4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | ||||||||||||||||||||||||||||||||||||
SUMMARY OF UNAUDITED RESULTS | ||||||||||||||||||||||||||||||||||||
Quarters | $ million | Full year | ||||||||||||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||||||||||||
10,409 | 6,743 | 11,461 | +54 | Income/(loss) attributable to | 42,309 | 20,101 | +110 | |||||||||||||||||||||||||||||
9,814 | 9,454 | 6,391 | +4 | Adjusted Earnings | A | 39,870 | 19,289 | +107 | ||||||||||||||||||||||||||||
20,600 | 21,512 | 16,349 | -4 | Adjusted EBITDA | A | 84,289 | 55,004 | +53 | ||||||||||||||||||||||||||||
22,404 | 12,539 | 8,170 | +79 | Cash flow from operating activities | 68,413 | 45,104 | +52 | |||||||||||||||||||||||||||||
(6,918) | (5,049) | 2,579 | Cash flow from investing activities | (22,448) | (4,761) | |||||||||||||||||||||||||||||||
15,486 | 7,490 | 10,749 | Free cash flow | G | 45,965 | 40,343 | ||||||||||||||||||||||||||||||
7,319 | 5,426 | 6,500 | Cash capital expenditure | C | 24,833 | 19,698 | ||||||||||||||||||||||||||||||
11,114 | 9,359 | 9,701 | +19 | Operating expenses | F | 39,477 | 35,964 | +10 | ||||||||||||||||||||||||||||
11,037 | 9,893 | 9,386 | +12 | Underlying operating expenses | F | 39,456 | 35,309 | +12 | ||||||||||||||||||||||||||||
16.7% | 17.3% | 8.8% | ROACE on a Net income basis | D | 16.7% | 8.8% | ||||||||||||||||||||||||||||||
15.8% | 14.7% | 8.5% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 15.8% | 8.5% | ||||||||||||||||||||||||||||||
44,838 | 48,343 | 52,556 | Net debt | E | 44,838 | 52,556 | ||||||||||||||||||||||||||||||
18.9% | 20.3% | 23.1% | Gearing | E | 18.9% | 23.1% | ||||||||||||||||||||||||||||||
2,831 | 2,766 | 3,142 | +2 | Total production available for sale (thousand boe/d) | 2,864 | 3,237 | -12 | |||||||||||||||||||||||||||||
1.47 | 0.93 | 1.49 | +58 | Basic earnings per share ($) | 5.76 | 2.59 | +122 | |||||||||||||||||||||||||||||
1.39 | 1.30 | 0.83 | +7 | Adjusted Earnings per share ($) | B | 5.43 | 2.49 | +118 | ||||||||||||||||||||||||||||
0.2875 | 0.2500 | 0.2400 | +15 | Dividend per share ($) | 1.0375 | 0.8935 | +16 | |||||||||||||||||||||||||||||
1.Q4 on Q3 change
Quarter Analysis1
Income attributable to
Fourth quarter 2022 income attributable to
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as income attributable to
Cash flow from operating activities for the fourth quarter 2022 was
Cash flow from investing activities for the quarter was an outflow of
Net debt and Gearing: At the end of the fourth quarter 2022, net debt was
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Shareholder distributions
Total shareholder distributions in the quarter amounted to
Full Year Analysis1
Full year income attributable to
Full year 2022 income attributable to
Adjusted Earnings and Adjusted EBITDA2 for the full year 2022 were driven by the same factors as income attributable to
Cash flow from operating activities for the full year 2022 was
Cash flow from investing activities for the full year 2022 was an outflow of
This announcement, together with supplementary financial and operational disclosure and a separate press release for this quarter, is available at www.shell.com/investors3.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
- Not incorporated by reference.
FOURTH QUARTER 2022 PORTFOLIO DEVELOPMENTS
Withdrawal from Russian oil and gas activities
We refer to Note 8 to the Condensed Consolidated Financial Statements.
In
Upstream
In
In
Marketing
In
Chemicals and Products
In
In
Renewables and Energy Solutions
In
Page 2
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
PERFORMANCE BY SEGMENT
INTEGRATED GAS | ||||||||||||||||||||||||||
Quarters | $ million | Full year | ||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
5,293 | 5,736 | 4,771 | -8 | Segment earnings | 22,212 | 8,060 | +176 | |||||||||||||||||||
(675) | 3,417 | 735 | Of which: Identified items | A | 6,075 | (988) | ||||||||||||||||||||
5,968 | 2,319 | 4,036 | +157 | Adjusted Earnings | A | 16,137 | 9,048 | +78 | ||||||||||||||||||
8,332 | 5,393 | 6,091 | +55 | Adjusted EBITDA | A | 26,569 | 16,754 | +59 | ||||||||||||||||||
6,409 | 6,664 | 6,542 | -4 | Cash flow from operating activities | 27,692 | 13,210 | +110 | |||||||||||||||||||
1,527 | 956 | 1,014 | Cash capital expenditure | C | 4,265 | 3,502 | ||||||||||||||||||||
123 | 123 | 154 | 0 | Liquids production available for sale (thousand b/d) | 128 | 169 | -25 | |||||||||||||||||||
4,607 | 4,645 | 4,777 | -1 | Natural gas production available for sale (million scf/d) | 4,600 | 4,842 | -5 | |||||||||||||||||||
917 | 924 | 978 | -1 | Total production available for sale (thousand boe/d) | 921 | 1,004 | -8 | |||||||||||||||||||
6.78 | 7.24 | 7.94 | -6 | LNG liquefaction volumes (million tonnes) | 29.68 | 30.98 | -4 | |||||||||||||||||||
16.82 | 15.66 | 16.72 | +7 | LNG sales volumes (million tonnes) | 65.98 | 64.20 | +3 |
1.Q4 on Q3 change
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, reflected the net effect of higher contributions from trading and optimisation and realised prices (increase of
Fourth quarter 2022 segment earnings also included charges of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, partly offset by net cash outflows related to derivatives (outflow of
Total oil and gas production, compared with the third quarter 2022, decreased by 1% mainly due to longer maintenance at Prelude, and operational issues at QGC, partly offset by a comparative gain related to "Protected Industrial Actions" at Prelude in the third quarter. LNG liquefaction volumes decreased by 6% mainly due to higher unplanned maintenance, and lower feedgas supply, partly offset by a comparative gain related to "Protected Industrial Actions" at Prelude in the third quarter.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected the combined effect of higher realised prices and higher contributions from trading and optimisation (increase of
Full year 2022 segment earnings also included gains of
Page 3
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the full year 2022 was primarily driven by Adjusted EBITDA and net cash inflows related to derivatives (inflow of
Total oil and gas production, compared with the full year 2021, decreased by 8% mainly due to derecognition of Sakhalin-related volumes, production-sharing contract effects, partly offset by new field ramp-up in
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
Page 4
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
UPSTREAM | |||||||||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | ||||||||||||||||||||||
1,380 | 5,357 | 4,914 | -74 | Segment earnings | 16,223 | 9,603 | +69 | ||||||||||||||||||||||
(1,681) | (539) | 2,077 | Of which: Identified items | A | (1,096) | 1,587 | |||||||||||||||||||||||
3,061 | 5,896 | 2,838 | -48 | Adjusted Earnings | A | 17,319 | 8,015 | +116 | |||||||||||||||||||||
9,418 | 12,539 | 8,446 | -25 | Adjusted EBITDA | A | 42,100 | 27,170 | +55 | |||||||||||||||||||||
7,224 | 8,343 | 6,974 | -13 | Cash flow from operating activities | 29,641 | 21,562 | +37 | ||||||||||||||||||||||
1,845 | 1,733 | 1,504 | Cash capital expenditure | C | 8,143 | 6,168 | |||||||||||||||||||||||
1,331 | 1,273 | 1,456 | +5 | Liquids production available for sale (thousand b/d) | 1,333 | 1,515 | -12 | ||||||||||||||||||||||
3,067 | 2,995 | 3,799 | +2 | Natural gas production available for sale (million scf/d) | 3,272 | 3,845 | -15 | ||||||||||||||||||||||
1,859 | 1,789 | 2,110 | +4 | Total production available for sale (thousand boe/d) | 1,897 | 2,178 | -13 | ||||||||||||||||||||||
1.Q4 on Q3 change
The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. It also markets and transports oil and gas, and operates the infrastructure necessary to deliver them to the market.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, were mainly driven by lower oil and gas prices (decrease of
Fourth quarter 2022 segment earnings also included charges of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, partly offset by tax payments of
Total production, compared with the third quarter 2022, increased mainly due to lower scheduled maintenance and lower unscheduled deferment.
Full Year Analysis1
Segment earnings, compared with the full year 2021, mainly reflected higher realised oil and gas prices (increase of
Full year 2022 segment earnings also included a gain from net impairment reversals of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the full year 2022 was primarily driven by Adjusted EBITDA, partly offset by the timing impact of dividends from joint ventures and associates of
Total production, compared with the full year 2021, decreased due to the impact of divestments and scheduled maintenance. The impact of field decline was more than offset by growth from new fields.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
Page 5
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
MARKETING | |||||||||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | ||||||||||||||||||||||
375 | 757 | 471 | -51 | Segment earnings² | 2,133 | 3,536 | -40 | ||||||||||||||||||||||
(72) | (63) | (140) | Of which: Identified items | A | (622) | 68 | |||||||||||||||||||||||
446 | 820 | 611 | -46 | Adjusted Earnings² | A | 2,754 | 3,468 | -21 | |||||||||||||||||||||
1,045 | 1,505 | 1,125 | -31 | Adjusted EBITDA2 | A | 5,324 | 6,021 | -12 | |||||||||||||||||||||
1,062 | 2,299 | 1,218 | -54 | Cash flow from operating activities | 2,376 | 5,019 | -53 | ||||||||||||||||||||||
1,993 | 746 | 829 | Cash capital expenditure | C | 4,831 | 2,273 | |||||||||||||||||||||||
2,543 | 2,581 | 2,522 | -1 | Marketing sales volumes (thousand b/d) | 2,503 | 2,433 | +3 | ||||||||||||||||||||||
- Q4 on Q3 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
The Marketing segment comprises the Mobility, Lubricants, and Sectors & Decarbonisation businesses. The Mobility business operates Shell’s retail network including electric vehicle charging services. The Lubricants business produces, markets and sells lubricants for road transport, and machinery used in manufacturing, mining, power generation, agriculture and construction. The Sectors & Decarbonisation business sells fuels, speciality products and services including low-carbon energy solutions to a broad range of commercial customers including the aviation, shipping, commercial road transport and agricultural sectors.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, reflected lower Marketing margins (decrease of
Fourth quarter 2022 segment earnings also included impairment charges of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, working capital inflows of
Marketing sales volumes (comprising hydrocarbon sales), compared with the third quarter 2022, decreased mainly due to seasonal effects.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected higher operating expenses (increase of
Full year 2022 segment earnings also included net losses of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the full year 2022 was primarily driven by Adjusted EBITDA, and non-cash cost-of-sales adjustments of
Marketing sales volumes (comprising hydrocarbon sales), compared with the full year 2021, increased mainly due to demand recovery in Aviation (within Sectors & Decarbonisation).
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
Page 6
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
CHEMICALS AND PRODUCTS | |||||||||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | ||||||||||||||||||||||
332 | 980 | (3) | -66 | Segment earnings² | 4,515 | 404 | +1018 | ||||||||||||||||||||||
(412) | 208 | 127 | Of which: Identified items | A | (204) | (1,712) | |||||||||||||||||||||||
744 | 772 | (130) | -4 | Adjusted Earnings² | A | 4,719 | 2,115 | +123 | |||||||||||||||||||||
1,574 | 1,797 | 741 | -12 | Adjusted EBITDA2 | A | 8,561 | 5,635 | +52 | |||||||||||||||||||||
3,119 | 3,385 | (1,572) | -8 | Cash flow from operating activities | 12,906 | 3,709 | +248 | ||||||||||||||||||||||
786 | 828 | 1,410 | Cash capital expenditure | C | 3,838 | 5,175 | |||||||||||||||||||||||
1,434 | 1,434 | 1,348 | 0 | Refinery processing intake (thousand b/d) | 1,402 | 1,639 | -14 | ||||||||||||||||||||||
1,800 | 1,803 | 1,929 | 0 | Refining & Trading sales volumes (thousand b/d) | 1,700 | 2,026 | -16 | ||||||||||||||||||||||
3,017 | 2,879 | 3,475 | +5 | Chemicals sales volumes (thousand tonnes) | 12,281 | 14,216 | -14 | ||||||||||||||||||||||
- Q4 on Q3 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
The Chemicals and Products segment includes chemicals manufacturing plants with their own marketing network, and refineries which turn crude oil and other feedstocks into a range of oil products which are moved and marketed around the world for domestic, industrial and transport use. The segment also includes the Pipeline business, Trading of crude oil, oil products and petrochemicals, and Oil Sands activities (the extraction of bitumen from mined oil sands and its conversion into synthetic crude oil).
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, reflected higher operating expenses (increase of
Fourth quarter 2022 segment earnings also included losses of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the fourth quarter were a loss of
Cash flow from operating activities for the quarter was primarily driven by working capital inflows of
Chemicals manufacturing plant utilisation was 75% (previous methodology: 69%) compared with 76% (previous methodology: 70%) in the third quarter 2022.
Refinery utilisation was 90% (previous methodology: 77%) compared with 88% (previous methodology: 79%) in the third quarter 2022, due to lower unplanned maintenance.
With effect from the second quarter 2022, the methodology applied in calculating both Chemicals manufacturing plant utilisation and Refinery utilisation has been revised to further align with industry disclosures. The revisions include moving from stream days capacity (defined as the maximum throughput, excluding the impact of maintenance or operational outages) to calendar days capacity (defined as the throughput including typical limitations such as maintenance over an extended period of time). Furthermore, Refinery utilisation is now specific to the capacity of the crude distillation unit (except for
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected higher Products margins (increase of
Page 7
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Full year 2022 segment earnings also included impairment charges of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the full year 2022 were a loss of
Cash flow from operating activities for the full year 2022 was primarily driven by Adjusted EBITDA, non-cash cost-of-sales adjustments of
Chemicals manufacturing plant utilisation was 79% (previous methodology: 72%) compared with 85% (previous methodology: 78%) in the full year 2021, due to higher turnarounds and optimisation for the low-margin environment during the full year 2022.
Refinery utilisation was 86% (previous methodology: 74%) compared with 80% (previous methodology: 72%) in the full year 2021, due to lower unplanned maintenance, and lower turnarounds.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
Page 8
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
RENEWABLES AND ENERGY SOLUTIONS | |||||||||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | Reference | 2022 | 2021 | % | ||||||||||||||||||||||
4,673 | (4,023) | 1,894 | +216 | Segment earnings | (1,059) | (1,514) | +30 | ||||||||||||||||||||||
4,379 | (4,406) | 1,851 | Of which: Identified items | A | (2,805) | (1,272) | |||||||||||||||||||||||
293 | 383 | 43 | -23 | Adjusted Earnings | A | 1,745 | (243) | +819 | |||||||||||||||||||||
396 | 530 | 80 | -25 | Adjusted EBITDA | A | 2,459 | (21) | +11923 | |||||||||||||||||||||
2,674 | (8,051) | (5,236) | +133 | Cash flow from operating activities | (6,394) | 451 | -1518 | ||||||||||||||||||||||
1,076 | 1,086 | 1,617 | Cash capital expenditure | C | 3,469 | 2,359 | |||||||||||||||||||||||
66 | 67 | 59 | -2 | External power sales (terawatt hours)2 | 243 | 247 | -2 | ||||||||||||||||||||||
241 | 157 | 249 | +53 | Sales of pipeline gas to end-use customers (terawatt hours)3 | 843 | 899 | -6 | ||||||||||||||||||||||
1.Q4 on Q3 change
2.Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
3.Physical natural gas sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders. Excluding sales of natural gas by other segments and LNG sales.
The Renewables and Energy Solutions segment includes Shell’s
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, reflected higher trading and optimisation results mainly driven by the European market, partly offset by the American market as significant price volatility continued. The fourth quarter 2022 also included higher operating expenses.
Fourth quarter 2022 segment earnings also included net gains of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the quarter was primarily driven by working capital movements (inflow of
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected higher trading and optimisation results for gas and power mainly in
Full year 2022 segment earnings also included net losses of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the full year 2022 was primarily driven by net cash outflows related to derivatives (outflow of
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
Page 9
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Additional Growth Measures
Quarters | Full year | |||||||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | %¹ | 2022 | 2021 | % | ||||||||||||||||||||
Renewable power generation capacity (gigawatt): | ||||||||||||||||||||||||||
2.2 | 2.2 | 0.7 | +2 | – In operation2 | 2.2 | 0.7 | +220 | |||||||||||||||||||
4.2 | 3.0 | 2.3 | +38 | – Under construction and/or committed for sale3 | 4.2 | 2.3 | +85 |
- Q4 on Q3 change
- Shell's equity share of renewable generation capacity post commercial operation date. It excludes Shell's equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.
- Shell's equity share of renewable generation capacity under construction and/or committed for sale under long-term offtake agreements (PPA). It excludes Shell's equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.
CORPORATE | ||||||||||||||||||||
Quarters | $ million | Full year | ||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | Reference | 2022 | 2021 | |||||||||||||||
(654) | (543) | (859) | Segment earnings | (2,461) | (2,606) | |||||||||||||||
(28) | 28 | 30 | Of which: Identified items | A | (90) | 81 | ||||||||||||||
(626) | (571) | (889) | Adjusted Earnings | A | (2,371) | (2,686) | ||||||||||||||
(164) | (251) | (133) | Adjusted EBITDA | A | (725) | (554) | ||||||||||||||
1,916 | (100) | 245 | Cash flow from operating activities | 2,192 | 1,154 |
The Corporate segment covers the non-operating activities supporting Shell, comprising Shell’s holdings and treasury organisation, its self-insurance activities and its headquarters and central functions. All finance expense and income and related taxes are included in Corporate segment earnings rather than in the earnings of business segments.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, reflected unfavourable movements in the net interest expense, partly offset by favourable currency exchange rate effects.
Adjusted EBITDA2 was mainly driven by favourable currency exchange effects.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected by favourable movements in the net interest expense, partly offset by lower tax credits and unfavourable currency exchange rate effects.
Adjusted EBITDA was mainly driven by unfavourable currency exchange effects.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
PRELIMINARY RESERVES UPDATE
When final volumes are reported in the 2022 Annual Report and Accounts and 2022 Form 20-F, Shell expects that
The proved Reserves Replacement Ratio on an
Further information will be provided in the 2022 Annual Report and Accounts and 2022 Form 20-F, which are expected to be filed in
OUTLOOK FOR THE FIRST QUARTER 2023
Cash capital expenditure is expected to be within the
Page 10
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Upstream production is expected to be approximately 1,750 - 1,950 thousand boe/d.
Marketing sales volumes are expected to be approximately 2,150 - 2,650 thousand b/d.
Refinery utilisation is expected to be approximately 87% - 95%. Chemicals manufacturing plant utilisation is expected to be approximately 68% - 76%. The utilisation ranges presented use the revised methodology (please refer to 'Chemicals and Products' in the 'Performance by Segment' section).
Corporate Adjusted Earnings are expected to be a net expense of approximately
FORTHCOMING EVENTS
The “Shell LNG Outlook 2023” event is scheduled on
Page 11
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME | |||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
101,303 | 95,749 | 85,280 | Revenue1, 4 | 381,314 | 261,504 | ||||||||||||
(268) | 2,512 | 975 | Share of profit/(loss) of joint ventures and associates4 | 3,972 | 4,097 | ||||||||||||
160 | 498 | 3,968 | Interest and other income/(expenses)2, 4 | 915 | 7,056 | ||||||||||||
101,195 | 98,759 | 90,223 | Total revenue and other income/(expenses) | 386,201 | 272,657 | ||||||||||||
65,489 | 70,684 | 56,566 | Purchases | 258,488 | 174,912 | ||||||||||||
7,220 | 5,910 | 6,530 | Production and manufacturing expenses | 25,518 | 23,822 | ||||||||||||
3,491 | 3,229 | 2,867 | Selling, distribution and administrative expenses4 | 12,883 | 11,328 | ||||||||||||
403 | 220 | 304 | Research and development | 1,075 | 815 | ||||||||||||
649 | 424 | 280 | Exploration | 1,712 | 1,423 | ||||||||||||
6,459 | 6,124 | 6,445 | Depreciation, depletion and amortisation2, 4 | 18,529 | 26,921 | ||||||||||||
1,040 | 734 | 963 | Interest expense | 3,181 | 3,607 | ||||||||||||
84,752 | 87,324 | 73,954 | Total expenditure | 321,387 | 242,828 | ||||||||||||
16,443 | 11,435 | 16,269 | Income/(loss) before taxation | 64,814 | 29,829 | ||||||||||||
5,975 | 4,587 | 4,665 | Taxation charge/(credit) | 21,941 | 9,199 | ||||||||||||
10,469 | 6,848 | 11,604 | Income/(loss) for the period¹ | 42,873 | 20,630 | ||||||||||||
59 | 104 | 144 | Income/(loss) attributable to non-controlling interest | 565 | 529 | ||||||||||||
10,409 | 6,743 | 11,461 | Income/(loss) attributable to | 42,309 | 20,101 | ||||||||||||
1.47 | 0.93 | 1.49 | Basic earnings per share | 5.76 | 2.59 | ||||||||||||
1.46 | 0.92 | 1.48 | Diluted earnings per share | 5.71 | 2.57 |
1. See Note 2 “Segment information”.
2. See Note 7 “Other notes to the unaudited Condensed Consolidated Financial Statements”.
3. See Note 3 “Earnings per share”.
4. See Note 8 “Withdrawal from Russian oil and gas activities”.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
10,469 | 6,848 | 11,604 | Income/(loss) for the period | 42,873 | 20,630 | ||||||||||||
Other comprehensive income/(loss) net of tax: | |||||||||||||||||
Items that may be reclassified to income in later periods: | |||||||||||||||||
2,855 | (3,456) | (193) | – Currency translation differences | (2,986) | (1,413) | ||||||||||||
12 | (25) | (11) | – Debt instruments remeasurements | (78) | (28) | ||||||||||||
(345) | (57) | (129) | – Cash flow hedging gains/(losses) | (232) | 21 | ||||||||||||
(264) | 183 | 86 | – Net investment hedging gains/(losses) | 180 | 295 | ||||||||||||
(32) | 11 | (1) | – Deferred cost of hedging | 200 | (39) | ||||||||||||
77 | 30 | 59 | – Share of other comprehensive income/(loss) of joint ventures and associates | 274 | (109) | ||||||||||||
2,303 | (3,315) | (190) | Total | (2,642) | (1,273) | ||||||||||||
Items that are not reclassified to income in later periods: | |||||||||||||||||
(2,090) | 126 | 604 | – Retirement benefits remeasurements | 5,466 | 7,198 | ||||||||||||
(37) | (21) | 121 | – Equity instruments remeasurements | (491) | 145 | ||||||||||||
(227) | 12 | 30 | – Share of other comprehensive income/(loss) of joint ventures and associates | (253) | 3 | ||||||||||||
(2,354) | 117 | 755 | Total | 4,722 | 7,346 | ||||||||||||
(51) | (3,198) | 564 | Other comprehensive income/(loss) for the period | 2,080 | 6,073 | ||||||||||||
10,417 | 3,649 | 12,169 | Comprehensive income/(loss) for the period | 44,953 | 26,703 | ||||||||||||
114 | (38) | 118 | Comprehensive income/(loss) attributable to non-controlling interest | 621 | 468 | ||||||||||||
10,303 | 3,687 | 12,051 | Comprehensive income/(loss) attributable to | 44,333 | 26,235 |
Page 12
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||
$ million | |||||||||||
Assets | |||||||||||
Non-current assets | |||||||||||
Intangible assets | 25,701 | 24,693 | |||||||||
Property, plant and equipment | 198,642 | 194,932 | |||||||||
Joint ventures and associates | 23,864 | 23,415 | |||||||||
Investments in securities | 3,362 | 3,797 | |||||||||
Deferred tax1 | 7,815 | 12,426 | |||||||||
Retirement benefits1 | 10,200 | 8,471 | |||||||||
Trade and other receivables | 6,920 | 7,065 | |||||||||
Derivative financial instruments² | 582 | 815 | |||||||||
277,087 | 275,614 | ||||||||||
Current assets | |||||||||||
Inventories | 31,894 | 25,258 | |||||||||
Trade and other receivables | 66,510 | 53,208 | |||||||||
Derivative financial instruments² | 24,437 | 11,369 | |||||||||
Cash and cash equivalents | 40,246 | 36,970 | |||||||||
163,087 | 126,805 | ||||||||||
Assets classified as held for sale1 | 2,850 | 1,960 | |||||||||
165,937 | 128,765 | ||||||||||
Total assets | 443,024 | 404,379 | |||||||||
Liabilities | |||||||||||
Non-current liabilities | |||||||||||
Debt | 74,794 | 80,868 | |||||||||
Trade and other payables | 3,432 | 2,075 | |||||||||
Derivative financial instruments² | 3,563 | 887 | |||||||||
Deferred tax1 | 16,186 | 12,547 | |||||||||
Retirement benefits1 | 7,296 | 11,325 | |||||||||
Decommissioning and other provisions1 | 23,845 | 25,804 | |||||||||
129,117 | 133,506 | ||||||||||
Current liabilities | |||||||||||
Debt | 9,001 | 8,218 | |||||||||
Trade and other payables | 79,357 | 63,173 | |||||||||
Derivative financial instruments² | 23,779 | 16,311 | |||||||||
Income taxes payable | 4,869 | 3,254 | |||||||||
Decommissioning and other provisions | 2,910 | 3,338 | |||||||||
119,916 | 94,294 | ||||||||||
Liabilities directly associated with assets classified as held for sale1 | 1,395 | 1,253 | |||||||||
121,310 | 95,547 | ||||||||||
Total liabilities | 250,427 | 229,053 | |||||||||
Equity attributable to | 190,471 | 171,966 | |||||||||
Non-controlling interest1 | 2,126 | 3,360 | |||||||||
Total equity | 192,597 | 175,326 | |||||||||
Total liabilities and equity | 443,024 | 404,379 | |||||||||
- See Note 7 “Other notes to the unaudited Condensed Consolidated Financial Statements”.
- See Note 6 “Derivative financial instruments and debt excluding lease liabilities”.
Page 13
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | ||||||||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||||||||||||||||
Equity attributable to | ||||||||||||||||||||||||||||
$ million | Share capital1 | Shares held in trust | Other reserves² | Retained earnings | Total | Non-controlling interest | Total equity | |||||||||||||||||||||
At | 641 | (610) | 18,909 | 153,026 | 171,966 | 3,360 | 175,326 | |||||||||||||||||||||
Comprehensive income/(loss) for the period | — | — | 2,024 | 42,309 | 44,333 | 621 | 44,953 | |||||||||||||||||||||
Transfer from other comprehensive income | — | — | (34) | 34 | — | — | — | |||||||||||||||||||||
Dividends³ | — | — | — | (7,283) | (7,283) | (206) | (7,489) | |||||||||||||||||||||
Repurchases of shares4 | (57) | — | 57 | (18,547) | (18,547) | — | (18,547) | |||||||||||||||||||||
Share-based compensation | — | (116) | 176 | 131 | 190 | — | 190 | |||||||||||||||||||||
Other changes | — | — | — | (187) | (187) | (1,650) | 5 | (1,838) | ||||||||||||||||||||
At | 584 | (727) | 21,131 | 169,482 | 190,471 | 2,126 | 192,597 | |||||||||||||||||||||
At | 651 | (709) | 12,752 | 142,616 | 155,310 | 3,227 | 158,537 | |||||||||||||||||||||
Comprehensive income/(loss) for the period | — | — | 6,134 | 20,101 | 26,235 | 468 | 26,703 | |||||||||||||||||||||
Transfer from other comprehensive income | — | — | (45) | 45 | — | — | — | |||||||||||||||||||||
Dividends3 | — | — | — | (6,321) | (6,321) | (348) | (6,669) | |||||||||||||||||||||
Repurchases of shares | (10) | — | 10 | (3,513) | (3,513) | — | (3,513) | |||||||||||||||||||||
Share-based compensation | — | 99 | 58 | 93 | 250 | — | 250 | |||||||||||||||||||||
Other changes | — | — | — | 5 | 5 | 13 | 18 | |||||||||||||||||||||
At | 641 | (610) | 18,909 | 153,026 | 171,966 | 3,360 | 175,326 | |||||||||||||||||||||
- See Note 4 “Share capital”.
- See Note 5 “Other reserves”.
- The amount charged to retained earnings is based on prevailing exchange rates on payment date.
- Includes shares committed to repurchase under an irrevocable contract and repurchases subject to settlement at the end of the quarter.
- See Note 7 “Other notes to the unaudited Condensed Consolidated Financial Statements”.
Page 14
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||||||||
16,443 | 11,435 | 16,269 | Income before taxation for the period | 64,814 | 29,829 | ||||||||||||||||||
Adjustment for: | |||||||||||||||||||||||
596 | 389 | 819 | – Interest expense (net) | 2,135 | 3,096 | ||||||||||||||||||
6,459 | 6,124 | 6,445 | – Depreciation, depletion and amortisation1 | 18,529 | 26,921 | ||||||||||||||||||
395 | 218 | 72 | – Exploration well write-offs | 881 | 639 | ||||||||||||||||||
(21) | (93) | (3,679) | – Net (gains)/losses on sale and revaluation of non-current assets and businesses | (642) | (5,995) | ||||||||||||||||||
268 | (2,512) | (975) | – Share of (profit)/loss of joint ventures and associates | (3,972) | (4,097) | ||||||||||||||||||
1,413 | 814 | 1,611 | – Dividends received from joint ventures and associates | 4,398 | 3,929 | ||||||||||||||||||
2,902 | 484 | (860) | – (Increase)/decrease in inventories | (8,360) | (7,319) | ||||||||||||||||||
5,179 | (98) | (6,799) | – (Increase)/decrease in current receivables | (8,989) | (20,567) | ||||||||||||||||||
2,308 | (4,544) | 4,688 | – Increase/(decrease) in current payables | 11,915 | 17,519 | ||||||||||||||||||
(7,669) | 3,334 | (6,592) | – Derivative financial instruments | (2,619) | 5,882 | ||||||||||||||||||
135 | (87) | (27) | – Retirement benefits | 417 | 16 | ||||||||||||||||||
218 | (744) | 176 | – Decommissioning and other provisions | 35 | (76) | ||||||||||||||||||
(1,850) | 1,258 | (1,236) | – Other1 | 2,991 | 803 | ||||||||||||||||||
(4,372) | (3,438) | (1,743) | Tax paid | (13,120) | (5,476) | ||||||||||||||||||
22,404 | 12,539 | 8,170 | Cash flow from operating activities | 68,413 | 45,104 | ||||||||||||||||||
(6,417) | (5,268) | (6,236) | Capital expenditure | (22,600) | (19,000) | ||||||||||||||||||
(860) | (95) | (145) | Investments in joint ventures and associates | (1,973) | (479) | ||||||||||||||||||
(42) | (63) | (120) | Investments in equity securities | (261) | (218) | ||||||||||||||||||
52 | 39 | 8,843 | Proceeds from sale of property, plant and equipment and businesses | 1,431 | 14,233 | ||||||||||||||||||
119 | 203 | 137 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 511 | 584 | ||||||||||||||||||
65 | 36 | 151 | Proceeds from sale of equity securities | 117 | 296 | ||||||||||||||||||
401 | 253 | 121 | Interest received | 906 | 423 | ||||||||||||||||||
518 | 496 | 489 | Other investing cash inflows | 2,060 | 2,928 | ||||||||||||||||||
(754) | (650) | (662) | Other investing cash outflows | (2,641) | (3,528) | ||||||||||||||||||
(6,918) | (5,049) | 2,579 | Cash flow from investing activities | (22,448) | (4,761) | ||||||||||||||||||
(248) | (206) | (32) | Net increase/(decrease) in debt with maturity period within three months | 318 | 14 | ||||||||||||||||||
Other debt: | |||||||||||||||||||||||
31 | 103 | 1,602 | – New borrowings | 269 | 1,791 | ||||||||||||||||||
(2,217) | (1,171) | (7,850) | – Repayments | (8,460) | (21,534) | ||||||||||||||||||
(1,183) | (747) | (1,258) | Interest paid | (3,677) | (4,014) | ||||||||||||||||||
356 | (843) | (391) | Derivative financial instruments | (1,799) | (1,165) | ||||||||||||||||||
(1,974) | 1 | 4 | — | Change in non-controlling interest | (1,965) | 19 | |||||||||||||||||
Cash dividends paid to: | |||||||||||||||||||||||
(1,785) | (1,818) | (1,838) | – | (7,405) | (6,253) | ||||||||||||||||||
(42) | (54) | (42) | – Non-controlling interest | (206) | (348) | ||||||||||||||||||
(4,474) | (4,950) | (1,703) | Repurchases of shares | (18,437) | (2,889) | ||||||||||||||||||
(542) | (25) | (254) | Shares held in trust: net sales/(purchases) and dividends received | (593) | (285) | ||||||||||||||||||
(12,078) | (9,707) | (11,764) | Cash flow from financing activities | (41,954) | (34,664) | ||||||||||||||||||
860 | (774) | (87) | Effects of exchange rate changes on cash and cash equivalents | (736) | (539) | ||||||||||||||||||
4,268 | (2,992) | (1,102) | Increase/(decrease) in cash and cash equivalents | 3,275 | 5,140 | ||||||||||||||||||
35,978 | 38,970 | 38,073 | Cash and cash equivalents at beginning of period | 36,970 | 31,830 | ||||||||||||||||||
40,246 | 35,978 | 36,970 | Cash and cash equivalents at end of period | 40,246 | 36,970 | ||||||||||||||||||
- See Note 7 “Other notes to the unaudited Condensed Consolidated Financial Statements”.
- 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 15
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of
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
Key accounting considerations, significant judgements and estimates
Future long-term commodity price assumptions and management’s view on the future development of refining margins represent a significant estimate. Future long-term commodity price assumptions were subject to change in the second quarter 2022. These assumptions continue to apply for impairment testing purposes in the fourth quarter 2022.
The discount rate applied to provisions is reviewed on a regular basis. The discount rate was reviewed and adjusted in the third quarter 2022. See Note 7.
Changes to IFRS not yet adopted
IFRS 17 Insurance contracts was issued in 2017, with amendments published in 2020 and 2021, and is required to be adopted for annual reporting periods beginning on or after
2. Segment information
As from
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.
Page 16
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | ||||||||||||||||||||
INFORMATION BY SEGMENT | ||||||||||||||||||||
Quarters | $ million | Full year | ||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||
Third-party revenue | ||||||||||||||||||||
13,802 | 14,471 | 12,702 | 54,751 | 29,922 | ||||||||||||||||
2,945 | 1,623 | 2,605 | Upstream | 8,352 | 9,182 | |||||||||||||||
28,417 | 31,965 | 23,964 | Marketing | 120,639 | 83,494 | |||||||||||||||
33,480 | 37,649 | 33,801 | Chemicals and Products | 144,342 | 116,448 | |||||||||||||||
22,656 | 10,031 | 12,200 | Renewables and Energy Solutions | 53,190 | 22,416 | |||||||||||||||
4 | 10 | 7 | Corporate | 41 | 43 | |||||||||||||||
101,303 | 95,749 | 85,280 | Total third-party revenue¹ | 381,314 | 261,504 | |||||||||||||||
Inter-segment revenue | ||||||||||||||||||||
5,038 | 5,666 | 2,874 | 18,412 | 8,072 | ||||||||||||||||
13,229 | 13,164 | 10,838 | Upstream | 52,285 | 35,789 | |||||||||||||||
183 | 169 | 69 | Marketing | 606 | 253 | |||||||||||||||
602 | 696 | 491 | Chemicals and Products | 2,684 | 1,890 | |||||||||||||||
2,035 | 1,992 | 2,010 | Renewables and Energy Solutions | 6,791 | 4,675 | |||||||||||||||
— | — | — | Corporate | — | — | |||||||||||||||
CCS earnings | ||||||||||||||||||||
5,293 | 5,736 | 4,771 | 22,212 | 8,060 | ||||||||||||||||
1,380 | 5,357 | 4,914 | Upstream | 16,223 | 9,603 | |||||||||||||||
375 | 757 | 471 | Marketing | 2,133 | 3,536 | |||||||||||||||
332 | 980 | (3) | Chemicals and Products | 4,515 | 404 | |||||||||||||||
4,673 | (4,023) | 1,894 | Renewables and Energy Solutions | (1,059) | (1,514) | |||||||||||||||
(654) | (543) | (859) | Corporate | (2,461) | (2,606) | |||||||||||||||
11,399 | 8,264 | 11,187 | Total CCS earnings | 41,562 | 17,482 | |||||||||||||||
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 2022 included income of
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS | |||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
10,409 | 6,743 | 11,461 | Income/(loss) attributable to | 42,309 | 20,101 | ||||||||||||
59 | 104 | 144 | Income/(loss) attributable to non-controlling interest | 565 | 529 | ||||||||||||
10,469 | 6,848 | 11,604 | Income/(loss) for the period | 42,873 | 20,630 | ||||||||||||
Current cost of supplies adjustment: | |||||||||||||||||
1,210 | 1,800 | (481) | Purchases | (1,714) | (3,772) | ||||||||||||
(301) | (433) | 106 | Taxation | 444 | 808 | ||||||||||||
22 | 51 | (42) | Share of profit/(loss) of joint ventures and associates | (41) | (184) | ||||||||||||
930 | 1,417 | (417) | Current cost of supplies adjustment | (1,311) | (3,148) | ||||||||||||
of which: | |||||||||||||||||
904 | 1,354 | (380) | Attributable to | (1,196) | (3,029) | ||||||||||||
27 | 62 | (37) | Attributable to non-controlling interest | (116) | (119) | ||||||||||||
11,399 | 8,264 | 11,187 | CCS earnings | 41,562 | 17,482 | ||||||||||||
of which: | |||||||||||||||||
11,313 | 8,098 | 11,081 | CCS earnings attributable to | 41,113 | 17,072 | ||||||||||||
86 | 167 | 106 | CCS earnings attributable to non-controlling interest | 449 | 410 |
Page 17
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
3. Earnings per share
EARNINGS PER SHARE | |||||||||||||||||
Quarters | Full year | ||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
10,409 | 6,743 | 11,461 | Income/(loss) attributable to | 42,309 | 20,101 | ||||||||||||
Weighted average number of shares used as the basis for determining: | |||||||||||||||||
7,063.9 | 7,276.7 | 7,701.9 | Basic earnings per share (million) | 7,347.5 | 7,761.7 | ||||||||||||
7,127.2 | 7,341.3 | 7,744.3 | Diluted earnings per share (million) | 7,410.5 | 7,806.8 |
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF €0.07 EACH1 | ||||||||||||||||||||||||||
Number of shares | Nominal value ($ million) | |||||||||||||||||||||||||
A | B | Ordinary shares | A | B | Ordinary shares | Total | ||||||||||||||||||||
At | 4,101,239,499 | 3,582,892,954 | 345 | 296 | 641 | |||||||||||||||||||||
Repurchases of shares before assimilation | — | (34,106,548) | — | (3) | (3) | |||||||||||||||||||||
Assimilation of ordinary A and B shares into ordinary shares on | (4,101,239,499) | (3,548,786,406) | 7,650,025,905 | (345) | (293) | 638 | — | |||||||||||||||||||
Repurchases of B shares on | (507,742) | — | — | |||||||||||||||||||||||
Repurchases of shares after assimilation | (646,014,770) | (54) | (54) | |||||||||||||||||||||||
At | 7,003,503,393 | 584 | 584 | |||||||||||||||||||||||
At | 4,101,239,499 | 3,706,183,836 | 345 | 306 | 651 | |||||||||||||||||||||
Repurchases of shares | — | (123,290,882) | — | (10) | (10) | |||||||||||||||||||||
At | 4,101,239,499 | 3,582,892,954 | 345 | 296 | 641 |
1. Share capital at
On
At Shell plc’s Annual General Meeting on
Page 18
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
5. Other reserves
OTHER RESERVES | ||||||||||||||||||||
$ million | Merger reserve | Share premium reserve | Capital redemption reserve | Share plan reserve | Accumulated other comprehensive income | Total | ||||||||||||||
At | 37,298 | 154 | 139 | 964 | (19,646) | 18,909 | ||||||||||||||
Other comprehensive income/(loss) attributable to | — | — | — | — | 2,024 | 2,024 | ||||||||||||||
Transfer from other comprehensive income | — | — | — | — | (34) | (34) | ||||||||||||||
Repurchases of shares | — | — | 57 | — | — | 57 | ||||||||||||||
Share-based compensation | — | — | — | 176 | — | 176 | ||||||||||||||
At | 37,298 | 154 | 197 | 1,139 | (17,655) | 21,131 | ||||||||||||||
At | 37,298 | 154 | 129 | 906 | (25,735) | 12,752 | ||||||||||||||
Other comprehensive income/(loss) attributable to | — | — | — | — | 6,134 | 6,134 | ||||||||||||||
Transfer from other comprehensive income | — | — | — | — | (45) | (45) | ||||||||||||||
Repurchases of shares | — | — | 10 | — | — | 10 | ||||||||||||||
Share-based compensation | — | — | — | 58 | — | 58 | ||||||||||||||
At | 37,298 | 154 | 139 | 964 | (19,646) | 18,909 |
The merger reserve and share premium reserve were established as a consequence of
6. Derivative financial instruments and debt excluding lease liabilities
As disclosed in the Consolidated Financial Statements for the year ended
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 | ||||||||
Carrying amount | 56,153 | 61,579 | ||||||
Fair value¹ | 51,959 | 67,066 |
1. Mainly determined from the prices quoted for these securities.
Page 19
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
7. Other notes to the unaudited Condensed Consolidated Financial Statements
Consolidated Statement of Income
Interest and other income
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
160 | 498 | 3,968 | Interest and other income/(expenses) | 915 | 7,056 | ||||||||||||
of which: | |||||||||||||||||
445 | 346 | 144 | Interest income | 1,046 | 511 | ||||||||||||
15 | 2 | 48 | Dividend income (from investments in equity securities) | 216 | 91 | ||||||||||||
21 | 93 | 3,679 | Net gains on sales and revaluation of non-current assets and businesses | 642 | 5,995 | ||||||||||||
(510) | (12) | 70 | Net foreign exchange gains/(losses) on financing activities | (340) | 118 | ||||||||||||
189 | 69 | 28 | Other | (648) | 341 |
For the full year 2022, Other includes the write-down of the loan to
Depreciation, depletion and amortisation
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
6,459 | 6,124 | 6,445 | Depreciation, depletion and amortisation | 18,529 | 26,921 | ||||||||||||
of which: | |||||||||||||||||
5,731 | 5,665 | 5,364 | Depreciation | 22,393 | 23,070 | ||||||||||||
788 | 466 | 1,090 | Impairments | 2,313 | 4,065 | ||||||||||||
(60) | (8) | (9) | Impairment reversals | (6,177) | (214) |
Impairments in the fourth quarter 2022 mainly relate to Renewables and Energy Solutions, Chemicals and Products and Upstream. Impairments in the full year 2022 mainly related to the withdrawal from Russian oil and gas activities (see Note 8) and Upstream. Gains in 2022 from reversals of impairments mainly related to
Condensed Consolidated Balance Sheet
Application of IAS 29 Financial Reporting in Hyperinflationary Economies
As from the second quarter 2022, Shell applies IAS 29 Financial Reporting in Hyperinflationary Economies (IAS 29) for its Turkish lira functional currency entities. The application of IAS 29 had no significant impact.
Taxation
$ million | ||||||||
Non-current assets | ||||||||
Deferred tax | 7,815 | 12,426 | ||||||
Non-current liabilities | ||||||||
Deferred tax | 16,186 | 12,547 | ||||||
Net deferred liability | (8,371) | (121) |
The presentation in the balance sheet takes into consideration the offsetting of deferred tax assets and deferred tax liabilities within the same tax jurisdiction, where this is permitted. The overall deferred tax position in a particular tax jurisdiction determines if a deferred tax balance related to that jurisdiction is presented within deferred tax assets or deferred tax liabilities.
Shell's net deferred tax position was a liability of
Page 20
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
pensions (
On
On
In the fourth quarter 2022, EU member states transposed the "Council Regulation on an emergency intervention to address high energy prices" (EU solidarity contribution) into national laws. This resulted in a charge of
Assets classified as held for sale
$ million | ||||||||
Assets classified as held for sale | 2,850 | 1,960 | ||||||
Liabilities directly associated with assets classified as held for sale | 1,395 | 1,253 |
Assets classified as held for sale and associated liabilities at
Retirement benefits
$ million | ||||||||
Non-current assets | ||||||||
Retirement benefits | 10,200 | 8,471 | ||||||
Non-current liabilities | ||||||||
Retirement benefits | 7,296 | 11,325 | ||||||
Surplus/(deficit) | 2,904 | (2,854) |
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. The change of the net retirement benefit liability as at
Decommissioning and other provisions
$ million | ||||||||
Non-current liabilities | ||||||||
Decommissioning and other provisions | 23,845 | 25,804 |
The discount rate applied since
Page 21
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Non-controlling interest
$ million | ||||||||
Non-controlling interest | 2,126 | 3,360 |
The decrease in the non-controlling interest is mainly attributable to the acquisition of the non-controlling interest in Shell Midstream Partners, L.P. for a cash consideration of
Consolidated Statement of Cash Flows
Cash flow from operating activities - Other
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
(1,850) | 1,258 | (1,236) | Other | 2,991 | 803 |
Cash flow from operating activities - Other for the fourth quarter 2022 includes $541 million of net outflows (third quarter 2022: $625 million net inflows; fourth quarter 2021:
8. Withdrawal from Russian oil and gas activities
Following the invasion of
a.withdraw from its ventures in
b.withdraw from its service station and lubricants operations in
c.withdraw in a phased manner from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and LNG, aligned with new government guidance.
Since these announcements:
•Shell stopped all spot purchases of Russian crude, liquefied natural gas, and of cargoes of refined products directly exported from
•All of Shell's long-term 3rd party purchases of Russian crude have stopped (when contractually allowed and all by the end of 2022).
•All of Shell's contracts to purchase refined products exported from
•Shell's two pipeline gas contracts terminated by the end of 2022.
•Shell still holds two long-term LNG offtake contracts with Russian entities, accounted for as regular sales and purchase contracts. The counterparty in one of these contracts stopped delivering cargoes to Shell in the third quarter 2022.
•Shell sold its service station and lubricants operations in
These actions led to recognition of net pre-tax charges of
Page 22
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | ||||||||||||||||
Q4 2022 | Q3 2022 | Full year 2022 | ||||||||||||||
Revenue | — | — | (468) | |||||||||||||
Share of profit of joint ventures and associates | — | — | (1,614) | |||||||||||||
Interest and other income/(expenses) | — | 81 | (1,116) | |||||||||||||
Selling, distribution and administrative expenses | — | — | (104) | |||||||||||||
Depreciation, depletion and amortisation | — | — | (695) | |||||||||||||
Other | (101) | 1 | (26) | (173) | ||||||||||||
Income/(loss) before taxation | (101) | 55 | (4,170) | |||||||||||||
Taxation charge/(credit) | — | — | (366) | |||||||||||||
Income/(loss) for the period | (101) | 55 | (3,804) | |||||||||||||
1.Mainly relating to a provision.
In relation to the assets with a potential exposure to Shell's intended withdrawal from all Russian hydrocarbons, including those assets for which the above charges were recognised during the year, there is a
Further details are provided below.
Sakhalin-2
Shell holds a 27.5% (minus one share) interest in
On
Shell understands that pursuant to the Presidential Decree, all licences, assets, rights and obligations of SEIC were purportedly transferred to the LLC on
Shell is one of five energy companies which each committed to provide financing and guarantees for up to 10% of the total cost of the project, with the final loan instalments having been made in the second quarter 2020. Following the first quarter 2022 announcements, Shell assessed the recoverability of the loan to
Upstream
Salym
Page 23
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Shell has a 50% interest in
Gydan
Shell had a 50% interest in LLC Gydan Energy, a joint operation with GazpromNeft to explore and develop blocks in the Gydan peninsula, in north-western
Marketing
Shell Neft’s retail network consisted of 240 sites owned by
Other
Marked-to-market risk adjustments of $335 million related to long-term offtake natural gas contracts, an impairment of right-of-use assets of $114 million and other charges of $36 million were recognised in the first quarter 2022. In the second quarter 2022, further marked-to-market risk adjustments of $133 million were recognised following changes demanded to the contractual payment mechanism leading to the suspension by Gazprom of gas deliveries under these long-term offtake contracts. Finally,
9. Post-balance sheet events
On
Page 24
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings and Adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA)
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.
We define “Adjusted EBITDA” as “Income/(loss) for the period” adjusted for current cost of supplies; identified items; tax charge/(credit); depreciation, amortisation and depletion; exploration well write-offs and net interest expense. All items include the non-controlling interest component. Management uses this measure to evaluate Shell's performance in the period and over time.
ADJUSTED EARNINGS | |||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
10,409 | 6,743 | 11,461 | Income/(loss) attributable to | 42,309 | 20,101 | ||||||||||||
904 | 1,354 | (380) | Add: Current cost of supplies adjustment attributable to | (1,196) | (3,029) | ||||||||||||
1,498 | (1,356) | 4,690 | Less: Identified items attributable to | 1,243 | (2,216) | ||||||||||||
9,814 | 9,454 | 6,391 | Adjusted Earnings | 39,870 | 19,289 | ||||||||||||
Of which: | |||||||||||||||||
5,968 | 2,319 | 4,036 | 16,137 | 9,048 | |||||||||||||
3,061 | 5,896 | 2,838 | Upstream | 17,319 | 8,015 | ||||||||||||
446 | 820 | 611 | Marketing | 2,754 | 3,468 | ||||||||||||
744 | 772 | (130) | Chemicals and Products | 4,719 | 2,115 | ||||||||||||
293 | 383 | 43 | Renewables and Energy Solutions | 1,745 | (243) | ||||||||||||
(626) | (571) | (889) | Corporate | (2,371) | (2,686) | ||||||||||||
(73) | (165) | (117) | Less: Non-controlling interest | (434) | (429) | ||||||||||||
ADJUSTED EBITDA | |||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
9,814 | 9,454 | 6,391 | Adjusted Earnings | 39,870 | 19,289 | ||||||||||||
73 | 165 | 117 | Add: Non-controlling interest | 434 | 429 | ||||||||||||
3,991 | 5,621 | 3,586 | Add: Taxation charge/(credit) excluding tax impact of identified items | 18,578 | 8,482 | ||||||||||||
5,732 | 5,665 | 5,364 | Add: Depreciation, depletion and amortisation excluding impairments | 22,393 | 23,071 | ||||||||||||
395 | 218 | 72 | Add: Exploration well write-offs | 881 | 639 | ||||||||||||
1,040 | 734 | 963 | Add: Interest expense excluding identified items | 3,180 | 3,607 | ||||||||||||
445 | 346 | 144 | Less: Interest income | 1,046 | 510 | ||||||||||||
20,600 | 21,512 | 16,349 | Adjusted EBITDA | 84,289 | 55,004 | ||||||||||||
Of which: | |||||||||||||||||
8,332 | 5,393 | 6,091 | 26,569 | 16,754 | |||||||||||||
9,418 | 12,539 | 8,446 | Upstream | 42,100 | 27,170 | ||||||||||||
1,045 | 1,505 | 1,125 | Marketing | 5,324 | 6,021 | ||||||||||||
1,574 | 1,797 | 741 | Chemicals and Products | 8,561 | 5,635 | ||||||||||||
396 | 530 | 80 | Renewables and Energy Solutions | 2,459 | (21) | ||||||||||||
(164) | (251) | (133) | Corporate | (725) | (554) |
Page 25
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Identified items
Identified items comprise: divestment gains and losses, impairments, redundancy and restructuring, provisions for onerous contracts, fair value accounting of commodity derivatives and certain gas contracts and the impact of exchange rate movements on certain deferred tax balances, and other items. Identified items in the table below are presented on a net basis.
IDENTIFIED ITEMS | |||||||||||||||||||||||
Quarters | $ million | Full year | |||||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||||||||
Identified items included in Income/(loss) before taxation | |||||||||||||||||||||||
21 | 92 | 3,661 | Divestment gains/(losses) | 657 | 5,996 | ||||||||||||||||||
(778) | (458) | (1,115) | Impairment reversals/(impairments) | 2,260 | (3,884) | ||||||||||||||||||
23 | (26) | 131 | Redundancy and restructuring | 44 | (227) | ||||||||||||||||||
— | 29 | (233) | Provisions for onerous contracts | (508) | (340) | ||||||||||||||||||
5,618 | (2,199) | 3,845 | Fair value accounting of commodity derivatives and certain gas contracts | 3,244 | (3,249) | ||||||||||||||||||
(1,087) | 1 | 608 | (638) | Other | (1,519) | 1 | (621) | ||||||||||||||||
3,796 | (1,955) | 5,653 | Total identified items included in Income/(loss) before taxation | 4,178 | (2,326) | ||||||||||||||||||
(2,285) | 2 | 601 | (973) | Total identified items included in Taxation charge/(credit) | (2,919) | 2 | 91 | ||||||||||||||||
Identified items included in Income/(loss) for the period | |||||||||||||||||||||||
(46) | 99 | 3,003 | Divestment gains/(losses) | 418 | 4,632 | ||||||||||||||||||
(659) | (363) | (838) | Impairments | 725 | (2,993) | ||||||||||||||||||
17 | (29) | 97 | Redundancy and restructuring | 43 | (140) | ||||||||||||||||||
— | 17 | (217) | Provisions for onerous contracts | (487) | (299) | ||||||||||||||||||
4,181 | (998) | 3,216 | Fair value accounting of commodity derivatives and certain gas contracts | 3,421 | (2,764) | ||||||||||||||||||
74 | (81) | (18) | Impact of exchange rate movements on tax balances | (57) | (128) | ||||||||||||||||||
(2,056) | 3 | 1 | (564) | Other | (2,804) | 3 | (543) | ||||||||||||||||
1,512 | (1,354) | 4,679 | Impact on CCS earnings | 1,259 | (2,235) | ||||||||||||||||||
Of which: | |||||||||||||||||||||||
(675) | 3,417 | 735 | 6,075 | (988) | |||||||||||||||||||
(1,681) | (539) | 2,077 | Upstream | (1,096) | 1,587 | ||||||||||||||||||
(72) | (63) | (140) | Marketing | (622) | 68 | ||||||||||||||||||
(412) | 208 | 127 | Chemicals and Products | (204) | (1,712) | ||||||||||||||||||
4,379 | (4,406) | 1,851 | Renewables and Energy Solutions | (2,805) | (1,272) | ||||||||||||||||||
(28) | 28 | 30 | Corporate | (90) | 81 | ||||||||||||||||||
13 | 2 | (11) | Impact on CCS earnings attributable to non-controlling interest | 15 | (19) | ||||||||||||||||||
1,498 | (1,356) | 4,690 | Impact on CCS earnings attributable to | 1,243 | (2,216) |
- Includes
$(940) million related to the EU solidarity contribution. - Includes
$(528) million related to the EU solidarity contribution and$(441) million related to theUK Energy Profits Levy. The third quarter 2022 includes$(361) million related to theUK Energy Profits Levy. - Includes
$(2,270) million related to the EU solidarity contribution and to theUK Energy Profits Levy. The third quarter 2022 includes$(361) million related to theUK Energy Profits Levy.
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 included in Income / (loss) before taxation 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).
Page 26
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Provisions for onerous contracts: Provisions for onerous contracts that relate to businesses that Shell has exited or to redundant assets or assets that cannot be used.
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
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, including charges relating to the EU solidarity contribution and the deferred tax impact of the
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.
Quarters | $ million | Full year | |||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
6,417 | 5,268 | 6,236 | Capital expenditure | 22,600 | 19,000 | ||||||||||||
860 | 95 | 145 | Investments in joint ventures and associates | 1,973 | 479 | ||||||||||||
42 | 63 | 120 | Investments in equity securities | 261 | 218 | ||||||||||||
7,319 | 5,426 | 6,500 | Cash capital expenditure | 24,833 | 19,698 | ||||||||||||
Of which: | |||||||||||||||||
1,527 | 956 | 1,014 | 4,265 | 3,502 | |||||||||||||
1,845 | 1,733 | 1,504 | Upstream | 8,143 | 6,168 | ||||||||||||
1,993 | 746 | 829 | Marketing | 4,831 | 2,273 | ||||||||||||
786 | 828 | 1,410 | Chemicals and Products | 3,838 | 5,175 | ||||||||||||
1,076 | 1,086 | 1,617 | Renewables and Energy Solutions | 3,469 | 2,359 | ||||||||||||
91 | 78 | 127 | Corporate | 287 | 221 |
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 an Adjusted Earnings plus Non-controlling interest (NCI) basis, both adjusted for after-tax interest expense.
Both measures refer to Capital employed which consists of total equity, current debt and non-current debt.
Page 27
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
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 2022 | Q3 2022 | Q4 2021 | |||||||||
Income - current and previous three quarters | 42,873 | 44,009 | 20,630 | ||||||||
Interest expense after tax - current and previous three quarters | 2,290 | 2,273 | 2,741 | ||||||||
Income before interest expense - current and previous three quarters | 45,164 | 46,282 | 23,371 | ||||||||
Capital employed – opening | 264,413 | 262,074 | 266,551 | ||||||||
Capital employed – closing | 276,392 | 272,227 | 264,413 | ||||||||
Capital employed – average | 270,402 | 267,150 | 265,482 | ||||||||
ROACE on a Net income basis | 16.7% | 17.3% | 8.8% |
ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis
In this calculation, the sum of Adjusted Earnings (see Reference A) plus non-controlling interest (NCI) 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 2022 | Q3 2022 | Q4 2021 | |||||||||
Adjusted Earnings - current and previous three quarters (Reference A) | 39,870 | 36,446 | 19,289 | ||||||||
Add: Income/(loss) attributable to NCI - current and previous three quarters | 565 | 649 | 529 | ||||||||
Add: Current cost of supplies adjustment attributable to NCI - current and previous three quarters | (116) | (180) | (119) | ||||||||
Less: Identified items attributable to NCI (Reference A) - current and previous three quarters | 15 | (9) | (19) | ||||||||
Adjusted Earnings plus NCI excluding identified items - current and previous three quarters | 40,303 | 36,924 | 19,718 | ||||||||
Add: Interest expense after tax - current and previous three quarters | 2,290 | 2,273 | 2,741 | ||||||||
Adjusted Earnings plus NCI excluding identified items before interest expense - current and previous three quarters | 42,593 | 39,197 | 22,459 | ||||||||
Capital employed - average | 270,402 | 267,150 | 265,482 | ||||||||
ROACE on an Adjusted Earnings plus NCI basis | 15.8% | 14.7% | 8.5% |
E. Gearing
Gearing is a 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 28
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | |||||||||||||
$ million | Quarters | ||||||||||||
Current debt | 9,001 | 8,046 | 8,218 | ||||||||||
Non-current debt | 74,794 | 73,944 | 80,868 | ||||||||||
Total debt | 83,796 | 81,990 | 89,086 | ||||||||||
Of which lease liabilities | 27,643 | 26,560 | 27,507 | ||||||||||
Add: Debt-related derivative financial instruments: net liability/(asset) | 3,071 | 4,470 | 424 | ||||||||||
Add: Collateral on debt-related derivatives: net liability/(asset) | (1,783) | (2,139) | 16 | ||||||||||
Less: Cash and cash equivalents | (40,246) | (35,978) | (36,970) | ||||||||||
Net debt | 44,838 | 48,343 | 52,556 | ||||||||||
Add: Total equity | 192,597 | 190,237 | 175,326 | ||||||||||
Total capital | 237,434 | 238,581 | 227,882 | ||||||||||
Gearing | 18.9 | % | 20.3 | % | 23.1 | % | |||||||
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 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
7,220 | 5,910 | 6,530 | Production and manufacturing expenses | 25,518 | 23,822 | ||||||||||||
3,491 | 3,229 | 2,867 | Selling, distribution and administrative expenses | 12,883 | 11,328 | ||||||||||||
403 | 220 | 304 | Research and development | 1,075 | 815 | ||||||||||||
11,114 | 9,359 | 9,701 | Operating expenses | 39,477 | 35,964 | ||||||||||||
Of which identified items: | |||||||||||||||||
23 | (26) | 131 | Redundancy and restructuring (charges)/reversal | 46 | (226) | ||||||||||||
(100) | 561 | (238) | (Provisions)/reversal | 77 | (254) | ||||||||||||
— | — | (208) | Other | (143) | (175) | ||||||||||||
(77) | 535 | (314) | (21) | (655) | |||||||||||||
11,037 | 9,893 | 9,386 | Underlying operating expenses | 39,456 | 35,309 |
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 29
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS | ||||||||||||||||||||
Quarters | $ million | Full year | ||||||||||||||||||
Q4 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | ||||||||||||||||
22,404 | 12,539 | 8,170 | Cash flow from operating activities | 68,413 | 45,104 | |||||||||||||||
(6,918) | (5,049) | 2,579 | Cash flow from investing activities | (22,448) | (4,761) | |||||||||||||||
15,486 | 7,490 | 10,749 | Free cash flow | 45,965 | 40,343 | |||||||||||||||
235 | 278 | 9,132 | Less: Divestment proceeds (Reference I) | 2,059 | 15,113 | |||||||||||||||
17 | — | 164 | Add: Tax paid on divestments (reported under "Other investing cash outflows") | 17 | 188 | |||||||||||||||
971 | 661 | 1,385 | Add: Cash outflows related to inorganic capital expenditure1 | 4,205 | 1,658 | |||||||||||||||
16,238 | 7,872 | 3,166 | Organic free cash flow2 | 48,128 | 27,076 | |||||||||||||||
- 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.
- 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 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
22,404 | 12,539 | 8,170 | Cash flow from operating activities | 68,413 | 45,104 | ||||||||||||
2,902 | 484 | (860) | (Increase)/decrease in inventories | (8,360) | (7,319) | ||||||||||||
5,179 | (98) | (6,799) | (Increase)/decrease in current receivables | (8,989) | (20,567) | ||||||||||||
2,308 | (4,544) | 4,688 | Increase/(decrease) in current payables | 11,915 | 17,519 | ||||||||||||
10,390 | (4,157) | (2,971) | (Increase)/decrease in working capital | (5,435) | (10,366) | ||||||||||||
12,014 | 16,696 | 11,140 | Cash flow from operating activities excluding working capital movements | 73,848 | 55,471 |
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 2022 | Q3 2022 | Q4 2021 | 2022 | 2021 | |||||||||||||
52 | 39 | 8,843 | Proceeds from sale of property, plant and equipment and businesses | 1,431 | 14,233 | ||||||||||||
119 | 203 | 137 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 511 | 584 | ||||||||||||
65 | 36 | 151 | Proceeds from sale of equity securities | 117 | 296 | ||||||||||||
235 | 278 | 9,132 | Divestment proceeds | 2,059 | 15,113 |
Page 30
4th QUARTER 2022 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
Forward-Looking Statements
This Unaudited Condensed Financial Report contains forward-looking statements (within the meaning of the
Shell’s net carbon footprint
Also, in this Unaudited Condensed Financial Report we may refer to Shell’s “Net Carbon Footprint” or “Net Carbon Intensity”, which include Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbon emissions associated with their use of the energy products we sell. Shell only controls its own emissions. The use of the term Shell’s “Net Carbon Footprint” or “Net Carbon Intensity” are for convenience only and not intended to suggest these emissions are those of
Shell’s Net-Zero Emissions Target
Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year. They reflect the current economic environment and what we can reasonably expect to see over the next ten years. Accordingly, they reflect our Scope 1, Scope 2 and Net Carbon Footprint (NCF) targets over the next ten years. However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCF target, as these targets are currently outside our planning period. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans to reflect this movement. However, if society is not net zero in 2050, as of today, there would be significant risk that Shell may not meet this target.
Forward-Looking Non-GAAP measures
This Unaudited Condensed Financial Report may contain certain forward-looking non-GAAP measures such as cash capital expenditure and divestments. We are unable to provide a reconciliation of these forward-looking Non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile those Non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of Shell, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are calculated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements.
The contents of websites referred to in this Unaudited Condensed Financial Report do not form part of this Unaudited Condensed Financial Report.
We may have used certain terms, such as resources, in this Unaudited Condensed Financial Report that the
This announcement contains inside information.
The information in this announcement reflects the unaudited consolidated financial position and results of |
Page 31
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS |
Contacts:
- Caroline Omloo, Company Secretary
- Media: International +44 (0) 207 934 5550;
LEI number of
Classification: Inside Information
Page 32
Source:
2023 GlobeNewswire, Inc., source