SHELL PLC
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 (MORE TO FOLLOW) Dow Jones Newswires
02-04-21 0216ET
