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Prudential Continues To Deliver Resilient Operational Performance Amidst Market VolatilityHONG KONG SAR - Media OutReach - 10 August 2022 - Performance highlights for the continuing business1 on a constant (and actual) exchange rate basis2 APE sales3 up 9 per cent (6 per cent) to $2,213 million reflecting diversified geographic footprint, product mix and distribution channels New business profit4 fell by (5) per cent ((7) per cent) to $1,098 million following the impact of higher interest rates and differences in geographical and channel mix Adjusted operating profit5 up 8 per cent (6 per cent) to $1,661 million Shareholder GWS capital surplus over GMCR, following Hong Kong and China regulatory changes, remains strong and resilient with a coverage ratio of 548 per cent6. Shareholder GWS capital surplus over GPCR was $16.2 billion7, equivalent to a coverage ratio of 317 per cent8 Mark FitzPatrick, Group Chief Executive, said: "Our resilient operational performance demonstrates the strength of our well positioned and well diversified franchise across the Asia region, driven by our multi-channel, digitally enhanced distribution platform. This enabled us to maintain APE sales growth over the first quarter, despite considerable Covid-19-related disruption in many markets. We achieved stronger APE sales growth in the second quarter as conditions started to normalise in most markets. New business profit was (5) per cent9 lower as the benefit of higher APE sales was offset by the impact of higher interest rates under our EEV methodology, lower sales in Hong Kong, where margins have traditionally been higher, and an increase in bancassurance sales. Excluding the effects of interest rates and other economic changes, new business profit was broadly flat when compared with the corresponding period in 2021. "The Group's adjusted operating profit was up 8 per cent9, driven by a 6 per cent9 increase in life and asset management adjusted operating profit combined with a 32 per cent9 reduction in central costs, as interest costs fell following our $2.25 billion debt redemption programme that completed in January 2022. We are on track to deliver a $70 million10 reduction in head office costs by the start of 2023 in addition to the $180 million saving achieved following the demerger of the UK business. The first 2022 interim dividend is 5.74 cents per share, up 7 per cent11, equating to one third of the prior year full-year dividend of 17.23 cents per share. "We continue to invest in the business including extending Pulse beyond a consumer app so that it covers Prudential's key business processes, from enabling agents by using tools designed to enhance productivity, to fulfilment of policy sales and servicing. Ultimately we believe this will help drive greater customer centricity and efficiency. In addition, via the Pulse platform, we are able to add additional distribution capability, allowing access to new channels and new customer segments which extend beyond our existing distribution footprint. "Our Group-wide Supervision Framework (GWS) capital position is strong and resilient. The Hong Kong Insurance Authority (IA) approved our application to early adopt the RBC framework in Hong Kong, and this is incorporated within our GWS position at 30 June 2022. The Group's shareholder surplus above the Group Minimum Capital Requirement (GMCR) was $19.4 billion12, representing a cover ratio of 548 per cent6. The Group aligns its established EEV and free surplus framework with the Group's Prescribed Capital Requirement (GPCR). At 30 June 2022, our shareholder surplus above the GPCR was $16.2 billion7 and results in a coverage ratio of 317 per cent8. "The first half of the year saw considerable macroeconomic volatility, characterised in many markets by lower equity index levels, material increases in government bond yields and widening corporate bond spreads. The combined impact of these factors on our balance sheet, with the fall in investments exceeding the reduction in liabilities, led to a significant fall in IFRS profit after tax for continuing operations from $1,070 million11 in the first half of 2021 to $106 million in the first half of 2022 and also led to a reduction in EEV under our active economic methodology. "Our Moody's total leverage ratio at 30 June 2022 was estimated to be 22 per cent, well within our target range of 20-25 per cent, demonstrating our financial flexibility following recent actions. "From a leadership perspective, as previously announced, we are delighted that Anil Wadhwani will join Prudential as Group CEO in February 2023. He will join a growth business, with a multi-channel distribution model and a distinctive geographic footprint, combined with the agility to grow and serve its customers even against the backdrop of the challenges of the Covid-19 pandemic. Although there are signs that Covid-19-related impacts in many of our markets are stabilising, over the remainder of the year we expect that operating conditions may continue to be challenging. We remain confident that Prudential has the financial resilience, capital strength and capability to meet the growing health and savings needs of our customers in Asia and Africa. By doing so, we believe we will deliver on our purpose to help people get the most out of life and also build value for our shareholders over the long-term." Summary financials Half year 2022 $m Half year 2021 $m Change on AER basis2 Change on CER basis2 New business profit from continuing operations1,4 1,098 1,176 (7)% (5)% Operating free surplus generated from continuing operations1,13 1,224 1,112 10% 12% Adjusted operating profit from continuing operations1,5 1,661 1,571 6% 8% IFRS profit after tax from continuing operations1 106 1,070 (90)% (90)% 30 Jun 2022 31 Dec 2021 Total Per share Total Per share EEV shareholders' equity $42.3bn 1,539¢ $47.4bn 1,725¢ IFRS shareholders' equity $16.1bn 586¢ $17.1bn 622¢ Notes 1 Continuing operations represents the Asia, Africa and head office functions of the Group following the demerger of Jackson. 2 Further information on actual and constant exchange rate bases is set out in note A1 of the IFRS financial results. 3 APE sales is a measure of new business activity that comprises the aggregate of annualised regular premiums and one-tenth of single premiums on new business written during the period for all insurance products, including premiums for contracts designated as investment contracts under IFRS 4. It is not representative of premium income recorded in the IFRS financial statements. See note II of the Additional financial information for further explanation. 4 New business profit, on a post-tax basis, on business sold in the period, calculated in accordance with EEV Principles. 5 In this press release 'adjusted operating profit' refers to adjusted IFRS operating profit based on longer-term investment returns from continuing operations. This alternative performance measure is reconciled to IFRS profit for the period in note B1.1 of the IFRS financial results. 6 GWS coverage ratio of capital resources over Group minimum capital requirement attributable to the shareholder business. 7 GWS capital resources in excess of the Group prescribed capital requirement attributable to the shareholder business, before allowing for the 2022 first cash interim dividend. The shareholder position excludes the contribution to Group eligible capital resources and the Group prescribed capital requirements from participating business in Hong Kong, Singapore and Malaysia. Under the GWS Framework, all debt instruments (senior and subordinated) issued by Prudential plc at 30 June 2022, except the $350 million senior debt issued in the first half of 2022, are included as GWS eligible group capital resources. 8 GWS coverage ratio of capital resources over Group prescribed capital requirement attributable to the shareholder business. Prescribed capital requirements are set at the level at which the local regulator of a given entity can impose penalties, sanctions or intervention measures. The GWS group capital adequacy requirements require that total eligible group capital resources are not less than the Group Prescribed Capital Requirements (GPCR) and that GWS Tier 1 group capital resources are not less than the Group Minimum Capital Requirements (GMCR). 9 On a constant exchange rate basis. 10 Annual saving from full year 2021 costs, based on full year 2021 exchange rates. 11 On an actual exchange rate basis. 12 GWS capital resources in excess of the Group minimum capital requirement attributable to the shareholder business, before allowing for the 2022 first cash interim dividend. The shareholder position excludes the contribution to Group eligible capital resources and Group minimum capital requirement of participating business in Hong Kong, Singapore and Malaysia. Under the GWS Framework, all debt instruments (senior and subordinated) issued by Prudential plc at 30 June 2022, except the $350 million senior debt issued in the first half of 2022, are included as GWS eligible group capital resources. 13 Operating free surplus generated from insurance and asset management operations before restructuring costs. For insurance operations, operating free surplus generated represents amounts emerging from the in-force business during the period net of amounts reinvested in writing new business and excludes non-operating items. For asset management businesses, it equates to post-tax operating profit for the period. Restructuring costs are presented separately from the business unit amount. Further information is set out in 'movement in Group free surplus' of the EEV financial results. Notes to editors: a. The results in this announcement are prepared on two bases: International Financial Reporting Standards (IFRS) and European Embedded Value (EEV). The results prepared under IFRS form the basis of the Group's statutory financial statements. The supplementary EEV financial results have been prepared in accordance with the amended European Embedded Value Principles issued by the European Insurance CFO Forum in 2016. The Group's EEV financial results are stated on a post-tax basis and include the post-tax IFRS financial results of the Group's asset management and other operations. The IFRS and EEV results are presented in US dollars and the basis of translation is discussed in note A1 of the IFRS financial statements. Period-on-period percentage increases are stated on a constant exchange rate basis unless otherwise stated. Constant exchange rates are calculated by translating prior period results using the current period foreign exchange rate ie current period average rates for the income statement and current period closing rates for the balance sheet. b. EEV and adjusted IFRS operating profit for continuing operations is based on longer-term investment returns and is stated after excluding the effect of short-term fluctuations in investment returns against long-term assumptions and other corporate transactions. Furthermore, for EEV financial results, operating profit based on longer-term investment returns excludes the effect of changes in economic assumptions and the mark-to-market value movement on core borrowings. Separately on the IFRS basis, adjusted operating profit also excludes amortisation of acquisition accounting adjustments. c. Total number of Prudential plc shares in issue as at 30 June 2022 was 2,749,314,856. d. We are expected to announce our Half Year 2022 Results to the Hong Kong Stock Exchange and to the UK Financial Media at 12.00pm HKT – 5.00am UKT – 12.00am ET on Wednesday, 10 August 2022. The announcement will be released on the London Stock Exchange at 2.00pm HKT – 7.00am UKT – 2.00am ET on Wednesday, 10 August. A pre-recorded presentation for analysts and investors will be available on-demand from 12.00pm HKT – 5.00am UKT – 12.00am ET on Wednesday, 10 August 2022 using the following link: https://www.investis-live.com/prudential/62d51c1fd9438014009aa544/hebae. A copy of the script used in the recorded video will also be available from 12.00pm HKT – 5.00am UKT – 12.00am ET on Wednesday, 10 August 2022 on Prudential plc's website. A Q&A video conference for analysts and investors will be held at 1.00pm HKT – 6.00am UKT – 1.00am ET on Wednesday, 10 August. Registration to view the video conference online To register to watch the video conference and submit questions online, please do so via the following link: https://www.investis-live.com/prudential/62d52566d9438014009d4b1b/bmppi. The webcast will be available to replay afterwards using the same link. Dial-in details A dial-in facility will be available to listen to the call and ask questions: please allow 15 minutes ahead of the start time to join the call (lines open half an hour before the call is due to start, i.e. from 12.30pm HKT – 5.30am UKT – 12.30am ET). Dial-in: 580 33 413 (HK) / +44 (0) 20 3936 2999 (UK and international) / 010 5387 5828 (China), Toll free: 800 908 350 (HK) / 0800 640 6441 (UK), Participant access code: 570192. Once participants have entered this code their name and company details will be taken. Transcript Following the call a transcript will be published on the results centre page of the Prudential plc's website on Friday 12 August 2022. Playback facility Please use the following for a playback facility: +44 (0) 20 3936 3001 (UK and international), replay code 744029. This will be available from approximately 10.00pm HKT – 3.00pm UKT – 10.00am ET on 10 August until 6.59am HK time on 25 August 2022 – 11.59pm UKT – 6.59pm ET on 24 August. e. 2022 First interim ordinary dividend Ex-dividend date 18 August 2022 (Hong Kong, UK and Singapore) Record date 19 August 2022 Payment of dividend 27 September 2022 (Hong Kong, UK and ADR holders) On or around 4 October 2022 (Singapore) f. About Prudential plc Prudential plc provides life and health insurance and asset management in Asia and Africa. The business helps people get the most out of life, by making healthcare affordable and accessible and by promoting financial inclusion. Prudential protects people's wealth, helps them grow their assets, and empowers them to save for their goals. The business has more than 19 million life customers and is listed on stock exchanges in London (PRU), Hong Kong (2378), Singapore (K6S) and New York (PUK). Prudential is not affiliated in any manner with Prudential Financial, Inc. a company whose principal place of business is in the United States of America, nor with The Prudential Assurance Company Limited, a subsidiary of M&G plc, a company incorporated in the United Kingdom. https://www.prudentialplc.com/. g. Discontinued operations Throughout this results announcement 'discontinued operations' refers to the US operations (Jackson). All amounts presented refer to continuing operations unless otherwise stated, which reflect the Group following the completed demerger of Jackson. h. Prudential will file an Interim Report on Form 6-K with the Securities and Exchange Commission shortly and it will be available in due course on the Prudential plc website. i. Forward-looking statements This document may contain 'forward-looking statements' with respect to certain of Prudential's (and its wholly and jointly owned businesses') plans and its goals and expectations relating to its future financial condition, performance, results, strategy and objectives. Statements that are not historical facts, including statements about Prudential's (and its wholly and jointly owned businesses') beliefs and expectations and including, without limitation, statements containing the words 'may', 'will', 'should', 'continue', 'aims', 'estimates', 'projects', 'believes', 'intends', 'expects', 'plans', 'seeks' and 'anticipates', and words of similar meaning, are forward-looking statements. These statements are based on plans, estimates and projections as at the time they are made, and therefore undue reliance should not be placed on them. By their nature, all forward-looking statements involve risk and uncertainty. A number of important factors could cause Prudential's actual future financial condition or performance or other indicated results of the entity referred to in any forward-looking statement to differ materially from those indicated in such forward-looking statement. Such factors include, but are not limited to, current and future market conditions including fluctuations in interest rates and exchange rates, inflation (including interest rate rises as a response), sustained high or low interest rate environments, the performance of financial and credit markets generally and the impact of economic uncertainty, slowdown or contraction, (including as a result of the Russia-Ukraine conflict and related or other geopolitical tensions and conflicts) which may also impact policyholder behaviour and reduce product affordability, asset valuation impacts from the transition to a lower carbon economy, derivative instruments not effectively mitigating any exposures; global political uncertainties, including the potential for increased friction in cross-border trade and the exercise of laws, regulations and executive powers to restrict trade, financial transactions, capital movements and/or investment; the impact of Covid-19 outbreaks, including adverse financial market and liquidity impacts, responses and actions taken by governments, regulators and supervisors, the impact on sales, claims and assumptions and increased product lapses, disruption to Prudential's operations (and those of its suppliers and partners), risks associated with new sales processes and technological and information security risks; the policies and actions of regulatory authorities, including, in particular, the policies and actions of the Hong Kong Insurance Authority, as Prudential's Group-wide supervisor, as well as the degree and pace of regulatory changes and new government initiatives generally; given its designation as an Internationally Active Insurance Group, the impact on Prudential of systemic risk and other group supervision policy standards adopted by the International Association of Insurance Supervisors; the physical, social and financial impacts of climate change and global health crises on Prudential's business and operations; the impact of not adequately responding to environmental, social and governance issues (including not properly considering the interests of Prudential's stakeholders or failing to maintain high standards of corporate governance); the impact of competition and fast-paced technological change; the effect on Prudential's business and results from, in particular, mortality and morbidity trends, lapse rates and policy renewal rates; the timing, impact and other uncertainties of future acquisitions or combinations within relevant industries; the impact of internal transformation projects and other strategic actions failing to meet their objectives or adversely impacting the Group's employees; the availability and effectiveness of reinsurance for Prudential's businesses; the risk that Prudential's operational resilience (or that of its suppliers and partners) may prove to be inadequate, including in relation to operational disruption due to external events; disruption to the availability, confidentiality or integrity of Prudential's information technology, digital systems and data (or those of its suppliers and partners) including the Pulse platform; any ongoing impact on Prudential of the demerger of Jackson Financial Inc.; the increased operational and financial risks and uncertainties associated with operating joint ventures with independent partners, particularly where joint ventures are not controlled by Prudential; the impact of changes in capital, solvency standards, accounting standards or relevant regulatory frameworks, and tax and other legislation and regulations in the jurisdictions in which Prudential and its affiliates operate; and the impact of legal and regulatory actions, investigations and disputes. These and other important factors may, for example, result in changes to assumptions used for determining results of operations or re-estimations of reserves for future policy benefits. Further discussion of these and other important factors that could cause actual future financial condition or performance to differ, possibly materially, from those anticipated in Prudential's forward-looking statements can be found under the 'Risk Factors' heading of this document and the 'Risk Factors' heading in Prudential's 2021 Annual Report. Prudential's 2021 Annual Report is available on its website at www.prudentialplc.com. These factors are not exhaustive as Prudential operates in a continually changing business environment with new risks emerging from time to time that it may be unable to predict or that it currently does not expect to have a material adverse effect on its business. Any forward-looking statements contained in this document speak only as of the date on which they are made. Prudential expressly disclaims any obligation to update any of the forward-looking statements contained in this document or any other forward-looking statements it may make, whether as a result of future events, new information or otherwise except as required pursuant to the UK Prospectus Rules, the UK Listing Rules, the UK Disclosure Guidance and Transparency Rules, the Hong Kong Listing Rules, the SGX-ST Listing Rules or other applicable laws and regulations. j. Cautionary statements This document does not constitute or form part of any offer or invitation to purchase, acquire, subscribe for, sell, dispose of or issue, or any solicitation of any offer to purchase, acquire, subscribe for, sell or dispose of, any securities in any jurisdiction nor shall it (or any part of it) or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor. Hashtag: #PrudentialThe issuer is solely responsible for the content of this announcement.
Acquisition Will Enhance End-to-End Global Healthcare Logistics Capabilities and Expand Scale and Expertise in Europe and Latin America ATLANTA, Aug. 08, 2022 (GLOBE NEWSWIRE) -- UPS (NYSE: UPS) today announced plans to acquire Bomi Group, an industry-leading multinational healthcare logistics provider. The transaction will add temperature-controlled facilities in 14 countries and nearly 3,000 highly-skilled Bomi Group team members to the UPS Healthcare network in Europe and Latin America. “As a leading global healthcare logistics company, Bomi enhances our portfolio of services and accelerates our journey to become the number one provider of complex healthcare logistics,” said EVP and President of UPS International, Healthcare and Supply Chain Solutions Kate Gutmann. “UPS Healthcare and Bomi Group employees share similar values and our cultures are firmly rooted in a relentless focus on quality. The combination of our two teams will significantly improve our healthcare customers’ ability to continue to develop and deliver life-saving innovations.” Since 1985, Bomi Group has provided high value-added services for the Medtech and Pharma sectors with a customized and tailored approach. It is a quality-focused company devoted to healthcare that has built solid and long-lasting business relationships with more than 150 multinational customers worldwide. Key Bomi Group leaders, including CEO Marco Ruini, will continue in their roles to provide seamless service to Bomi Group customers after the transaction closes. Bomi Group’s employees will also continue to play vital roles in the combined organization. “With over 35 years in the healthcare logistics industry, our team has developed best-in-class services designed to meet and exceed the needs of our medical technology and pharmaceutical customers,” said Ruini. “Joining the UPS team will expand those capabilities and create an even more integrated and powerful global network for our customers.” The acquisition will add more than 350 temperature-controlled vehicles and four million square feet (391k m2) to the UPS Healthcare global footprint, offering customers access to faster shipping times, greater production flexibility, and offerings to help them attract new business. The acquisition will play a key role in the delivery of next-generation pharmaceutical and biologic treatments that increasingly require time-critical and temperature-sensitive logistics. “We are focused on building healthcare logistics capabilities and services that allow our customers to deliver the newest healthcare innovations,” said UPS Healthcare President Wes Wheeler. “We are excited to combine Bomi’s talent, expertise and capabilities with UPS Healthcare – together, we will provide unmatched solutions to our customers, powered by UPS’s integrated, global smart logistics network.” The acquisition of Bomi is part of UPS Healthcare’s continued expansion of its network and services to meet growing demand – including Bomi, UPS Healthcare has doubled its global footprint since 2020. Recent expansions include newly constructed and soon-to-be-opened dedicated state-of-the-art healthcare logistics facilities in Germany and Australia, and expanded campuses in Hungary and the Netherlands. UPS Healthcare also recently enhanced UPS Premier, a technology-led service that can prioritize and track critical shipments within 10 feet (about 3 meters) of their location anywhere in UPS’s global network. UPS Premier brings worldwide visibility, control, reliability and product recovery capabilities to UPS Healthcare customers. These expansions and new services meet the complex and varied needs of UPS Healthcare’s customers, helping them turn logistics into a competitive advantage. The transaction is expected to close by the end of the year, subject to customary regulatory review and approval. The value and terms of the transaction are not being disclosed at this time. J.P. Morgan Securities LLC served as the financial advisor to UPS. For more information about UPS Healthcare’s innovations and customer-driven solutions, visit Healthcare.ups.com and about.ups.com. About UPS UPS (NYSE: UPS) is one of the world’s largest companies, with 2021 revenue of $97.3 billion, and provides a broad range of integrated logistics solutions for customers in more than 220 countries and territories. Focused on its purpose statement, “Moving our world forward by delivering what matters,” the company’s more than 500,000 employees embrace a strategy that is simply stated and powerfully executed: Customer First. People Led. Innovation Driven. UPS is committed to reducing its impact on the environment and supporting the communities we serve around the world. UPS also takes an unwavering stance in support of diversity, equity and inclusion. More information can be found at www.ups.com, about.ups.com, and www.investors.ups.com. About UPS Healthcare UPS Healthcare delivers unparalleled healthcare logistics expertise to its customers around the world. UPS Healthcare has 11+ million square feet of cGMP and GDP-compliant healthcare distribution space globally. Services include inventory management, cold chain packaging and shipping, storage and fulfillment of medical devices, and lab and clinical trial logistics. UPS Healthcare's global infrastructure, its UPS® Premier visibility service, its track and trace technology, and its global quality system are well-suited to meet today's complex logistics demands for the pharmaceutical, medical device, and laboratory diagnostic industries. Visit Healthcare.ups.com for more information. About Bomi Group BOMI GROUP is a leading Italian multinational company in the field of integrated logistics serving the Healthcare sector. Bomi is the logistics partner of more than 150 customers worldwide, including major players in the medical device, in vitro diagnostics, biomedical and pharmaceutical sectors. The Group is present through its subsidiaries and affiliates in 14 countries worldwide, with a particular focus on Europe and South America, employs over 3,000 people and has its own fleet of vehicles for daily deliveries to hospitals, clinics, laboratories, pharmacies and home patients. For more information visit bomigroup.com. ### Forward-Looking Statements This release and our filings with the Securities and Exchange Commission contain and in the future may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements other than those of current or historical fact, and all statements accompanied by terms such as “will,” “believe,” “project,” “expect,” “estimate,” “assume,” “intend,” “anticipate,” “target,” “plan,” and similar terms, are intended to be forward-looking statements. Forward-looking statements are made subject to the safe harbor provisions of the federal securities laws pursuant to Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. From time to time, we also include written or oral forward-looking statements in other publicly disclosed materials. Forward-looking statements may relate to our intent, belief, forecasts of, or current expectations about our strategic direction, prospects, future results, or future events; they do not relate strictly to historical or current facts. Management believes that these forward-looking statements are reasonable as and when made. However, caution should be taken not to place undue reliance on any forward-looking statements because such statements speak only as of the date when made and the future, by its very nature, cannot be predicted with certainty. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or anticipated results. These risks and uncertainties, include, but are not limited to the impact of: our inability to complete the pending acquisition on the expected terms, or at all, for any reason, including our inability to receive regulatory approvals; continued uncertainties related to the COVID-19 pandemic on our business and operations, financial performance and liquidity, our customers and suppliers, and on the global economy; changes in general economic conditions, in the U.S. or internationally; industry evolution and significant competition; changes in our relationships with our significant customers; our ability to attract and retain qualified employees; increased or more complex physical or data security requirements, or any data security breach; strikes, work stoppages or slowdowns by our employees; results of negotiations and ratifications of labor contracts; our ability to maintain our brand image and corporate reputation; disruptions to our information technology infrastructure; global climate change; interruptions in or impacts on our business from natural or man-made events or disasters including terrorist attacks, epidemics or pandemics; exposure to changing economic, political and social developments in international markets; our ability to realize the anticipated benefits from acquisitions, dispositions, joint ventures or strategic alliances; changing prices of energy, including gasoline, diesel and jet fuel, or interruptions in supplies of these commodities; changes in exchange rates or interest rates; our ability to accurately forecast our future capital investment needs; significant expenses and funding obligations relating to employee health, retiree health and/or pension benefits; our ability to manage insurance and claims expenses; changes in business strategy, government regulations, or economic or market conditions that may result in impairments of our assets; potential additional U.S. or international tax liabilities; increasingly stringent laws and regulations, including relating to climate change; potential claims or litigation related to labor and employment, personal injury, property damage, business practices, environmental liability and other matters; and other risks discussed in our filings with the Securities and Exchange Commission from time to time, including our Annual Report on Form 10-K for the year ended December 31, 2021, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, and subsequently filed reports. You should consider the limitations on, and risks associated with, forward-looking statements and not unduly rely on the accuracy of predictions contained in such forward-looking statements. We do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements. Contact: UPS Media Relations pr@ups.com 404-828-7123
The company will offer an exclusive workshop to promote awareness of DeFi security challenges in South Korea and beyondSEOUL, SOUTH KOREA - Media OutReach - 4 August 2022 - Sooho.io, the leading DeFi infrastructure service provider trusted by Fortune 500s, today announced that Jasper Lee, Audit Tech Lead, will offer a workshop on Smart Contract Bug Hunting for Fun & Profit, at Korea Blockchain Week 2022 in Seoul – the event's first in-person conference since 2020. The workshop will be held three times during the conference on July 29, Aug 5, and Aug 12, 2022. In 2021 alone, almost US$10 billion worth of assets were stolen due to the vulnerabilities within smart contracts. Through this executive workshop, audiences will explore the differences between Web3.0 and Web2.0 from a security perspective, as well as learn about the major types and causes of smart contract vulnerabilities. The workshop will also include a live demo search for vulnerabilities within real smart contracts live on DeFi services. Not only will audiences learn about previously discovered vulnerabilities, but will also take home practical methodologies for finding and fixing vulnerabilities. "Sooho.io is excited for the opportunity to participate at Korea Blockchain Week 2022 and share our insights into the future of DeFi with like-minded crypto enthusiasts. As larger companies adopt the same pioneering spirit we once embarked with, events like these are increasingly important to fostering a healthy ecosystem for sustained growth. Representation at this event brings Sooho.io closer to the crypto community, helping us in our commitment to strengthening Korea's DeFi ecosystem," said Jisu Park, CEO, and Founder of Sooho.io. Earlier this year, Sooho.io expanded its services and developed a bridge layer for Web 3.0 reminiscent of a SWIFT service on top of Lambda256's The Balance mainnet. The mission of The Balance is to develop various types of decentralized apps (dApps) to build out the ecosystem, involving projects such as IPFS, play-to-earn, oracles, DEXs, NFTs, wallets, and stablecoins, supporting effortless and seamless integration with existing services. "Being based in an emerging blockchain hub (South Korea) has afforded me nuanced perspectives on DeFi security. Navigating an industry presented with boundless opportunity and promotion of greater diversification inevitably comes with associated risks. I'm looking forward to sharing my thoughts, and see this as a means to forward discourse among entrepreneurs, investors, and blockchain pioneers alike," said Jasper Lee, Audit Tech Lead at Sooho.io. During Korea Blockchain Week 2002, Sooho.io will also launch EspressoNFT on Ethereum and Polygon networks. Holders of EspressoNFTs can visit Sooho.io's cafe for a free drink located adjacent to the Gangnam Station. The Sooho.io cafe will also be hosting after-parties organized by the Ethereum, Cosmos, and Polygon communities. Hosted by FactBlock and co-hosted by Hashed, Korea Blockchain Week 2022 brings together the industry's most influential players and pioneers to discuss blockchain technology, cryptocurrency, DeFi, NFT, Metaverse, Web3, and more. The conference will feature inspirational keynotes, panel discussions, pitch competitions, investor meet-ups, and world-class networking opportunities for crypto enthusiasts. To register for the workshop, click here: event website. Hashtag: #SoohoioAbout Sooho.ioFounded in 2018, Sooho.io is a leading DeFi infrastructure service provider trusted by Fortune 500s including Samsung SDS, LG CNS, and more. Headquartered in South Korea, the company aims to become the SWIFT for Web3.0 and connect the Korean DeFi ecosystem with the rest of the world. The company specializes in developing DeFi products and smart contract auditing, offering one-stop customizable solutions to financial institutions. To learn more, visit Sooho.io. Access Sooho.io's press kit here.
Second Quarter 2022 Highlights Product revenue of $400.7 million, up 34% year over year Total revenue of $1.03 billion, up 29% year over year Bookings of $1.38 billion, up 42% year over year1 Billings of $1.30 billion, up 36% year over year2 Deferred revenue of $3.93 billion, up 35% year over year GAAP operating margin of 19.0% Non-GAAP operating margin of 24.8%2 GAAP diluted net income per share attributable to Fortinet, Inc. of $0.213 Non-GAAP diluted net income per share attributable to Fortinet, Inc. of $0.242,3 Cash flow from operations of $323.4 million Free cash flow of $283.5 million2 Cash paid for share repurchases of $800.0 million SUNNYVALE, Calif., Aug. 03, 2022 (GLOBE NEWSWIRE) -- Fortinet® (Nasdaq: FTNT), a global leader in broad, integrated and automated cybersecurity solutions, today announced financial results for the second quarter ended June 30, 2022. “We delivered strong revenue and billings growth in the second quarter driven by an over 50% year-over-year increase in the number of transactions larger than one million dollars. Large enterprise companies continue to favor Fortinet’s industry leading cost for performance advantage and integrated platform strategy,” said Ken Xie, Founder, Chairman, and Chief Executive Officer. “Fortinet’s market share gains are being driven by the convergence of networking and security and an accelerating focus on vendor consolidation with our Core Platform and Platform Extension solutions designed to secure our customers’ entire infrastructure from the data center to the cloud.” Financial Highlights for the Second Quarter of 2022 Revenue: Total revenue was $1.03 billion for the second quarter of 2022, an increase of 28.6% compared to $801.1 million for the same quarter of 2021. Product Revenue: Product revenue was $400.7 million for the second quarter of 2022, an increase of 34.3% compared to $298.3 million for the same quarter of 2021. Service Revenue: Service revenue was $629.4 million for the second quarter of 2022, an increase of 25.2% compared to $502.8 million for the same quarter of 2021. Bookings1: Total bookings were $1.38 billion for the second quarter of 2022, an increase of 42.1% compared to $967.9 million for the same quarter of 2021. Backlog was $349.9 million as of June 30, 2022, an increase of $188.0 million compared to $161.9 million as of December 31, 2021. Billings2: Total billings were $1.30 billion for the second quarter of 2022, an increase of 35.7% compared to $960.9 million for the same quarter of 2021. Deferred Revenue: Total deferred revenue was $3.93 billion as of June 30, 2022, an increase of 35.3% compared to $2.91 billion as of June 30, 2021. GAAP Operating Income and Margin: GAAP operating income was $195.3 million for the second quarter of 2022, representing a GAAP operating margin of 19.0%. GAAP operating income was $147.5 million for the same quarter of 2021, representing a GAAP operating margin of 18.4%. Non-GAAP Operating Income and Margin2: Non-GAAP operating income was $255.4 million for the second quarter of 2022, representing a non-GAAP operating margin of 24.8%. Non-GAAP operating income was $203.3 million for the same quarter of 2021, representing a non-GAAP operating margin of 25.4%. GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.3: GAAP net income was $173.5 million for the second quarter of 2022, compared to GAAP net income of $137.5 million for the same quarter of 2021. GAAP diluted net income per share was $0.21 for the second quarter of 2022, based on 810.1 million diluted weighted-average shares outstanding, compared to GAAP diluted net income per share of $0.16 for the same quarter of 2021, based on 835.4 million diluted weighted-average shares outstanding. Non-GAAP Net Income and Diluted Net Income Per Share Attributable to Fortinet, Inc.2,3: Non-GAAP net income was $194.1 million for the second quarter of 2022, compared to non-GAAP net income of $158.7 million for the same quarter of 2021. Non-GAAP diluted net income per share was $0.24 for the second quarter of 2022, based on 810.1 million diluted weighted-average shares outstanding, compared to $0.19 for the same quarter of 2021, based on 835.4 million diluted weighted-average shares outstanding. Cash Flow: Cash flow from operations was $323.4 million for the second quarter of 2022, compared to $418.2 million for the same quarter of 2021. Free Cash Flow2: Free cash flow was $283.5 million for the second quarter of 2022, compared to $394.7 million for the same quarter of 2021. Share Repurchase Program3: During the three and six months ended June 30, 2022, Fortinet repurchased 14.4 million and 25.8 million shares of its common stock at an average price of $55.45 and $57.82 per share and for an aggregate purchase price of $800.0 million and $1.49 billion, respectively. During the three and six months ended June 30, 2021, Fortinet repurchased 2.3 million shares of its common stock at an average price of $40.28 per share and for an aggregate purchase price of $91.6 million. In July 2022, Fortinet’s board of directors authorized a $1.0 billion increase in the authorized stock repurchase under our share repurchase program. As of August 1, 2022, approximately $1.03 billion remained available for future share repurchases. Guidance For the third quarter of 2022, Fortinet currently expects: Revenue in the range of $1.105 billion to $1.135 billion Billings in the range of $1.385 billion to $1.415 billion Non-GAAP gross margin in the range of 75.0% to 76.0% Non-GAAP operating margin in the range of 25.0% to 26.0% Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $0.26 to $0.28, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 810 million to 820 million. For the fiscal year 2022, Fortinet currently expects: Revenue in the range of $4.350 billion to $4.400 billion Service revenue in the range of $2.620 billion to $2.670 billion Billings in the range of $5.560 billion to $5.640 billion Non-GAAP gross margin in the range of 75.0% to 76.0% Non-GAAP operating margin in the range of 25.0% to 26.0% Diluted non-GAAP net income per share attributable to Fortinet, Inc. in the range of $1.01 to $1.06, assuming a non-GAAP effective tax rate of 17%. This assumes a diluted share count of 810 million to 820 million. These statements are forward looking and actual results may differ materially. Refer to the Forward-Looking Statements section below for information on the factors that could cause our actual results to differ materially from these forward-looking statements. Our guidance with respect to non-GAAP financial measures excludes stock-based compensation, amortization of acquired intangible assets and gain on intellectual property matters. We have not reconciled our guidance with respect to non-GAAP financial measures to the corresponding GAAP measures because certain items that impact these measures are uncertain or out of our control, or cannot be reasonably predicted. Accordingly, a reconciliation of these non-GAAP financial measures to the corresponding GAAP measures is not available without unreasonable effort. 1 Bookings represents the total value of all orders received during the period. Backlog represents orders received but not fulfilled and excludes Alaxala Networks Corporation. When an order is fulfilled, billings and revenue are recognized. 2 A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading “Non-GAAP Financial Measures”. 3 All share and per share amounts presented herein have been retroactively adjusted to reflect the five-for-one forward stock split which was effective June 22, 2022. Conference Call Details Fortinet will host a conference call today at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the earnings results. A live webcast of the conference call and supplemental slides will be accessible from the Investor Relations page of Fortinet’s website at https://investor.fortinet.com and a replay will be archived and accessible at https://investor.fortinet.com/events-and-presentations. Third Quarter 2022 Conference Participation Schedule: KeyBanc Technology Leadership Conference August 8, 2022 Stifel Tech Executive Summit Deer Valley August 29-31, 2022 Citibank Investor Conference September 7, 2022 Evercore Investor Conference September 8, 2022 Goldman Sachs Communicopia Conference September 12, 2022 Members of Fortinet’s management team are expected to present at these conferences and discuss the latest company strategies and initiatives. Fortinet’s conference presentations are expected to be available via webcast on the company’s web site. To access the most updated information, pre-register and listen to the webcast of each event, please visit the Investor Presentation & Events page of Fortinet’s website at https://investor.fortinet.com/events-and-presentations. The schedule is subject to change. About Fortinet (www.fortinet.com) Fortinet (NASDAQ: FTNT) makes possible a digital world that we can trust through its mission to protect people, devices and data everywhere. This is why many of the world’s largest enterprises, service providers and government organizations choose Fortinet to securely accelerate their digital journey. The Fortinet Core Platform and Platform Extension products deliver broad, integrated and automated protections across the entire digital attack surface, securing critical devices, data, applications, and connections from the data center to the cloud to the home office. The Fortinet NSE Training Institute, an initiative of Fortinet’s Training Advancement Agenda, provides one of the largest and broadest training programs in the industry to make cyber training and new career opportunities available to everyone. Learn more at https://www.fortinet.com, the Fortinet Blog or FortiGuard Labs. Copyright © 2022 Fortinet, Inc. All rights reserved. The symbols ® and ™ denote respectively federally registered trademarks and common law trademarks of Fortinet, Inc., its subsidiaries and affiliates. Fortinet’s trademarks include, but are not limited to, the following: Fortinet, the Fortinet logo, FortiGate, FortiOS, FortiGuard, FortiCare, FortiAnalyzer, FortiManager, FortiASIC, FortiClient, FortiCloud, FortiMail, FortiSandbox, FortiADC, FortiAI, FortiAIOps, FortiAntenna, FortiAP, FortiAPCam, FortiAuthenticator, FortiCache, FortiCall, FortiCam, FortiCamera, FortiCarrier, FortiCASB, FortiCentral, FortiConnect, FortiController, FortiConverter, FortiCWP, FortiDB, FortiDDoS, FortiDeceptor, FortiDeploy, FortiDevSec, FortiEdge, FortiEDR, FortiExplorer, FortiExtender, FortiFirewall, FortiFone, FortiGSLB, FortiHypervisor, FortiInsight, FortiIsolator, FortiLAN, FortiLink, FortiMoM, FortiMonitor, FortiNAC, FortiNDR, FortiPenTest, FortiPhish, FortiPlanner, FortiPolicy, FortiPortal, FortiPresence, FortiProxy, FortiRecon, FortiRecorder, FortiSASE, FortiSDNConnector, FortiSIEM, FortiSMS, FortiSOAR, FortiSwitch, FortiTester, FortiToken, FortiTrust, FortiVoice, FortiWAN, FortiWeb, FortiWiFi, FortiWLC, FortiWLM and FortiXDR. Other trademarks belong to their respective owners. Fortinet has not independently verified statements or certifications herein attributed to third parties and Fortinet does not independently endorse such statements. Notwithstanding anything to the contrary herein, nothing herein constitutes a warranty, guarantee, contract, binding specification or other binding commitment by Fortinet or any indication of intent related to a binding commitment, and performance and other specification information herein may be unique to certain environments. FTNT-F Forward-Looking Statements This press release contains forward-looking statements that involve risks and uncertainties. These forward-looking statements include statements regarding any indications related to future market share gains, guidance and expectations around future financial results, including guidance and expectations for the third quarter and full year 2022, statements regarding the momentum in our business and future growth expectations, and any statements regarding our market opportunity and market size, and business momentum. Although we attempt to be accurate in making forward-looking statements, it is possible that future circumstances might differ from the assumptions on which such statements are based such that actual results are materially different from our forward-looking statements in this release. Important factors that could cause results to differ materially from the statements herein include the following: general economic risks, including those caused by the COVID-19 pandemic, the war in Ukraine, economic challenges, fears of a recession, and any actual recession, and the effects of increased inflation in certain geographies; significantly heightened supply chain challenges due to the current global environment; negative impacts from the COVID-19 pandemic on sales, billings, revenue, demand and buying patterns, component supply and ability to manufacture products to meet demand in a timely fashion, and costs such as possible increased costs for shipping and components; global economic conditions, country-specific economic conditions, and foreign currency risks; competitiveness in the security market; the dynamic nature of the security market and its products and services; specific economic risks worldwide and in different geographies, and among different customer segments; uncertainty regarding demand and increased business and renewals from existing customers; uncertainties around continued success in sales growth and market share gains; uncertainties in market opportunities and the market size; actual or perceived vulnerabilities in our supply chain, products or services, and any actual or perceived breach of our network or our customers’ networks; longer sales cycles, particularly for larger enterprise, service providers, government and other large organization customers; the effectiveness of our salesforce and failure to convert sales pipeline into final sales; risks associated with successful implementation of multiple integrated software products and other product functionality risks; risks associated with integrating acquisitions and changes in circumstances and plans associated therewith, including, among other risks, changes in plans related to product and services integrations, product and services plans and sales strategies; sales and marketing execution risks; execution risks around new product development and introductions and innovation; litigation and disputes and the potential cost, distraction and damage to sales and reputation caused thereby or by other factors; cybersecurity threats, breaches and other disruptions; market acceptance of new products and services; the ability to attract and retain personnel; changes in strategy; risks associated with management of growth; lengthy sales and implementation cycles, particularly in larger organizations; technological changes that make our products and services less competitive; risks associated with the adoption of, and demand for, our products and services in general and by specific customer segments, including those caused by the COVID-19 pandemic; competition and pricing pressure; product inventory shortages for any reason, including those caused by the COVID-19 pandemic, the war in Ukraine and the effects of increased inflation in certain geographies; risks associated with business disruption caused by natural disasters and health emergencies such as earthquakes, fires, power outages, typhoons, floods, health epidemics and viruses such as the COVID-19 pandemic, and by manmade events such as civil unrest, labor disruption, international trade disputes, international conflicts such as the war in Ukraine, terrorism, wars, and critical infrastructure attacks; tariffs, trade disputes and other trade barriers, and negative impact on sales based on geo-political dynamics and disputes and protectionist policies; any political and government disruption around the world, including the impact of any future shutdowns of the U.S. government; and the other risk factors set forth from time to time in our most recent Annual Report on Form 10-K, our most recent Quarterly Report on Form 10-Q and our other filings with the Securities and Exchange Commission (SEC), copies of which are available free of charge at the SEC’s website at www.sec.gov or upon request from our investor relations department. All forward-looking statements herein reflect our opinions only as of the date of this release, and we undertake no obligation, and expressly disclaim any obligation, to update forward-looking statements herein in light of new information or future events. COVID-19 Impact While the broader implications of the COVID-19 pandemic on our employees and overall financial performance remain uncertain, we have seen certain impacts on our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources. Going forward, the situation is uncertain, rapidly changing and hard to predict, and the COVID-19 pandemic may have a material negative impact on our future periods, including our results for the three months ending September 30, 2022, our annual results for 2022, and beyond. To highlight the uncertainty remaining for the three-month period ending September 30, 2022, it should be noted that, due to customer buying patterns and the efforts of our sales force and channel partners to meet or exceed quarterly quotas, we have historically received a substantial portion of each quarter’s sales orders and generated a substantial portion of each quarter’s billings and revenue during the last two weeks of the quarter. Additionally, significantly heightened supply chain challenges are impacting businesses around the globe. If we experience significant changes in our billings growth rates or if we are unable to supply product to meet demand, it will impact product revenue in the current quarter and FortiGuard and FortiCare service revenues in subsequent quarters, as we sell annual and multi-year service contracts that are recognized ratably over the contractual service term. In addition, the broader implications of the pandemic on our business and operations and our financial results, including the extent to which the effects of the pandemic will impact future results and growth in the cybersecurity industry, remain uncertain. The duration and severity of the economic downturn from the pandemic may negatively impact our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources in a material way. As a result, the effects of the pandemic may not be fully reflected in our results of operations until future periods. Non-GAAP Financial Measures We have provided in this release financial information that has not been prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP). These non-GAAP financial and liquidity measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below. Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period, less any deferred revenue balances acquired from business combination(s) and adjustment due to adoption of new accounting standard during the period. We consider billings to be a useful metric for management and investors because billings drive current and future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue and are impacted by the term of security and support agreements. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue. Free cash flow (non-GAAP). We define free cash flow as net cash provided by operating activities minus purchases of property and equipment and excluding any significant non-recurring items, such as proceeds from intellectual property matter. We believe free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by the business that, after capital expenditures and net of proceeds from intellectual property matter, can be used for strategic opportunities, including repurchasing outstanding common stock, investing in our business, making strategic acquisitions and strengthening the balance sheet. A limitation of using free cash flow rather than the GAAP measures of cash provided by or used in operating activities, investing activities, and financing activities is that free cash flow does not represent the total increase or decrease in the cash and cash equivalents balance for the period because it excludes cash flows from significant non-recurring items, such as proceeds from intellectual property matter, investing activities other than capital expenditures and cash flows from financing activities. Management accounts for this limitation by providing information about our capital expenditures and other investing and financing activities on the face of the cash flow statement and under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” in our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K and by presenting cash flows from investing and financing activities in our reconciliation of free cash flow. In addition, it is important to note that other companies, including companies in our industry, may not use free cash flow, may calculate free cash flow in a different manner than we do or may use other financial measures to evaluate their performance, all of which could reduce the usefulness of free cash flow as a comparative measure. Non-GAAP operating income and operating margin. We define non-GAAP operating income as operating income plus stock-based compensation, impairment and amortization of acquired intangible assets, less gain on intellectual property matter and, when applicable, other significant non-recurring items in a given quarter, such as non-recurring gains or losses on litigation-related matters. Non-GAAP operating margin is defined as non-GAAP operating income divided by GAAP revenue. We consider these non-GAAP financial measures to be useful metrics for management and investors because they exclude the items noted above so that our management and investors can compare our recurring core business operating results over multiple periods. There are a number of limitations related to the use of non-GAAP operating income instead of operating income calculated in accordance with GAAP. First, non-GAAP operating income excludes the items noted above. Second, the components of the costs that we exclude from our calculation of non-GAAP operating income may differ from the components that peer companies exclude when they report their non-GAAP results of operations. Management accounts for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating income and evaluating non-GAAP operating income together with operating income calculated in accordance with GAAP. Non-GAAP net income and diluted net income per share attributable to Fortinet, Inc. We define non-GAAP net income as net income or loss plus the items noted above under non-GAAP operating income and operating margin. In addition, we adjust non-GAAP net income and diluted net income per share for gains or losses on investments in privately held companies, a tax adjustment required for an effective tax rate on a non-GAAP basis and adjustments attributable to non-controlling interests, which differs from the GAAP effective tax rate. We define non-GAAP diluted net income per share as non-GAAP net income divided by the non-GAAP diluted weighted-average shares outstanding. We consider these non-GAAP financial measures to be useful metrics for management and investors for the same reasons that we use non-GAAP operating income and non-GAAP operating margin. However, in order to provide a more complete picture of our recurring core business operating results, we include in non-GAAP net income and non-GAAP diluted net income per share, the tax adjustment required resulting in an effective tax rate on a non-GAAP basis, which often differs from the GAAP tax rate. We believe the non-GAAP effective tax rates we use are reasonable estimates of normalized tax rates for our current and prior fiscal years under our global operating structure. The same limitations described above regarding our use of non-GAAP operating income and non-GAAP operating margin apply to our use of non-GAAP net income and non-GAAP diluted net income per share. We account for these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP net income and non-GAAP diluted net income per share and evaluating non-GAAP net income and non-GAAP diluted net income per share together with net income or loss and diluted net income per share calculated in accordance with GAAP. FORTINET, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited, in millions) June 30, 2022 December 31, 2021 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 710.0 $ 1,319.1 Short-term investments 1,020.6 1,194.0 Marketable equity securities 24.3 38.6 Accounts receivable—net 919.5 807.7 Inventory 195.2 175.8 Prepaid expenses and other current assets 83.3 65.4 Total current assets 2,952.9 3,600.6 LONG-TERM INVESTMENTS 188.5 440.8 PROPERTY AND EQUIPMENT—NET 814.6 687.6 DEFERRED CONTRACT COSTS 456.9 423.3 DEFERRED TAX ASSETS 480.2 342.3 GOODWILL AND OTHER INTANGIBLE ASSETS—NET 166.7 188.7 OTHER ASSETS 234.7 235.8 TOTAL ASSETS $ 5,294.5 $ 5,919.1 LIABILITIES AND EQUITY (DEFICIT) CURRENT LIABILITIES: Accounts payable $ 193.1 $ 148.4 Accrued liabilities 241.2 197.3 Accrued payroll and compensation 187.4 195.0 Deferred revenue 2,013.2 1,777.4 Total current liabilities 2,634.9 2,318.1 DEFERRED REVENUE 1,918.8 1,675.5 INCOME TAX LIABILITIES 67.1 79.5 LONG-TERM DEBT 989.4 988.4 OTHER LIABILITIES 63.9 59.2 Total liabilities 5,674.1 5,120.7 COMMITMENTS AND CONTINGENCIES EQUITY (DEFICIT): Common stock 0.8 0.8 Additional paid-in capital 1,237.3 1,253.6 Accumulated other comprehensive loss (23.4 ) (4.8 ) Accumulated deficit (1,607.6 ) (467.9 ) Total Fortinet, Inc. stockholders’ equity (deficit) (392.9 ) 781.7 Non-controlling interests 13.3 16.7 Total equity (deficit) (379.6 ) 798.4 TOTAL LIABILITIES AND EQUITY (DEFICIT) $ 5,294.5 $ 5,919.1 FORTINET, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited, in millions, except per share amounts) Three Months Ended Six Months Ended June 30, 2022 June 30, 2021 June 30, 2022 June 30, 2021 REVENUE: Product $ 400.7 $ 298.3 $ 771.7 $ 539.0 Service 629.4 502.8 1,213.2 972.4 Total revenue 1,030.1 801.1 1,984.9 1,511.4 COST OF REVENUE: Product 155.2 115.6 316.2 206.9 Service 95.6 71.3 188.4 136.6 Total cost of revenue 250.8 186.9 504.6 343.5 GROSS PROFIT: Product 245.5 182.7 455.5 332.1 Service 533.8 431.5 1,024.8 835.8 Total gross profit 779.3 614.2 1,480.3 1,167.9 OPERATING EXPENSES: Research and development 124.3 106.6 249.2 203.8 Sales and marketing 415.5 326.9 803.1 630.9 General and administrative 45.4 34.4 84.0 66.4 Gain on intellectual property matter (1.2 ) (1.2 ) (2.3 ) (2.3 ) Total operating expenses 584.0 466.7 1,134.0 898.8 OPERATING INCOME 195.3 147.5 346.3 269.1 INTEREST INCOME 2.4 1.2 3.7 2.3 INTEREST EXPENSE (4.5 ) (4.5 ) (9.0 ) (5.8 ) OTHER INCOME (EXPENSE)—NET (9.3 ) 0.8 (18.4 ) (1.2 ) INCOME BEFORE INCOME TAXES AND LOSS FROM EQUITY METHOD INVESTMENT 183.9 145.0 322.6 264.4 PROVISION FOR (BENEFIT FROM) INCOME TAXES 2.4 7.5 (5.7 ) 19.7 LOSS FROM EQUITY METHOD INVESTMENT (8.1 ) — (16.6 ) — NET INCOME INCLUDING NON-CONTROLLING INTERESTS 173.4 137.5 311.7 244.7 Less: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS, NET OF TAX (0.1 ) — (0.2 ) — NET INCOME ATTRIBUTABLE TO FORTINET, INC. $ 173.5 $ 137.5 $ 311.9 $ 244.7 Net income per share attributable to Fortinet, Inc.(a): Basic $ 0.22 $ 0.17 $ 0.39 $ 0.30 Diluted $ 0.21 $ 0.16 $ 0.38 $ 0.29 Weighted-average shares used to compute net income per share attributable to Fortinet, Inc.(a): Basic 795.4 816.7 799.4 815.9 Diluted 810.1 835.4 815.4 833.7 (a) All share and per share amounts presented herein have been retroactively adjusted to reflect the five-for-one forward stock split which was effective June 22, 2022. FORTINET, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited, in millions) Six Months Ended June 30, 2022 June 30, 2021 CASH FLOWS FROM OPERATING ACTIVITIES: Net income including non-controlling interests $ 311.7 $ 244.7 Adjustments to reconcile net income to net cash provided by operating activities: Stock-based compensation 107.9 102.1 Amortization of deferred contract costs 107.1 81.8 Depreciation and amortization 50.6 36.2 Amortization of investment premiums 2.8 2.9 Loss from equity method investment 16.6 — Other 22.8 0.3 Changes in operating assets and liabilities, net of impact of business combinations: Accounts receivable—net (119.3 ) 135.6 Inventory (31.2 ) (20.1 ) Prepaid expenses and other current assets (18.2 ) (16.4 ) Deferred contract costs (140.6 ) (124.8 ) Deferred tax assets (136.3 ) (25.8 ) Other assets (16.7 ) (11.8 ) Accounts payable 52.7 (9.5 ) Accrued liabilities 30.1 21.3 Accrued payroll and compensation (6.8 ) 18.7 Other liabilities 5.7 (1.2 ) Deferred revenue 480.6 300.1 Net cash provided by operating activities 719.5 734.1 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of investments (389.1 ) (1,262.5 ) Sales of investments 3.0 71.4 Maturities of investments 797.3 600.3 Purchases of property and equipment (162.5 ) (75.6 ) Purchases of investment in privately held company — (75.0 ) Payments made in connection with business combinations, net of cash acquired — (10.3 ) Net cash provided by (used in) investing activities 248.7 (751.7 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term borrowings, net of discount and underwriting fees — 989.4 Payments for debt issuance costs — (2.4 ) Repurchase and retirement of common stock (1,491.2 ) (91.6 ) Proceeds from issuance of common stock 15.9 15.8 Taxes paid related to net share settlement of equity awards (99.9 ) (76.0 ) Other (1.1 ) (0.1 ) Net cash provided by (used in) financing activities (1,576.3 ) 835.1 EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS (1.0 ) — NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (609.1 ) 817.5 CASH AND CASH EQUIVALENTS—Beginning of period 1,319.1 1,061.8 CASH AND CASH EQUIVALENTS—End of period $ 710.0 $ 1,879.3 Reconciliations of non-GAAP results of operations measures to the nearest comparable GAAP measures (Unaudited, in millions, except per share amounts) Reconciliation of net cash provided by operating activities to free cash flow Three Months Ended June 30, 2022 June 30, 2021 Net cash provided by operating activities $ 323.4 $ 418.2 Less: Purchases of property and equipment (39.9 ) (23.5 ) Free cash flow $ 283.5 $ 394.7 Net cash provided by (used in) investing activities $ 294.1 $ (278.2 ) Net cash used in financing activities $ (830.3 ) $ (120.9 ) Reconciliation of GAAP operating income to non-GAAP operating income, operating margin, net income attributable to Fortinet, Inc. and diluted net income per share attributable to Fortinet, Inc. Three Months Ended June 30, 2022 Three Months Ended June 30, 2021 GAAP Results Adjustments Non-GAAP Results GAAP Results Adjustments Non-GAAP Results Operating income $ 195.3 $ 60.1 (a) $ 255.4 $ 147.5 $ 55.8 (b) $ 203.3 Operating margin 19.0 % 24.8 % 18.4 % 25.4 % Adjustments: Stock-based compensation 55.3 53.5 Amortization of acquired intangible assets 6.0 3.5 Gain on intellectual property matter (1.2 ) (1.2 ) Tax adjustment (39.1 ) (c) (34.6 ) (c) Adjustments attributable non-controlling interests (0.4 ) (d) — Net income attributable to Fortinet, Inc. $ 173.5 $ 20.6 $ 194.1 $ 137.5 $ 21.2 $ 158.7 Diluted net income per share attributable to Fortinet, Inc.(e) $ 0.21 $ 0.24 $ 0.16 $ 0.19 Shares used in diluted net income per share attributable to Fortinet, Inc. calculations(e) 810.1 810.1 835.4 835.4 (a) To exclude $55.3 million of stock-based compensation and $6.0 million of amortization of acquired intangible assets, offset by a $1.2 million gain on intellectual property matter in the three months ended June 30, 2022. (b) To exclude $53.5 million of stock-based compensation and $3.5 million of amortization of acquired intangible assets, offset by a $1.2 million gain on intellectual property matter in the three months ended June 30, 2021. (c) Non-GAAP financial information is adjusted to an effective tax rate of 17% and 21% in the three months ended June 30, 2022 and 2021, respectively, on a non-GAAP basis, which differs from the GAAP effective tax rate. (d) Adjustments related to the non-GAAP results attributable to non-controlling interests, which were adjusted to an effective tax rate of 31% for the subsidiary of Alaxala Networks Corporation in the three months ended June 30, 2022. (e) All share and per share amounts presented herein have been retroactively adjusted to reflect the five-for-one forward stock split which was effective June 22, 2022. Reconciliation of total revenue to total billings Three Months Ended June 30, 2022 June 30, 2021 Total revenue $ 1,030.1 $ 801.1 Add: Change in deferred revenue 274.1 159.8 Total billings $ 1,304.2 $ 960.9 Investor Contact: Media Contact: Peter Salkowski Sandra Wheatley Fortinet, Inc. Fortinet, Inc. 408-331-4595 408-391-9408 psalkowski@fortinet.com swheatley@fortinet.com
Ferrer wants to drive a new way of doing business and being in the world, because they believe that their activity as a company has to create more social and environmental value than the one it consumes BARCELONA, Spain, July 28, 2022 (GLOBE NEWSWIRE) -- In 2021 the pharmaceutical company Ferrer invested 61.4% of its net profits in social and environmental causes, as part of its purpose to make a positive impact in society. As the company's Sustainability Report states, Ferrer reinvested the major part of its profits in several projects aimed at fostering equal opportunities for people in vulnerable situations, as well as projects aimed at protecting the planet. In this way, Ferrer materialized its purpose to make a positive impact. And the number of net profits invested represent a 53.2% rise in comparison to 2020. Among the main projects in which Ferrer invested its profits in 2021, it is worth highlighting the one million healthy menus supplied in the Barcelona Metropolitan Area to people in an extreme situation of vulnerability. These meals, elaborated with food grown in biodynamic urban social gardens and with a permaculture regime, want to promote a green, sustainable and agroecological city model. The company also supports boys and girls at risk of social exclusion through music education programs. These are aimed at preventing school failure and enhance their educational, cultural, and emotional development. As Mario Rovirosa, Ferrer's CEO explained, the company has set its profit margin "in less than a half compared to the other companies in the sector". The purpose is to "reinvest in initiatives with a social and environmental impact to create a fairer and more egalitarian society." Likewise, Rovirosa asserted that the company has been working for years on its transformation towards being a "positive impact organization." "We know we still have a long way to go, but we want to be promoters of a new way of doing business and being in the world because we believe that our activity as a pharmaceutical company must create more social and environmental value than it consumes", Rovirosa stated. In this way, all Ferrer's strategy is related to the people and the development of their talent, the protection of the planet and the battle to achieve a fairer and more egalitarian society. As a result of the work completed in 2021, Ferrer also became in early 2022 the first Spanish pharmaceutical laboratory to enter the B Corp community, the companies' association aimed at building a more inclusive and sustainable economy. In the certification process carried out by B Lab Spain, Ferrer was highly valued for its strategy to develop innovative therapeutic solutions capable of transforming the lives of patients that suffer serious and debilitating diseases. Also, they recognized the company's ability to operate with the highest standards of quality and safety, transparency, ethics, and honesty. Commitment to talent and a fairer and more liveable world The 2021 Ferrer Sustainability Report's data also reflects the company's commitment, through its Great People axis, to a culture focused on people, based on trust and responsibility. In this sense, the company was recognized in Spain, Mexico, and Portugal as an excellent place to work (Great Place to Work®). This proved their ability to attract and retain the best professionals, with almost 96% of its workforce on indefinite contracts at the end of 2021, and 103,139 cumulative hours of training for their teams. "Ferrer's people are the main activists of our purpose. Each one of us, in our day-to-day decisions, contributes to the creation of our culture. A culture that has to do with how we lead, how we communicate, and how we organize ourselves, but that also involves a compromise with a more sustainable world. That is because, as a company, we want to contribute to the environmental preservation of our planet and the equality of opportunities. Moreover, we want to make Ferrer not only a great company to work for, but also a company with a positive impact and, therefore, focused on the benefit for all our stakeholders," highlighted Bea Vila, Chief People & Sustainability Officer of Ferrer. The people at Ferrer were also a driving force behind the Social Justice axis, through which the company intends to create a fairer and more equitable society. Therefore, the company mobilized 420 volunteers during the Days for Good, dedicating more than 1,300 hours to social and environmental projects. Within the same axis oriented towards social justice, the company itself promotes the defense of human rights to prevent and guarantee non-discrimination, health, and freedom of association. Furthermore, they want to achieve decent working conditions among its people and contribute to correct social inequality. Through the actions for the environmental preservation of the planet that are part of the Liveable Planet axis, Ferrer achieved a reduction of its global carbon footprint of 18.9% in 2021. This way, they approached the objective of having reduced it by 25% by 2030. To this extent, the company works with a 100% electricity coming from renewable sources, avoiding the emission of 7,500 tons of CO2 each year. Besides, the company also achieved to recover 76.5% of its waste globally, thanks to actions such as treatment, recycling, recovery, and composting, among others. In the packaging field, Ferrer reaffirmed its commitment to the circular economy with the launch of the Packaging for good program, which includes the promotion of eco-design and the recovery of materials. The program works in line with the company's vision of reducing by 25% the carbon footprint of its packaging in 2030 through the eco-design of 50% of its products. In addition, in June 2021 Ferrer started the Ecoins project in Costa Rica, a reverse logistics project that allowed the recovery of more than 4,500 tons of materials at more than 450 recollection points. With this project, Ferrer positioned itself as the first pharmacist to assume the recovery of waste medicines and fulfill the indications of the Costa Rican law regarding the Extended Responsibility of the Producer. Moreover, to achieve Ferrer's goal of becoming a carbon-positive company, they have joined to the Business Ambition 1'5°C, promoted by the United Nations to reduce greenhouse gas emissions, and the company participated as well in the Conference on Climate Change (COP26) to align its commitment with the recommendations and experiences of the scientific community. Contact information: gortizdez@ferrer.com Tel.: +34 936 003 779 Related Files 280722 Ferrer Sustainability Report.docx Related Images Image 1: Ferrer for good This content was issued through the press release distribution service at Newswire.com.
London, July 28, 2022 "With volatile energy markets and the ongoing need for action to tackle climate change, 2022 continues to present huge challenges for consumers, governments, and companies alike. Consequently, we are using our financial strength to invest in secure energy supplies which the world needs today, taking real, bold steps to cut carbon emissions, and transforming our company for a low-carbon energy future. And, crucially, our Powering Progress strategy is delivering strong results for our shareholders on the back of years of portfolio high grading, combined with robust operational performance. We are increasing shareholder distributions through a $6 billion share buyback programme which is expected to be completed by Q3 2022 results." Shell plc Chief Executive Officer, Ben van Beurden DISCIPLINE DELIVERING RESULTS: MORE CASH, MORE RESILIENCE Strong performance in a turbulent economic environment with Adjusted Earnings of $11.5 billion in Q2 2022. Adjusted EBITDA of $23.1 billion in Q2 2022 versus $19.0 billion in Q1 2022. Announced $6 billion share buybacks are expected to be completed by Q3 2022 results; total distributions significantly in excess of 30% of CFFO for the last four quarters. With the current energy sector outlook and subject to Board approval, shareholder distributions are expected to remain in excess of 30% of CFFO. In the first half of 2022 shareholder distributions have doubled from those in the first half of 2013, a decade ago, when Brent prices were similar, with increased discipline, integrated value delivery and improved resilience driving better results. Strengthening energy security through natural gas investments in Pierce and Jackdaw (UK), participation in the North Field LNG expansion (Qatar) and Crux FID (Australia). Positioning for the future of energy with a final investment decision for Holland Hydrogen I (Netherlands) and progressing the completion of the acquisition of Sprng Energy (India). Disciplined cash capex: expected to be in the $23 - 27 billion range in 2022. $ million Adj. Earnings1 Adj. EBITDA CFFO Cash capex Integrated Gas 3,758 6,529 8,176 919 Upstream 4,912 11,167 8,110 2,858 Marketing 751 1452 (454) 1,620 Mobility 413 938 1,223 Lubricants 225 333 206 Sectors & Decarbonisation 113 181 191 Chemicals & Products 2,035 3,184 2,728 1,226 Chemicals (158) 2 848 Products 2,193 3,182 378 Renewables & Energy Solutions 725 1,013 (558) 321 Corporate (626) (197) 652 81 Less: Non-controlling interest 82 Shell Q2 2022 11,472 23,150 18,655 7,024 Q1 2022 9,130 19,028 14,815 5,064 1 Income/(loss) attributable to shareholders for Q2 2022 is $ 18.0 billon. Reconciliation of non-GAAP measures can be found in the unaudited results, available on www.shell.com/investors. CFFO increased by $3.8 billion versus Q1 2022 to $18.7 billion, driven by higher Adjusted EBITDA and lower working capital outflows. In Q2 2022, Tax paid & other includes tax payments of $3.2 billion, offset by current cost of supplies adjustment and other movements. Working capital in Q2 2022 is mainly impacted by inventory price and volume hurt of $6.8 billion, offset by favourable accounts receivable and payable movements and initial margin inflows. Net debt reduced by ~$2.1 billion (~4%), to $46.4 billion in Q2 2022. $ billion Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Divestment proceeds 1.3 1.3 9.1 0.7 0.8 Free cash flow 9.7 12.2 10.7 10.5 12.4 Net debt 65.7 57.5 52.6 48.5 46.4 Q2 2022 FINANCIAL PERFORMANCE DRIVERS INTEGRATED GAS Key data Q1 2022 Q2 2022 Q3 2022 outlook Realised liquids price ($/bbl) 88.76 90.37 — Realised gas price ($/mscf) 10.31 11.28 — Production (kboe/d) 896 944 890 - 940 LNG liquefaction volumes (MT) 8.00 7.66 6.9 - 7.5 LNG sales volumes (MT) 18.29 15.21 — Adjusted Earnings below Q1 2022, reflecting lower trading and optimisation results as well as impact of Sakhalin derecognition partly offset by higher realised prices and Pearl Train 1 and Prelude returning to operations in Q2 2022. Trading and optimisation results in Q2 2022 were strong, but lower than Q1 2022, driven by lower sales volumes and fewer portfolio optimisation opportunities. Q3 2022 outlook includes substantially more planned maintenance compared with Q2 2022 and uncertainty around the impact of "Permitted Industrial Actions" at Prelude. UPSTREAM Key data Q1 2022 Q2 2022 Q3 2022 outlook Realised liquids price ($/bbl) 88.63 101.42 — Realised gas price ($/mscf) 8.79 13.85 — Liquids production (kboe/d) 1,403 1,325 — Gas production (mscf/d) 3,606 3,428 — Total production (kboe/d) 2,025 1,917 1,750 - 1,950 Production was lower than in Q1 2022, mainly driven by higher scheduled maintenance. Adjusted Earnings benefited from higher prices and a gain related to storage and working gas transfer effects in a joint venture. The Q3 2022 production outlook reflects that Salym-related volumes in Russia are no longer recognised. MARKETING Key data Q1 2022 Q2 2022 Q3 2022 outlook Marketing sales volumes (kb/d) 2,372 2,515 2,350 - 2,850 Mobility (kb/d) 1,591 1,672 — Lubricants (kb/d) 92 86 — Sectors & Decarbonisation (kb/d) 690 757 — Marketing margins were higher than in Q1 2022, with seasonal impact of higher volumes in Mobility, partly offset by lower Lubricants margins due to higher feedstock costs. Marketing Adjusted Earnings also impacted by deferred tax charges. CHEMICALS & PRODUCTS Key data Q1 2022 Q2 2022 Q3 2022 outlook Refining & Trading sales volumes (kb/d) 1,598 1,596 — Chemicals sales volumes (kT) 3,330 3,054 3,100 - 3,600 Refinery utilisation **(%) 81 84 90 - 98 Chemicals manufacturing plant utilization ** (%) 85 78 82 - 90 Global indicative refining margin ($/bbl) 10 28 — Global indicative chemical margin ($/t) 98 86 — Higher realised refining margins reflecting the dislocation in product markets, particularly middle distillates. Trading and optimisation results in Q2 2022 were strong as demand outpaced supply, but below exceptional Q1 2022 results. Lower chemicals margins due to higher feedstock and utility costs and higher turnaround activities. **With effect from Q2 2022, the methodology applied in calculating both Chemicals manufacturing plant utilisation and Refinery utilisation has been revised. For details, see the Quarterly Results Announcement. RENEWABLES & ENERGY SOUTIONS Key data Q1 2022 Q2 2022 Adj. Earnings ($ billion)* 0.3 0.7 Adj. EBITDA ($ billion) 0.5 1.0 External power sales (TWh) 57 54 Sales of pipeline gas to end-use customers (TWh) 257 188 Renewable power generation capacity 4.6 5.7 in operation (GW) 1.0 1.1 under construction and/or committed for sale (GW) 3.6 4.6 *Segment Earnings for Q2 2022 is -$ 0.2 billion. Reconciliation of non-GAAP measures can be found in the unaudited results, available on www.shell.com/investors Exceptionally strong Adjusted Earnings and Adjusted EBITDA resulting from higher trading and optimisation margins for gas and power, due to extraordinary gas and power price volatility in North America, Europe and Australia. Final investment decision taken to build a 200 MW electrolyser Holland Hydrogen I, Europe’s largest renewable hydrogen plant once operational in 2025. Progressing with the acquisition of Sprng Energy group, one of India’s leading renewable power platforms. Signed 10-year renewable energy supply agreement with Air Liquide to provide 52 GWh of solar energy per year to power industrial and medical gas production operations in Italy. Launched the Shell Energy brand into the residential power market in the United States of America, offering 100% renewable electricity plans to eligible customers in Texas. Acquired minority stake in Carbonext, Brazil’s largest developer of REDD+ carbon credit generating projects. The Renewables and Energy Solutions segment includes Shell’s Integrated Power activities, comprising electricity generation, marketing, trading and optimisation of power and pipeline gas, and digitally enabled customer solutions. The segment also includes production and marketing of hydrogen, development of commercial carbon capture & storage hubs, trading of carbon credits and investment in nature-based projects that avoid or reduce carbon. CORPORATE Key data Q1 2022 Q2 2022 Q3 2022 outlook Adjusted Earnings ($ million) (548) (626) (650) - (450) The Adjusted Earnings outlook is a net expense of $2,000 - 2,400 million for the full year 2022. This excludes the impact of currency exchange rate effects. UPCOMING INVESTOR EVENTS 6 October 2022 Shell Insights: Marketing Business Update 27 October 2022 Third quarter 2022 results and dividends USEFUL LINKS Results materials Q2 2022 Quarterly Databook Q2 2022 Dividend announcement Q2 2022 Webcast registration Q2 2022 ALTERNATIVE PERFORMANCE (NON-GAAP) MEASURES This announcement includes certain measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles (GAAP) such as IFRS, including Adjusted Earnings, Adjusted EBITDA, CFFO excluding working capital movements, Cash capital expenditure, free cash flow, Divestment proceeds and Net debt. This information, along with comparable GAAP measures, is useful to investors because it provides a basis for measuring Shell plc’s operating performance and ability to retire debt and invest in new business opportunities. Shell plc’s management uses these financial measures, along with the most directly comparable GAAP financial measures, in evaluating the business performance. This announcement contains a forward-looking Non-GAAP measure for cash capital expenditure. We are unable to provide a reconciliation of this forward-looking Non-GAAP measure to the most comparable GAAP financial measure because certain information needed to reconcile the Non-GAAP measure to the most comparable GAAP financial measure is dependent on future events some of which are outside the control of the company, such as oil and gas prices, interest rates and exchange rates. Moreover, estimating such GAAP measure with the required precision necessary to provide a meaningful reconciliation is extremely difficult and could not be accomplished without unreasonable effort. Non-GAAP measures in respect of future periods which cannot be reconciled to the most comparable GAAP financial measure are estimated in a manner which is consistent with the accounting policies applied in Shell plc’s consolidated financial statements. CAUTIONARY STATEMENT All amounts shown throughout this announcement are unaudited. The numbers presented throughout this announcement may not sum precisely to the totals provided and percentages may not precisely reflect the absolute figures, due to rounding. The companies in which Shell plc directly and indirectly owns investments are separate legal entities. In this announcement “Shell”, “Shell Group” and “Group” are sometimes used for convenience where references are made to Shell plc and its subsidiaries in general. Likewise, the words “we”, “us” and “our” are also used to refer to Shell plc and its subsidiaries in general or to those who work for them. These terms are also used where no useful purpose is served by identifying the particular entity or entities. “Subsidiaries”, “Shell subsidiaries” and “Shell companies” as used in this announcement refer to entities over which Shell plc either directly or indirectly has control. Entities and unincorporated arrangements over which Shell has joint control are generally referred to as “joint ventures” and “joint operations”, respectively. “Joint ventures” and “joint operations” are collectively referred to as “joint arrangements”. Entities over which Shell has significant influence but neither control nor joint control are referred to as “associates”. The term “Shell interest” is used for convenience to indicate the direct and/or indirect ownership interest held by Shell in an entity or unincorporated joint arrangement, after exclusion of all third-party interest. This announcement contains forward-looking statements (within the meaning of the U.S. Private Securities Litigation Reform Act of 1995) concerning the financial condition, results of operations and businesses of Shell. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management’s current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell to market risks and statements expressing management’s expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "aim", "ambition", "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "milestones", "objectives", "outlook", "plan", "probably", "project", "risks", "schedule", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell’s products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, judicial, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; (m) risks associated with the impact of pandemics, such as the COVID-19 (coronavirus) outbreak; and (n) changes in trading conditions. No assurance is provided that future dividend payments will match or exceed previous dividend payments. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional risk factors that may affect future results are contained in Shell plc’s Form 20-F for the year ended December 31, 2021 (available at www.shell.com/investor and www.sec.gov). These risk factors also expressly qualify all forward-looking statements contained in this announcement and should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, July 28, 2022. Neither Shell plc nor any of its subsidiaries undertake any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement. Shell’s Net Carbon Footprint Also, in this announcement we may refer to Shell’s “Net Carbon Footprint” or “Net Carbon Intensity”, which include Shell’s carbon emissions from the production of our energy products, our suppliers’ carbon emissions in supplying energy for that production and our customers’ carbon emissions associated with their use of the energy products we sell. Shell only controls its own emissions. The use of the terms Shell’s “Net Carbon Footprint” or “Net Carbon Intensity” is for convenience only and not intended to suggest these emissions are those of Shell plc or its subsidiaries. Shell’s Net-Zero Emissions Target Shell’s operating plan, outlook and budgets are forecasted for a ten-year period and are updated every year. They reflect the current economic environment and what we can reasonably expect to see over the next ten years. Accordingly, they reflect our Scope 1, Scope 2 and Net Carbon Footprint (NCF) targets over the next ten years. However, Shell’s operating plans cannot reflect our 2050 net-zero emissions target and 2035 NCF target, as these targets are currently outside our planning period. In the future, as society moves towards net-zero emissions, we expect Shell’s operating plans to reflect this movement. However, if society is not net zero in 2050, as of today, there would be significant risk that Shell may not meet this target. The content of websites referred to in this announcement does not form part of this announcement. We may have used certain terms, such as resources, in this announcement that the United States Securities and Exchange Commission (SEC) strictly prohibits us from including in our filings with the SEC. Investors are urged to consider closely the disclosure in our Form 20-F, File No 1-32575, available on the SEC website www.sec.gov. The financial information presented in this announcement does not constitute statutory accounts within the meaning of section 434(3) of the Companies Act 2006 (“the Act”). Statutory accounts for the year ended December 31, 2021 were published in Shell’s Annual Report and Accounts, a copy of which was delivered to the Registrar of Companies for England and Wales, and in Shell’s Form 20-F. The auditor’s report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain a statement under sections 498(2) or 498(3) of the Act. The information in this announcement does not constitute the unaudited condensed consolidated financial statements which are contained in Shell’s second quarter 2022 and half year unaudited results available on www.shell.com/investors. CONTACTS Media: International +44 207 934 5550; USA +1 832 337 4355
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