TIDMSHELL
SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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SUMMARY OF UNAUDITED RESULTS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
10,409 6,743 11,461 +54 Income/(loss) attributable to Shell plc shareholders 42,309 20,101 +110
9,814 9,454 6,391 +4 Adjusted Earnings A 39,870 19,289 +107
20,600 21,512 16,349 -4 Adjusted EBITDA A 84,289 55,004 +53
22,404 12,539 8,170 +79 Cash flow from operating activities 68,413 45,104 +52
(6,918) (5,049) 2,579 Cash flow from investing activities (22,448) (4,761)
15,486 7,490 10,749 Free cash flow G 45,965 40,343
7,319 5,426 6,500 Cash capital expenditure C 24,833 19,698
11,114 9,359 9,701 +19 Operating expenses F 39,477 35,964 +10
11,037 9,893 9,386 +12 Underlying operating expenses F 39,456 35,309 +12
16.7% 17.3% 8.8% ROACE on a Net income basis D 16.7% 8.8%
ROACE on an Adjusted Earnings plus Non-controlling
15.8% 14.7% 8.5% interest (NCI) basis D 15.8% 8.5%
44,838 48,343 52,556 Net debt E 44,838 52,556
18.9% 20.3% 23.1% Gearing E 18.9% 23.1%
2,831 2,766 3,142 +2 Total production available for sale (thousand boe/d) 2,864 3,237 -12
1.47 0.93 1.49 +58 Basic earnings per share ($) 5.76 2.59 +122
1.39 1.30 0.83 +7 Adjusted Earnings per share ($) B 5.43 2.49 +118
0.2875 0.2500 0.2400 +15 Dividend per share ($) 1.0375 0.8935 +16
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1.Q4 on Q3 change
Quarter Analysis1
Income attributable to Shell plc shareholders, compared with the
third quarter 2022, mainly reflected higher LNG trading and
optimisation results, favourable deferred tax movements, partly
offset by lower realised oil and gas prices, and higher operating
expenses.
Fourth quarter 2022 income attributable to Shell plc
shareholders also included net gains of $4.2 billion due to the
fair value accounting of commodity derivatives, partly offset by
charges of $1.9 billion related to the EU solidarity contribution
and the UK Energy Profits Levy, and impairment charges of $0.7
billion. These gains and losses are included in identified items
amounting to a net gain of $1.5 billion in the quarter. This
compares with identified items in the third quarter 2022 which
amounted to a net charge of $1.4 billion.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as income attributable to Shell plc shareholders and
adjusted for the above identified items and the cost of supplies
adjustment of positive $0.9 billion.
Cash flow from operating activities for the fourth quarter 2022
was $22.4 billion, and included working capital inflows of $10.4
billion, and tax payments of $4.4 billion. The working capital
inflows were mainly driven by higher initial margin inflows, lower
prices on crude inventories, a decrease in accounts receivable, and
cash relating to joint ventures.
Cash flow from investing activities for the quarter was an
outflow of $6.9 billion and included capital expenditure of $6.4
billion.
Net debt and Gearing: At the end of the fourth quarter 2022, net
debt was $44.8 billion, compared with $48.3 billion at the end of
the third quarter 2022, mainly reflecting higher free cash flow.
Gearing was 18.9% at the end of the fourth quarter 2022, compared
with 20.3% at the end of the third quarter 2022, driven by net debt
reduction and higher income which resulted in higher equity.
SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
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Shareholder distributions
Total shareholder distributions in the quarter amounted to $6.3
billion. Dividends declared to Shell plc shareholders for the
fourth quarter 2022 amount to $0.2875 per share. Shell has now
completed the $4 billion of share buybacks announced in the third
quarter 2022 results announcement. Today, Shell announces a share
buyback programme of $4 billion which is expected to be completed
by the first quarter 2023 results announcement.
Full Year Analysis1
Full year income attributable to Shell plc shareholders,
compared with the full year 2021, reflected higher realised prices,
higher refining margins, and higher trading and optimisation
results (mainly related to Integrated Gas, Chemicals and Products
and Renewables and Energy Solutions), partly offset by lower
volumes, and lower chemicals margins.
Full year 2022 income attributable to Shell plc shareholders
also included net gains of $3.4 billion due to the fair value
accounting of commodity derivatives, charges of $2.3 billion
related to the EU solidarity contribution and the UK Energy Profits
Levy, and net impairment reversals of $0.7 billion. These gains and
losses are included in identified items amounting to a net gain of
$1.2 billion in the full year 2022. This compares with identified
items in the full year 2021 which amounted to a net charge of $2.2
billion.
Adjusted Earnings and Adjusted EBITDA2 for the full year 2022
were driven by the same factors as income attributable to Shell plc
shareholders and adjusted for identified items and the cost of
supplies adjustment of negative $1.2 billion.
Cash flow from operating activities for the full year 2022 was
$68.4 billion, and reflected working capital outflows of $5.4
billion, and tax payments of $13.1 billion.
Cash flow from investing activities for the full year 2022 was
an outflow of $22.4 billion and included capital expenditure of
$22.6 billion.
This announcement, together with supplementary financial and
operational disclosure and a separate press release for this
quarter, is available at www.shell.com/investors3.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
3. Not incorporated by reference.
FOURTH QUARTER 2022 PORTFOLIO DEVELOPMENTS
Withdrawal from Russian oil and gas activities
We refer to Note 8 to the Condensed Consolidated Financial
Statements.
Integrated Gas
In October 2022, QatarEnergy selected us as a partner in the
North Field South LNG project in Qatar. Shell will obtain a 9.375%
participating interest in the 16 mtpa project.
Upstream
In November 2022, we completed the sale of our 100% shareholding
in Shell Philippines Exploration B.V. to Malampaya Energy XP Pte
Ltd.
In December 2022, we announced that Sarawak Shell Berhad, a
subsidiary of Shell plc, had agreed to sell its stake in two
offshore production-sharing contracts in the Baram Delta to
Petroleum Sarawak Exploration & Production Sdn. Bhd.
Marketing
In November 2022, we agreed to acquire 100% shareholding of
Nature Energy Biogas A/S for nearly $2 billion. The transaction is
subject to regulatory approvals and is expected to close in the
first quarter 2023.
Chemicals and Products
In October 2022, we announced that Shell USA, Inc. and Shell
Midstream Partners, L.P. had completed the definitive agreement and
plan of merger announced in July 2022, pursuant to which Shell USA,
Inc. acquired all of the common units representing limited partner
interests in Shell Midstream Partners, L.P. not held by Shell USA,
Inc. or its affiliates.
In November 2022, we announced the commencement of operations at
our Pennsylvania Chemical project, Shell Polymers Monaca.
Renewables and Energy Solutions
In December 2022, we announced that Shell and Eneco had won the
tender to develop a 760 MW offshore wind farm at Hollandse Kust
(west) VI in the Netherlands.
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SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
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PERFORMANCE BY SEGMENT
INTEGRATED GAS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
5,293 5,736 4,771 -8 Segment earnings 22,212 8,060 +176
(675) 3,417 735 Of which: Identified items A 6,075 (988)
5,968 2,319 4,036 +157 Adjusted Earnings A 16,137 9,048 +78
8,332 5,393 6,091 +55 Adjusted EBITDA A 26,569 16,754 +59
6,409 6,664 6,542 -4 Cash flow from operating activities 27,692 13,210 +110
1,527 956 1,014 Cash capital expenditure C 4,265 3,502
123 123 154 0 Liquids production available for sale (thousand b/d) 128 169 -25
Natural gas production available for sale (million
4,607 4,645 4,777 -1 scf/d) 4,600 4,842 -5
917 924 978 -1 Total production available for sale (thousand boe/d) 921 1,004 -8
6.78 7.24 7.94 -6 LNG liquefaction volumes (million tonnes) 29.68 30.98 -4
16.82 15.66 16.72 +7 LNG sales volumes (million tonnes) 65.98 64.20 +3
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1.Q4 on Q3 change
The Integrated Gas segment includes liquefied natural gas (LNG),
conversion of natural gas into gas-to-liquids (GTL) fuels and other
products. The segment includes natural gas and liquids exploration
and extraction, and the operation of the upstream and midstream
infrastructure necessary to deliver gas and liquids to market as
well as the marketing, trading and optimisation of LNG, including
LNG as a fuel for heavy-duty vehicles.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022,
reflected the net effect of higher contributions from trading and
optimisation and realised prices (increase of $2,855 million), and
favourable deferred tax movements (increase of $516 million),
partly offset by lower volumes (decrease of $363 million) mainly
reflecting longer than expected maintenance at Prelude and
operational issues at QGC. The trading and optimisation
contributions were driven by seasonality combined with capturing
optimisation opportunities generated through the scale and scope of
our LNG trading portfolio.
Fourth quarter 2022 segment earnings also included charges of
$708 million due to the fair value accounting of commodity
derivatives. As part of Shell's normal business, commodity
derivative hedge contracts are entered into for mitigation of
economic exposures on future purchases and sales. As these
commodity derivatives are measured at fair value, this creates an
accounting mismatch over periods. These charges are part of
identified items and compare with the third quarter 2022 which
included gains of $3,419 million due to the fair value accounting
of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, partly offset by net cash
outflows related to derivatives (outflow of $949 million), and tax
payments (outflow of $712 million).
Total oil and gas production, compared with the third quarter
2022, decreased by 1% mainly due to longer maintenance at Prelude,
and operational issues at QGC, partly offset by a comparative gain
related to "Protected Industrial Actions" at Prelude in the third
quarter. LNG liquefaction volumes decreased by 6% mainly due to
higher unplanned maintenance, and lower feedgas supply, partly
offset by a comparative gain related to "Protected Industrial
Actions" at Prelude in the third quarter.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected
the combined effect of higher realised prices and higher
contributions from trading and optimisation (increase of $8,588
million), partly offset by lower volumes (decrease of $1,295
million) and higher operating expenses (increase of $478
million).
Full year 2022 segment earnings also included gains of $6,273
million due to the fair value accounting of commodity derivatives
and net impairment reversals of $779 million, partly offset by
other impacts of $608 million, which mainly comprised loan
write-downs, and charges of $387 million due to provisions for
onerous contracts. These gains and losses are part of identified
items and compare with the full year 2021 which included losses of
$1,423 million due to the fair value accounting of commodity
derivatives and impairment charges of $395 million, partly offset
by gains of $1,097 million related to the sale of assets.
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SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
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Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the full year 2022 was
primarily driven by Adjusted EBITDA and net cash inflows related to
derivatives (inflow of $6,104 million), partly offset by tax
payments (outflow of $2,824 million) and working capital movements
(outflow of $1,412 million).
Total oil and gas production, compared with the full year 2021,
decreased by 8% mainly due to derecognition of Sakhalin-related
volumes, production-sharing contract effects, partly offset by new
field ramp-up in Trinidad and Tobago. LNG liquefaction volumes
decreased by 4% mainly due to the derecognition of Sakhalin-related
volumes, and lower feedgas supply, partly offset by lower
maintenance.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
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SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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UPSTREAM
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
1,380 5,357 4,914 -74 Segment earnings 16,223 9,603 +69
(1,681) (539) 2,077 Of which: Identified items A (1,096) 1,587
3,061 5,896 2,838 -48 Adjusted Earnings A 17,319 8,015 +116
9,418 12,539 8,446 -25 Adjusted EBITDA A 42,100 27,170 +55
7,224 8,343 6,974 -13 Cash flow from operating activities 29,641 21,562 +37
1,845 1,733 1,504 Cash capital expenditure C 8,143 6,168
1,331 1,273 1,456 +5 Liquids production available for sale (thousand b/d) 1,333 1,515 -12
3,067 2,995 3,799 +2 Natural gas production available for sale (million 3,272 3,845 -15
scf/d)
1,859 1,789 2,110 +4 Total production available for sale (thousand boe/d) 1,897 2,178 -13
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1.Q4 on Q3 change
The Upstream segment includes exploration and extraction of
crude oil, natural gas and natural gas liquids. It also markets and
transports oil and gas, and operates the infrastructure necessary
to deliver them to the market.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022, were
mainly driven by lower oil and gas prices (decrease of $1,849
million) and the comparative adverse impacts of the one-off
non-cash provision release (decrease of $503 million) and storage
transfer effects, included in the share of profit of joint ventures
and associates (decrease of $609 million), in the third
quarter.
Fourth quarter 2022 segment earnings also included charges of
$1,385 million relating to the EU solidarity contribution and $441
million relating to the UK Energy Profits Levy, partly offset by
gains of $304 million due to the fair value accounting of commodity
derivatives. These gains and losses are part of identified items,
and compare with the third quarter 2022 which included a gain of
$312 million due to the impact of the discount rate change on
provisions and charges of $361 million relating to the UK Energy
Profits Levy and an impairment charge of $303 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, partly offset by tax payments
of $3,364 million.
Total production, compared with the third quarter 2022,
increased mainly due to lower scheduled maintenance and lower
unscheduled deferment.
Full Year Analysis1
Segment earnings, compared with the full year 2021, mainly
reflected higher realised oil and gas prices (increase of $8,838
million) and a gain of $1,066 million relating to storage and
working gas transfer effects, partly offset by lower volumes
(reduction of $2,458 million), mainly as a result of
divestments.
Full year 2022 segment earnings also included a gain from net
impairment reversals of $853 million and charges of $1,385 million
relating to the EU solidarity contribution and $802 million
relating to the UK Energy Profits Levy. These gains and losses are
part of identified items, and compare with the full year 2021 which
included a net gain of $3,261 million related to the sale of assets
(mainly related to the sale of the Permian business in the USA),
partly offset by impairment charges of $633 million, losses of $393
million due to the fair value accounting of commodity derivatives,
and legal provisions of $287 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the full year 2022 was
primarily driven by Adjusted EBITDA, partly offset by the timing
impact of dividends from joint ventures and associates of $2,650
million and tax payments of $9,423 million.
Total production, compared with the full year 2021, decreased
due to the impact of divestments and scheduled maintenance. The
impact of field decline was more than offset by growth from new
fields.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
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SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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MARKETING
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
375 757 471 -51 Segment earnings(2) 2,133 3,536 -40
Of which: Identified
(72) (63) (140) items A (622) 68
446 820 611 -46 Adjusted Earnings(2) A 2,754 3,468 -21
1,045 1,505 1,125 -31 Adjusted EBITDA2 A 5,324 6,021 -12
Cash flow from
1,062 2,299 1,218 -54 operating activities 2,376 5,019 -53
Cash capital
1,993 746 829 expenditure C 4,831 2,273
Marketing sales
volumes (thousand
2,543 2,581 2,522 -1 b/d) 2,503 2,433 +3
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1. Q4 on Q3 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 Analysis1
Segment earnings, compared with the third quarter 2022,
reflected lower Marketing margins (decrease of $201 million) mainly
driven by seasonal impacts in Mobility, and higher operating
expenses (increase of $177 million).
Fourth quarter 2022 segment earnings also included impairment
charges of $85 million. These charges are part of identified
items.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by Adjusted EBITDA, working capital inflows of
$231 million, and dividends from joint ventures and associates of
$108 million, partly offset by tax payments of $160 million and
non-cash cost-of-sales adjustments of $123 million.
Marketing sales volumes (comprising hydrocarbon sales), compared
with the third quarter 2022, decreased mainly due to seasonal
effects.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected
higher operating expenses (increase of $704 million) including the
effects of higher volumes, partly offset by higher Marketing
margins (increase of $171 million).
Full year 2022 segment earnings also included net losses of $321
million from impairments, net losses of $135 million related to the
sale of assets, and provisions for onerous contracts of $62
million. These net losses are part of identified items and compare
with the full year 2021 which included gains of $290 million mainly
related to the dilution of Shell's interest in the Raizen joint
venture, charges of $109 million related to redundancy and
restructuring costs, and impairment charges of $106 million.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the full year 2022 was
primarily driven by Adjusted EBITDA, and non-cash cost-of-sales
adjustments of $568 million, partly offset by working capital
outflows of $3,074 million, and tax payments of $494 million.
Marketing sales volumes (comprising hydrocarbon sales), compared
with the full year 2021, increased mainly due to demand recovery in
Aviation (within Sectors & Decarbonisation).
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
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SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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CHEMICALS AND PRODUCTS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
332 980 (3) -66 Segment earnings(2) 4,515 404 +1018
Of which: Identified
(412) 208 127 items A (204) (1,712)
744 772 (130) -4 Adjusted Earnings(2) A 4,719 2,115 +123
1,574 1,797 741 -12 Adjusted EBITDA2 A 8,561 5,635 +52
Cash flow from operating
3,119 3,385 (1,572) -8 activities 12,906 3,709 +248
786 828 1,410 Cash capital expenditure C 3,838 5,175
1,434 1,434 1,348 0 Refinery processing 1,402 1,639 -14
intake (thousand b/d)
1,800 1,803 1,929 0 Refining & Trading sales 1,700 2,026 -16
volumes (thousand b/d)
3,017 2,879 3,475 +5 Chemicals sales volumes 12,281 14,216 -14
(thousand tonnes)
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1. Q4 on Q3 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 Analysis1
Segment earnings, compared with the third quarter 2022,
reflected higher operating expenses (increase of $213 million), and
higher depreciation charges (increase of $101 million), with both
operating expenses and depreciation including the start-up of
operations at Shell Polymers Monaca. These increases were partly
offset by favourable deferred tax movements (increase of $230
million). Margins were in line with the third quarter 2022, with
higher Refining margins offset by lower contributions from trading
and optimisation.
Fourth quarter 2022 segment earnings also included losses of
$214 million due to the fair value accounting of commodity
derivatives, legal provisions of $86 million, impairment charges of
$84 million and tax charges relating to the EU solidarity
contribution of $74 million. These charges are part of identified
items, and compare with the third quarter 2022 which included gains
of $226 million due to the fair value accounting of commodity
derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified items.
Adjusted Earnings for the fourth quarter were a loss of $688
million for Chemicals and earnings of $1,432 million for
Products.
Cash flow from operating activities for the quarter was
primarily driven by working capital inflows of $3,074 million,
Adjusted EBITDA, and dividends from joint ventures and associates
of $176 million, partly offset by non-cash cost-of-sales
adjustments of $1,108 million, the timing of payments relating to
emissions and biofuel programmes of $384 million, and tax payments
of $217 million.
Chemicals manufacturing plant utilisation was 75% (previous
methodology: 69%) compared with 76% (previous methodology: 70%) in
the third quarter 2022.
Refinery utilisation was 90% (previous methodology: 77%)
compared with 88% (previous methodology: 79%) in the third quarter
2022, due to lower unplanned maintenance.
With effect from the second quarter 2022, the methodology
applied in calculating both Chemicals manufacturing plant
utilisation and Refinery utilisation has been revised to further
align with industry disclosures. The revisions include moving from
stream days capacity (defined as the maximum throughput, excluding
the impact of maintenance or operational outages) to calendar days
capacity (defined as the throughput including typical limitations
such as maintenance over an extended period of time). Furthermore,
Refinery utilisation is now specific to the capacity of the crude
distillation unit (except for Scotford Refinery which uses the
capacity of the hydrocracker), and no longer the capacity across
all refinery units.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected
higher Products margins (increase of $5,721 million) reflecting
higher Refining margins and higher contributions from trading and
optimisation, lower tax charges (decrease of $300 million), as well
as lower depreciation charges (decrease of $175 million). These
were partly offset by lower Chemicals margins (decrease of $2,705
million) and higher operating expenses (increase of $822
million).
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SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
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Full year 2022 segment earnings also included impairment charges
of $226 million, legal provisions of $149 million, losses of $147
million related to the fair value accounting of commodity
derivatives, tax charges relating to the EU solidarity contribution
of $74 million, gains of $223 million related to the sale of
assets, and gains of $104 million related to the remeasurement of
redundancy and restructuring costs. These gains and losses are part
of identified items, and compare with the full year 2021 which
included impairment charges of $1,814 million, charges of $82
million related to provisions for onerous contracts, and gains of
$160 million related to the fair value accounting of commodity
derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified items.
Adjusted Earnings for the full year 2022 were a loss of $1,371
million for Chemicals and earnings of $6,090 million for
Products.
Cash flow from operating activities for the full year 2022 was
primarily driven by Adjusted EBITDA, non-cash cost-of-sales
adjustments of $1,187 million, the timing of payments relating to
emissions and biofuel programmes of $1,169 million, working capital
inflows of $757 million, dividends from joint ventures and
associates of $694 million, and a long-term payable for a volume
purchase contract of $507 million.
Chemicals manufacturing plant utilisation was 79% (previous
methodology: 72%) compared with 85% (previous methodology: 78%) in
the full year 2021, due to higher turnarounds and optimisation for
the low-margin environment during the full year 2022.
Refinery utilisation was 86% (previous methodology: 74%)
compared with 80% (previous methodology: 72%) in the full year
2021, due to lower unplanned maintenance, and lower
turnarounds.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
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SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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RENEWABLES AND ENERGY SOLUTIONS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 %(1) Reference 2022 2021 %
4,673 (4,023) 1,894 +216 Segment earnings (1,059) (1,514) +30
4,379 (4,406) 1,851 Of which: Identified items A (2,805) (1,272)
293 383 43 -23 Adjusted Earnings A 1,745 (243) +819
396 530 80 -25 Adjusted EBITDA A 2,459 (21) +11923
2,674 (8,051) (5,236) +133 Cash flow from operating activities (6,394) 451 -1518
1,076 1,086 1,617 Cash capital expenditure C 3,469 2,359
66 67 59 -2 External power sales (terawatt hours)2 243 247 -2
241 157 249 +53 Sales of pipeline gas to end-use customers (terawatt 843 899 -6
hours)3
----------------- -------------- -------------- ----------------- ------------------------------------------------------------ ------------- --------- --------- ----------
1.Q4 on Q3 change
2.Physical power sales to third parties; excluding financial
trades and physical trade with brokers, investors, financial
institutions, trading platforms, and wholesale traders.
3.Physical natural gas sales to third parties; excluding
financial trades and physical trade with brokers, investors,
financial institutions, trading platforms, and wholesale traders.
Excluding sales of natural gas by other segments and LNG sales.
The Renewables and Energy Solutions segment includes Shell's
Integrated Power activities, comprising electricity generation,
marketing, trading and optimisation of power and pipeline gas, and
digitally enabled customer solutions. The segment also includes
production and marketing of hydrogen, development of commercial
carbon capture & storage hubs, trading of carbon credits and
investment in nature-based projects that avoid or reduce
carbon.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022,
reflected higher trading and optimisation results mainly driven by
the European market, partly offset by the American market as
significant price volatility continued. The fourth quarter 2022
also included higher operating expenses.
Fourth quarter 2022 segment earnings also included net gains of
$4,748 million due to the fair value accounting of commodity
derivatives, and impairment charges of $361 million mainly in
Europe. As part of Shell's normal business, commodity derivative
hedge contracts are entered into for mitigation of economic
exposures on future purchases, sales and inventory. As these
commodity derivatives are measured at fair value, this creates an
accounting mismatch over periods. These net gains are part of
identified items and compare with the third quarter 2022 which
included net losses of $4,414 million due to the fair value
accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the quarter was
primarily driven by working capital movements (inflow of $3,579
million), and Adjusted EBITDA, partly offset by net cash outflows
related to derivatives (outflow of $1,322 million).
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected
higher trading and optimisation results for gas and power mainly in
Europe driven by price volatility, partly offset by higher
operating expenses as a result of business growth and
acquisitions.
Full year 2022 segment earnings also included net losses of
$2,443 million due to the fair value accounting of commodity
derivatives, and impairment charges of $361 million mainly in
Europe. These losses are part of identified items and compare with
the full year 2021 which included net losses of $1,219 million due
to the fair value accounting of commodity derivatives.
Adjusted Earnings and Adjusted EBITDA2 were driven by the same
factors as the segment earnings and adjusted for identified
items.
Cash flow from operating activities for the full year 2022 was
primarily driven by net cash outflows related to derivatives
(outflow of $4,998 million), and working capital movements (outflow
of $3,676 million), partly offset by Adjusted EBITDA.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
Page 9
SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
-----------------------------------------------------
Additional Growth Measures
Quarters Full year
Q4 2022 Q3 2022 Q4 2021 %(1) 2022 2021 %
Renewable power
generation
capacity
(gigawatt):
2.2 2.2 0.7 +2 -- In operation2 2.2 0.7 +220
4.2 3.0 2.3 +38 -- Under 4.2 2.3 +85
construction
and/or committed
for sale3
------ ------ ------ -------- ---------------- ----- ------ ------ --------
1. Q4 on Q3 change
2. Shell's equity share of renewable generation capacity post commercial
operation date. It excludes Shell's equity share of associates where
information cannot be obtained and prior period comparatives have been
revised accordingly.
3. Shell's equity share of renewable generation capacity under construction
and/or committed for sale under long-term offtake agreements (PPA). It
excludes Shell's equity share of associates where information cannot be
obtained and prior period comparatives have been revised accordingly.
CORPORATE
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 Reference 2022 2021
Segment
(654) (543) (859) earnings (2,461) (2,606)
Of which:
Identified
(28) 28 30 items A (90) 81
Adjusted
(626) (571) (889) Earnings A (2,371) (2,686)
Adjusted
(164) (251) (133) EBITDA A (725) (554)
Cash flow from
operating
1,916 (100) 245 activities 2,192 1,154
------- -------- -------- -------------- ------------- --------- ---------
The Corporate segment covers the non-operating activities
supporting Shell, comprising Shell's holdings and treasury
organisation, its self-insurance activities and its headquarters
and central functions. All finance expense and income and related
taxes are included in Corporate segment earnings rather than in the
earnings of business segments.
Quarter Analysis1
Segment earnings, compared with the third quarter 2022,
reflected unfavourable movements in the net interest expense,
partly offset by favourable currency exchange rate effects.
Adjusted EBITDA2 was mainly driven by favourable currency
exchange effects.
Full Year Analysis1
Segment earnings, compared with the full year 2021, reflected by
favourable movements in the net interest expense, partly offset by
lower tax credits and unfavourable currency exchange rate
effects.
Adjusted EBITDA was mainly driven by unfavourable currency
exchange effects.
1. All earnings amounts are shown post-tax, unless stated otherwise.
2. Adjusted EBITDA is without taxation.
PRELIMINARY RESERVES UPDATE
When final volumes are reported in the 2022 Annual Report and
Accounts and 2022 Form 20-F, Shell expects that SEC proved oil and
gas reserves additions before taking into account production will
be approximately 1.3 billion boe, and that 2022 production will be
approximately 1.1 billion boe. As a result, total proved reserves
on an SEC basis are expected to be approximately 9.6 billion boe.
Acquisitions and divestments of 2022 reserves are expected to
account for a net increase of approximately 1.0 billion boe.
The proved Reserves Replacement Ratio on an SEC basis is
expected to be 120% for the year and 58% for the 3-year average.
Excluding the impact of acquisitions and divestments, the proved
Reserves Replacement Ratio is expected to be 26% for the year and
39% for the 3-year average.
Further information will be provided in the 2022 Annual Report
and Accounts and 2022 Form 20-F, which are expected to be filed in
March 2023.
OUTLOOK FOR THE FIRST QUARTER 2023
Cash capital expenditure is expected to be within the $23 - 27
billion range for the full year.
Page 10
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RESULTS
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Integrated Gas production is expected to be approximately 910 -
970 thousand boe/d. LNG liquefaction volumes are expected to be
approximately 6.6 - 7.2 million tonnes.
Upstream production is expected to be approximately 1,750 -
1,950 thousand boe/d.
Marketing sales volumes are expected to be approximately 2,150 -
2,650 thousand b/d.
Refinery utilisation is expected to be approximately 87% - 95%.
Chemicals manufacturing plant utilisation is expected to be
approximately 68% - 76%. The utilisation ranges presented use the
revised methodology (please refer to 'Chemicals and Products' in
the 'Performance by Segment' section).
Corporate Adjusted Earnings are expected to be a net expense of
approximately $400 - $600 million in the first quarter 2023 and a
net expense of approximately $1,700 - $2,300 million for the full
year 2023. This excludes the impact of currency exchange rate
effects.
FORTHCOMING EVENTS
The "Shell LNG Outlook 2023" event is scheduled on February 16,
2023. The "Annual ESG Update" event is scheduled on March 22, 2023.
First quarter 2023 results and dividends are scheduled to be
announced on May 4, 2023. The Annual General Meeting is scheduled
on May 23, 2023. The "Capital Markets Day 2023" event is scheduled
on June 14, 2023. Second quarter 2023 and half year results and
dividends are scheduled to be announced on July 27, 2023. Third
quarter 2023 results and dividends are scheduled to be announced on
November 2, 2023.
Page 11
SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
-----------------------------------------------------
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
101,303 95,749 85,280 Revenue1, 4 381,314 261,504
Share of profit/(loss)
of joint ventures and
(268) 2,512 975 associates4 3,972 4,097
Interest and other
160 498 3,968 income/(expenses)2, 4 915 7,056
Total revenue and other
101,195 98,759 90,223 income/(expenses) 386,201 272,657
65,489 70,684 56,566 Purchases 258,488 174,912
Production and
7,220 5,910 6,530 manufacturing expenses 25,518 23,822
Selling, distribution
and administrative
3,491 3,229 2,867 expenses4 12,883 11,328
Research and
403 220 304 development 1,075 815
649 424 280 Exploration 1,712 1,423
Depreciation, depletion
6,459 6,124 6,445 and amortisation2, 4 18,529 26,921
1,040 734 963 Interest expense 3,181 3,607
84,752 87,324 73,954 Total expenditure 321,387 242,828
Income/(loss) before
16,443 11,435 16,269 taxation 64,814 29,829
Taxation
5,975 4,587 4,665 charge/(credit) 21,941 9,199
Income/(loss) for the
10,469 6,848 11,604 period(1) 42,873 20,630
Income/(loss)
attributable to
non-controlling
59 104 144 interest 565 529
Income/(loss)
attributable to Shell
10,409 6,743 11,461 plc shareholders 42,309 20,101
Basic earnings per
1.47 0.93 1.49 share ($)3 5.76 2.59
Diluted earnings per
1.46 0.92 1.48 share ($)3 5.71 2.57
---------- --------- --------- ----------------------- ---------- ---------
1. See Note 2 "Segment information".
2. See Note 7 "Other notes to the unaudited Condensed Consolidated Financial Statements".
3. See Note 3 "Earnings per share".
4. See Note 8 "Withdrawal from Russian oil and gas activities".
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
10,469 6,848 11,604 Income/(loss) for the period 42,873 20,630
Other comprehensive income/(loss) net of tax:
Items that may be reclassified to income in later
periods:
2,855 (3,456) (193) -- Currency translation differences (2,986) (1,413)
12 (25) (11) -- Debt instruments remeasurements (78) (28)
(345) (57) (129) -- Cash flow hedging gains/(losses) (232) 21
(264) 183 86 -- Net investment hedging gains/(losses) 180 295
(32) 11 (1) -- Deferred cost of hedging 200 (39)
-- Share of other comprehensive income/(loss) of joint
77 30 59 ventures and associates 274 (109)
2,303 (3,315) (190) Total (2,642) (1,273)
Items that are not reclassified to income in later
periods:
(2,090) 126 604 -- Retirement benefits remeasurements 5,466 7,198
(37) (21) 121 -- Equity instruments remeasurements (491) 145
-- Share of other comprehensive income/(loss) of joint
(227) 12 30 ventures and associates (253) 3
(2,354) 117 755 Total 4,722 7,346
(51) (3,198) 564 Other comprehensive income/(loss) for the period 2,080 6,073
10,417 3,649 12,169 Comprehensive income/(loss) for the period 44,953 26,703
114 (38) 118 Comprehensive income/(loss) attributable to non-controlling 621 468
interest
10,303 3,687 12,051 Comprehensive income/(loss) attributable to Shell 44,333 26,235
plc shareholders
--------- --------- -------- --------------------------------------------------------------- --------- ---------
Page 12
SHELL PLC 4th QUARTER 2022 AND FULL YEAR
UNAUDITED RESULTS
--------------------------------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEET
$ million
December 31, 2022 December 31, 2021
Assets
Non-current assets
Intangible assets 25,701 24,693
Property, plant and equipment 198,642 194,932
Joint ventures and associates 23,864 23,415
Investments in securities 3,362 3,797
Deferred tax1 7,815 12,426
Retirement benefits1 10,200 8,471
Trade and other receivables 6,920 7,065
Derivative financial instruments(2) 582 815
277,087 275,614
Current assets
Inventories 31,894 25,258
Trade and other receivables 66,510 53,208
Derivative financial instruments(2) 24,437 11,369
Cash and cash equivalents 40,246 36,970
163,087 126,805
Assets classified as held for sale1 2,850 1,960
165,937 128,765
Total assets 443,024 404,379
Liabilities
Non-current liabilities
Debt 74,794 80,868
Trade and other payables 3,432 2,075
Derivative financial instruments(2) 3,563 887
Deferred tax1 16,186 12,547
Retirement benefits1 7,296 11,325
Decommissioning and other provisions1 23,845 25,804
129,117 133,506
Current liabilities
Debt 9,001 8,218
Trade and other payables 79,357 63,173
Derivative financial instruments(2) 23,779 16,311
Income taxes payable 4,869 3,254
Decommissioning and other provisions 2,910 3,338
119,916 94,294
Liabilities directly associated with assets classified
as held for sale1 1,395 1,253
121,310 95,547
Total liabilities 250,427 229,053
Equity attributable to Shell plc shareholders 190,471 171,966
Non-controlling interest1 2,126 3,360
Total equity 192,597 175,326
Total liabilities and equity 443,024 404,379
---------------------------------------------------------------- ----------------- -----------------
1. See Note 7 "Other notes to the unaudited Condensed Consolidated
Financial Statements".
2. See Note 6 "Derivative financial instruments and debt excluding lease
liabilities".
Page 13
SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
--------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Equity attributable to Shell plc shareholders
Share Shares held Other Retained Non-controlling Total
$ million capital1 in trust reserves(2) earnings Total interest equity
At January 1, 2022 641 (610) 18,909 153,026 171,966 3,360 175,326
Comprehensive
income/(loss) for
the period -- -- 2,024 42,309 44,333 621 44,953
Transfer from other
comprehensive
income -- -- (34) 34 -- -- --
Dividends(3) -- -- -- (7,283) (7,283) (206) (7,489)
Repurchases of
shares4 (57) -- 57 (18,547) (18,547) -- (18,547)
Share-based
compensation -- (116) 176 131 190 -- 190
Other changes -- -- -- (187) (187) (1,650) 5 (1,838)
At December 31,
2022 584 (727) 21,131 169,482 190,471 2,126 192,597
At January 1, 2021 651 (709) 12,752 142,616 155,310 3,227 158,537
Comprehensive
income/(loss) for
the period -- -- 6,134 20,101 26,235 468 26,703
Transfer from other
comprehensive
income -- -- (45) 45 -- -- --
Dividends3 -- -- -- (6,321) (6,321) (348) (6,669)
Repurchases of
shares (10) -- 10 (3,513) (3,513) -- (3,513)
Share-based
compensation -- 99 58 93 250 -- 250
Other changes -- -- -- 5 5 13 18
At December 31,
2021 641 (610) 18,909 153,026 171,966 3,360 175,326
------------------- ------------ ------------ ------------- ---------- -------- --------------- --------
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.
5. See Note 7 "Other notes to the unaudited Condensed Consolidated Financial
Statements".
Page 14
SHELL PLC
4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
16,443 11,435 16,269 Income before taxation for the period 64,814 29,829
Adjustment for:
596 389 819 -- Interest expense (net) 2,135 3,096
6,459 6,124 6,445 -- Depreciation, depletion and amortisation1 18,529 26,921
395 218 72 -- Exploration well write-offs 881 639
-- Net (gains)/losses on sale and revaluation of non-current
(21) (93) (3,679) assets and businesses (642) (5,995)
268 (2,512) (975) -- Share of (profit)/loss of joint ventures and associates (3,972) (4,097)
1,413 814 1,611 -- Dividends received from joint ventures and associates 4,398 3,929
2,902 484 (860) -- (Increase)/decrease in inventories (8,360) (7,319)
5,179 (98) (6,799) -- (Increase)/decrease in current receivables (8,989) (20,567)
2,308 (4,544) 4,688 -- Increase/(decrease) in current payables 11,915 17,519
(7,669) 3,334 (6,592) -- Derivative financial instruments (2,619) 5,882
135 (87) (27) -- Retirement benefits 417 16
218 (744) 176 -- Decommissioning and other provisions 35 (76)
(1,850) 1,258 (1,236) -- Other1 2,991 803
(4,372) (3,438) (1,743) Tax paid (13,120) (5,476)
22,404 12,539 8,170 Cash flow from operating activities 68,413 45,104
(6,417) (5,268) (6,236) Capital expenditure (22,600) (19,000)
(860) (95) (145) Investments in joint ventures and associates (1,973) (479)
(42) (63) (120) Investments in equity securities (261) (218)
Proceeds from sale of property, plant and equipment
52 39 8,843 and businesses 1,431 14,233
Proceeds from joint ventures and associates from sale,
119 203 137 capital reduction and repayment of long-term loans 511 584
65 36 151 Proceeds from sale of equity securities 117 296
401 253 121 Interest received 906 423
518 496 489 Other investing cash inflows 2,060 2,928
(754) (650) (662) Other investing cash outflows (2,641) (3,528)
(6,918) (5,049) 2,579 Cash flow from investing activities (22,448) (4,761)
Net increase/(decrease) in debt with maturity period
(248) (206) (32) within three months 318 14
Other debt:
31 103 1,602 -- New borrowings 269 1,791
(2,217) (1,171) (7,850) -- Repayments (8,460) (21,534)
(1,183) (747) (1,258) Interest paid (3,677) (4,014)
356 (843) (391) Derivative financial instruments (1,799) (1,165)
(1,974) 1 4 -- Change in non-controlling interest (1,965) 19
Cash dividends paid to:
(1,785) (1,818) (1,838) -- Shell plc shareholders2 (7,405) (6,253)
(42) (54) (42) -- Non-controlling interest (206) (348)
(4,474) (4,950) (1,703) Repurchases of shares (18,437) (2,889)
Shares held in trust: net sales/(purchases) and dividends
(542) (25) (254) received (593) (285)
(12,078) (9,707) (11,764) Cash flow from financing activities (41,954) (34,664)
860 (774) (87) Effects of exchange rate changes on cash and cash (736) (539)
equivalents
4,268 (2,992) (1,102) Increase/(decrease) in cash and cash equivalents 3,275 5,140
35,978 38,970 38,073 Cash and cash equivalents at beginning of period 36,970 31,830
40,246 35,978 36,970 Cash and cash equivalents at end of period 40,246 36,970
----------------- -------------- --------------- ---------------- ------------------------------------------------------------------------ ---------- ----------
1. See Note 7 "Other notes to the unaudited Condensed Consolidated 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.
Page 15
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RESULTS
-----------------------------------------------------
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
1. Basis of preparation
These unaudited Condensed Consolidated Financial Statements of
Shell plc ("the Company") and its subsidiaries (collectively
referred to as "Shell") have been prepared on the basis of the same
accounting principles as those used in the Company's Annual Report
and Accounts (pages 228 to 283) and Form 20-F (pages 204 to 261)
for the year ended December 31, 2021 as filed with the Registrar of
Companies for England and Wales, the Autoriteit Financiële Markten
(the Netherlands) and the US Securities and Exchange Commission,
and should be read in conjunction with these filings.
The financial information presented in the unaudited Condensed
Consolidated Financial Statements does not constitute statutory
accounts within the meaning of section 434(3) of the Companies Act
2006 ("the Act"). Statutory accounts for the year ended December
31, 2021 were published in Shell's Annual Report and Accounts, a
copy of which was delivered to the Registrar of Companies for
England and Wales, and in Shell's Form 20-F. The auditor's report
on those accounts was unqualified, did not include a reference to
any matters to which the auditor drew attention by way of emphasis
without qualifying the report and did not contain a statement under
sections 498(2) or 498(3) of the Act. The statutory accounts for
the year ended December 31, 2022 will be delivered to the Registrar
of Companies for England and Wales in due course.
Key accounting considerations, significant judgements and
estimates
Future long-term commodity price assumptions and management's
view on the future development of refining margins represent a
significant estimate. Future long-term commodity price assumptions
were subject to change in the second quarter 2022. These
assumptions continue to apply for impairment testing purposes in
the fourth quarter 2022.
The discount rate applied to provisions is reviewed on a regular
basis. The discount rate was reviewed and adjusted in the third
quarter 2022. See Note 7.
Changes to IFRS not yet adopted
IFRS 17 Insurance contracts was issued in 2017, with amendments
published in 2020 and 2021, and is required to be adopted for
annual reporting periods beginning on or after January 1, 2023.
Shell is in the process of implementing the standard. The standard
is not expected to have a significant effect on future financial
reporting.
2. Segment information
As from January 1, 2022, onwards reporting segments are aligned
with Shell's Powering Progress strategy. The Renewables and Energy
Solutions business is now reported separately from Integrated Gas.
Oil Products and Chemicals were reorganised into two segments --
Marketing and Chemicals and Products. The shales assets in Canada
are now reported as part of the Integrated Gas segment instead of
the Upstream segment. Prior period comparatives have been revised
to conform with current year presentation. The reporting segment
changes have no impact at a Shell Group level.
Segment earnings are presented on a current cost of supplies
basis (CCS earnings), which is the earnings measure used by the
Chief Executive Officer for the purposes of making decisions about
allocating resources and assessing performance. On this basis, the
purchase price of volumes sold during the period is based on the
current cost of supplies during the same period after making
allowance for the tax effect. CCS earnings therefore exclude the
effect of changes in the oil price on inventory carrying amounts.
Sales between segments are based on prices generally equivalent to
commercially available prices.
Page 16
SHELL PLC
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--------------------------------------------------------------------------
INFORMATION BY SEGMENT
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Third-party revenue
13,802 14,471 12,702 Integrated Gas 54,751 29,922
2,945 1,623 2,605 Upstream 8,352 9,182
28,417 31,965 23,964 Marketing 120,639 83,494
Chemicals and
33,480 37,649 33,801 Products 144,342 116,448
Renewables and
22,656 10,031 12,200 Energy Solutions 53,190 22,416
4 10 7 Corporate 41 43
Total third-party
101,303 95,749 85,280 revenue(1) 381,314 261,504
Inter-segment revenue
5,038 5,666 2,874 Integrated Gas 18,412 8,072
13,229 13,164 10,838 Upstream 52,285 35,789
183 169 69 Marketing 606 253
Chemicals and
602 696 491 Products 2,684 1,890
Renewables and
2,035 1,992 2,010 Energy Solutions 6,791 4,675
-- -- -- Corporate -- --
CCS earnings
5,293 5,736 4,771 Integrated Gas 22,212 8,060
1,380 5,357 4,914 Upstream 16,223 9,603
375 757 471 Marketing 2,133 3,536
Chemicals and
332 980 (3) Products 4,515 404
Renewables and
4,673 (4,023) 1,894 Energy Solutions (1,059) (1,514)
(654) (543) (859) Corporate (2,461) (2,606)
11,399 8,264 11,187 Total CCS earnings 41,562 17,482
--------------------- ------------------ ------------------- --------------------- --------- ---------
1.Includes revenue from sources other than from contracts with
customers, which mainly comprises the impact of fair value
accounting of commodity derivatives. Fourth quarter 2022 included
income of $10,371 million (Q3 2022: $440 million loss; Q4 2021:
$4,287 million income). This amount includes both the reversal of
prior losses of $621 million (Q3 2022: $4,233 million losses; Q4
2021: $2,860 million losses) related to sales contracts and prior
losses of $1,032 million (Q3 2022: $4,114 million gains; Q4 2021:
$2,476 million gains) related to purchase contracts that were
previously recognised and where physical settlement took place in
the fourth quarter 2022.
RECONCILIATION OF INCOME FOR THE PERIOD TO CCS EARNINGS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Income/(loss)
attributable to
Shell plc
10,409 6,743 11,461 shareholders 42,309 20,101
Income/(loss)
attributable to
non-controlling
59 104 144 interest 565 529
Income/(loss) for
10,469 6,848 11,604 the period 42,873 20,630
Current cost of
supplies
adjustment:
1,210 1,800 (481) Purchases (1,714) (3,772)
(301) (433) 106 Taxation 444 808
Share of
profit/(loss) of
joint ventures and
22 51 (42) associates (41) (184)
Current cost of
supplies
930 1,417 (417) adjustment (1,311) (3,148)
of which:
Attributable to
Shell plc
904 1,354 (380) shareholders (1,196) (3,029)
Attributable to
non-controlling
27 62 (37) interest (116) (119)
11,399 8,264 11,187 CCS earnings 41,562 17,482
of which:
11,313 8,098 11,081 CCS earnings 41,113 17,072
attributable to
Shell plc
shareholders
86 167 106 CCS earnings 449 410
attributable to
non-controlling
interest
--------- --------- --------- ------------------- ---------- ---------
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-----------------------------------------------------
3. Earnings per share
EARNINGS PER SHARE
Quarters Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Income/(loss) attributable to Shell plc shareholders
10,409 6,743 11,461 ($ million) 42,309 20,101
Weighted average number of shares used as the basis
for determining:
7,063.9 7,276.7 7,701.9 Basic earnings per share (million) 7,347.5 7,761.7
7,127.2 7,341.3 7,744.3 Diluted earnings per share (million) 7,410.5 7,806.8
--------- --------- --------- -------------------------------------------------------- --------- ---------
4. Share capital
ISSUED AND FULLY PAID ORDINARY SHARES OF EUR0.07 EACH1
Number of shares Nominal value ($ million)
Ordinary Ordinary
A B shares A B shares Total
At January 1, 2022 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 January 29, 2022 (4,101,239,499) (3,548,786,406) 7,650,025,905 (345) (293) 638 --
Repurchases of B shares on January 27 and 28, 2022,
cancelled as ordinary shares on February 2 and 3,
2022 (507,742) -- --
Repurchases of shares after assimilation (646,014,770) (54) (54)
At December 31, 2022 7,003,503,393 584 584
At January 1, 2021 4,101,239,499 3,706,183,836 345 306 651
Repurchases of shares -- (123,290,882) -- (10) (10)
At December 31, 2021 4,101,239,499 3,582,892,954 345 296 641
-------------------------------------------------------- --------------- --------------- ------------- ----- ----- -------- -----
1. Share capital at December 31, 2022 also included 50,000
issued and fully paid sterling deferred shares of GBP1 each.
On January 29, 2022, as part of the simplification announced on
December 20, 2021, the Company's A shares and B shares assimilated
into a single line of ordinary shares. This is reflected in the
above table.
At Shell plc's Annual General Meeting on May 24, 2022, the Board
was authorised to allot ordinary shares in Shell plc, and to grant
rights to subscribe for, or to convert, any security into ordinary
shares in Shell plc, up to an aggregate nominal amount of EUR177
million (representing 2,530 million ordinary shares of EUR0.07
each), and to list such shares or rights on any stock exchange.
This authority expires at the earlier of the close of business on
August 24, 2023, and the end of the Annual General Meeting to be
held in 2023, unless previously renewed, revoked or varied by Shell
plc in a general meeting.
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5. Other reserves
OTHER RESERVES
Accumulated
Share Capital Share other
Merger premium redemption plan comprehensive
$ million reserve reserve reserve reserve income Total
At January 1, 2022 37,298 154 139 964 (19,646) 18,909
Other comprehensive income/(loss) attributable to
Shell plc shareholders -- -- -- -- 2,024 2,024
Transfer from other comprehensive income -- -- -- -- (34) (34)
Repurchases of shares -- -- 57 -- -- 57
Share-based compensation -- -- -- 176 -- 176
At December 31, 2022 37,298 154 197 1,139 (17,655) 21,131
At January 1, 2021 37,298 154 129 906 (25,735) 12,752
Other comprehensive income/(loss) attributable to
Shell plc shareholders -- -- -- -- 6,134 6,134
Transfer from other comprehensive income -- -- -- -- (45) (45)
Repurchases of shares -- -- 10 -- -- 10
Share-based compensation -- -- -- 58 -- 58
At December 31, 2021 37,298 154 139 964 (19,646) 18,909
---------------------------------------------------- ------- ------- ---------- ------- ------------- ------
The merger reserve and share premium reserve were established as
a consequence of Shell plc (formerly Royal Dutch Shell plc)
becoming the single parent company of Royal Dutch Petroleum Company
and The "Shell" Transport and Trading Company, p.l.c., now The
Shell Transport and Trading Company Limited, in 2005. The merger
reserve increased in 2016 following the issuance of shares for the
acquisition of BG Group plc. The capital redemption reserve was
established in connection with repurchases of shares of Shell plc.
The share plan reserve is in respect of equity-settled share-based
compensation plans.
6. Derivative financial instruments and debt excluding lease
liabilities
As disclosed in the Consolidated Financial Statements for the
year ended December 31, 2021, presented in the Annual Report and
Accounts and Form 20-F for that year, Shell is exposed to the risks
of changes in fair value of its financial assets and liabilities.
The fair values of the financial assets and liabilities are defined
as the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market
participants at the measurement date. Methods and assumptions used
to estimate the fair values at December 31, 2022, are consistent
with those used in the year ended December 31, 2021, though the
carrying amounts of derivative financial instruments measured using
predominantly unobservable inputs have changed since that date.
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 December 31, 2022 December 31, 2021
Carrying amount 56,153 61,579
Fair value(1) 51,959 67,066
---------------------------- ----------------- -----------------
1. Mainly determined from the prices quoted for these securities.
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7. Other notes to the unaudited Condensed Consolidated Financial
Statements
Consolidated Statement of Income
Interest and other income
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
160 498 3,968 Interest and other income/(expenses) 915 7,056
of which:
445 346 144 Interest income 1,046 511
Dividend income (from investments in equity
15 2 48 securities) 216 91
Net gains on sales and revaluation of non-current
21 93 3,679 assets and businesses 642 5,995
Net foreign exchange gains/(losses) on financing
(510) (12) 70 activities (340) 118
189 69 28 Other (648) 341
------- ------- ------- ----------------------------------------------------- ------- -------
For the full year 2022, Other includes the write-down of the
loan to Nord Stream 2 amounting to $1,126 million. See Note 8.
Depreciation, depletion and amortisation
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Depreciation,
depletion and
6,459 6,124 6,445 amortisation 18,529 26,921
of which:
5,731 5,665 5,364 Depreciation 22,393 23,070
788 466 1,090 Impairments 2,313 4,065
Impairment
(60) (8) (9) reversals (6,177) (214)
------------ ----------- ----------- ----------------- ---------- --------
Impairments in the fourth quarter 2022 mainly relate to
Renewables and Energy Solutions, Chemicals and Products and
Upstream. Impairments in the full year 2022 mainly related to the
withdrawal from Russian oil and gas activities (see Note 8) and
Upstream. Gains in 2022 from reversals of impairments mainly
related to Integrated Gas and Upstream.
Condensed Consolidated Balance Sheet
Application of IAS 29 Financial Reporting in Hyperinflationary
Economies
As from the second quarter 2022, Shell applies IAS 29 Financial
Reporting in Hyperinflationary Economies (IAS 29) for its Turkish
lira functional currency entities. The application of IAS 29 had no
significant impact.
Taxation
$ million
December 31, 2022 December 31, 2021
Non-current assets
Deferred tax 7,815 12,426
Non-current liabilities
Deferred tax 16,186 12,547
Net deferred liability (8,371) (121)
-------------------------- ----------------- -----------------
The presentation in the balance sheet takes into consideration
the offsetting of deferred tax assets and deferred tax liabilities
within the same tax jurisdiction, where this is permitted. The
overall deferred tax position in a particular tax jurisdiction
determines if a deferred tax balance related to that jurisdiction
is presented within deferred tax assets or deferred tax
liabilities.
Shell's net deferred tax position was a liability of $8,371
million at December 31, 2022 (December 31, 2021: $121 million). The
increase in the net liability since December 31, 2021, was mainly
driven by a reduction of the deferred tax asset due to the
utilisation of tax losses ($4,406 million), impairment reversals
($1,740 million), an increase of deferred tax liabilities on
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pensions ($1,223 million) and remeasurement of deferred tax
liabilities due to a tax rate change ($802 million), partly offset
by recognition of deferred tax assets based on future profit
forecast ($1,045 million).
On July 14, 2022, the Energy (Oil & Gas) Profits Levy Act
2022 (EPL) was enacted in the UK which applies an additional tax of
25% on the profits earned by oil and gas companies from the
production of oil and gas on the United Kingdom Continental Shelf.
In the fourth quarter 2022, the EPL percentage was increased to 35%
and the end date was extended from December 31, 2025 to March 31,
2028. The enactment of the EPL principally led to remeasurement of
deferred tax positions resulting in a charge of $441 million in the
fourth quarter 2022 (third quarter 2022: $361 million).
On August 16, 2022, the Inflation Reduction Act (IRA) was
enacted in the USA. As from 2023, under the IRA a Corporate Minimum
Tax on Book Earnings (BMT) applies a 15% tax on adjusted financial
statement income. The enactment of the IRA had no impact in
2022.
In the fourth quarter 2022, EU member states transposed the
"Council Regulation on an emergency intervention to address high
energy prices" (EU solidarity contribution) into national laws.
This resulted in a charge of $1,468 million in the fourth quarter
recognised in the income statement in Share of profit/(loss) of
joint ventures and associates and in the taxation charge.
Assets classified as held for sale
$ million
December 31, 2022 December 31, 2021
Assets classified as held for sale 2,850 1,960
Liabilities directly associated with assets classified
as held for sale 1,395 1,253
--------------------------------------------------------- ----------------- -----------------
Assets classified as held for sale and associated liabilities at
December 31, 2022 principally relate to three Upstream projects
held for sale. The major classes of assets and liabilities
classified as held for sale are Property, plant and equipment
($2,526 million; December 31, 2021: $896 million), Decommissioning
and other provisions ($1,105 million; December 31, 2021: $229
million) and Trade and other payables ($278 million; December 31,
2021: $375 million).
Retirement benefits
$ million
December 31, 2022 December 31, 2021
Non-current assets
Retirement benefits 10,200 8,471
Non-current liabilities
Retirement benefits 7,296 11,325
Surplus/(deficit) 2,904 (2,854)
-------------------------- ----------------- -----------------
Amounts recognised in the balance sheet in relation to defined
benefit plans include both plan assets and obligations that are
presented on a net basis on a plan-by-plan basis. The change of the
net retirement benefit liability as at December 31, 2021, into the
net retirement benefit asset as at December 31, 2022, is mainly
driven by an increase of the market yield on high-quality corporate
bonds in the USA, the UK and Eurozone, partly offset by an increase
in long-term Eurozone inflation rate expectations, experience
losses due to high short-term inflation and losses on plan
assets.
Decommissioning and other provisions
$ million
Non-current liabilities December 31, 2022 December 31, 2021
Decommissioning and other
provisions 23,845 25,804
---------------------------- ----------------- -----------------
The discount rate applied since September 30, 2022 was 3.25%
(June 30, 2022: 2.0%, December 31, 2021: 2.0%). Non-current
decommissioning and other provisions decreased by $3,383 million at
September 30, 2022 as a result of the change in the discount
rate.
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Non-controlling interest
$ million
December 31, 2022 December 31, 2021
Non-controlling interest 2,126 3,360
--------------------------- ----------------- -----------------
The decrease in the non-controlling interest is mainly
attributable to the acquisition of the non-controlling interest in
Shell Midstream Partners, L.P. for a cash consideration of $1,974
million in the fourth quarter 2022.
Consolidated Statement of Cash Flows
Cash flow from operating activities - Other
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
(1,850) 1,258 (1,236) Other 2,991 803
---------- --------- --------- ------------- ----------- ------
Cash flow from operating activities - Other for the fourth
quarter 2022 includes $541 million of net outflows (third quarter
2022: $625 million net inflows; fourth quarter 2021: $1,129 million
net outflows) due to the timing of payments relating to emissions
and biofuel programmes in Europe and North America and $683 million
in relation to reversal of currency gains on Cash and cash
equivalents (third quarter 2022: $478 million reversal of currency
losses; fourth quarter 2021: $66 million reversal of currency
losses). In the first quarter 2022, it also included $1,126 million
for the write-down of the Nord Stream 2 loan (see Note 8).
8. Withdrawal from Russian oil and gas activities
Following the invasion of Ukraine by Russia, Shell announced in
the first quarter 2022 its intent to:
a.withdraw from its ventures in Russia with Gazprom and related
entities, and to end its involvement in the Nord Stream 2 pipeline
project;
b.withdraw from its service station and lubricants operations in
Russia; and
c.withdraw in a phased manner from its involvement in all
Russian hydrocarbons, including crude oil, petroleum products, gas
and LNG, aligned with new government guidance.
Since these announcements:
--Shell stopped all spot purchases of Russian crude, liquefied
natural gas, and of cargoes of refined products directly exported
from Russia. Shell has not renewed any long-term contracts for
Russian crude, but was still legally obliged to take delivery of
crude bought under contracts that were signed before the
invasion.
--All of Shell's long-term 3rd party purchases of Russian crude
have stopped (when contractually allowed and all by the end of
2022).
--All of Shell's contracts to purchase refined products exported
from Russia have also ended.
--Shell's two pipeline gas contracts terminated by the end of
2022.
--Shell still holds two long-term LNG offtake contracts with
Russian entities, accounted for as regular sales and purchase
contracts. The counterparty in one of these contracts stopped
delivering cargoes to Shell in the third quarter 2022.
--Shell sold its service station and lubricants operations in
Russia in the second quarter 2022.
These actions led to recognition of net pre-tax charges of
$4,235 million (post-tax: $3,894 million) in the first quarter
2022, net pre-tax negative charges of $111 million (post-tax: $136
million) in the second quarter 2022, net pre-tax negative charges
of $55 million (post-tax: $55 million) in the third quarter 2022
and net pre-tax charges of $101 million (post-tax: $101 million) in
the fourth quarter 2022. These were recognised in:
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Q4 2022 Q3 2022 Full year 2022
Revenue -- -- (468)
Share of profit of joint ventures and associates -- -- (1,614)
Interest and other income/(expenses) -- 81 (1,116)
Selling, distribution and administrative expenses -- -- (104)
Depreciation, depletion and amortisation -- -- (695)
Other (101) 1 (26) (173)
Income/(loss) before taxation (101) 55 (4,170)
Taxation charge/(credit) -- -- (366)
Income/(loss) for the period (101) 55 (3,804)
-------------------------------------------------------- ------- ------- --------------
1.Mainly relating to a provision.
In relation to the assets with a potential exposure to Shell's
intended withdrawal from all Russian hydrocarbons, including those
assets for which the above charges were recognised during the year,
there is a $0.1 billion balance sheet carrying amount as at
December 31, 2022 (September 30, 2022: $0 billion, June 30, 2022:
$0.2 billion; March 31, 2022: $1 billion).
Further details are provided below.
Integrated Gas
Sakhalin-2
Shell holds a 27.5% (minus one share) interest in Sakhalin
Energy Investment Company Ltd. (SEIC). Other ownership interests
were Gazprom 50% (plus one share), Mitsui 12.5% and Mitsubishi 10%.
Up to March 31, 2022, this investment was accounted for as an
associate applying the equity method. Following the first quarter
announcements, the recoverable amount of the investment was
estimated as the risk-adjusted dividends declared on Sakhalin's
2021 results, of which the first part was received in April 2022.
This resulted in recognition of an impairment charge of $1,614
million in the first quarter 2022. Significant influence over the
Sakhalin-2 investment was lost from April 1, 2022, with the
resignation of Shell's executive directors and withdrawal of
managerial and technical staff, leading to recognition, without
financial impact, of the investment as a financial asset accounted
for at fair value from that date, with subsequent changes in fair
value recognised in other comprehensive income.
On June 30, 2022, a Russian Presidential Decree was passed
requiring the transfer of all licences, rights and obligations of
SEIC into a newly-created Russian company (LLC) that would assume
the rights and obligations of SEIC. The decree stated that the
foreign shareholders would be invited to apply for shares in that
entity equivalent to their shareholding in SEIC. Following the
receipt of dividends in the second quarter 2022 and the
Presidential Decree, appropriate fair value adjustments to the
investment value have been recognised, against other comprehensive
income.
Shell understands that pursuant to the Presidential Decree, all
licences, assets, rights and obligations of SEIC were purportedly
transferred to the LLC on August 17, 2022. On September 1, 2022,
Shell formally advised the Russian Federation (RFG) that it would
not apply for shares in the LLC, that it objected to the purported
transfers from SEIC to the LLC and that it reserved all rights and
remedies. Shell understands the RFG has commenced a process to sell
those shares in the LLC which Shell did not apply for. This process
was expected to be completed in the first quarter 2023, but the
decree was amended in January 2023 to remove the timeline. Pursuant
to the Presidential Decree, the RFG is also expected to conduct an
audit of 'the activities of foreign shareholders in SEIC and/or
individuals', based on which the RFG will determine the 'amount of
damage caused' and 'persons liable to indemnify it'. The carrying
value of the investment is zero as at December 31, 2022 (September
30, 2022: zero).
Nord Stream 2
Shell is one of five energy companies which each committed to
provide financing and guarantees for up to 10% of the total cost of
the project, with the final loan instalments having been made in
the second quarter 2020. Following the first quarter 2022
announcements, Shell assessed the recoverability of the loan to
Nord Stream 2, leading to a full write-down in the first quarter
2022 of the loan amounting to $1,126 million. On September 26,
2022, one of the two Nord Stream 2 pipelines ruptured resulting in
a gas leak and significant damage. Investigations are now under way
to determine the cause of the rupture. The rupture had no financial
impact in the third quarter 2022, following the full write-down of
the loan in the first quarter 2022.
Upstream
Salym
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Shell has a 50% interest in Salym Petroleum Development N.V.
(Salym), a joint operation with GazpromNeft (GPN) that is
developing the Salym fields in the Khanty Mansiysk Autonomous
District of western Siberia. Shell consolidated its share in the
joint operation. Following the first quarter announcements, Shell
assessed the recoverability of the Salym carrying amounts, leading
to full impairment amounting to $233 million in the first quarter
2022. In July 2022, the Shell directors of Salym resigned. Joint
control was lost early in the third quarter 2022 and from that date
Salym was accounted for as a financial asset at fair value, with a
carrying value of zero. Pursuant to Russian legislative changes and
court decisions in the second and third quarter 2022, the Russian
branch of Salym has purportedly been transformed into a Russian LLC
(Salym Petroleum Development Limited Liability Company). All
assets, rights and obligations of the Russian branch of Salym have
purportedly been transferred to that entity, of which Shell,
purportedly, automatically holds 50%. On December 22, 2022, Shell
signed transaction documents with GPN to sell its 50% interest in
Salym Petroleum Development Limited Liability Company. Completion
is subject to a number of approvals in the Russian Federation.
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 Siberia. This project is in the
exploration phase, with no production. Following the first quarter
announcements, Shell assessed the recoverability of the Gydan
carrying amounts, leading to full impairment amounting to $153
million and other charges of $35 million in the first quarter 2022.
During the second quarter 2022, all rights and obligations for
Shell's 50% interest were transferred to GazpromNeft with an
insignificant impact on the income statement.
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
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,
$140 million was recognised in income in the second quarter 2022
from the derecognition of lease liabilities following the
termination of lease arrangements for which the right-of-use assets
were impaired in the first quarter 2022.
9. Post-balance sheet events
On January 30, 2023, Shell announced to reduce the size of its
Executive Committee from nine to seven members. Under the changes,
which are expected to take effect on July 1, 2023, Shell's
Integrated Gas and Upstream businesses will be combined to form a
new Integrated Gas and Upstream Directorate and the Downstream
business will be combined with Renewables and Energy Solutions to
form a new Downstream and Renewables Directorate. Separately, the
Strategy, Sustainability and Corporate Relations Directorate will
be discontinued. The changes announced do not affect Shell's
financial reporting segments, which remain unchanged.
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ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES
A.Adjusted Earnings and Adjusted earnings before interest,
taxes, depreciation and amortisation (EBITDA)
The "Adjusted Earnings" measure aims to facilitate a comparative
understanding of Shell's financial performance from period to
period by removing the effects of oil price changes on inventory
carrying amounts and removing the effects of identified items.
These items are in some cases driven by external factors and may,
either individually or collectively, hinder the comparative
understanding of Shell's financial results from period to period.
This measure excludes earnings attributable to non-controlling
interest.
We define "Adjusted EBITDA" as "Income/(loss) for the period"
adjusted for current cost of supplies; identified items; tax
charge/(credit); depreciation, amortisation and depletion;
exploration well write-offs and net interest expense. All items
include the non-controlling interest component. Management uses
this measure to evaluate Shell's performance in the period and over
time.
ADJUSTED EARNINGS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
10,409 6,743 11,461 Income/(loss) attributable to Shell plc shareholders 42,309 20,101
Add: Current cost of supplies adjustment attributable
904 1,354 (380) to Shell plc shareholders (Note 2) (1,196) (3,029)
Less: Identified items attributable to Shell plc
1,498 (1,356) 4,690 shareholders 1,243 (2,216)
9,814 9,454 6,391 Adjusted Earnings 39,870 19,289
Of which:
5,968 2,319 4,036 Integrated Gas 16,137 9,048
3,061 5,896 2,838 Upstream 17,319 8,015
446 820 611 Marketing 2,754 3,468
744 772 (130) Chemicals and Products 4,719 2,115
293 383 43 Renewables and Energy Solutions 1,745 (243)
(626) (571) (889) Corporate (2,371) (2,686)
(73) (165) (117) Less: Non-controlling interest (434) (429)
-------- --------- -------- ----------------------------------------------------------- --------- ---------
ADJUSTED EBITDA
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
9,814 9,454 6,391 Adjusted Earnings 39,870 19,289
73 165 117 Add: Non-controlling interest 434 429
Add: Taxation charge/(credit) excluding tax impact
3,991 5,621 3,586 of identified items 18,578 8,482
Add: Depreciation, depletion and amortisation excluding
5,732 5,665 5,364 impairments 22,393 23,071
395 218 72 Add: Exploration well write-offs 881 639
1,040 734 963 Add: Interest expense excluding identified items 3,180 3,607
445 346 144 Less: Interest income 1,046 510
20,600 21,512 16,349 Adjusted EBITDA 84,289 55,004
Of which:
8,332 5,393 6,091 Integrated Gas 26,569 16,754
9,418 12,539 8,446 Upstream 42,100 27,170
1,045 1,505 1,125 Marketing 5,324 6,021
1,574 1,797 741 Chemicals and Products 8,561 5,635
396 530 80 Renewables and Energy Solutions 2,459 (21)
(164) (251) (133) Corporate (725) (554)
-------- --------- -------- ----------------------------------------------------------- --------- ---------
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Identified items
Identified items comprise: divestment gains and losses,
impairments, redundancy and restructuring, provisions for onerous
contracts, fair value accounting of commodity derivatives and
certain gas contracts and the impact of exchange rate movements on
certain deferred tax balances, and other items. Identified items in
the table below are presented on a net basis.
IDENTIFIED ITEMS
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Identified items included in Income/(loss) before
taxation
21 92 3,661 Divestment gains/(losses) 657 5,996
(778) (458) (1,115) Impairment reversals/(impairments) 2,260 (3,884)
23 (26) 131 Redundancy and restructuring 44 (227)
-- 29 (233) Provisions for onerous contracts (508) (340)
Fair value accounting of commodity derivatives and
5,618 (2,199) 3,845 certain gas contracts 3,244 (3,249)
(1,087) 1 608 (638) Other (1,519) 1 (621)
Total identified items included in Income/(loss) before
3,796 (1,955) 5,653 taxation 4,178 (2,326)
(2,285) 2 601 (973) Total identified items included in Taxation charge/(credit) (2,919) 2 91
Identified items included in Income/(loss) for the
period
(46) 99 3,003 Divestment gains/(losses) 418 4,632
(659) (363) (838) Impairments 725 (2,993)
17 (29) 97 Redundancy and restructuring 43 (140)
-- 17 (217) Provisions for onerous contracts (487) (299)
Fair value accounting of commodity derivatives and
4,181 (998) 3,216 certain gas contracts 3,421 (2,764)
74 (81) (18) Impact of exchange rate movements on tax balances (57) (128)
(2,056) 3 1 (564) Other (2,804) 3 (543)
1,512 (1,354) 4,679 Impact on CCS earnings 1,259 (2,235)
Of which:
(675) 3,417 735 Integrated Gas 6,075 (988)
(1,681) (539) 2,077 Upstream (1,096) 1,587
(72) (63) (140) Marketing (622) 68
(412) 208 127 Chemicals and Products (204) (1,712)
4,379 (4,406) 1,851 Renewables and Energy Solutions (2,805) (1,272)
(28) 28 30 Corporate (90) 81
13 2 (11) Impact on CCS earnings attributable to non-controlling 15 (19)
interest
1,498 (1,356) 4,690 Impact on CCS earnings attributable to Shell plc 1,243 (2,216)
shareholders
--------- ----- --------- --------- ----------------------------------------------------------- --------- ----- ---------
1. Includes $(940) million related to the EU solidarity contribution.
2. Includes $(528) million related to the EU solidarity contribution and
$(441) million related to the UK Energy Profits Levy. The third quarter
2022 includes $(361) million related to the UK Energy Profits Levy.
3. Includes $(2,270) million related to the EU solidarity contribution and
to the UK Energy Profits Levy. The third quarter 2022 includes $(361)
million related to the UK Energy Profits Levy.
The identified items categories above may include after-tax
impacts of identified items of joint ventures and associates which
are fully reported within "Share of profit of joint ventures and
associates" in the Consolidated Statement of Income, and fully
reported as identified items included in Income / (loss) before
taxation in the table above. Identified items related to
subsidiaries are consolidated and reported across appropriate lines
of the Consolidated Statement of Income. Only pre-tax identified
items reported by subsidiaries are taken into account in the
calculation of underlying operating expenses (Reference F).
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Provisions for onerous contracts: Provisions for onerous
contracts that relate to businesses that Shell has exited or to
redundant assets or assets that cannot be used.
Fair value accounting of commodity derivatives and certain gas
contracts: In the ordinary course of business, Shell enters into
contracts to supply or purchase oil and gas products, as well as
power and environmental products. Shell also enters into contracts
for tolling, pipeline and storage capacity. Derivative contracts
are entered into for mitigation of resulting economic exposures
(generally price exposure) and these derivative contracts are
carried at period-end market price (fair value), with movements in
fair value recognised in income for the period. Supply and purchase
contracts entered into for operational purposes, as well as
contracts for tolling, pipeline and storage capacity, are, by
contrast, recognised when the transaction occurs; furthermore,
inventory is carried at historical cost or net realisable value,
whichever is lower. As a consequence, accounting mismatches occur
because: (a) the supply or purchase transaction is recognised in a
different period, or (b) the inventory is measured on a different
basis. In addition, certain contracts are, due to pricing or
delivery conditions, deemed to contain embedded derivatives or
written options and are also required to be carried at fair value
even though they are entered into for operational purposes. The
accounting impacts are reported as identified items.
Impacts of exchange rate movements on tax balances represent the
impact on tax balances of exchange rate movements arising on (a)
the conversion to dollars of the local currency tax base of
non-monetary assets and liabilities, as well as losses (this
primarily impacts the Upstream and Integrated Gas segments) and (b)
the conversion of dollar-denominated inter-segment loans to local
currency, leading to taxable exchange rate gains or losses (this
primarily impacts the Corporate segment).
Other identified items represent other credits or charges that
based on Shell management's assessment hinder the comparative
understanding of Shell's financial results from period to period,
including charges relating to the EU solidarity contribution and
the deferred tax impact of the UK Energy Profits Levy.
B. Adjusted Earnings per share
Adjusted Earnings per share is calculated as Adjusted Earnings
(see Reference A), divided by the weighted average number of shares
used as the basis for basic earnings per share (see Note 3).
C. Cash capital expenditure
Cash capital expenditure represents cash spent on maintaining
and developing assets as well as on investments in the period.
Management regularly monitors this measure as a key lever to
delivering sustainable cash flows. Cash capital expenditure is the
sum of the following lines from the Consolidated Statement of Cash
flows: Capital expenditure, Investments in joint ventures and
associates and Investments in equity securities.
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
6,417 5,268 6,236 Capital expenditure 22,600 19,000
Investments in joint
ventures and
860 95 145 associates 1,973 479
Investments in
42 63 120 equity securities 261 218
Cash capital
7,319 5,426 6,500 expenditure 24,833 19,698
Of which:
1,527 956 1,014 Integrated Gas 4,265 3,502
1,845 1,733 1,504 Upstream 8,143 6,168
1,993 746 829 Marketing 4,831 2,273
Chemicals and
786 828 1,410 Products 3,838 5,175
Renewables and
Energy
1,076 1,086 1,617 Solutions 3,469 2,359
91 78 127 Corporate 287 221
---------- --------- --------- -------------------- ---------- --------
D. Return on average capital employed
Return on average capital employed ("ROACE") measures the
efficiency of Shell's utilisation of the capital that it employs.
Shell uses two ROACE measures: ROACE on a Net income basis and
ROACE on an Adjusted Earnings plus Non-controlling interest (NCI)
basis, both adjusted for after-tax interest expense.
Both measures refer to Capital employed which consists of total
equity, current debt and non-current debt.
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ROACE on a Net income basis
In this calculation, the sum of income for the current and
previous three quarters, adjusted for after-tax interest expense,
is expressed as a percentage of the average capital employed for
the same period.
$ million Quarters
Q4 2022 Q3 2022 Q4 2021
Income - current and previous three quarters 42,873 44,009 20,630
Interest expense after tax - current and previous
three quarters 2,290 2,273 2,741
Income before interest expense - current and previous
three quarters 45,164 46,282 23,371
Capital employed -- opening 264,413 262,074 266,551
Capital employed -- closing 276,392 272,227 264,413
Capital employed -- average 270,402 267,150 265,482
ROACE on a Net income basis 16.7% 17.3% 8.8%
-------------------------------------------------------- -------- ------- -------
ROACE on an Adjusted Earnings plus Non-controlling interest
(NCI) basis
In this calculation, the sum of Adjusted Earnings (see Reference
A) plus non-controlling interest (NCI) excluding identified items
for the current and previous three quarters, adjusted for after-tax
interest expense, is expressed as a percentage of the average
capital employed for the same period.
$ million Quarters
Q4 2022 Q3 2022 Q4 2021
Adjusted Earnings - current and previous three quarters
(Reference A) 39,870 36,446 19,289
Add: Income/(loss) attributable to NCI - current and
previous three quarters 565 649 529
Add: Current cost of supplies adjustment attributable
to NCI - current and previous three quarters (116) (180) (119)
Less: Identified items attributable to NCI (Reference
A) - current and previous three quarters 15 (9) (19)
Adjusted Earnings plus NCI excluding identified items
- current and previous three quarters 40,303 36,924 19,718
Add: Interest expense after tax - current and previous
three quarters 2,290 2,273 2,741
Adjusted Earnings plus NCI excluding identified items
before interest expense - current and previous three
quarters 42,593 39,197 22,459
Capital employed - average 270,402 267,150 265,482
ROACE on an Adjusted Earnings plus NCI basis 15.8% 14.7% 8.5%
---------------------------------------------------------- -------- ------- -------
E. Gearing
Gearing is a measure of Shell's capital structure and is defined
as net debt as a percentage of total capital. Net debt is defined
as the sum of current and non-current debt, less cash and cash
equivalents, adjusted for the fair value of derivative financial
instruments used to hedge foreign exchange and interest rate risks
relating to debt, and associated collateral balances. Management
considers this adjustment useful because it reduces the volatility
of net debt caused by fluctuations in foreign exchange and interest
rates, and eliminates the potential impact of related collateral
payments or receipts. Debt-related derivative financial instruments
are a subset of the derivative financial instrument assets and
liabilities presented on the balance sheet. Collateral balances are
reported under "Trade and other receivables" or "Trade and other
payables" as appropriate.
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4th QUARTER 2022 AND FULL YEAR UNAUDITED RESULTS
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$ million Quarters
December 31, September 30, December 31,
2022 2022 2021
Current debt 9,001 8,046 8,218
Non-current debt 74,794 73,944 80,868
Total debt 83,796 81,990 89,086
Of which lease liabilities 27,643 26,560 27,507
Add: Debt-related derivative financial instruments:
net liability/(asset) 3,071 4,470 424
Add: Collateral on debt-related derivatives: net
liability/(asset) (1,783) (2,139) 16
Less: Cash and cash equivalents (40,246) (35,978) (36,970)
Net debt 44,838 48,343 52,556
Add: Total equity 192,597 190,237 175,326
Total capital 237,434 238,581 227,882
Gearing 18.9% 20.3% 23.1%
--------------------------------------------------------- ----- ---- ------ ----- ------ ----
F. Operating expenses
Operating expenses is a measure of Shell's cost management
performance, comprising the following items from the Consolidated
Statement of Income: production and manufacturing expenses;
selling, distribution and administrative expenses; and research and
development expenses.
Underlying operating expenses is a measure aimed at facilitating
a comparative understanding of performance from period to period by
removing the effects of identified items, which, either
individually or collectively, can cause volatility, in some cases
driven by external factors.
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Production and manufacturing
7,220 5,910 6,530 expenses 25,518 23,822
Selling, distribution and
3,491 3,229 2,867 administrative expenses 12,883 11,328
403 220 304 Research and development 1,075 815
11,114 9,359 9,701 Operating expenses 39,477 35,964
Of which identified items:
Redundancy and
restructuring
23 (26) 131 (charges)/reversal 46 (226)
(100) 561 (238) (Provisions)/reversal 77 (254)
-- -- (208) Other (143) (175)
(77) 535 (314) (21) (655)
11,037 9,893 9,386 Underlying operating expenses 39,456 35,309
--------- --------- --------- ------------------------------- --------- --------
G. Free cash flow
Free cash flow is used to evaluate cash available for financing
activities, including dividend payments and debt servicing, after
investment in maintaining and growing the business. It is defined
as the sum of "Cash flow from operating activities" and "Cash flow
from investing activities".
Cash flows from acquisition and divestment activities are
removed from Free cash flow to arrive at the Organic free cash
flow, a measure used by management to evaluate the generation of
free cash flow without these activities.
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Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
22,404 12,539 8,170 Cash flow from operating activities 68,413 45,104
(6,918) (5,049) 2,579 Cash flow from investing activities (22,448) (4,761)
15,486 7,490 10,749 Free cash flow 45,965 40,343
235 278 9,132 Less: Divestment proceeds (Reference I) 2,059 15,113
Add: Tax paid on divestments (reported under "Other
17 -- 164 investing cash outflows") 17 188
Add: Cash outflows related to inorganic capital
971 661 1,385 expenditure1 4,205 1,658
16,238 7,872 3,166 Organic free cash flow2 48,128 27,076
--------------------- ------------------ ------------------- ----------------------------------------------------------- ---------- ---------
1. Cash outflows related to inorganic capital expenditure includes portfolio
actions which expand Shell's activities through acquisitions and
restructuring activities as reported in capital expenditure lines in the
Consolidated Statement of Cash Flows.
2. Free cash flow less divestment proceeds, adding back outflows related to
inorganic expenditure.
H. Cash flow from operating activities excluding working capital movements
Working capital movements are defined as the sum of the
following items in the Consolidated Statement of Cash Flows: (i)
(increase)/decrease in inventories, (ii) (increase)/decrease in
current receivables, and (iii) increase/(decrease) in current
payables.
Cash flow from operating activities excluding working capital
movements is a measure used by Shell to analyse its operating cash
generation over time excluding the timing effects of changes in
inventories and operating receivables and payables from period to
period.
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
22,404 12,539 8,170 Cash flow from operating activities 68,413 45,104
2,902 484 (860) (Increase)/decrease in inventories (8,360) (7,319)
5,179 (98) (6,799) (Increase)/decrease in current receivables (8,989) (20,567)
2,308 (4,544) 4,688 Increase/(decrease) in current payables 11,915 17,519
10,390 (4,157) (2,971) (Increase)/decrease in working capital (5,435) (10,366)
12,014 16,696 11,140 Cash flow from operating activities excluding working 73,848 55,471
capital movements
-------- --------- --------- --------------------------------------------------------- --------- ----------
I. Divestment proceeds
Divestment proceeds represent cash received from divestment
activities in the period. Management regularly monitors this
measure as a key lever to deliver sustainable cash flow.
Quarters $ million Full year
Q4 2022 Q3 2022 Q4 2021 2022 2021
Proceeds from sale of property, plant and equipment
52 39 8,843 and businesses 1,431 14,233
Proceeds from joint ventures and associates from sale,
119 203 137 capital reduction and repayment of long-term loans 511 584
65 36 151 Proceeds from sale of equity securities 117 296
235 278 9,132 Divestment proceeds 2,059 15,113
------- --------- --------- ---------------------------------------------------------- --------- ----------
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SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
RESULTS
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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 Shell plc directly and indirectly owns
investments are separate legal entities. In this Unaudited
Condensed Financial Report, "Shell", "Shell Group" and "Group" are
sometimes used for convenience where references are made to Shell
plc and its subsidiaries in general. Likewise, the words "we", "us"
and "our" are also used to refer to Shell plc and its subsidiaries
in general or to those who work for them. These terms are also used
where no useful purpose is served by identifying the particular
entity or entities. "Subsidiaries", "Shell subsidiaries" and "Shell
companies" as used in this Unaudited Condensed Financial Report
refer to entities over which Shell plc either directly or
indirectly has control. Entities and unincorporated arrangements
over which Shell has joint control are generally referred to as
"joint ventures" and "joint operations", respectively. "Joint
ventures" and "joint operations" are collectively referred to as
"joint arrangements". Entities over which Shell has significant
influence but neither control nor joint control are referred to as
"associates". The term "Shell interest" is used for convenience to
indicate the direct and/or indirect ownership interest held by
Shell in an entity or unincorporated joint arrangement, after
exclusion of all third-party interest.
Forward-Looking Statements
This Unaudited Condensed Financial Report contains
forward-looking statements (within the meaning of the U.S. Private
Securities Litigation Reform Act of 1995) concerning the financial
condition, results of operations and businesses of Shell. All
statements other than statements of historical fact are, or may be
deemed to be, forward-looking statements. Forward-looking
statements are statements of future expectations that are based on
management's current expectations and assumptions and involve known
and unknown risks and uncertainties that could cause actual
results, performance or events to differ materially from those
expressed or implied in these statements. Forward-looking
statements include, among other things, statements concerning the
potential exposure of Shell to market risks and statements
expressing management's expectations, beliefs, estimates,
forecasts, projections and assumptions. These forward-looking
statements are identified by their use of terms and phrases such as
"aim", "ambition", "anticipate", "believe", "could", "estimate",
"expect", "goals", "intend", "may", "milestones", "objectives",
"outlook", "plan", "probably", "project", "risks", "schedule",
"seek", "should", "target", "will" and similar terms and phrases.
There are a number of factors that could affect the future
operations of Shell and could cause those results to differ
materially from those expressed in the forward-looking statements
included in this Unaudited Condensed Financial Report, including
(without limitation): (a) price fluctuations in crude oil and
natural gas; (b) changes in demand for Shell's products; (c)
currency fluctuations; (d) drilling and production results; (e)
reserves estimates; (f) loss of market share and industry
competition; (g) environmental and physical risks; (h) risks
associated with the identification of suitable potential
acquisition properties and targets, and successful negotiation and
completion of such transactions; (i) the risk of doing business in
developing countries and countries subject to international
sanctions; (j) legislative, judicial, fiscal and regulatory
developments including regulatory measures addressing climate
change; (k) economic and financial market conditions in various
countries and regions; (l) political risks, including the risks of
expropriation and renegotiation of the terms of contracts with
governmental entities, delays or advancements in the approval of
projects and delays in the reimbursement for shared costs; (m)
risks associated with the impact of pandemics, such as the COVID-19
(coronavirus) outbreak; and (n) changes in trading conditions. No
assurance is provided that future dividend payments will match or
exceed previous dividend payments. All forward-looking statements
contained in this Unaudited Condensed Financial Report are
expressly qualified in their entirety by the cautionary statements
contained or referred to in this section. Readers should not place
undue reliance on forward-looking statements.
Additional risk factors that may affect future results are
contained in Shell plc's Form 20-F for the year ended December 31,
2021 (available at www.shell.com/investor and www.sec.gov). These
risk factors also expressly qualify all forward-looking statements
contained in this Unaudited Condensed Financial Report and should
be considered by the reader. Each forward-looking statement speaks
only as of the date of this Unaudited Condensed Financial Report,
February 2, 2023. Neither Shell plc nor any of its subsidiaries
undertake any obligation to publicly update or revise any
forward-looking statement as a result of new information, future
events or other information. In light of these risks, results could
differ materially from those stated, implied or inferred from the
forward-looking statements contained in this Unaudited Condensed
Financial Report.
Shell's net carbon footprint
Also, in this Unaudited Condensed Financial Report we may refer
to Shell's "Net Carbon Footprint" or "Net Carbon Intensity", which
include Shell's carbon emissions from the production of our energy
products, our suppliers' carbon emissions in supplying energy for
that production and our customers' carbon emissions associated with
their use of the energy products we sell. Shell only controls its
own emissions. The use of the term Shell's "Net Carbon Footprint"
or "Net Carbon Intensity" are for convenience only and not intended
to suggest these emissions are those of Shell plc or its
subsidiaries.
Shell's Net-Zero Emissions Target
Shell's operating plan, outlook and budgets are forecasted for a
ten-year period and are updated every year. They reflect the
current economic environment and what we can reasonably expect to
see over the next ten years. Accordingly, they reflect our Scope 1,
Scope 2 and Net Carbon Footprint (NCF) targets over the next ten
years. However, Shell's operating plans cannot reflect our 2050
net-zero emissions target and 2035 NCF target, as these targets are
currently outside our planning period. In the future, as society
moves towards net-zero emissions, we expect Shell's operating plans
to reflect this movement. However, if society is not net zero in
2050, as of today, there would be significant risk that Shell may
not meet this target.
Forward-Looking Non-GAAP measures
This Unaudited Condensed Financial Report may contain certain
forward-looking non-GAAP measures such as cash capital expenditure
and divestments. We are unable to provide a reconciliation of these
forward-looking Non-GAAP measures to the most comparable GAAP
financial measures because certain information needed to reconcile
those Non-GAAP measures to the most comparable GAAP financial
measures is dependent on future events some of which are outside
the control of Shell, such as oil and gas prices, interest rates
and exchange rates. Moreover, estimating such GAAP measures with
the required precision necessary to provide a meaningful
reconciliation is extremely difficult and could not be accomplished
without unreasonable effort. Non-GAAP measures in respect of future
periods which cannot be reconciled to the most comparable GAAP
financial measure are calculated in a manner which is consistent
with the accounting policies applied in Shell plc's consolidated
financial statements.
The contents of websites referred to in this Unaudited Condensed
Financial Report do not form part of this Unaudited Condensed
Financial Report.
We may have used certain terms, such as resources, in this
Unaudited Condensed Financial Report that the United States
Securities and Exchange Commission (SEC) strictly prohibits us from
including in our filings with the SEC. Investors are urged to
consider closely the disclosure in our Form 20-F, File No 1-32575,
available on the SEC website www.sec.gov.
This announcement contains inside information.
February 2, 2023
The information in this announcement reflects the
unaudited consolidated financial position and results of
Shell plc. Company No. 4366849, Registered Office: Shell
Centre, London, SE1 7NA, England, UK.
----------------------------------------------------------
Page 31
SHELL PLC 4th QUARTER 2022 AND FULL YEAR UNAUDITED
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Contacts:
- Caroline Omloo, Company Secretary
- Media: International +44 (0) 207 934 5550; USA +1 832 337
4355
LEI number of Shell plc: 21380068P1DRHMJ8KU70
Classification: Inside Information
Page 32
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