2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||||||||||
SUMMARY OF UNAUDITED RESULTS | |||||||||||||||||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||||||||||
3,134 | 8,709 | 18,040 | -64 | Income/(loss) attributable to | 11,843 | 25,156 | -53 | ||||||||||||||||||||||||||||||
5,073 | 9,646 | 11,472 | -47 | Adjusted Earnings | A | 14,720 | 20,601 | -29 | |||||||||||||||||||||||||||||
14,435 | 21,432 | 23,150 | -33 | Adjusted EBITDA | A | 35,867 | 42,177 | -15 | |||||||||||||||||||||||||||||
15,130 | 14,159 | 18,655 | +7 | Cash flow from operating activities | 29,289 | 33,470 | -12 | ||||||||||||||||||||||||||||||
(3,015) | (4,238) | (6,207) | Cash flow from investing activities | (7,253) | (10,481) | ||||||||||||||||||||||||||||||||
12,116 | 9,921 | 12,448 | Free cash flow | G | 22,037 | 22,989 | |||||||||||||||||||||||||||||||
5,130 | 6,501 | 7,024 | Cash capital expenditure | C | 11,631 | 12,088 | |||||||||||||||||||||||||||||||
9,653 | 9,312 | 9,547 | +4 | Operating expenses | F | 18,964 | 19,004 | — | |||||||||||||||||||||||||||||
9,607 | 9,293 | 9,270 | +3 | Underlying operating expenses | F | 18,900 | 18,526 | +2 | |||||||||||||||||||||||||||||
11.6% | 17.2% | 14.3% | ROACE on a Net income basis | D | 11.6% | 14.3% | |||||||||||||||||||||||||||||||
13.4% | 15.9% | 12.4% | ROACE on an Adjusted Earnings plus Non-controlling interest (NCI) basis | D | 13.4% | 12.4% | |||||||||||||||||||||||||||||||
40,310 | 44,224 | 46,357 | Net debt | E | 40,310 | 46,357 | |||||||||||||||||||||||||||||||
17.3% | 18.4% | 19.3% | Gearing | E | 17.3% | 19.3% | |||||||||||||||||||||||||||||||
2,731 | 2,902 | 2,898 | -6 | Total production available for sale (thousand boe/d) | 2,816 | 2,930 | -4 | ||||||||||||||||||||||||||||||
0.46 | 1.26 | 2.42 | -63 | Basic earnings per share ($) | 1.73 | 3.34 | -48 | ||||||||||||||||||||||||||||||
0.75 | 1.39 | 1.54 | -46 | Adjusted Earnings per share ($) | B | 2.15 | 2.74 | -22 | |||||||||||||||||||||||||||||
0.3310 | 0.2875 | 0.2500 | +15 | Dividend per share ($) | 0.6185 | 0.5000 | +24 |
1.Q2 on Q1 change
Quarter Analysis1
Income attributable to
Second quarter 2023 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 second quarter 2023 was
Cash flow from investing activities for the quarter was an outflow of
Net debt and Gearing: At the end of the second quarter 2023, net debt was
Shareholder distributions
Total shareholder distributions in the quarter amounted to
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
in the first quarter 2023 results announcement. Today,
Half Year Analysis1
Income attributable to
First half 2023 income attributable to
Adjusted Earnings and Adjusted EBITDA2 for the first half 2023 were driven by the same factors as income attributable to
Cash flow from operating activities for the first half 2023 was
Cash flow from investing activities for the first half 2023 was an outflow of
This announcement, together with supplementary financial and operational disclosure 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.
SECOND QUARTER 2023 PORTFOLIO DEVELOPMENTS
In
Upstream
In
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
PERFORMANCE BY SEGMENT
INTEGRATED GAS | ||||||||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | |||||||||||||||||||
754 | 2,410 | 8,103 | -69 | Segment earnings2 | 3,164 | 11,183 | -72 | |||||||||||||||||||
(1,744) | (2,506) | 4,346 | Of which: Identified items | A | (4,250) | 3,332 | ||||||||||||||||||||
2,498 | 4,917 | 3,758 | -49 | Adjusted Earnings2 | A | 7,415 | 7,850 | -6 | ||||||||||||||||||
4,827 | 7,482 | 6,529 | -35 | Adjusted EBITDA2 | A | 12,309 | 12,844 | -4 | ||||||||||||||||||
3,628 | 6,286 | 8,176 | -42 | Cash flow from operating activities | H | 9,914 | 14,619 | -32 | ||||||||||||||||||
1,089 | 813 | 919 | Cash capital expenditure | C | 1,901 | 1,782 | ||||||||||||||||||||
142 | 138 | 144 | +2 | Liquids production available for sale (thousand b/d) | 140 | 132 | +6 | |||||||||||||||||||
4,895 | 4,825 | 4,642 | +1 | Natural gas production available for sale (million scf/d) | 4,860 | 4,573 | +6 | |||||||||||||||||||
985 | 970 | 944 | +2 | Total production available for sale (thousand boe/d) | 978 | 920 | +6 | |||||||||||||||||||
7.17 | 7.19 | 7.66 | — | LNG liquefaction volumes (million tonnes) | 14.35 | 15.66 | -8 | |||||||||||||||||||
16.03 | 16.97 | 15.21 | -6 | LNG sales volumes (million tonnes) | 33.00 | 33.50 | -2 |
- Q2 on Q1 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
Quarter Analysis1
Segment earnings, compared with the first quarter 2023, reflected the effect of lower contributions from trading and optimisation due to seasonality and fewer optimisation opportunities and lower realised prices (decrease of
Second quarter 2023 segment earnings also included net impairment charges and 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 quarter was primarily driven by Adjusted EBITDA, and working capital inflows of
Total oil and gas production, compared with the first quarter 2023, increased by 2% mainly due to the ramp-up of new fields, and lower maintenance.
Half Year Analysis1
Segment earnings, compared with the first half 2022, reflected the net effect of lower realised prices and higher contributions from trading and optimisation (decrease of
Half year 2023 segment earnings also included unfavourable movements of
Adjusted Earnings and Adjusted EBITDA2 were driven by the same factors as the segment earnings and adjusted for identified items.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Cash flow from operating activities for the first half 2023 was primarily driven by Adjusted EBITDA and working capital inflow of
Total oil and gas production, compared with the first half 2022, increased by 6% mainly due to lower maintenance in Pearl GTL, Prelude,
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
UPSTREAM | |||||||||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
1,586 | 2,779 | 6,391 | -43 | Segment earnings2 | 4,365 | 9,486 | -54 | ||||||||||||||||||||||
(98) | (21) | 1,479 | Of which: Identified items | A | (120) | 1,124 | |||||||||||||||||||||||
1,684 | 2,801 | 4,912 | -40 | Adjusted Earnings2 | A | 4,485 | 8,362 | -46 | |||||||||||||||||||||
6,447 | 8,837 | 11,167 | -27 | Adjusted EBITDA2 | A | 15,284 | 20,144 | -24 | |||||||||||||||||||||
4,519 | 5,808 | 8,110 | -22 | Cash flow from operating activities | H | 10,327 | 14,074 | -27 | |||||||||||||||||||||
2,029 | 1,870 | 2,858 | Cash capital expenditure | C | 3,899 | 4,565 | |||||||||||||||||||||||
1,283 | 1,346 | 1,325 | -5 | Liquids production available for sale (thousand b/d) | 1,314 | 1,364 | -4 | ||||||||||||||||||||||
2,425 | 3,078 | 3,428 | -21 | Natural gas production available for sale (million scf/d) | 2,749 | 3,517 | -22 | ||||||||||||||||||||||
1,701 | 1,877 | 1,917 | -9 | Total production available for sale (thousand boe/d) | 1,788 | 1,970 | -9 |
- Q2 on Q1 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
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 first quarter 2023, mainly reflected lower prices (decrease of
Second quarter 2023 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, and working capital inflows of
Total production, compared with the first quarter 2023, decreased mainly due to scheduled maintenance and divestments, partly offset by growth from new fields.
Half Year Analysis1
Segment earnings, compared with the first half 2022, mainly reflected lower realised oil and gas prices (decrease of
First half 2023 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 first half 2023 was primarily driven by Adjusted EBITDA, partly offset by tax payments of
Total production, compared with the first half 2022, decreased mainly due to the impact of divestments, partly offset by growth from new fields.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
MARKETING | |||||||||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
970 | 1,137 | 836 | -15 | Segment earnings² | 2,107 | 1,000 | +111 | ||||||||||||||||||||||
76 | 262 | 85 | Of which: Identified items | A | 338 | (487) | |||||||||||||||||||||||
894 | 874 | 751 | +2 | Adjusted Earnings² | A | 1,768 | 1,488 | +19 | |||||||||||||||||||||
1,604 | 1,578 | 1,452 | +2 | Adjusted EBITDA2 | A | 3,181 | 2,775 | +15 | |||||||||||||||||||||
1,412 | 1,086 | (454) | +30 | Cash flow from operating activities | H | 2,498 | (984) | +354 | |||||||||||||||||||||
670 | 2,685 | 1,620 | Cash capital expenditure | C | 3,355 | 2,092 | |||||||||||||||||||||||
2,607 | 2,446 | 2,515 | +7 | Marketing sales volumes (thousand b/d) | 2,527 | 2,444 | +3 |
- Q2 on Q1 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, marine, commercial road transport and agricultural sectors.
Quarter Analysis1
Segment earnings, compared with the first quarter 2023, reflected higher Marketing margins (increase of
Second quarter 2023 segment earnings also included a gain 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, and the timing of payments relating to emissions and biofuel programmes of
Marketing sales volumes (comprising hydrocarbon sales), compared with the first quarter 2023, increased mainly due to seasonal effects.
Half Year Analysis1
Segment earnings, compared with the first half 2022, reflected higher Marketing margins (increase of
First half 2023 segment earnings also included 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 first half 2023 was primarily driven by Adjusted EBITDA, the timing of payments relating to emissions and biofuel programmes of
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Marketing sales volumes (comprising hydrocarbon sales), compared with the first half 2022, increased mainly due to Mobility asset acquisitions and improved demand in Aviation.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
CHEMICALS AND PRODUCTS | |||||||||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
349 | 1,799 | 2,131 | -81 | Segment earnings² | 2,148 | 3,203 | -33 | ||||||||||||||||||||||
(100) | 22 | 96 | Of which: Identified items | A | (78) | 1 | |||||||||||||||||||||||
450 | 1,777 | 2,035 | -75 | Adjusted Earnings² | A | 2,226 | 3,203 | -30 | |||||||||||||||||||||
1,300 | 3,050 | 3,184 | -57 | Adjusted EBITDA2 | A | 4,350 | 5,191 | -16 | |||||||||||||||||||||
2,110 | 2,290 | 2,728 | -8 | Cash flow from operating activities | H | 4,401 | 6,402 | -31 | |||||||||||||||||||||
669 | 613 | 1,226 | Cash capital expenditure | C | 1,281 | 2,224 | |||||||||||||||||||||||
1,335 | 1,413 | 1,342 | -6 | Refinery processing intake (thousand b/d) | 1,374 | 1,370 | — | ||||||||||||||||||||||
1,466 | 1,706 | 1,596 | -14 | Refining & Trading sales volumes (thousand b/d) | 1,585 | 1,597 | -1 | ||||||||||||||||||||||
2,828 | 2,831 | 3,054 | — | Chemicals sales volumes (thousand tonnes) | 5,658 | 6,384 | -11 |
- Q2 on Q1 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 first quarter 2023, reflected lower Products margins (decrease of
Second quarter 2023 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. In the second quarter 2023, Chemicals had negative adjusted earnings of
Cash flow from operating activities for the quarter was primarily driven by Adjusted EBITDA, working capital inflows of
Chemicals manufacturing plant utilisation was 70% compared with 71% in the first quarter 2023.
Refinery utilisation was 85% compared with 91% in the first quarter 2023 due to higher planned and unplanned maintenance.
Half Year Analysis1
Segment earnings, compared with the first half 2022, reflected lower Products margins (decrease of
First half 2023 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. In the first half 2023, Chemicals had negative adjusted earnings of
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Cash flow from operating activities for the first half 2023 was primarily driven by Adjusted EBITDA, cash inflows relating to commodity derivatives of
Chemicals manufacturing plant utilisation was 71% compared with 82% in the first half 2022, mainly due to economic optimisation in the first half 2023.
Refinery utilisation was 88% compared with 82% in the first half 2022, due to lower planned maintenance partly offset by portfolio activities.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||||||||
RENEWABLES AND ENERGY SOLUTIONS | |||||||||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | Reference | 2023 | 2022 | % | ||||||||||||||||||||||
530 | 2,200 | (173) | -76 | Segment earnings2 | 2,729 | (1,709) | +260 | ||||||||||||||||||||||
301 | 1,810 | (898) | Of which: Identified items | A | 2,112 | (2,778) | |||||||||||||||||||||||
228 | 389 | 725 | -41 | Adjusted Earnings2 | A | 617 | 1,069 | -42 | |||||||||||||||||||||
438 | 668 | 1,013 | -35 | Adjusted EBITDA2 | A | 1,106 | 1,534 | -28 | |||||||||||||||||||||
3,192 | 1,091 | (558) | +193 | Cash flow from operating activities | H | 4,283 | (1,017) | +521 | |||||||||||||||||||||
556 | 440 | 321 | Cash capital expenditure | C | 996 | 1,307 | |||||||||||||||||||||||
67 | 68 | 54 | -2 | External power sales (terawatt hours)3 | 135 | 110 | +23 | ||||||||||||||||||||||
172 | 221 | 188 | -22 | Sales of pipeline gas to end-use customers (terawatt hours)4 | 393 | 445 | -12 |
- Q2 on Q1 change
- Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
- Physical power sales to third parties; excluding financial trades and physical trade with brokers, investors, financial institutions, trading platforms, and wholesale traders.
- 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.
Renewables and Energy Solutions includes renewable power generation, the marketing and trading and optimisation of power and pipeline gas, as well as carbon credits, and digitally enabled customer solutions. It also includes the production and marketing of hydrogen, development of commercial carbon capture and storage hubs, investment in nature-based projects that avoid or reduce carbon emissions, and
Quarter Analysis1
Segment earnings, compared with the first quarter 2023, reflected higher operating expenses (increase of
Second quarter 2023 segment earnings also included favourable movements 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 inflows of
Half Year Analysis1
Segment earnings, compared with the first half 2022, reflected higher operating expenses (increase of
Half year 2023 segment earnings also included favourable movements 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 first half 2023 was primarily driven by working capital inflows of
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Additional Growth Measures
Quarters | Half year | ||||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | %¹ | 2023 | 2022 | % | |||||||||||||||||
Renewable power generation capacity (gigawatt): | |||||||||||||||||||||||
2.5 | 2.3 | 0.5 | +6 | – In operation2 | 2.5 | 0.5 | +413 | ||||||||||||||||
4.6 | 4.0 | 2.4 | +14 | – Under construction and/or committed for sale3 | 4.6 | 2.4 | +89 |
- Q2 on Q1 change
Shell 's equity share of renewable generation capacity post commercial operation date. It excludesShell '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 excludesShell 's equity share of associates where information cannot be obtained and prior period comparatives have been revised accordingly.
CORPORATE | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | Reference | 2023 | 2022 | |||||||||||||||
(701) | (1,064) | (529) | Segment earnings1 | (1,765) | (1,264) | |||||||||||||||
(48) | (24) | 97 | Of which: Identified items | A | (72) | (90) | ||||||||||||||
(654) | (1,039) | (626) | Adjusted Earnings1 | A | (1,693) | (1,174) | ||||||||||||||
(180) | (183) | (197) | Adjusted EBITDA1 | A | (363) | (310) | ||||||||||||||
269 | (2,403) | 652 | Cash flow from operating activities | H | (2,134) | 375 |
1.Segment earnings, Adjusted Earnings and Adjusted EBITDA are presented on a CCS basis (see Note 2).
The Corporate segment covers the non-operating activities supporting
Quarter Analysis1
Segment earnings, compared with the first quarter 2023, reflected favourable movements in tax credits and lower net interest expense.
Adjusted EBITDA2 was in line with the previous quarter.
Half Year Analysis1
Segment earnings, compared with the first half 2022, reflected unfavourable movements in tax credits and unfavourable currency exchange rate effects.
Adjusted EBITDA2 was mainly driven by unfavourable currency exchange rate effects.
- All earnings amounts are shown post-tax, unless stated otherwise.
- Adjusted EBITDA is without taxation.
OUTLOOK FOR THE THIRD QUARTER 2023
Cash capital expenditure range for the full year has been lowered and is expected to be within
Upstream production is expected to be approximately 1,600 - 1,800 thousand boe/d. Production outlook reflects scheduled maintenance across the portfolio.
Marketing sales volumes are expected to be approximately 2,450 - 2,950 thousand b/d.
Refinery utilisation is expected to be approximately 82% - 90%. Chemicals manufacturing plant utilisation is expected to be approximately 67% - 75%.
Corporate Adjusted Earnings are expected to be a net expense of approximately
FORTHCOMING EVENTS
Third quarter 2023 results and dividends are scheduled to be announced on
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
74,578 | 86,959 | 100,059 | Revenue1 | 161,538 | 184,263 | ||||||||||||
629 | 1,581 | 2,031 | Share of profit/(loss) of joint ventures and associates | 2,210 | 1,728 | ||||||||||||
813 | 481 | 993 | Interest and other income/(expenses)2 | 1,294 | 257 | ||||||||||||
76,020 | 89,021 | 103,083 | Total revenue and other income/(expenses) | 165,041 | 186,247 | ||||||||||||
51,492 | 57,502 | 66,658 | Purchases | 108,994 | 122,315 | ||||||||||||
6,041 | 6,008 | 6,359 | Production and manufacturing expenses | 12,049 | 12,389 | ||||||||||||
3,314 | 3,051 | 2,924 | Selling, distribution and administrative expenses | 6,365 | 6,163 | ||||||||||||
297 | 253 | 264 | Research and development | 550 | 452 | ||||||||||||
444 | 404 | 370 | Exploration | 847 | 639 | ||||||||||||
7,872 | 6,285 | (348) | Depreciation, depletion and amortisation2 | 14,157 | 5,947 | ||||||||||||
1,211 | 1,165 | 695 | Interest expense | 2,375 | 1,406 | ||||||||||||
70,671 | 74,667 | 76,923 | Total expenditure | 145,339 | 149,311 | ||||||||||||
5,348 | 14,354 | 26,160 | Income/(loss) before taxation | 19,702 | 36,936 | ||||||||||||
2,195 | 5,582 | 7,922 | Taxation charge/(credit) | 7,776 | 11,379 | ||||||||||||
3,154 | 8,772 | 18,238 | Income/(loss) for the period¹ | 11,926 | 25,557 | ||||||||||||
20 | 64 | 198 | Income/(loss) attributable to non-controlling interest | 83 | 401 | ||||||||||||
3,134 | 8,709 | 18,040 | Income/(loss) attributable to | 11,843 | 25,156 | ||||||||||||
0.46 | 1.26 | 2.42 | Basic earnings per share | 1.73 | 3.34 | ||||||||||||
0.46 | 1.25 | 2.40 | Diluted earnings per share | 1.71 | 3.31 |
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”.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | ||||||||||||||||
3,154 | 8,772 | 18,238 | Income/(loss) for the period | 11,926 | 25,557 | |||||||||||||||
Other comprehensive income/(loss) net of tax: | ||||||||||||||||||||
Items that may be reclassified to income in later periods: | ||||||||||||||||||||
(267) | 553 | (2,644) | – Currency translation differences | 286 | (2,385) | |||||||||||||||
(7) | 18 | (24) | – Debt instruments remeasurements | 12 | (65) | |||||||||||||||
100 | (180) | (98) | – Cash flow hedging gains/(losses) | (80) | 169 | |||||||||||||||
8 | (52) | 211 | – Net investment hedging gains/(losses) | (44) | 261 | |||||||||||||||
(53) | (2) | 9 | – Deferred cost of hedging | (55) | 222 | |||||||||||||||
(10) | (35) | (22) | – Share of other comprehensive income/(loss) of joint ventures and associates | (46) | 168 | |||||||||||||||
(229) | 302 | (2,567) | Total | 73 | (1,630) | |||||||||||||||
Items that are not reclassified to income in later periods: | ||||||||||||||||||||
(24) | (32) | 5,712 | – Retirement benefits remeasurements | (55) | 7,430 | |||||||||||||||
16 | 8 | (457) | – Equity instruments remeasurements | 23 | (433) | |||||||||||||||
(24) | (8) | 36 | – Share of other comprehensive income/(loss) of joint ventures and associates | (32) | (38) | |||||||||||||||
(32) | (33) | 5,291 | Total | (65) | 6,959 | |||||||||||||||
(261) | 269 | 2,724 | Other comprehensive income/(loss) for the period | 8 | 5,330 | |||||||||||||||
2,893 | 9,041 | 20,962 | Comprehensive income/(loss) for the period | 11,934 | 30,887 | |||||||||||||||
(15) | 84 | 327 | Comprehensive income/(loss) attributable to non-controlling interest | 68 | 545 | |||||||||||||||
2,908 | 8,958 | 20,635 | Comprehensive income/(loss) attributable to | 11,866 | 30,342 |
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEET | |||||||||||
$ million | |||||||||||
Assets | |||||||||||
Non-current assets | |||||||||||
Goodwill1 | 17,655 | 16,039 | |||||||||
Other intangible assets | 8,642 | 9,662 | |||||||||
Property, plant and equipment | 197,177 | 198,642 | |||||||||
Joint ventures and associates | 24,434 | 23,864 | |||||||||
Investments in securities | 3,431 | 3,362 | |||||||||
Deferred tax1 | 6,238 | 7,815 | |||||||||
Retirement benefits | 10,398 | 10,200 | |||||||||
Trade and other receivables | 6,031 | 6,920 | |||||||||
Derivative financial instruments² | 541 | 582 | |||||||||
274,547 | 277,086 | ||||||||||
Current assets | |||||||||||
Inventories | 26,975 | 31,894 | |||||||||
Trade and other receivables | 52,383 | 66,510 | |||||||||
Derivative financial instruments² | 15,616 | 24,437 | |||||||||
Cash and cash equivalents | 45,094 | 40,246 | |||||||||
140,068 | 163,087 | ||||||||||
Assets classified as held for sale1 | 417 | 2,851 | |||||||||
140,486 | 165,938 | ||||||||||
Total assets | 415,033 | 443,024 | |||||||||
Liabilities | |||||||||||
Non-current liabilities | |||||||||||
Debt | 72,252 | 74,794 | |||||||||
Trade and other payables | 4,440 | 3,432 | |||||||||
Derivative financial instruments² | 3,080 | 3,563 | |||||||||
Deferred tax1 | 15,955 | 16,186 | |||||||||
Retirement benefits | 7,491 | 7,296 | |||||||||
Decommissioning and other provisions | 23,592 | 23,845 | |||||||||
126,810 | 129,116 | ||||||||||
Current liabilities | |||||||||||
Debt | 12,114 | 9,001 | |||||||||
Trade and other payables | 63,996 | 79,357 | |||||||||
Derivative financial instruments² | 12,513 | 23,779 | |||||||||
Income taxes payable | 4,462 | 4,869 | |||||||||
Decommissioning and other provisions | 3,037 | 2,910 | |||||||||
96,123 | 119,916 | ||||||||||
Liabilities directly associated with assets classified as held for sale1 | 6 | 1,395 | |||||||||
96,129 | 121,311 | ||||||||||
Total liabilities | 222,939 | 250,427 | |||||||||
Equity attributable to | 190,461 | 190,472 | |||||||||
Non-controlling interest1 | 1,633 | 2,125 | |||||||||
Total equity | 192,094 | 192,597 | |||||||||
Total liabilities and equity | 415,033 | 443,024 |
- See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.
- See Note 6 “Derivative financial instruments and debt excluding lease liabilities”.
Page 14
2nd QUARTER 2023 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 | 584 | (726) | 21,132 | 169,482 | 190,472 | 2,125 | 192,597 | ||||||||||||||||||||||
Comprehensive income/(loss) for the period | — | — | 24 | 11,842 | 11,866 | 68 | 11,934 | ||||||||||||||||||||||
Transfer from other comprehensive income | — | — | (121) | 121 | — | — | — | ||||||||||||||||||||||
Dividends³ | — | — | — | (4,014) | (4,014) | (585) | (4,599) | ||||||||||||||||||||||
Repurchases of shares4 | (22) | — | 22 | (8,054) | (8,054) | — | (8,054) | ||||||||||||||||||||||
Share-based compensation | — | 500 | (203) | (105) | 192 | — | 192 | ||||||||||||||||||||||
Other changes | — | — | — | 1 | 1 | 24 | 25 | ||||||||||||||||||||||
At | 562 | (227) | 20,854 | 169,272 | 190,461 | 1,633 | 192,094 | ||||||||||||||||||||||
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 |
- 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.
Page 15
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||||||||||||||||||||
CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||||||||
5,348 | 14,354 | 26,160 | Income before taxation for the period | 19,702 | 36,936 | ||||||||||||||||||
Adjustment for: | |||||||||||||||||||||||
612 | 664 | 551 | – Interest expense (net) | 1,276 | 1,150 | ||||||||||||||||||
7,872 | 6,285 | (348) | – Depreciation, depletion and amortisation1 | 14,157 | 5,947 | ||||||||||||||||||
204 | 236 | 189 | – Exploration well write-offs | 440 | 268 | ||||||||||||||||||
(53) | (45) | (334) | – Net (gains)/losses on sale and revaluation of non-current assets and businesses | (98) | (527) | ||||||||||||||||||
(629) | (1,581) | (2,031) | – Share of (profit)/loss of joint ventures and associates | (2,210) | (1,728) | ||||||||||||||||||
884 | 896 | 1,245 | – Dividends received from joint ventures and associates | 1,780 | 2,171 | ||||||||||||||||||
1,171 | 4,217 | (6,833) | – (Increase)/decrease in inventories | 5,389 | (11,747) | ||||||||||||||||||
8,289 | 5,943 | (4,066) | – (Increase)/decrease in current receivables | 14,231 | (14,071) | ||||||||||||||||||
(4,619) | (10,932) | 6,656 | – Increase/(decrease) in current payables | (15,552) | 14,150 | ||||||||||||||||||
(907) | (2,336) | (1,779) | – Derivative financial instruments | (3,244) | 1,716 | ||||||||||||||||||
14 | 15 | 123 | – Retirement benefits | 30 | 370 | ||||||||||||||||||
(236) | (84) | 571 | – Decommissioning and other provisions | (320) | 562 | ||||||||||||||||||
954 | (330) | 1,706 | – Other1 | 624 | 3,582 | ||||||||||||||||||
(3,773) | (3,144) | (3,155) | Tax paid | (6,917) | (5,310) | ||||||||||||||||||
15,130 | 14,159 | 18,655 | Cash flow from operating activities | 29,289 | 33,470 | ||||||||||||||||||
(4,614) | (6,161) | (6,677) | Capital expenditure | (10,774) | (10,914) | ||||||||||||||||||
(436) | (307) | (264) | Investments in joint ventures and associates | (743) | (1,019) | ||||||||||||||||||
(80) | (33) | (83) | Investments in equity securities | (114) | (156) | ||||||||||||||||||
362 | 1,479 | 783 | Proceeds from sale of property, plant and equipment and businesses | 1,841 | 1,340 | ||||||||||||||||||
100 | 257 | 51 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 357 | 190 | ||||||||||||||||||
18 | 2 | 4 | Proceeds from sale of equity securities | 20 | 16 | ||||||||||||||||||
522 | 448 | 160 | Interest received | 970 | 252 | ||||||||||||||||||
1,908 | 700 | 293 | Other investing cash inflows1 | 2,607 | 1,046 | ||||||||||||||||||
(794) | (623) | (474) | Other investing cash outflows | (1,417) | (1,236) | ||||||||||||||||||
(3,015) | (4,238) | (6,207) | Cash flow from investing activities | (7,253) | (10,481) | ||||||||||||||||||
(186) | (86) | 640 | Net increase/(decrease) in debt with maturity period within three months | (272) | 772 | ||||||||||||||||||
Other debt: | |||||||||||||||||||||||
362 | 415 | 35 | – New borrowings | 777 | 135 | ||||||||||||||||||
(1,774) | (1,453) | (2,531) | – Repayments | (3,228) | (5,072) | ||||||||||||||||||
(1,158) | (869) | (1,090) | Interest paid | (2,027) | (1,747) | ||||||||||||||||||
(152) | 200 | (828) | Derivative financial instruments | 48 | (1,311) | ||||||||||||||||||
2 | (30) | 2 | Change in non-controlling interest | (27) | 5 | ||||||||||||||||||
Cash dividends paid to: | |||||||||||||||||||||||
(1,983) | (2,029) | (1,851) | – | (4,013) | (3,802) | ||||||||||||||||||
(575) | (10) | (63) | – Non-controlling interest | (585) | (110) | ||||||||||||||||||
(3,624) | (4,291) | (5,541) | Repurchases of shares | (7,915) | (9,013) | ||||||||||||||||||
86 | (232) | 78 | Shares held in trust: net sales/(purchases) and dividends received | (146) | (25) | ||||||||||||||||||
(9,003) | (8,385) | (11,150) | Cash flow from financing activities | (17,388) | (20,168) | ||||||||||||||||||
(93) | 293 | (688) | Effects of exchange rate changes on cash and cash equivalents | 199 | (822) | ||||||||||||||||||
3,020 | 1,829 | 609 | Increase/(decrease) in cash and cash equivalents | 4,848 | 1,999 | ||||||||||||||||||
42,074 | 40,246 | 38,360 | Cash and cash equivalents at beginning of period | 40,246 | 36,970 | ||||||||||||||||||
45,094 | 42,074 | 38,970 | Cash and cash equivalents at end of period | 45,094 | 38,970 |
1.See Note 7 “Other notes to the unaudited Condensed Consolidated Interim Financial Statements”.
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
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 Condensed Consolidated Interim 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
On consolidation, assets and liabilities of non-dollar entities are translated to dollars at period-end rates of exchange, while their statements of income, other comprehensive income and cash flows are translated at average rates. Until the end of 2022 this translation was performed at quarterly average rates. As from
New standards adopted in 2023
IFRS 17 Insurance contracts (IFRS 17) as issued in 2017, with amendments published in 2020 and 2021, was adopted as from
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income taxes (IAS 12)), published in
International Tax Reform — Pillar Two Model Rules (Amendments to IAS 12) as issued on
Going concern
These unaudited Condensed Consolidated Interim Financial 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 2023 (see Note 7).
The discount rate applied in assessing value in use represents a significant estimate. The discount rate applied was subject to change in the second quarter 2023 (see Note 7).
2. Segment information
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
Page 17
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
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.
INFORMATION BY SEGMENT | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
Third-party revenue | |||||||||||||||||
7,938 | 10,932 | 12,403 | 18,869 | 26,477 | |||||||||||||
1,533 | 2,062 | 2,253 | Upstream | 3,595 | 3,784 | ||||||||||||
26,573 | 26,280 | 34,121 | Marketing | 52,853 | 60,257 | ||||||||||||
28,656 | 32,056 | 39,793 | Chemicals and Products | 60,712 | 73,213 | ||||||||||||
9,866 | 15,619 | 11,477 | Renewables and Energy Solutions | 25,485 | 20,503 | ||||||||||||
12 | 12 | 12 | Corporate | 24 | 28 | ||||||||||||
74,578 | 86,959 | 100,059 | Total third-party revenue1 | 161,538 | 184,263 | ||||||||||||
Inter-segment revenue | |||||||||||||||||
2,940 | 3,534 | 4,176 | 6,474 | 7,708 | |||||||||||||
8,859 | 11,146 | 13,951 | Upstream | 20,005 | 25,892 | ||||||||||||
123 | 163 | 153 | Marketing | 286 | 254 | ||||||||||||
508 | 565 | 718 | Chemicals and Products | 1,073 | 1,385 | ||||||||||||
771 | 1,475 | 1,522 | Renewables and Energy Solutions | 2,246 | 2,764 | ||||||||||||
— | — | — | Corporate | — | — | ||||||||||||
CCS earnings | |||||||||||||||||
754 | 2,410 | 8,103 | 3,164 | 11,183 | |||||||||||||
1,586 | 2,779 | 6,391 | Upstream | 4,365 | 9,486 | ||||||||||||
970 | 1,137 | 836 | Marketing | 2,107 | 1,000 | ||||||||||||
349 | 1,799 | 2,131 | Chemicals and Products | 2,148 | 3,203 | ||||||||||||
530 | 2,200 | (173) | Renewables and Energy Solutions | 2,729 | (1,709) | ||||||||||||
(701) | (1,064) | (529) | Corporate | (1,765) | (1,264) | ||||||||||||
3,488 | 9,262 | 16,759 | Total CCS earnings | 12,749 | 21,899 |
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 2023 included income of
Page 18
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||||||||
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | ||||||||||||||||
3,134 | 8,709 | 18,040 | Income/(loss) attributable to | 11,843 | 25,156 | |||||||||||||||
20 | 64 | 198 | Income/(loss) attributable to non-controlling interest | 83 | 401 | |||||||||||||||
3,154 | 8,772 | 18,238 | Income/(loss) for the period | 11,926 | 25,557 | |||||||||||||||
Current cost of supplies adjustment: | ||||||||||||||||||||
383 | 647 | (1,929) | Purchases | 1,030 | (4,723) | |||||||||||||||
(96) | (171) | 496 | Taxation | (267) | 1,178 | |||||||||||||||
47 | 13 | (46) | Share of profit/(loss) of joint ventures and associates | 60 | (114) | |||||||||||||||
334 | 489 | (1,479) | Current cost of supplies adjustment | 823 | (3,659) | |||||||||||||||
Of which: | ||||||||||||||||||||
326 | 481 | (1,363) | Attributable to | 807 | (3,453) | |||||||||||||||
8 | 8 | (116) | Attributable to non-controlling interest | 16 | (205) | |||||||||||||||
3,488 | 9,262 | 16,759 | CCS earnings | 12,749 | 21,899 | |||||||||||||||
Of which: | ||||||||||||||||||||
3,460 | 9,190 | 16,677 | CCS earnings attributable to | 12,650 | 21,703 | |||||||||||||||
27 | 72 | 82 | CCS earnings attributable to non-controlling interest | 99 | 196 |
3. Earnings per share
EARNINGS PER SHARE | |||||||||||||||||
Quarters | Half year | ||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
3,134 | 8,709 | 18,040 | Income/(loss) attributable to | 11,843 | 25,156 | ||||||||||||
Weighted average number of shares used as the basis for determining: | |||||||||||||||||
6,793.4 | 6,918.9 | 7,453.2 | Basic earnings per share (million) | 6,855.8 | 7,527.7 | ||||||||||||
6,854.2 | 6,982.1 | 7,518.5 | Diluted earnings per share (million) | 6,917.8 | 7,589.6 |
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
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 | 7,003,503,393 | 584 | 584 | |||||||||||||||||||||||
Repurchases of shares | (268,292,487) | (22) | (22) | |||||||||||||||||||||||
At | 6,735,210,906 | 562 | 562 | |||||||||||||||||||||||
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 |
1.Share capital at
On
At
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 | 196 | 1,140 | (17,656) | 21,132 | ||||||||||||||
Other comprehensive income/(loss) attributable to | — | — | — | — | 24 | 24 | ||||||||||||||
Transfer from other comprehensive income | — | — | — | — | (121) | (121) | ||||||||||||||
Repurchases of shares | — | — | 22 | — | — | 22 | ||||||||||||||
Share-based compensation | — | — | — | (203) | — | (203) | ||||||||||||||
At | 37,298 | 154 | 220 | 936 | (17,752) | 20,854 | ||||||||||||||
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 |
The merger reserve and share premium reserve were established as a consequence of
Page 20
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Company, p.l.c., now
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 | 56,779 | 56,152 | ||||||
Fair value¹ | 52,829 | 51,959 |
1. Mainly determined from the prices quoted for these securities.
7. Other notes to the unaudited Condensed Consolidated Interim Financial Statements
Consolidated Statement of Income
Interest and other income
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
813 | 481 | 993 | Interest and other income/(expenses) | 1,294 | 257 | ||||||||||||
Of which: | |||||||||||||||||
599 | 500 | 144 | Interest income | 1,100 | 255 | ||||||||||||
29 | — | 198 | Dividend income (from investments in equity securities) | 29 | 199 | ||||||||||||
65 | 45 | 334 | Net gains on sales and revaluation of non-current assets and businesses | 110 | 527 | ||||||||||||
7 | (236) | 166 | Net foreign exchange gains/(losses) on financing activities | (229) | 182 | ||||||||||||
113 | 171 | 151 | Other | 284 | (907) |
Depreciation, depletion and amortisation
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
7,872 | 6,285 | (348) | Depreciation, depletion and amortisation | 14,157 | 5,947 | ||||||||||||
Of which: | |||||||||||||||||
5,708 | 5,697 | 5,608 | Depreciation | 11,404 | 10,997 | ||||||||||||
2,490 | 589 | 153 | Impairments | 3,079 | 1,059 | ||||||||||||
(326) | — | (6,109) | Impairment reversals | (326) | (6,109) |
The impairments in the second quarter 2023 were mainly triggered by a change in the discount rate applied. Impairments recognised in the second quarter 2023 of
Page 21
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
In the second quarter 2023, gains resulting from reversals of impairments recognised previously were recognised of $326 million pre-tax (second quarter 2022:
For impairment testing purposes and potential reversal of impairments recognised previously, the respective carrying amounts of property, plant and equipment and intangible assets were compared with the higher of the fair value less cost to sell and their value in use. Cash flow projections used in the determination of value in use were made using management’s forecasts of commodity prices, market supply and demand, operational and capital expenditures, potential costs associated with operational GHG emissions and expected production volumes. The discount rate applied was subject to change in the second quarter 2023, triggered by increasing risk free rates. The discount rate applied is based on a nominal post-tax weighted average cost of capital (WACC) of 7.5% (2022: 6.5%) except for the Renewables and Energy Solutions segment where a nominal post-tax WACC of 6.0% (2022: 5.0%) is applied.
Oil and gas price assumptions applied for impairment testing in
necessary, adjusted on a periodic basis. Reviews include comparison with available market data and forecasts that reflect
developments in demand such as global economic growth, technology efficiency, and policy measures. Factors impacting
supply include consideration of investment and resource potential, cost of development of new supply, and behaviour of
major resource holders. The near-term commodity price assumptions applied in the relevant impairment testing in the
second quarter 2023 were as follows:
Commodity price assumptions [A] | 2024 | 2025 | 2026 | 2027 | ||||||||||
Brent crude oil ($/b) | 70 | 70 | 70 | 74 | ||||||||||
4.00 | 4.00 | 4.00 | 4.21 | |||||||||||
[A] Money of the day. |
For periods after 2027, the real-term price assumptions applied were
per million British thermal units (/MMBtu) for
Condensed Consolidated Balance Sheet
$ million | ||||||||
17,655 | 16,039 |
Deferred tax
$ million | ||||||||
Non-current assets | ||||||||
Deferred tax | 6,238 | 7,815 | ||||||
Non-current liabilities | ||||||||
Deferred tax | 15,955 | 16,186 | ||||||
Net deferred liability | (9,717) | (8,371) |
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.
Page 22
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
Assets classified as held for sale
$ million | ||||||||
Assets classified as held for sale | 417 | 2,851 | ||||||
Liabilities directly associated with assets classified as held for sale | 6 | 1,395 |
The major class of assets classified as held for sale at
Non-controlling interest
$ million | ||||||||
Non-controlling interest | 1,633 | 2,125 |
The change in non-controlling interest is mainly driven by dividend payments to non-controlling shareholders during the second quarter 2023.
Consolidated Statement of Cash Flows
Cash flow from operating activities - Other
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
954 | (330) | 1,706 | Other | 624 | 3,582 |
Cash flow from operating activities - Other for the second quarter 2023 includes $764 million of net inflows (first quarter 2023: $69 million net outflows; second quarter 2022: $685 million net inflows) due to the timing of payments relating to emissions and biofuel programmes in
Other investing cash inflows
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
1,908 | 700 | 293 | Other investing cash inflows | 2,607 | 1,046 |
Other investing cash inflows in the second quarter 2023 mainly relate to repayments of short-term debt securities and short-term loans.
8. Post-balance sheet events
On
Page 23
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings and Adjusted earnings before interest, taxes, depreciation and amortisation (“Adjusted 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
ADJUSTED EARNINGS | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
3,134 | 8,709 | 18,040 | Income/(loss) attributable to | 11,843 | 25,156 | ||||||||||||
326 | 481 | (1,363) | Add: Current cost of supplies adjustment attributable to | 807 | (3,453) | ||||||||||||
Of which: | |||||||||||||||||
49 | 119 | (299) | Marketing | 167 | (505) | ||||||||||||
277 | 363 | (1,064) | Chemicals and Products | 640 | (2,949) | ||||||||||||
3,460 | 9,190 | 16,677 | CCS earnings attributable to | 12,650 | 21,703 | ||||||||||||
Of which: | |||||||||||||||||
754 | 2,410 | 8,103 | 3,164 | 11,183 | |||||||||||||
1,586 | 2,779 | 6,391 | Upstream | 4,365 | 9,486 | ||||||||||||
970 | 1,137 | 836 | Marketing | 2,107 | 1,000 | ||||||||||||
349 | 1,799 | 2,131 | Chemicals and Products | 2,148 | 3,203 | ||||||||||||
530 | 2,200 | (173) | Renewables and Energy Solutions | 2,729 | (1,709) | ||||||||||||
(701) | (1,064) | (529) | Corporate | (1,765) | (1,264) | ||||||||||||
(27) | (72) | (82) | Less: Non-controlling interest | (99) | (196) | ||||||||||||
(1,613) | (456) | 5,205 | Less: Identified items attributable to | (2,069) | 1,101 | ||||||||||||
Of which: | |||||||||||||||||
(1,744) | (2,506) | 4,346 | (4,250) | 3,332 | |||||||||||||
(98) | (21) | 1,479 | Upstream | (120) | 1,124 | ||||||||||||
76 | 262 | 85 | Marketing | 338 | (487) | ||||||||||||
(100) | 22 | 96 | Chemicals and Products | (78) | 1 | ||||||||||||
301 | 1,810 | (898) | Renewables and Energy Solutions | 2,112 | (2,778) | ||||||||||||
(48) | (24) | 97 | Corporate | (72) | (90) | ||||||||||||
— | — | — | Less: Non-controlling interest | — | — | ||||||||||||
5,073 | 9,646 | 11,472 | Adjusted Earnings | 14,720 | 20,601 | ||||||||||||
Of which: | |||||||||||||||||
2,498 | 4,917 | 3,758 | 7,415 | 7,850 | |||||||||||||
1,684 | 2,801 | 4,912 | Upstream | 4,485 | 8,362 | ||||||||||||
894 | 874 | 751 | Marketing | 1,768 | 1,488 | ||||||||||||
450 | 1,777 | 2,035 | Chemicals and Products | 2,226 | 3,203 | ||||||||||||
228 | 389 | 725 | Renewables and Energy Solutions | 617 | 1,069 | ||||||||||||
(654) | (1,039) | (626) | Corporate | (1,693) | (1,174) | ||||||||||||
(27) | (72) | (82) | Less: Non-controlling interest | (99) | (196) |
1. See Note 2 “Segment information”.
Page 24
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||||||||
ADJUSTED EBITDA | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | ||||||||||||||||
5,073 | 9,646 | 11,472 | Adjusted Earnings | 14,720 | 20,601 | |||||||||||||||
27 | 72 | 82 | Add: Non-controlling interest | 99 | 196 | |||||||||||||||
2,813 | 5,118 | 5,248 | Add: Taxation charge/(credit) excluding tax impact of identified items | 7,932 | 8,966 | |||||||||||||||
Of which: | ||||||||||||||||||||
831 | 1,095 | 1,320 | 1,926 | 2,215 | ||||||||||||||||
1,688 | 2,864 | 3,004 | Upstream | 4,552 | 5,496 | |||||||||||||||
243 | 265 | 313 | Marketing | 509 | 506 | |||||||||||||||
(48) | 380 | 428 | Chemicals and Products | 333 | 543 | |||||||||||||||
101 | 168 | 205 | Renewables and Energy Solutions | 269 | 300 | |||||||||||||||
(2) | 345 | (22) | Corporate | 343 | (94) | |||||||||||||||
5,708 | 5,697 | 5,608 | Add: Depreciation, depletion and amortisation excluding impairments | 11,404 | 10,997 | |||||||||||||||
Of which: | ||||||||||||||||||||
1,447 | 1,440 | 1,381 | 2,887 | 2,690 | ||||||||||||||||
2,778 | 2,809 | 3,037 | Upstream | 5,587 | 5,931 | |||||||||||||||
454 | 434 | 379 | Marketing | 888 | 764 | |||||||||||||||
914 | 898 | 726 | Chemicals and Products | 1,812 | 1,440 | |||||||||||||||
110 | 112 | 81 | Renewables and Energy Solutions | 221 | 164 | |||||||||||||||
4 | 4 | 4 | Corporate | 9 | 8 | |||||||||||||||
203 | 235 | 189 | Add: Exploration well write-offs | 439 | 268 | |||||||||||||||
Of which: | ||||||||||||||||||||
23 | — | 52 | 23 | 52 | ||||||||||||||||
180 | 235 | 137 | Upstream | 415 | 216 | |||||||||||||||
1,210 | 1,164 | 695 | Add: Interest expense excluding identified items | 2,373 | 1,406 | |||||||||||||||
Of which: | ||||||||||||||||||||
29 | 30 | 18 | 59 | 36 | ||||||||||||||||
120 | 133 | 83 | Upstream | 253 | 150 | |||||||||||||||
12 | 4 | 9 | Marketing | 16 | 18 | |||||||||||||||
(5) | 3 | 3 | Chemicals and Products | (2) | 13 | |||||||||||||||
1 | 1 | 2 | Renewables and Energy Solutions | 2 | 2 | |||||||||||||||
1,053 | 992 | 580 | Corporate | 2,046 | 1,187 | |||||||||||||||
599 | 500 | 144 | Less: Interest income | 1,100 | 255 | |||||||||||||||
Of which: | ||||||||||||||||||||
1 | — | — | 1 | — | ||||||||||||||||
3 | 5 | 5 | Upstream | 8 | 9 | |||||||||||||||
— | — | — | Marketing | — | — | |||||||||||||||
11 | 9 | 8 | Chemicals and Products | 20 | 8 | |||||||||||||||
2 | 1 | (1) | Renewables and Energy Solutions | 4 | — | |||||||||||||||
582 | 485 | 132 | Corporate | 1,067 | 238 | |||||||||||||||
14,435 | 21,432 | 23,150 | Adjusted EBITDA | 35,867 | 42,177 | |||||||||||||||
Of which: | ||||||||||||||||||||
4,827 | 7,482 | 6,529 | 12,309 | 12,844 | ||||||||||||||||
6,447 | 8,837 | 11,167 | Upstream | 15,284 | 20,144 | |||||||||||||||
1,604 | 1,578 | 1,452 | Marketing | 3,181 | 2,775 | |||||||||||||||
1,300 | 3,050 | 3,184 | Chemicals and Products | 4,350 | 5,191 | |||||||||||||||
438 | 668 | 1,013 | Renewables and Energy Solutions | 1,106 | 1,534 | |||||||||||||||
(180) | (183) | (197) | Corporate | (363) | (310) |
Page 25
2nd QUARTER 2023 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 in the table below are presented on a net basis.
IDENTIFIED ITEMS | |||||||||||||||||
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
Identified items included in Income/(loss) before taxation | |||||||||||||||||
65 | 45 | 351 | Divestment gains/(losses) | 110 | 544 | ||||||||||||
(2,164) | (592) | 6,016 | Impairment reversals/(impairments) | (2,757) | 3,496 | ||||||||||||
(24) | (10) | (11) | Redundancy and restructuring | (33) | 48 | ||||||||||||
— | (24) | (334) | Provisions for onerous contracts | (24) | (537) | ||||||||||||
130 | 551 | 1,114 | Fair value accounting of commodity derivatives and certain gas contracts | 681 | (175) | ||||||||||||
(142) | 208 | 248 | Other | 66 | (1,039) | ||||||||||||
(2,136) | 178 | 7,384 | Total identified items included in Income/(loss) before taxation | (1,958) | 2,336 | ||||||||||||
(523) | 635 | 2,179 | Less: total identified items included in Taxation charge/(credit) | 112 | 1,235 | ||||||||||||
Identified items included in Income/(loss) for the period | |||||||||||||||||
50 | 67 | 205 | Divestment gains/(losses) | 117 | 366 | ||||||||||||
(1,661) | (457) | 4,276 | Impairment reversals/(impairments) | (2,117) | 1,747 | ||||||||||||
(17) | (5) | (5) | Redundancy and restructuring | (21) | 54 | ||||||||||||
— | (18) | (314) | Provisions for onerous contracts | (18) | (504) | ||||||||||||
46 | (114) | 1,014 | Fair value accounting of commodity derivatives and certain gas contracts | (68) | 237 | ||||||||||||
45 | 14 | (218) | Impact of exchange rate movements on tax balances | 60 | (50) | ||||||||||||
(77) | 55 | 247 | Other | (22) | (749) | ||||||||||||
(1,613) | (456) | 5,205 | Impact on CCS earnings | (2,069) | 1,101 | ||||||||||||
Of which: | |||||||||||||||||
(1,744) | (2,506) | 4,346 | (4,250) | 3,332 | |||||||||||||
(98) | (21) | 1,479 | Upstream | (120) | 1,124 | ||||||||||||
76 | 262 | 85 | Marketing | 338 | (487) | ||||||||||||
(100) | 22 | 96 | Chemicals and Products | (78) | 1 | ||||||||||||
301 | 1,810 | (898) | Renewables and Energy Solutions | 2,112 | (2,778) | ||||||||||||
(48) | (24) | 97 | Corporate | (72) | (90) | ||||||||||||
— | — | — | Impact on CCS earnings attributable to non-controlling interest | — | — | ||||||||||||
(1,613) | (456) | 5,205 | Impact on CCS earnings attributable to | (2,069) | 1,101 |
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).
Provisions for onerous contracts: Provisions for onerous contracts that relate to businesses that
Fair value accounting of commodity derivatives and certain gas contracts: In the ordinary course of business,
Page 26
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
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
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.
Page 27
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | ||||||||||||||||
4,614 | 6,161 | 6,677 | Capital expenditure | 10,774 | 10,914 | |||||||||||||||
Of which: | ||||||||||||||||||||
803 | 697 | 883 | 1,500 | 1,696 | ||||||||||||||||
1,936 | 1,752 | 2,776 | Upstream | 3,688 | 4,326 | |||||||||||||||
656 | 2,677 | 1,499 | Marketing | 3,332 | 1,969 | |||||||||||||||
663 | 610 | 1,226 | Chemicals and Products | 1,274 | 2,221 | |||||||||||||||
483 | 375 | 272 | Renewables and Energy Solutions | 858 | 661 | |||||||||||||||
72 | 50 | 21 | Corporate | 122 | 40 | |||||||||||||||
436 | 307 | 264 | Investments in joint ventures and associates | 743 | 1,019 | |||||||||||||||
Of which: | ||||||||||||||||||||
286 | 116 | 36 | 401 | 86 | ||||||||||||||||
93 | 118 | 81 | Upstream | 211 | 239 | |||||||||||||||
14 | 8 | 120 | Marketing | 23 | 123 | |||||||||||||||
3 | 2 | — | Chemicals and Products | 6 | 2 | |||||||||||||||
46 | 46 | 26 | Renewables and Energy Solutions | 91 | 568 | |||||||||||||||
(6) | 16 | — | Corporate | 10 | 1 | |||||||||||||||
80 | 33 | 83 | Investments in equity securities | 114 | 156 | |||||||||||||||
Of which: | ||||||||||||||||||||
— | — | — | — | — | ||||||||||||||||
— | — | — | Upstream | — | — | |||||||||||||||
— | — | — | Marketing | — | — | |||||||||||||||
2 | — | — | Chemicals and Products | 2 | 1 | |||||||||||||||
27 | 19 | 24 | Renewables and Energy Solutions | 46 | 77 | |||||||||||||||
51 | 14 | 60 | Corporate | 65 | 78 | |||||||||||||||
5,130 | 6,501 | 7,024 | Cash capital expenditure | 11,631 | 12,088 | |||||||||||||||
Of which: | ||||||||||||||||||||
1,089 | 813 | 919 | 1,901 | 1,782 | ||||||||||||||||
2,029 | 1,870 | 2,858 | Upstream | 3,899 | 4,565 | |||||||||||||||
670 | 2,685 | 1,620 | Marketing | 3,355 | 2,092 | |||||||||||||||
669 | 613 | 1,226 | Chemicals and Products | 1,281 | 2,224 | |||||||||||||||
556 | 440 | 321 | Renewables and Energy Solutions | 996 | 1,307 | |||||||||||||||
117 | 81 | 81 | Corporate | 198 | 118 |
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.
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.
Page 28
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||
$ million | Quarters | |||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | ||||||||||||
Income - current and previous three quarters | 29,242 | 44,327 | 36,844 | |||||||||||
Interest expense after tax - current and previous three quarters | 2,941 | 2,594 | 2,397 | |||||||||||
Income before interest expense - current and previous three quarters | 32,183 | 46,920 | 39,241 | |||||||||||
Capital employed – opening | 278,039 | 265,581 | 271,319 | |||||||||||
Capital employed – closing | 276,460 | 280,672 | 278,039 | |||||||||||
Capital employed – average | 277,250 | 273,126 | 274,679 | |||||||||||
ROACE on a Net income basis | 11.6% | 17.2% | 14.3% |
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 2023 | Q1 2023 | Q2 2022 | |||||||||
Adjusted Earnings - current and previous three quarters (Reference A) | 33,988 | 40,387 | 31,122 | ||||||||
Add: Income/(loss) attributable to NCI - current and previous three quarters | 247 | 426 | 675 | ||||||||
Add: Current cost of supplies adjustment attributable to NCI - current and previous three quarters | 105 | (19) | (260) | ||||||||
Less: Identified items attributable to NCI (Reference A) - current and previous three quarters | 15 | 15 | (11) | ||||||||
Adjusted Earnings plus NCI excluding identified items - current and previous three quarters | 34,325 | 40,778 | 31,548 | ||||||||
Add: Interest expense after tax - current and previous three quarters | 2,941 | 2,594 | 2,397 | ||||||||
Adjusted Earnings plus NCI excluding identified items before interest expense - current and previous three quarters | 37,265 | 43,372 | 33,945 | ||||||||
Capital employed - average | 277,250 | 273,126 | 274,679 | ||||||||
ROACE on an Adjusted Earnings plus NCI basis | 13.4% | 15.9% | 12.4% |
E. Gearing and Net debt
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 | 12,114 | 9,044 | 6,521 | ||||||||
Non-current debt | 72,252 | 76,098 | 77,220 | ||||||||
Total debt | 84,366 | 85,142 | 83,741 | ||||||||
Of which lease liabilities | 27,587 | 27,797 | 27,032 | ||||||||
Add: Debt-related derivative financial instruments: net liability/(asset) | 2,773 | 2,740 | 2,882 | ||||||||
Add: Collateral on debt-related derivatives: net liability/(asset) | (1,736) | (1,583) | (1,296) | ||||||||
Less: Cash and cash equivalents | (45,094) | (42,074) | (38,970) | ||||||||
Net debt | 40,310 | 44,224 | 46,357 | ||||||||
Add: Total equity | 192,094 | 195,530 | 194,299 | ||||||||
Total capital | 232,404 | 239,754 | 240,655 | ||||||||
Gearing | 17.3 | % | 18.4 | % | 19.3 | % |
Page 29
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
F. Operating expenses and Underlying 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 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
6,041 | 6,008 | 6,359 | Production and manufacturing expenses | 12,049 | 12,389 | ||||||||||||
Of which: | |||||||||||||||||
1,082 | 1,135 | 1,462 | 2,217 | 2,541 | |||||||||||||
2,095 | 2,231 | 2,439 | Upstream | 4,326 | 4,862 | ||||||||||||
195 | 235 | 192 | Marketing | 430 | 488 | ||||||||||||
2,069 | 1,875 | 1,759 | Chemicals and Products | 3,944 | 3,498 | ||||||||||||
598 | 519 | 473 | Renewables and Energy Solutions | 1,117 | 963 | ||||||||||||
3 | 13 | 34 | Corporate | 15 | 37 | ||||||||||||
3,314 | 3,051 | 2,924 | Selling, distribution and administrative expenses | 6,365 | 6,163 | ||||||||||||
Of which: | |||||||||||||||||
45 | 25 | 57 | 71 | 128 | |||||||||||||
58 | 57 | 48 | Upstream | 115 | 132 | ||||||||||||
2,051 | 1,796 | 1,627 | Marketing | 3,847 | 3,440 | ||||||||||||
787 | 822 | 858 | Chemicals and Products | 1,608 | 1,773 | ||||||||||||
257 | 244 | 223 | Renewables and Energy Solutions | 501 | 445 | ||||||||||||
116 | 106 | 111 | Corporate | 222 | 246 | ||||||||||||
297 | 253 | 264 | Research and development | 550 | 452 | ||||||||||||
Of which: | |||||||||||||||||
26 | 29 | 24 | 54 | 46 | |||||||||||||
122 | 108 | 142 | Upstream | 230 | 214 | ||||||||||||
68 | 56 | 38 | Marketing | 124 | 87 | ||||||||||||
52 | 40 | 35 | Chemicals and Products | 92 | 67 | ||||||||||||
29 | 21 | 25 | Renewables and Energy Solutions | 50 | 38 | ||||||||||||
— | — | — | Corporate | — | — | ||||||||||||
9,653 | 9,312 | 9,547 | Operating expenses | 18,964 | 19,004 | ||||||||||||
Of which identified items: | |||||||||||||||||
(23) | (9) | (10) | Redundancy and restructuring (charges)/reversal | (31) | 49 | ||||||||||||
(23) | (10) | (267) | (Provisions)/reversal | (33) | (384) | ||||||||||||
— | — | — | Other | — | (143) | ||||||||||||
(45) | (19) | (277) | Total identified items | (64) | (478) | ||||||||||||
9,607 | 9,293 | 9,270 | Underlying operating expenses | 18,900 | 18,526 |
G. Free cash flow and Organic 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 30
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | ||||||||||||||||||||
Quarters | $ million | Half year | ||||||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | ||||||||||||||||
15,130 | 14,159 | 18,655 | Cash flow from operating activities | 29,289 | 33,470 | |||||||||||||||
(3,015) | (4,238) | (6,207) | Cash flow from investing activities | (7,253) | (10,481) | |||||||||||||||
12,116 | 9,921 | 12,448 | Free cash flow | 22,037 | 22,989 | |||||||||||||||
480 | 1,738 | 838 | Less: Divestment proceeds (Reference I) | 2,218 | 1,546 | |||||||||||||||
2 | — | — | Add: Tax paid on divestments (reported under "Other investing cash outflows") | 2 | — | |||||||||||||||
166 | 2,147 | 2,060 | Add: Cash outflows related to inorganic capital expenditure1 | 2,313 | 2,573 | |||||||||||||||
11,804 | 10,331 | 13,670 | Organic free cash flow2 | 22,135 | 24,017 |
- 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 and 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
Quarters | $ million | Half year | |||||||||||||||
Q2 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
15,130 | 14,159 | 18,655 | Cash flow from operating activities | 29,289 | 33,470 | ||||||||||||
Of which: | |||||||||||||||||
3,628 | 6,286 | 8,176 | 9,914 | 14,619 | |||||||||||||
4,519 | 5,808 | 8,110 | Upstream | 10,327 | 14,074 | ||||||||||||
1,412 | 1,086 | (454) | Marketing | 2,498 | (984) | ||||||||||||
2,110 | 2,290 | 2,728 | Chemicals and Products | 4,401 | 6,402 | ||||||||||||
3,192 | 1,091 | (558) | Renewables and Energy Solutions | 4,283 | (1,017) | ||||||||||||
269 | (2,403) | 652 | Corporate | (2,134) | 375 | ||||||||||||
1,171 | 4,217 | (6,833) | (Increase)/decrease in inventories | 5,389 | (11,747) | ||||||||||||
8,289 | 5,943 | (4,066) | (Increase)/decrease in current receivables | 14,231 | (14,071) | ||||||||||||
(4,619) | (10,932) | 6,656 | Increase/(decrease) in current payables | (15,552) | 14,150 | ||||||||||||
4,840 | (772) | (4,243) | (Increase)/decrease in working capital | 4,068 | (11,667) | ||||||||||||
10,290 | 14,931 | 22,898 | Cash flow from operating activities excluding working capital movements | 25,221 | 45,138 |
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 2023 | Q1 2023 | Q2 2022 | 2023 | 2022 | |||||||||||||
362 | 1,479 | 783 | Proceeds from sale of property, plant and equipment and businesses | 1,841 | 1,340 | ||||||||||||
100 | 257 | 51 | Proceeds from joint ventures and associates from sale, capital reduction and repayment of long-term loans | 357 | 190 | ||||||||||||
18 | 2 | 4 | Proceeds from sale of equity securities | 20 | 16 | ||||||||||||
480 | 1,738 | 838 | Divestment proceeds | 2,218 | 1,546 |
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2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties affecting
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.
- Investments in our low-carbon products and services may not achieve expected returns.
- 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
Russia's invasion ofUkraine has affected the safety and security of our people and operations in these and neighbouring countries. The resulting sanctions and export controls and the evolving geopolitical situation have caused wide-ranging challenges to our operations which could continue in the medium to longer term.- 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
Nigeria could have a material adverse effect on us. - 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
the Netherlands causes earthquakes that affect local communities. - 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 that provide new products and solutions.
- 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 AND CULTURE RISKS
- We are exposed to regulatory and 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.
Page 32
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
2023 PORTFOLIO DEVELOPMENTS
In
Upstream
In
In
In
In
In
Marketing
In
RESPONSIBILITY STATEMENT
It is confirmed that to the best of our knowledge: (a) the unaudited Condensed Consolidated Interim Financial Statements have been prepared in accordance with IAS 34 Interim Financial Reporting as issued by the
The Directors of
Sir
On behalf of the Board
Wael Sawan | ||||||||||||||
Chief Executive Officer | Chief Financial Officer | |||||||||||||
Page 33
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS |
INDEPENDENT REVIEW REPORT TO
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 (
As disclosed in Note 1,
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.
Responsibilities of the Directors
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
Page 34
2nd QUARTER 2023 AND HALF 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 Interim Financial Report contains forward-looking statements (within the meaning of the
Shell’s Net Carbon Intensity
Also, in this Unaudited Condensed Interim Financial Report we may refer to Shell’s “Net Carbon Intensity”, which includes 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’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 Intensity (NCI) targets over the next ten years. However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCI 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
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
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.
Page 35
2nd QUARTER 2023 AND HALF YEAR UNAUDITED RESULTS | |||||
The information in this announcement reflects the unaudited consolidated financial position and results of |
Contacts:
- Caroline J.M. Omloo, Company Secretary
- Media: International +44 (0) 207 934 5550;
LEI number of
Classification: Half yearly financial reports and audit reports / limited reviews; Inside Information
Page 36
Source:
2023 GlobeNewswire, Inc., source