Financial ratios

The following three non- 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

 

2018

2017

2016

2015

2014

Income for the period

23,906

13,435

4,777

2,200

14,730

Interest expense after tax

2,513

2,995

2,730

2,030

938

Income before interest expense

26,419

16,430

7,507

4,230

15,668

Capital employed – opening

283,477

280,988

222,500

218,326

225,710

Capital employed – closing

279,358

283,477

280,988

222,500

218,326

Capital employed – average

281,417

282,233

251,744

220,413

222,018

9.4%

5.8%

3.0%

1.9%

7.1%

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

$ million unless specified

 

2018

2017

2016

2015

2014

[A]

Attributable to shareholders.

excluding identified items [A]

21,404

15,764

7,185

11,446

23,051

Capital employed – opening

283,477

280,988

222,500

218,326

225,710

Capital employed – closing

279,358

283,477

280,988

222,500

218,326

Capital employed – average

281,417

282,233

251,744

220,413

222,018

ROACE on CCS basis excluding identified items [A]

7.6%

5.6%

2.9%

5.2%

10.4%

Calculation of return on average capital in service

$ million unless specified

 

2018

2017

2016

2015

2014

Income for the period

23,906

13,435

4,777

2,200

14,730

Add: Depreciation on exploration and evaluation assets after tax

137

198

351

399

366

Add: Interest expense after tax

2,513

2,995

2,730

2,030

938

Income before depreciation on exploration and evaluation assets and interest expense

26,556

16,628

7,858

4,628

16,034

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

222,793

216,475

156,749

145,702

155,049

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

227,252

222,784

216,475

156,749

145,702

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

225,022

219,630

186,612

151,226

150,376

Return on average capital in service

11.8%

7.6%

4.2%

3.1%

10.7%

Gearing (at December 31)

$ million unless specified

 

2018

2017

2016

2015

2014

[A]

Includes finance lease liabilities of $14,026 million at December 31, 2018 and $15,524 million at December 31, 2017.

[B]

With effect from 2018, the net debt calculation has been amended. Gearing as previously published at December 31, 2017 was 24.8%, at December 31, 2016: 28%, at December 31, 2015: 14% and at December 31, 2014: 12.2%.

Current debt

10,134

11,795

9,484

5,530

7,208

Non-current debt

66,690

73,870

82,992

52,849

38,332

Total debt [A]

76,824

85,665

92,476

58,379

45,540

Add: Debt-related derivative financial instruments: net liability/(asset)

1,273

591

Add: Collateral on debt-related derivatives: net liability/(asset)

72

Less: Cash and cash equivalents

(26,741)

(20,312)

(19,130)

(31,752)

(21,607)

Net debt

51,428

65,944

73,346

26,627

23,933

Add: Total equity

202,534

197,812

188,511

164,121

172,786

Total capital

253,962

263,756

261,857

190,748

196,719

Gearing [B]

20.3%

25.0%

29.1%

14.8%

12.3%

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.

GAAP
generally accepted accounting principles
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ROACE
return on average capital employed
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CCS Earnings
earnings on a current cost of supplies basis
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