Financial ratios

The following three non-GAAP measures are used to evaluate the efficiency of Shell’s utilisation of the capital that it employs. The first two measures show returns generated by Shell as a percentage of its total capital employed (consisting of total equity, current debt and non-current debt). The "return on average capital in service" measure excludes the impacts of exploration and evaluation assets and assets under construction on income and capital employed, because these assets do not yet generate returns.

Calculation of return on average capital employed (ROACE)

$ million unless specified

 

2016

2015

2014

2013

2012

Income for the period

4,777

2,200

14,730

16,526

26,960

Interest expense after tax

2,730

2,030

938

808

938

Income before interest expense

7,507

4,230

15,668

17,334

27,898

Capital employed – opening

222,500

218,326

225,710

213,936

197,141

Capital employed – closing

280,988

222,500

218,326

225,710

213,936

Capital employed – average

251,744

220,413

222,018

219,823

205,539

ROACE

3.0%

1.9%

7.1%

7.9%

13.6%

Calculation of ROACE on CCS basis excluding identified items [A]

$ million unless specified

 

2016

2015

2014

2013

2012

[A]

Attributable to shareholders.

CCS earnings excluding identified items [A]

7,185

11,446

23,051

20,018

25,259

Capital employed – opening

222,500

218,326

225,710

213,936

197,141

Capital employed – closing

280,988

222,500

218,326

225,710

213,936

Capital employed – average

251,744

220,413

222,018

219,823

205,539

ROACE on CCS basis excluding identified items [A]

2.9%

5.2%

10.4%

9.1%

12.3%

Calculation of return on average capital in service

$ million unless specified

 

2016

2015

2014

2013

2012

Income for the period

4,777

2,200

14,730

16,526

26,960

Add: Depreciation on exploration and evaluation assets after tax

351

399

366

720

525

Add: Interest expense after tax

2,730

2,030

938

808

938

Income before depreciation on exploration and evaluation assets and interest expense

7,858

4,628

16,034

18,054

28,423

Capital employed excluding assets under construction and exploration and evaluation assets – opening

156,749

145,702

155,049

147,746

146,648

Capital employed excluding assets under construction and exploration and evaluation assets – closing

216,293

156,749

145,403

155,049

147,746

Capital employed excluding assets under construction and exploration and evaluation assets – average

186,521

151,226

150,226

151,397

147,197

Return on average capital in service

4.2%

3.1%

10.7%

11.9%

19.3%

Gearing (at December 31)

$ million unless specified

 

2016

2015

2014

2013

2012

Current debt

9,484

5,530

7,208

8,344

7,833

Non-current debt

82,992

52,849

38,332

36,218

29,921

Total debt

92,476

58,379

45,540

44,562

37,754

Less: Cash and cash equivalents

(19,130)

(31,752)

(21,607)

(9,696)

(18,550)

Net debt

73,346

26,627

23,933

34,866

19,204

Add: Total equity

188,511

164,121

172,786

181,148

176,182

Total capital

261,857

190,748

196,719

216,014

195,386

Gearing

28.0%

14.0%

12.2%

16.1%

9.8%

Gearing is a non-GAAP measure, defined as net debt (total debt less cash and cash equivalents) as a percentage of total capital (net debt plus total equity). It is a key measure of Shell’s capital structure.