SHELL PLC
-------------------------------------------------------- -------- -------- -------
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
Q3 2020 Q2 2020 Q3 2019
CCS earnings - current and previous three quarters (14,272) (8,264) 22,284
Identified items - current and previous three quarters (21,957) (19,865) 2,536
Interest expense after tax -- current and previous
three quarters 2,933 3,014 3,115
CCS earnings excluding identified items before interest
expense - current and previous three quarters 10,618 14,616 22,864
Capital employed -- average 275,451 277,168 280,684
ROACE on a CCS basis excluding identified items 3.9% 5.3% 8.1%
---------------------------------------------------------- -------- -------- -------
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.
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ROYAL DUTCH SHELL PLC 3RD QUARTER 2020
UNAUDITED RESULTS
---------------------------------------
$ million Quarters
September 30, September 30,
2020 June 30, 2020 2019
Current debt 17,811 17,530 12,812
Non-current debt 91,245 87,460 76,112
Total debt(1) 109,056 104,990 88,924
Add: Debt-related derivative financial instruments:
net liability/(asset) (564) 525 1,013
Add: Collateral on debt-related derivatives: net
liability/(asset) 686 266 148
Less: Cash and cash equivalents (35,714) (27,939) (15,417)
Net debt 73,463 77,843 74,668
Add: Total equity 160,341 160,445 192,580
Total capital 233,804 238,288 267,249
Gearing 31.4% 32.7% 27.9%
------------------------------------------------------ ------ ----- ------- --- ------- -----
1. Includes lease liabilities of $28,930 million at September 30,
2020 and $29,073 million at June 30, 2020, and $31,085 million at
September 30, 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 Nine Months
Q3 2020 Q2 2020 Q3 2019 2020 2019
Production and manufacturing
5,496 5,822 6,002 expenses 17,299 19,191
Selling, distribution and
2,366 2,370 2,429 administrative expenses 7,130 7,662
233 232 219 Research and development 708 656
8,095 8,423 8,650 Operating expenses 25,137 27,509
Of which identified items:
Redundancy and
restructuring
25 (508) 7 (charges)/reversal (501) (72)
(267) (411) -- (Provisions)/reversal (678) (306)
-- -- -- Other -- (131)
(242) (919) 7 (1,179) (509)
7,854 7,504 8,657 Underlying operating expenses 23,958 27,000
--------- --------- --------- ------------------------------- --------- --------
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.
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ROYAL DUTCH SHELL PLC 3RD QUARTER 2020
UNAUDITED RESULTS
---------------------------------------
Quarters $ million Nine Months
Q3 2020 Q2 2020 Q3 2019 2020 2019
10,403 2,563 12,252 Cash flow from operating activities 27,818 31,913
(2,833) (2,320) (2,130) Cash flow from investing activities (7,871) (10,918)
7,571 243 10,122 Free cash flow 19,947 20,995
869 696 3,979 Less: Divestment proceeds (Reference I) 3,798 5,736
Add: Tax paid on divestments (reported under "Other
-- -- 4 investing cash outflows") -- 80
Add: Cash outflows related to inorganic capital
12 199 484 expenditure1 614 849
6,713 (254) 6,630 Organic free cash flow2 16,763 16,189
--------- --------- --------- ------------------------------------------------------- --------- ----------
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 Nine Months
Q3 2020 Q2 2020 Q3 2019 2020 2019
10,403 2,563 12,252 Cash flow from operating activities 27,818 31,913
405 (3,713) 813 (Increase)/decrease in inventories 6,286 (2,089)
(540) 3,959 2,644 (Increase)/decrease in current receivables 9,733 1,527
1,583 (4,226) (3,289) Increase/(decrease) in current payables (11,073) (2,184)
1,448 (3,980) 168 (Increase)/decrease in working capital 4,947 (2,746) (MORE TO FOLLOW) Dow Jones Newswires
10-29-20 0315ET
