Enhanced Disclosures – New Reporting Segments
May 3, 2022
Our new reporting segmentation aligns to how our businesses are organised and managed to deliver our Powering Progress strategy. New segmentation and the enhanced disclosures create more transparency on our Growth businesses.
Changes to Shell’s reporting structure
Title: Changes to Shell’s reporting structure
Duration: 5.48 minutes
Shell’s executive vice president investor relations, Tjerk Huysinga, shares what changes are made to Shell’s reporting structure.
Tjerk shares how segments within the reporting structure are changing, and why. More information on the new segment of Renewables and Energy Solutions is shared.
Last year we announced our Powering Progress strategy and in Q1 2022, we implemented a new reporting segmentation to align with how our businesses are organised and managed to deliver our strategy. Our businesses are organised under three strategic pillars. First, Upstream. Second, Transition, which includes Integrated Gas and Chemicals and Products, and thirdly, Growth, which includes Marketing and Renewables and Energy Solutions. And we have significantly enhanced our disclosures for the businesses in our Growth pillar. We are continuing our journey to improve transparency and expect that these changes will make it easier for you to model the value of these growing businesses.
So, here are the key changes to our reporting segments: The former Oil Products segment will be split up. Marketing becomes a standalone segment. The Refining and Trading activities are combined with Chemicals and are now reported as the Chemicals and Products segment. The Renewables and Energy Solutions portfolio, previously reported as part of the Integrated Gas segment, will become a standalone segment.
Our Renewables and Energy Solutions business is essential for our ambition to become a major provider of renewable and low-carbon energy services. We are and will be helping our customers, whether households or businesses to decarbonize their energy use. Our activities in this new segment are as follows: Our integrated power value-chain including the marketing and trading of gas and power. Shell's production and marketing of decarbonised hydrogen. The development of commercial Carbon Capture and Storage hubs. And our investments in nature-based projects that avoid or reduce carbon as well as the marketing of carbon credits. I also like to highlight that electric mobility and biofuels are reported in the Marketing segment.
With the new segmentation we are increasing the transparency and granularity of our financial reporting. For each of the new segments we are providing P&L details and a reconciliation from adjusted earnings to adjusted EBITDA to Free Cash Flow. All of this with 5 years of historic financials. We are sharing further insight into our marketing activities by publishing financials for Mobility, Lubricants and Sectors and Decarbonisation, separately. For Mobility we have split the absolute margin into Fuel margin, Convenience Retail margin and Other income, which includes Electric Mobility. For Chemicals, we have started reporting an Indicative Chemical margin in Q1 similar to the Indicative Refining Margin, which we introduced in 2021.
Along with the enhanced financial disclosures, we are increasing transparency on our operational performance and on the progress we make against our strategic growth objectives. For Renewables and Energy Solutions for example, we now report our external power sales on a quarterly basis. This is a key metric for our customer-led integrated power strategy. In this segment we also publish the sales of natural gas. Natural gas marketing is closely integrated with our Power business often serving the same customers in the utility sector. Additional disclosures on renewable capacity demonstrate our progress in building a core base of renewable generation assets to support low-carbon offers to our customers.
In our Marketing segment, our enhanced operational disclosures include: volumes of premium fuel sold, the number of EV charge points we install and operate, the number of our convenience retail stores, Shell branded forecourts, and customer touch points, will be provided on an annual basis. Volumes of premium lubricants and additional lubricant gross margin insights will also be provided on an annual basis.
Our new segmentation and the enhanced disclosures create more transparency on how we are delivering our Powering Progress strategy. As our low-carbon businesses mature, we look forward to providing even further insight into our journey.