CFO video comment

Title: Q4 Results February 2021

Duration 02:57

 

Description:

A video led by  Jessica Uhl delivering the figures to summarize the Q4 February 2021 Results

Accessibility Script

 

[Audio]

Theme music begins

[Vision]

Jessica Uhl standing in front of a grey background

[Jessica to Camera]

2020 was an exceptionally challenging year, but it was also a year of delivery for Shell.

[Animation footage]

Jessica Uhl Shell CFO

[Jessica to Camera]

We have kept energy supplies flowing, while helping our colleagues, customers and communities to stay safe. We took decisive measures to preserve cash, ensure the resilience of our business, and deliver a strong operational performance throughout the year.

[Animation footage]

Year of delivery

Preserve cash

Resilience of our business

Strong operational performance

[Jessica to Camera]

For the full year, our cash flow from operations was an industry-leading $34.1 billion and we reduced our net debt by $4 billion, strengthening our balance sheet. We exceeded our cost reduction targets ahead of time, saving $4.5 billion in underlying opex, and also reduced cash capital expenditure by more than $7 billion from our original plan level. In the fourth quarter of 2020, our adjusted earnings were some $400 million, with cash flow from operations excluding working capital movements of $6.6 billion.

[Animation footage]

Industry-leading cash flow

Exceeded cost reduction targets

[Jessica to Camera]

We remain committed to our progressive dividend policy and expect to grow  our dividend per share by 4% as of the first quarter 2021

[Animation footage]

Progressive dividend policy

[Jessica to Camera]

Our performance in 2020 reflects the resilience of our people and our portfolio. As we look to 2021 and beyond, I am confident that our advantaged assets and premium products will enable us to keep generating leading cash flows, grow our business, further reduce our net debt and increase shareholder distributions.

[Animation footage]

Generating cash

Grow our business

Increase shareholder distributions

[Audio]

Theme music fades out

[Graphic]

Shell logo

#ShellResults

©Shell International Limited 2021

[Graphic]

Graphic appears reading: Thank you for your interest in Royal Dutch Shell plc. Please understand that an investment in Royal Dutch Shell plc securities carries with it the risk that you could sustain losses as a result of your investment. Therefore, an investment in Royal Dutch Shell plc securities may not be appropriate for all investors. Accordingly, before investing in our securities we urge you to read our Annual Report and Form 20-F and consider the risks discussed within. You can find our full disclaimer on the next slide in this presentation. You can download the full presentation slides, including the disclaimer, and our Annual Report and Form 20-F at www.shell.com/investors

[Graphic]

A graphic appears titled Definitions and cautionary note, reading: Adjusted Earnings is the income attributable to RDS plc shareholders for the period, adjusted for the after-tax effect of oil price changes on inventory and for identified items. In this presentation, “earnings” refers to “Adjusted Earnings” unless stated otherwise. Adjusted Earnings per share is calculated by dividing “CCS earnings attributable to RDS plc shareholders” by the average number of shares outstanding over the year. In this presentation, “earnings per share” refers to “basic adjusted earnings per share” unless stated otherwise. In this presentation, ROACE refers to “ROACE on a CCS basis excluding identified items” unless stated otherwise. This measure is defined as the sum of CCS earnings excluding identified items for the current and previous three quarters, adjusted for after-tax interest expense, expressed as a percentage of the average capital employed for the same period. Capital employed consists of total equity, current debt and non-current debt. In this presentation, “costs” and “underlying costs” refer to “underlying operating expenses unless stated otherwise. Underlying operating expenses represent “operating expenses excluding identified items”. Operating expenses consist of the following lines in the Consolidated Statement of Income: (i) production and manufacturing expenses; (ii) selling, distribution and administrative expenses; (iii) and research and development expenses. Cash flow from operating activities excluding working capital movements is defined as “Cash flow from operating activities” less 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. In this presentation, “capex” refers to “Cash capital expenditure” unless stated otherwise. Cash capital expenditure comprises the following lines from the Consolidated Statement of Cash Flows: Capital expenditure, Investments in joint ventures and associates and Investments in equity securities. Free Cash Flow is defined as the sum of “Cash flow from operating activities” and “Cash flow from investing activities”. Organic free cash flow is defined as free cash flow excluding inorganic cash capital expenditure, divestment proceeds and tax paid on divestments. In this presentation, “divestments” refers to “divestment proceeds” unless stated otherwise. Divestment proceeds are defined as the sum of (i) proceeds from sale of property, plant and equipment and businesses, (ii) proceeds from sale of joint ventures and associates and (iii) proceeds from sale of equity securities. Gearing is defined as net debt (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) as a percentage of total capital (net debt plus total equity). Reconciliations of the above non-GAAP measures are included in the Royal Dutch Shell plc Unaudited Condensed Financial Report for the full year ended December 31, 2020. Reserves: Our use of the term “reserves” in this presentation means SEC proved oil and gas reserves. Resources: Our use of the term “resources” in this presentation includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves. Resources are consistent with the Society of Petroleum Engineers (SPE) 2P + 2C definitions.

This presentation contains the following forward-looking non-GAAP measures: Cash Capital Expenditure, Net debt and Divestments. We are unable to provide a reconciliation of the above forward-looking non-GAAP measures to the most comparable GAAP financial measures because certain information needed to reconcile the above non-GAAP measures to the most comparable GAAP financial measures is dependent on future events some of which are outside the control of the company, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measures consistent with the company accounting policies and 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 measures are calculated in a manner which is consistent with the accounting policies applied in Royal Dutch Shell plc’s financial statements.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate legal entities. In this presentation “Shell”, “Shell Group” and “Royal Dutch Shell” are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Royal Dutch 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 presentation refer to entities over which Royal Dutch 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. 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.

This presentation 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 Royal Dutch 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 Royal Dutch 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”, “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 Royal Dutch Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this presentation, 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, 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 presentation 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 Royal Dutch Shell’s Form 20-F for the year ended December 31, 2019 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this presentation and should be considered by the reader. Each forward-looking statement speaks only as of the date of this presentation, February 4, 2021. Neither Royal Dutch 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 presentation. We may have used certain terms, such as resources, in this presentation 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. 

Q4 2020 financial results

$ million
IFRS earnings ¹
Adjusted earnings
CFFO
CFFO ex WC
Cash capex
Organic FCF
Integrated Gas
20
1,109
2,203
2,195
1,664
416
Upstream
(2,091)
(748)
2,010
2,890
1,654
513
Oil Products
(1,775)
540
1,198
782
1,310
(53)
Refining & Trading
(2,722)
(287)
Marketing
947
828
Chemicals
367
381
774
775
830
(57)
Corporate
(954)
(836)
102
(17)
46
52
Less: Non-controlling interest
(44)
(54)
RDS
Q4 2020
(4,014)
393
6,287
6,624
5,503
871
Q4 2019
965
2,931
10,267
12,300
6,883
3,928
FY 2020
(21,680)
4,846
34,105
29,495
17,827
17,634
FY 2019
15,842
16,462
42,178
46,957
23,919
20,116

1 Income/(loss) for Q4 2020. Oil Products, Chemicals and Non-controlling interest presented on a current cost of supplies basis. See reconciliation of non-GAAP measures on  www.shell.com/investors.

Results presentation

Ben van Beurden (CEO, Royal Dutch Shell plc) and Jessica Uhl (CFO, Royal Dutch Shell plc) hosted webcasts of the fourth quarter 2020 results on Thursday February 4th, 2021.

Title: Shell Presentation Fourth Quarter / Results 2020

Duration: 11.56 minutes

Description: Jessica Uhl (CFO, Royal Dutch Shell plc) is presenting a results analyst webcast of the fourth quarter 2020 results.

Accessibility script

[Text displayed]

Fourth Quarter / Results

Strong operational delivery in an extraordinary year

Royal Dutch Shell plc

February 4, 2021

#MakeTheFuture

[Video footage]

Jessica Uhl in a mid shot appears in a virtual presentation world. A grey background with a number 4 as well as a yellow graphic. In the top left corner next to the Shell pecten is the text Fourth Quarter 2020 / Results. The camera zooms in as she speaks.

[Text displayed]

Jessica Uhl Shell CFO

[Voice of Jessica]

Welcome everyone to our fourth quarter 2020 and full year results presentation.

2020 was an extraordinary year.

[Video footage]

Footage appears next to Jessica of a masked Shell employee in a hardhat, two masked Shell employees in a factory and a Shell employee in a mask disinfecting a bus.

[Voice of Jessica]

With the COVID pandemic, the economic downturn, dislocations in commodity prices with at one point, for the first time in history, a negative oil price 2020 was a very challenging year across society.

[Visual]

The box containing the mid shot of Jessica moves along to the left hand side of the screen next to a large graphic of the number four.

[Voice of Jessica]

For Shell, while it was tough, it was also a year of delivery. Delivery of the decisive measures we took to preserve cash and delivery of solid and resilient operational, safety and financial performance while we focused on care for our people, customers and communities.

Let us look at our performance in 2020 in more detail.

Despite the weak macroeconomic conditions and various challenges impacting our staff and operations throughout the year, our Adjusted Earnings amounted to almost $5 billion and cash flow from operations was $34 billion in 2020.

[Visual]

Next to Jessica appears a slide presentation which says ‘Adjusted earnings amounted to almost $5 Billion’ Then it changes to ‘$34 Billion cash flow from operations’

[Voice of Jessica]

Our industry-leading cash flow delivery was achieved through the resiliency of each of our businesses with strong full year cash generation in Integrated Gas, Upstream, Oil Products and Chemicals.

[Visual]

In the slide box next to Jessica it has a slide containing details attributing to the heading 2020 / Strong operational delivery in an extraordinary year. The slide moves full screen comparing the 2020 and 2019 actuals. At the bottom text displays ‘Well positioned to deliver strong results in the future’

[Voice of Jessica]

We reported $21 billion post tax impairments across our portfolio in 2020, given the challenging outlook for commodity prices and margin assumptions.

[Visual]

Full screen slide now is titled 2020 results / Strong performance Cost Reduction Targets Exceeded

[Voice of Jessica]

We delivered our cost reduction targets for the year, in fact, we exceeded those targets.

[Visual]

The presentation slide grows smaller and now appears next to Jessica. Titled $18 Billion organic free cash flow

[Voice of Jessica]

Our organic free cash flow was $18 billion, close to 2019 levels.

[Visual]

Next to Jessica the slide reads $4 Billion net debt reduction

[Voice of Jessica]

We reduced net debt by almost $4 billion and we delivered this performance safely. We had no work-related fatalities in Shell-operated ventures in 2020 and we reported fewer injuries than in 2019.

[Visual]

Slide moves away so just the midshot of Jessica is visible in the virtual landscape.

[Voice of Jessica]

So, at the start of the COVID crisis, to protect our balance sheet and ensure financial resiliency, we took the difficult but prudent decision of re-basing our dividends.

[Visual]

Jessica’s box moves to the left showing the large graphic of the number 4 again.

[Voice of Jessica]

This has allowed us to reduce net debt during the year and retain a strong base to respond to changing dynamics as well as drive our strategy.

In Q3, we said that we plan to raise the dividend per share annually, in line with our progressive dividend policy and subject to Board approval.

[Visual]

The screen is now a full slide

[Text displayed]

Expect to grow Q1 dividends by 4%

[Voice of Jessica]

We increased our dividends per share by some 4% in Q3 2020 and we expect to grow it by a further 4% as of the first quarter 2021.

[Visual]

Midshot of Jessica Uhl reappears central

[Voice of Jessica]

Our operational and financial performance in 2020 shows that, from our portfolio decisions to cash preservation measures, we have made Shell more resilient to deliver strong cash throughout the cycle.

We proved our ability to adapt and we see that our integrated business model has served and will serve us well.

The portfolio decisions we made in 2020 further strengthened our businesses, across our three pillars: Growth, Transition and Upstream.

[Visual]

Slide appears to the right of the midshot of Jessica titled Growth Pillar.

[Voice of Jessica]

Let me start with our Growth pillar: Marketing, Power, Hydrogen, Biofuels, Carbon Capture and Storage as well as Nature-Based Solutions. We focused on establishing new business models in power and hydrogen.

[Visual]

Slide disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

For example, in the Netherlands, our CrossWind joint venture won the tender to develop the offshore wind farm Hollandse Kust Noord. We will supply electricity to our customers and aim to power a 200 megawatt electrolyser in Rotterdam.

[Video footage]

Shot of a boat leaving a harbour. We see the boat from above. This is followed by the shot of a wind farm at sea. We now see this closer from the perspective of the boat.

 

[Voice of Jessica]

This takes us a step closer to building integrated renewable energy systems to meet our customers' evolving needs for power.

[Visual]

Video disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

And our Marketing business had one of its best years in 2020, despite the unprecedented drop in demand. I will come back to Marketing in more detail soon.

[Visual]

Slide appears to the right of the midshot of Jessica titled Transition Pillar

[Voice of Jessica]

Our Transition pillar, which consists of Integrated Gas, Chemicals and Refining, made a number of key strategic and portfolio shifts in the year.

[Visual]

Slide disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

Take Refining, for example. In total, we made significant moves with 6 of our refineries in the year, either exiting, divesting or repurposing them to align our assets with the future of energy.

We are also working on opportunities to address carbon emissions that are difficult to avoid.

[Video footage]

Next to Jessica we see 3 different shots of the Shell Pernis refinery in The Netherlands

[Voice of Jessica]

A good example of this, is the progress made to put in place further carbon capture and storage at our Pernis refinery in The Netherlands.

[Visual]

Slide disappears and the box containing Jessica is now centre screen before moving to the left to reveal the large number 4 graphic.

[Voice of Jessica]

In Integrated Gas, we were also disciplined in executing our strategy.

We exited projects that were not competitive within our portfolio, like the brownfield LNG project Lake Charles in the US.

[Video footage]

Next to Jessica there is video footage of a cargo ship labelled with ‘powered by natural gas’ We see a shot from the other side of the ship then an overhead shot of a forest which goes full screen.

[Voice of Jessica]

And we also brought the first carbon-neutral LNG cargoes to market, taking advantage of our capability to offset carbon emissions with nature-based carbon credits.

[Visual]

Full screen slide titled Upstream Pillar.

[Text displayed]

Upstream Pillar

/ Simplify & Strengthen Portfolio

[Voice of Jessica]

Finally, our Upstream pillar. We are simplifying and strengthening our Upstream portfolio.

[Visual]

Full screen slide titled Upstream Pillar moves to the right to reveal the midshot of Jessica alongside it.

[Voice of Jessica]

In 2020, we divested more non-core assets, while focusing on our nine advantaged core positions, which generate more than 80% of our cash flows and Brazil Deep Water is one of them.

[Visual]

Slide disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

For example, we took final investment decision on Mero 3 in the Santos Basin, strengthening our position in our resilient and cash-generative deep-water assets.

[Visual]

A slide is now full screen titles Upstream Pillar

[Text displayed]

Upstream Pillar

/ Simplify & Strengthen Portfolio

/ Focus on core positions

[Voice of Jessica]

Across all our business pillars, you can see our strategy defining the portfolio decisions we made in 2020.

[Text displayed]

Marketing

[Visual]

Full screen slide titled Marketing moves to the right to reveal the midshot of Jessica alongside it.

[Voice of Jessica]

Let us now look at our Marketing business in more detail.

Shell has built a leading position in Marketing. We serve around 30 million customers every day in about 80 countries. From fuels to our digital solutions, we bring value, quality and convenience to our customer's lives.

[Visual]

Slide disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

Being connected to so many customers every day gives us unique insights into their preferences. This closeness combined with our scale are key competitive advantages in this growing business.

[Video footage]

Next to Jessica there is footage of a Shell station employee wearing a mask and gloves welcoming customers. A masked employee serves somebody at the counter and also through a plastic screen.

[Voice of Jessica]

Early in 2020 we quickly adapted to the new reality. We kept our sites open, running and safe. And we selectively expanded our operations in key areas of growth, mainly in Asia.

[Visual]

Slide next to Jessica is titled ‘Increased convenience retail’ followed by ‘Increased digital services’

[Voice of Jessica]

Also, we increased our convenience retail offerings and digital services. Our basket size from our convenience stores increased by 15%, which more than offset the decline in demand. We significantly improved our opex yield to more than 60% and increased the margin share of our premium fuels and lubricants to record numbers.

So, Marketing reported strong financial performance in 2020, in a challenging environment.

[Visual]

Slide disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

This performance in such a difficult reality reinforces our belief in the growth potential of this business. From Upstream and our Transition Businesses to our Growth Businesses our portfolio showed great resilience last year and, while we focused on our customers and operations, we also remained disciplined on cost.

[Visual]

Slide appears next to Jess titles 2020 / Delivering on cash preservation measures, the slide moves full screen and has more detail relating to opex and capex

[Voice of Jessica]

When we saw the first, clear signs of the macroeconomic challenges ahead, we acted fast and decisively to preserve cash. We announced cost reduction targets early in 2020 and we delivered on them. In fact, we exceeded them.

[Visual]

Slide moves to the right hand screen and Jessica is alongside it. Before she moves central to the screen and the slide disappears.

[Voice of Jessica]

Let me start with operating expenses. We said we would reduce our underlying opex by $3 to $4 billion compared with 2019 levels by Q1 2021.

[Visual]

Full screen slide titled 2020 Results / Cash preservation

[Text displayed]

2020 Results / Cash preservation

$4.5 Billion underlying opex reduction

[Voice of Jessica]

By Q4 2020, we delivered $4.5 billion in reductions, exceeding the total target and ahead of schedule.

[Visual]

Slide moves to the right hand screen and Jessica is alongside it. Before she moves central to the screen and the slide disappears.

[Voice of Jessica]

We achieved this by reducing activities and through structural improvements, from implementing remote inspections to improved digital financial tools that will serve us going forward.

[Video footage]

Workmen with metal rods are shown with graphics to show the space between the poles. A person crouched over a laptop and computer graphics are surrounding it. A camera does a 360 degree turn and we see it’s attached to a drone that sets off. A person wearing a hard hat uses a tablet to view what the camera sees.

[Voice of Jessica]

We accelerated digitalisation across Shell and expanded activities in our business operations centres in Krakow, Bangalore, Chennai and Manila.

[Visual]

Video footage disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

In short, we made Shell simpler and more cost effective and we see further opportunity. We are completing the redesign of our organisation that will come into effect in the second half of 2021.

[Visual]

Slide appears to the right hand screen and Jessica is alongside it. The slide is titled 2020 results

[Voice of Jessica]

Beyond lowering our operating expenses, we also said we would cut our cash capital expenditure by $5 billion compared with our original plan of $25 billion for 2020.

In fact, we reduced it by more than $7 billion, with rigorous capital discipline, with capital efficiency and by stopping or re-phasing projects.

[Video footage]

Montage of a Shell forecourt, inside and out.

[Visual]

Video footage disappears and the box containing Jessica is now centre screen

[Voice of Jessica]

We also optimised our working capital by revising payment terms and inventory levels.

Let me now turn to the fourth quarter. In the fourth quarter, oil and gas prices and energy demand recovered slightly, compared to earlier in the year, but were still far lower than in Q4 2019. Refining margins, while up from Q3, remained at historic lows. And Chemicals started to see some recovery in margins. We saw relatively low volatility in the quarter, leaving fewer opportunities to generate additional value from trading and optimisation in Oil Products.

Our volumes were hit by lower demand, OPEC+ restrictions and hurricanes in the Gulf of Mexico. But despite these headwinds, our financial performance in the fourth quarter was good.

[Visual]

Slide appears to the right hand screen and Jessica is alongside it. The slide is titled Q4 2020 / Strong cash flow generation proving financial resilience. The slide moves full screen now highlighting further information on cash flow.

[Voice of Jessica]

Our Adjusted Earnings amounted to nearly $400 million. And we delivered $6.6 billion of cash flow from operations excluding working capital movements.

Our net debt increased by nearly $2 billion in the fourth quarter to $75.4 billion, mainly due to lower free cash flow generation, including a small outflow in working capital.

[Visual]

Slide moves to the right hand screen and Jessica is alongside it.

[Voice of Jessica]

Reducing net debt to $65 billion remains our priority.

[Visual]

Slide is now titled Target 20-30% CFFO distributed to shareholders

[Voice of Jessica]

Once we achieve this milestone, we aim to distribute, in aggregate, 20 to 30% of our cash flow from operations to our shareholders.

Let us now go through some of the key factors behind our financial performance in the quarter.

[Visual]

Full screen slide titled Q4 2020 / Financial highlights: Adjusted Earnings, this contains a graph

[Voice of Jessica]

Compared with the same quarter in 2019, our earnings reflected significantly adverse macroeconomic conditions. This impacted our realised prices, margins and volumes and hit our Adjusted Earnings by over $4 billion, as you can see in the chart.

[Visual]

Slide moves to the right hand screen and Jessica is alongside it. Slide changes to be titled ‘Strong cash conversion’

[Voice of Jessica]

We offset some of this impact by reducing our operating expenses by more than a billion dollars, compared with the same quarter last year.

And our cash conversion was again strong in the fourth quarter, which demonstrates our capacity to deliver robust cash flows even at what might be the bottom of the cycle.

[Visual]

Full screen slide titled Q4 2020 / Financial highlights: Cash Flow this details another chart

[Voice of Jessica]

Our cash flow in the fourth quarter was impacted by an outflow from commodity derivatives of almost $900 million, while last year saw an inflow. Overall, the difference year on year is an impact of some $1.7 billion.

[Visual]

Slide moves to the right hand screen and Jessica is alongside it. Then the slide disappears and Jessica is in the centre of the screen

[Voice of Jessica]

As stated before, these derivative movements are driven by the change in commodity prices and are eventually offsetting over time.

We are also pleased to see higher cash generation from our Chemicals business, showing the strength of our integrated business model. Chemicals has realised better base and intermediates margins across most product lines, mainly because of improved demand in Asia. And with that, let me summarise the highlights.

[Visual]

Slide appears to the right hand screen and Jessica is alongside it. It is titled 2020 / Robust performance & results

[Voice of Jessica]

We delivered robust operational performance and financial results during an extraordinary year. These results reflect the swift and decisive actions we took to preserve cash.

Our performance also reflects our resilient portfolio, our integrated business model, our steadfast people and our deep capabilities to manage adversity and market dislocations. Together, these create our capacity to deliver robust cash flow through the cycle today and into the future.

[Visual]

Slide disappears to show Jessica centre screen

[Voice of Jessica]

So, we enter 2021 proud of our delivery, eager to contribute to the recovery and energized to accelerate our strategy to make the future of energy.

[Visual]

Slide appears to the right hand screen and Jessica is alongside it. It shows a graphic of a calendar with the date 11th February Strategy Day

[Voice of Jessica]

I look forward to engaging further on the future of energy with members of our management team at our Strategy Day on the 11th of February.

[Visual]

Slide moves and Jessica is now centre screen

[Voice of Jessica]

Thank you and please stay safe.

[Text displayed]

Thank you for your interest in Royal Dutch Shell plc. Please understand that an investment in Royal Dutch Shell plc securities carries with it the risk that you could sustain losses as a result of your investment. Therefore, an investment in Royal Dutch Shell plc securities may not be appropriate for all investors. Accordingly, before investing in our securities we urge you to read our Annual Report and Form 20-F and consider the risks discussed within. You can find our full disclaimer on the next slide in this presentation. You can download the full presentation slides, including the disclaimer, and our Annual Report and Form 20-F at www.shell.com/investors

[Visual]

Slide shows in full the Definitions & Cautionary Note in detail

  

Webcast Q&A recordings