2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
SUMMARY OF UNAUDITED RESULTS | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
18,040 | 7,116 | 3,428 | +154 | Income/(loss) attributable to | 25,156 | 9,087 | +177 | |||||||||||||||||||
11,472 | 9,130 | 5,534 | +26 | Adjusted Earnings | A | 20,601 | 8,768 | +135 | ||||||||||||||||||
23,150 | 19,028 | 13,623 | +22 | Adjusted EBITDA2 | A | 42,177 | 25,195 | +67 | ||||||||||||||||||
18,655 | 14,815 | 12,617 | +26 | Cash flow from operating activities | 33,470 | 20,910 | +60 | |||||||||||||||||||
(6,207) | (4,273) | (2,946) | Cash flow from investing activities | (10,481) | (3,535) | |||||||||||||||||||||
12,448 | 10,542 | 9,671 | Free cash flow | G | 22,989 | 17,375 | ||||||||||||||||||||
7,024 | 5,064 | 4,383 | Cash capital expenditure | C | 12,088 | 8,357 | ||||||||||||||||||||
9,547 | 9,457 | 8,470 | +1 | Operating expenses | F | 19,004 | 17,905 | +6 | ||||||||||||||||||
9,270 | 9,256 | 8,505 | — | Underlying operating expenses | F | 18,526 | 17,228 | +8 | ||||||||||||||||||
14.3% | 9.3% | 3.2% | ROACE on a Net income basis | D | 14.3% | 3.2% | ||||||||||||||||||||
12.4% | 10.6% | 4.9% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 12.4% | 4.9% | ||||||||||||||||||||
46,357 | 48,489 | 65,735 | Net debt | E | 46,357 | 65,735 | ||||||||||||||||||||
19.3% | 21.3% | 27.7% | Gearing | E | 19.3% | 27.7% | ||||||||||||||||||||
2,898 | 2,962 | 3,254 | -2 | Total production available for sale (thousand boe/d) | 2,930 | 3,371 | -13 | |||||||||||||||||||
2.42 | 0.94 | 0.44 | +157 | Basic earnings per share ($) | 3.34 | 1.17 | +185 | |||||||||||||||||||
1.54 | 1.20 | 0.71 | +28 | Adjusted Earnings per share ($) | B | 2.74 | 1.13 | +142 | ||||||||||||||||||
0.25 | 0.25 | 0.24 | — | Dividend per share ($) | 0.50 | 0.41 | +21 |
1. Q2 on Q1 change.
2.With effect from Q3 2021, Adjusted EBITDA includes the non-controlling interest component of Adjusted Earnings. Prior period comparatives have been revised.
Quarter Analysis
Income attributable to
Second quarter 2022 income attributable to
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as income attributable to
Cash flow from operating activities for the second quarter 2022 was
Cash flow from investing activities for the quarter was an outflow of
Net debt and Gearing: At the end of the second quarter 2022, net debt was
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
Shareholder distributions
Total shareholder distributions in the quarter amounted to
Half Year Analysis
Income attributable to
First half 2022 income attributable to
Adjusted Earnings and Adjusted EBITDA for the first half 2022 were driven by the same factors as income attributable to
Cash flow from operating activities for the first half 2022 was
Cash flow from investing activities for the first half 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/investors1.
1. Not incorporated by reference.
SECOND QUARTER 2022 PORTFOLIO DEVELOPMENTS
Withdrawal from Russian oil and gas activities
We refer to Note 9 to the Condensed Consolidated Interim Financial Statements.
In
In
Upstream
In
In
In
Marketing
In
In
Chemicals and Products
In
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
Renewables and Energy Solutions
In
In
Page 2
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
PERFORMANCE BY SEGMENT
INTEGRATED GAS | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
8,103 | 3,079 | 969 | +163 | Segment earnings | 11,183 | 3,421 | +227 | |||||||||||||||||||
4,346 | (1,013) | (636) | Identified items | A | 3,332 | 245 | ||||||||||||||||||||
3,758 | 4,093 | 1,605 | -8 | Adjusted Earnings | A | 7,850 | 3,176 | +147 | ||||||||||||||||||
6,529 | 6,315 | 3,318 | +3 | Adjusted EBITDA | A | 12,844 | 6,741 | +91 | ||||||||||||||||||
8,176 | 6,443 | 2,191 | +27 | Cash flow from operating activities | 14,619 | 4,753 | +208 | |||||||||||||||||||
919 | 863 | 765 | Cash capital expenditure | C | 1,782 | 1,662 | ||||||||||||||||||||
144 | 120 | 165 | +20 | Liquids production available for sale (thousand b/d) | 132 | 179 | -26 | |||||||||||||||||||
4,642 | 4,504 | 4,817 | +3 | Natural gas production available for sale (million scf/d) | 4,573 | 4,918 | -7 | |||||||||||||||||||
944 | 896 | 995 | +5 | Total production available for sale (thousand boe/d) | 920 | 1,026 | -10 | |||||||||||||||||||
7.66 | 8.00 | 7.49 | -4 | LNG liquefaction volumes (million tonnes) | 15.66 | 15.65 | — | |||||||||||||||||||
15.21 | 18.29 | 15.92 | -17 | LNG sales volumes (million tonnes) | 33.50 | 32.30 | +4 |
1.Q2 on Q1 change.
Quarter Analysis
Segment earnings, compared with the first quarter 2022, mainly reflected higher production (increase of
Second quarter 2022 segment earnings included impairment reversals of
Adjusted Earnings and Adjusted EBITDA 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, variation margins cash inflows, the positive impact of timing differences between cash flows of derivatives and physical transactions, and working capital inflows, partly offset by tax payments.
Total oil and gas production, compared with the first quarter 2022, increased by 5% due to lower maintenance in Pearl GTL and Prelude, partly offset by the derecognition of Sakhalin-related volumes. LNG liquefaction volumes decreased by 4% mainly due to the derecognition of Sakhalin-related volumes, partly offset by lower maintenance.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly reflected higher margins (increase of
First half 2022 segment earnings included gains of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first half 2022 was primarily driven by Adjusted EBITDA, and the positive impact of derivatives, partly offset by tax payments.
Total oil and gas production, compared with the first half 2021, decreased by 10% due to higher maintenance in Pearl GTL and Prelude, the derecognition of Sakhalin-related volumes, and a divestment in
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
UPSTREAM | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
6,391 | 3,095 | 2,458 | +106 | Segment earnings | 9,486 | 3,370 | +181 | |||||||||||||||||||
1,479 | (355) | (53) | Identified items | A | 1,124 | (74) | ||||||||||||||||||||
4,912 | 3,450 | 2,511 | +42 | Adjusted Earnings | A | 8,362 | 3,444 | +143 | ||||||||||||||||||
11,167 | 8,977 | 6,696 | +24 | Adjusted EBITDA | A | 20,144 | 11,956 | +68 | ||||||||||||||||||
8,110 | 5,964 | 4,972 | +36 | Cash flow from operating activities | 14,074 | 8,864 | +59 | |||||||||||||||||||
2,858 | 1,707 | 1,693 | Cash capital expenditure | C | 4,565 | 3,174 | ||||||||||||||||||||
1,325 | 1,403 | 1,555 | -6 | Liquids production available for sale (thousand b/d) | 1,364 | 1,556 | -12 | |||||||||||||||||||
3,428 | 3,606 | 3,767 | -5 | Natural gas production available for sale (million scf/d) | 3,517 | 4,248 | -17 | |||||||||||||||||||
1,917 | 2,025 | 2,205 | -5 | Total production available for sale (thousand boe/d) | 1,970 | 2,289 | -14 |
1.Q2 on Q1 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 Analysis
Segment earnings, compared with the first quarter 2022, mainly reflected higher realised oil and gas prices (increase of
Second quarter 2022 segment earnings included a net gain from impairments and impairment reversals of
Adjusted Earnings and Adjusted EBITDA 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 the timing impact of dividends from joint ventures and associates and tax payments.
Total production, compared with the first quarter 2022, decreased mainly due to scheduled maintenance.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly reflected higher realised oil and gas prices (increase of
First half 2022 segment earnings included a net gain from impairments and impairment reversals of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first half of 2022 was primarily driven by Adjusted EBITDA, partly offset by the timing impact of dividends from joint ventures and associates and tax payments.
Total production, compared with the first half 2021, decreased due to the impact of divestments and scheduled maintenance. The impact of field decline was offset by growth from new fields.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
MARKETING | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
836 | 165 | 977 | +408 | Segment earnings² | 1,000 | 1,633 | -39 | |||||||||||||||||||
85 | (572) | 22 | Identified items | A | (487) | (125) | ||||||||||||||||||||
751 | 737 | 955 | +2 | Adjusted Earnings² | A | 1,488 | 1,757 | -15 | ||||||||||||||||||
1,452 | 1,323 | 1,710 | +10 | Adjusted EBITDA2 | A | 2,775 | 3,136 | -12 | ||||||||||||||||||
(454) | (530) | 1,133 | +14 | Cash flow from operating activities | (984) | 1,959 | -150 | |||||||||||||||||||
1,620 | 473 | 467 | Cash capital expenditure | C | 2,092 | 850 | ||||||||||||||||||||
2,515 | 2,372 | 2,406 | +6 | Marketing sales volumes (thousand b/d) | 2,444 | 2,313 | +6 |
1.Q2 on Q1 change.
2.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 Analysis
Segment earnings, compared with the first quarter 2022, reflected higher Marketing margins (increase of
Second quarter 2022 segment earnings included a net gain of
Adjusted Earnings and Adjusted EBITDA 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 outflows of
Marketing sales volumes (comprising hydrocarbon sales), compared with the first quarter 2022, increased mainly due to seasonal effects in Mobility, and Sectors & Decarbonisation.
Half Year Analysis
Segment earnings, compared with the first half 2021, mainly reflected higher operating expenses (increase of
Half year 2022 segment earnings included net losses of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the half year 2022 was primarily driven by working capital outflows of
Marketing sales volumes (comprising hydrocarbon sales), compared with the first half 2021, increased mainly due to demand recovery in Aviation (within Sectors & Decarbonisation).
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
CHEMICALS AND PRODUCTS | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
2,131 | 1,072 | (508) | +99 | Segment earnings² | 3,203 | 152 | +2002 | |||||||||||||||||||
96 | (96) | (1,496) | Identified items | A | 1 | (1,618) | ||||||||||||||||||||
2,035 | 1,168 | 989 | +74 | Adjusted Earnings² | A | 3,203 | 1,770 | +81 | ||||||||||||||||||
3,184 | 2,006 | 1,909 | +59 | Adjusted EBITDA2 | A | 5,191 | 3,612 | +44 | ||||||||||||||||||
2,728 | 3,673 | 2,180 | -26 | Cash flow from operating activities | 6,402 | 2,557 | +150 | |||||||||||||||||||
1,226 | 998 | 1,311 | Cash capital expenditure | C | 2,224 | 2,329 | ||||||||||||||||||||
1,342 | 1,397 | 1,833 | -4 | Refinery processing intake (thousand b/d) | 1,370 | 1,792 | -24 | |||||||||||||||||||
1,596 | 1,598 | 2,145 | — | Refining & Trading sales volumes (thousand b/d) | 1,597 | 2,045 | -22 | |||||||||||||||||||
3,054 | 3,330 | 3,609 | -8 | Chemicals sales volumes (thousand tonnes) | 6,384 | 7,192 | -11 |
1.Q2 on Q1 change.
2.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 Analysis
Segment earnings, compared with the first quarter 2022, reflected higher Products margins (increase of
Second quarter 2022 segment earnings included gains of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the second quarter were a loss of
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, non-cash cost-of-sales adjustments of
Chemicals manufacturing plant utilisation was 78% (previous methodology: 71%) compared with 85% (previous methodology: 78%) in the first quarter 2022, due to higher turnarounds.
Refinery utilisation was 84% (previous methodology: 69%) compared with 81% (previous methodology: 71%) in the first quarter 2022, due to turnaround completion in the second quarter 2022.
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
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected higher Products margins (increase of
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
Half year 2022 segment earnings included gains of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items. Adjusted Earnings for the first half 2022 were a loss of
Cash flow from operating activities for the half year 2022 was primarily driven by Adjusted EBITDA, non-cash cost-of-sales adjustments of
Chemicals manufacturing plant utilisation was 82% (previous methodology: 75%) compared with 88% (previous methodology: 81%) in the first half 2021, due to higher turnarounds.
Refinery utilisation was 82% (previous methodology: 70%) compared with 82% (previous methodology: 74%) in the first half 2021, due to the impact of divestments and turnarounds.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
RENEWABLES AND ENERGY SOLUTIONS | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | Reference | 2022 | 2021 | % | |||||||||||||||||||
(173) | (1,536) | (564) | +89 | Segment earnings | (1,709) | (282) | -507 | |||||||||||||||||||
(898) | (1,880) | (551) | Identified items | A | (2,778) | (167) | ||||||||||||||||||||
725 | 344 | (13) | +111 | Adjusted Earnings | A | 1,069 | (115) | +1030 | ||||||||||||||||||
1,013 | 521 | 89 | +95 | Adjusted EBITDA | A | 1,534 | 23 | +6645 | ||||||||||||||||||
(558) | (459) | 1,686 | -22 | Cash flow from operating activities | (1,017) | 1,846 | -155 | |||||||||||||||||||
321 | 985 | 117 | Cash capital expenditure | C | 1,307 | 286 | ||||||||||||||||||||
54 | 57 | 61 | -5 | External power sales (terawatt hours)2 | 111 | 125 | -12 | |||||||||||||||||||
188 | 257 | 197 | -27 | Sales of pipeline gas to end-use customers (terawatt hours)3 | 445 | 458 | -3 |
1.Q2 on Q1 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 Analysis
Segment earnings, compared with the first quarter 2022, mainly reflected higher trading and optimisation results for gas and power, due to extraordinary gas and power price volatility, across
Identified items (post-tax): Second quarter 2022 segment earnings included net losses of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the second quarter 2022 was primarily driven by net cash outflows related to derivatives, partly offset by Adjusted EBITDA, and working capital inflows.
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected higher trading and optimisation results for gas and power, due to the extraordinary market environment, and lower operating expenses.
Identified items (post-tax): First half 2022 segment earnings included net charges of
Adjusted Earnings and Adjusted EBITDA were driven by the same factors as the segment earnings and adjusted for identified items.
Cash flow from operating activities for the first half 2022 was primarily driven by working capital outflows, net cash outflows related to derivatives, partly offset by Adjusted EBITDA.
Additional Growth Measures
Quarters | Half year | |||||||||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | %¹ | 2022 | 2021 | % | ||||||||||||||||||||
Renewable power generation capacity (gigawatt): | ||||||||||||||||||||||||||
1.1 | 1.0 | 1.2 | +5 | – In operation2 | 1.1 | 1.2 | -10 | |||||||||||||||||||
4.6 | 3.6 | 3.1 | +28 | – Under construction and/or committed for sale3 | 4.6 | 3.1 | +50 |
1.Q2 on Q1 change.
2.Shell's equity share of renewable generation capacity post commercial operation date.
3.Shell's equity share of renewable generation capacity under construction and/or committed for sale under long-term offtake agreements (PPA).
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
CORPORATE | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | Reference | 2022 | 2021 | |||||||||||||||
(529) | (736) | (592) | Segment earnings | (1,264) | (1,124) | |||||||||||||||
97 | (187) | (193) | Identified items | A | (90) | (59) | ||||||||||||||
(626) | (548) | (399) | Adjusted Earnings | A | (1,174) | (1,065) | ||||||||||||||
(197) | (114) | (101) | Adjusted EBITDA | A | (310) | (274) | ||||||||||||||
652 | (277) | 454 | Cash flow from operating activities | 375 | 932 |
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 Analysis
Segment earnings, compared with the first quarter 2022, reflected favourable movements in tax credits and lower net interest expense, partly offset by unfavourable currency exchange rate effects.
Second quarter 2022 segment earnings included a gain of
Adjusted Earnings are derived from segment earnings, adjusted for identified items. Adjusted EBITDA were mainly driven by unfavourable currency exchange effects.
Half Year Analysis
Segment earnings, compared with the first half 2021, reflected unfavourable movements in tax credits, partly offset by lower net interest expense.
First half 2022 segment earnings included a loss of
Adjusted Earnings are derived from segment earnings, adjusted for identified items. Adjusted EBITDA were mainly driven by unfavourable currency exchange effects.
OUTLOOK FOR THE THIRD QUARTER 2022
Cash capital expenditure is expected to be in line with the
LNG liquefaction volumes are expected to be approximately 6.9 - 7.5 million tonnes.
Third quarter 2022 outlook includes substantially more planned maintenance compared with second quarter 2022 and uncertainty around the impact of “Permitted Industrial Actions” at Prelude.
Upstream production is expected to be approximately 1,750 - 1,950 thousand boe/d in the third quarter 2022.
The third quarter production outlook reflects that Salym-related volumes in
Marketing sales volumes are expected to be approximately 2,350 - 2,850 thousand b/d.
Refinery utilisation is expected to be approximately 90% - 98%.
Chemicals manufacturing plant utilisation is expected to be approximately 82% - 90%.
The utilisation ranges presented use the revised methodology (please refer to 'Chemicals and Products' in the 'Performance by Segment' section).
Chemicals sales volumes are expected to be approximately 3,100 - 3,600 thousand tonnes.
Corporate Adjusted Earnings are expected to be a net expense of approximately
FORTHCOMING EVENTS
The “Shell Insights: Marketing Business Update” event is scheduled for
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
100,059 | 84,204 | 60,515 | Revenue1, 4 | 184,263 | 116,181 | ||||||||||||
2,031 | (303) | 1,114 | Share of profit/(loss) of joint ventures and associates4 | 1,728 | 2,108 | ||||||||||||
993 | (737) | 134 | Interest and other income/(expenses)2, 4 | 257 | 2,590 | ||||||||||||
103,083 | 83,164 | 61,764 | Total revenue and other income/(expenses) | 186,247 | 120,879 | ||||||||||||
66,658 | 55,657 | 39,717 | Purchases | 122,315 | 74,086 | ||||||||||||
6,359 | 6,029 | 5,162 | Production and manufacturing expenses | 12,389 | 11,970 | ||||||||||||
2,924 | 3,239 | 3,107 | Selling, distribution and administrative expenses4 | 6,163 | 5,569 | ||||||||||||
264 | 189 | 201 | Research and development | 452 | 366 | ||||||||||||
370 | 269 | 332 | Exploration | 639 | 617 | ||||||||||||
(348) | 6,295 | 8,223 | Depreciation, depletion and amortisation4, 5 | 5,947 | 14,119 | ||||||||||||
695 | 711 | 893 | Interest expense | 1,406 | 1,784 | ||||||||||||
76,923 | 72,388 | 57,634 | Total expenditure | 149,311 | 108,512 | ||||||||||||
26,160 | 10,776 | 4,130 | Income/(loss) before taxation | 36,936 | 12,367 | ||||||||||||
7,922 | 3,457 | 571 | Taxation charge/(credit) | 11,379 | 3,024 | ||||||||||||
18,238 | 7,319 | 3,559 | Income/(loss) for the period¹ | 25,557 | 9,343 | ||||||||||||
198 | 203 | 131 | Income/(loss) attributable to non-controlling interest | 401 | 255 | ||||||||||||
18,040 | 7,116 | 3,428 | Income/(loss) attributable to | 25,156 | 9,087 | ||||||||||||
2.42 | 0.94 | 0.44 | Basic earnings per share ($)3 | 3.34 | 1.17 | ||||||||||||
2.40 | 0.93 | 0.44 | Diluted earnings per share ($)3 | 3.31 | 1.16 |
1. See Note 2 “Segment information”.
2. See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.
3. See Note 3 “Earnings per share”.
4. See Note 9 “Withdrawal from Russian oil and gas activities”.
5. See Note 8 “Impairments and reversals of impairments”.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,238 | 7,319 | 3,559 | Income/(loss) for the period | 25,557 | 9,343 | ||||||||||||
Other comprehensive income/(loss) net of tax: | |||||||||||||||||
Items that may be reclassified to income in later periods: | |||||||||||||||||
(2,644) | 259 | 575 | – Currency translation differences | (2,385) | (277) | ||||||||||||
(24) | (41) | (2) | – Debt instruments remeasurements | (65) | (16) | ||||||||||||
(98) | 267 | (84) | – Cash flow hedging gains/(losses) | 169 | 48 | ||||||||||||
211 | 50 | (51) | – Net investment hedging gains/(losses) | 261 | 120 | ||||||||||||
9 | 212 | (20) | – Deferred cost of hedging | 222 | (54) | ||||||||||||
(22) | 190 | (7) | – Share of other comprehensive income/(loss) of joint ventures and associates | 168 | (63) | ||||||||||||
(2,567) | 938 | 410 | Total | (1,630) | (242) | ||||||||||||
Items that are not reclassified to income in later periods: | |||||||||||||||||
5,712 | 1,718 | 1,675 | – Retirement benefits remeasurements | 7,430 | 6,303 | ||||||||||||
(457) | 24 | 10 | – Equity instruments remeasurements | (433) | 50 | ||||||||||||
36 | (74) | (42) | – Share of other comprehensive income/(loss) of joint ventures and associates | (38) | (67) | ||||||||||||
5,291 | 1,668 | 1,643 | Total | 6,959 | 6,285 | ||||||||||||
2,724 | 2,606 | 2,053 | Other comprehensive income/(loss) for the period | 5,330 | 6,044 | ||||||||||||
20,962 | 9,925 | 5,612 | Comprehensive income/(loss) for the period | 30,887 | 15,386 | ||||||||||||
327 | 218 | 145 | Comprehensive income/(loss) attributable to non-controlling interest | 545 | 266 | ||||||||||||
20,635 | 9,707 | 5,467 | Comprehensive income/(loss) attributable to | 30,342 | 15,121 |
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
CONDENSED CONSOLIDATED BALANCE SHEET | ||||||||
$ million | ||||||||
Assets | ||||||||
Non-current assets | ||||||||
Intangible assets | 25,540 | 24,693 | ||||||
Property, plant and equipment 3 | 200,122 | 194,932 | ||||||
Joint ventures and associates | 23,264 | 23,415 | ||||||
Investments in securities | 3,507 | 3,797 | ||||||
Deferred tax1 | 8,575 | 12,426 | ||||||
Retirement benefits1 | 14,973 | 8,471 | ||||||
Trade and other receivables | 5,853 | 7,065 | ||||||
Derivative financial instruments² | 839 | 815 | ||||||
282,674 | 275,614 | |||||||
Current assets | ||||||||
Inventories | 36,087 | 25,258 | ||||||
Trade and other receivables | 66,708 | 53,208 | ||||||
Derivative financial instruments² | 23,257 | 11,369 | ||||||
Cash and cash equivalents | 38,970 | 36,970 | ||||||
165,022 | 126,805 | |||||||
Assets classified as held for sale1 | 203 | 1,960 | ||||||
165,224 | 128,765 | |||||||
Total assets | 447,898 | 404,379 | ||||||
Liabilities | ||||||||
Non-current liabilities | ||||||||
Debt | 77,220 | 80,868 | ||||||
Trade and other payables | 3,829 | 2,075 | ||||||
Derivative financial instruments² | 3,238 | 887 | ||||||
Deferred tax1 | 16,145 | 12,547 | ||||||
Retirement benefits1 | 8,693 | 11,325 | ||||||
Decommissioning and other provisions | 25,798 | 25,804 | ||||||
134,922 | 133,506 | |||||||
Current liabilities | ||||||||
Debt | 6,521 | 8,218 | ||||||
Trade and other payables | 75,445 | 63,173 | ||||||
Derivative financial instruments² | 28,881 | 16,311 | ||||||
Income taxes payable | 4,506 | 3,254 | ||||||
Decommissioning and other provisions | 2,943 | 3,338 | ||||||
118,295 | 94,294 | |||||||
Liabilities directly associated with assets classified as held for sale1 | 382 | 1,253 | ||||||
118,678 | 95,547 | |||||||
Total liabilities | 253,600 | 229,053 | ||||||
Equity attributable to | 190,500 | 171,966 | ||||||
Non-controlling interest | 3,799 | 3,360 | ||||||
Total equity | 194,299 | 175,326 | ||||||
Total liabilities and equity | 447,898 | 404,379 |
1. See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.
2. See Note 6 “Derivative financial instruments and debt excluding lease liabilities”.
3. See Note 8 “Impairments and reversals of impairments”.
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2nd QUARTER 2022 AND HALF 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 | — | — | 5,186 | 25,156 | 30,342 | 545 | 30,887 | |||||||||||||||||||
Transfer from other comprehensive income | — | — | 13 | (13) | — | — | — | |||||||||||||||||||
Dividends³ | — | — | — | (3,680) | (3,680) | (110) | (3,790) | |||||||||||||||||||
Repurchases of shares4 | (27) | — | 27 | (8,544) | (8,544) | — | (8,544) | |||||||||||||||||||
Share-based compensation | — | 427 | (137) | 175 | 465 | — | 465 | |||||||||||||||||||
Other changes | — | — | — | (49) | (49) | 3 | (47) | |||||||||||||||||||
At | 614 | (184) | 23,998 | 166,072 | 190,500 | 3,799 | 194,299 | |||||||||||||||||||
At | 651 | (709) | 12,752 | 142,616 | 155,310 | 3,227 | 158,537 | |||||||||||||||||||
Comprehensive income/(loss) for the period | — | — | 6,033 | 9,087 | 15,121 | 266 | 15,386 | |||||||||||||||||||
Transfer from other comprehensive income | — | — | (15) | 15 | — | — | — | |||||||||||||||||||
Dividends3 | — | — | — | (2,620) | (2,620) | (265) | (2,886) | |||||||||||||||||||
Share-based compensation | — | 350 | (219) | 59 | 190 | — | 190 | |||||||||||||||||||
Other changes | — | — | — | (2) | (2) | 16 | 15 | |||||||||||||||||||
At | 651 | (358) | 18,552 | 149,155 | 167,999 | 3,244 | 171,243 |
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. Includes shares committed to repurchase under an irrevocable contract and repurchases subject to settlement at the end of the quarter.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
26,160 | 10,776 | 4,130 | Income before taxation for the period | 36,936 | 12,367 | ||||||||||||
Adjustment for: | |||||||||||||||||
551 | 599 | 797 | – Interest expense (net) | 1,150 | 1,554 | ||||||||||||
(348) | 6,295 | 8,223 | – Depreciation, depletion and amortisation3 | 5,947 | 14,119 | ||||||||||||
189 | 79 | 108 | – Exploration well write-offs | 268 | 244 | ||||||||||||
(334) | (193) | 55 | – Net (gains)/losses on sale and revaluation of non-current assets and businesses | (527) | (2,018) | ||||||||||||
(2,031) | 303 | (1,114) | – Share of (profit)/loss of joint ventures and associates | (1,728) | (2,108) | ||||||||||||
1,245 | 926 | 782 | – Dividends received from joint ventures and associates | 2,171 | 1,361 | ||||||||||||
(6,833) | (4,914) | (2,495) | – (Increase)/decrease in inventories | (11,747) | (5,921) | ||||||||||||
(4,066) | (10,005) | (4,080) | – (Increase)/decrease in current receivables | (14,071) | (10,909) | ||||||||||||
6,656 | 7,495 | 5,016 | – Increase/(decrease) in current payables | 14,150 | 10,881 | ||||||||||||
(1,779) | 3,495 | 2,173 | – Derivative financial instruments | 1,716 | 2,358 | ||||||||||||
123 | 247 | 47 | – Retirement benefits | 370 | 156 | ||||||||||||
571 | (9) | (124) | – Decommissioning and other provisions | 562 | (46) | ||||||||||||
1,706 | 1,876 | 561 | – Other1 | 3,582 | 1,145 | ||||||||||||
(3,155) | (2,155) | (1,465) | Tax paid | (5,310) | (2,274) | ||||||||||||
18,655 | 14,815 | 12,617 | Cash flow from operating activities | 33,470 | 20,910 | ||||||||||||
(6,677) | (4,237) | (4,232) | Capital expenditure | (10,914) | (8,117) | ||||||||||||
(264) | (755) | (115) | Investments in joint ventures and associates | (1,019) | (184) | ||||||||||||
(83) | (72) | (36) | Investments in equity securities | (156) | (57) | ||||||||||||
783 | 557 | 1,162 | Proceeds from sale of property, plant and equipment and businesses | 1,340 | 4,268 | ||||||||||||
51 | 138 | 4 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 190 | 279 | ||||||||||||
4 | 12 | 108 | Proceeds from sale of equity securities | 16 | 139 | ||||||||||||
160 | 92 | 110 | Interest received | 252 | 209 | ||||||||||||
293 | 753 | 799 | Other investing cash inflows | 1,046 | 1,510 | ||||||||||||
(474) | (762) | (746) | Other investing cash outflows | (1,236) | (1,583) | ||||||||||||
(6,207) | (4,273) | (2,946) | Cash flow from investing activities | (10,481) | (3,535) | ||||||||||||
640 | 131 | (34) | Net increase/(decrease) in debt with maturity period within three months | 772 | 79 | ||||||||||||
Other debt: | |||||||||||||||||
35 | 101 | 57 | – New borrowings | 135 | 166 | ||||||||||||
(2,531) | (2,541) | (3,901) | – Repayments | (5,072) | (9,607) | ||||||||||||
(1,090) | (657) | (1,162) | Interest paid | (1,747) | (1,968) | ||||||||||||
(828) | (483) | (57) | Derivative financial instruments | (1,311) | (506) | ||||||||||||
2 | 3 | — | Change in non-controlling interest | 5 | 15 | ||||||||||||
Cash dividends paid to: | |||||||||||||||||
(1,851) | (1,950) | (1,310) | – | (3,802) | (2,602) | ||||||||||||
(63) | (47) | (140) | – Non-controlling interest | (110) | (265) | ||||||||||||
(5,541) | (3,472) | — | Repurchases of shares | (9,013) | (216) | ||||||||||||
78 | (103) | (2) | Shares held in trust: net sales/(purchases) and dividends received | (25) | (65) | ||||||||||||
(11,150) | (9,019) | (6,550) | Cash flow from financing activities | (20,168) | (14,970) | ||||||||||||
(688) | (134) | (2) | Effects of exchange rate changes on cash and cash equivalents | (822) | (130) | ||||||||||||
609 | 1,389 | 3,119 | Increase/(decrease) in cash and cash equivalents | 1,999 | 2,275 | ||||||||||||
38,360 | 36,970 | 30,985 | Cash and cash equivalents at beginning of period | 36,970 | 31,830 | ||||||||||||
38,970 | 38,360 | 34,104 | Cash and cash equivalents at end of period | 38,970 | 34,104 |
1.See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.
2.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.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
3.See Note 8 “Impairments and reversals of impairments”.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Interim Financial Statements (“Interim Statements”) of
The financial information presented in the unaudited Interim Statements does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 (“the Act”). Statutory accounts for the year ended
Going concern
These unaudited Interim Statements have been prepared on the going concern basis of accounting. In assessing the appropriateness of the going concern assumption over the period to
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, resulting in reversal of impairment losses recognised previously. See Note 8.
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 14
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
INFORMATION BY SEGMENT | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
Third-party revenue | |||||||||||||||||
12,403 | 14,074 | 5,537 | 26,477 | 11,559 | |||||||||||||
2,253 | 1,531 | 2,281 | Upstream | 3,784 | 4,217 | ||||||||||||
34,121 | 26,136 | 20,165 | Marketing | 60,257 | 36,742 | ||||||||||||
39,793 | 33,420 | 28,861 | Chemicals and Products | 73,213 | 54,752 | ||||||||||||
11,477 | 9,026 | 3,658 | Renewables and Energy Solutions | 20,503 | 8,885 | ||||||||||||
12 | 16 | 12 | Corporate | 28 | 26 | ||||||||||||
100,059 | 84,204 | 60,515 | Total third-party revenue¹ | 184,263 | 116,181 | ||||||||||||
Inter-segment revenue | |||||||||||||||||
4,176 | 3,532 | 1,871 | 7,708 | 3,470 | |||||||||||||
13,951 | 11,940 | 8,793 | Upstream | 25,892 | 15,852 | ||||||||||||
153 | 101 | 55 | Marketing | 254 | 108 | ||||||||||||
718 | 667 | 505 | Chemicals and Products | 1,385 | 875 | ||||||||||||
1,522 | 1,242 | 785 | Renewables and Energy Solutions | 2,764 | 1,668 | ||||||||||||
— | — | — | Corporate | — | — | ||||||||||||
CCS earnings | |||||||||||||||||
8,103 | 3,079 | 969 | 11,183 | 3,421 | |||||||||||||
6,391 | 3,095 | 2,458 | Upstream | 9,486 | 3,370 | ||||||||||||
836 | 165 | 977 | Marketing | 1,000 | 1,633 | ||||||||||||
2,131 | 1,072 | (508) | Chemicals and Products | 3,203 | 152 | ||||||||||||
(173) | (1,536) | (564) | Renewables and Energy Solutions | (1,709) | (282) | ||||||||||||
(529) | (736) | (592) | Corporate | (1,264) | (1,124) | ||||||||||||
16,759 | 5,140 | 2,741 | Total CCS earnings | 21,899 | 7,171 |
1.Includes revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives. Second quarter 2022 included income of
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,040 | 7,116 | 3,428 | Income/(loss) attributable to | 25,156 | 9,087 | ||||||||||||
198 | 203 | 131 | Income/(loss) attributable to non-controlling interest | 401 | 255 | ||||||||||||
18,238 | 7,319 | 3,559 | Income/(loss) for the period | 25,557 | 9,343 | ||||||||||||
Current cost of supplies adjustment: | |||||||||||||||||
(1,929) | (2,794) | (994) | Purchases | (4,723) | (2,625) | ||||||||||||
496 | 682 | 208 | Taxation | 1,178 | 562 | ||||||||||||
(46) | (68) | (33) | Share of profit/(loss) of joint ventures and associates | (114) | (108) | ||||||||||||
(1,479) | (2,180) | (818) | Current cost of supplies adjustment | (3,659) | (2,172) | ||||||||||||
of which: | |||||||||||||||||
(1,363) | (2,090) | (793) | Attributable to | (3,453) | (2,108) | ||||||||||||
(116) | (89) | (25) | Attributable to non-controlling interest | (205) | (64) | ||||||||||||
16,759 | 5,140 | 2,741 | CCS earnings | 21,899 | 7,171 | ||||||||||||
of which: | |||||||||||||||||
16,677 | 5,026 | 2,634 | CCS earnings attributable to | 21,703 | 6,980 | ||||||||||||
82 | 114 | 106 | CCS earnings attributable to non-controlling interest | 196 | 191 |
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
3. Earnings per share
EARNINGS PER SHARE | |||||||||||||||||
Quarters | Half year | ||||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,040 | 7,116 | 3,428 | Income/(loss) attributable to | 25,156 | 9,087 | ||||||||||||
Weighted average number of shares used as the basis for determining: | |||||||||||||||||
7,453.2 | 7,603.0 | 7,790.1 | Basic earnings per share (million) | 7,527.7 | 7,786.1 | ||||||||||||
7,518.5 | 7,661.6 | 7,835.9 | Diluted earnings per share (million) | 7,589.6 | 7,834.2 |
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 | (294,476,534) | (25) | (25) | |||||||||||||||||||||||
At | 7,355,041,629 | 614 | 614 | |||||||||||||||||||||||
At | 4,101,239,499 | 3,706,183,836 | 345 | 306 | 651 | |||||||||||||||||||||
At | 4,101,239,499 | 3,706,183,836 | 345 | 306 | 651 |
1. Share capital at
On
At Shell plc’s Annual General Meeting on
Page 16
2nd QUARTER 2022 AND HALF 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 | — | — | — | — | 5,186 | 5,186 | ||||||||||||||
Transfer from other comprehensive income | — | — | — | — | 13 | 13 | ||||||||||||||
Repurchases of shares | — | — | 27 | — | — | 27 | ||||||||||||||
Share-based compensation | — | — | — | (137) | — | (137) | ||||||||||||||
At | 37,298 | 154 | 168 | 827 | (14,447) | 23,998 | ||||||||||||||
At | 37,298 | 154 | 129 | 906 | (25,735) | 12,752 | ||||||||||||||
Other comprehensive income/(loss) attributable to | — | — | — | — | 6,033 | 6,033 | ||||||||||||||
Transfer from other comprehensive income | — | — | — | — | (15) | (15) | ||||||||||||||
Share-based compensation | — | — | — | (219) | — | (219) | ||||||||||||||
At | 37,298 | 154 | 129 | 687 | (19,717) | 18,552 |
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 | 56,709 | 61,579 | ||||||
Fair value¹ | 54,304 | 67,066 |
1. Mainly determined from the prices quoted for these securities.
Page 17
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
7. Other notes to the unaudited Condensed Consolidated Interim Financial Statements
Consolidated Statement of Income
Interest and other income
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
993 | (737) | 134 | Interest and other income/(expenses) | 257 | 2,590 | ||||||||||||
of which: | |||||||||||||||||
144 | 111 | 95 | Interest income | 255 | 230 | ||||||||||||
198 | 1 | 34 | Dividend income (from investments in equity securities) | 199 | 35 | ||||||||||||
334 | 193 | (55) | Net gains on sales and revaluation of non-current assets and businesses | 527 | 2,018 | ||||||||||||
166 | 15 | 4 | Net foreign exchange gains/(losses) on financing activities | 182 | 90 | ||||||||||||
151 | (1,057) | 56 | Other | (907) | 217 |
For the first quarter 2022, Other includes the write-down of the loan 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.
Deferred tax
$ million | ||||||||
Non-current assets | ||||||||
Deferred tax | 8,575 | 12,426 | ||||||
Non-current liabilities | ||||||||
Deferred tax | 16,145 | 12,547 | ||||||
Net deferred liability | (7,570) | (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
On
Assets classified as held for sale
$ million | ||||||||
Assets classified as held for sale | 203 | 1,960 | ||||||
Liabilities directly associated with assets classified as held for sale | 382 | 1,253 |
Page 18
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
Assets classified as held for sale and associated liabilities at
Retirement benefits
$ million | ||||||||
Non-current assets | ||||||||
Retirement benefits | 14,973 | 8,471 | ||||||
Non-current liabilities | ||||||||
Retirement benefits | 8,693 | 11,325 | ||||||
Surplus/(deficit) | 6,280 | (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
Consolidated Statement of Cash Flows
Cash flow from operating activities - Other
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
1,706 | 1,876 | 561 | Other | 3,582 | 1,145 |
Cash flow from operating activities - Other for the second quarter 2022 includes $685 million of net inflows (first quarter 2022: $490 million; second quarter 2021: $710 million) due to the timing of payments relating to emissions and biofuel programmes in
8. Impairments and reversals of impairments
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
(348) | 6,295 | 8,223 | Depreciation, depletion and amortisation | 5,947 | 14,119 | ||||||||||||
of which: | |||||||||||||||||
5,608 | 5,388 | 5,890 | Depreciation | 10,997 | 11,702 | ||||||||||||
153 | 907 | 2,334 | Impairments | 1,059 | 2,622 | ||||||||||||
(6,109) | — | (1) | Impairment reversals | (6,109) | (205) |
The gain in the second quarter 2022 resulting from reversals of impairments recognised previously was mainly triggered by revision of Shell's mid- and long-term commodity price assumptions reflecting the current energy market demand and supply fundamentals.
In the second quarter 2022, gains from reversals were recognised of
Gains from reversals of impairments of
Page 19
2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
For impairment testing purposes and potential reversal of impairments recognised previously, the respective carrying amounts of property, plant and equipment and intangible assets were compared with their value in use. Cash flow projections used in the determination of value in use were made using management’s forecasts of commodity prices, market supply and demand, operational and capital expenditures, potential costs associated with operational GHG emissions and expected production volumes. The discount rate applied is based on a nominal post-tax weighted average cost of capital (WACC) of 5% (2021: 5%) for the Renewables and Energy Solutions segment and a nominal post-tax WACC of 6.5% (2021: 6.5%) for all other segments.
Oil and gas price assumptions applied for impairment testing in
Commodity price assumptions [A] | 2023 | 2024 | 2025 | 2026 | ||||||||||
Brent crude oil ($/b) | 80 | 70 | 70 | 71 | ||||||||||
4.00 | 3.50 | 3.50 | 3.98 | |||||||||||
[A] Money of the day. |
For periods after 2026, the real-term price assumptions applied were
9. 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.Orderly withdrawal from its involvement in all Russian hydrocarbons, including crude oil, petroleum products, gas and LNG in a phased manner, aligned with new government guidance. Since these announcements, Shell has stopped all spot purchases of Russian crude, liquefied natural gas, and of cargoes of refined products directly exported from
Subsequently, this led to recognition of net pre-tax charges of
Q2 2022 | Q1 2022 | Half year 2022 | ||||||||||||
Revenue | (133) | (335) | (468) | |||||||||||
Share of profit of joint ventures and associates | — | (1,614) | (1,614) | |||||||||||
Interest and other income/(expenses) | (71) | 1 | (1,126) | (1,197) | ||||||||||
Selling, distribution and administrative expenses | 115 | (219) | (104) | |||||||||||
Depreciation, depletion and amortisation | 163 | (858) | (695) | |||||||||||
Other | 37 | (83) | (46) | |||||||||||
Income/(loss) before taxation | 111 | (4,235) | (4,124) | |||||||||||
Taxation charge/(credit) | 25 | 341 | 366 | |||||||||||
Income/(loss) for the period | 136 | (3,894) | (3,758) |
1.Mainly related to the loss following release of currency translation adjustments ($376 million) for Shell Neft and Gydan, partly offset by Sakhalin dividends received ($165 million) and termination of leases ($140 million).
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
In relation to the assets with a potential exposure to Shell's intended exit from all Russian hydrocarbons, including those assets for which the above charges were recognised in the first and second quarters 2022, the remaining balance sheet carrying amount as at
Further details are provided below.
Sakhalin-2
Shell has a 27.5% (minus one share) interest in
On
Shell is one of five energy companies which have each committed to provide financing and guarantees for up to 10% of the total cost of the project. Following the first quarter announcements, Shell assessed the recoverability of the loan to
Upstream
Salym
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 Shell Neft and 171 sites owned by dealers and Shell Neft operated a lubricant blending plant. Shell Neft was a 100% Shell-owned subsidiary and was fully consolidated until the date of the disposal. Following the first quarter announcements, Shell assessed the recoverability of Shell Neft carrying amounts, resulting in an impairment of non-current assets of $358 million and other charges of $236 million. In the second quarter 2022, Shell transferred all shares of Shell Neft to Lukoil leading to net charges of $83 million, including the release of currency translation losses ($343 million).
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
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
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,
10. Post-balance sheet events
On
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2nd QUARTER 2022 AND HALF 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 | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,040 | 7,116 | 3,428 | Income/(loss) attributable to | 25,156 | 9,087 | ||||||||||||
(1,363) | (2,090) | (793) | Add: Current cost of supplies adjustment attributable to | (3,453) | (2,108) | ||||||||||||
5,205 | (4,104) | (2,899) | Less: Identified items attributable to | 1,101 | (1,788) | ||||||||||||
11,472 | 9,130 | 5,534 | Adjusted Earnings | 20,601 | 8,768 | ||||||||||||
Of which: | |||||||||||||||||
3,758 | 4,093 | 1,605 | 7,850 | 3,176 | |||||||||||||
4,912 | 3,450 | 2,511 | Upstream | 8,362 | 3,444 | ||||||||||||
751 | 737 | 955 | Marketing | 1,488 | 1,757 | ||||||||||||
2,035 | 1,168 | 989 | Chemicals and Products | 3,203 | 1,770 | ||||||||||||
725 | 344 | (13) | Renewables and Energy Solutions | 1,069 | (115) | ||||||||||||
(626) | (548) | (399) | Corporate | (1,174) | (1,065) | ||||||||||||
(82) | (114) | (115) | Less: Non-controlling interest | (196) | (199) |
ADJUSTED EBITDA | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
11,472 | 9,130 | 5,534 | Adjusted Earnings | 20,601 | 8,768 | ||||||||||||
82 | 114 | 115 | Add: Non-controlling interest | 196 | 199 | ||||||||||||
5,248 | 3,719 | 1,178 | Add: Taxation charge/(credit) excluding tax impact of identified items | 8,966 | 2,728 | ||||||||||||
5,608 | 5,388 | 5,890 | Add: Depreciation, depletion and amortisation excluding impairments | 10,997 | 11,702 | ||||||||||||
189 | 79 | 108 | Add: Exploration well write-offs | 268 | 244 | ||||||||||||
695 | 711 | 893 | Add: Interest expense excluding identified items | 1,406 | 1,784 | ||||||||||||
144 | 111 | 95 | Less: Interest income | 255 | 230 | ||||||||||||
23,150 | 19,028 | 13,623 | Adjusted EBITDA1 | 42,177 | 25,195 | ||||||||||||
Of which: | |||||||||||||||||
6,529 | 6,315 | 3,318 | 12,844 | 6,741 | |||||||||||||
11,167 | 8,977 | 6,696 | Upstream | 20,144 | 11,956 | ||||||||||||
1,452 | 1,323 | 1,710 | Marketing | 2,775 | 3,136 | ||||||||||||
3,184 | 2,006 | 1,909 | Chemicals and Products | 5,191 | 3,612 | ||||||||||||
1,013 | 521 | 89 | Renewables and Energy Solutions | 1,534 | 23 | ||||||||||||
(197) | (114) | (101) | Corporate | (310) | (274) |
1.With effect from Q3 2021, Adjusted EBITDA includes the non-controlling interest component of Adjusted Earnings. Prior period comparatives have been revised.
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2nd QUARTER 2022 AND HALF 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 | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
Identified items before tax | |||||||||||||||||
351 | 193 | (55) | Divestment gains/(losses) | 544 | 2,018 | ||||||||||||
6,016 | (2,521) | (2,333) | Impairment reversals/(impairments) | 3,496 | (2,417) | ||||||||||||
(11) | 59 | 68 | Redundancy and restructuring | 48 | (679) | ||||||||||||
(334) | (203) | — | Provisions for onerous contracts | (537) | — | ||||||||||||
1,114 | (1,289) | (1,373) | Fair value accounting of commodity derivatives and certain gas contracts | (175) | (985) | ||||||||||||
248 | (1,287) | (29) | Other | (1,039) | 2 | ||||||||||||
7,384 | (5,048) | (3,722) | Total identified items before tax | 2,336 | (2,062) | ||||||||||||
(2,179) | 944 | 815 | Total tax impact of identified items | (1,235) | 265 | ||||||||||||
Identified items after tax | |||||||||||||||||
205 | 161 | (83) | Divestment gains/(losses) | 366 | 1,328 | ||||||||||||
4,276 | (2,529) | (1,787) | Impairments | 1,747 | (1,881) | ||||||||||||
(5) | 60 | 45 | Redundancy and restructuring | 54 | (441) | ||||||||||||
(314) | (190) | — | Provisions for onerous contracts | (504) | — | ||||||||||||
1,014 | (777) | (1,181) | Fair value accounting of commodity derivatives and certain gas contracts | 237 | (816) | ||||||||||||
(218) | 168 | 121 | Impact of exchange rate movements on tax balances | (50) | 11 | ||||||||||||
247 | (996) | (23) | Other | (749) | 2 | ||||||||||||
5,205 | (4,104) | (2,908) | Impact on CCS earnings | 1,101 | (1,796) | ||||||||||||
Of which: | |||||||||||||||||
4,346 | (1,013) | (636) | 3,332 | 245 | |||||||||||||
1,479 | (355) | (53) | Upstream | 1,124 | (74) | ||||||||||||
85 | (572) | 22 | Marketing | (487) | (125) | ||||||||||||
96 | (96) | (1,496) | Chemicals and Products | 1 | (1,618) | ||||||||||||
(898) | (1,880) | (551) | Renewables and Energy Solutions | (2,778) | (167) | ||||||||||||
97 | (187) | (193) | Corporate | (90) | (59) | ||||||||||||
— | — | (8) | Impact on CCS earnings attributable to non-controlling interest | — | (8) | ||||||||||||
5,205 | (4,104) | (2,899) | Impact on CCS earnings attributable to | 1,101 | (1,788) |
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).
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
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
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.
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 | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
6,677 | 4,237 | 4,232 | Capital expenditure | 10,914 | 8,117 | ||||||||||||
264 | 755 | 115 | Investments in joint ventures and associates | 1,019 | 184 | ||||||||||||
83 | 72 | 36 | Investments in equity securities | 156 | 57 | ||||||||||||
7,024 | 5,064 | 4,383 | Cash capital expenditure | 12,088 | 8,357 | ||||||||||||
Of which: | |||||||||||||||||
919 | 863 | 765 | 1,782 | 1,662 | |||||||||||||
2,858 | 1,707 | 1,693 | Upstream | 4,565 | 3,174 | ||||||||||||
1,620 | 473 | 467 | Marketing | 2,092 | 850 | ||||||||||||
1,226 | 998 | 1,311 | Chemicals and Products | 2,224 | 2,329 | ||||||||||||
321 | 985 | 117 | Renewables and Energy Solutions | 1,307 | 286 | ||||||||||||
81 | 37 | 30 | Corporate | 118 | 58 |
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.
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.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
$ million | Quarters | ||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | |||||||||
Income - current and previous three quarters | 36,844 | 22,165 | 5,933 | ||||||||
Interest expense after tax - current and previous three quarters | 2,397 | 2,575 | 2,668 | ||||||||
Income before interest expense - current and previous three quarters | 39,241 | 24,740 | 8,601 | ||||||||
Capital employed – opening | 271,319 | 269,323 | 265,435 | ||||||||
Capital employed – closing | 278,039 | 265,581 | 271,319 | ||||||||
Capital employed – average | 274,679 | 267,452 | 268,377 | ||||||||
ROACE on a Net income basis | 14.3% | 9.3% | 3.2% |
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 | ||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | |||||||||
Adjusted Earnings - current and previous three quarters (Reference A) | 31,122 | 25,184 | 10,115 | ||||||||
Add: Income/(loss) attributable to NCI - current and previous three quarters | 675 | 608 | 371 | ||||||||
Add: Current cost of supplies adjustment attributable to NCI - current and previous three quarters | (260) | (170) | (90) | ||||||||
Less: Identified items attributable to NCI (Reference A) - current and previous three quarters | (11) | (19) | (18) | ||||||||
Adjusted Earnings plus NCI excluding identified items - current and previous three quarters | 31,548 | 25,642 | 10,414 | ||||||||
Add: Interest expense after tax - current and previous three quarters | 2,397 | 2,575 | 2,668 | ||||||||
Adjusted Earnings plus NCI excluding identified items before interest expense - current and previous three quarters | 33,945 | 28,217 | 13,081 | ||||||||
Capital employed - average | 274,679 | 267,452 | 268,377 | ||||||||
ROACE on an Adjusted Earnings plus NCI basis | 12.4% | 10.6% | 4.9% |
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.
$ million | Quarters | ||||||||||
Current debt | 6,521 | 7,027 | 13,042 | ||||||||
Non-current debt | 77,220 | 79,021 | 87,034 | ||||||||
Total debt | 83,741 | 86,048 | 100,076 | ||||||||
Of which lease liabilities | 27,032 | 26,816 | 28,340 | ||||||||
Add: Debt-related derivative financial instruments: net liability/(asset) | 2,882 | 1,269 | (912) | ||||||||
Add: Collateral on debt-related derivatives: net liability/(asset) | (1,296) | (467) | 675 | ||||||||
Less: Cash and cash equivalents | (38,970) | (38,360) | (34,104) | ||||||||
Net debt | 46,357 | 48,489 | 65,735 | ||||||||
Add: Total equity | 194,299 | 179,533 | 171,243 | ||||||||
Total capital | 240,655 | 228,022 | 236,978 | ||||||||
Gearing | 19.3 | % | 21.3 | % | 27.7 | % |
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
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 | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
6,359 | 6,029 | 5,162 | Production and manufacturing expenses | 12,389 | 11,970 | ||||||||||||
2,924 | 3,239 | 3,107 | Selling, distribution and administrative expenses | 6,163 | 5,569 | ||||||||||||
264 | 189 | 201 | Research and development | 452 | 366 | ||||||||||||
9,547 | 9,457 | 8,470 | Operating expenses | 19,004 | 17,905 | ||||||||||||
Of which identified items: | |||||||||||||||||
(10) | 59 | 68 | Redundancy and restructuring (charges)/reversal | 49 | (679) | ||||||||||||
(267) | (117) | (31) | (Provisions)/reversal | (384) | (31) | ||||||||||||
— | (144) | (2) | Other | (143) | 33 | ||||||||||||
(277) | (201) | 35 | (478) | (677) | |||||||||||||
9,270 | 9,256 | 8,505 | Underlying operating expenses | 18,526 | 17,228 |
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.
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,655 | 14,815 | 12,617 | Cash flow from operating activities | 33,470 | 20,910 | ||||||||||||
(6,207) | (4,273) | (2,946) | Cash flow from investing activities | (10,481) | (3,535) | ||||||||||||
12,448 | 10,542 | 9,671 | Free cash flow | 22,989 | 17,375 | ||||||||||||
838 | 708 | 1,274 | Less: Divestment proceeds (Reference I) | 1,546 | 4,686 | ||||||||||||
— | — | 24 | Add: Tax paid on divestments (reported under "Other investing cash outflows") | — | 24 | ||||||||||||
2,060 | 513 | 2 | Add: Cash outflows related to inorganic capital expenditure1 | 2,573 | 92 | ||||||||||||
13,670 | 10,347 | 8,424 | Organic free cash flow2 | 24,017 | 12,805 |
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.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
Quarters | $ million | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
18,655 | 14,815 | 12,617 | Cash flow from operating activities | 33,470 | 20,910 | ||||||||||||
(6,833) | (4,914) | (2,495) | (Increase)/decrease in inventories | (11,747) | (5,921) | ||||||||||||
(4,066) | (10,005) | (4,080) | (Increase)/decrease in current receivables | (14,071) | (10,909) | ||||||||||||
6,656 | 7,495 | 5,016 | Increase/(decrease) in current payables | 14,150 | 10,881 | ||||||||||||
(4,243) | (7,425) | (1,559) | (Increase)/decrease in working capital | (11,667) | (5,949) | ||||||||||||
22,898 | 22,240 | 14,176 | Cash flow from operating activities excluding working capital movements | 45,138 | 26,859 |
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 | Half year | |||||||||||||||
Q2 2022 | Q1 2022 | Q2 2021 | 2022 | 2021 | |||||||||||||
783 | 557 | 1,162 | Proceeds from sale of property, plant and equipment and businesses | 1,340 | 4,268 | ||||||||||||
51 | 138 | 4 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 190 | 279 | ||||||||||||
4 | 12 | 108 | Proceeds from sale of equity securities | 16 | 139 | ||||||||||||
838 | 708 | 1,274 | Divestment proceeds | 1,546 | 4,686 |
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting Shell are described in the Risk Factors section of the Annual Report and Accounts (pages 22 to 33) and Form 20-F (pages 23 to 32) for the year ended
STRATEGIC RISKS
▪We are exposed to macroeconomic risks including fluctuating prices of crude oil, natural gas, oil products and chemicals.
▪Our ability to deliver competitive returns and pursue commercial opportunities depends in part on the accuracy of our price assumptions.
▪Our ability to achieve our strategic objectives depends on how we react to competitive forces.
▪Rising concerns about climate change and effects of the energy transition could continue to lead to a fall in demand and potentially lower prices for fossil fuels. Climate change could also have a physical impact on our assets and supply chains. This risk may also lead to additional legal and/or regulatory measures, resulting in project delays or cancellations, potential additional litigation, operational restrictions and additional compliance obligations.
▪If we fail to stay in step with the pace and extent of society’s changing demands for energy as it transitions to a low-carbon future, we could fail in sustaining and developing our business.
▪We seek to execute divestments in pursuing our strategy. We may be unable to divest these assets successfully in line with our strategy.
▪We operate in more than 70 countries that have differing degrees of political, legal and fiscal stability. This exposes us to a wide range of political developments that could result in changes to contractual terms, laws and regulations. We and our joint arrangements and associates also face the risk of litigation and disputes worldwide.
OPERATIONAL RISKS
▪
▪The estimation of proved oil and gas reserves involves subjective judgements based on available information and the application of complex rules. This means subsequent downward adjustments are possible.
▪Our future hydrocarbon production depends on the delivery of large and integrated projects and our ability to replace proved oil and gas reserves.
▪The nature of our operations exposes us, and the communities in which we work, to a wide range of health, safety, security and environment risks.
▪A further erosion of the business and operating environment in
▪An erosion of our business reputation could have a material adverse effect on our brand, our ability to secure new resources or access capital markets, and on our licence to operate.
▪We rely heavily on information technology systems in our operations.
▪Our business exposes us to risks of social instability, criminality, civil unrest, terrorism, piracy, cyber disruption and acts of war that could have a material adverse effect on our operations.
▪Production from the Groningen field in
▪We are exposed to treasury and trading risks, including liquidity risk, interest rate risk, foreign exchange risk and credit risk. We are affected by the global macroeconomic environment and the conditions of financial and commodity markets.
▪Our future performance depends on the successful development and deployment of new technologies and new products.
▪We have substantial pension commitments, the funding of which is subject to capital market risks and other factors.
▪We mainly self-insure our hazard risk exposures. Consequently, we could incur significant financial losses from different types of risks that are not insured with third-party insurers.
▪Many of our major projects and operations are conducted in joint arrangements or with associates. This could reduce our degree of control and our ability to identify and manage risks.
CONDUCT RISKS
▪We are exposed to conduct risk in our trading operations.
▪Violations of antitrust and competition laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.
▪Violations of anti-bribery, tax-evasion and anti-money laundering laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.
▪Violations of data protection laws carry fines and expose us and/or our employees to criminal sanctions and civil suits.
▪Violations of trade compliance laws and regulations, including sanctions, carry fines and expose us and our employees to criminal proceedings and civil suits.
OTHER (generally applicable to an investment in securities)
▪The Company’s Articles of Association determine the jurisdiction for shareholder disputes. This could limit shareholder remedies.
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2nd QUARTER 2022 AND HALF YEAR UNAUDITED RESULTS |
FIRST QUARTER 2022 PORTFOLIO DEVELOPMENTS
Intent to withdraw from Russian oil and gas activities
We refer to Note 9 to the Condensed Consolidated Interim Financial Statements.
In
Upstream
In
In
In
Chemicals and Products
In
In
Renewables and Energy Solutions
In
In
In
In
In
RESPONSIBILITY STATEMENT
It is confirmed that to the best of our knowledge: (a) the Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the
The Directors of
On behalf of the Board
Chief Executive Officer | Chief Financial Officer | |||||||||||||
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INDEPENDENT REVIEW REPORT TO SHELL PLC
Conclusion
We have been engaged by
Based on our review, nothing has come to our attention that causes us to believe that the Interim Statements in the half-yearly financial report for the six months ended
Basis for Conclusion
We conducted our review in accordance with International Standard on Review Engagements ("ISRE") 2410 (
From
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.
Directors’ responsibilities
The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom’s
In preparing the half-yearly financial report, the Directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for expressing to
Use of our report
This report is made solely to
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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 Interim Financial Report contains forward-looking statements (within the meaning of the
Shell’s net carbon footprint
Also, in this Unaudited Condensed Interim 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 Interim 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 Interim Financial Report do not form part of this Unaudited Condensed Interim Financial Report.
We may have used certain terms, such as resources, in this Unaudited Condensed Interim Financial Report that the
This announcement contains inside information.
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The information in this announcement reflects the unaudited consolidated financial position and results of |
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