
309,588 301,712
--------------------------- --------------------------------------------------------- ----------------
Current assets
Inventories 23,240 21,117
Trade and other receivables 40,694 42,431
Derivative financial
instruments(2) 6,835 7,193
Cash and cash equivalents 15,417 26,741
--------------------------------------------------------- ----------------
86,186 97,482
--------------------------------------------------------- ----------------
Total assets 395,774 399,194
--------------------------------------------------------- ----------------
Liabilities
Non-current liabilities
Debt 76,112 66,690
Trade and other payables 2,229 2,735
Derivative financial
instruments(2) 1,301 1,399
Deferred tax 14,373 14,837
Retirement benefits 14,166 11,653
Decommissioning and other
provisions 19,849 21,533
--------------------------------------------------------- ----------------
128,028 118,847
--------------------------------------------------------- ----------------
Current liabilities
Debt 12,812 10,134
Trade and other payables 45,543 48,888
Derivative financial
instruments(2) 5,165 7,184
Taxes payable 8,292 7,497
Retirement benefits 394 451
Decommissioning and other
provisions 2,960 3,659
--------------------------------------------------------- ----------------
75,165 77,813
--------------------------------------------------------- ----------------
Total liabilities 203,194 196,660
--------------------------------------------------------- ----------------
Equity attributable to
Royal Dutch Shell plc
shareholders 188,617 198,646
Non-controlling interest 3,964 3,888
--------------------------------------------------------- ----------------
Total equity 192,580 202,534
--------------------------------------------------------- ----------------
Total liabilities and
equity 395,774 399,194
--------------------------------------------------------- ----------------
(1.) See Note 8 "Adoption of IFRS 16 Leases".
1. 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
--------------------------------------------------------
Shares Non-
Share held in Other Retained controlling Total
$ million capital(1) trust reserves(2) earnings Total interest equity
---------------------------- ----------- -------- ------------ --------- -------- ------------ --------
At January 1, 2019
(as previously published) 685 (1,260) 16,615 182,606 198,646 3,888 202,534
Impact of IFRS 16(3) - - - 4 4 - 4
At January 1, 2019
(as revised) 685 (1,260) 16,615 182,610 198,650 3,888 202,538
Comprehensive income/(loss)
for the period - - (5,913) 14,878 8,965 482 9,447
Transfer from other
comprehensive income - - (56) 56 - - -
Dividends - - - (11,472) (11,472) (403) (11,875)
Repurchases of shares (20) - 20 (7,526) (7,526) - (7,526)
Share-based compensation - 749 (131) (619) (1) - (1)
Other changes in
non-controlling interest - - - - - (3) (3)
----------- -------- ------------ --------- -------- ------------ --------
At September 30,
2019 666 (511) 10,535 177,927 188,617 3,964 192,580
----------- -------- ------------ --------- -------- ------------ --------
At January 1, 2018 696 (917) 16,794 177,733 194,306 3,456 197,762
Comprehensive income/(loss)
for the period - - (670) 17,762 17,092 349 17,441
Transfer from other
comprehensive income - - (1,108) 1,108 - - -
Dividends - - - (11,806) (11,806) (489) (12,295)
Repurchases of shares (4) - 4 (2,007) (2,007) - (2,007)
Share-based compensation - (301) 25 177 (99) - (99)
Other changes in
non-controlling interest - - - 47 47 637 684
----------- -------- ------------ --------- -------- ------------ --------
At September 30,
2018 692 (1,218) 15,045 183,014 197,533 3,953 201,486
----------- -------- ------------ --------- -------- ------------ --------
(1.) See Note 4 "Share capital".
1. See Note 5 "Other reserves".
2. See Note 8 "Adoption of IFRS 16 Leases".
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Nine months
-------------------------- ------------------------------------------- ------------------
Q3 Q2
2019(1) 2019(1) Q3 2018 2019(1) 2018
-------- ------- ------- -------- --------
8,372 4,917 9,737 Income before taxation for the period(2) 22,695 27,714
Adjustment for:
921 1,030 690 - Interest expense (net) 2,846 2,161
6,815 6,699 5,198 - Depreciation, depletion and amortisation 19,464 15,891
402 202 149 - Exploration well write-offs 722 304
- Net (gains)/losses on sale and
revaluation of non-current assets
(2,039) (379) (163) and businesses (2,483) (2,338)
- Share of (profit)/loss of joint
(769) (632) (1,000) ventures and associates (2,885) (2,755)
- Dividends received from joint ventures
859 1,217 1,374 and associates 2,820 3,368
813 (61) (1,693) - (Increase)/decrease in inventories (2,089) (4,871)
- (Increase)/decrease in current
2,644 308 (2,722) receivables 1,527 (6,466)
- Increase/(decrease) in current
(3,289) 321 1,788 payables (2,184) 5,678
(149) (480) 560 - Derivative financial instruments (1,738) (827)
(634) 30 (93) - Retirement benefits(2) (582) 232
(250) 8 (434) - Decommissioning and other provisions(2) (544) (973)
67 (39) 535 - Other(2) 54 719
(1,511) (2,110) (1,834) Tax paid (5,710) (6,773)
-------- ------- ------- -------- --------
12,252 11,031 12,092 Cash flow from operating activities 31,913 31,064
-------- ------- ------- -------- --------
(5,992) (5,150) (5,800) Capital expenditure (16,264) (15,864)
Investments in joint ventures and
(30) (160) (78) associates (631) (672)
(76) (26) (24) Investments in equity securities(2) (141) (112)
Proceeds from sale of property, plant
2,932 644 231 and equipment and businesses 3,754 2,400
Proceeds from sale of joint ventures
922 102 935 and associates 1,567 1,119
126 17 188 Proceeds from sale of equity securities(2) 414 4,408
229 220 236 Interest received 686 602
732 592 588 Other investing cash inflows(2) 2,004 1,299
(973) (404) (358) Other investing cash outflows(2) (2,308) (1,527)
-------- ------- ------- -------- --------
(2,130) (4,166) (4,082) Cash flow from investing activities (10,918) (8,347)
-------- ------- ------- -------- --------
Net increase/(decrease) in debt with
maturity period
2,009 145 (155) within three months 2,063 (416)
Other debt:
142 180 424 - New borrowings 462 788
(7,180) (2,848) (2,260) - Repayments (11,561) (7,232)
(1,088) (1,214) (864) Interest paid (3,417) (2,648)
76 45 - Derivative financial instruments(2) 76 -
- - (1) Change in non-controlling interest (2) 673
Cash dividends paid to:
(3,773) (3,825) (3,949) - Royal Dutch Shell plc shareholders (11,473) (11,806)
(133) (203) (134) - Non-controlling interest (404) (486)
(2,944) (2,142) (1,414) Repurchases of shares (7,340) (1,414)
Shares held in trust: net sales/(purchases)
(94) (7) (2) and dividends received (557) (1,088)
-------- ------- ------- -------- --------
(12,985) (9,868) (8,355) Cash flow from financing activities (32,153) (23,629)
-------- ------- ------- -------- --------
Currency translation differences
relating to cash and
(190) 4 (11) cash equivalents (166) (288)
-------- ------- ------- -------- --------
Increase/(decrease) in cash and cash
(3,054) (3,000) (356) equivalents (11,324) (1,200)
-------- ------- ------- -------- --------
Cash and cash equivalents at beginning
18,470 21,470 19,468 of period 26,741 20,312
-------- ------- ------- -------- --------
Cash and cash equivalents at end
15,417 18,470 19,112 of period 15,417 19,112
-------- ------- ------- -------- --------
1. See Note 8 "Adoption of IFRS 16 Leases".
2. 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 (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 Form 20-F for the year ended
December 31, 2018 (pages 167 to 214) as filed with the US Securities and
Exchange Commission, except for the adoption of IFRS 16 Leases on
January 1, 2019, and should be read in conjunction with that filing.
Under IFRS 16, all lease contracts, with limited exceptions, are
recognised in financial statements by way of right-of-use assets and
corresponding lease liabilities. Shell applied the modified
retrospective transition method without restating comparative
information. Further information in respect of the implementation of
IFRS 16 is included in Note 8.
In March 2019, the IFRS Interpretations Committee (IFRIC) made its
agenda decision regarding "Physical settlement of contracts to buy or
sell a non-financial item (IFRS 9)". The impact of this decision is
under review.
The financial information presented in the unaudited 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, 2018 were published in Shell's Annual Report and
Form 20-F and a copy was delivered to the Registrar of Companies for
England and Wales. The auditor's report on those accounts was
unqualified, did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying the report
and did not contain a statement under sections 498(2) or 498(3) of the
Act.
1. Segment information
Segment earnings are presented on a current cost of supplies basis (CCS
earnings), which is the earnings measure used by the Chief Executive
Officer for the purposes of making decisions about allocating resources
and assessing performance. On this basis, the purchase price of volumes
sold during the period is based on the current cost of supplies during
the same period after making allowance for the tax effect. CCS earnings
therefore exclude the effect of changes in the oil price on inventory
carrying amounts. Sales between segments are based on prices generally
equivalent to commercially available prices.
With the adoption of IFRS 16, the interest expense on leases formerly
classified as operating leases is reported under the Corporate segment,
while depreciation related to the respective right-of-use assets is
reported in the segments making use of the assets. This treatment is
consistent with the existing treatment for leases formerly classified as
finance leases.
INFORMATION BY SEGMENT
Quarters $ million Nine months
----------------------------- --------------------------------------------- --------------------
Q3 2019 Q2 2019 Q3 2018 2019 2018
---------- ------- -------- -------- ----------
Third-party revenue
9,735 8,942 10,848 Integrated Gas 30,316 31,862
2,347 2,457 1,769 Upstream 7,237 6,687
74,499 79,131 87,518 Downstream 223,282 247,563
12 13 16 Corporate 36 39
86,592 90,544 100,151 Total third-party revenue(1) 260,871 286,151
---------- ------- -------- -------- ----------
Inter-segment revenue(2)
1,025 1,045 1,276 Integrated Gas 3,162 3,705
8,144 8,996 10,526 Upstream 26,840 28,924
267 234 259 Downstream 840 762
- - - Corporate - -
---------- ------- -------- --------------------------------------------- -------- ----------
CCS earnings
2,597 1,340 2,116 Integrated Gas 6,731 7,865
1,722 1,554 2,249 Upstream 4,982 5,197
2,574 1,072 1,709 Downstream 5,240 4,683
(663) (789) (335) Corporate (2,122) (835)
6,230 3,177 5,739 Total 14,831 16,910
---------- ------- -------- -------- ----------
(1.) Includes revenue from sources other than from contracts with
customers, which mainly comprises the impact of fair value accounting
of commodity derivatives. Third quarter 2019 included income of
$1,460 million (Q2 2019: $969 million income; nine months 2019:
$3,166 million income).
1. Inter-segment revenue has been revised to amend for
transactions within segments that were previously
reported as inter-segment revenue, and vice versa.
Comparative information has been revised. The amounts
previously reported as inter-segment revenue for
Integrated Gas were Q2 2019: $1,005 million, Q3 2018:
$1,242 million and nine months 2018: $3,601 million.
The amounts previously reported as inter-segment
revenue for Downstream were Q2 2019: $1,316 million,
Q3 2018: $1,559 million and nine months 2018: $4,280
million.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million Nine months
----------------------------- --------------------------------------------- --------------------
Q3 2019 Q2 2019 Q3 2018 2019 2018
---------- ------- -------- -------- ----------
Income/(loss) attributable to Royal
5,879 2,998 5,839 Dutch Shell plc shareholders 14,878 17,762
Income/(loss) attributable to non-controlling
145 164 202 interest 466 498
6,024 3,162 6,041 Income/(loss) for the period 15,344 18,260
Current cost of supplies adjustment:
240 30 (381) Purchases (715) (1,760)
(56) 1 95 Taxation 181 435
Share of profit/(loss) of joint ventures
22 (16) (16) and associates 21 (25)
---------- ------- -------- -------- --------
206 15 (302) Current cost of supplies adjustment(1) (513) (1,350)
---------- ------- -------- -------- --------
6,230 3,177 5,739 CCS earnings 14,831 16,910
of which:
CCS earnings attributable to Royal
6,081 3,025 5,570 Dutch Shell plc shareholders 14,399 16,499
149 152 169 CCS earnings attributable to non-controlling 432 411
interest
---------- ------- -------- -------- --------
(1.) The adjustment attributable to Royal Dutch Shell plc shareholders
is a positive $202 million in the third quarter 2019 (Q2 2019:
positive $27 million; Q3 2018: negative $269 million; nine months
2019: negative $479 million; nine months 2018: negative $1,263
million).
1. Earnings per share
EARNINGS PER SHARE
Quarters Nine months
------------------------- ----------------------
Q3 2019 Q2 2019 Q3 2018 2019 2018
------- ------- ------- ----------- ---------
Income/(loss) attributable to Royal
Dutch Shell plc shareholders
5,879 2,998 5,839 ($ million) 14,878 17,762
Weighted average number of shares
used as the basis for determining:
8,017.5 8,100.8 8,290.3 Basic earnings per share (million) 8,097.6 8,301.4
8,067.6 8,153.7 8,353.1 Diluted earnings per share (million) 8,151.4 8,368.7
------- ------- ------- --------------------------------------- ----------- ---------
1. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH(1)
Nominal value ($
Number of shares million)
---------------------------- ---------------------- -----
A B A B Total
------------- ------------- -------------- ------ -----
At January 1,
2019 4,471,889,296 3,745,486,731 376 309 685
Repurchases of
shares (227,226,527) (11,488,283) (19) (1) (20)
------------- ------------- -------------- ------ -----
At September
30, 2019 4,244,662,769 3,733,998,448 357 308 665
------------- ------------- -------------- ------ -----
At January 1,
2018 4,597,136,050 3,745,486,731 387 309 696
Repurchases of
shares (43,054,969) - (4) - (4)
At September
30, 2018 4,554,081,081 3,745,486,731 383 309 692
--------------- ------------- ------------- -------------- ------ -----
1. Share capital at September 30, 2019 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.
1. Other reserves
OTHER RESERVES
Capital Accumulated
Merger Share premium redemption Share plan other comprehensive
$ million reserve reserve reserve reserve income Total
---------------------------------- -------- ------------- ----------- ---------- -------------------- -------
At January 1, 2019 37,298 154 95 1,098 (22,030) 16,615
Other comprehensive income/(loss)
attributable to Royal Dutch
Shell plc shareholders - - - - (5,913) (5,913)
Transfer from other comprehensive
income - - - - (56) (56)
Repurchases of shares - - 20 - - 20
Share-based compensation - - - (131) - (131)
-------- ------------- ----------- ---------- -------------------- -------
At September 30, 2019 37,296 154 116 966 (27,998) 10,535
-------- ------------- ----------- ---------- -------------------- -------
At January 1, 2018 37,298 154 84 1,440 (22,182) 16,794
Other comprehensive income/(loss)
attributable to Royal Dutch
Shell plc shareholders - - - - (670) (670)
Transfer from other comprehensive
income - - - - (1,108) (1,108)
Repurchases of shares - - 4 - - 4
Share-based compensation - - - 25 - 25
-------- ------------- ----------- ---------- -------------------- -------
At September 30, 2018 37,298 154 88 1,465 (23,960) 15,045
-------- ------------- ----------- ---------- -------------------- -------
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.
1. Derivative financial instruments and debt excluding lease liabilities
As disclosed in the Consolidated Financial Statements for the year ended
December 31, 2018, presented in the Annual Report and Form 20-F for that
year, Shell is exposed to the risks of changes in fair value of its
financial assets and liabilities. The fair values of the financial
assets and liabilities are defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Methods
and assumptions used to estimate the fair values at September 30, 2019
are consistent with those used in the year ended December 31, 2018,
though the carrying amounts of derivative financial instruments measured
using predominantly unobservable inputs have changed since that date.
The table below provides the comparison of the fair value with the
carrying amount of debt excluding lease liabilities, disclosed in
accordance with IFRS 7 Financial Instruments: Disclosures.
DEBT EXCLUDING LEASE LIABILITIES
September 30, December 31,
$ million 2019 2018
----------------------------- -------------------- -------------------
Carrying amount 57,839 62,798
Fair value(1) 63,345 64,708
(1.) Mainly determined from the prices quoted for these securities.
1. Change in presentation of Consolidated Statement of Cash Flows
With effect from January 1, 2019, the starting point for the
Consolidated Statement of Cash Flows is 'Income before taxation'
(previously: Income). Furthermore, to improve transparency, "Retirement
benefits" and "Decommissioning and other provisions" have been
separately disclosed. The "Other" component of cash flow from investing
activities has been expanded to distinguish between cash inflows and
outflows. Prior period comparatives for these line items have been
revised to conform with current year presentation. In addition, a new
line item, "Derivative financial instruments", has been introduced to
cash flow from financing activities. Overall, the revisions do not have
an impact on cash flow from operating activities, cash flow from
investing activities or cash flow from financing activities, as
previously published.
1. Adoption of IFRS 16 Leases
IFRS 16 was adopted with effect from January 1, 2019. Under the new
standard, all lease contracts, with limited exceptions, are recognised
in the financial statements by way of right-of-use assets and
corresponding lease liabilities. Shell applied the modified
retrospective transition method, and consequently comparative
information is not restated. As a practical expedient, no reassessment
was performed of contracts that were previously identified as leases and
contracts that were not previously identified as containing a lease
applying IAS 17 Leases and IFRIC 4 Determining whether an Arrangement
contains a Lease. At January 1, 2019, additional lease liabilities were
recognised for leases previously classified as operating leases applying
IAS 17. These lease liabilities were measured at the present value of
the remaining lease payments, discounted using entity-specific
incremental borrowing rates at January 1, 2019. In general, a
corresponding right-of-use asset was recognised for an amount equal to
each lease liability, adjusted by the amount of any prepaid or accrued
lease payment relating to the specific lease contract, as recognised on
the balance sheet at December 31, 2018. Provisions for onerous lease
contracts at December 31, 2018 were adjusted to the respective
right-of-use assets recognised at January 1, 2019.
The reconciliation of differences between the operating lease
commitments disclosed under the prior standard and the additional lease
liabilities recognised on the balance sheet at January 1, 2019 is as
follows:
LEASE LIABILITIES RECONCILIATION
$ million
----------------------------------------------------------------
Undiscounted future minimum lease payments under operating
leases at December 31, 2018 24,219
Impact of discounting(1) (5,167)
Leases not yet commenced at January
1, 2019 (2,586)
Short-term leases(2) (277)
Long-term leases expiring before
December 31, 2019(2) (192)
Other reconciling items
(net) 40
-------------------------------------------------------------------- -------
Additional lease liability at
January 1, 2019 16,037
------------------------------------------------------------ -------
Finance lease liability at December
31, 2018 14,026
------------------------------------------------------------ -------
Total lease liability at
January 1, 2019 30,063
-------------------------------------------------------------------- -------
(1.) Under the modified retrospective transition method, lease payments
were discounted at January 1, 2019 using an incremental borrowing rate
representing the rate of interest that the entity within Shell that
entered into the lease would have to pay to borrow over a similar term,
and with a similar security, the funds necessary to obtain an asset of a
similar value to the right-of-use asset in a similar economic
environment. The incremental borrowing rate applied to each lease was
determined taking into account the risk-free rate, adjusted for factors
such as the credit rating of the contracting entity and the terms and
conditions of the lease. The weighted average incremental borrowing rate
applied by Shell upon transition was 7.2%.
(2.) Shell has applied the practical expedient to classify leases for
which the lease term ends within 12 months of the date of initial
application of IFRS 16 as short-term leases. Shell has also applied the
recognition exemption for short-term leases.
Compared with the previous accounting for operating leases under IAS 17,
the application of the new standard has a significant impact on the
classification of expenditures and cash flows. It also impacts the
timing of expenses recognised in the statement of income.
With effect from 2019, expenses related to leases previously classified
as operating leases are presented under Depreciation, depletion and
amortisation and Interest expense (in 2018 these were mainly reported in
Purchases, Production and manufacturing expenses, and Selling,
distribution and administrative expenses).
With effect from 2019, payments related to leases previously classified
as operating leases are presented under Cash flow from financing
activities (in 2018 these were reported in Cash flow from operating
activities and Cash flow from investing activities).
The adoption of the new standard had an accumulated impact of $4 million
in equity following the recognition of lease liabilities of $16,037
million and additional right-of-use assets of $15,558 million and
reclassifications mainly related to pre-paid leases and onerous
contracts previously recognised.
The detailed impact on the balance sheet at January 1, 2019, is as
follows:
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
---------------------------------------
December 31, IFRS 16 January 1,
2018 impact 2019
------------ ------- ----------
Assets
Non-current assets
Intangible assets 23,586 23,586
Property, plant and equipment 223,175 15,558 238,733
Joint ventures and associates 25,329 25,329
Investments in securities 3,074 3,074
Deferred tax 12,097 12,097
Retirement benefits 6,051 6,051
Trade and other receivables(1) 7,826 (814) 7,012
Derivative financial instruments(4) 574 574
301,712 14,744 316,456
--------------------------------------- ------------ ------- ----------
Current assets
Inventories 21,117 21,117
Trade and other receivables 42,431 69 42,500
Derivative financial instruments(4) 7,193 7,193
Cash and cash equivalents 26,741 26,741
------------ ----------
97,482 69 97,551
------------ ------- ----------
Total assets 399,194 14,813 414,007
------------ ------- ----------
Liabilities
Non-current liabilities
Debt 66,690 13,125 79,815
Trade and other payables(2) 2,735 (540) 2,195
Derivative financial instruments(4) 1,399 1,399
Deferred tax 14,837 14,837
Retirement benefits 11,653 11,653
Decommissioning and other provisions(3) 21,533 (347) 21,186
------------ ------- ----------
118,847 12,238 131,085
------------ ------- ----------
Current liabilities
Debt 10,134 2,912 13,046
Trade and other payables 48,888 (23) 48,865
Derivative financial instruments(4) 7,184 7,184
Taxes payable 7,497 7,497
Retirement benefits 451 451
Decommissioning and other provisions(3) 3,659 (318) 3,341
------------ ------- ----------
77,813 2,571 80,384
------------ ------- ----------
Total liabilities 196,660 14,809 211,469
------------ ------- ----------
Equity attributable to Royal Dutch
Shell plc shareholders 198,646 4 198,650
Non-controlling interest 3,888 3,888
------------ ----------
Total equity 202,534 4 202,538
------------ ------- ----------
Total liabilities and equity 399,194 14,813 414,007
------------ ------- ----------
(1.) Mainly in respect of pre-paid leases.
1. Mainly related to operating lease contracts that were measured at fair
value under IFRS 3 Business Combinations following the acquisition of BG
in 2016.
2. Mainly in respect of onerous contracts.
3. See Note 6 "Derivative financial instruments and debt excluding lease
liabilities".
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
Impact of IFRS 16 Leases
IFRS 16 Leases primarily impacts the following key measures of Shell's
financial performance: Segment earnings; Cash flow from operating
activities; Cash flow from operating activities excluding working
capital movements; Free cash flow; Capital investment and Cash capital
expenditure; Operating expenses; Gearing; and Return on average capital
employed.
As explained in Note 8 "Adoption of IFRS 16 Leases", in accordance with
Shell's use of the modified retrospective transition method, comparative
information for prior years is not restated, and continues to be
presented as reported under IAS 17.
Additional information is provided in this section of the report to
provide indicative impacts of Shell's transition from IAS 17 to IFRS 16.
In addition to the IFRS 16 reported basis, impacted Alternative
Performance Measures are presented on an IAS 17 basis, to enable
like-for-like comparisons between 2019 and 2018. For 2019, information
on an IAS 17 basis represents estimates for the purpose of transition.
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 shown as follows:
IDENTIFIED ITEMS
Quarters $ million Nine months
--------------------- -------------------------------------------------------- ------------------
Q3 Q2
2019 2019 Q3 2018 2019 2018
----- ----- ------- --------- -------
Identified items before tax
2,039 379 163 -- Divestment gains/(losses) 2,483 2,356
(509) (672) 253 -- Impairments (1,214) (582)
-- Fair value accounting of commodity derivatives and
47 12 (239) certain gas contracts (14) (494)
6 (27) (68) -- Redundancy and restructuring (74) (171)
- (437) (9) -- Other (437) 51
1,584 (746) 100 Total identified items before tax 744 1,160
----- ----- ------- -------------------------------------------------------- --------- -------
Tax impact
(283) (123) (41) -- Divestment gains/(losses) (425) (207)
79 226 (143) -- Impairments 293 (114)
-- Fair value accounting of commodity derivatives and
44 (10) 70 certain gas contracts 137 190
(4) 14 10 -- Redundancy and restructuring 30 57
(106) 16 (52) -- Impact of exchange rate movements on tax balances (98) (357)
- 208 2 -- Other 208 54
----- ----- ------- --------- -------
(271) 331 (154) Total tax impact 146 (377)
----- ----- ------- --------- -------
Identified items after tax
1,756 256 122 -- Divestment gains/(losses) 2,058 2,149
(430) (446) 110 -- Impairments (921) (696)
-- Fair value accounting of commodity derivatives and
91 1 (169) certain gas contracts 124 (304)
2 (13) (58) -- Redundancy and restructuring (43) (114)
(106) 16 (52) -- Impact of exchange rate movements on tax balances (98) (357)
- (229) (7) -- Other (229) 105
----- ----- ------- --------- -------
1,313 (415) (54) Impact on CCS earnings 890 783
----- ----- ------- --------- -------
Of which:
(77) (386) (176) Integrated Gas (237) 829
815 219 363 Upstream 1,015 303
421 (266) (301) Downstream (73) (753)
154 18 60 Corporate 185 404
----- ----- ------- -------------------------------------------------------- --------- -------
Impact on CCS earnings attributable
- 22 - to non-controlling interest 22 -
----- ----- ------- --------- -------
Impact on CCS earnings attributable
1,313 (437) (54) to shareholders 868 783
----- ----- ------- --------- -------
The reconciliation from income attributable to RDS plc shareholders to
CCS earnings attributable to RDS plc shareholders excluding identified
items is shown on page 1.
The categories above represent the nature of the items identified
irrespective of whether the items relate to Shell subsidiaries or joint
ventures and associates. The after-tax impact of identified items of
joint ventures and associates is fully reported within "Share of profit
of joint ventures and associates" in the Consolidated Statement of
Income, and fully reported as "identified items before tax" in the table
above. Identified items related to subsidiaries are consolidated and
reported across appropriate lines of the Consolidated Statement of
Income. Only pre-tax identified items reported by subsidiaries are taken
into account in the calculation of "underlying operating expenses"
(Reference G).
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as power
and environmental products. Shell also enters into contracts for tolling,
pipeline and storage capacity. Derivative contracts are entered into for
mitigation of resulting economic exposures (generally price exposure)
and these derivative contracts are carried at period-end market price
(fair value), with movements in fair value recognised in income for the
period. Supply and purchase contracts entered into for operational
purposes, as well as contracts for tolling, pipeline and storage
capacity, are, by contrast, recognised when the transaction occurs;
furthermore, inventory is carried at historical cost or net realisable
value, whichever is lower. As a consequence, accounting mismatches occur
because: (a) the supply or purchase transaction is recognised in a
different period, or (b) the inventory is measured on a different basis.
In addition, certain contracts are, due to pricing or delivery
conditions, deemed to contain embedded derivatives or written options
and are also required to be carried at fair value even though they are
entered into for operational purposes. The accounting impacts are
reported as identified items.
Impacts of exchange rate movements on tax balances represent the impact
on tax balances of exchange rate movements arising on (a) the conversion
to dollars of the local currency tax base of non-monetary assets and
liabilities, as well as losses and (b) the conversion of
dollar-denominated inter-segment loans to local currency, leading to
taxable exchange rate gains or losses (this primarily impacts the
Corporate segment).
Other identified items represent other credits or charges Shell's
management assesses should be excluded to provide additional insight,
such as the impact arising from changes in tax legislation and certain
provisions for onerous contracts or litigation.
1. 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).
1. Capital investment and Cash capital expenditure
Capital investment is a measure used to make decisions about allocating
resources and assessing performance. It comprises Capital expenditure,
Investments in joint ventures and associates and Investments in equity
securities, exploration expense excluding well write-offs, leases
recognised in the period and other adjustments.
The definition reflects two changes with effect from January 1, 2019,
for simplicity reasons. Firstly, "Investments in equity securities" now
includes investments under the Corporate segment and is aligned with the
line introduced in the Consolidated Statement of Cash Flows from January
1, 2019. Secondly, the adjustments previously made to bring the Capital
investment measure onto an accruals basis no longer apply. Comparative
information has been revised.
"Cash capital expenditure" was introduced with effect from January 1,
2019, to monitor investing activities on a cash basis, excluding items
such as lease additions which do not necessarily result in cash outflows
in the period. The measure comprises the following lines from the
Consolidated Statement of Cash flows: Capital expenditure, Investments
in joint ventures and associates and Investments in equity securities.
The reconciliation of "Capital expenditure" to "Cash capital
expenditure" and "Capital investment" is as follows. Information for
2019 is also presented on an "IAS 17 basis" to enable like-for-like
performance comparisons with 2018.
Quarters $ million Nine months
------------------------------------- ------------------------------ -------------------------
Q3
Q3 2019 2019 Q2 2019 Q3 2018 2019 2019 2018
-------- ------ --------- -------- -------- ------ -------
As IAS 17 As As As IAS 17 As
Reported basis revised revised Reported basis revised
-------- ------ --------- -------- -------- ------ -------
5,992 6,155 5,150 5,800 Capital expenditure 16,264 16,688 15,864
Investments in joint ventures
30 30 160 78 and associates 631 631 672
Investments in equity
76 76 26 24 securities 141 141 112
-------- ------ --------- -------- -------- ------ -------
6,098 6,260 5,337 5,902 Cash capital expenditure 17,036 17,460 16,648
Of which:
894 898 738 688 Integrated Gas 2,976 2,979 2,558
2,639 2,798 2,342 3,323 Upstream 7,482 7,900 8,946
2,454 2,454 2,176 1,817 Downstream 6,301 6,304 4,990
111 111 81 75 Corporate 277 277 155
-------- ------ --------- -------- ------------------------------ -------- ------ -------
Exploration expense, excluding
exploration wells written
244 244 237 172 off 668 668 489
Leases recognised in the
1,902 1,370 773 184 period 3,634 1,511 403
(484) (484) (7) (541) Other adjustments (553) (553) (541)
-------- ------ --------- -------- -------- ------ -------
7,759 7,390 6,341 5,717 Capital investment 20,785 19,086 16,999
Of which:
2,303 2,294 836 864 Integrated Gas 5,103 4,557 2,908
2,452 2,530 2,700 2,918 Upstream 7,889 7,920 8,799
2,870 2,455 2,731 1,859 Downstream 7,471 6,332 5,136
134 111 73 75 Corporate 322 277 156
-------- ------ --------- -------- ------------------------------ -------- ------ -------
1. Divestments
Following completion of the $30 billion divestment programme for
2016-18, the Divestments measure was discontinued with effect from
January 1, 2019.
1. Return on average capital employed
Return on average capital employed (ROACE) measures the efficiency of
Shell's utilisation of the capital that it employs. Shell uses two ROACE
measures: ROACE on a Net income basis and ROACE on a CCS basis excluding
identified items.
Both measures refer to Capital employed which consists of total equity,
current debt and non-current debt. Information for 2019 is also
presented on an "IAS 17 basis" to enable like-for-like performance
comparisons with 2018.
ROACE on a Net income 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
------------------------------------------ ----------------------------------------------
Q3 2019 Q3 2019 Q2 2019 Q3 2018
----------- ------- ----------- -----------
IAS 17
As reported basis As reported As reported
----------- ------- ----------- -----------
Income - current and previous three
quarters 20,989 21,148 21,006 22,197
Interest expense after tax - current and
previous three quarters 3,115 2,640 2,819 2,434
----------- ------- ----------- -----------
Income before interest expense - current
and previous three quarters 24,105 23,788 23,825 24,632
----------- ------- ----------- -----------
Capital employed -- opening 279,864 279,864 281,711 286,889
Capital employed -- closing 281,505 265,935 288,900 279,864
----------- ------- ----------- -----------
Capital employed -- average 280,684 272,900 285,306 283,376
----------- ------- ----------- -----------
ROACE on a Net income basis 8.6% 8.7% 8.4% 8.7%
----------- ------- ----------- -----------
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.
This definition reflects two changes with effect from January 1, 2019.
Firstly, the calculation considers "CCS earnings excluding identified
items" instead of "CCS earnings attributable to Royal Dutch Shell plc
shareholders excluding identified items" used under the previous
definition. This change ensures consistency with the basis for average
capital employed. Secondly, the calculation adds back the after-tax
interest expense. This change is made for consistency with peers.
Comparative information has been revised.
$ million Quarters
------------------------------------------------- --------------------------------------------
Q3 2019 Q3 2019 Q2 2019 Q3 2018
----------- ------- ---------- ----------
IAS 17
As reported basis As revised As revised
----------- ------- ---------- ----------
CCS earnings - current and previous three
quarters 22,284 22,443 21,794 20,086
Identified items - current and previous
three quarters 2,536 2,536 1,169 (438)
Interest expense after tax - current and
previous three quarters 3,115 2,640 2,819 2,434
----------- ------- ---------- ----------
CCS earnings excluding identified items before
interest expense - current and previous three
quarters 22,864 22,547 23,444 22,958
----------- ------- ---------- ----------
Capital employed -- average 280,684 272,900 285,306 283,376
----------- ------- ---------- ----------
ROACE on a CCS basis excluding identified
items 8.1% 8.3% 8.2% 8.1%
----------- ------- ---------- ----------
1. Gearing
Gearing is a key measure of Shell's capital structure and is defined as
net debt as a percentage of total capital. Net debt is defined as the
sum of current and non-current debt, less cash and cash equivalents,
adjusted for the fair value of derivative financial instruments used to
hedge foreign exchange and interest rate risks relating to debt, and
associated collateral balances. Management considers this adjustment
useful because it reduces the volatility of net debt caused by
fluctuations in foreign exchange and interest rates, and eliminates the
potential impact of related collateral payments or receipts.
Debt-related derivative financial instruments are a subset of the
derivative financial instrument assets and liabilities presented on the
balance sheet. Collateral balances are reported under "Trade and other
receivables" or "Trade and other payables" as appropriate.
Information for 2019 is also presented on an "IAS 17 basis" to enable
like-for-like performance comparisons with 2018.
$ million Quarters
----------------------------------------------------- -------------------------------------------
Q3 2019 Q3 2019 Q2 2019 Q3 2018
--------- -------- ---------- ----------
As IAS 17 As As
reported basis reported reported
--------- -------- ---------- ----------
Current debt 12,812 9,596 16,617 13,923
Non-current debt 76,112 63,762 76,029 64,455
--------- -------- ---------- ----------
Total debt(1) 88,924 73,358 92,646 78,378
--------- -------- ---------- ----------
Add: Debt-related derivative financial instruments:
net liability/(asset) 1,013 1,013 634 1,247
Add: Collateral on debt-related derivatives:
net liability/(asset) 148 148 78 -
Less: Cash and cash equivalents (15,417) (15,417) (18,470) (19,112)
Net debt 74,668 59,102 74,887 60,513
----------------------------------------------------- --------- -------- ---------- ----------
Add: Total equity 192,580 192,577 196,254 201,486
--------- -------- ---------- ----------
Total capital 267,249 251,679 271,142 261,999
--------- -------- ---------- ----------
Gearing 27.9% 23.5% 27.6% 23.1%
--------- -------- ---------- ----------
1. Includes lease liabilities of $31,085 million at September 30, 2019,
$30,758 million at June 30, 2019, and finance lease liabilities of
$14,277 million at September 30, 2018.
1. Operating expenses
Operating expenses is a measure of Shell's cost management performance,
comprising the following items from the Consolidated Statement of
Income: production and manufacturing expenses; selling, distribution and
administrative expenses; and research and development expenses.
Underlying operating expenses measures Shell's total operating expenses
performance excluding identified items.
Information for 2019 is also presented on an "IAS 17 basis" to enable
like-for-like performance comparisons with 2018.
Quarters $ million Nine months
------------------------------------ ----------------------------------- --------------------------------
Q3
Q3 2019 2019 Q2 2019 Q3 2018 2019 2019 2018
-------- ------ -------- -------- ----------- --------- --------
As IAS 17 As As IAS As
reported basis reported reported As reported 17 basis reported
-------- ------ -------- -------- ----------- --------- --------
Production and manufacturing
6,002 6,835 6,256 expenses 19,191 20,167
Selling, distribution and
2,429 2,881 2,829 administrative expenses 7,662 8,198
219 225 227 Research and development 656 672
-------- -------- -------- ----------- --------
8,650 9,163 9,941 9,312 Operating expenses 27,509 28,871 29,037
-------- ------ -------- -------- ----------- --------- --------
Of which identified items:
(Redundancy and restructuring
7 7 (27) (64) charges)/reversal (72) (72) (159)
- - (306) - (Provisions)/reversal (306) (306) -
- - (131) - Other (131) (131) -
7 7 (464) (64) (509) (509) (159)
-------- ------ -------- -------- ----------------------------------- ----------- --------- --------
8,657 9,170 9,477 9,248 Underlying operating expenses 27,000 28,362 28,878
-------- ------ -------- -------- ----------------------------------- ----------- --------- --------
H. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the businesses. It is defined as
the sum of "Cash flow from operating activities" and "Cash flow from
investing activities".
Cash flows from acquisition and divestment activities are removed from
Free cash flow to arrive at the Organic free cash flow, a measure used
by management to evaluate the generation of free cash flow without these
activities.
Information for 2019 is also presented on an "IAS 17 basis" to enable
like-for-like performance comparisons with 2018.
Quarters $ million Nine months
------------------------------------- ------------------------------------ --------------------------------
Q3 2019 Q3 2019 Q2 2019 Q3 2018 2019 2019 2018
-------- ------- -------- -------- ---------- ---------- --------
As IAS 17 As As As IAS 17 As
reported basis reported reported reported basis reported
-------- ------- -------- -------- ---------- ---------- --------
Cash flow from operating
12,252 11,285 11,031 12,092 activities 31,913 29,087 31,064
Cash flow from investing
(2,130) (2,292) (4,166) (4,082) activities (10,918) (11,342) (8,347)
-------- ------- -------- -------- ---------- ---------- --------
10,122 8,993 6,865 8,010 Free cash flow 20,995 17,746 22,717
-------- ------- -------- -------- ---------- ---------- --------
Less: Cash inflows related
3,979 3,979 763 1,355 to divestments(1) 5,736 5,736 7,927
-------- ------- -------- -------- ---------- ---------- --------
Add: Tax paid on divestments
(reported under "Other investing
4 4 77 - cash outflows") 80 80 45
-------- ------- -------- -------- ---------- ---------- --------
Add: Cash outflows related
484 484 7 883 to inorganic capital expenditure(2) 849 849 1,669
-------- ------- -------- -------- ---------- ---------- --------
6,630 5,501 6,186 7,538 Organic free cash flow(3) 16,189 12,939 16,504
-------- ------- -------- -------- ---------- ---------- --------
(1.) Cash inflows related to divestments includes Proceeds from sale of
property, plant and equipment and businesses, Proceeds from sale of
joint ventures and associates, and Proceeds from sale of equity
securities as reported in the Consolidated Statement of Cash Flows.
(2.) 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.
(3.) Free cash flow less inflows related to divestments, adding back
outflows related to inorganic expenditure.
1. Cash flow from operating activities excluding working capital movements
Working capital movements are defined as the sum of the following items
in the Consolidated Statement of Cash Flows: (i) (increase)/decrease in
inventories, (ii) (increase)/decrease in current receivables, and (iii)
increase/(decrease) in current payables.
Cash flow from operating activities excluding working capital movements
is a measure used by Shell to analyse its operating cash generation over
time excluding the timing effects of changes in inventories and
operating receivables and payables from period to period.
Information for 2019 is also presented on an "IAS 17 basis" to enable
like-for-like performance comparisons with 2018.
Quarters $ million Nine months
------------------------------------- ------------------------------ ---------------------------
Q3 2019 Q3 2019 Q2 2019 Q3 2018 2019 2019 2018
-------- ------- -------- -------- -------- ------- --------
As IAS 17 As As As IAS 17 As
reported basis reported reported reported basis reported
-------- ------- -------- -------- -------- ------- --------
Cash flow from operating
12,252 11,285 11,031 12,092 activities 31,913 29,087 31,064
Of which:
4,224 3,939 3,403 3,320 Integrated Gas 11,854 11,015 8,831
4,448 4,252 5,616 6,663 Upstream 15,343 14,746 15,792
3,205 2,719 2,398 1,037 Downstream 4,992 3,602 5,134
375 375 (385) 1,072 Corporate (276) (277) 1,307
- (Increase)/decrease in
813 813 (61) (1,693) inventories (2,089) (2,089) (4,871)
- (Increase)/decrease in
2,644 2,644 308 (2,722) current receivables 1,527 1,527 (6,466)
- Increase/(decrease) in
(3,289) (3,289) 321 1,788 current payables (2,184) (2,184) 5,678
(Increase)/decrease in working
168 168 569 (2,627) capital (2,746) (2,746) (5,659)
-------- ------- -------- -------- ------------------------------ -------- ------- --------
Cash flow from operating
activities excluding working
12,083 11,117 10,462 14,719 capital movements 34,658 31,833 36,723
-------- ------- -------- -------- -------- ------- --------
Of which:
4,271 3,987 2,824 3,741 Integrated Gas 10,811 9,973 9,684
4,722 4,526 5,378 7,294 Upstream 15,490 14,893 16,768
3,169 2,683 2,462 2,923 Downstream 8,622 7,232 9,540
(80) (80) (202) 761 Corporate (265) (265) 731
-------- ------- -------- -------- ------------------------------ -------- ------- --------
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited. All peak
production figures in Portfolio Developments are quoted at 100% expected
production. The numbers presented throughout this announcement may not
sum precisely to the totals provided and percentages may not precisely
reflect the absolute figures, due to rounding.
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate legal entities. In this announcement
"Shell", "Shell group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our" are
also used to refer to Royal Dutch Shell plc and subsidiaries in general
or to those who work for them. These terms are also used where no useful
purpose is served by identifying the particular entity or entities.
"Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in
this announcement refer to entities over which Royal Dutch Shell plc
either directly or indirectly has control. Entities and unincorporated
arrangements over which Shell has joint control are generally referred
to as "joint ventures" and "joint operations", respectively. Entities
over which Shell has significant influence but neither control nor joint
control are referred to as "associates". The term "Shell interest" is
used for convenience to indicate the direct and/or indirect ownership
interest held by Shell in an entity or unincorporated joint arrangement,
after exclusion of all third-party interest.
This announcement contains forward-looking statements (within the
meaning of the US Private Securities Litigation Reform Act of 1995)
concerning the financial condition, results of operations and businesses of Royal Dutch Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Royal Dutch Shell to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "aim", "ambition", "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "schedule", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Royal Dutch Shell's Form 20-F for the year ended December 31, 2018 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, October 31, 2019. Neither Royal Dutch Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement. This Report contains references to Shell's website. These references are for the readers' convenience only. Shell is not incorporating by reference any information posted on www.shell.com. We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. US investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. This announcement contains inside information. October 31, 2019 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 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
October 31, 2019 03:00 ET (07:00 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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