Royal Dutch Shell PLC, FCFF calculation

US$ in millions

12 months ended:	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Net cash from operating activities	43,738)	39,308)	44,905)	35,302)	26,174)
Interest paid, net of tax¹	770)	643)	762)	933)	760)
Interest capitalised, net of tax²	394)	375)	303)	378)	561)
Capital expenditure	(31,854)	(40,145)	(32,576)	(26,301)	(26,940)
Proceeds from sale of property, plant and equipment and businesses	9,873)	1,212)	6,346)	6,990)	3,325)
Free cash flow to the firm (FCFF)	22,921)	1,393)	19,740)	17,301)	3,880)

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

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Item	Description	The company
FCFF	Free cash flow to the firm is the cash flow available to the Royal Dutch Shell PLC suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made.	Royal Dutch Shell PLC FCFF decreased from 2012 to 2013 but then increased from 2013 to 2014 exceeding 2012 level.

Royal Dutch Shell PLC, interest paid, net of tax calculation

US$ in millions

12 months ended:	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Earnings before tax (EBT)
Income attributable to Royal Dutch Shell plc shareholders	14,874)	16,371)	26,592)	30,918)	20,127)
Add: Net income attributable to noncontrolling interest	(144)	155)	248)	267)	347)
Add: Income tax expense	13,584)	17,066)	23,449)	24,475)	14,870)
EBT	28,314)	33,592)	50,289)	55,660)	35,344)
Effective Income Tax Rate (EITR)
EITR¹	47.98%	50.80%	46.63%	43.97%	42.07%
Interest Paid, Net of Tax
Interest paid, before tax	1,480)	1,307)	1,428)	1,665)	1,312)
Less: Interest paid, tax²	710)	664)	666)	732)	552)
Interest paid, net of tax	770)	643)	762)	933)	760)
Interest Costs Capitalized, Net of Tax
Interest capitalised, before tax	757)	762)	567)	674)	969)
Less: Interest capitalised, tax³	363)	387)	264)	296)	408)
Interest capitalised, net of tax	394)	375)	303)	378)	561)

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

¹ 2014 Calculation
EITR = 100 × Income tax expense ÷ EBT
= 100 × 13,584 ÷ 28,314 = 47.98%

² 2014 Calculation
Interest paid, tax = Interest paid × EITR
= 1,480 × 47.98% = 710

³ 2014 Calculation
Interest capitalised, tax = Interest capitalised × EITR
= 757 × 47.98% = 363

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Royal Dutch Shell PLC, current EV/FCFF calculation, comparison to benchmarks

Selected Financial Data (US$ in millions)
Enterprise value (EV)	209,386)
Free cash flow to the firm (FCFF)	22,921)
Valuation Ratio
EV/FCFF	9.14
Benchmarks
EV/FCFF, Competitors¹
Chevron Corp.	15.69
ConocoPhillips	17.69
Exxon Mobil Corp.	14.39
Marathon Petroleum Corp.	7.19
Occidental Petroleum Corp.	12.43
Valero Energy Corp.	7.41

Based on: 20-F (reporting date: 2014-12-31).

¹ Click competitor name to see calculations.

If the company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.
Otherwise, if the company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.

Royal Dutch Shell PLC, historical EV/FCFF calculation, comparison to benchmarks

	Dec 31, 2014	Dec 31, 2013	Dec 31, 2012	Dec 31, 2011	Dec 31, 2010
Selected Financial Data (US$ in millions)
Enterprise value (EV)¹	209,386)	259,612)	230,560)	249,613)	242,298)
Free cash flow to the firm (FCFF)²	22,921)	1,393)	19,740)	17,301)	3,880)
Valuation Ratio
EV/FCFF³	9.14	186.39	11.68	14.43	62.44
Benchmarks
EV/FCFF, Competitors⁴
Chevron Corp.	—	—	—	—	—
ConocoPhillips	—	—	—	—	—
Exxon Mobil Corp.	—	—	—	—	—
Marathon Petroleum Corp.	—	—	—	—	—
Occidental Petroleum Corp.	—	—	—	—	—
Valero Energy Corp.	—	—	—	—	—

Based on: 20-F (reporting date: 2014-12-31), 20-F (reporting date: 2013-12-31), 20-F (reporting date: 2012-12-31), 20-F (reporting date: 2011-12-31), 20-F (reporting date: 2010-12-31).

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² See details »

³ 2014 Calculation
EV/FCFF = EV ÷ FCFF
= 209,386 ÷ 22,921 = 9.14

⁴ Click competitor name to see calculations.

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Valuation ratio	Description	The company
EV/FCFF	Enterprise value to free cash flow to the firm is whole company valuation indicator.	Royal Dutch Shell PLC EV/FCFF ratio increased from 2012 to 2013 but then decreased significantly from 2013 to 2014.

Royal Dutch Shell PLC (NYSE:RDSA)

Enterprise Value to FCFF (EV/FCFF)

Free Cash Flow to The Firm (FCFF)

Interest Paid, Net of Tax

Enterprise Value to FCFF Ratio, Current

Enterprise Value to FCFF Ratio, Historical