SHEL 20-F Report ended Dec. 31, 2019

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[A]	As disclosed in the 2018 Directors’ Remuneration Report, the REMCO set Ben van Beurden’s base salary for 2019 at €1,557,000 (+2.0% compared with 2018) effective from January 1, 2019, and Jessica Uhl’s base salary at €1,015,000 (+2.0% compared with 2018) effective from January 1, 2019.

[B]	Executive Directors received car allowances, transport between home and office, occasional business-required partner travel, as well as employer contributions to life and medical insurance plans.

[C]

The full value of the bonus, comprising both the 50% delivered in cash and 50% bonus delivered in shares. For 2019, the market price of A shares on February 21, 2020 (€22.735), was used to determine the number of shares delivered, resulting in 9,521 A shares for Ben van Beurden and 5.951 A shares for Jessica Uhl. For 2018, 50% of the bonus was delivered in shares and the market price of A shares on February 21, 2019 (€27.745), was used to determine the number of shares delivered, resulting in 28,045 A shares for Ben van Beurden and 14,490 A shares for Jessica Uhl.

[D]

Remuneration for performance periods of more than one year, comprising the value of released LTIP awards. The amounts reported for 2019 relate to the 2017 LTIP award, which vested on March 4, 2020, at the market price of €19.986 and $45.21 for A shares and A ADSs respectively. The value in respect of the LTIP is calculated as the product of: the number of shares of the original award multiplied by the vesting percentage; plus accrued dividend shares; and the market price of A shares or A ADSs at the vesting date. The market price of A ADSs is converted into euros using the exchange rate on the respective date. Ben van Beurden also received a release of 57,980 RDS A shares under the 2017 Deferred Bonus Plan (DBP) on March 4, 2020. The original deferred bonus share awards, which are those represented by the deferred bonus and dividend shares accrued on these shares are not considered as long-term remuneration as they relate to the 2016 short-term annual bonus value. Share price appreciation accounted for -€1,603,428 on the LTIP and -€317,962 on the DBP for Ben van Beurden and -$521,010 on the LTIP for Jessica Uhl.

[E]	For Ben van Beurden, the amount reported for pension consists of a net pay defined contribution amount of €395,060. The amount to be reported for his defined benefit pension accrual is 0 calculated in accordance with UK reporting requirements. For Jessica Uhl, the amount reported for pension consists of a defined contribution amount of €102,709 and a defined benefit pension accrual €158,012.

[F]	Includes tax equalisation of pension contributions to foreign pension plan(s), when they are taxable above a certain pensionable salary threshold or once a double tax treaty exemption ceases, under Dutch law. Tax equalisation is applied for the loss of pension relief for members of a foreign pension plan(s) in their host country.

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[A]	This meets the purposes of Schedule 7 to The Companies (Miscellaneous Reporting) Regulations 2018.

[B]	“Connected person” has the meaning given to “person closely associated” within the Market Abuse Regulation.

[C]	[This information is given in accordance with Listing Rule 9.8.4R. Further information in connection with Listing Rule 9.8.4R is contained in the remainder of “Other Statutory Information” which follows on 125-137.

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[A] Changes in line items from 2018 onwards compared with 2017 are the result of the implementation of IFRS 9 Financial Instruments, effective from January 1, 2018.

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[A] See Note 3 .

[B] The repurchase of shares recognised through retained earnings includes the aggregate maximum consideration to which Shell is contractually bound to under the current tranche of the buyback programme, plus associated stamp duty (see Note 20) .

[C] The amendments to IFRS 2 Share-based payment became effective January 1, 2018. Following adoption of the amendments, components of share-based payments (related to tax) that were previously classified as cash-settled are classified as equity-settled from 2018 onwards.

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[ A] With effect from 2019, the starting point for the Consolidated Statement of Cash Flows is ‘Income before taxation’ (previously 'Income'). Furthermore, to improve transparency, 'Retirement benefits' and 'Decommissioning and other provisions' have been separately disclosed. The 'Other' component of cash flow from investing activities has been expanded to distinguish between cash inflows and outflows. Prior period comparatives for these line items have been revised to conform with current year presentation. Overall, the revisions do not have an impact on cash flow from operating activities, cash flow from investing activities or cash flow from financing activities, as previously published.

[B] As from 2019, a new line item 'Derivative financial instruments' has been introduced for derivatives related to debt .

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1 - BASIS OF PREPARATION

The Consolidated Financial Statements of Royal Dutch Shell plc (the "Company") and its subsidiaries (collectively referred to as "Shell") have been prepared in accordance with the provisions of the Companies Act 2006 (the "Act") and Article 4 of the IAS Regulation, and therefore in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union. As applied to Shell, there are no material differences from IFRS as issued by the International Accounting Standards Board ("IASB"); therefore, the Consolidated Financial Statements have been prepared in accordance with IFRS as issued by the IASB.

As described in the accounting policies in Note 2A, the Consolidated Financial Statements have been prepared under the historical cost convention except for certain items measured at fair value. Those accounting policies have been applied consistently in all periods, except for those accounting standards that were adopted from January 1, 2019 (see Note 3 below).

2A - SIGNIFICANT ACCOUNTING POLICIES, JUDGEMENTS AND ESTIMATES

This Note describes Shell’s significant accounting policies, which are those relevant to an understanding of the Consolidated Financial Statements. It includes the measurement bases used in preparing the Consolidated Financial Statements. It allows an understanding as to how transactions, other events and conditions are reported. It also describes: (a) judgements, apart from those involving estimations, that management makes in applying the policies that have the most significant effect on the amounts recognised in the Consolidated Financial Statements; and (b) estimations, including assumptions about the future, that management makes in applying the policies. The sources of estimation uncertainty that have a significant risk of a material adjustment to the carrying amounts of assets and liabilities within the next financial year are specifically identified as a significant estimate.

The accounting policies applied are consistent with those of the previous financial years except for the adoption as from January 1, 2019 of IFRS 16 Leases ("IFRS 16"), amendments to IAS 19 Employee Benefits ("IAS 19") and the Annual Improvement Cycle 2015-2017.

Mandatory

The impact of the transition to the accounting pronouncements as listed below have an immaterial impact other than for IFRS 16.

IFRS 16 Leases

Under IFRS 16, all lease contracts, with limited exceptions, are recognised in the financial statements by way of right-of-use assets and corresponding lease liabilities. Shell applied the modified retrospective transition method, and consequently comparative information is not restated. As a practical expedient, no reassessment was performed of contracts that were previously identified as leases and contracts that were not previously identified as containing a lease applying IAS 17 Leases ("IAS 17") and IFRIC 4 Determining whether an Arrangement contains a Lease . At the adoption date, additional lease liabilities were recognised for leases previously classified as operating leases applying IAS 17 (see Note 3). These lease liabilities were measured at the present value of the remaining lease payments and discounted using entity-specific incremental borrowing rates at January 1, 2019. In general, a corresponding right-of-use asset was recognised for an amount equal to each lease liability, adjusted by the amount of any prepaid or accrued lease payment relating to the specific lease contract, as recognised on the balance sheet at December 31, 2018. Provisions for onerous lease contracts at December 31, 2018 were adjusted to the respective right-of-use assets recognised at January 1, 2019.

The adoption of the new standard had an accumulated impact of $ 4 million in equity following the recognition of lease liabilities of $ 16.0 billion and additional right-of-use assets of $ 15.6 billion and reclassifications mainly related to pre-paid leases and onerous contracts previously recognised (see Note 3).

IAS 19 Employee Benefits

IAS 19 specifies how a company accounts for a defined benefit plan. When a plan event (i.e., a plan amendment, curtailment or settlement) occurs, IAS 19 requires a company to update its assumptions and remeasure its net defined benefit liability or asset. The IAS 19 amendments that are adopted clarify that after a plan event, entities would use these updated assumptions to measure current service cost and net interest for the remainder of the reporting period after the plan event. These amendments had no impact on Shell.

Annual Improvement Cycle 2015-2017

The Annual Improvements to IFRS Standards 2015-2017 Cycle includes minor amendments affecting IFRS 3 Business combinations , IFRS 11 Joint arrangements , IAS 12 Income taxes , and IAS 23 Borrowing costs . None of the amendments had a material impact on Shell.

IFRIC 23 Uncertainty over income tax treatments ("IFRIC 23")

IFRIC 23 clarifies the recognition and measurement for income tax when it is unclear whether a taxation authority will accept the tax treatment claimed. An uncertain tax position arises where there is more than one possible interpretation of how tax regulations apply to a given transaction or event. The interpretation requires the Company to determine whether uncertain tax treatments are assessed separately or as a group. The interpretation also requires an assumption that a taxation authority has full knowledge of all relevant information. Where it is not probable that a taxation authority will accept an uncertain tax treatment, it requires the Company to reflect the effect of the uncertainty in the accounting tax position. Finally, reassessment should be performed on a yearly basis in the event of changes in facts and circumstances.

Based on the assessment performed, this interpretation had no material impact on Shell's uncertain income tax accounting positions recognised.

NATURE OF THE CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements are presented in US dollars (dollars) and comprise the financial statements of the Company and its subsidiaries, being those entities over which the Company has control, either directly or indirectly, through exposure or rights to their variable returns and the ability to affect those returns through its power over the entities. Information about subsidiaries at December 31, 2019, can be found in Exhibit 8.

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Subsidiaries are consolidated from the date on which control is obtained until the date that such control ceases, using consistent accounting policies. All inter-company balances and transactions, including unrealised profits arising from such transactions, are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Non-controlling interest represents the proportion of income, other comprehensive income and net assets in subsidiaries that is not attributable to the Company’s shareholders.

CURRENCY TRANSLATION

Foreign currency transactions are translated using the exchange rate at the dates of the transactions or valuation where items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at quarter-end exchange rates of monetary assets and liabilities denominated in foreign currencies (including those in respect of inter-company balances, unless related to loans of a long-term investment nature) are recognised in income. This is except when recognised in other comprehensive income in respect of cash flow or net investment hedges, and presented within interest and other income or within purchases where not related to financing. Share capital issued in currencies other than the dollar is translated at the exchange rate at the date of issue.

On consolidation, assets and liabilities of non-dollar entities are translated to dollars at year-end rates of exchange, while their statements of income, other comprehensive income and cash flows are translated at quarterly average rates. The resulting translation differences are recognised as currency translation differences within other comprehensive income. Upon sale of all or part of an interest in, or upon liquidation of, an entity, the appropriate portion of cumulative currency translation differences related to that entity are generally recognised in income.

REVENUE RECOGNITION (from January 1, 2018)

Revenue from sales of oil, natural gas, chemicals and other products is recognised at the transaction price to which Shell expects to be entitled, after deducting sales taxes, excise duties and similar levies. For contracts that contain separate performance obligations, the transaction price is allocated to those separate performance obligations by reference to their relative standalone selling prices.

Revenue is recognised when control of the products has been transferred to the customer. For sales by Integrated Gas and Upstream operations, this generally occurs when the product is physically transferred into a vessel, pipe or other delivery mechanism; for sales by refining operations, it is either when the product is placed onboard a vessel or offloaded from the vessel, depending on the contractually agreed terms; and for sales of oil products and chemicals, it is either at the point of delivery or the point of receipt, depending on contractual conditions.

Revenue resulting from hydrocarbon production from properties in which Shell has an interest with partners in joint arrangements is recognised on the basis of Shell’s volumes lifted and sold. Revenue resulting from the production of oil and natural gas under production-sharing contracts ("PSCs") is recognised for those amounts relating to Shell’s cost recoveries and Shell’s share of the remaining production. Gains and losses on derivative contracts and the revenue and costs associated with other contracts that are classified as held primarily for the purpose of being traded are reported on a net basis in the Consolidated Statement of Income. Purchases and sales of hydrocarbons under exchange contracts that are necessary to obtain or reposition feedstocks for refinery operations are presented net in the Consolidated Statement of Income.

Revenue resulting from arrangements that are not considered contracts with customers is presented as revenue from other sources.

REVENUE RECOGNITION (prior to January 1, 2018)

Revenue from sales of oil, natural gas, chemicals and other products is recognised at the fair value of consideration received or receivable, after deducting sales taxes, excise duties and similar levies, when the significant risks and rewards of ownership have been transferred, which is when title passes to the customer. For sales by Integrated Gas and Upstream operations, this generally occurs when product is physically transferred into a vessel, pipe or other delivery mechanism; for sales by refining operations, it is either when product is placed onboard a vessel or offloaded from the vessel, depending on the contractually agreed terms; and for sales of oil products and chemicals, it is either at the point of delivery or the point of receipt, depending on contractual conditions.

Revenue resulting from hydrocarbon production from properties in which Shell has an interest with partners in joint arrangements is recognised on the basis of Shell’s working interest (entitlement method). Revenue resulting from the production of oil and natural gas under PSCs is recognised for those amounts relating to Shell’s cost recoveries and Shell’s share of the remaining production. Gains and losses on derivative contracts and the revenue and costs associated with other contracts that are classified as held for trading purposes are reported on a net basis in the Consolidated Statement of Income. Purchases and sales of hydrocarbons under exchange contracts that are necessary to obtain or reposition feedstocks for refinery operations are presented net in the Consolidated Statement of Income.

RESEARCH AND DEVELOPMENT

Development costs that are expected to generate probable future economic benefits are capitalised as intangible assets. All other research and development expenditure is recognised in income as incurred.

EXPLORATION COSTS

Hydrocarbon exploration costs are accounted for under the successful efforts method: exploration costs are recognised in income when incurred, except that exploratory drilling costs, including in respect of the recapitalisation of the depreciation, are included in property, plant and equipment pending determination of proved reserves. Exploration costs capitalised in respect of exploration wells that are more than 12 months old are written off unless: (a) proved reserves are booked; or (b) (i) they have found commercially producible quantities of reserves and (ii) they are subject to further exploration or appraisal activity in that either drilling of additional exploratory wells is under way or firmly planned for the near future or other activities are being undertaken to sufficiently progress the assessing of reserves and the economic and operating viability of the project.

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

Recognition

Property, plant and equipment comprise assets owned by Shell, assets held by Shell under lease contracts, and assets operated by Shell as contractor in PSCs. They include rights and concessions in respect of properties with proved reserves ("proved properties") and with no proved reserves ("unproved properties"). Property, plant and equipment, including expenditure on major inspections, and intangible assets are initially recognised in the Consolidated Balance Sheet at cost where it is probable that they will generate future economic benefits. This includes capitalisation of decommissioning and restoration costs associated with provisions for asset retirement (see 'Provisions'), certain development costs (see 'Research and development') and the effects of associated cash flow hedges (see 'Financial instruments (from January 1, 2018)') as applicable. The accounting for exploration costs is described separately (see 'Exploration costs'). Intangible assets include goodwill, liquefied natural gas ("LNG") off-take and sales contracts obtained through acquisition, software costs and trademarks. Interest is capitalised as an increase in property, plant and equipment, on major capital projects during construction.

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Property, plant and equipment and intangible assets are subsequently carried at cost less accumulated depreciation, depletion and amortisation (including any impairment). Gains and losses on sale are determined by comparing the proceeds with the carrying amounts of assets sold and are recognised in income, within interest and other income.

An asset is classified as held for sale if its carrying amount will be recovered principally through sale rather than through continuing use, which is when the sale is highly probable, and it is available for immediate sale. Assets classified as held for sale are measured at the lower of the carrying amount upon classification and the fair value less costs to sell.

Depreciation, depletion and amortisation

Property, plant and equipment related to hydrocarbon production activities are in principle depreciated on a unit-of-production basis over the proved developed reserves of the field concerned, other than assets whose useful lives differ from the lifetime of the field which are depreciated applying the straight-line method. However, for certain Upstream assets, the use for this purpose of proved developed reserves, which are determined using the SEC-mandated yearly average oil and gas prices, would result in depreciation charges for these assets which do not reflect the pattern in which their future economic benefits are expected to be consumed as, for example, it may result in assets with long-term expected lives being depreciated in full within one year. Therefore, in these instances, other approaches are applied to determine the reserves base for the purpose of calculating depreciation, such as using management’s expectations of future oil and gas prices rather than yearly average prices, to provide a phasing of periodic depreciation charges that more appropriately reflects the expected utilisation of the assets concerned.

Rights and concessions in respect of proved properties are depleted on the unit-of-production basis over the total proved reserves of the relevant area. Where individually insignificant, unproved properties may be grouped and depreciated based on factors such as the average concession term and past experience of recognising proved reserves.

Property, plant and equipment held under leases contracts and capitalised LNG off-take and sales contracts are depreciated or amortised over the term of the respective contract. Other property, plant and equipment and intangible assets are depreciated or amortised on a straight-line basis over their estimated useful lives, except for goodwill, which is not amortised. They include refineries and chemical plants (for which the useful life is generally 20 years ), retail service stations ( 15 years ), upgraders ( 30 years ) and major inspection costs, which are depreciated over the estimated period before the next planned major inspection ( three to five years ).

On classification of an asset as held for sale, depreciation ceases.

Estimates of the useful lives and residual values of property, plant and equipment and intangible assets are reviewed annually and adjusted if appropriate.

Impairment

The carrying amount of goodwill is tested for impairment annually; in addition, assets other than unproved properties (see 'Exploration costs') are tested for impairment whenever events or changes in circumstances indicate that the carrying amounts for those assets may not be recoverable. On classification as held for sale, the carrying amounts of property, plant and equipment and intangible assets are also reviewed. If assets are determined to be impaired, the carrying amounts of those assets are written down to their recoverable amount, which is the higher of fair value less costs to sell (see 'Fair value measurements') and value in use.

Value in use is determined as the amount of estimated risk-adjusted discounted future cash flows. For this purpose, assets are grouped into cash-generating units based on separately identifiable and largely independent cash inflows. Estimates of future cash flows used in the evaluation of impairment of assets are made using management’s forecasts of commodity prices, market supply and demand, potential costs associated with operational GHG emissions, and forecast product and refining margins. In addition, management takes into consideration the expected useful lives of the refineries, and exploration and production assets, and expected production volumes. The latter takes into account assessments of field and reservoir performance and includes expectations about both proved reserves and volumes that are expected to constitute proved reserves in the future (unproved volumes), which are risk-weighted utilising geological, production, recovery and economic projections. Cash flow estimates are risk-adjusted to reflect local conditions as appropriate and discounted at a rate based on Shell’s marginal cost of debt.

Impairments, except those related to goodwill, are reversed as applicable to the extent that the events or circumstances that triggered the original impairment have changed.

Impairment losses and reversals are reported within depreciation, depletion and amortisation.

Judgements and estimates

Proved oil and gas reserves

Unit-of-production depreciation, depletion and amortisation charges are principally measured based on management’s estimates of proved developed oil and gas reserves. Also, exploration drilling costs are capitalised pending the results of further exploration or appraisal activity, which may take several years to complete and before any related proved reserves can be booked.

Proved reserves are estimated by a central group of reserves experts. The estimated proved reserves are made by reference to available geological and engineering data and only include volumes for which access to market is assured with reasonable certainty. Yearly average oil and gas prices are applied in the determination of proved reserves. Estimates of proved reserves are inherently imprecise, require the application of judgement and are subject to regular revision, either upward or downward, based on new information such as from the drilling of additional wells, observation of long-term reservoir performance under producing conditions and changes in economic factors, including product prices, contract terms, legislation or development plans.

Changes to estimates of proved developed reserves affect prospectively the amounts of depreciation, depletion and amortisation charged and, consequently, the carrying amounts of exploration and production assets. It is expected, however, that in the normal course of business the diversity of the asset portfolio will limit the effect of such revisions. The outcome of, or assessment of plans for, exploration or appraisal activity may result in the related capitalised exploration drilling costs being recognised in income in that period.

Judgement is involved in determining when to use an alternative reserves base in order to appropriately reflect the expected utilisation of the assets concerned (see 'Depreciation, depletion and amortisation').

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Information about the carrying amounts of exploration and production assets and the amounts charged to income, including depreciation, depletion and amortisation and the quantitative impact of the use of an alternative reserve base, is presented in Note 8.

Impairment

For the purposes of determining whether impairment of assets has occurred, and the extent of any impairment loss or its reversal, the key assumptions management uses in estimating risk-adjusted future cash flows for value-in-use measures are future oil and gas prices, potential costs associated with operational GHG emissions, expected production volumes and refining margins appropriate to the local circumstances and environment. These assumptions and the judgements of management that are based on them are subject to change as new information becomes available. Changes in economic conditions can affect the rate used to discount future cash flow estimates or the risk-adjustment in the future cash flows.

Estimation is involved with respect to the expected life of refineries and chemicals sites, and also including management’s view on the future development of refining margins.

The determination of cash-generating units requires judgement. Changes in this determination could impact the calculation of value in use and therefore the conclusion on the recoverability of assets’ carrying amounts when performing an impairment test.

Judgement, which is subject to change as new information becomes available, can be required in determining when an asset is classified as held for sale. A change in that judgement could result in impairment charges affecting income, depending on whether classification requires a write down of the asset to its fair value less costs to sell.

Significant estimates

Future commodity price assumptions, presented in Note 8, tend to be stable because management does not consider short-term increases or decreases in prices as being indicative of long-term levels, but they are nonetheless subject to change. Expected production volumes, which comprise proved reserves and unproved volumes, are used for impairment testing because management believes this to be the most appropriate indicator of expected future cash flows. As discussed in 'Proved oil and gas reserves' above, reserves estimates are inherently imprecise. Furthermore, projections about unproved volumes are based on information that is necessarily less robust than that available for mature reservoirs. Due to the nature and geographical spread of the business activity in which those assets are used, it is typically not practicable to estimate the likelihood or extent of impairments under different sets of assumptions for Shell overall.

Changes in assumptions could affect the carrying amounts of assets, and any impairment losses and reversals will affect income.

Forecast refining margins are a key input for impairment testing in Downstream. Management's estimate of longer-term refining margins is based on the mean reversion of markets, unless a fundamental shift in markets has been identified, over the life of the refineries. Under this approach, that is consistently applied, it is assumed that refining margins will revert to historical averages over time.

Changes in assumptions could affect the carrying amounts of assets and estimation of environmental provisions. Any impairment losses and reversals will affect income .

Information about the carrying amounts of assets and impairments is presented in Notes 7 and 8.

LEASES (from January 1, 2019)

A contract or parts of contract, that conveys the right to control the use of an identified asset for a period of time in exchange for payments to be made to the owners (lessors) are accounted for as leases. Contracts are assessed to determine whether a contract is, or contains, a lease at the inception of a contract or when the terms and conditions of a contract are significantly changed. The lease term is the non-cancellable period of a lease, together with contractual options to extend or to terminate the lease early, where it is reasonably certain that an extension option will be exercised or a termination option will not be exercised.

At the commencement of a lease contract, a right-of-use asset and a corresponding lease liability are recognised, unless the lease term is 12 months or less. The commencement date of a lease is the date the underlying asset is made available for use. The lease liability is measured at an amount equal to the present value of the lease payments during the lease term that are not paid at that date. The lease liability includes contingent rentals and variable lease payments that depend on an index, rate, or where they are fixed payments in substance. The lease liability is remeasured when the contractual cash flows of variable lease payments change due to a change in an index or rate when the lease term changes following a reassessment.

Lease payments are discounted using the interest rate implicit in the lease. If that rate is not readily available, the incremental borrowing rate is applied. The incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment.

In general, a corresponding right-of-use asset is recognised for an amount equal to each lease liability, adjusted by the amount of any pre-paid lease payment relating to the specific lease contract. The depreciation on right-of-use assets is recognised in income unless capitalised as exploration drilling cost (see 'Exploration cost') or capitalised when the right-of-use asset is used to construct another asset.

Where Shell is the lessor in a lease arrangement at inception, the lease arrangement will be classified as a finance lease or an operating lease. Classification is based on the extent to which the risks and rewards incidental to ownership of the underlying asset lie with the lessor or the lessee.

Where Shell, usually in its capacity as operator, has entered into a lease contract on behalf of a joint arrangement, a lease liability is recognised to the extent that Shell has primary responsibility for the lease liability. A finance sub-lease is subsequently recognised if the related right-of-use asset is subleased to the joint arrangement. This is usually the case when the joint arrangement has the right to direct the use of the asset.

Impairment of the right-of-use asset

Right-of-use assets are subject to existing impairment requirements as set out in 'Property, plant and equipment' (see Note 8).

Judgements and estimates

A lease term includes optional lease periods where it is reasonably certain to exercise the option to extend or not to exercise the option to terminate the lease. Determination of the lease term is subject to judgement and has an impact on the measurement of the lease liability and related right-of-use asset.

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Where the rate implicit in the lease is not readily available, an incremental borrowing rate is applied. This incremental borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use asset in a similar economic environment. Determination of the incremental borrowing rate requires estimation. The incremental borrowing rate is determined using the risk-free rate over a matched term, adjusted for factors such as the credit rating of the lessee and the borrowing currency.

Significant estimate

The operating leases that were recognised on the balance sheet following the adoption of IFRS 16 (see Note 3) were measured applying an incremental borrowing rate at transition date to the future payments under these lease contracts. To determine the incremental borrowing rate for each lease contract, a risk-free rate at transition date was applied, adjusted for other factors such as the credit rating of the entity that entered into the lease contract, a country risk premium, the impact of currency, an asset specific element and the term of the lease contract. All factors are subject to estimation. If a higher or lower incremental borrowing rate had been applied, the lease liability and corresponding right-of-use asset would respectively have been lower or higher. The incremental borrowing rate will not be revised each period and will not result in a material adjustment to the carrying amount of lease liability and right-of-use asset in the future years.

LEASES (prior to January 1, 2019)

Agreements under which payments are made to owners in return for the right to use an asset for a period are accounted for as leases. Leases that transfer substantially all the risks and rewards of ownership are recognised at the commencement of the lease term as finance leases within property, plant and equipment and debt at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Finance lease payments are apportioned between interest expense and repayments of debt. All other leases are classified as operating leases and the cost is recognised in income on a straight-line basis, except where capitalised as exploration drilling costs (see 'Exploration costs').

JOINT ARRANGEMENTS AND ASSOCIATES

Arrangements under which Shell has contractually agreed to share control (see 'Nature of the Consolidated Financial Statements' for the definition of control) with another party or parties are joint ventures where the parties have rights to the net assets of the arrangement, or joint operations where the parties have rights to the assets and obligations for the liabilities relating to the arrangement. Investments in entities over which Shell has the right to exercise significant influence but neither control nor joint control are classified as associates. Information about incorporated joint arrangements and associates at December 31, 2019, can be found in Exhibit 8.

Investments in joint ventures and associates are accounted for using the equity method, under which the investment is initially recognised at cost and subsequently adjusted for the Shell share of post-acquisition income less dividends received and the Shell share of other comprehensive income and other movements in equity, together with any loans of a long-term investment nature. Where necessary, adjustments are made to the financial statements of joint ventures and associates to bring the accounting policies used into line with those of Shell. In an exchange of assets and liabilities for an interest in a joint venture, the non-Shell share of any excess of the fair value of the assets and liabilities transferred over the pre-exchange carrying amounts is recognised in income. Unrealised gains on other transactions between Shell and its joint ventures and associates are eliminated to the extent of Shell’s interest in them; unrealised losses are treated similarly but may also result in an assessment of whether the asset transferred is impaired.

Shell recognises its assets and liabilities relating to its interests in joint operations, including its share of assets held jointly and liabilities incurred jointly with other partners.

INVENTORIES

Inventories are stated at cost or net realisable value, whichever is lower. Cost comprises direct purchase costs (including transportation), and associated costs incurred in bringing inventories to their present condition and location, and is determined using the first-in, first-out ("FIFO") method for oil, gas and chemicals and by the weighted average cost method for materials.

TAXATION

The charge for current tax is calculated based on the income reported by the Company and its subsidiaries, as adjusted for items that are non-taxable or disallowed and using rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is determined, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Balance Sheet and on unused tax losses and credits carried forward.

Deferred tax assets and liabilities are calculated using the enacted or substantively enacted rates that are expected to apply when an asset is realised or a liability is settled. They are not recognised where they arise on the initial recognition of goodwill or of an asset or liability in a transaction (other than in a business combination) that, at the time of the transaction, affects neither accounting nor taxable profit, or in respect of taxable temporary differences associated with subsidiaries, joint ventures and associates where the reversal of the respective temporary difference can be controlled by Shell and it is probable that it will not reverse in the foreseeable future.

Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the deductible temporary differences, unused tax losses and credits carried forward can be utilised.

Income tax receivables and payables as well as deferred tax assets and liabilities include provisions for uncertain income tax positions/treatments.

Income taxes are recognised in income except when they relate to items recognised in other comprehensive income, in which case the tax is recognised in other comprehensive income. Income tax assets and liabilities are presented separately in the Consolidated Balance Sheet except where there is a right of offset within fiscal jurisdictions and an intention to settle such balances on a net basis.

Judgements and estimates

Tax liabilities are recognised when it is considered probable that there will be a future outflow of funds to a taxing authority. In such cases, provision is made for the amount that is expected to be settled, where this can be reasonably estimated. Provisions for uncertain income tax positions/treatments are measured at the most likely amount or the expected value, whichever method is more appropriate. Generally, uncertain tax treatments are assessed on an individual basis, except where they are expected to be settled collectively. It is assumed that taxing authorities will examine positions taken if they have the right to do so and that they have full knowledge of the relevant information. A change in estimate of the likelihood of a future outflow and/or in the expected amount to be settled

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would be recognised in income in the period in which the change occurs. This requires the application of judgement as to the ultimate outcome, which can change over time depending on facts and circumstances. Judgements mainly relate to transfer pricing, including inter-company financing, interpretation of PSCs, expenditure deductible for tax purposes and taxation arising on disposal.

Deferred tax assets are recognised only to the extent it is considered probable that those assets will be recoverable. This involves an assessment of when those assets are likely to reverse, and a judgement as to whether or not there will be sufficient taxable profits available to offset the assets when they do reverse. This requires assumptions regarding future profitability and is therefore inherently uncertain. To the extent assumptions regarding future profitability change, there can be an increase or decrease in the amounts recognised in respect of deferred tax assets as well as in the amounts recognised in income in the period in which the change occurs.

Taxation information, including charges and deferred tax assets and liabilities, is presented in Note 16. Income taxes include taxes at higher rates levied on income from certain Integrated Gas and Upstream activities.

RETIREMENT BENEFITS

Benefits in the form of retirement pensions and healthcare and life insurance are provided to certain employees and retirees under defined benefit and defined contribution plans.

Obligations under defined benefit plans are calculated annually by independent actuaries using the projected unit credit method, which takes into account employees’ years of service and, for pensions, average or final pensionable remuneration, and are discounted to their present value using interest rates of high-quality corporate bonds denominated in the currency in which the benefits will be paid and of a duration consistent with the plan obligations. Where plans are funded, payments are made to independently managed trusts; assets held by those trusts are measured at fair value. Defined benefit plan surpluses are recognised as assets to the extent that they are considered recoverable, which is generally by way of a refund or lower future employer contributions.

The amounts recognised in income in respect of defined benefit plans mainly comprise service cost and net interest. Service cost comprises principally the increase in the present value of the obligation for benefits resulting from employee service during the period (current service cost) and also amounts relating to past service and settlements or amendments of plans. Plan amendments are changes to benefits and are generally recognised when all legal and regulatory approvals have been received and the effects have been communicated to members. Net interest is calculated using the net defined benefit liability or asset matched against the discount rate yield curve at the beginning of each year for each plan. Remeasurements of the net defined benefit liability or asset resulting from actuarial gains and losses, and the return on plan assets excluding the amount recognised in income, are recognised in other comprehensive income.

For defined contribution plans, pension expense represents the amount of employer contributions payable for the period.

Significant judgements and estimates

Defined benefit obligations and plan assets, and the resulting liabilities and assets that are recognised, are subject to significant volatility as actuarial assumptions regarding future outcomes and market values change. Substantial judgement is required in determining the actuarial assumptions, which vary for the different plans to reflect local conditions but are determined under a common process in consultation with independent actuaries. The assumptions applied in respect of each plan are reviewed annually and adjusted where necessary to reflect changes in experience and actuarial recommendations.

Information about the amounts reported in respect of defined benefit pension plans, assumptions applicable to the principal plans and their sensitivity to changes are presented in Note 17.

PROVISIONS

Provisions are recognised at the balance sheet date at management’s best estimate of the expenditure required to settle the present obligation. Non-current amounts are discounted at a rate intended to reflect the time value of money. The carrying amounts of provisions are regularly reviewed and adjusted for new facts or changes in law or technology.

Provisions for decommissioning and restoration costs, which arise principally in connection with hydrocarbon production facilities and pipelines, are measured on the basis of current requirements, technology and price levels; the present value is calculated using amounts discounted over the useful economic life of the assets. The liability is recognised (together with a corresponding amount as part of the related property, plant and equipment) once an obligation crystallises in the period when a reasonable estimate can be made. The effects of changes resulting from revisions to the timing or the amount of the original estimate of the provision are reflected on a prospective basis, generally by adjustment to the carrying amount of the related property, plant and equipment. However, where there is no related asset, or the change reduces the carrying amount to nil, the effect, or the amount in excess of the reduction in the related asset to nil, is recognised in income.

Redundancy provisions are recognised when a detailed formal plan identifies the business or part of the business concerned, the location and number of employees affected, a detailed estimate of the associated costs and an appropriate timeline, and the employees affected have been notified of the plan's main features.

Other provisions are recognised in income in the period in which an obligation arises and the amount can be reasonably estimated. Provisions are measured based on current legal requirements and existing technology where applicable. Recognition of any joint and several liability is based on management’s best estimate of the final pro rata share of the liability. Provisions are determined independently of expected insurance recoveries. Recoveries are recognised when virtually certain of realisation.

Significant estimates

Estimates of provisions for future decommissioning and restoration costs are recognised and based on current legal and constructive requirements, technology and price levels. Because actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and can take place many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes. The discount rate applied is reviewed annually.

Information about decommissioning and restoration provisions is presented in Note 18.

FINANCIAL INSTRUMENTS (from January 1, 2018)

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Financial assets and liabilities are presented separately in the Consolidated Balance Sheet except where there is a legally enforceable right of offset and Shell has the intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Financial Assets

Financial assets are classified at initial recognition and subsequently measured at amortised cost, fair value through other comprehensive income or fair value through profit or loss. The classification of financial assets is determined by the contractual cash flows and where applicable the business model for managing the financial assets.

A financial asset is measured at amortised cost, if the objective of the business model is to hold the financial asset in order to collect contractual cash flows and the contractual terms give rise to cash flows that are solely payments of principal and interest. It is initially recognised at fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset. Subsequently the financial asset is measured using the effective interest method less any impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired.

All equity instruments and other debt instruments are recognised at fair value. For equity instruments, on initial recognition, an irrevocable election (on an instrument-by-instrument basis) can be made to designate these as at fair value through other comprehensive income instead of fair value through profit and loss. Dividends received on equity instruments are recognised as other income in profit or loss when the right of payment has been established, except when Shell benefits from such proceeds as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other comprehensive income.

Investments in securities

Investments in securities (“securities”) comprise equity and debt securities. Equity securities are carried at fair value. Generally, unrealised holding gains and losses are recognised in other comprehensive income. On sale, net gains and losses previously accumulated in other comprehensive income are transferred to retained earnings. Debt securities are generally carried at fair value with unrealised holding gains and losses recognised in other comprehensive income. On sale, net gains and losses previously accumulated in other comprehensive income are recognised in income.

Impairment of financial assets

The expected credit loss model is applied for recognition and measurement of impairments in financial assets measured at amortised cost or at fair value through other comprehensive income. The expected credit loss model is also applied for financial guarantee contracts to which IFRS 9 applies and are not accounted for at fair value through profit or loss. The loss allowance for the financial asset is measured at an amount equal to the 12-month expected credit losses. If the credit risk on the financial asset has increased significantly since initial recognition, the loss allowance for the financial asset is measured at an amount equal to the lifetime expected credit losses. Changes in loss allowances are recognised in profit and loss. For trade receivables, a simplified impairment approach is applied recognising expected lifetime losses from initial recognition.

Financial Liabilities

Financial liabilities are measured at amortised cost, unless they are required to be measured at fair value through profit or loss, such as instruments held for trading, or Shell has opted to measure them at fair value through profit or loss. Debt and trade payables are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently at amortised cost except for fixed rate debt subject to fair value hedging which is remeasured for the hedged risk (see below). Interest expense on debt is accounted for using the effective interest method, and other than interest capitalised, is recognised in income. For financial liabilities that are measured under the fair value option, the change in the fair value related to own credit risk is recognised in other comprehensive income. The remaining fair value change is recognised to fair value through profit and loss.

Derivative contracts and hedges

Derivative contracts are used in the management of interest rate risk, foreign exchange risk, commodity price risk, and foreign currency cash balances. Derivatives that are not closely related to the host contract in terms of economic characteristics and risks of which the host contract is not a financial asset, are separated from their host contract and recognised at fair value with the associated gains and losses recognised in income.

Certain derivative contracts qualify and are designated either as a “fair value” hedge of the change in fair value of a recognised asset or liability or an unrecognised firm commitment or as a “cash flow” hedge for the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable forecast transaction.

A change in the fair value of a fair value hedge is recognised in income, together with the consequential adjustment to the carrying amount of the hedged item. The effective portion of a change in fair value of a derivative contract designated as a cash flow hedge is recognised in other comprehensive income until the hedged transaction occurs; any ineffective portion is recognised in income. Where the hedged item is a non-financial asset or liability, the amount in accumulated other comprehensive income is transferred to the initial carrying amount of the asset or liability (reclassified to the balance sheet); for other hedged items, the amount in accumulated other comprehensive income is reclassified to income when the hedged transaction affects income.

The effective portion of a change due to retranslation at quarter-end exchange rates in the carrying amount of debt and the principal amount of derivative contracts used to hedge net investments in foreign operations is recognised in other comprehensive income until the related investment is sold or liquidated; any ineffective portion is recognised in income.

All relationships between hedging instruments and hedged items are documented, as well as risk management objectives and strategies for undertaking hedge transactions. The effectiveness of hedges is also continually assessed and hedge accounting is discontinued when there is a change in the risk management strategy.

Unless designated as hedging instruments, contracts to sell or purchase non-financial items that can be settled net as if the contracts were financial instruments and that do not meet expected own use requirements (typically, forward sale and purchase contracts for commodities in trading operations), and contracts that are or contain written options, are recognised at fair value; associated gains and losses are recognised in income.

Derivatives that are held primarily for the purpose of trading are presented as current in the Consolidated Balance Sheet.

FINANCIAL INSTRUMENTS (prior to January 1, 2018)

Financial assets and liabilities are presented separately in the Consolidated Balance Sheet except where there is a legally enforceable right of offset and Shell has the intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Financial assets

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Investments in securities

Investments in securities (also referred to as “securities”) comprise equity and debt securities classified on initial recognition as available-for-sale and are carried at fair value, except where their fair value cannot be measured reliably, in which case they are carried at cost, less any impairment. Unrealised holding gains and losses other than impairments are recognised in other comprehensive income, except for translation differences arising on foreign currency debt securities, which are recognised in income. On maturity or sale, net gains and losses previously deferred in accumulated other comprehensive income are recognised in income.

Interest income on debt securities is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.

Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and in hand, including offsetting bank overdrafts, short-term bank deposits, money market funds, reverse repos and similar instruments that have a maturity of three months or less at the date of purchase.

Trade receivables

Trade receivables are recognised initially at fair value based on amounts exchanged and subsequently at amortised cost less any impairment.

Financial liabilities

Debt and trade payables are recognised initially at fair value based on amounts exchanged, net of transaction costs, and subsequently at amortised cost except for fixed rate debt subject to fair value hedging which is remeasured for the hedged risk (see below). Interest expense on debt is accounted for using the effective interest method and, other than interest capitalised, is recognised in income.

Derivative contracts and hedges

Derivative contracts are used in the management of interest rate risk, foreign exchange risk and commodity price risk, and in the management of foreign currency cash balances. These contracts are recognised at fair value.

Certain derivative contracts qualify and are designated either as a “fair value” hedge of the change in fair value of a recognised asset or liability or an unrecognised firm commitment or as a “cash flow” hedge of the change in cash flows to be received or paid relating to a recognised asset or liability or a highly probable forecast transaction.

A change in the fair value of a hedging instrument designated as a fair value hedge is recognised in income, together with the consequential adjustment to the carrying amount of the hedged item. The effective portion of a change in fair value of a derivative contract designated as a cash flow hedge is recognised in other comprehensive income until the hedged transaction occurs; any ineffective portion is recognised in income. Where the hedged item is a non-financial asset or liability, the amount in accumulated other comprehensive income is transferred to the initial carrying amount of the asset or liability (reclassified to the balance sheet); for other hedged items, the amount in accumulated other comprehensive income is reclassified to income when the hedged transaction affects income.

The effective portion of a change due to retranslation at quarter-end exchange rates in the carrying amount of debt and the principal amount of derivative contracts used to hedge net investments in foreign operations is recognised in other comprehensive income until the related investment is sold or liquidated; any ineffective portion is recognised in income.

All relationships between hedging instruments and hedged items are documented, as well as risk management objectives and strategies for undertaking hedge transactions. The effectiveness of hedges is also continually assessed and hedge accounting is discontinued when a hedge ceases to be highly effective.

Gains and losses on derivative contracts not qualifying and designated as hedges, including forward sale and purchase contracts for commodities in trading operations that may be settled by the physical delivery or receipt of the commodity, are recognised in income.

Unless designated as hedging instruments, contracts to sell or purchase non-financial items that can be settled net as if the contracts were financial instruments and that do not meet expected own use requirements (typically, forward sale and purchase contracts for commodities in trading operations), and contracts that are or contain written options, are recognised at fair value; associated gains and losses are recognised in income.

Derivatives embedded within contracts that are not already required to be recognised at fair value, and that are not closely related to the host contract in terms of economic characteristics and risks, are separated from their host contract and recognised at fair value; associated gains and losses are recognised in income.

FAIR VALUE MEASUREMENTS

Fair value measurements are estimates of the amounts for which assets or liabilities could be transferred at the measurement date, based on the assumption that such transfers take place between participants in principal markets and, where applicable, taking highest and best use into account.

Judgements and estimates

Where available, fair value measurements are derived from prices quoted in active markets for identical assets or liabilities. In the absence of such information, other observable inputs are used to estimate fair value. Inputs derived from external sources are corroborated or otherwise verified, as appropriate. In the absence of publicly available information, fair value is determined using estimation techniques that take into account market perspectives relevant to the asset or liability, in as far as they can reasonably be ascertained, based on predominantly unobservable inputs. For derivative contracts where publicly available information is not available, fair value estimations are generally determined using models and other valuation methods, the key inputs for which include future prices, volatility, price correlation, counterparty credit risk and market liquidity, as appropriate; for other assets and liabilities, fair value estimations are generally based on the net present value of expected future cash flows.

SHARE-BASED COMPENSATION PLANS

The fair value of share-based compensation expense arising from the Performance Share Plan ("PSP") and the Long-term Incentive Plan ("LTIP") - Shell’s main equity-settled plans - is estimated using a Monte Carlo option pricing model and is recognised in income from the date of grant over the vesting period with a corresponding increase directly in equity. The model projects and averages the results for a range of potential outcomes for the vesting conditions, the principal assumptions for which are the share price volatility and dividend yields for Shell and four of its main competitors over the last three years and the last 10 years. Prior to the adoption of the IFRS 2 amendments in 2018, changes in the fair value of share-based compensation for cash-settled plans were recognised in income with a corresponding change in liabilities.

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SHARES HELD IN TRUST

Shares in the Company, which are held by employee share ownership trusts and trust-like entities, are not included in assets but are reflected at cost as a deduction from equity as shares held in trust.

ACQUISITIONS AND SALES OF INTERESTS IN A BUSINESS

Assets acquired and liabilities assumed when control is obtained over a business, and when an interest or an additional interest is acquired in a joint operation which is a business, are recognised at their fair value at the date of the acquisition; the amount of the purchase consideration above this value is reco gnised as goodwill. When control is obtained, any non-controlling interest is recognised as the proportionate share of the identifiable net assets. The acquisition of a non-controlling interest in a subsidiary and the sale of an interest while retaining control are accounted for as transactions within equity. The difference between the purchase consideration or sale proceeds after tax and the relevant proportion of the non-controlling interest, measured by reference to the carrying amount of the interest’s net assets at the date of acquisition or sale, is recognised in retained earnings as a movement in equity attributable to Royal Dutch Shell plc shareholders.

CONSOLIDATED STATEMENT OF INCOME PRESENTATION

2B - CHANGES TO IFRS NOT YET ADOPTED

Inter-Bank Offered Rate ("IBOR") Reform - Phase 1

Amendments to IFRS 9 Financial Instruments ("IFRS 9") and IFRS 7 Financial Instruments: Disclosures ("IFRS 7") were issued in September 2019. The amendments contain a temporary exception from applying specific hedge accounting requirements pre-IBOR reform (Phase 1). Further amendments to IFRS standards (Phase 2) are expected to address potential financial reporting implications when an existing interest rate benchmark is replaced with an alternative.

Shell’s fixed rate debt hedged to floating rate will be affected by the market-wide replacement of London Inter-Bank Offered Rate ("LIBOR") to alternative risk-free reference rates, most significantly by reform of dollar LIBOR.

The majority of Shell's debt related interest rate and currency swaps were designated in fair value hedge relationships at December 31, 2019. In relation to the required prospective assessment of the existence of an economic relationship between the hedged items and hedging instruments for these hedge relationships, Shell will apply the temporary exception in IFRS 9 on hedge relationships directly affected by the IBOR reform. By applying the exception, Shell anticipates that the interest rate benchmark on which the hedged risk is based is not altered as a result of the IBOR reform.

The notional amount of hedging instruments designated in hedge relationships affected by the reform, at December 31, 2019 , was $ 31,823 million .

A Group-wide project is in progress to manage the transition to alternative benchmark rates.

I FRS 17 Insurance contracts ("IFRS 17")

3 - ADOPTION OF IFRS 16 LEASES

IFRS 16 was adopted as from January 1, 2019. All operating lease contracts, with limited exceptions, were recognised on the balance sheet by recognising right-of-use assets and corresponding lease liabilities at the transition date. Shell applied the modified retrospective transition method, and consequently comparative information is not restated. As a practical expedient, no reassessment was performed of contracts that were previously identified as leases and contracts that were not previously identified as containing a lease applying IAS 17 Leases ("IAS 17") and IFRIC 4 Determining whether an Arrangement contains a Lease . At the adoption date, additional lease liabilities were recognised for leases previously classified as operating leases applying IAS 17. These lease liabilities were measured at the present value of the remaining lease payments and discounted using entity-specific incremental borrowing rates at January 1, 2019. In general, a corresponding right-of-use asset was recognised for an amount equal to each lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to the specific lease contract, as recognised on the balance sheet at December 31, 2018. Provisions for onerous lease contracts at December 31, 2018 were adjusted to the respective right-of-use assets recognised at January 1, 2019. As a practical expedient the recognition exemption for leases with a remaining term of less than 12 months from the adoption date was applied upon adoption.

At the transition date, the remaining lease payments were discounted, as required under the transition approach chosen, using the incremental borrowing rate as per the transition date of January 1, 2019. To determine the incremental borrowing rate for each lease contract, a risk-free rate at transition date was applied, adjusted for other factors such as the credit rating of the entity that entered into the lease contract, a country risk premium, the impact of currency, an asset specific element and the term the the lease contract. The weighted average incremental borrowing rate applied upon transition was 7.2 % .

Compared with the previous accounting for operating leases under IAS 17, the application of the new standard has a significant impact on the classification of expenditures and cash flows. It also impacts the timing of expenses recognised in the statement of income. With effect from 2019, expenses related to leases previously classified as operating leases are presented under 'Depreciation, depletion and amortisation' and 'Interest expense'. Before 2019, these were mainly included in 'Purchases, Production and manufacturing expenses', and 'Selling, distribution and administrative expenses'. Payments related to leases previously classified as operating leases are presented under 'Cash flow from financing activities' (before 2019 these were included in 'Cash flow from operating activities' and 'Cash flow from investing activities').

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The adoption of the new standard had an accumulated impact at January 1, 2019 of $ 4 million on equity following the recognition of lease liabilities of $ 16.0 billion and additional right-of-use assets of $ 15.6 billion and reclassifications mainly related to pre-paid leases and onerous contracts previously recognised.

The reconciliation of differences between the operating lease commitments disclosed under the prior standard and the additional lease liabilities recognised on the balance sheet at January 1, 2019 is as follows:

Lease liabilities reconciliation		$ million
Undiscounted future minimum lease payments under operating leases at December 31, 2018			24,219
Impact of discounting			( 5,167	)
Leases not yet commenced at January 1, 2019			( 2,586	)
Short-term leases			( 277	)
Long-term leases expiring before December 31, 2019			( 192	)
Other reconciling items (net)			40
Additional lease liability at January 1, 2019			16,037
Finance lease liability at December 31, 2018			14,026
Total lease liability at January 1, 2019			30,063

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The detailed impact on the balance sheet at January 1, 2019, is as follows:

Consolidated Balance Sheet		$ million
		Dec 31, 2018					IFRS 16 impact					Jan 1, 2019
Assets
Non-current assets
Intangible assets			23,586					—					23,586
Property, plant and equipment			223,175					15,558					238,733
Joint ventures and associates			25,329					—					25,329
Investments in securities			3,074					—					3,074
Deferred tax			12,097					—					12,097
Retirement benefits			6,051					—					6,051
Trade and other receivables [A]			7,826					( 814	)				7,012
Derivative financial instruments			574					—					574
			301,712					14,744					316,456
Current assets
Inventories			21,117					—					21,117
Trade and other receivables			42,431					69					42,500
Derivative financial instruments			7,193					—					7,193
Cash and cash equivalents			26,741					—					26,741
			97,482					69					97,551
Total assets			399,194					14,813					414,007
Liabilities
Non-current liabilities
Debt			66,690					13,125					79,815
Trade and other payables [B]			2,735					( 540	)				2,195
Derivative financial instruments			1,399					—					1,399
Deferred tax			14,837					—					14,837
Retirement benefits			11,653					—					11,653
Decommissioning and other provisions [C]			21,533					( 347	)				21,186
			118,847					12,238					131,085
Current liabilities
Debt			10,134					2,912					13,046
Trade and other payables			48,888					( 23	)				48,865
Derivative financial instruments			7,184					—					7,184
Taxes payable			7,497					—					7,497
Retirement benefits			451					—					451
Decommissioning and other provisions [C]			3,659					( 318	)				3,341
			77,813					2,571					80,384
Total liabilities			196,660					14,809					211,469
Equity
Share capital			685					—					685
Shares held in trust			( 1,260	)				—					( 1,260	)
Other reserves			16,615					—					16,615
Retained earnings			182,606					4					182,610
Equity attributable to Royal Dutch Shell plc shareholders			198,646					4					198,650
Non-controlling interest			3,888					—					3,888
Total equity			202,534					4					202,538
Total liabilities and equity			399,194					14,813					414,007

[A] Mainly in respect of pre-paid leases.

[B] Mainly related to operating lease contracts that were measured at fair value under IFRS 3 Business Combinations following the acquisition of BG in 2016.

[C] Mainly in respect of onerous contracts.

4 - SEGMENT INFORMATION

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General Information

Shell is an international energy company engaged in the principal aspects of the oil and gas industry and reports its business through the segments: Integrated Gas, Upstream, Downstream, and Corporate.

The Integrated Gas segment covers liquefied natural gas ("LNG") activities and the conversion of natural gas into gas-to-liquids fuels and other products, as well as the New Energies portfolio. It includes natural gas exploration and extraction and the operation of the upstream and midstream infrastructure necessary to deliver gas to market. It markets and trades natural gas, LNG, electricity and carbon-emission rights and also markets and sells LNG as a fuel for heavy-duty vehicles and marine vessels.

Upstream combines the following two operating segments: 1) Upstream, which is engaged in the exploration for and extraction of crude oil, natural gas and natural gas liquids, and the marketing and transportation of oil and gas, and 2) Oil Sands, which is engaged in the extraction of bitumen from mined oil sands and conversion into synthetic crude oil. These operating segments have similar economic characteristics because their earnings are significantly dependent on crude oil and natural gas prices and production volumes.

The Downstream segment is engaged in oil products and chemicals manufacturing, marketing and trading activities, that turn crude oil and other feedstocks into a range of products which are moved and marketed around the world for domestic, industrial and transport use.

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.

Basis of Segmental Reporting

Sales between segments are based on prices generally equivalent to commercially available prices. Third-party revenue and non-current assets information by geographical area are based on the country of operation of the group subsidiaries that report this information. Separate disclosure is provided for the UK as this is the Company’s country of domicile.

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.

With the adoption of IFRS 16, the interest expense on leases, formerly classified as operating leases, is reported under the Corporate segment, while depreciation related to the respective right-of-use assets is reported in the segment making use of the assets. This treatment is consistent with how formerly classified finance leases were treated.

Information by segment on a current cost of supplies basis is as follows:

2019									$ million
	Integrated Gas		Upstream		Downstream		Corporate		Total
Revenue:
Third-party	41,322		9,965		293,545		45		344,877		[A][B]
Inter-segment	4,280		36,448		1,132		—		41,860
Share of profit/(loss) of joint ventures and associates (CCS basis)	1,791		379		1,725		( 307	)	3,588
Interest and other income, of which:	263		2,180		266		916		3,625
Interest income	—		—		—		899		899
Net gains on sale and revaluation of non-current assets and businesses	282		1,888		297		52		2,519
Other	( 19	)	292		( 31	)	( 35	)	207
Third-party and inter-segment purchases (CCS basis)	23,498		7,168		264,966		( 6	)	295,626
Production and manufacturing expenses	5,768		11,545		9,088		37		26,438
Selling, distribution and administrative expenses	716		48		9,280		449		10,493
Research and development expenses	181		452		329		—		962
Exploration expenses	281		2,073		—		—		2,354
Depreciation, depletion and amortisation charge, of which:	6,238		17,003		5,413		47		28,701
Impairment losses	579		2,576		627		—		3,782		[C]
Impairment reversals	—		—		( 190	)	—		( 190	)	[D]
Interest expense	104		534		74		3,978		4,690
Taxation charge/(credit) (CCS basis)	2,242		5,954		1,241		( 578	)	8,859
CCS earnings	8,628		4,195		6,277		( 3,273	)	15,827

[A] Includes $ 3,760 million of revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives.

[B] In March 2019, the IFRS Interpretation Committee ("IFRIC") finalised an agenda decision regarding 'Physical settlement of contracts to buy or sell a non-financial item (IFRS 9)'. This agenda decision has been analysed and will be prospectively implemented from January 1, 2020. The impact will be limited to a reclassification within total revenue.

[C] Impairment losses comprise Property, plant and equipment ( $ 3,639 million ) and Intangible assets ( $ 143 million ).

[D] See Note 8.

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2018									$ million
	Integrated Gas		Upstream		Downstream		Corporate		Total
Revenue:
Third-party	43,764		9,892		334,680		43		388,379		[A]
Inter-segment	5,031		37,841		917		—		43,789		[B]
Share of profit/(loss) of joint ventures and associates (CCS basis)	2,273		285		1,785		( 222	)	4,121
Interest and other income, of which:	2,230		600		345		896		4,071
Interest income	—		—		—		772		772
Net gains on sale and revaluation of non-current assets and businesses	2,231		712		302		20		3,265
Other	( 1	)	( 112	)	43		104		34
Third-party and inter-segment purchases (CCS basis)	27,775		6,144		303,709		1		337,629
Production and manufacturing expenses	5,370		11,463		10,294		( 157	)	26,970
Selling, distribution and administrative expenses	458		200		10,142		560		11,360
Research and development expenses	186		493		307		—		986
Exploration expenses	208		1,132		—		—		1,340
Depreciation, depletion and amortisation charge, of which:	4,850		13,006		4,064		215		22,135
Impairment losses	200		1,065		424		7		1,696		[C]
Impairment reversals	—		( 1,265	)	—		—		( 1,265	)	[D]
Interest expense	212		591		95		2,847		3,745		[E]
Taxation charge/(credit) (CCS basis)	2,795		8,791		1,515		( 1,270	)	11,831
CCS earnings	11,444		6,798		7,601		( 1,479	)	24,364

[A] Includes $ 3,348 million of revenue from sources other than from contracts with customers, which mainly comprises the impact of fair value accounting of commodity derivatives.

[B] Inter-segment revenue has been revised to amend for transactions within segments that were previously reported as inter-segment revenue, and vice versa.

[C] Impairment losses comprise Property, plant and equipment ( $ 1,515 million ) and Intangible assets ( $ 181 million ).

[D] See Note 8.

[E] Interest expense has been reclassified between segments compared with prior year.

2017									$ million
	Integrated Gas		Upstream		Downstream		Corporate		Total
Revenue:
Third-party	32,674		7,723		264,731		51		305,179
Inter-segment	4,096		32,469		1,090		—		37,655		[A]
Share of profit/(loss) of joint ventures and associates (CCS basis)	1,714		623		1,956		( 129	)	4,164
Interest and other income, of which:	687		1,188		154		437		2,466
Interest income	—		—		—		677		677
Net gains on sale and revaluation of non-current assets and businesses	301		1,189		136		14		1,640
Other	386		( 1	)	18		( 254	)	149
Third-party and inter-segment purchases (CCS basis)	22,478		5,535		234,321		20		262,354
Production and manufacturing expenses	5,120		12,119		9,519		( 106	)	26,652
Selling, distribution and administrative expenses	237		5		9,789		478		10,509
Research and development expenses	114		533		275		—		922
Exploration expenses	141		1,804		—		—		1,945
Depreciation, depletion and amortisation charge, of which:	4,965		17,303		3,877		78		26,223
Impairment losses	302		4,118		385		—		4,805		[B]
Impairment reversals	( 10	)	( 605	)	—		—		( 615	)	[C]
Interest expense	248		744		109		2,941		4,042
Taxation charge/(credit) (CCS basis)	790		2,409		1,783		( 636	)	4,346
CCS earnings	5,078		1,551		8,258		( 2,416	)	12,471

[A] Inter-segment revenue has been revised to amend for transactions within segments that were previously reported as inter-segment revenue, and vice versa.

[B] Impairment losses comprise Property, plant and equipment ( $ 4,572 million ) and Intangible assets ( $ 233 million ).

[C] See Note 8.

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Reconciliation of CCS earnings to income for the period	$ million
	2019		2018		2017
CCS earnings	15,827		24,364		12,471
Current cost of supplies adjustment:
Purchases	784		( 559	)	1,252
Taxation	( 194	)	116		( 349	)
Share of profit of joint ventures and associates	15		( 15	)	61
	605		( 458	)	964
Income for the period	16,432		23,906		13,435

Information by geographical area is as follows:

2019											$ million
	Europe			Asia, Oceania, Africa			USA		Other Americas		Total
Third-party revenue, by origin	98,455		[A]	139,916		[B]	83,212		23,294		344,877
Intangible assets, property, plant and equipment, joint ventures and associates at December 31	43,262		[C]	119,732			67,105		54,544		284,643

[A] Includes $ 41,094 million that originated from the UK.

[B] Includes $ 84,282 million that originated from Singapore.

[C] Includes $ 24,696 million located in the UK.

2018												$ million
	Europe			Asia, Oceania, Africa			USA			Other Americas		Total
Third-party revenue, by origin	118,960		[A]	153,716		[B]	89,876			25,827		388,379
Intangible assets, property, plant and equipment, joint ventures and associates at December 31	38,617		[C]	117,127			59,625			56,721		272,090

[A] Includes $ 54,659 million that originated from the UK.

[B] Includes $ 89,811 million that originated from Singapore.

[C] Includes $ 21,863 million located in the UK.

2017												$ million
	Europe			Asia, Oceania, Africa			USA			Other Americas		Total
Third-party revenue, by origin	100,609		[A]	114,683		[B]	66,854			23,033		305,179
Intangible assets, property, plant and equipment, joint ventures and associates at December 31	41,416		[C]	122,345			55,898			58,828		278,487

[A] Includes $ 49,370 million that originated from the UK.

[B] Includes $ 62,046 million that originated from Singapore.

[C] Includes $ 22,734 million located in the UK.

5 - INTEREST AND OTHER INCOME

$ million
	2019		2018		2017
Interest income	899		772		677
Dividend income (from investments in equity securities)	23		104		375
Net gains on sale and revaluation of non-current assets and businesses	2,519		3,265		1,640
Net foreign exchange gains/(losses) on financing activities	5		( 174	)	( 453	)
Other	179		104		227
Total	3,625		4,071		2,466

In 2019, net gains on sale of non-current assets and businesses arose mainly in respect of gains on the sale of Upstream assets in the USA and Denmark, as well as Downstream assets in Saudi Arabia and China and Integrated Gas assets in Australia.

In 2018 , net gains on sale of non-current assets and businesses arose mainly in respect of gains on the sale of Integrated Gas assets in Thailand, Malaysia, Oman and New Zealand, as well as Upstream assets in Iraq and Malaysia and a Downstream divestment in Argentina, partly offset by a charge related to the disposal of our Upstream assets in Ireland.

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In 2017 , net gains on sale of non-current assets and businesses arose mainly in respect of gains on the sale of Upstream assets in the UK and the USA as well as Downstream assets in Australia and Saudi Arabia, partly offset by a loss on the Motiva transaction. Net foreign exchange losses on financing activities in 2017 includes a charge of $ 545 million from the release of cumulative currency translation differences following the restructuring of funding for our North America businesses.

6 - INTEREST EXPENSE

$ million
	2019			2018		2017
Interest incurred and similar charges	4,592		[A]	3,550		3,448
Less: interest capitalised	( 752	)		( 876	)	( 622	)
Other net losses on fair value hedges of debt	132			169		114
Accretion expense	718			902		1,102
Total	4,690			3,745		4,042

[A] Includes $ 2,186 million of interest expenses related to leases of which $ 1,137 million related to those leases which formerly would have been classified as operating leases (see Note 3).

The rate applied in determining the amount of interest capitalised in 2019 was 4.5 % ( 2018 : 4.0 % ; 2017 : 3.0 % ). The rate increase in 2019 was mainly driven by the weighted average rate for leases recognised upon the adoption of IFRS 16 Leases (see Note 3).

7 - INTANGIBLE ASSETS

2019	$ million
	Goodwill		LNG off-take and sales contracts		Other		Total
Cost
At January 1	14,338		10,365		6,392		31,095
Additions	674		—		586		1,260
Sales, retirements and other movements	( 46	)	( 154	)	( 122	)	( 322	)
Currency translation differences	7		—		10		17
At December 31	14,973		10,211		6,866		32,050
Depreciation, depletion and amortisation, including impairments
At January 1	622		3,293		3,594		7,509
Charge for the year	135		876		354		1,365
Sales, retirements and other movements	( 1	)	( 155	)	( 172	)	( 328	)
Currency translation differences	12		—		6		18
At December 31	768		4,014		3,782		8,564
Carrying amount at December 31	14,205		6,197		3,084		23,486

2018	$ million
	Goodwill		LNG off-take and sales contracts		Other		Total
Cost
At January 1	14,154		10,429		6,106		30,689
Additions	331		—		659		990
Sales, retirements and other movements	( 75	)	( 64	)	( 253	)	( 392	)
Currency translation differences	( 72	)	—		( 120	)	( 192	)
At December 31	14,338		10,365		6,392		31,095
Depreciation, depletion and amortisation, including impairments
At January 1	492		2,432		3,585		6,509
Charge for the year	173		925		370		1,468
Sales, retirements and other movements	( 21	)	( 64	)	( 275	)	( 360	)
Currency translation differences	( 22	)	—		( 86	)	( 108	)
At December 31	622		3,293		3,594		7,509
Carrying amount at December 31	13,716		7,072		2,798		23,586

Goodwill at December 31, 2019 , principally related to the acquisition of BG Group plc in 2016, allocated to Integrated Gas ( $ 4,897 million ) and Upstream ( $ 5,967 million ) at the operating segment level, and to Pennzoil-Quaker State Company ( $ 1,609 million ), a lubricants business in the Downstream segment based largely in North America. Information on annual impairment testing is included in Note 8.

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8 - PROPERTY, PLANT AND EQUIPMENT

2019	$ million
	Exploration and production
	Exploration and evaluation			Production		Manufacturing, supply and distribution		Other		Total
Cost
At January 1 (as previously published)	21,181			280,381		91,235		22,040		414,837
Impact of IFRS 16 [A]	—			4,871		6,459		4,228		15,558
At January 1 (as revised)	21,181			285,252		97,694		26,268		430,395
Additions	2,659			11,374		10,945		3,145		28,123
Sales, retirements and other movements	( 5,442	)		( 11,253	)	( 3,683	)	( 456	)	( 20,834	)
Currency translation differences	198			1,293		( 139	)	124		1,476
At December 31	18,596			286,666		104,817		29,081		439,160
Depreciation, depletion and amortisation, including impairments
At January 1	3,287			131,692		46,218		10,465		191,662
Charge for the year	1,096			19,346		5,742		1,573		27,757
Sales, retirements and other movements	( 440	)		( 15,567	)	( 2,981	)	( 437	)	( 19,425	)
Currency translation differences	67			829		( 107	)	28		817
At December 31	4,010			136,300		48,872		11,629		200,811
Carrying amount at December 31	14,586			150,366		55,945		17,452		238,349

[A] See Note 3.

2018	$ million
	Exploration and production
	Exploration and evaluation			Production		Manufacturing, supply and distribution		Other		Total
Cost
At January 1	22,510			292,256		86,948		22,355		424,069
Additions	3,514			12,596		6,438		1,594		24,142
Sales, retirements and other movements	( 4,443	)		( 19,643	)	( 667	)	( 814	)	( 25,567	)
Currency translation differences	( 400	)		( 4,828	)	( 1,484	)	( 1,095	)	( 7,807	)
At December 31	21,181			280,381		91,235		22,040		414,837
Depreciation, depletion and amortisation, including impairments
At January 1	5,060			137,525		44,483		10,621		197,689
Charge for the year	( 979	)		16,551		4,000		1,095		20,667
Sales, retirements and other movements	( 608	)		( 19,631	)	( 1,353	)	( 756	)	( 22,348	)
Currency translation differences	( 186	)		( 2,753	)	( 912	)	( 495	)	( 4,346	)
At December 31	3,287			131,692		46,218		10,465		191,662
Carrying amount at December 31	17,894			148,689		45,017		11,575		223,175

Sales, retirements and other movements in 2019 related to sales of Shell's 36.8 % non-operating interest in the Danish Underground Consortium, its 50 % interest in the SASREF joint venture in Saudi Arabia and its 22.45 % non-operating interest in the Caesar-Tonga asset in the Gulf of Mexico.

The carrying amount of property, plant and equipment at December 31, 2019 , included $ 27,779 million ( 2018 : $ 33,451 million ) of assets under construction. This amount excludes exploration and evaluation assets. The carrying amount at December 31, 2019 , also included $ 1,401 million of assets classified as held for sale ( 2018 : $ 705 million ).

The carrying amount of exploration and production assets at December 31, 2019 , included rights and concessions in respect of proved and unproved properties of $ 14,355 million ( 2018 : $ 15,860 million ). Exploration and evaluation assets principally comprise rights and concessions in respect of unproved properties and capitalised exploration drilling costs.

The carrying amount of assets at December 31, 2019 , for which an alternative reserves base was applied in the calculation of the depreciation charge (see Note 2A), was $ 173 million ( 2018 : $ 5,838 million ). If no alternative reserves base had been used, the pre-tax depreciation charge for the year ended December 31, 2019 , would have been $ 77 million higher ( 2018 : $ 1,003 million , 2017 : $ 5,558 million ).

Contractual commitments for the purchase and lease of property, plant and equipment at December 31, 2019 , amounted to $ 5,519 million . In 2018 , the contractual commitments for the purchase of property, plant and equipment amounted to $ 4,783 million ).

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Within property, plant and equipment the following amounts relate to leases:

Right-of-use assets	$ million
	Exploration and production
	Exploration and evaluation		Production		Manufacturing, supply and distribution		Other		Total
Cost
At January 1 (as previously published)	—		11,508		4,259		789		16,556
Impact of IFRS 16 [A]	—		4,871		6,459		4,228		15,558
At January 1 (as revised)	—		16,379		10,718		5,017		32,114
Additions	5		664		3,124		917		4,710
Sales, retirements and other movements	—		( 1,867	)	( 268	)	( 157	)	( 2,292	)
Currency translation differences	—		37		—		( 18	)	19
At December 31	5		15,213		13,574		5,759		34,551
Depreciation, depletion and amortisation, including impairments
At January 1	—		5,209		1,110		589		6,908
Charge for the year	—		1,632		1,855		703		4,190
Sales, retirements and other movements	—		( 1,091	)	( 30	)	( 128	)	( 1,249	)
Currency translation differences	—		11		1		—		12
At December 31	—		5,761		2,936		1,164		9,861
Carrying amount at December 31	5		9,452		10,638		4,595		24,690

[ A] Up to and including 2018 Shell recognised lease assets and liabilities that were classified as finance leases under IAS 17 Leases (see Note 3).

Impairments	$ million
	2019		2018		2017
Impairment losses [A]
Exploration and production	2,983		1,066		4,187
Manufacturing, supply and distribution	654		441		376
Other	2		8		9
Total	3,639		1,515		4,572
Impairment reversals [A]
Exploration and production	—		1,265		615
Manufacturing, supply and distribution	190		—		—
Total	190		1,265		615

[A] See Note 4.

Impairment losses in 2019 were mainly triggered by the revision to Shell's long-term oil and gas price outlook and change to future capital expenditure plans. The impairment losses related primarily to Upstream shale and deep-water properties in North and South America, in Integrated Gas to properties in Australia and in Downstream to the refining portfolio. Impairment losses in 2018 were mainly in Upstream, and principally related to the disposal of Shell’s interests in Norway and Ireland and related to assets in the Gulf of Mexico. Impairment reversals in 2018 were mainly related to assets in North America. Impairment losses in 2017 were mainly in Upstream, and principally related to the disposal of interests in Canada and interests in Ireland classified as held for sale.

Fo r impairment testing purposes, the respective carrying amounts of property, plant and equipment and intangible assets were compared with their value in use. Cash flow projections used in the determination of value in use were made using management’s forecasts of commodity prices, market supply and demand, potential costs associated with operational GHG emissions, product margins including forecast refining margins and expected production volumes (see Note 2A). These cash flows were adjusted for the risks specific to the assets, and therefore these risks were not included in the determination of the discount rate applied. The nominal pre-tax rate applied in 2019 was 6 % ( 2018 : 6 % ; 2017 : 6 % ).

Oil and gas price assumptions applied for impairment testing are reviewed and, where necessary, adjusted on a periodic basis. Reviews include comparison with available market data and forecasts that reflect developments in demand such as global economic growth, technology efficiency, policy measures and, in supply, consideration of investment and resource potential, cost of development of new supply, and behaviour of major resource holders. The near-term commodity price assumptions applied in impairment testing in 2019 were as follows:

Commodity price assumptions [A]
	2020		2021		2022
Brent crude oil ($/b)	60		60		60
Henry Hub natural gas ($/MMBtu)	2.75		2.75		3.00

[A] Money of the day.

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For periods after 2022 , the real terms long-term price assumptions applied were $ 60 per barrel (/b) ( 2018 : $ 70 /b after 2021 ) for Brent crude oil and $ 3.00 per million British thermal units (/MMBtu) ( 2018 : $ 3.50 / MMBtu after 2021 ) for Henry Hub natural gas.

Capitalised exploration drilling costs	$ million
	2019		2018		2017
At January 1	6,629		6,981		7,910
Additions pending determination of proved reserves	2,036		2,588		1,708
Amounts charged to expense	( 1,218	)	( 449	)	( 897	)
Reclassifications to productive wells on determination of proved reserves	( 1,655	)	( 2,461	)	( 1,894	)
Other movements	( 124	)	( 30	)	154
At December 31	5,668		6,629		6,981

	Projects				Wells
	Number		$ million		Number	$ million
Between 1 and 5 years	45		3,195		150	2,117
Between 6 and 10 years	10		961		74	1,746
Between 11 and 15 years	5		237		25	495
Between 16 and 20 years	—		—		2	35
Total	60		4,393		251	4,393

Exploration drilling costs capitalised for periods greater than one year at December 31, 2019 , analysed according to the most recent year of activity, are presented in the table above. They comprise $ 284 million relating to five projects where drilling activities were under way or firmly planned for the future, and $ 4,109 million relating to 55 projects awaiting development concepts.

9 - JOINT VENTURES AND ASSOCIATES

Shell share of comprehensive income of joint ventures and associates															$ million
	2019							2018							2017
	Joint ventures		Associates		Total			Joint ventures		Associates		Total			Joint ventures		Associates		Total
Income for the period	1,121		2,483		3,604			1,307		2,799		4,106			2,102		2,123		4,225
Other comprehensive (loss)/income for the period	( 82	)	8		( 74	)		172		11		183			164		6		170
Comprehensive income for the period	1,039		2,491		3,530			1,479		2,810		4,289			2,266		2,129		4,395

Carrying amount of interests in joint ventures and associates

$ million

Dec 31, 2019

Dec 31, 2018

Joint ventures

Associates

Total

Joint ventures

Associates

Total

Net assets

13,426

9,382

22,808

14,263

11,066

25,329

Transactions with joint ventures and associates	$ million
	2019		2018		2017
Sales and charges to joint ventures and associates	7,748		8,270		13,121
Purchases and charges from joint ventures and associates	9,573		11,212		10,680

These transactions principally comprise sales and purchases of goods and services in the ordinary course of business. Related balances outstanding at December 31, 2019 , and 2018 , are presented in Notes 11 and 15.

Other arrangements in respect of joint ventures and associates	$ million
	Dec 31, 2019		Dec 31, 2018
Commitments to make purchases from joint ventures and associates [A]	2,177		1,823	[B]
Commitments to provide debt or equity funding to joint ventures and associates	897		638

[A] Commitments to make purchases from joint ventures and associates mainly relate to contracts associated with LNG processing fees and transportation capacity. Shell has other purchase obligations related to joint ventures and associates that are not fixed or determinable and are principally intended to be resold in a short period of time through sales agreements with third parties. These include long-term LNG and natural gas purchase commitments and commitments to purchase refined products or crude oil at market prices.

[B] As revised to include commitments of $ 569 million .

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10 - INVESTMENTS IN SECURITIES

Investment in securities	$ million
	Dec 31, 2019		Dec 31, 2018
Equity securities:	1,437		1,823
Equity securities at fair value through other comprehensive income	1,437		1,823
Debt securities:	1,552		1,251
Debt securities at amortised cost	11		8
Debt securities at fair value through other comprehensive income	1,086		953
Debt securities at fair value through profit and loss	455		290
Total	2,989		3,074
At fair value
Measured by reference to prices in active markets for identical assets	1,725		1,873
Measured using predominantly unobservable inputs	1,253		1,193
Total	2,978		3,066
At cost	11		8
Total	2,989		3,074

Equity securities at December 31, 2019 , principally comprised interests below 5 % , in various investments. Debt securities principally comprised a portfolio required to be held by the Company’s internal insurance entities as security for their activities.

Investments in securities measured using predominantly unobservable inputs [A]	$ million
	2019		2018
At January 1	1,193		1,268
(Losses)/Gains recognised in other comprehensive income	( 42	)	212
Other movements	102		( 287	)
At December 31	1,253		1,193

[A] Based on expected dividend flows, adjusted for country and other risks as appropriate and discounted to their present value.

11 - TRADE AND OTHER RECEIVABLES

	$ million
	Dec 31, 2019					Dec 31, 2018
	Current		Non-current			Current		Non-current
Trade receivables	30,216		—			27,541		—
Lease receivables [A]	213		1,528
Other receivables [A]	7,791		4,039			8,543		4,823
Amounts due from joint ventures and associates	912		1,078			992		1,183
Prepayments and deferred charges	4,282		1,440			5,355		1,820
Total	43,414		8,085			42,431		7,826

[A] In 2018 'Lease receivables' were included in 'Other receivables'.

The fair value of financial assets included above approximates the carrying amount and was determined from predominantly unobservable inputs.

Other receivables at December 31, 2019 , include receivables from certain governments in their capacity as joint arrangement partners, of $ 1,209 million ( 2018 : $ 1,449 million ), after provisions for impairments, that are overdue in part or in full. Recoverability and timing thereof is subject to uncertainty, however, the ultimate risk of default on the carrying amount is considered to be low. Other receivables also include income tax and other tax receivables (see Note 16).

Provisions for impairments deducted from trade and other receivables amounted to $ 649 million at December 31, 2019 ( 2018 : $ 790 million ).

Shell uses a provision matrix to calculate expected credit losses ("ECLs") for trade receivables. The provision matrix is initially based on Shell’s historical observed default rates. Shell calculates the ECL to adjust the historical credit loss experienced with forward-looking information. The ECL at December 31, 2019 is $ 83 million (2018: $ 23 million ) which represents 0.08 % - 0.27 % of all trade receivables.

A loss allowance provision of $ 193 million ( 2018 : $ 243 million ) was established, in addition to all other impairments to trade receivables as at December 31, 2019 , that are outside of the provision matrix calculations.

Lease receivables

Lease contracts where Shell is the lessor are classified as finance lease or operating lease. Receivables for lease contracts classified as finance leases are as follows:

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Finance lease				$ million
				Dec 31, 2019
Less than one year				305
Between 1 and 5 years				953
5 years and later				1,019
Total undiscounted lease payments receivable				2,277
Unearned finance income				536
Net investment in the lease				1,741

In addition at December 31, 2019, Shell is entitled to contractual payments under operating leases of $ 344 million .

12 - INVENTORIES

	$ million
	Dec 31, 2019		Dec 31, 2018
Oil, gas and chemicals	22,654		19,516
Materials	1,417		1,601
Total	24,071		21,117

13 - CASH AND CASH EQUIVALENTS

	$ million
	Dec 31, 2019		Dec 31, 2018
Cash	4,168		4,034
Short-term bank deposits	2,665		3,655
Money market funds, reverse repos and other cash equivalents	11,222		19,052
Total	18,055		26,741

Included in cash and cash equivalents at December 31, 2019 , were amounts totalling $ 431 million ( 2018 : $ 443 million as revised ) subject to currency controls or other legal restrictions. Information about credit risk is presented in Note 19.

14 - DEBT AND LEASE ARRANGEMENTS

DEBT
Debt	$ million
	Dec 31, 2019						Dec 31, 2018
	Debt (excluding lease liabilities)		Lease liabilities [A]		Total		Debt (excluding lease liabilities)		Finance lease liabilities		Total
Short-term debt	3,962		—		3,962		693		—		693
Long-term debt due within 1 year	6,146		4,956		11,102		8,419		1,022		9,441
Current debt	10,108		4,956		15,064		9,112		1,022		10,134
Non-current debt	55,779		25,581		81,360		53,686		13,004		66,690
Total	65,887		30,537		96,424		62,798		14,026		76,824

[A] See Note 3.

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Net debt	$ million
	Current debt		Non-current debt		Derivative financial instruments		Cash and cash equivalents (see Note 13)		Net debt
At January 1, 2019 (as previously published)	( 10,134	)	( 66,690	)	( 1,345	)	26,741		( 51,428	)
Impact of IFRS 16 [A]	( 2,912	)	( 13,125	)					( 16,037	)
At January 1, 2019 (as revised)	( 13,046	)	( 79,815	)	( 1,345	)	26,741		( 67,465	)
Cash flow	10,333		( 7,269	)	351		( 8,810	)	( 5,395	)
Lease additions	( 971	)	( 3,547	)					( 4,518	)
Other movements [B]	( 11,453	)	9,179		453		—		( 1,821	)
Currency translation differences and foreign exchange gains/(losses)	73		92		( 183	)	124		106
At December 31, 2019	( 15,064	)	( 81,360	)	( 724	)	18,055		( 79,093	)
At January 1, 2018	( 11,795	)	( 73,870	)	( 591	)	20,312		( 65,944	)
Cash flow	10,392		( 2,418	)	446		6,878		15,298
Finance lease additions	( 51	)	( 652	)					( 703	)
Other movements	( 8,939	)	9,270		( 261	)	—		70
Currency translation differences and foreign exchange gains/(losses)	259		980		( 939	)	( 449	)	( 149	)
At December 31, 2018	( 10,134	)	( 66,690	)	( 1,345	)	26,741		( 51,428	)

[ A] See Note 3

[B] 'Other movements' includes $ 1,618 million relating to existing leases entered into on behalf of certain joint operations .

Management’s financial strategy is to manage Shell’s assets and liabilities with the aim that, across the business cycle, 'cash in' at least equals 'cash out' while maintaining a strong balance sheet.

Gearing is a key 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. Across the business cycle, management aims to return to a gearing level within a range of 15 % - 25 % .

Gearing	$ million, except where indicated
	Dec 31, 2019			Dec 31, 2018 [A]
Net debt	79,093			51,428
Total equity	190,463			202,534
Total capital	269,556			253,962
Gearing	29.3	%	[B]	20.3		%

[A] Shell used the modified retrospective transition method for implementing IFRS 16 Leases (see Note 3). Comparative information was not restated, and continues to be presented as previously reported under IAS 17 Leases .

[B] Gearing increased to 29.3 % , at December 31, 2019 , comparable with 25.0 % on an IAS 17 basis (2018: 20.3 % ).

Management’s priorities for applying Shell’s cash are the servicing and reduction of debt commitments, payment of dividends, followed by a balance of capital investment and share buybacks. Management’s policy is to grow the dollar dividend through time, in line with its view of Shell’s underlying earnings and cash flow.

Shell has access to international debt capital markets via two commercial paper ("CP") programmes, a Euro medium-term note ("EMTN") programme and a US universal shelf ("US shelf") registration. Issuances under the CP programmes are supported by a committed credit facility and cash.

Borrowing facilities and amounts undrawn	$ million
	Facility					Amount undrawn
	Dec 31, 2019		Dec 31, 2018			Dec 31, 2019		Dec 31, 2018
CP programmes	20,000		20,000			16,610		20,000
EMTN programme	unlimited		unlimited			N/A		N/A
US shelf registration	unlimited		unlimited			N/A		N/A
Committed credit facilities	10,000		8,840			10,000		8,840

Under the CP programmes, Shell can issue debt of up to $ 10 billion with maturities not exceeding 270 days and $ 10 billion with maturities not exceeding 397 days . The EMTN programme is updated each year, most recently in July 2019. In 2019, debt issued under this programme amounted to $ 3 billion ( 2018 : $ nil ). The US shelf registration provides Shell with the flexibility to issue debt securities, ordinary shares, preferred shares and warrants. The registration is updated every three years and was last updated in December 2017. During 2019 , debt totalling $ 4 billion ( 2018 : $ 3 billion ) was issued under the registration. On December 13, 2019, Shell entered into $ 10 billion revolving credit facilities, which in anticipation of the LIBOR reform (see Note 2B), were linked to the new Secured Overnight Financing Rate ("SOFR"). Under the terms of the facilities, the LIBOR interest rate will be replaced by SOFR as early as the first

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anniversary of the signing date of these revolving credit facilities. The committed credit facilities are available at pre-agreed margins, with $ 2 billion expiring in 2020 and $ 8 billion expiring in 2024. Each facility includes two one-year extension options at the discretion of each lender. The terms and availability are not conditional on Shell’s financial ratios nor its financial credit ratings. The interest and fees paid on both facilities are linked to Shell’s progress towards reaching its short-term Net Carbon Footprint intensity target.

In addition, other subsidiaries have access to undrawn short-term bank facilities totalling $ 2,784 million at December 31, 2019 ( 2018 : $ 3,035 million ).

The following tables compare contractual cash flows for debt excluding lease liabilities at December 31, with the carrying amount in the Consolidated Balance Sheet. Contractual amounts reflect the effects of changes in foreign exchange rates; differences from carrying amounts reflect the effects of discounting, premiums and, where fair value hedge accounting is applied, fair value adjustments. Interest is estimated assuming interest rates applicable to variable rate debt remain constant and there is no change in aggregate principal amounts of debt other than repayment at scheduled maturity, as reflected in the table.

2019	$ million
	Contractual payments
	Less than 1 year		Between 1 and 2 years		Between 2 and 3		Between 3 and 4 years		Between 4 and 5 years		5 years and later		Total		Difference from carrying amount		Carrying amount
Commercial paper	3,390		—		—		—		—		—		3,390		( 38	)	3,352
Bonds	5,900		4,971		4,392		4,326		2,091		38,323		60,003		694		60,697
Bank and other borrowings	859		425		56		71		15		412		1,838		—		1,838
Total (excluding interest)	10,149		5,396		4,448		4,397		2,106		38,735		65,231		656		65,887
Interest	1,665		1,559		1,430		1,357		1,263		14,618		21,892

2018	$ million
	Contractual payments
	Less than 1 year		Between 1 and 2 years		Between 2 and 3		Between 3 and 4 years		Between 4 and 5 years		5 years and later		Total		Difference from carrying amount		Carrying amount
Bonds	8,163		5,900		4,993		4,458		4,312		33,162		60,988		181		61,169
Bank and other borrowings	945		39		209		50		27		359		1,629		—		1,629
Total (excluding interest)	9,108		5,939		5,202		4,508		4,339		33,521		62,617		181		62,798
Interest	1,780		1,555		1,426		1,319		1,244		14,406		21,730

Interest rate swaps have been entered into against certain fixed rate debt affecting the effective interest rate on these balances (see Note 19).

The fair value of debt excluding lease liabilities at December 31, 2019 , was $ 71,163 million ( 2018 : $ 64,708 million ), mainly determined from the prices quoted for those securities.

LEASE ARRANGEMENTS

From January 1, 2019, leases are recognised as a right-of-use asset (see Note 8) and a corresponding liability at the date which the lease asset is available for the use by Shell (see Note 3). Lease liabilities are secured on the leased assets. Shell has lease contracts in Upstream and Integrated Gas for floating production storage and offloading units, subsea equipment, power generation for drilling and ancillary equipment, service vessels, LNG vessels and land and buildings; in Downstream, principally for tankers, storage capacity and retail sites; and in Corporate, principally for land and buildings.

Lease expenses not included in the measurement of lease liability				$ million
				2019
Expense relating to short-term leases				834
Expense relating to variable lease payments not included in the lease liabilities				1,091

The total cash outflow in respect of leases representing repayment of principal and payment of interest in 2019 was $ 7,866 million , recognised in the Consolidated Statement of Cash Flows from financing activities.

The future lease payments under lease contracts and the present value of future lease payments at December 31, by payment date are as follows:

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2019	$ million
	Contractual lease payments			Interest		Lease liabilities [A]
Less than 1 year	7,337			2,381		4,956
Between 1 and 5 years	17,435			6,141		11,294
5 years and later	21,340			7,053		14,287
Total	46,112		[B]	15,575		30,537

[ A] See Note 3.

[B] Future cash outflows in respect of leases may differ from lease liabilities recognised due to future decisions that may be taken by Shell in respect of the use of leased assets. These decisions may result in variable lease payments to be made. In addition, Shell may reconsider whether it will exercise extension options or termination options, where future reconsideration is not reflected in the lease liabilities. There is no exposure to these potential additional payments in excess of the recognised lease liabilities until these decisions have been taken by Shell.

2018	$ million
	Finance leases [A]							Operating leases [A]
	Future minimum lease payments		Interest		Present value of future minimum lease payments			Future minimum lease payments
Less than 1 year	2,061		1,039		1,022			4,784
Between 1 and 5 years	7,508		3,391		4,117			11,575
5 years and later	13,370		4,483		8,887			7,860
Total	22,939		8,913		14,026			24,219

[A] Shell used the modified retrospective transition method for the adoption of IFRS 16 Leases (see Note 3). Comparative information is not restated and continues to be presented as previously reported under IAS 17 Leases .

15 - TRADE AND OTHER PAYABLES

	$ million
	Dec 31, 2019				Dec 31, 2018
	Current		Non-current		Current		Non-current
Trade payables	29,497		—		30,351		—
Other payables	6,356		2,060		5,597		2,413
Amounts due to joint ventures and associates	3,312		40		2,851		33
Accruals and deferred income	10,043		242		10,089		289
Total	49,208		2,342		48,888		2,735

The fair value of financial liabilities included above approximates the carrying amount and was determined from predominantly unobservable inputs.

Other payables include amounts due to joint arrangement partners and in respect of other project-related items.

Information about offsetting, collateral and liquidity risk is presented in Note 19.

16 - TAXATION

Taxation charge	$ million
	2019		2018		2017
Current tax:
Charge in respect of current period	7,597		10,415		7,204
Adjustments in respect of prior periods	( 1	)	60		( 613	)
Total	7,596		10,475		6,591
Deferred tax:
Relating to the origination and reversal of temporary differences, tax losses and credits	1,377		1,438		( 4,102	)
Relating to changes in tax rates and legislation	( 67	)	( 157	)	2,004		[A]
Adjustments in respect of prior periods	147		( 41	)	202
Total	1,457		1,240		( 1,896	)
Total taxation charge	9,053		11,715		4,695

[A] Mainly in respect of the US Tax Cuts and Jobs Act.

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Adjustments in respect of prior periods relate to events in the current period and reflect the effects of changes in rules, facts or other factors compared with those used in establishing the current tax position or deferred tax balance in prior periods.

Reconciliation of applicable tax charge at statutory tax rates to taxation charge					$ million
	2019		2018		2017
Income before taxation	25,485		35,621		18,130
Less: share of profit of joint ventures and associates	( 3,604	)	( 4,106	)	( 4,225	)
Income before taxation and share of profit of joint ventures and associates	21,881		31,515		13,905
Applicable tax charge at standard statutory tax rates [A]	7,214		11,641		4,709
Adjustments in respect of prior periods	146		19		( 411	)
Tax effects of: [B]
Expenses not deductible for tax purposes	1,493		1,176		1,000
Derecognition/(recognition) of deferred tax assets	846		( 381	)	( 957	)
Incentives for investment and development [A]	( 757	)	( 557	)	( 527	)
Disposals	( 235	)	( 524	)	( 910	)
Income not subject to tax at standard statutory rates	159		( 286	)	( 359	)
Changes in tax rates and legislation	( 67	)	( 157	)	2,004
Exchange rate differences	( 34	)	623		320
Other reconciling items	288		161		( 174	)
Taxation charge	9,053		11,715		4,695

[A] Incentives for investment and development include conditional preferential tax rates to attract investment, uplift on carried forward losses and capital expenditure, investment tax allowances and credits for research and development. Up to and including 2018, preferential tax rates were reported within the applicable tax charge at standard statutory tax rates. Comparative numbers for 2018 and 2017 were reclassified to conform with the current year presentation.

[B] The tax effect categories have changed to provide better insights. Comparative numbers for 2018 and 2017 were reclassified to conform with the current year presentation.

The weighted average of statutory tax rates was 33 % in 2019 ( 2018 : 37 % as revised; 2017 : 34 % as revised). Compared with 2018 , the decrease in the rate reflects a higher proportion of earnings in the Downstream and Integrated Gas segments, subject to relatively lower tax rates than earnings in the Upstream segment. In addition, a higher proportion of Integrated Gas income was earned in countries with relatively lower statutory tax rates.

Taxes payable			$ million
	Dec 31, 2019		Dec 31, 2018
Income taxes	3,478		3,990
Sales taxes, excise duties and similar levies	3,215		3,507
Total	6,693		7,497

Included in other receivables at December 31, 2019 was income tax receivable of $ 1,328 million ( 2018 : $ 1,042 million ) (see Note 11).

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2019 - Deferred tax											$ million
Deferred tax asset	Decommissioning and other provisions		Property, plant and equipment		Tax losses and credits carried forward		Retirement benefits		Other		Total
At January 1, 2019 (as previously published)	5,902		3,718		12,167		3,310		4,233		29,330
Impact of IFRS 16	( 43	)	—		—		—		43		—
At January 1, 2019 (as revised)	5,859		3,718		12,167		3,310		4,276		29,330
(Charge)/credit to income	15		( 521	)	( 647	)	( 76	)	10		( 1,219	)
Currency translation differences	56		6		57		( 8	)	( 2	)	109
Other	( 550	)	( 189	)	52		434		77		( 176	)
At December 31, 2019	5,380		3,014		11,629		3,660		4,361		28,044
Deferred tax liability
At January 1, 2019 (as previously published)			( 27,771	)			( 1,674	)	( 2,625	)	( 32,070	)
Impact of IFRS 16			144				—		( 144	)	—
At January 1, 2019 (as revised)			( 27,627	)			( 1,674	)	( 2,769	)	( 32,070	)
(Charge)/credit to income			( 227	)			46		( 57	)	( 238	)
Currency translation differences			( 129	)			( 6	)	( 5	)	( 140	)
Other			( 57	)			541		( 78	)	406
At December 31, 2019			( 28,040	)			( 1,093	)	( 2,909	)	( 32,042	)
Net deferred tax liability at December 31, 2019											( 3,998	)
Deferred tax asset/liability as presented in the balance sheet at December 31, 2019
Deferred tax asset											10,524
Deferred tax liability											( 14,522	)

2018 - Deferred tax											$ million
Deferred tax asset	Decommissioning and other provisions		Property, plant and equipment		Tax losses and credits carried forward		Retirement benefits		Other		Total
At January 1, 2018	6,182		3,379		13,684		3,868		4,144		31,257
(Charge)/credit to income	166		345		( 553	)	14		119		91
Currency translation differences	( 177	)	( 32	)	( 462	)	( 93	)	( 42	)	( 806	)
Other	( 269	)	26		( 502	)	( 479	)	12		( 1,212	)
At December 31, 2018	5,902		3,718		12,167		3,310		4,233		29,330
Deferred tax liability
At January 1, 2018			( 26,904	)			( 742	)	( 2,827	)	( 30,473	)
(Charge)/credit to income			( 1,751	)			180		240		( 1,331	)
Currency translation differences			409				24		36		469
Other			475				( 1,136	)	( 74	)	( 735	)
At December 31, 2018			( 27,771	)			( 1,674	)	( 2,625	)	( 32,070	)
Net deferred tax liability at December 31, 2018											( 2,740	)
Deferred tax asset/liability as presented in the balance sheet at December 31, 2018
Deferred tax asset											12,097
Deferred tax liability											( 14,837	)

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.

Other movements in deferred tax assets and liabilities principally relate to acquisitions, sales of non-current assets and businesses, and amounts recognised in other comprehensive income.

The deferred tax category 'Other' primarily includes deferred tax positions in respect of leases, financial assets and liabilities, inventories, intangible assets and investments in subsidiaries, joint ventures and associates.

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The amount of deferred tax assets dependent on future taxable profits not arising from the reversal of existing deferred tax liabilities, and which relate to tax jurisdictions where Shell has suffered a loss in the current or preceding year, was $ 8,773 million at December 31, 2019 ( 2018 : $ 9,979 million ). It is considered probable based on business forecasts that such profits will be available.

Unrecognised taxable temporary differences associated with undistributed retained earnings of investments in subsidiaries, joint ventures and associates amounted to $ 6,356 million at December 31, 2019 ( 2018 : $ 3,951 million ). These retained earnings are subject to withholding tax upon distribution. The increase of the amount compared with 2018 is related to a change in the withholding tax legislation, as a result of which a larger part of the undistributed retained earnings will be subject to withholding tax.

Unrecognised deductible temporary differences, unused tax losses and credits carried forward amounted to $ 33,068 million at December 31, 2019 ( 2018 : $ 30,010 million as revised ) including amounts of $ 24,295 million ( 2018 : $ 22,704 million as revised ) that are subject to time limits for utilisation of five years or later, or are not time limited.

Futhermore, there are unrecognised losses for Petroleum Resource Rent Tax ("PRRT") in Australia, amounting to $ 36,905 million as at the end of the most recent PRRT fiscal year (June 30, 2019). In 2018 , a portion of the PRRT losses amounting to $ 4,900 million was included in the amount of the unrecognised deductible temporary differences, unused tax losses and credits carried forward. Based on business forecasts at existing commodity price levels, and the annual augmentation of the unused PRRT losses, this amount is expected to increase in the near future.

17 - RETIREMENT BENEFITS

Retirement benefits are provided through a number of funded and unfunded defined benefit plans and defined contribution plans, the most significant of which are in the Netherlands, UK and USA. Benefits comprise principally pensions; retirement healthcare and life insurance are also provided in certain countries.

Retirement benefit expense	$ million
	2019		2018		2017
Defined benefit plans:
Current service cost, net of plan participants’ contributions	1,188		1,494		1,500
Interest expense on obligations	2,364		2,282		2,309
Interest income on plan assets	( 2,253	)	( 2,087	)	( 2,019	)
Other	26		( 221	)	( 404	)
Total	1,325		1,468		1,386
Defined contribution plans	428		410		429
Total retirement benefit expense	1,753		1,878		1,815

Retirement benefit expense is presented principally within production and manufacturing expenses and selling, distribution and administrative expenses in the Consolidated Statement of Income. Interest income on plan assets is calculated using the same rate as that applied to the related defined benefit obligations for each plan to determine interest expense.

Remeasurements	$ million
	2019		2018		2017
Actuarial gains/(losses) on obligations:
Due to changes in financial assumptions [A]	( 11,711	)	8,186		( 4,495	)
Due to experience adjustments [B]	232		( 268	)	37
Due to changes in demographic assumptions [C]	( 75	)	( 459	)	933
Total	( 11,554	)	7,459		( 3,525	)
Return on plan assets in excess/(shortage) of interest income	8,460		( 2,312	)	4,942
Other movements	( 12	)	66		50
Total remeasurements	( 3,106	)	5,213		1,467

[A] Primarily relates to changes in the discount rate assumptions.

[B] Experience adjustments arise from differences between the actuarial assumptions made in respect of the year and actual outcomes.

[C] Primarily relates to updates in mortality assumptions.

Defined benefit plans	$ million
	December 31, 2019		December 31, 2018
Obligations	( 103,545	)	( 91,856	)
Plan assets	94,826		85,803
Net liability	( 8,719	)	( 6,053	)
Retirement benefits in the Consolidated Balance Sheet:
Non-current assets	4,717		6,051
Non-current liabilities	( 13,017	)	( 11,653	)
Current liabilities	( 419	)	( 451	)
Total	( 8,719	)	( 6,053	)

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Defined benefit plan obligations	$ million, except where indicated
	2019		2018
At January 1	91,856		104,285
Current service cost	1,186		1,491
Interest expense	2,364		2,282
Actuarial losses/(gains)	11,554		( 7,459	)
Benefit payments	( 3,961	)	( 4,435	)
Other movements	194		( 360	)
Currency translation differences	352		( 3,948	)
At December 31	103,545		91,856
Comprising:
Funded pension plans	93,727		83,276
Weighted average duration	17 Years		17 Years
Unfunded pension plans	4,793		4,359
Weighted average duration	13 Years		13 Years
Other unfunded plans	5,025		4,221
Weighted average duration	14 Years		12 Years

Defined benefit plan assets	$ million, except where indicated
	2019		2018
At January 1	85,803		93,243
Return on plan assets in excess/(shortage) of interest income	8,460		( 2,312	)
Interest income	2,253		2,087
Employer contributions	1,462		763
Plan participants’ contributions	42		47
Benefit payments	( 3,741	)	( 4,123	)
Other movements	160		( 102	)
Currency translation differences	387		( 3,800	)
At December 31	94,826		85,803
Comprising:
Quoted in active markets:
Equities	26	%	24	%
Debt securities	51	%	53	%
Real estate	1	%	1	%
Other	0	%	1	%
Other:
Equities	8	%	8	%
Debt securities	4	%	3	%
Real estate	6	%	6	%
Investment funds	3	%	3	%
Cash	1	%	1	%

Long-term investment strategies of plans are generally determined by the relevant pension plan trustees using a structured asset/liability modelling approach to define the asset mix that best meets the objectives of optimising returns within agreed risk levels while maintaining adequate funding levels.

Employer contributions to defined benefit pension plans are based on actuarial valuations in accordance with local regulations and are estimated to be $ 0.7 billion in 2020 .

Significant funding requirements:

•	Additional contributions to the Netherlands defined benefit pension plan would be required if the 12-month rolling average local funding percentage falls below 105 % for six months or more. At the most recent (2019) funding valuation the local funding percentage was above this level;

•	There are no set minimum statutory funding requirements for the UK plans. Under an agreement with the trustee of the main UK defined benefit plan, Shell will provide additional contributions if the funding position falls below a certain level, although this is currently not anticipated; and

•	Under the Pension Protection Act, US pension plans are subject to minimum required contribution levels based on the funding position. No contributions are required based on the most recent funding valuation.

The principal assumptions applied in determining the present value of defined benefit obligations and their bases were as follows:

•	rates of increase in pensionable remuneration, pensions in payment and healthcare costs: historical experience and management’s long-term expectation;

•	discount rates: prevailing long-term AA corporate bond yields, chosen to match the currency and duration of the relevant obligation; and

•	mortality rates: published standard mortality tables for the individual countries concerned adjusted for Shell experience where statistically significant.

The weighted averages for those assumptions and related sensitivity information at December 31 are presented below. Sensitivity information indicates by how much the defined benefit obligations would increase or decrease if a given assumption were to increase or decrease with no change in other assumptions.

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					$ million, except where indicated
					Effect of using alternative assumptions
	Assumptions used				Increase/(decrease) in defined benefit obligations
	2019		2018		Range of assumptions	2019					2018
Rate of increase in pensionable remuneration	4.1	%	4.1	%	-1% to +1%	( 1,975	)	to	2,266		( 1,576	)	to	1,819
Rate of increase in pensions in payment	1.6	%	1.8	%	-1% to +1%	( 9,541	)	to	11,757		( 8,304	)	to	10,104
Rate of increase in healthcare costs	6.1	%	6.3	%	-1% to +1%	( 546	)	to	675		( 410	)	to	496
Discount rate for pension plans	2.1	%	2.9	%	-1% to +1%	18,431		to	( 14,155	)	15,606		to	( 12,078	)
Discount rate for healthcare plans	3.2	%	4.2	%	-1% to +1%	704		to	( 558	)	536		to	( 436	)
Expected age at death for persons aged 60:
Men	87 years		87 years		-1 year to +1 year	( 1,717	)	to	1,782		( 1,538	)	to	1,583
Women	89 years		89 years		-1 year to +1 year	( 1,631	)	to	1,694		( 1,436	)	to	1,476

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18 - DECOMMISSIONING AND OTHER PROVISIONS

	$ million
	Decommissioning and restoration			Legal		Environmental		Redundancy		Other			Total
At January 1, 2019
Current (as previously published)	876			213		264		491		1,815			3,659
Impact of IFRS 16 [A]	—			—		—		( 50	)	( 268	)		( 318	)
Current (as revised)	876			213		264		441		1,547			3,341
Non-current (as previously published)	17,057			1,247		1,074		468		1,687			21,533
Impact of IFRS 16 [A]	—			—		—		( 188	)	( 159	)		( 347	)
Non-current (as revised)	17,057			1,247		1,074		280		1,528			21,186
	17,933			1,460		1,338		721		3,075			24,527
Additions	625			585		229		290		535			2,264
Amounts charged against provisions	( 797	)		( 216	)	( 223	)	( 304	)	( 562	)		( 2,102	)
Accretion expense	644			28		16		3		25			716
Disposals	( 1,238	)	[B]	—		( 8	)	—		( 14	)		( 1,260	)
Remeasurements and other movements	1,696			( 45	)	( 155	)	( 192	)	( 988	)	[C]	316
Currency translation differences	156			( 1	)	—		( 3	)	( 3	)		149
	1,086			351		( 141	)	( 206	)	( 1,007	)		83
At December 31, 2019
Current	755			626		263		295		872			2,811
Non-current	18,264			1,185		934		220		1,196			21,799
	19,019			1,811		1,197		515		2,068			24,610
At January 1, 2018
Current	817			423		287		758		1,180			3,465
Non-current	19,767			1,095		1,218		560		2,326			24,966
	20,584			1,518		1,505		1,318		3,506			28,431
Additions	418			196		191		535		1,070			2,410
Amounts charged against provisions	( 497	)		( 200	)	( 212	)	( 504	)	( 887	)		( 2,300	)
Accretion expense	755			17		17		15		48			852
Disposals	( 1,781	)		( 14	)	( 11	)	( 3	)	( 49	)		( 1,858	)
Remeasurements and other movements	( 1,065	)		( 47	)	( 130	)	( 367	)	( 122	)		( 1,731	)
Currency translation differences	( 481	)		( 10	)	( 22	)	( 35	)	( 64	)		( 612	)
	( 2,651	)		( 58	)	( 167	)	( 359	)	( 4	)		( 3,239	)
At December 31, 2018
Current	876			213		264		491		1,815			3,659
Non-current	17,057			1,247		1,074		468		1,687			21,533
	17,933			1,460		1,338		959		3,502			25,192

[A] Following the implementation of IFRS 16 Leases (see Note 3) provisions related to onerous operating lease contracts at December 31, 2018 were derecognised and related right-of-use assets were adjusted accordingly. Certain operating lease contracts, mainly related to office buildings became onerous following restructuring and these onerous operating lease contracts were included in the provision for redundancy.

[B] Mainly related to the disposal of interests in Denmark and Canada.

[C] Mainly related to reclassifications to Trade and other payables.

The amount and timing of settlement in respect of these provisions are uncertain and dependent on various factors that are not always within management’s control. Reviews of estimated future decommissioning and restoration costs and the discount rate applied are carried out annually. The discount rate applied at December 31, 2019 was 3 % ( December 31, 2018 : 4 % ). This decrease resulted from the decrease in capital markets rates in 2019.

In 2019 , there was an increase of $ 2,241 million ( 2018 :$ nil ) in the decommissioning and restoration provision as a result of the change in the discount rate, partly offset by a decrease in the provision resulting from changes in cost estimates of $ 545 million ( 2018 : $ 982 million ), reported within re-measurements and other movements.

Of the decommissioning and restoration provision at December 31, 2019 , an estimated $ 2,869 million is expected to be utilised within one to five years, $ 2,432 million within six to 10 years, and the remainder in later periods.

Other provisions include amounts recognised in respect of employee benefits .

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19 - FINANCIAL INSTRUMENTS

Financial instruments in the Consolidated Balance Sheet include investments in securities (see Note 10), cash and cash equivalents (see Note 13), debt (see Note 14) and derivative contracts.

RISKS

In the normal course of business, financial instruments of various kinds are used for the purposes of managing exposure to interest rate, foreign exchange and commodity price movements.

Treasury standards are applicable to all subsidiaries and each subsidiary is required to adopt a treasury policy consistent with these standards. These policies cover: financing structure; interest rate and foreign exchange risk management; insurance; counterparty risk management; and use of derivative contracts. Wherever possible, treasury operations are carried out through specialist regional organisations without removing from each subsidiary the responsibility to formulate and implement appropriate treasury policies.

Apart from forward foreign exchange contracts to meet known commitments, the use of derivative contracts by most subsidiaries is not permitted by their treasury policy.

Other than in exceptional cases, the use of external derivative contracts is confined to specialist trading and central treasury organisations that have appropriate skills, experience, supervision, control and reporting systems.

Shell’s operations expose it to market, credit and liquidity risk, as described below.

Market risk

Market risk is the possibility that changes in interest rates, foreign exchange rates or the prices of crude oil, natural gas, LNG, refined products, chemical feedstocks, power and carbon-emission rights will adversely affect the value of assets, liabilities or expected future cash flows.

Interest rate risk

Most debt is raised from central borrowing programmes. Shell’s policy continues to be to have debt principally denominated in dollars and to maintain a largely floating interest rate exposure profile; however, Shell has issued a significant amount of fixed rate debt in recent years, taking advantage of historically low interest rates available in debt markets. As a result, a substantial portion of the debt portfolio at December 31, 2019, is at fixed rates and this reduces Shell’s exposure to the dollar LIBOR interest rate (see Note 2B).

The financing of most subsidiaries is structured on a floating-rate basis, and any further interest rate risk management is only applied under exceptional circumstances.

On the basis of the floating-rate net debt position at December 31, 2019 (both issued and hedged), and assuming other factors (principally foreign exchange rates and commodity prices) remained constant and that no further interest rate management action was taken, an increase in interest rates of 1 % would have decreased 2019 income before taxation by $ 98 million ( 2018 : $ 37 million , based on the floating rate position at December 31, 2018 ).

The carrying amounts and maturities of debt and borrowing facilities are presented in Note 14. Interest expense is presented in Note 6.

Foreign exchange risk

Many of the markets in which Shell operates are priced, directly or indirectly, in dollars. As a result, the functional currency of most Integrated Gas and Upstream entities and those with significant cross-border business is the dollar. For Downstream entities, the functional currency is typically the local currency. Consequently, Shell is exposed to varying levels of foreign exchange risk when an entity enters into transactions that are not denominated in its functional currency, when foreign currency monetary assets and liabilities are translated at the balance sheet date and as a result of holding net investments in operations that are not dollar-functional. Each entity is required to adopt treasury policies that are designed to measure and manage its foreign exchange exposures by reference to its functional currency.

Foreign exchange gains and losses arise in the normal course of business from the recognition of receivables and payables and other monetary items in currencies other than an entity’s functional currency. Foreign exchange risk may also arise in connection with capital expenditure. For major projects, an assessment is made at the final investment decision stage whether to hedge any resulting exposure.

Assuming other factors (principally interest rates and commodity prices) remained constant and that no further foreign exchange risk management action were taken, a 10 % appreciation against the dollar at December 31 of the main currencies to which Shell is exposed would have the following effects:

	$ million
	Increase/(decrease) in income before taxation					Increase in net assets
	2019		2018			2019		2018
10% appreciation against the dollar of:
Canadian dollar	( 97	)	( 40	)		1,380		1,245
Euro	36		65			1,227		1,190
Australian dollar	( 55	)	( 109	)		835		835
Sterling	( 58	)	( 46	)		581		779

The above sensitivity information was calculated by reference to carrying amounts of assets and liabilities at December 31 only. The effect on income before taxation arises in connection with monetary balances denominated in currencies other than an entity’s functional currency; the effect on net assets arises principally from the translation of assets and liabilities of entities that are not dollar-functional.

Foreign exchange gains and losses included in income are presented in Note 5.

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Commodity price risk

Certain subsidiaries have a mandate to trade crude oil, natural gas, LNG, refined products, chemical feedstocks, power and carbon-emission rights, and to use commodity derivative contracts (forwards, futures, swaps and options) as a means of managing price and timing risks arising from this trading activity. In effecting these transactions, the entities concerned operate within procedures and policies designed to ensure that risks, including those relating to the default of counterparties, are managed within authorised limits.

Value-at-risk ("VAR") techniques based on variance/covariance or Monte Carlo simulation models are used to make a statistical assessment of the market risk arising from possible future changes in market values over a 1 -day holding period and within a 95 % confidence level. The calculation of potential changes in fair value takes into account positions, the history of price movements and the correlation of these price movements. Models are regularly reviewed against actual fair value movements to ensure integrity is maintained. The VAR year-end positions in respect of commodities traded in active markets, which are presented in the table below, are calculated on a diversified basis in order to reflect the effect of offsetting risk within combined portfolios.

Value-at-risk (pre-tax)			$ million
	December 31, 2019		December 31, 2018
Global oil	22		28
North America gas and power	12		11
Europe gas and power	5		3
Carbon-emission rights	4		2

Credit risk

Policies are in place to ensure that sales of products are made to customers with appropriate creditworthiness. These policies include detailed credit analysis and monitoring of trading partners against counterparty credit limits. Credit information is regularly shared between business and finance functions, with dedicated teams in place to quickly identify and respond to cases of credit deterioration. Mitigation measures are defined and implemented for high-risk business partners and customers, and include shortened payment terms, collateral or other security posting and vigorous collections. In addition, policies limit the amount of credit exposure to any individual financial institution. There are no material concentrations of credit risk, with individual customers or geographically, and there has been no significant level of counterparty default in recent years.

Surplus cash is invested in a range of short-dated, secure and liquid instruments including short-term bank deposits, money market funds, reverse repos and similar instruments. The portfolio of these investments is diversified to avoid concentrating risk in any one instrument, country or counterparty. Management monitors the investments regularly and adjusts the investment portfolio in light of new market information where necessary to ensure credit risk is effectively diversified.

In commodity trading, counterparty credit risk is managed within a framework of credit limits with utilisation being regularly reviewed. Credit risk exposure is monitored and the acceptable level is determined by a credit committee. Credit checks are performed by a department independent of traders, and are undertaken before contractual commitment. Where appropriate, netting arrangements, credit insurance, prepayments and collateral are used to manage specific risks.

Shell routinely enters into offsetting, master netting and similar arrangements with trading and other counterparties to manage credit risk. Where there is a legally enforceable right of offset under such arrangements and Shell has the intention to settle on a net basis or realise the asset and settle the liability simultaneously, the net asset or liability is recognised in the Consolidated Balance Sheet, otherwise assets and liabilities are presented gross. These amounts, as presented net and gross within trade and other receivables, trade and other payables and derivative financial instruments in the Consolidated Balance Sheet at December 31, were as follows:

2019											$ million
					Amounts offset				Amounts not offset
	Gross amounts before offset		Amounts offset		Net amounts as presented		Cash collateral received/pledged		Other offsetting instruments		Net amounts
Assets:
Within trade receivables	13,821		8,975		4,846		54		101		4,691
Within derivative financial instruments	12,995		7,310		5,685		531		2,262		2,892
Liabilities:
Within trade payables	13,335		9,029		4,306		11		101		4,194
Within derivative financial instruments	12,355		7,253		5,102		706		2,262		2,134

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2018											$ million
					Amounts offset				Amounts not offset
	Gross amounts before offset		Amounts offset		Net amounts as presented		Cash collateral received/pledged		Other offsetting instruments		Net amounts
Assets:
Within trade receivables	12,697		8,340		4,358		62		221		4,075
Within derivative financial instruments	12,323		6,353		5,970		437		2,653		2,880
Liabilities:
Within trade payables	12,931		8,264		4,667		97		221		4,349
Within derivative financial instruments	12,227		5,044		7,183		1,115		2,653		3,415

Amounts not offset principally relate to contracts where the intention to settle on a net basis was not clearly established at December 31.

The carrying amount of financial assets pledged as collateral for liabilities or contingent liabilities at December 31, 2019 , presented within trade and other receivables, was $ 1,948 million ( 2018 : $ 3,094 million ). The carrying amount of collateral held at December 31, 2019 , presented within trade and other payables, was $ 718 million ( 2018 : $ 535 million ). Collateral mainly relates to initial margins held with commodity exchanges and over-the-counter counterparty variation margins. Some derivative contracts are fully cash collateralised, thereby eliminating both counterparty risk and the Group’s own non-performance risk.

Liquidity risk

Liquidity risk is the risk that suitable sources of funding for Shell’s business activities may not be available. Management believes that it has access to sufficient debt funding sources (capital markets), and to undrawn committed borrowing facilities to meet foreseeable requirements. Information about borrowing facilities is presented in Note 14.

DERIVATIVE CONTRACTS AND HEDGES

Derivative contracts are used principally as hedging instruments, however, because hedge accounting is not always applied, movements in the carrying amounts of derivative contracts that are recognised in income are not always matched in the same period by the recognition of the income effects of the related hedged items.

Carrying amounts, maturities and hedges

The carrying amounts of derivative contracts at December 31, designated and not designated as hedging instruments for hedge accounting purposes, were as follows:

2019													$ million
					Assets						Liabilities
	Designated		Not designated		Total		Designated		Not designated		Total		Net
Interest rate swaps	227		8		235		34		24		58		177
Forward foreign exchange contracts	7		236		243		2		309		311		( 68	)
Currency swaps and options	90		15		105		932		56		988		( 883	)
Commodity derivatives	—		6,914		6,914		—		5,281		5,281		1,633
Other contracts	—		341		341		—		—		—		341
Total	324		7,514		7,838		968		5,670		6,638		1,200

2018													$ million
					Assets						Liabilities
	Designated		Not designated		Total		Designated		Not designated		Total		Net
Interest rate swaps	86		3		89		174		14		188		( 99	)
Forward foreign exchange contracts	—		331		331		33		264		297		34
Currency swaps and options	186		26		212		1,202		203		1,405		( 1,193	)
Commodity derivatives	—		6,864		6,864		—		6,637		6,637		227
Other contracts	—		271		271		—		56		56		215
Total	272		7,495		7,767		1,409		7,174		8,583		( 816	)

Net losses before tax on derivative contracts, excluding realised commodity contracts and those accounted for as hedges, were $ 2,004 million in 2019 ( 2018 : $ 1,818 million losses; 2017 : $ 1,321 million losses).

Certain contracts, mainly to hedge price risk relating to forecast commodity transactions which mature in 2020-2021, were designated in cash flow hedging relationships. The net carrying amount of commodity derivative contracts designated as cash flow hedging instruments at December 31, 2019 , was a liability of $ 101 million ( 2018 : $ 120 million asset) (see Note 22), and was presented after the offset of related margin balances maintained with exchanges.

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Certain interest rate and currency swaps were designated in fair value hedges, principally in respect of debt for which the net carrying amount of the related derivative contracts, net of accrued interest, at December 31, 2019 , was a liability of $ 518 million ( 2018 : $ 1,242 million ).

In the course of trading operations, certain contracts are entered into for delivery of commodities that are accounted for as derivatives. The resulting price exposures are managed by entering into related derivative contracts. These contracts are managed on a fair value basis and the maximum exposure to liquidity risk is the undiscounted fair value of derivative liabilities.

For a minority of commodity derivative contracts, carrying amounts cannot be derived from quoted market prices or other observable inputs, in which case fair value is estimated using valuation techniques such as Black-Scholes, option spread models and extrapolation using quoted spreads with assumptions developed internally based on observable market activity.

Other contracts include certain contracts that are held to sell or purchase commodities and others containing embedded derivatives, which are required to be recognised at fair value because of pricing or delivery conditions, even though they were entered into to meet operational requirements. These contracts are expected to mature in 2020-2025 , with certain contracts having early termination rights (for either party). Valuations are derived from quoted market prices.

The contractual maturities of derivative liabilities at December 31 compare with their carrying amounts in the Consolidated Balance Sheet as follows:

2019																	$ million
	Contractual maturities
	Less than 1 year		Between 1 and 2 years		Between 2 and 3 years		Between 3 and 4 years		Between 4 and 5 years		5 years and later		Total		Difference from carrying amount [A]		Carrying amount
Interest rate swap	35		8		4		4		5		4		60		( 2	)	58
Forward foreign exchange contracts	214		40		8		—		118		—		380		( 69	)	311
Currency swaps and options	255		475		444		201		204		1,777		3,356		( 2,368	)	988
Commodity derivatives	3,472		756		349		189		123		511		5,400		( 119	)	5,281
Total	3,976		1,279		805		394		450		2,292		9,196		( 2,558	)	6,638

[A] Mainly related to the effect of discounting.

2018																	$ million
	Contractual maturities
	Less than 1 year		Between 1 and 2 years		Between 2 and 3 years		Between 3 and 4 years		Between 4 and 5 years		5 years and later		Total		Difference from carrying amount [A]		Carrying amount
Interest rate swap	101		68		20		1		1		1		192		( 4	)	188
Forward foreign exchange contracts	177		( 24	)	33		( 1	)	( 5	)	( 15	)	165		132		297
Currency swaps and options	605		265		474		405		198		1,715		3,662		( 2,257	)	1,405
Commodity derivatives	4,733		978		422		213		138		382		6,866		( 229	)	6,637
Other contracts	58		—		—		—		—		—		58		( 2	)	56
Total	5,674		1,287		949		618		332		2,083		10,943		( 2,360	)	8,583

[A] Mainly related to the effect of discounting.

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Fair value measurements

The net carrying amounts of derivative contracts held at December 31, categorised according to the predominant source and nature of inputs used in determining the fair value of each contract, were as follows:

2019							$ million
	Prices in active markets for identical assets/liabilities		Other observable inputs		Unobservable inputs		Total
Interest rate swaps	—		177		—		177
Forward foreign exchange contracts	—		( 68	)	—		( 68	)
Currency swaps and options	—		( 883	)	—		( 883	)
Commodity derivatives	( 6	)	895		744		1,633
Other contracts	27		304		10		341
Total	21		425		754		1,200

2018							$ million
	Prices in active markets for identical assets/liabilities		Other observable inputs		Unobservable inputs		Total
Interest rate swaps	—		( 99	)	—		( 99	)
Forward foreign exchange contracts	—		34		—		34
Currency swaps and options	—		( 1,193	)	—		( 1,193	)
Commodity derivatives	( 52	)	431		( 152	)	227
Other contracts	—		90		125		215
Total	( 52	)	( 737	)	( 27	)	( 816	)

Net carrying amounts of derivative contracts measured using predominantly unobservable inputs			$ million
	2019		2018
At January 1	( 27	)	297
Net gains/(losses) recognised in revenue	1,085		( 258	)
Purchases	453		461
Sales	( 633	)	( 540	)
Recategorisations (net)	( 125	)	18
Currency translation differences	1		( 5	)
At December 31	754		( 27	)

Included in net gains recognised in revenue in 2019 were unrealised net gains totalling $ 612 million relating to assets and liabilities held at December 31, 2019 ( 2018 : $ 36 million losses).

20 - SHARE CAPITAL

Issued and fully paid ordinary shares of €0.07 each [A]
	Number of shares				Nominal value ($ million)
	A		B		A		B		Total
At January 1, 2019	4,471,889,296		3,745,486,731		376		309		685
Repurchases of shares	( 320,101,779	)	( 16,079,624	)	( 27	)	( 1	)	( 28	)
At December 31, 2019	4,151,787,517		3,729,407,107		349		308		657
At January 1, 2018	4,597,136,050		3,745,486,731		387		309		696
Repurchases of shares	( 125,246,754	)	—		( 11	)	—		( 11	)
At December 31, 2018	4,471,889,296		3,745,486,731		376		309		685

[A] Share capital at December 31, 2019 , and 2018 , also included 50,000 issued and fully paid sterling deferred shares of £ 1 each.

At the Company’s Annual General Meeting ("AGM") on May 21, 2019, the Board was authorised to allot ordinary shares in the Company, and to grant rights to subscribe for or to convert any security into ordinary shares in the Company, up to an aggregate nominal amount of € 190.3 million (representing 2,720 million ordinary shares of € 0.07 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 21, 2020, and the end of the AGM to be held in 2020, unless previously renewed, revoked or varied by the Company in a general meeting.

At the May 21, 2019 AGM, shareholders granted the Company the authority to repurchase up to 815 million ordinary shares (excluding any treasury shares), renewing the authority granted by the shareholders at previous AGMs. The authority will expire at the earlier of the close of business on August 21, 2020, and the end of the AGM of the Company to be held in 2020. Ordinary shares purchased by the Company pursuant to this authority will either be cancelled or held in treasury. Treasury shares are shares in the Company which are owned by the Company itself. The minimum price, exclusive of expenses, which may be paid for an ordinary share is € 0.07 . The maximum price, exclusive of expenses, which may be paid for an ordinary share is the higher of: (i) an amount equal to 5 %

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above the average market value for an ordinary share for the five business days immediately preceding the date of the purchase; and (ii) the higher of the price of the last independent trade and the highest current independent bid on the trading venues where the purchase is carried out.

21 - SHARE-BASED COMPENSATION PLANS AND SHARES HELD IN TRUST

Share-based compensation expense	$ million
	2019		2018		2017
Equity-settled	537		531		422
Cash-settled [A]	—		—		380
Total	537		531		802

[A] As from 2018 onwards, components of share-based payments (related to tax) that were previously classified as cash-settled are classified as equity-settled. On an incidental basis awards may be cash settled, where an equity settlement is not possible under local regulations.

The principal share-based employee compensation plans are the PSP and LTIP. Awards of shares and American Depository Shares ("ADSs") of the Company under the PSP and LTIP are granted upon certain conditions to eligible employees. The actual amount of shares that may vest ranges from 0 % to 200 % of the awards, depending on the outcomes of prescribed performance conditions over a three-year period beginning on January 1 of the award year. Shares and ADSs vest for nil consideration.

Share awards under the PSP and LTIP
	Number of A shares (million)		Number of B shares (million)		Number of A ADSs (million)		Weighted Average remaining contractual life (years)
At January 1, 2019	30		12		8		1.0
Granted	11		3		3
Vested	( 11	)	( 5	)	( 3	)
Forfeited	( 1	)	—		—
At December 31, 2019	29		10		8		1.0
At January 1, 2018	33		12		9		0.9
Granted	10		4		3
Vested	( 12	)	( 4	)	( 4	)
Forfeited	( 1	)	—		—
At December 31, 2018	30		12		8		1.0

Other plans offer eligible employees opportunities to acquire shares and ADSs of the Company or receive cash benefits measured by reference to the Company’s share price.

Shell employee share ownership trusts and trust-like entities purchase the Company’s shares in the open market to meet delivery commitments under employee share plans. At December 31, 2019 , they held 17.4 million A shares ( 2018 : 19.6 million ), 6.5 million B shares ( 2018 : 7.1 million ) and 5.3 million A ADSs ( 2018 : 5.9 million ).

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22 - OTHER RESERVES

Other reserves attributable to Royal Dutch Shell plc shareholders											$ million
	Merger reserve		Share premium reserve		Capital redemption reserve		Share plan reserve		Accumulated other comprehensive income		Total
At January 1, 2019	37,298		154		95		1,098		( 22,030	)	16,615
Other comprehensive loss attributable to Royal Dutch Shell plc shareholders	—		—		—		—		( 2,069	)	( 2,069	)
Transfer from other comprehensive income	—		—		—		—		( 74	)	( 74	)
Repurchases of shares	—		—		28		—		—		28
Share-based compensation	—		—		—		( 49	)	—		( 49	)
At December 31, 2019	37,298		154		123		1,049		( 24,173	)	14,451
At January 1, 2018 (as previously published)	37,298		154		84		1,440		( 22,044	)	16,932
Impact of IFRS 9	—		—		—		—		( 138	)	( 138	)
At January 1, 2018 (as revised)	37,298		154		84		1,440		( 22,182	)	16,794
Other comprehensive income attributable to Royal Dutch Shell plc shareholders	—		—		—		—		1,123		1,123
Transfer from other comprehensive income	—		—		—		—		( 971	)	( 971	)
Repurchases of shares	—		—		11		—		—		11
Share-based compensation	—		—		—		( 342	)	—		( 342	)
At December 31, 2018	37,298		154		95		1,098		( 22,030	)	16,615
At January 1, 2017	37,311		154		84		1,644		( 27,895	)	11,298
Other comprehensive loss attributable to Royal Dutch Shell plc shareholders	—		—		—		—		5,851		5,851
Scrip dividends	( 13	)	—		—		—		—		( 13	)
Share-based compensation	—		—		—		( 204	)	—		( 204	)
At December 31, 2017	37,298		154		84		1,440		( 22,044	)	16,932

The merger reserve and share premium reserve were established as a consequence of the Company becoming the single parent company of Royal Dutch Petroleum Company and The “Shell” Transport and Trading Company, plc, now The Shell Transport and Trading Company Limited, in 2005. The capital redemption reserve was established in connection with repurchases of shares of the Company. The share plan reserve is in respect of equity-settled share-based compensation plans (see Note 21). The movement represents the net of the charge for the year and the release as a result of vested awards and is after deduction of tax of $ 45 million in 2019 ( 2018 : $ 71 million ; 2017 : $ 11 million ).

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Accumulated other comprehensive income comprises the following:

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Accumulated other comprehensive income attributable to Royal Dutch Shell plc shareholders															$ million
	Currency translation differences		Unrealised gains/(losses) on securities		Debt instruments remeasurements		Cash flow and net investment hedging gains/(losses)		Deferred cost of hedging		Retirement benefits remeasurements		Equity instrument remeasurements		Total
At January 1, 2019	( 11,747	)			( 21	)	117		( 353	)	( 10,932	)	906		( 22,030	)
Recognised in other comprehensive income	302				24		( 579	)	9		( 3,106	)	( 17	)	( 3,367	)
Reclassified to income	38				5		268		86		—		—		397
Reclassified to the balance sheet	—				—		11		—		—		—		11
Reclassified to retained earnings	—				—		—		—		11		( 85	)	( 74	)
Tax on amounts recognised/reclassified	4				—		33		( 29	)	1,004		( 13	)	999
Total, net of tax	344				29		( 267	)	66		( 2,091	)	( 115	)	( 2,034	)
Share of joint ventures and associates	( 2	)			—		( 74	)	—		—		2		( 74	)
Other comprehensive income/(loss) for the period	342				29		( 341	)	66		( 2,091	)	( 113	)	( 2,108	)
Less: non-controlling interest	( 35	)			—		—		—		—		—		( 35	)
Attributable to Royal Dutch Shell plc shareholders	307				29		( 341	)	66		( 2,091	)	( 113	)	( 2,143	)
At December 31, 2019	( 11,440	)			8		( 224	)	( 287	)	( 13,023	)	793		( 24,173	)
At January 1, 2018 (as previously published)	( 8,735	)	1,969		—		( 633	)	—		( 14,645	)	—		( 22,044	)
Impact of IFRS 9	—		( 1,969	)	( 6	)	6		( 144	)	—		1,975		( 138	)
At January 1, 2018 (as revised)	( 8,735	)			( 6	)	( 627	)	( 144	)	( 14,645	)	1,975		( 22,182	)
Recognised in other comprehensive income	( 3,794	)			( 15	)	50		( 362	)	5,213		( 147	)	945
Reclassified to income	651				—		722		95		—		—		1,468
Reclassified to the balance sheet	—				—		( 30	)	—		—		—		( 30	)
Reclassified to retained earnings	—				—		—		—		137		( 1,108	)	( 971	)
Tax on amounts recognised/reclassified	( 29	)			—		( 12	)	58		( 1,625	)	( 6	)	( 1,614	)
Total, net of tax	( 3,172	)			( 15	)	730		( 209	)	3,725		( 1,261	)	( 202	)
Share of joint ventures and associates	( 25	)			—		14		—		1		193		183
Other comprehensive loss for the period	( 3,197	)			( 15	)	744		( 209	)	3,726		( 1,068	)	( 19	)
Less: non-controlling interest	185				—		—		—		( 13	)	( 1	)	171
Attributable to Royal Dutch Shell plc shareholders	( 3,012	)			( 15	)	744		( 209	)	3,713		( 1,069	)	152
At December 31, 2018	( 11,747	)			( 21	)	117		( 353	)	( 10,932	)	906		( 22,030	)
At January 1, 2017	( 13,831	)	1,321		—		( 144	)	—		( 15,241	)	—		( 27,895	)
Recognised in other comprehensive income	4,513		796		—		( 467	)	—		1,467		—		6,309
Reclassified to income	610		( 211	)	—		( 87	)	—		—		—		312
Reclassified to the balance sheet	—		—		—		( 18	)	—		—		—		( 18	)
Tax on amounts recognised/reclassified	33		8		—		20		—		( 863	)	—		( 802	)
Total, net of tax	5,156		593		—		( 552	)	—		604		—		5,801
Share of joint ventures and associates	53		55		—		63		—		( 1	)	—		170
Other comprehensive income/(loss) for the period	5,209		648		—		( 489	)	—		603		—		5,971
Less: non-controlling interest	( 113	)	—		—		—		—		( 7	)	—		( 120	)
Attributable to Royal Dutch Shell plc shareholders	5,096		648		—		( 489	)	—		596		—		5,851
At December 31, 2017	( 8,735	)	1,969		—		( 633	)	—		( 14,645	)	—		( 22,044	)

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23 - DIVIDENDS

Interim dividends	$ million
	2019		2018		2017
A shares:
Cash: $1.88 per share (2018: $1.88; 2017: $1.88)	8,147		8,605		4,919
Scrip: none (2018: none; 2017: $1.88 per share)	—		—		3,558
Total - A shares	8,147		8,605		8,477
B shares:
Cash: $1.88 per share (2018: $1.88; 2017: $1.88)	7,051		7,070		5,958
Scrip: none (2018: none; 2017: $1.88 per share)	—		—		1,193
Total - B shares	7,051		7,070		7,151
Total	15,198		15,675		15,628

In addition, on January 30, 2020 , the Directors announced a further interim dividend in respect of 2019 of $ 0.47 per A share and $ 0.47 per B share. The total dividend is estimated to be $ 3,691 million and is payable on March 23, 2020 , to shareholders on the register at February 14, 2020 . The Scrip Dividend Programme has been cancelled with effect from the fourth quarter 2017 interim dividend.

Dividends on A shares are by default paid in euros, although holders may elect to receive dividends in US dollars or in sterling. Dividends on B shares are by default paid in sterling, although holders may elect to receive dividends in US dollars or in euros. Dividends on ADSs are paid in dollars.

24 - EARNINGS PER SHARE

	2019		2018		2017
Income attributable to Royal Dutch Shell plc shareholders ($ million)	15,842		23,352		12,977
Weighted average number of A and B shares used as the basis for determining:
Basic earnings per share (million)	8,058.3		8,282.8		8,223.4
Diluted earnings per share (million)	8,112.5		8,348.7		8,299.0

Basic earnings per share are calculated by dividing the income attributable to Royal Dutch Shell plc shareholders for the year by the weighted average number of A and B shares outstanding during the year. The weighted average number of shares outstanding excludes shares held in trust.

Diluted earnings per share are based on the same income figures. The weighted average number of shares outstanding during the year is increased by dilutive shares related to share-based compensation plans.

25 - LEGAL PROCEEDINGS AND OTHER CONTINGENCIES

GENERAL

In the ordinary course of business, Shell subsidiaries are subject to a number of contingencies arising from litigation and claims brought by governmental, including tax authorities, and private parties. The operations and earnings of Shell subsidiaries continue, from time to time, to be affected to varying degrees by political, legislative, fiscal and regulatory developments, including those relating to the protection of the environment and indigenous groups in the countries in which they operate. The industries in which Shell subsidiaries are engaged are also subject to physical risks of various types.

The amounts claimed in relation to such events and, if such claims against Shell were successful, the costs of implementing the remedies sought in the various cases could be substantial. Based on information available to date and taking into account that in some cases it is not practicable to estimate the possible magnitude or timing of any resultant payments, management believes that the foregoing are not expected to have a material adverse impact on Shell’s Consolidated Financial Statements. However, there remains a high degree of uncertainty around these contingencies, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition.

In certain divestment transactions, liabilities related to dismantling and restoration are de-recognised upon transfer of these obligations to the buyer. For certain of these obligations Shell has issued guarantees to third parties and continues to be liable in case that the primary obligator is not able to meet its obligation. These potential obligations arising from issuance of these guarantees are assessed to be remote.

PESTICIDE LITIGATION

Shell Oil Company ("SOC"), along with another agricultural chemical pesticide manufacturer and several distributors, has been sued by public and quasi-public water purveyors alleging responsibility for groundwater contamination caused by applications of chemical pesticides. There are approximately 36 such cases currently pending. These suits assert various theories of strict liability and negligence, and seek to recover actual damages, including drinking well treatment and remediation costs. Most assert claims for punitive damages. While the Company continues to vigorously defend these lawsuits, a new environmental regulatory standard became effective in the State of California, where a majority of the suits are pending. The new standard requires public water systems state wide to perform quarterly or monthly sampling of their drinking water sources for a chemical contained in certain pesticides, beginning in January 2018. Water systems deemed out of compliance with the new five parts per trillion regulatory standard must take corrective action to resolve the exceedance or take the potable water source out of service. In response to this new regulatory standard, the Company is monitoring the sampling results to determine the number of wells potentially impacted. Based on the claims asserted and SOC’s track record, with regard to amounts paid to resolve varying claims, management does not expect the outcome of these lawsuits pending at December 31, 2019, to have a material adverse impact on Shell. However, there remains a high degree of uncertainty regarding the potential outcome of some of these pending lawsuits, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition.

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CLIMATE CHANGE LITIGATION

In the USA, 12 lawsuits have been filed by several municipalities and one state against oil and gas companies, including Royal Dutch Shell plc. The plaintiffs seek damages for claimed harm to their public and private infrastructure from rising sea levels allegedly due to climate change caused by the defendants’ fossil fuel products. A similar suit has been filed by a crab fishing industry group claiming harm to their fisheries as a result of alleged ocean-related impacts of climate change. In the Netherlands a case has been filed against Shell by a group of environmental non-governmental organisations (" eNGOs") and individual claimants seeking a court order that Shell reduce by (net) 100 % by 2050 the emissions associated with its business activities and products. Management believes the outcome of these matters should be resolved in a manner favourable to Shell, however, there remains a high degree of uncertainty regarding the ultimate outcome of these lawsuits, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition.

BRAZIL TAX

Pursuant to Law 7.183/2015 issued by the State of Rio de Janeiro (RJ State) and effective March 2016, a value-added levy has been imposed on oil extraction in the RJ State. The Company understands that the obligations arising from this law are not legally sustainable and Shell obtained favourable injunctions suspending the enforcement of the law in two separate lawsuits, one filed to cover year 2016 and the other covering year 2017 onwards. The injunctions remain in effect and Shell received favourable decisions on the subject matter from the RJ State Court. The RJ State has appealed against both decisions and one is pending confirmation by the State Court while the other is pending final decisions by the Brazilian Superior and Supreme Courts. In addition, and as this is an industry-wide issue, the Brazilian Association of Oil and Gas Exploration and Production Companies, of which Shell is a member, filed a suit in February 2016 before the Brazilian Supreme Court, challenging the constitutionality of the law. This matter is currently pending with the Supreme Court. Should Shell be required to pay such a levy, it could result in a potential total liability of approximately $ 5,275 million as of end 2019.

LOUISIANA COAST LITIGATION

The State of Louisiana and multiple local governments have initiated 43 lawsuits against 200 + Oil and Gas companies claiming historical oil and gas operations caused or contributed to wide-spread contamination, land loss and the erosion of the Louisiana coastline. Shell entities are named in 14 of the suits. The amounts claimed are unspecified. The cases are of first impression, arise out of an untested 1980 Louisiana statute and represent a novel attempt to render illegal operations that federal and state agencies permitted and authorized at the time. Management believes the outcome of these matters should be resolved in a manner favourable to Shell; there remains a high degree of uncertainty, however, concerning the scope of the claims and the ultimate outcome, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition.

NIGERIAN LITIGATION

Shell subsidiaries and associates operating in Nigeria are parties to various environmental and contractual disputes brought in the courts of Nigeria, England and the Netherlands. These disputes are at different stages in litigation, including at the appellate stage, where judgements have been rendered against Shell entities. If taken at face value, the aggregate amount of these judgements could be seen as material. Management, however, believes that the outcomes of these matters will ultimately be resolved in a manner favourable to Shell. However, there remains a high degree of uncertainty regarding these cases, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition.

The authorities in various countries are investigating Shell Nigeria Exploration and Production Company Ltd.’s ("SNEPCO’s") investment in Nigerian oil block OPL 245 and the 2011 settlement of litigation pertaining to that block with regard to potential anti-bribery, anti-corruption and anti-money laundering laws.

On January 27, 2017, the Nigeria Federal High Court issued an Interim Order of Attachment for Oil Prospecting Licence 245 ("OPL 245"), pending the conclusion of the investigation. SNEPCO applied for and was granted a discharge of this order on constitutional and procedural grounds. Also in Nigeria, in March 2017 criminal charges alleging official corruption and conspiracy to commit official corruption were filed against SNEPCO, one current Shell employee and third parties including ENI SpA and one of its subsidiaries. Those proceedings are ongoing. In January 2020, criminal charges alleging disobeying direction of law were filed in Nigeria against Shell Nigeria Ultra Deep Ltd., SNEPCO, and third parties including Nigeria Agip Exploration Limited. Those proceedings are ongoing. In March 2017, parties alleging to be shareholders of Malabu Oil and Gas Company Ltd. (Malabu) filed two actions to challenge the 2011 settlement and the award of OPL 245 to SNEPCO and an ENI SpA subsidiary by the Federal Government of Nigeria. Those proceedings are also ongoing. On May 8, 2018, Human Environmental Development Agenda ("HEDA") sought permission from the Federal High Court of Nigeria to apply for an order to direct the Attorney General of the Federation to revoke OPL 245 on grounds that the entire Malabu transaction in relation to the OPL is unconstitutional, illegal and void as it was obtained through fraudulent and corrupt practice. On October 4, 2018, SNEPCO was joined as a defendant in the HEDA action. Those proceedings are ongoing. On December 12, 2018, the Federal Republic of Nigeria issued a claim form in the UK against Shell and six subsidiaries, ENI SpA and two of its subsidiaries, Malabu as well as two other entities for the amount of $ 1,092 million plus damages for having participated in a fraudulent and corrupt scheme leading to the acquisition by Shell and ENI corporate defendants in 2011 of OPL 245. The Shell entities were served in April and May 2019. The Shell entities and other defendants have challenged the jurisdiction of the English courts to try the claims and a hearing is scheduled for April 2020. On February 14, 2017, Royal Dutch Shell plc received a notice of request for indictment from the Milan public prosecutor with respect to this matter. On December 20, 2017, Royal Dutch Shell plc along with four former Shell employees including one former executive were remanded to trial in Milan. On May 14, 2018, a trial commenced in the Court of Milan. On September 18, 2018, Shell was joined to the proceedings as the civilly responsible party (responsabile civile) for the damages caused by the alleged illegal acts of the four former Shell employees. Three other Shell entities (Shell UK Ltd, Shell Petroleum Development Company of Nigeria Ltd. and Shell Exporation and Production Africa Ltd. ) also joined the proceedings but were denied status as responsabile civile for their respective former employees at that phase of the proceedings. The trial is ongoing with closing arguments scheduled to begin on March 25, 2020. Based on Shell’s review of the Prosecutor of Milan's file and all the information and facts currently available to Shell, management does not believe that there is a basis to convict Shell in Milan. Furthermore, management is not aware of any evidence to convict any former or current Shell employee in Milan.

On September 20, 2018, a guilty judgement was filed by the Milan Judge of the Preliminary Hearing in a separate OPL 245 fast track trial of two individuals, neither of whom worked on behalf of Shell. That decision is under appeal.

In February 2019, we were informed by the Dutch Public Prosecutor’s Office ("DPP") that they were nearing the conclusion of their investigation and preparing to prosecute Royal Dutch Shell plc for criminal charges directly or indirectly related to the 2011 settlement of disputes over OPL 245 in Nigeria. On October 2, 2019 the U.S. Department of Justice ("DOJ") informed Shell that it was closing its inquiry into Shell in relation to OPL 245. We understand that the decision was based on the facts available to the DOJ, including ongoing legal proceedings in Europe.

There remains a high degree of uncertainty around the OPL 245 matters and contingencies discussed above, as well as their potential effect on future operations, earnings, cash flows and Shell’s financial condition. Accordingly, at this time, it is not practicable to estimate the magnitude and timing of any

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26 - EMPLOYEES

Employee costs	$ million
	2019		2018		2017
Remuneration	10,075		10,167		10,855
Social security contributions	844		810		844
Retirement benefits (see Note 17)	1,753		1,878		1,815
Share-based compensation (see Note 21)	537		531		802
Total [A]	13,209		13,386		14,316

[A] Excludes employees seconded to joint ventures and associates.

Average employee numbers	Thousand
	2019		2018		2017
Integrated Gas	10		9		8
Upstream	14		14		16
Downstream	36		39		42
Corporate [A]	23		20		19
Total [B]	83		82		85

[A] Includes all employees working in business service centres irrespective of the segment they support.

[B] Excludes employees seconded to joint ventures and associates ( 2019 : 3,000 employees, 2018 : 3,000 employees, 2017 : 3,000 employees).

27 - DIRECTORS AND SENIOR MANAGEMENT

Remuneration of Directors of the Company	$ million
	2019		2018		2017
Emoluments	8		12		11
Value of released awards under long-term incentive plans	12		20		5
Employer contributions to pension plans	1		1		1

Emoluments comprise salaries and fees, annual bonuses (for the period for which performance is assessed) and other benefits. The value of released awards under long-term incentive plans for the period is in respect of the performance period ending in that year. In 2019 , retirement benefits were accrued in respect of qualifying services under defined benefit plans by two Directors.

Further information on the remuneration of the Directors can be found in the Directors’ Remuneration Report on pages 98-101.

Directors and Senior Management expense	$ million
	2019		2018		2017
Short-term benefits	18		26		23
Retirement benefits	3		3		3
Share-based compensation	15		14		17
Termination and related amounts	2		—		3
Total	38		43		46

Directors and Senior Management comprise members of the Executive Committee and the Non-executive Directors of the Company.

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28 - AUDITOR’S REMUNERATION

	$ million
	2019		2018		2017
Fees in respect of the audit of the Consolidated and Parent Company Financial Statements, including audit of consolidation returns	32		31		27
Other audit fees, principally in respect of audits of accounts of subsidiaries	18		16		21
Total audit fees	50		47		48
Audit-related fees	4		5		4
Fees in respect of other non-audit services	—		1		1
Total	54		53		53

In addition, the auditor provided audit services to retirement benefit plans for employees of subsidiaries. Remuneration paid by those benefit plans amounted to $ 1 million in 2019 ( 2018 : $ 1 million ; 2017 : $ 1 million ).

29 - POST-BALANCE SHEET EVENTS

On February 27, 2020 the fully-consolidated Shell Midstream Partners, L.P. (“SHLX”) signed an agreement with its Shell-controlled general partner to eliminate all incentive distribution rights and economic general partner interest in SHLX and convert the general partner’s two per cent general partner interest in SHLX into a non-economic general partner interest in SHLX. SHLX has also entered into a Purchase and Sale Agreement with Shell affiliates to acquire our 79 % interest in the Mattox Pipeline Company LLC, which owns the Mattox Pipeline, and certain logistics assets at the Shell Norco Manufacturing Complex. As consideration for the assets and the elimination of incentive distribution rights, Shell will receive 160 million newly issued SHLX common units, plus $ 1.2 billion of Series A perpetual convertible preferred units at a price of $ 23.63 per unit. The transaction is expected to close in the second quarter of 2020 and is subject to regulatory approvals and other customary closing conditions.

After the balance sheet date, we have seen macro-economic uncertainty with regards to prices and demand for oil, gas and products as a result of the COVID-19 (coronavirus) outbreak. Furthermore, recent global developments and uncertainty in oil supply in March have caused further abnormally large volatility in commodity markets. The scale and duration of these developments remain uncertain but could impact our earnings, cash flow and financial condition.

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