Shell Plc · LSE:SHEL
Shell — Royal Dutch Shell — Corporate Update (March 2019)
14 slides from Shell's corporate update, Mar 28, 2019
Slide 1: IFRS16 update call
IFRS16 update call Royal Dutch Shell plc March 28, 2019 #makethefuture Royal Dutch Shell March 28, 2019
Slide 2: Introduction
Introduction Martin ten Brink Tjerk Huysinga EVP Controller EVP Investor Relations Royal Dutch Shell March 28, 2019 2
Slide 3: Definitions & cautionary note
All figure quoted in this presentation are unaudited and provisional. Unless specified otherwise, all figures quoted on a full-year basis. For 2019, we will provide estimates for key indicators on a pre-IFRS16 basis for comparability with actuals. Definitions & Gearing is defined as net debt as a pe
Slide 4: Key messages
Key messages ◼ IFRS16 has a material impact on Shell’s financial statements and Thrive in the energy financial metrics transition ◼ Accounting change only, no cash impact (net) ◼ IFRS16 does not change Shell’s strategy and financial framework World-class investment case ◼ Additional lease liability
Slide 5: Outline of changes
IFRS16 Implementation approach Key changes Outline of changes ◼ Effective January 1, 2019 ◼ No distinction between operating and finance ◼ Modified retrospective method leases ◼ Operating leases on balance sheet ◼ Practical expedients applied: ◼ Short-term leases ◼ Onerous lease provisions ◼ Practic
Slide 6: Operating lease portfolio
IFRS16 Most frequently leased assets Operating lease commitments (December 31, 2018) Operating lease Vessels $ billion, undiscounted portfolio $8.3 billion Rigs $5.3 billion Other assets: Retail sites $2.8 billion Storage and pipelines $1.8 billion Total undiscounted Land and buildings & Rigs Retail
Slide 7: Incremental borrowing rate
IFRS16 Incremental borrowing rates From undiscounted commitments to lease liability Incremental ◼ 3 asset categories: $ billion borrowing rate ◼ Vessels ◼ Rigs ◼ Other ◼ 2 lease tenures: ◼ Less than 10 years ◼ 10 years and longer ◼ Credit rating per contracting entity Average incremental Operating l
Slide 8: Impact on financial metrics
IFRS16 Outlook for 2019 Impact on financial metrics ~4%-5% ◼ Operating lease liabilities on balance sheet Gearing increase ◼ Higher net debt, gearing increases Operating ~$2-3 billion ◼ Operating lease costs reported as depreciation and expenses decrease interest ◼ Lease interest expenses treated as
Slide 9: Impact on financial metrics
IFRS16 Outlook for 2019 Impact on ◼ Capital investment will increase by including all leases, financial metrics Capital ~$1-2 billion no longer only finance leases investment increase ◼ A supplementary metric “Cash capital expenditure” will be added starting Q1’19, comprising capital expenditure, in
Slide 10: Impact on financial statements
$ billion IAS 17 IFRS16 Net impact Balance sheet IFRS16 BALANCE SHEET (at January 1, 2019) Additional assets and liabilities Impact on ◼ Assets 14.8 14.8 ◼ Negligible impact on equity financial PP&E (Right-of-use assets) 15.6 15.6 Trade and other receivables1 (0.8) (0.8) statements Income statement
Slide 11: Going forward
IFRS16 ◼ During 2019 Going forward Key financial indicators will also be provided on a pre-IFRS16 basis to support transition ◼ May 2, 2019 First quarter 2019 results announcement, including IFRS16 transition disclosures ◼ June 4 & 5, 2019 Management Day, outlook consistent with IFRS16 Royal Dutch S
Slide 12: Key messages
Key messages ◼ IFRS16 has a material impact on Shell’s financial statements and Thrive in the energy financial metrics transition ◼ Accounting change only, no cash impact (net) ◼ IFRS16 does not change Shell’s strategy and financial framework World-class investment case ◼ Additional lease liability
Slide 13: Questions & Answers
Questions & Answers Martin ten Brink Tjerk Huysinga EVP Controller EVP Investor Relations Royal Dutch Shell March 28, 2019 13
Slide 14: Royal Dutch Shell March 28, 2019
Royal Dutch Shell March 28, 2019