Equinor fourth quarter 2022
45
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Capital employed adjusted –
this measure is defined as Equinor's total equity (including non-controlling interests) and
net
interest-bearing debt adjusted.
●
Net interest-bearing debt adjusted
– this measure is defined as Equinor's interest bearing financial liabilities less cash
and cash
equivalents and current financial investments, adjusted for collateral deposits and balances held by Equinor's
captive insurance
company and balances related to the SDFI.
●
Net debt to capital employed
,
Net debt to capital employed adjusted, including lease liabilities
and
employed ratio adjusted
– Following implementation of IFRS 16 Equinor presents a “net debt to capital employed adjusted”
excluding lease liabilities from the gross interest-bearing debt. Comparable numbers are presented
in the table Calculation of
capital employed and net debt to capital employed ratio in the report include Finance lease
according to IAS17, adjusted for
marketing instruction agreement.
In Equinor’s view, net debt ratio provides useful information about Equinor’s capital structure
and
financial strength.
●
Organic investments/capex
– Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments
in note 2 Segments to the Condensed interim financial statements, amounted to USD 2.8
billion in Q4 2022
(Q4 2021: USD 2.2
billion) and USD 10.0 billion for YTD 2022 (2021: USD 8.5 billion). Organic capital expenditures
are capital expenditures excluding
acquisitions, recognised lease assets (RoU assets) and other investments with significant different cash flow pattern. In Q4 2022,
a total of USD 0.5 billion (Q4 2021: USD 0.1 billion) is excluded in the organic capital
expenditures (YTD 2022: USD 1.9 billion |
YTD 2021: USD 0.4 billion). Forward-looking organic capital expenditures included in this report
are not reconcilable to its most
directly comparable IFRS measure without unreasonable efforts, because the amounts excluded from
such IFRS measure to
determine organic capital expenditures cannot be predicted with reasonable certainty. Organic capital expenditure is a measure
which Equinor believes gives relevant information about Equinor’s investments in maintenance
and development of the company’s
assets.
●
Gross investments/capex
– Capital expenditures, defined as Additions to PP&E, intangibles and equity accounted investments
in the financial statements, including Equinor’s proportionate share of capital expenditures
in equity accounted investments not
included in additions to equity accounted investments. Forward-looking gross capital expenditures
included in this report are not
reconcilable to its most directly comparable IFRS measure without unreasonable efforts, because the amounts
excluded from
such IFRS measure to determine gross capital expenditures cannot be predicted with reasonable
certainty.
●
Return on average capital employed after tax (ROACE)
– this measure provides useful information for both the group and
investors about performance during the period under evaluation. Equinor uses ROACE to measure the
return on capital employed,
regardless of whether the financing is through equity or debt. The use of ROACE should
not be viewed as an alternative to income
before financial items, income taxes and minority interest, or to net income, which are measures
calculated in accordance with
GAAP or ratios based on these figures. Average capital employed adjusted at 31 December 2022 is
calculated as the average of
the capital employed adjusted at 31 December 2022 and at 31 December 2021 as presented in
the table Calculation of capital
employed and net debt to capital employed ratio later in this report. For a reconciliation for
adjusted earnings after tax, see
Reconciliation of net operating income/(loss) to adjusted earnings as presented later in this report.
Forward-looking ROACE
included in this report is not reconcilable to its most directly comparable IFRS measure without
unreasonable efforts, because the
amounts excluded from IFRS measures used to determine ROACE cannot be predicted with
reasonable certainty.
●
Free cash flow for the fourth quarter of 2022 and 2021
includes the following line items in the Consolidated statement of cash
flows: Cash flows provided by operating activities before taxes paid and working capital items (2022: USD
21.0 billion | 2021: USD
18.0 billion), taxes paid (2022: negative USD 14.2 billion | 2021: negative USD 6.7 billion), cash used/received
in business
combinations (2022: USD 0.0 billion | 2021: USD 0.0 billion), capital expenditures and investments (2022:
negative USD 2.4 billion
| 2021: negative USD 2.2 billion), increase/decrease in other items interest-bearing (2022: USD 0.0 billion |
2021: USD 0.2 billion),
proceeds from sale of assets and businesses (2022: USD 0.0 billion | 2021: USD 0.1 billion), dividend
paid (2022: negative USD
2.2 billion | 2021: negative USD 0.6 billion) and share buy-back (2022: negative USD 0.6 billion |
2021: negative USD 0.2 billion),
resulting in a free cash flow of USD 1.7 billion in the fourth quarter of 2022 (2021:
8.6 billion). Free cash flow represents, and is
used by management to evaluate, cash generated from operational and investing activities
available for debt servicing and
distribution to shareholders.
●
Free cash flow for the full year of 2022 and 2021
includes the following line items in the Consolidated statement of cash flows:
Cash flows provided by operating activities before taxes paid and working capital items (2022: USD
83.6 billion | 2021: USD 42.0
billion), taxes paid (2022: negative USD 43.9 billion | 2021: negative USD 8.6 billion), cash
used/received in business
combinations (2022: USD 0.1 billion | 2021: negative USD 0.1 billion), capital expenditures and investments (2022:
negative USD
8.8 billion | 2021: negative USD 8.0 billion), increase/decrease in other items interest-bearing (2022: negative USD
0.0 billion |
2021: USD 0.0 billion), proceeds from sale of assets and businesses (2022: USD 1.0 billion | 2021: USD
1.9 billion), dividend paid
(2022: negative USD 5.4 billion | 2021: negative USD 1.8 billion) and share buy-back (2022: negative USD 3.3
billion | 2021:
negative USD 0.3 billion), resulting in a free cash flow of USD 23.4 billion in the full year
of 2022 (2021: USD 25.0 billion).
Adjusted earnings
adjust for the following items:
●
Changes in fair value of derivatives:
Certain gas contracts are, due to pricing or delivery conditions, deemed to contain
embedded derivatives, required to be carried at fair value. Also, certain transactions related
to historical divestments include
contingent consideration, are carried at fair value. The accounting impacts of changes in fair
value of the aforementioned are
excluded from adjusted earnings. In addition, adjustments are also made for changes in the unrealised
fair value of derivatives
related to some natural gas trading contracts. Due to the nature of these gas sales contracts, these
are classified as financial
derivatives to be measured at fair value at the balance sheet date. Unrealised gains and losses
on these contracts reflect the