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

 

2017

2016

2015

2014

2013

Income for the period

13,435

4,777

2,200

14,730

16,526

Interest expense after tax

2,995

2,730

2,030

938

808

Income before interest expense

16,430

7,507

4,230

15,668

17,334

Capital employed – opening

280,988

222,500

218,326

225,710

213,936

Capital employed – closing

283,477

280,988

222,500

218,326

225,710

Capital employed – average

282,233

251,744

220,413

222,018

219,823

ROACE

5.8%

3.0%

1.9%

7.1%

7.9%

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

$ million unless specified

 

2017

2016

2015

2014

2013

[A]

Attributable to shareholders.

CCS earnings excluding identified items [A]

15,764

7,185

11,446

23,051

20,018

Capital employed – opening

280,988

222,500

218,326

225,710

213,936

Capital employed – closing

283,477

280,988

222,500

218,326

225,710

Capital employed – average

282,233

251,744

220,413

222,018

219,823

ROACE on CCS basis excluding identified items [A]

5.6%

2.9%

5.2%

10.4%

9.1%

Calculation of return on average capital in service

$ million unless specified

 

2017

2016

2015

2014

2013

Income for the period

13,435

4,777

2,200

14,730

16,526

Add: Depreciation on exploration and evaluation assets after tax

198

351

399

366

720

Add: Interest expense after tax

2,995

2,730

2,030

938

808

Income before depreciation on exploration and evaluation assets and interest expense

16,628

7,858

4,628

16,034

18,054

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

216,475

156,749

145,702

155,049

147,746

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

222,784

216,475

156,749

145,702

155,049

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

219,630

186,612

151,226

150,376

151,397

Return on average capital in service

7.6%

4.2%

3.1%

10.7%

11.9%

Gearing (at December 31)

$ million unless specified

 

2017

2016

2015

2014

2013

Current debt

11,795

9,484

5,530

7,208

8,344

Non-current debt

73,870

82,992

52,849

38,332

36,218

Total debt

85,665

92,476

58,379

45,540

44,562

Less: Cash and cash equivalents

(20,312)

(19,130)

(31,752)

(21,607)

(9,696)

Net debt

65,353

73,346

26,627

23,933

34,866

Add: Total equity

197,812

188,511

164,121

172,786

181,148

Total capital

263,165

261,857

190,748

196,719

216,014

Gearing

24.8%

28.0%

14.0%

12.2%

16.1%

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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