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 |
||
|
|||||||
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.
