TIDMRDSA TIDMRDSB
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL
YEAR UNAUDITED RESULTS
-----------------------------------------------------
SUMMARY OF UNAUDITED RESULTS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 %(1) Reference 2020 2019 %
Income/(loss)
attributable to
(4,014) 489 965 -516 shareholders (21,680) 15,842 -237
CCS earnings
attributable to
(4,478) 177 871 -614 shareholders Note 2 (19,922) 15,270 -230
393 955 2,931 -87 Adjusted Earnings(2) A 4,846 16,462 -71
Cash flow from operating
6,287 10,403 10,267 -39 activities 34,105 42,178 -19
Cash flow from investing
(5,406) (2,833) (4,862) activities (13,277) (15,779)
882 7,571 5,405 Free cash flow G 20,828 26,399
5,503 3,737 6,883 Cash capital expenditure C 17,827 23,919
Underlying operating
8,544 7,854 9,993 -15 expenses F 32,502 36,993 -12
(6.8)% (4.9)% 6.7% ROACE (Net income basis) D (6.8)% 6.7%
ROACE (CCS basis
excluding identified
2.9% 3.9% 6.9% items) D 2.9% 6.9%
75,386 73,463 79,093 Net debt E 75,386 79,093
32.2% 31.4% 29.3% Gearing E 32.2% 29.3%
Total production
available for sale
3,371 3,081 3,763 -10 (thousand boe/d) 3,386 3,665 -8
Basic earnings per share
(0.52) 0.06 0.12 -533 ($) (2.78) 1.97 -241
Adjusted Earnings per
0.05 0.12 0.37 -86 share ($) B 0.62 2.04 -70
0.1665 0.1665 0.47 -65 Dividend per share ($) 0.6530 1.88 -65
--------- --------- --------- -------- ------------------------ ------------- ---------- ---------- --------
1. Q4 on Q4 change.
2. Adjusted Earnings is defined as income/(loss) attributable to
shareholders plus cost of supplies adjustment (see Note 2) and excluding
identified items (see Reference A).
Income attributable to Royal Dutch Shell plc shareholders amounted to a
loss of $4.0 billion for the fourth quarter 2020, which included
post-tax impairment charges of $2.7 billion and charges of $1.1 billion
mainly due to onerous contract provisions. Fourth quarter 2020 results
reflected lower realised prices for oil and LNG as well as lower
production volumes and realised refining margins compared with the
fourth quarter 2019. This was partly offset by lower operating expenses
and higher chemicals margins.
Cost of supplies adjustment attributable to Royal Dutch Shell plc
shareholders for the fourth quarter 2020 was negative $0.5 billion.
Adjusted Earnings were $0.4 billion for the fourth quarter 2020,
reflecting lower realised prices for oil and LNG as well as lower
production volumes and realised refining margins compared with the
fourth quarter 2019. This was partly offset by lower operating expenses
and higher chemicals margins.
Cash flow from operating activities for the fourth quarter 2020 was $6.3
billion, which included cash outflows from commodity derivatives of $0.9
billion and negative working capital movements of $0.3 billion. Cash
flow from investing activities for the quarter was an outflow of $5.4
billion, driven mainly by capital expenditure.
Net debt was $75.4 billion at the end of the fourth quarter 2020,
compared with $73.5 billion at the end of the third quarter 2020, mainly
driven by lower free cash flow generation and by lease additions, partly
offset by favourable foreign currency exchange translation differences.
Gearing was 32.2% at the end of the fourth quarter 2020, compared with
31.4% at the end of the third quarter 2020, mainly driven by increased
net debt and reduced earnings, partly offset by favourable foreign
currency exchange translation differences and a reduction in pensions
deficit.
Total dividends distributed to Royal Dutch Shell plc shareholders in the
quarter were $1.3 billion. The Board expects that the first quarter 2021
interim dividend will be US$0.1735 per share, an increase of 4% over
the US dollar dividend for the fourth quarter 2020.
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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Supplementary financial and operational disclosure and a separate press
release for this quarter are available at www.shell.com/investor1.
1. Not incorporated by reference.
Page 4
FOURTH QUARTER 2020 PORTFOLIO DEVELOPMENTS
Integrated Gas
During the quarter, QGC Common Facilities Company Pty Ltd, a
wholly-owned subsidiary of Shell, announced that it has agreed to the
sale of a 26.25% interest in the Queensland Curtis LNG Common Facilities
to Global Infrastructure Partners Australia for US$2.5 billion. The
transaction is subject to regulatory approval in Australia and customary
conditions and is expected to complete in the first half of 2021.
Upstream
In January 2021, Shell completed the sale of its 30% interest in Oil
Mining Lease 17 in the Eastern Niger Delta, and associated
infrastructure, to TNOG Oil and Gas Limited, a related company of Heirs
Holdings Limited and Transnational Corporation of Nigeria Plc, for a
consideration of $533 million. A total of $453 million was paid by
completion with the balance to be paid over an agreed period.
Page 2
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 %(1) 2020 2019 %
20 (151) 1,897 -99 Segment earnings (6,278) 8,628 -173
(1,089) (920) (89) Of which: Identified items (Reference A) (10,661) (326)
1,109 768 1,986 -44 Adjusted Earnings 4,383 8,955 -51
2,203 2,323 3,457 -36 Cash flow from operating activities 11,175 15,311 -27
Cash flow from operating activities excluding working
2,195 2,396 4,017 -45 capital movements (Reference H) 10,814 14,828 -27
1,664 1,020 1,323 Cash capital expenditure (Reference C) 4,301 4,299
156 143 161 -3 Liquids production available for sale (thousand b/d) 153 156 -2
Natural gas production available for sale (million
4,555 4,067 4,578 0 scf/d) 4,396 4,442 -1
942 844 950 -1 Total production available for sale (thousand boe/d) 911 922 -1
8.21 7.80 9.21 -11 LNG liquefaction volumes (million tonnes) 33.25 35.55 -6
16.89 17.13 20.09 -16 LNG sales volumes (million tonnes) 69.67 74.45 -6
--------- ------- ------- -------- --------------------------------------------------------- ---------- -------- --------
1. Q4 on Q4 change.
Fourth quarter segment earnings were $20 million. This included a net
charge of $519 million due to the fair value accounting of commodity
derivatives and a charge of $481 million related to onerous contract
provisions. These net charges are part of identified items (see
Reference A).
Compared with the fourth quarter 2019, Integrated Gas Adjusted Earnings
of $1,109 million primarily reflected lower realised prices for LNG, oil
and gas and lower contributions from trading and optimisation, partly
offset by lower operating expenses.
Cash flow from operating activities for the quarter was $2,203 million,
primarily driven by Adjusted Earnings before non-cash expenses including
depreciation, as well as dividends received. This was partly offset by
cash outflows from commodity derivatives of $289 million.
Compared with the fourth quarter 2019, total oil and gas production
decreased by 1% mainly due to more maintenance activities and field
decline, partly offset by the transfer of the Rashpetco operations in
Egypt from the Upstream segment and PSC effects. LNG liquefaction
volumes decreased mainly as a result of feedgas constraints and
maintenance activities.
Full year segment earnings amounted to a loss of $6,278 million. This
included a post-tax impairment charge of $9,282 million mainly related
to the Queensland Curtis LNG and Prelude floating LNG operations in
Australia. Also included were a net charge of $969 million due to the
fair value accounting of commodity derivatives and a charge of $607
million related to onerous contract provisions. These charges are part
of identified items (see Reference A).
Compared with the full year 2019, Integrated Gas Adjusted Earnings of
$4,383 million primarily reflected lower realised prices for LNG, oil
and gas and lower contributions from trading and optimisation, partly
offset by lower operating expenses.
Cash flow from operating activities for the full year 2020 was $11,175
million, primarily driven by Adjusted Earnings before non-cash expenses
including depreciation and well write-offs.
Compared with the full year 2019, total oil and gas production decreased
by 1% mainly due to more maintenance activities and lower wells
performance, partly offset by the transfer of the Rashpetco operations
in Egypt from the Upstream segment and field ramp-ups. LNG liquefaction
volumes decreased mainly as a result of lower feedgas availability, more
maintenance and cargo timing.
Page 3
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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UPSTREAM
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 %(1) 2020 2019 %
(2,091) (1,110) (855) -145 Segment earnings (10,785) 3,855 -380
(1,344) (226) (1,564) Of which: Identified items (Reference A) (7,933) (598)
(748) (884) 709 -205 Adjusted Earnings (2,852) 4,452 -164
2,010 2,101 3,995 -50 Cash flow from operating activities 10,037 19,085 -47
Cash flow from operating activities excluding working
2,890 2,629 4,834 -40 capital movements (Reference H) 9,784 19,946 -51
1,654 1,245 2,768 Cash capital expenditure (Reference C) 7,296 10,205
1,537 1,520 1,716 -10 Liquids production available for sale (thousand b/d) 1,599 1,668 -4
4,837 3,960 6,027 -20 Natural gas production available for sale (million 4,785 5,935 -19
scf/d)
2,371 2,203 2,755 -14 Total production available for sale (thousand boe/d) 2,424 2,691 -10
--------- --------- --------- -------- --------------------------------------------------------- ---------- -------- --------
1. Q4 on Q4 change.
Fourth quarter segment earnings amounted to a loss of $2,091 million.
This included a post-tax impairment charge of $1,272 million mainly
related to partial impairment of the Appomattox asset in the US Gulf of
Mexico. This charge is part of identified items (see Reference A).
Compared with the fourth quarter 2019, Upstream Adjusted Earnings were a
loss of $748 million, reflecting lower oil and gas prices, lower
production volumes mainly driven by hurricanes affecting US Gulf of
Mexico production and OPEC+ restrictions, and unfavourable deferred tax
movements. These were partly offset by lower well write-offs, and lower
operating expenses.
Cash flow from operating activities for the quarter was $2,010 million,
primarily driven by Adjusted Earnings before non-cash expenses including
depreciation.
Compared with the fourth quarter 2019, total production decreased by 14%,
mainly due to the impact of more maintenance activities, hurricanes in
the US Gulf of Mexico, the impact of divestments, OPEC+ restrictions,
and lower production in the NAM joint venture. New fields and ramp-ups
offset the impact of field declines.
Full year segment earnings amounted to a loss of $10,785 million. This
included a post-tax impairment charge of $6,447 million mainly related
to offshore assets in the US Gulf of Mexico, Brazil, Nigeria and Europe,
and unconventional assets in North America. Also included was a net
charge of $782 million related to the impact of the weakening Brazilian
real on a deferred tax position. These net charges are part of
identified items (see Reference A).
Compared with the full year 2019, Upstream Adjusted Earnings amounted to
a loss of $2,852 million, primarily reflecting lower realised oil and
gas prices, and lower production volumes.
Cash flow from operating activities for the full year 2020 was $10,037
million, primarily driven by Adjusted Earnings before non-cash expenses
including depreciation.
Compared with the full year 2019, total production decreased by 10%,
mainly due to the impact of divestments, lower production in the NAM
joint venture, OPEC+ restrictions and higher maintenance. New fields and
ramp-ups, mainly in Brazil, offset the impact of field declines.
Page 4
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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OIL PRODUCTS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 %(1) 2020 2019 %
(1,775) 2,092 1,183 -250 Segment earnings(2) (494) 6,139 -108
(2,315) 411 (318) Of which: Identified items (Reference A) (6,489) (93)
540 1,680 1,501 -64 Adjusted Earnings(2) 5,995 6,231 -4
Of which:
(287) 55 531 -154 Refining & Trading 1,425 1,526 -7
828 1,626 971 -15 Marketing 4,570 4,705 -3
1,198 5,131 2,538 -53 Cash flow from operating activities 10,845 6,345 +71
Cash flow from operating activities excluding working
782 3,476 3,120 -75 capital movements (Reference H) 7,041 10,738 -34
1,310 832 1,628 Cash capital expenditure (Reference C) 3,328 4,908
1,940 1,972 2,438 -20 Refinery processing intake (thousand b/d) 2,063 2,564 -20
4,781 (3) 4,740 (3) 6,435 -26 Oil Products sales volumes (thousand b/d) 4,710 (3) 6,561 -28
--------- --- ------- --- ------- -------- --------------------------------------------------------- --------- --- -------- --------
1. Q4 on Q4 change.
2. Earnings are presented on a CCS basis (see Note 2).
3. With effect from January 1, 2020, the reporting of Oil Products
sales volumes has changed (see Note 2). Sales volumes would be 5,256
thousand b/d in the fourth quarter 2020 on a comparable basis with 2019.
Fourth quarter segment earnings were a loss of $1,775 million. This
included a post-tax impairment charge of $1,325 million, mainly related
to assets in the Netherlands and in Singapore, and the shutdown of the
Convent Refinery in the USA. The shutdown of the Convent Refinery also
led to further post-tax charges of $661 million, related to provisions
for onerous contracts, and redundancy and restructuring. Also included
was a net charge of $352 million due to the fair value accounting of
commodity derivatives. These charges are part of identified items (see
Reference A).
Compared with the fourth quarter 2019, Oil Products Adjusted Earnings of
$540 million for the quarter reflected lower realised refining margins
due to a weaker macroeconomic environment and the COVID-19 pandemic, and
lower contributions from trading and optimisation. This was partly
offset by lower operating expenses, and favourable deferred tax
movements.
Cash flow from operating activities for the fourth quarter 2020 was
$1,198 million, primarily driven by Adjusted Earnings before
depreciation, as well as positive working capital movements of $416
million, offset by cash outflows for commodity derivatives of $784
million.
With effect from January 1, 2020, certain Oil Products contracts are no
longer included in sales volumes (see Note 2). Excluding this impact,
Oil Products sales volumes decreased due to the impact of COVID-19 with
lower Refining & Trading and Marketing sales volumes, compared with the
fourth quarter 2019.
--Refining & Trading Adjusted Earnings reflected lower realised refining
margins, and lower contributions from trading and optimisation. This was
partly offset by favourable deferred tax movements and lower operating
expenses, compared with the fourth quarter 2019.
--Marketing Adjusted Earnings reflected lower marketing sales volumes
and unfavourable deferred tax movements, partly offset by strong retail
and global commercial margins, and lower operating expenses, compared
with the fourth quarter 2019.
With effect from January 1, 2020, Shell discloses utilisation instead of
availability to improve transparency on refinery production volumes.
Utilisation is defined as the actual usage of the plants as a percentage
of the rated capacity. Refinery utilisation was 72% compared with 78% in
the fourth quarter 2019, mainly due to lower demand and economic
optimisation of the plants, as well as the shutdown of the Convent
Refinery.
Full year segment earnings were a loss of $494 million. This included a
post-tax impairment charge of $5,530 million, as a result of revised
medium- and long-term price outlook assumptions in response to changes
to the energy market demand and supply fundamentals as well as the
macroeconomic conditions and the COVID-19 pandemic, and the shutdown of
the Convent Refinery in the USA. This shutdown also led to further
post-tax charges of $661 million, related to provisions for onerous
contracts, and redundancy and restructuring. Segment earnings also
included further redundancy and
Page 5
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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restructuring costs of $223 million and a net charge of $101 million due
to the fair value accounting of commodity derivatives. These net charges
are part of identified items (see Reference A).
Compared with the full year 2019, Oil Products Adjusted Earnings of
$5,995 million reflected lower realised refining margins and lower
marketing sales volumes due to the weak macroeconomic environment and
the COVID-19 pandemic. These were partly offset by lower operating
expenses, contributions from crude and oil products trading and
optimisation, and favourable deferred tax movements.
Cash flow from operating activities for the full year 2020 was $10,845
million, primarily driven by Adjusted Earnings before depreciation and
positive working capital movements. This was partly offset by
cost-of-sales adjustments for the full year 2020.
With effect from January 1, 2020, certain Oil Products contracts are no
longer included in sales volumes (see Note 2). Excluding this impact,
Oil Products sales volumes decreased due to lower refining & trading and
marketing sales volumes, compared with the full year 2019.
--Refining & Trading Adjusted Earnings reflected lower realised refining
margins, partly offset by lower operating expenses, contributions from
crude and oil products trading and optimisation as well as favourable
deferred tax movements, compared with the full year 2019.
--Marketing Adjusted Earnings reflected lower marketing sales volumes
due to the COVID-19 pandemic, partly offset by strong retail and global
commercial margins, and lower operating expenses, compared with the full
year 2019.
With effect from January 1, 2020, Shell discloses utilisation instead of
availability to improve transparency on refinery production volumes.
Utilisation is defined as the actual usage of the plants as a percentage
of the rated capacity. Refinery utilisation was 72% compared with 78% in
the full year 2019, mainly due to lower demand and economic optimisation
of the plants.
Page 6
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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CHEMICALS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 %(1) 2020 2019 %
367 131 (78) +570 Segment earnings(2) 808 479 +69
(14) (96) (13) Of which: Identified items (Reference A) (154) (263)
381 227 (65) +685 Adjusted Earnings(2) 962 741 +30
774 335 (44) +1854 Cash flow from operating activities 1,664 1,394 +19
Cash flow from operating activities excluding working
775 488 338 +129 capital movements (Reference H) 1,756 1,721 +2
830 595 1,023 Cash capital expenditure (Reference C) 2,640 4,090
3,718 3,823 3,454 +8 Chemicals sales volumes (thousand tonnes) 15,036 15,223 -1
------- ------- ------- --------- --------------------------------------------------------- -------- -------- -------
1. Q4 on Q4 change.
2. Earnings are presented on a CCS basis (see Note 2).
Fourth quarter segment earnings were $367 million, which reflected
higher realised margins in base chemicals and intermediates from a
stronger price environment, compared with the fourth quarter 2019. There
were no significant identified items during the quarter.
Cash flow from operating activities for the quarter was $774 million,
primarily driven by Adjusted Earnings before depreciation and dividends
received from joint ventures.
With effect from January 1, 2020, Shell discloses utilisation instead of
availability to improve transparency on chemicals production volumes.
Utilisation is defined as the actual usage of the plants as a percentage
of the rated capacity. Chemicals manufacturing plant utilisation in the
fourth quarter 2020 was 79% compared with 71% in the fourth quarter
2019, mainly due to improved site availability, with a higher level of
maintenance activities in 2019.
Full year segment earnings were $808 million, which reflected higher
realised margins from a stronger price environment in the fourth quarter,
partly offset by lower volumes due to the COVID-19 pandemic compared
with the full year 2019. Segment earnings included a charge of $104
million due to a legal provision and redundancy and restructuring costs
of $38 million. These net charges are part of identified items (see
Reference A).
Compared with the full year 2019, Chemicals Adjusted Earnings of $962
million reflected higher realised margins from a stronger price
environment in the fourth quarter, partly offset by lower volumes due to
the COVID-19 pandemic.
Cash flow from operating activities for the full year 2020 was an inflow
of $1,664 million, primarily driven by Adjusted Earnings before
depreciation. This was partly offset by cost-of-sales adjustments for
the full year 2020.
With effect from January 1, 2020, Shell discloses utilisation instead of
availability to improve transparency on chemicals production volumes.
Utilisation is defined as the actual usage of the plants as a percentage
of the rated capacity. Chemicals manufacturing plant utilisation was 80%
compared with 76% in the full year 2019, mainly due to higher
maintenance activities in Asia and Europe in 2019, and the impact of
strike actions in the Netherlands in 2019.
Page 7
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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CORPORATE
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
(954) (739) (1,151) Segment earnings (2,952) (3,273)
(118) 52 (76) Of which: Identified items (Reference A) 460 109
(836) (792) (1,075) Adjusted Earnings (3,412) (3,383)
102 514 321 Cash flow from operating activities 384 44
(17) (33) (9) Cash flow from operating activities excluding working 101 (274)
capital movements (Reference H)
------- ------- --------- ----------------------------------------------------------- --------- ---------
Fourth quarter segment earnings were an expense of $954 million. This
included a loss of $124 million from the deferred tax impact of the
strengthening Brazilian real on financing positions, which is part of
identified items (see Reference A).
Adjusted Earnings were an expense of $836 million, reflecting favourable
currency exchange rate effects and lower net interest expense, compared
with the fourth quarter 2019.
Full year segment earnings were an expense of $2,952 million. This
included gains of $454 million from the deferred tax impact of the
weakening Brazilian real on financing positions, which is part of
identified items (see Reference A).
Adjusted Earnings were an expense of $3,412 million, reflecting adverse
currency exchange rate effects and lower interest expense, compared with
the full year 2019.
PRELIMINARY RESERVES UPDATE
When final volumes are reported in the 2020 Annual Report and Accounts
and 2020 Form 20-F, Shell expects that SEC proved oil and gas reserves
reductions before taking into account production will be approximately
0.7 billion boe, and that 2020 production will be approximately 1.3
billion boe. As a result, total proved reserves on an SEC basis are
expected to be approximately 9.1 billion boe. Acquisitions and
divestments of 2020 reserves are expected to account for a net reduction
of approximately 0.1 billion boe.
The proved Reserves Replacement Ratio on an SEC basis is expected to be
-53% for the year and 23% for the 3-year average. Excluding the impact
of acquisitions and divestments, the proved Reserves Replacement Ratio
is expected to be -46% for the year and 34% for the 3-year average.
Further information will be provided in the 2020 Annual Report and
Accounts and 2020 Form 20-F, which are expected to be filed in March
2021.
OUTLOOK FOR THE FIRST QUARTER 2021
As a result of the COVID-19 pandemic, there continues to be significant
uncertainty in the macroeconomic conditions with an expected negative
impact on demand for oil, gas and related products. The first quarter
2021 outlook provides ranges for operational and financial metrics based
on current expectations, but these are subject to change in the light of
evolving market conditions. Due to demand or regulatory requirements
and/or constraints in infrastructure, Shell may need to take measures to
curtail or reduce oil and/or gas production, LNG liquefaction as well as
utilisation of refining and chemicals plants and similarly sales volumes
could be impacted. Such measures will likely have a variety of impacts
on our operational and financial metrics.
Integrated Gas production is expected to be approximately 900 - 950
thousand boe/d. LNG liquefaction volumes are expected to be
approximately 8.0 - 8.6 million tonnes.
Upstream production is expected to be approximately 2,400 - 2,600
thousand boe/d.
Refinery utilisation is expected to be approximately 73% - 81%.
Oil Products sales volumes are expected to be approximately 4,000 -
5,000 thousand b/d.
Chemicals manufacturing plant utilisation is expected to be
approximately 80% - 88%.
Chemicals sales volumes are expected to be approximately 3,600 - 3,900
thousand tonnes.
Page 8
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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Corporate Adjusted Earnings are expected to be a net expense of
approximately $600 - $700 million in the first quarter 2021 and a net
expense of approximately $2,400 - $2,800 million for the full year 2021,
mainly representing a decrease in expected interest expense when
compared to the full year 2020. This excludes the impact of currency
exchange rate effects.
Page 9
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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FORTHCOMING EVENTS
The Shell Strategy Day is scheduled to take place on February 11, 2021.
The LNG Outlook and Integrated Gas Strategy is scheduled for February
25, 2021.
The ESG Update is scheduled to take place on April 15, 2021.
The Pre-AGM Engagement is scheduled for May (TBD), 2021.
The Annual General Meeting is scheduled to take place on May 18, 2021.
The Upstream Investor Day is scheduled to take place on May 26, 2021.
First quarter 2021 results and dividends are scheduled to be announced
on April 29, 2021. Second quarter and half year 2021 results and
dividends are scheduled to be announced on July 29, 2021. Third quarter
2021 results and dividends are scheduled to be announced on October 28,
2021.
From the first quarter 2021 onwards, the Quarterly Update Note will be
published up to one calendar week after the end of each quarter.
Page 10
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
43,989 44,021 84,006 Revenue(1) 180,543 344,877
629 461 719 Share of profit of joint ventures and associates 1,783 3,604
411 234 340 Interest and other income 869 3,625
45,028 44,717 85,066 Total revenue and other income 183,196 352,106
28,511 27,276 60,570 Purchases 117,093 252,983
6,701 5,496 7,247 Production and manufacturing expenses 24,001 26,438
2,751 2,366 2,831 Selling, distribution and administrative expenses 9,881 10,493
199 233 306 Research and development 907 962
508 222 965 Exploration 1,747 2,354
9,573 7,689 9,238 Depreciation, depletion and amortisation(2) 52,444 28,701
908 992 1,118 Interest expense 4,089 4,690
49,152 44,275 82,275 Total expenditure 210,162 326,621
(4,124) 442 2,791 Income/(loss) before taxation (26,966) 25,485
(168) (104) 1,702 Taxation charge/(credit) (5,433) 9,053
(3,956) 546 1,089 Income/(loss) for the period(1) (21,534) 16,432
58 57 124 Income/(loss) attributable to non-controlling interest 146 590
Income/(loss) attributable to Royal Dutch Shell plc
(4,014) 489 965 shareholders (21,680) 15,842
(0.52) 0.06 0.12 Basic earnings per share ($)(3) (2.78) 1.97
(0.52) 0.06 0.12 Diluted earnings per share ($)(3) (2.78) 1.95
--------- -------- -------- ------------------------------------------------------- ---------- ---------
1. See Note 2 "Segment information".
2. See Note 7 "Other notes to the Condensed Consolidated Financial
Statements".
3. See Note 3 "Earnings per share".
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
(3,956) 546 1,089 Income/(loss) for the period (21,534) 16,432
Other comprehensive income/(loss) net of tax:
Items that may be reclassified to income in later
periods:
2,280 1,246 1,467 -- Currency translation differences 1,179 344
3 5 (2) -- Debt instruments remeasurements 23 29
54 75 (120) -- Cash flow hedging gains/(losses) (160) (276)
(170) (153) (15) -- Net investment hedging gains/(losses) (423) 9
3 (59) (45) -- Deferred cost of hedging 100 66
-- Share of other comprehensive income/(loss) of joint
39 (51) 24 ventures and associates (42) (76)
2,208 1,063 1,310 Total 678 96
Items that are not reclassified to income in later
periods:
1,045 (580) 2,553 -- Retirement benefits remeasurements (2,702) (2,102)
88 36 (5) -- Equity instruments remeasurements 64 (30)
-- Share of other comprehensive income/(loss) of joint
6 45 6 ventures and associates 119 2
1,140 (499) 2,554 Total (2,519) (2,130)
3,347 564 3,863 Other comprehensive income/(loss) for the period (1,842) (2,034)
(609) 1,111 4,952 Comprehensive income/(loss) for the period (23,375) 14,398
134 82 143 Comprehensive income/(loss) attributable to non-controlling 136 625
interest
(743) 1,029 4,809 Comprehensive income/(loss) attributable to Royal (23,512) 13,773
Dutch Shell plc shareholders
--------- ------- ------- --------------------------------------------------------------- ---------- ---------
Page 11
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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CONDENSED CONSOLIDATED BALANCE SHEET
$ million
December 31, 2020 December 31, 2019
Assets
Non-current assets
Intangible assets 22,822 23,486
Property, plant and
equipment 210,847 238,349
Joint ventures and
associates 22,451 22,808
Investments in securities 3,222 2,989
Deferred tax 16,311 10,524
Retirement benefits(1) 2,474 4,717
Trade and other receivables 7,641 8,085
Derivative financial
instruments(2) 2,805 689
288,572 311,647
Current assets
Inventories 19,457 24,071
Trade and other receivables 33,625 43,414
Derivative financial
instruments(2) 5,783 7,149
Cash and cash equivalents 31,830 18,055
90,694 92,689
Total assets 379,267 404,336
Liabilities
Non-current liabilities
Debt 91,115 81,360
Trade and other payables 2,304 2,342
Derivative financial
instruments(2) 420 1,209
Deferred tax 10,463 14,522
Retirement benefits(1) 15,168 13,017
Decommissioning and other
provisions(1) 27,310 21,799
146,780 134,249
Current liabilities
Debt 16,899 15,064
Trade and other payables 41,677 49,208
Derivative financial
instruments(2) 5,308 5,429
Taxes payable 6,006 6,693
Retirement benefits(1) 437 419
Decommissioning and other
provisions(1) 3,624 2,811
73,950 79,624
Total liabilities 220,729 213,873
Equity attributable to Royal
Dutch Shell plc
shareholders 155,310 186,476
Non-controlling interest(1) 3,227 3,987
Total equity 158,537 190,463
Total liabilities and equity 379,267 404,336
---------------------------- ----------------- -----------------
1. See Note 7 "Other notes to the Condensed Consolidated Financial
Statements".
2. See Note 6 "Derivative financial instruments and debt excluding
lease liabilities".
Page 12
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Royal Dutch Shell plc
shareholders
Shares
Share held in Other Retained Non-controlling Total
$ million capital(1) trust reserves(2) earnings Total interest equity
At January 1, 2020 657 (1,063) 14,451 172,431 186,476 3,987 190,463
Comprehensive
income/(loss) for
the period -- -- (1,832) (21,397) (23,229) 136 (23,092)
Transfer from
other
comprehensive
income -- -- 270 (270) -- -- --
Dividends(3) -- -- -- (7,271) (7,271) (311) (7,581)
Repurchases of
shares (6) -- 6 (1,214) (1,214) -- (1,214)
Share-based
compensation -- 354 (143) (230) (19) -- (19)
Other changes in
non-controlling
interest -- -- -- 566 566 (585) (19)
At December 31,
2020 651 (709) 12,752 142,616 155,310 3,227 158,537
At January 1, 2019 685 (1,260) 16,615 182,610 198,650 3,888 202,538
Comprehensive
income/(loss) for
the period -- -- (2,069) 15,842 13,773 625 14,398
Transfer from
other
comprehensive
income -- -- (74) 74 -- -- --
Dividends -- -- -- (15,198) (15,198) (537) (15,735)
Repurchases of
shares (28) -- 28 (10,286) (10,286) -- (10,286)
Share-based
compensation -- 197 (49) (613) (465) -- (465)
Other changes in
non-controlling
interest -- -- -- 2 2 11 13
At December 31,
2019 657 (1,063) 14,451 172,431 186,476 3,987 190,463
------------------ ---------- ------- ----------- -------- -------- --------------- --------
1. See Note 4 "Share capital".
2. See Note 5 "Other reserves".
3. The amount charged to retained earnings is based on prevailing
exchange rates on payment date.
4. Comprehensive loss for the period of $21,397 million recognised in
retained earnings includes a gain of $283 million, recognised in equity,
that relates to remeasurement of a share of interest in a joint venture
in respect of prior years.
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ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
(4,124) 442 2,791 Income before taxation for the period (26,966) 25,485
Adjustment for:
716 814 859 -- Interest expense (net) 3,316 3,705
9,573 7,689 9,238 -- Depreciation, depletion and amortisation 52,444 28,701
199 14 496 -- Exploration well write-offs 815 1,218
-- Net (gains)/losses on sale and revaluation of non-current
(162) (103) (36) assets and businesses (286) (2,519)
(629) (461) (719) -- Share of (profit)/loss of joint ventures and associates (1,783) (3,604)
982 468 1,318 -- Dividends received from joint ventures and associates 2,591 4,139
(1,809) 405 (546) -- (Increase)/decrease in inventories 4,477 (2,635)
(107) (540) (2,448) -- (Increase)/decrease in current receivables 9,626 (921)
1,579 1,583 961 -- Increase/(decrease) in current payables (9,493) (1,223)
78 233 254 -- Derivative financial instruments 977 (1,484)
212 152 217 -- Retirement benefits 568 (365)
771 43 (141) -- Decommissioning and other provisions 1,104 (686)
(355) 265 (82) -- Other 8 (28)
(638) (601) (1,894) Tax paid (3,290) (7,605)
6,287 10,403 10,267 Cash flow from operating activities 34,105 42,178
(5,206) (3,679) (6,707) Capital expenditure (16,585) (22,971)
(269) (34) (112) Investments in joint ventures and associates (1,024) (743)
(28) (23) (65) Investments in equity securities (218) (205)
Proceeds from sale of property, plant and equipment
94 571 1,049 and businesses 2,489 4,803
111 159 1,032 Proceeds from sale of joint ventures and associates 1,240 2,599
7 139 55 Proceeds from sale of equity securities 281 469
111 112 224 Interest received 532 911
622 588 918 Other investing cash inflows 3,239 2,921
(848) (665) (1,255) Other investing cash outflows (3,232) (3,563)
(5,406) (2,833) (4,862) Cash flow from investing activities (13,277) (15,779)
Net increase/(decrease) in debt with maturity period
(299) (176) (406) within three months (63) (308)
Other debt:
2,048 4,745 8,758 -- New borrowings 23,033 11,185
(4,862) (2,688) (2,731) -- Repayments (17,385) (14,292)
(1,153) (831) (1,232) Interest paid (4,105) (4,649)
495 419 (124) Derivative financial instruments 1,157 (48)
(2) -- 2 Change in non-controlling interest (42) --
Cash dividends paid to:
(1,307) (1,236) (3,725) -- Royal Dutch Shell plc shareholders(1) (7,424) (15,198)
(69) (65) (133) -- Non-controlling interest (311) (537)
-- -- (2,848) Repurchases of shares (1,702) (10,188)
Shares held in trust: net sales/(purchases) and dividends
(184) 1 (618) received (382) (1,174)
(5,333) 169 (3,057) Cash flow from financing activities (7,224) (35,209)
567 36 289 Currency translation differences relating to cash 172 124
and cash equivalents
(3,884) 7,775 2,637 Increase/(decrease) in cash and cash equivalents 13,775 (8,686)
35,714 27,939 15,417 Cash and cash equivalents at beginning of period 18,055 26,741
31,830 35,714 18,055 Cash and cash equivalents at end of period 31,830 18,055
--------- --------- --------- -------------------------------------------------------------------- ---------- ----------
1. Cash dividends paid represents the payment of net dividends
(after deduction of withholding taxes where applicable) and payment of
withholding taxes on dividends paid in the previous quarter.
Page 14
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of Royal
Dutch Shell plc ("the Company") and its subsidiaries (collectively
referred to as "Shell") have been prepared on the basis of the same
accounting principles as those used in the Annual Report and Accounts
(pages 190 to 238) and Form 20-F (pages 142 to 189) for the year ended
December 31, 2019 as filed with the Registrar of Companies for England
and Wales and the US Securities and Exchange Commission, respectively,
and should be read in conjunction with these filings.
The financial information presented in the unaudited Condensed
Consolidated Financial Statements does not constitute statutory accounts
within the meaning of section 434(3) of the Companies Act 2006 ("the
Act"). Statutory accounts for the year ended December 31, 2019 were
published in Shell's Annual Report and Accounts, a copy of which was
delivered to the Registrar of Companies for England and Wales, and in
Shell's Form 20-F. The auditor's report on those accounts was
unqualified, did not include a reference to any matters to which the
auditor drew attention by way of emphasis without qualifying the report
and did not contain a statement under sections 498(2) or 498(3) of the
Act.
Key accounting considerations, significant judgements and estimates.
Future commodity price assumptions and management's view on the future
development of refining margins represent a significant estimate and
both were subject to change in the second quarter 2020, resulting in the
recognition of impairments in the second quarter 2020. These assumptions
continue to apply for impairment testing purposes in the third and
fourth quarter 2020.
After the finalisation of the operating plan in the fourth quarter 2020,
the overall deferred tax position was reviewed and deferred tax
positions recognised were updated in line with the operating plan.
The refinery portfolio is expected to be transformed during the energy
transition from fifteen sites into six high-value energy and chemical
parks integrated with Chemicals. Further evaluation and decisions on
assets resulted in the recognition of impairment charges and provisions
for decommissioning & restoration, onerous contracts and restructuring
in the fourth quarter 2020.
2. Segment information
With effect from January 1, 2020, Shell's reporting segments consist of
Integrated Gas, Upstream, Oil Products, Chemicals and Corporate,
reflecting the way Shell reviews and assesses its performance. Oil
Products and Chemicals businesses were previously reported under the
Downstream segment. Oil sands mining activities, previously included in
the Upstream segment, are reported under Oil Products. Comparative
information has been reclassified.
Segment earnings are presented on a current cost of supplies basis (CCS
earnings), which is the earnings measure used by the Chief Executive
Officer for the purposes of making decisions about allocating resources
and assessing performance. On this basis, the purchase price of volumes
sold during the period is based on the current cost of supplies during
the same period after making allowance for the tax effect. CCS earnings
therefore exclude the effect of changes in the oil price on inventory
carrying amounts. Sales between segments are based on prices generally
equivalent to commercially available prices.
With effect from January 1, 2020, additional contracts are classified as
held for trading purposes and consequently revenue is reported on a net
rather than gross basis. The effect on revenue for the fourth quarter
2020 is a reduction of $10,469 million (Q3 2020: $11,478 million, full
year 2020: $46,289 million).
Page 15
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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INFORMATION BY SEGMENT
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Third-party
revenue
8,010 7,684 11,006 Integrated Gas 33,287 41,323
1,576 1,670 2,604 Upstream 6,767 9,482
31,001 31,823 67,354 Oil Products 128,717 280,460
3,386 2,831 3,033 Chemicals 11,721 13,568
16 13 9 Corporate 51 45
Total third-party
43,989 44,021 84,006 revenue(1) 180,543 344,877
Inter-segment
revenue(2)
1,098 864 1,117 Integrated Gas 3,410 4,280
5,860 5,111 9,416 Upstream 21,564 35,735
1,733 1,547 1,629 Oil Products 6,213 7,819
784 715 854 Chemicals 2,850 3,917
-- -- -- Corporate -- --
CCS earnings
20 (151) 1,897 Integrated Gas (6,278) 8,628
(2,091) (1,110) (855) Upstream (10,785) 3,855
(1,775) 2,092 1,183 Oil Products (494) 6,139
367 131 (78) Chemicals 808 479
(954) (739) (1,151) Corporate (2,952) (3,273)
Total CCS
(4,434) 222 996 earnings (19,702) 15,827
---------- --------- --------- ----------------- ---------- ---------
1. Includes revenue from sources other than from contracts with
customers, which mainly comprises the impact of fair value accounting of
commodity derivatives. Fourth quarter 2020 included income of $114
million (Q3 2020: $1,803 million income; full year 2020: $10,008 million
income). This amount includes both the reversal of prior gains of $147
million (Q3 2020: $15 million losses) related to sales contracts and
prior gains of $23 million (Q3 2020: $22 million gains) related to
purchase contracts that were previously recognised and where physical
settlement has taken place in the fourth quarter 2020.
2. Comparative information for inter-segment revenue for Upstream,
Oil Products and Chemicals has been revised to conform with reporting
segment changes applicable from January 1, 2020.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Income/(loss) attributable to Royal Dutch Shell plc
(4,014) 489 965 shareholders (21,680) 15,842
58 57 124 Income/(loss) attributable to non-controlling interest 146 590
(3,956) 546 1,089 Income/(loss) for the period (21,534) 16,432
Current cost of supplies adjustment:
(589) (395) (69) Purchases 2,358 (784)
133 100 13 Taxation (586) 194
(23) (29) (37) Share of profit/(loss) of joint ventures and associates 59 (15)
(479) (324) (93) Current cost of supplies adjustment 1,831 (605)
of which:
(465) (312) (94) Attributable to Royal Dutch Shell plc shareholders 1,758 (572)
(14) (12) 1 Attributable to non-controlling interest 74 (33)
(4,434) 222 996 CCS earnings (19,702) 15,827
of which:
(4,478) 177 871 CCS earnings attributable to Royal Dutch Shell plc (19,922) 15,270
shareholders
44 45 125 CCS earnings attributable to non-controlling interest 220 557
--------- ------- -------- ------------------------------------------------------- ---------- --------
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ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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3. Earnings per share
EARNINGS PER SHARE
Quarters Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Income/(loss) attributable to Royal Dutch Shell plc
(4,014) 489 965 shareholders ($ million) (21,680) 15,842
Weighted average number of shares used as the basis
for determining:
7,784.4 7,788.7 7,907.2 Basic earnings per share (million) 7,795.6 8,058.3
7,784.4 7,823.6 7,962.5 Diluted earnings per share (million) 7,795.6 8,112.5
--------- --------- --------- ------------------------------------------------------- ---------- ---------
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH1
Nominal value ($
Number of shares million)
A B A B Total
At January 1,
2020 4,151,787,517 3,729,407,107 349 308 657
Repurchases of
shares (50,548,018) (23,223,271) (4) (2) (6)
At December
31, 2020 4,101,239,499 3,706,183,836 345 306 651
At January 1,
2019 4,471,889,296 3,745,486,731 376 309 685
Repurchases of
shares (320,101,779) (16,079,624) (27) (1) (28)
At December
31, 2019 4,151,787,517 3,729,407,107 349 308 657
-------------- ------------- ------------- -------- --- -----
1. Share capital at December 31, 2020 also included 50,000 issued and
fully paid sterling deferred shares of GBP1 each.
At Royal Dutch Shell plc's Annual General Meeting on May 19, 2020, 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 EUR182.7 million (representing 2,611 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 19, 2021, and the end of the Annual General Meeting to be held
in 2021, unless previously renewed, revoked or varied by Royal Dutch
Shell plc in a general meeting.
5. Other reserves
OTHER RESERVES
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve reserve reserve reserve income Total
At January 1, 2020 37,298 154 123 1,049 (24,173) 14,451
Other comprehensive income/(loss) attributable to
Royal Dutch Shell plc shareholders -- -- -- -- (1,832) (1,832)
Transfer from other comprehensive income -- -- -- -- 270 270
Repurchases of shares -- -- 6 -- -- 6
Share-based compensation -- -- -- (143) -- (143)
At December 31, 2020 37,298 154 129 906 (25,735) 12,752
At January 1, 2019 37,298 154 95 1,098 (22,030) 16,615
Other comprehensive income/(loss) attributable to
Royal Dutch Shell plc shareholders -- -- -- -- (2,069) (2,069)
Transfer from other comprehensive income -- -- -- -- (74) (74)
Repurchases of shares -- -- 28 -- -- 28
Share-based compensation -- -- -- (49) -- (49)
At December 31, 2019 37,298 154 123 1,049 (24,173) 14,451
---------------------------------------------------- ------- ------- ---------- ------- ------------- -------
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ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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The merger reserve and share premium reserve were established as a
consequence of Royal Dutch Shell plc becoming the single parent company
of Royal Dutch Petroleum Company and The "Shell" Transport and Trading
Company, p.l.c., now The Shell Transport and Trading Company Limited, in
2005. The merger reserve increased in 2016 following the issuance of
shares for the acquisition of BG Group plc. The capital redemption
reserve was established in connection with repurchases of shares of
Royal Dutch Shell plc. The share plan reserve is in respect of
equity-settled share-based compensation plans.
6. Derivative financial instruments and debt excluding lease liabilities
As disclosed in the Consolidated Financial Statements for the year ended
December 31, 2019, presented in the Annual Report and Accounts and Form
20-F for that year, Shell is exposed to the risks of changes in fair
value of its financial assets and liabilities. The fair values of the
financial assets and liabilities are defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. Methods
and assumptions used to estimate the fair values at December 31, 2020,
are consistent with those used in the year ended December 31, 2019,
though the carrying amounts of derivative financial instruments measured
using predominantly unobservable inputs have changed since that date.
The table below provides the comparison of the fair value with the
carrying amount of debt excluding lease liabilities, disclosed in
accordance with IFRS 7 Financial Instruments: Disclosures.
DEBT EXCLUDING LEASE LIABILITIES
$ million December 31, 2020 December 31, 2019
Carrying amount 79,594 65,887
Fair value(1) 88,294 71,163
---------------------------- ----------------- -----------------
1. Mainly determined from the prices quoted for these securities.
7. Other notes to the unaudited Condensed Consolidated Financial
Statements
Consolidated Statement of Income
Depreciation, depletion and amortisation
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Depreciation,
depletion and
9,573 7,689 9,238 amortisation 52,444 28,701
---------- --------- --------- ----------------- ---------- --------
Impairment losses of $3,344 million, of which $3,318 million recognised
in depreciation, depletion and amortisation and $26 million recognised
in share of profit of joint ventures and associates (Q3 2020: $1,636
million, of which $1,615 million recognised in depreciation, depletion
and amortisation and $21 million recognised in share of profit of joint
ventures and associates; full year: $28,062 million, of which $27,463
million recognised in depreciation, depletion and amortisation and $599
million recognised in share of profit of joint ventures and associates),
mainly relate to impairments in Upstream ($1,688 million pre-tax and
$1,272 million post-tax) and in Oil Products ($1,486 million pre-tax and
$1,325 million post-tax). In Upstream, the Appomattox asset in the US
Gulf of Mexico was partially impaired due to subsurface updates. The
impairments in Oil Products reflect the impact of the announced
transformation of the refining portfolio and mainly relate to assets in
the Netherlands and in Singapore, and the shutdown of the Convent
Refinery in the USA. The commodity price assumptions and the discount
rate applied remained unchanged from those disclosed in the notes to the
Condensed Consolidated Interim Financial Statements for the period ended
June 30, 2020. For further information regarding the impairments
recognised in the second quarter 2020, see notes 1 and 7 to the
Condensed Consolidated Interim Financial Statements for the period ended
June 30, 2020.
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ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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Condensed Consolidated Balance Sheet
Retirement benefits
$ million
December 31, 2020 December 31, 2019
Non-current assets
Retirement benefits 2,474 4,717
Non-current liabilities
Retirement benefits 15,168 13,017
Current liabilities
Retirement benefits 437 419
Net liability 13,131 8,719
-------------------------- ----------------- -----------------
The increase in the net retirement benefit liability is mainly driven by
a decrease of the market yield on high-quality corporate bonds partly
offset by returns on plan assets. Amounts recognised in the balance
sheet in relation to defined benefit plans include both plan assets and
obligations that are presented on a net basis on a plan-by-plan basis.
Decommissioning and other provisions
$ million
December 31, 2020 December 31, 2019
Non-current liabilities
Decommissioning and other
provisions 27,310 21,799
Current liabilities
Decommissioning and other
provisions 3,624 2,811
---------------------------- ----------------- -----------------
The discount rate applied at December 31, 2020 was 1.75% (December 31,
2019: 3.0%). Compared with December 31, 2019, non-current
decommissioning and restoration provisions increased by $3,999 million
at June 30, 2020 as a result of the change in the discount rate as at
that date.
Non-controlling interest
$ million
December 31, 2020 December 31, 2019
Non-controlling interest 3,227 3,987
--------------------------- ----------------- -----------------
The change in the non-controlling interest is mainly related to the
non-controlling interest in Shell Midstream Partners, L.P. ("SHLX")
following the completion of the sale of Shell's 79% interest in the
Mattox Pipeline Company LLC and certain logistics assets at the Shell
Norco Manufacturing Complex to SHLX in the second quarter 2020.
8. Post-Balance Sheet Events
A restructuring plan named Reshape was announced in the fourth quarter
2020. Under Reshape, between 7,000 and 9,000 job reductions are expected
by the end of 2022. The impact of Reshape was communicated to employees
in January 2021. Costs related to the currently announced plan will be
recognised in 2021.
Page 19
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings
The "Adjusted Earnings" measure aims to facilitate a comparative
understanding of Shell's financial performance from period to period by
removing the effects of oil price changes on inventory carrying amounts
and removing the effects of identified items. These items are in some
cases driven by external factors and may, either individually or
collectively, hinder the comparative understanding of Shell's financial
results from period to period. This measure excludes earnings
attributable to non-controlling interest. This measure was previously
referred to as "CCS earnings attributable to shareholders excluding
identified items" and was renamed for simplicity with effect from the
second quarter 2020.
ADJUSTED EARNINGS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Income/(loss) attributable to Royal Dutch Shell plc
(4,014) 489 965 shareholders (21,680) 15,842
Add: Current cost of supplies adjustment attributable
(465) (312) (94) to Royal Dutch Shell plc shareholders (Note 2) 1,758 (572)
Less: Identified items attributable to Royal Dutch
(4,871) (778) (2,060) Shell plc shareholders (24,767) (1,192)
393 955 2,931 Adjusted Earnings 4,846 16,462
--------- ------- --------- --------------------------------------------------------- ---------- ---------
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.
IDENTIFIED ITEMS
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Identified items before tax
162 103 128 Divestment gains/(losses) 316 2,611
(3,344) (1,636) (2,941) Impairments (28,061) (4,155)
Fair value accounting of commodity derivatives and
(957) 721 616 certain gas contracts (1,151) 602
(372) 25 (59) Redundancy and restructuring (883) (132)
(1,404) (267) (333) Other1 (2,098) (770)
(5,914) (1,055) (2,589) Total identified items before tax (31,877) (1,844)
1,033 276 529 Total tax impact of identified items 7,100 674
Identified items after tax
(20) 46 111 Divestment gains/(losses) 4 2,170
(2,746) (1,143) (2,240) Impairments (21,267) (3,162)
Fair value accounting of commodity derivatives and
(864) 532 526 certain gas contracts (1,034) 650
(267) 4 (46) Redundancy and restructuring (644) (89)
157 13 29 Impact of exchange rate movements on tax balances (240) (69)
(1,141) (230) (441) Other1 (1,595) (670)
(4,881) (778) (2,060) Impact on CCS earnings (24,777) (1,170)
Of which:
(1,089) (920) (89) Integrated Gas (10,661) (326)
(1,344) (226) (1,564) Upstream (7,933) (598)
(2,315) 411 (318) Oil Products (6,489) (93)
(14) (96) (13) Chemicals (154) (263)
(118) 52 (76) Corporate 460 109
(4,871) (778) (2,060) Impact on CCS earnings attributable to shareholders (24,767) (1,192)
(10) -- -- Impact on CCS earnings attributable to non-controlling (10) 22
interest
--------- --------- --------- ----------------------------------------------------------- ---------- ---------
1. Includes certain provisions for onerous contracts of post-tax $994
million (pre-tax $1,259 million) for the fourth quarter 2020, post-tax
$126 million (pre-tax $133 million) for the third quarter 2020 and
post-tax $1,120 million (pre-tax $1,392 million) for the full year 2020.
There were no provisions for onerous contracts in 2019.
Page 20
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
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The identified items categories above may include after-tax impacts of
identified items of joint ventures and associates which are fully
reported within "Share of profit of joint ventures and associates" in
the Consolidated Statement of Income, and fully reported as identified
items before tax in the table above. Identified items related to
subsidiaries are consolidated and reported across appropriate lines of
the Consolidated Statement of Income. Only pre-tax identified items
reported by subsidiaries are taken into account in the calculation of
underlying operating expenses (Reference F).
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as power
and environmental products. Shell also enters into contracts for tolling,
pipeline and storage capacity. Derivative contracts are entered into for
mitigation of resulting economic exposures (generally price exposure)
and these derivative contracts are carried at period-end market price
(fair value), with movements in fair value recognised in income for the
period. Supply and purchase contracts entered into for operational
purposes, as well as contracts for tolling, pipeline and storage
capacity, are, by contrast, recognised when the transaction occurs;
furthermore, inventory is carried at historical cost or net realisable
value, whichever is lower. As a consequence, accounting mismatches occur
because: (a) the supply or purchase transaction is recognised in a
different period, or (b) the inventory is measured on a different basis.
In addition, certain contracts are, due to pricing or delivery
conditions, deemed to contain embedded derivatives or written options
and are also required to be carried at fair value even though they are
entered into for operational purposes. The accounting impacts are
reported as identified items.
Impacts of exchange rate movements on tax balances represent the impact
on tax balances of exchange rate movements arising on (a) the conversion
to dollars of the local currency tax base of non-monetary assets and
liabilities, as well as losses (this primarily impacts the Upstream and
Integrated Gas segments) and (b) the conversion of dollar-denominated
inter-segment loans to local currency, leading to taxable exchange rate
gains or losses (this primarily impacts the Corporate segment).
Other identified items represent other credits or charges that based on
Shell management's assessment hinder the comparative understanding of
Shell's financial results from period to period and can include items
such as certain provisions for onerous contracts or litigation, the
impact arising from changes in tax legislation, the impact of changes in
discount rate used for provisions, as well as other credits or charges.
The fourth quarter 2020 mainly reflects provisions for onerous contracts
($994 million charge post-tax) in Integrated Gas and Oil Products.
B. Adjusted Earnings per share
Adjusted Earnings per share is calculated as Adjusted Earnings (see
Reference A), divided by the weighted average number of shares used as
the basis for basic earnings per share (see Note 3).
C. Cash capital expenditure
Cash capital expenditure represents cash spent on maintaining and
developing assets as well as on investments in the period. Management
regularly monitors this measure as a key lever to delivering sustainable
cash flows. Cash capital expenditure is the sum of the following lines
from the Consolidated Statement of Cash flows: Capital expenditure,
Investments in joint ventures and associates and Investments in equity
securities.
With effect from the first quarter 2020, "Capital investment" is no
longer presented in this announcement since Cash capital expenditure is
considered to be more closely aligned with management's focus on free
cash flow generation.
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
5,206 3,679 6,707 Capital expenditure 16,585 22,971
Investments in joint
ventures and
269 34 112 associates 1,024 743
Investments in
28 23 65 equity securities 218 205
Cash capital
5,503 3,737 6,883 expenditure 17,827 23,919
Of which:
1,664 1,020 1,323 Integrated Gas 4,301 4,299
1,654 1,245 2,768 Upstream 7,296 10,205
1,310 832 1,628 Oil Products 3,328 4,908
830 595 1,023 Chemicals 2,640 4,090
46 45 141 Corporate 262 418
---------- --------- --------- -------------------- ---------- --------
Page 21
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
-----------------------------------------------------
D. Return on average capital employed
Return on average capital employed ("ROACE") measures the efficiency of
Shell's utilisation of the capital that it employs. Shell uses two ROACE
measures: ROACE on a Net income basis and ROACE on a CCS basis excluding
identified items, both adjusted for after-tax interest expense. With
effect from the second quarter 2020, the after-tax interest expense
adjustment is calculated using an applicable blended statutory tax rate.
This change is implemented to eliminate the distorting volatility
effects of the effective tax rate. There is no significant impact on
prior periods comparatives, which therefore have not been revised.
Both measures refer to Capital employed which consists of total equity,
current debt and non-current debt.
ROACE on a Net income basis
In this calculation, the sum of income for the current and previous
three quarters, adjusted for after-tax interest expense, is expressed as
a percentage of the average capital employed for the same period.
$ million Quarters
Q4 2020 Q3 2020 Q4 2019
Income - current and previous three quarters (21,534) (16,489) 16,432
Interest expense after tax - current and previous
three quarters 2,822 2,933 3,024
Income before interest expense - current and previous
three quarters (18,712) (13,556) 19,456
Capital employed -- opening 286,887 281,505 295,398
Capital employed -- closing 266,551 269,397 286,887
Capital employed -- average 276,719 275,451 291,142
ROACE on a Net income basis (6.8)% (4.9)% 6.7%
-------------------------------------------------------- -------- -------- -------
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.
$ million Quarters
Q4 2020 Q3 2020 Q4 2019
CCS earnings - current and previous three quarters (19,702) (14,272) 15,827
Identified items - current and previous three quarters (24,777) (21,957) (1,170)
Interest expense after tax -- current and previous
three quarters 2,822 2,933 3,024
CCS earnings excluding identified items before interest
expense - current and previous three quarters 7,898 10,618 20,021
Capital employed -- average 276,719 275,451 291,142
ROACE on a CCS basis excluding identified items 2.9% 3.9% 6.9%
---------------------------------------------------------- -------- -------- -------
E. Gearing
Gearing is a key measure of Shell's capital structure and is defined as
net debt as a percentage of total capital. Net debt is defined as the
sum of current and non-current debt, less cash and cash equivalents,
adjusted for the fair value of derivative financial instruments used to
hedge foreign exchange and interest rate risks relating to debt, and
associated collateral balances. Management considers this adjustment
useful because it reduces the volatility of net debt caused by
fluctuations in foreign exchange and interest rates, and eliminates the
potential impact of related collateral payments or receipts.
Debt-related derivative financial instruments are a subset of the
derivative financial instrument assets and liabilities presented on the
balance sheet. Collateral balances are reported under "Trade and other
receivables" or "Trade and other payables" as appropriate.
Page 22
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
-----------------------------------------------------
$ million Quarters
December 31, September 30, December 31,
2020 2020 2019
Current debt 16,899 17,811 15,064
Non-current debt 91,115 91,245 81,360
Total debt(1) 108,014 109,056 96,424
Add: Debt-related derivative financial instruments:
net liability/(asset) (1,979) (564) 701
Add: Collateral on debt-related derivatives: net
liability/(asset) 1,181 686 23
Less: Cash and cash equivalents (31,830) (35,714) (18,055)
Net debt 75,386 73,463 79,093
Add: Total equity 158,537 160,341 190,463
Total capital 233,923 233,804 269,556
Gearing 32.2% 31.4% 29.3%
------------------------------------------------------ ------ ---- ------- ----- ------- ----
1. Includes lease liabilities of $28,419 million at December 31,
2020, $28,930 million at September 30, 2020, and $30,537 million at
December 31, 2019.
F. Operating expenses
Operating expenses is a measure of Shell's cost management performance,
comprising the following items from the Consolidated Statement of
Income: production and manufacturing expenses; selling, distribution and
administrative expenses; and research and development expenses.
Underlying operating expenses is a measure aimed at facilitating a
comparative understanding of performance from period to period by
removing the effects of identified items, which, either individually or
collectively, can cause volatility, in some cases driven by external
factors.
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Production and manufacturing
6,701 5,496 7,247 expenses 24,001 26,438
Selling, distribution and
2,751 2,366 2,831 administrative expenses 9,881 10,493
199 233 306 Research and development 907 962
9,652 8,095 10,384 Operating expenses 34,789 37,893
Of which identified items:
Redundancy and
restructuring
(371) 25 (58) (charges)/reversal (872) (130)
(737) (267) (333) (Provisions)/reversal (1,415) (639)
-- -- -- Other -- (131)
(1,108) (242) (391) (2,287) (900)
8,544 7,854 9,993 Underlying operating expenses 32,502 36,993
--------- --------- --------- ------------------------------- --------- --------
G. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the business. It is defined as the
sum of "Cash flow from operating activities" and "Cash flow from
investing activities".
Cash flows from acquisition and divestment activities are removed from
Free cash flow to arrive at the Organic free cash flow, a measure used
by management to evaluate the generation of free cash flow without these
activities.
Page 23
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
-----------------------------------------------------
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
6,287 10,403 10,267 Cash flow from operating activities 34,105 42,178
(5,406) (2,833) (4,862) Cash flow from investing activities (13,277) (15,779)
882 7,571 5,405 Free cash flow 20,828 26,399
212 869 2,135 Less: Divestment proceeds (Reference I) 4,010 7,871
Add: Tax paid on divestments (reported under "Other
-- -- 106 investing cash outflows") -- 187
Add: Cash outflows related to inorganic capital
202 12 551 expenditure1 817 1,400
871 6,713 3,928 Organic free cash flow2 17,634 20,116
--------- --------- --------- ------------------------------------------------------- ---------- ----------
1.Cash outflows related to inorganic capital expenditure includes
portfolio actions which expand Shell's activities through acquisitions
and restructuring activities as reported in capital expenditure lines in
the Consolidated Statement of Cash Flows.
2.Free cash flow less divestment proceeds, adding back outflows related
to inorganic expenditure.
H. Cash flow from operating activities excluding working capital
movements
Working capital movements are defined as the sum of the following items
in the Consolidated Statement of Cash Flows: (i) (increase)/decrease
in inventories, (ii) (increase)/decrease in current receivables, and
(iii) increase/(decrease) in current payables.
Cash flow from operating activities excluding working capital movements
is a measure used by Shell to analyse its operating cash generation over
time excluding the timing effects of changes in inventories and
operating receivables and payables from period to period.
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
6,287 10,403 10,267 Cash flow from operating activities 34,105 42,178
(1,809) 405 (546) (Increase)/decrease in inventories 4,477 (2,635)
(107) (540) (2,448) (Increase)/decrease in current receivables 9,626 (921)
1,579 1,583 961 Increase/(decrease) in current payables (9,493) (1,223)
(337) 1,448 (2,033) (Increase)/decrease in working capital 4,610 (4,779)
Cash flow from operating activities excluding working
6,624 8,955 12,300 capital movements 29,495 46,957
Of which:
2,195 2,396 4,017 Integrated Gas 10,814 14,828
2,890 2,629 4,834 Upstream 9,784 19,946
782 3,476 3,120 Oil Products 7,041 10,738
775 488 338 Chemicals 1,756 1,721
(17) (33) (9) Corporate 101 (274)
--------- -------- --------- --------------------------------------------------------- --------- ---------
I. Divestment proceeds
Divestment proceeds represent cash received from divestment activities
in the period. Management regularly monitors this measure as a key lever
to deliver sustainable cash flow.
Quarters $ million Full year
Q4 2020 Q3 2020 Q4 2019 2020 2019
Proceeds from sale of property, plant and equipment
94 571 1,049 and businesses 2,489 4,803
111 159 1,032 Proceeds from sale of joint ventures and associates 1,240 2,599
7 139 55 Proceeds from sale of equity securities 281 469
212 869 2,135 Divestment proceeds 4,010 7,871
------- ---------- ---------- ------------------------------------------------------- --------- ---------
Page 24
ROYAL DUTCH SHELL PLC 4TH QUARTER 2020 AND FULL YEAR
UNAUDITED RESULTS
-----------------------------------------------------
CAUTIONARY STATEMENT
All amounts shown throughout this announcement are unaudited. All peak
production figures in Portfolio Developments are quoted at 100% expected
production. The numbers presented throughout this announcement may not
sum precisely to the totals provided and percentages may not precisely
reflect the absolute figures, due to rounding.
The companies in which Royal Dutch Shell plc directly and indirectly
owns investments are separate legal entities. In this announcement
"Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for
convenience where references are made to Royal Dutch Shell plc and its
subsidiaries in general. Likewise, the words "we", "us" and "our" are
also used to refer to Royal Dutch Shell plc and its subsidiaries in
general or to those who work for them. These terms are also used where
no useful purpose is served by identifying the particular entity or
entities. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as
used in this announcement refer to entities over which Royal Dutch Shell
plc either directly or indirectly has control. Entities and
unincorporated arrangements over which Shell has joint control are
generally referred to as "joint ventures" and "joint operations",
respectively. Entities over which Shell has significant influence but
neither control nor joint control are referred to as "associates". The
term "Shell interest" is used for convenience to indicate the direct
and/or indirect ownership interest held by Shell in an entity or
unincorporated joint arrangement, after exclusion of all third-party
interest.
This announcement contains forward-looking statements (within the
meaning of the US Private Securities Litigation Reform Act of 1995)
concerning the financial condition, results of operations and businesses
of Royal Dutch Shell. All statements other than statements of historical
fact are, or may be deemed to be, forward-looking statements.
Forward-looking statements are statements of future expectations that
are based on management's current expectations and assumptions and
involve known and unknown risks and uncertainties that could cause
actual results, performance or events to differ materially from those
expressed or implied in these statements. Forward-looking statements
include, among other things, statements concerning the potential
exposure of Royal Dutch Shell to market risks and statements expressing
management's expectations, beliefs, estimates, forecasts, projections
and assumptions. These forward-looking statements are identified by
their use of terms and phrases such as "aim", "ambition", "anticipate",
"believe", "could", "estimate", "expect", "goals", "intend", "may",
"objectives", "outlook", "plan", "probably", "project", "risks",
"schedule", "seek", "should", "target", "will" and similar terms and
phrases. There are a number of factors that could affect the future
operations of Royal Dutch Shell and could cause those results to differ
materially from those expressed in the forward-looking statements
included in this announcement, including (without limitation): (a)
price fluctuations in crude oil and natural gas; (b) changes in demand
for Shell's products; (c) currency fluctuations; (d) drilling and
production results; (e) reserves estimates; (f) loss of market share and
industry competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential acquisition
properties and targets, and successful negotiation and completion of
such transactions; (i) the risk of doing business in developing
countries and countries subject to international sanctions; (j)
legislative, fiscal and regulatory developments including regulatory
measures addressing climate change; (k) economic and financial market
conditions in various countries and regions; (l) political risks,
including the risks of expropriation and renegotiation of the terms of
contracts with governmental entities, delays or advancements in the
approval of projects and delays in the reimbursement for shared costs;
(m) risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or exceed
previous dividend payments. All forward-looking statements contained in
this announcement are expressly qualified in their entirety by the
cautionary statements contained or referred to in this section. Readers
should not place undue reliance on forward-looking statements.
Additional risk factors that may affect future results are contained in
Royal Dutch Shell's Annual Report and Accounts and Form 20-F for the
year ended December 31, 2019 (available at www.shell.com/investor and
www.sec.gov). These risk factors also expressly qualify all
forward-looking statements contained in this announcement and should be
considered by the reader. Each forward-looking statement speaks only as
of the date of this announcement, February 4, 2021. Neither Royal Dutch
Shell plc nor any of its subsidiaries undertake any obligation to
publicly update or revise any forward-looking statement as a result of
new information, future events or other information. In light of these
risks, results could differ materially from those stated, implied or
inferred from the forward-looking statements contained in this
announcement.
This announcement contains references to Shell's website. These
references are for the readers' convenience only. Shell is not
incorporating by reference any information posted on www.shell.com.
We may have used certain terms, such as resources, in this announcement
that the United States Securities and Exchange Commission (SEC) strictly
prohibits us from including in our filings with the SEC. Investors are
urged to consider closely the disclosure in our Form 20-F, File No
1-32575, available on the SEC website www.sec.gov.
This announcement contains inside information.
February 4, 2021
The information in this announcement reflects the unaudited
consolidated financial position and results of Royal Dutch
Shell plc. Company No. 4366849, Registered Office: Shell
Centre, London, SE1 7NA, England, UK.
--------------------------------------------------------------
Contacts:
- Linda M. Coulter, Company Secretary
- Media: International +44 (0) 207 934 5550; USA +1 832 337 4355
LEI number of Royal Dutch Shell plc: 21380068P1DRHMJ8KU70
Classification: Inside Information
Page 25
(END) Dow Jones Newswires
February 04, 2021 02:01 ET (07:01 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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