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Business segment information
12 Months Ended
Dec. 31, 2017
Business segment information  
Business segment information

3) Business segment information

Description of the business segments

Financial information by business segment is reported in accordance with the internal reporting system. It shows internal segment information that is used to manage and measure the performance of Total and which is reviewed by the main operational decision-making body of the Group, namely the Executive Committee.

 

The operational profit and assets are broken down by business segment prior to the consolidation and inter-segment adjustments.

 

Sales prices between business segments approximate market prices.

 

TOTAL has implemented a new organization fully effective since January 1, 2017, structured around four following business segments:

-     An Exploration & Production segment;

-     A Gas, Renewables & Power segment including downstream Gas activities, New Energies activities (excluding biotechnologies) and Energy Efficiency division;

-     A Refining & Chemicals segment constituting a major industrial hub comprising the activities of refining, petrochemicals and specialty chemicals. This segment also includes the activities of oil Supply, Trading and marine Shipping;

-     A Marketing & Services segment including the global activities of supply and marketing in the field of petroleum products;

In addition, the Corporate segment includes holdings operating and financial activities.

 

Certain figures for the years 2015 and 2016 have been restated in order to reflect the new organization with four business segments.

 

Definition of the indicators

(i)  Operating income (measure used to evaluate operating performance)

Revenue from sales after deducting cost of goods sold and inventory variations, other operating expenses, exploration expenses and depreciation, depletion, and impairment of tangible assets and mineral interests.

Operating income excludes the amortization of intangible assets other than mineral interests, currency translation adjustments and gains or losses on the disposal of assets.

(ii)  Net operating income (measure used to evaluate the return on capital employed)

Operating income after taking into account the amortization of intangible assets other than mineral interests, currency translation adjustments, gains or losses on the disposal of assets, as well as all other income and expenses related to capital employed (dividends from non-consolidated companies, equity in income of affiliates, capitalized interest expenses), and after income taxes applicable to the above.

The only income and expense not included in net operating income but included in net income Group share are interest expenses related to net financial debt, after applicable income taxes (net cost of net debt) and non-controlling interests.

(iii)  Adjusted income

Operating income, net operating income, or net income excluding the effect of adjustment items described below.

(iv)  Capital employed

Non-current assets and working capital, at replacement cost, net of deferred income taxes and non-current liabilities.

(v)  ROACE (Return on Average Capital Employed)

Ratio of adjusted net operating income to average capital employed between the beginning and the end of the period.

 

Performance indicators excluding the adjustment items, such as adjusted incomes and ROACE are meant to facilitate the analysis of the financial performance and the comparison of income between periods.

Adjustment items

Adjustment items include:

(i)  Special items

Due to their unusual nature or particular significance, certain transactions qualified as “special items” are excluded from the business segment figures. In general, special items relate to transactions that are significant, infrequent or unusual. However, in certain instances, transactions such as restructuring costs or assets disposals, which are not considered to be representative of the normal course of business, may be qualified as special items although they may have occurred within prior years or are likely to occur again within the coming years.

(ii)  The inventory valuation effect

The adjusted results of the Refining & Chemicals and Marketing & Services segments are presented according to the replacement cost method. This method is used to assess the segments’ performance and facilitate the comparability of the segments’ performance with those of its main competitors.

In the replacement cost method, which approximates the LIFO (Last-In, First-Out) method, the variation of inventory values in the statement of income is, depending on the nature of the inventory, determined using either the month-end prices differential between one period and another or the average prices of the period rather than the historical value. The inventory valuation effect is the difference between the results according to the FIFO (First-In, First-Out) and the replacement cost.

(iii)  Effect of changes in fair value

The effect of changes in fair value presented as adjustment items reflects for some transactions differences between internal measure of performance used by TOTAL’s management and the accounting for these transactions under IFRS.

IFRS requires that trading inventories be recorded at their fair value using period end spot prices. In order to best reflect the management of economic exposure through derivative transactions, internal indicators used to measure performance include valuations of trading inventories based on forward prices.

Furthermore, TOTAL, in its trading activities, enters into storage contracts, which future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect.

A)  Information by business segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

For the year ended December 31, 2017

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

8,477

 

12,854

 

75,505

 

74,634

 

23

 

 —

 

171,493

 

Intersegment sales

 

22,837

 

1,180

 

26,844

 

857

 

374

 

(52,092)

 

 —

 

Excise taxes

 

 —

 

 —

 

(3,008)

 

(19,386)

 

 —

 

 —

 

(22,394)

 

Revenues from sales

 

31,314

 

14,034

 

99,341

 

56,105

 

397

 

(52,092)

 

149,099

 

Operating expenses

 

(14,672)

 

(13,828)

 

(94,097)

 

(53,629)

 

(1,107)

 

52,092

 

(125,241)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(13,850)

 

(482)

 

(1,074)

 

(657)

 

(40)

 

 —

 

(16,103)

 

Operating income

 

2,792

 

(276)

 

4,170

 

1,819

 

(750)

 

 —

 

7,755

 

Net income (loss) from equity affiliates and other items

 

1,546

 

31

 

2,979

 

497

 

54

 

 —

 

5,107

 

Tax on net operating income

 

(2,233)

 

(140)

 

(944)

 

(561)

 

540

 

 —

 

(3,338)

 

Net operating income

 

2,105

 

(385)

 

6,205

 

1,755

 

(156)

 

 —

 

9,524

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(1,225)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

332

 

Net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

8,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjustments)(a) 

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

 —

 

(20)

 

 —

 

 —

 

 —

 

 —

 

(20)

 

Intersegment sales

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Excise taxes

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Revenues from sales

 

 —

 

(20)

 

 —

 

 —

 

 —

 

 —

 

(20)

 

Operating expenses

 

(119)

 

(389)

 

167

 

(11)

 

(64)

 

 —

 

(416)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(4,308)

 

(291)

 

(53)

 

(10)

 

 —

 

 —

 

(4,662)

 

Operating income (b)

 

(4,427)

 

(700)

 

114

 

(21)

 

(64)

 

 —

 

(5,098)

 

Net income (loss) from equity affiliates and other items

 

(328)

 

(116)

 

2,177

 

102

 

 —

 

 —

 

1,835

 

Tax on net operating income

 

875

 

(54)

 

124

 

(2)

 

(114)

 

 —

 

829

 

Net operating income (b)

 

(3,880)

 

(870)

 

2,415

 

79

 

(178)

 

 —

 

(2,434)

 

Net cost of net debt

 

 

 

  

 

  

 

  

 

  

 

  

 

(29)

 

Non-controlling interests

 

 

 

  

 

  

 

  

 

  

 

  

 

516

 

Net income - group share

 

 

 

  

 

  

 

  

 

  

 

  

 

(1,947)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Of which inventory valuation effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On operating income

    

 —

    

 —

    

344

    

13

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On net operating income

 

 —

 

 —

 

298

 

(3)

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjusted)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

8,477

 

12,874

 

75,505

 

74,634

 

23

 

 —

 

171,513

 

Intersegment sales

 

22,837

 

1,180

 

26,844

 

857

 

374

 

(52,092)

 

 —

 

Excise taxes

 

 —

 

 —

 

(3,008)

 

(19,386)

 

 —

 

 —

 

(22,394)

 

Revenues from sales

 

31,314

 

14,054

 

99,341

 

56,105

 

397

 

(52,092)

 

149,119

 

Operating expenses

 

(14,553)

 

(13,439)

 

(94,264)

 

(53,618)

 

(1,043)

 

52,092

 

(124,825)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(9,542)

 

(191)

 

(1,021)

 

(647)

 

(40)

 

 —

 

(11,441)

 

Adjusted operating income

 

7,219

 

424

 

4,056

 

1,840

 

(686)

 

 —

 

12,853

 

Net income (loss) from equity affiliates and other items

 

1,874

 

147

 

802

 

395

 

54

 

 —

 

3,272

 

Tax on net operating income

 

(3,108)

 

(86)

 

(1,068)

 

(559)

 

654

 

 —

 

(4,167)

 

Adjusted net operating income

 

5,985

 

485

 

3,790

 

1,676

 

22

 

 —

 

11,958

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(1,196)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

(184)

 

Adjusted net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

10,578

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(M$)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

 

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Total expenditures

 

12,802

 

797

 

1,734

 

1,457

 

106

 

 —

 

16,896

 

Total divestments

 

1,918

 

73

 

2,820

 

413

 

40

 

 —

 

5,264

 

Cash flow from operating activities

 

11,459

 

993

 

7,440

 

2,130

 

297

 

 —

 

22,319

 

Balance sheet as of December 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, intangible assets, net

 

103,639

 

2,873

 

10,820

 

6,253

 

399

 

 —

 

123,984

 

Investments & loans in equity affiliates

 

16,820

 

835

 

4,010

 

438

 

 —

 

 —

 

22,103

 

Other non-current assets

 

6,975

 

1,709

 

677

 

1,060

 

496

 

 —

 

10,917

 

Working capital

 

3,224

 

123

 

876

 

792

 

(3,650)

 

 —

 

1,365

 

Provisions and other non-current liabilities

 

(24,212)

 

(848)

 

(3,839)

 

(1,544)

 

(106)

 

 —

 

(30,549)

 

Assets and liabilities classified as held for sale 

 

1,475

 

 —

 

 —

 

166

 

 —

 

 —

 

1,641

 

Capital Employed (balance sheet)

 

107,921

 

4,692

 

12,544

 

7,165

 

(2,861)

 

 —

 

129,461

 

Less inventory valuation effect

 

 —

 

 —

 

(1,499)

 

(236)

 

 1

 

 —

 

(1,734)

 

Capital Employed (Business segment information)

 

107,921

 

4,692

 

11,045

 

6,929

 

(2,860)

 

 —

 

127,727

 

ROACE as a percentage

 

 6

%

10

%

33

%

26

%

 —

 

 —

 

 9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

For the year ended December 31, 2016

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

7,629

 

10,124

 

65,632

 

66,351

 

 7

 

 —

 

149,743

 

Intersegment sales

 

17,759

 

1,009

 

21,467

 

744

 

307

 

(41,286)

 

 —

 

Excise taxes

 

 —

 

 —

 

(3,544)

 

(18,274)

 

 —

 

 —

 

(21,818)

 

Revenues from sales

 

25,388

 

11,133

 

83,555

 

48,821

 

314

 

(41,286)

 

127,925

 

Operating expenses

 

(14,236)

 

(10,993)

 

(77,562)

 

(46,432)

 

(1,006)

 

41,286

 

(108,943)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(11,583)

 

(301)

 

(1,002)

 

(600)

 

(37)

 

 —

 

(13,523)

 

Operating income

 

(431)

 

(161)

 

4,991

 

1,789

 

(729)

 

 —

 

5,459

 

Net income (loss) from equity affiliates and other items

 

1,375

 

71

 

779

 

170

 

426

 

 —

 

2,821

 

Tax on net operating income

 

401

 

(4)

 

(1,244)

 

(541)

 

164

 

 —

 

(1,224)

 

Net operating income

 

1,345

 

(94)

 

4,526

 

1,418

 

(139)

 

 —

 

7,056

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(850)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

(10)

 

Net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

6,196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2016

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjustments)(a) 

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

 —

 

(231)

 

 —

 

 —

 

 —

 

 —

 

(231)

 

Intersegment sales

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Excise taxes

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Revenues from sales

 

 —

 

(231)

 

 —

 

 —

 

 —

 

 —

 

(231)

 

Operating expenses

 

(691)

 

(79)

 

625

 

(136)

 

 —

 

 —

 

(281)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(2,089)

 

(139)

 

 —

 

(1)

 

 —

 

 —

 

(2,229)

 

Operating income (b)

 

(2,780)

 

(449)

 

625

 

(137)

 

 —

 

 —

 

(2,741)

 

Net income (loss) from equity affiliates and other items

 

(200)

 

(135)

 

(93)

 

(40)

 

(4)

 

 —

 

(472)

 

Tax on net operating income

 

1,108

 

51

 

(201)

 

36

 

 1

 

 —

 

995

 

Net operating income (b)

 

(1,872)

 

(533)

 

331

 

(141)

 

(3)

 

 —

 

(2,218)

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(23)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

150

 

Net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

(2,091)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Of which inventory valuation effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On operating income

    

 —

    

 —

    

695

    

(43)

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On net operating income

 

 —

 

 —

 

500

 

(13)

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2016

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjusted)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)(a)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

7,629

 

10,355

 

65,632

 

66,351

 

 7

 

 —

 

149,974

 

Intersegment sales

 

17,759

 

1,009

 

21,467

 

744

 

307

 

(41,286)

 

 —

 

Excise taxes

 

 —

 

 —

 

(3,544)

 

(18,274)

 

 —

 

 —

 

(21,818)

 

Revenues from sales

 

25,388

 

11,364

 

83,555

 

48,821

 

314

 

(41,286)

 

128,156

 

Operating expenses

 

(13,545)

 

(10,914)

 

(78,187)

 

(46,296)

 

(1,006)

 

41,286

 

(108,662)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(9,494)

 

(162)

 

(1,002)

 

(599)

 

(37)

 

 —

 

(11,294)

 

Adjusted operating income

 

2,349

 

288

 

4,366

 

1,926

 

(729)

 

 —

 

8,200

 

Net income (loss) from equity affiliates and other items

 

1,575

 

206

 

872

 

210

 

430

 

 —

 

3,293

 

Tax on net operating income

 

(707)

 

(55)

 

(1,043)

 

(577)

 

163

 

 —

 

(2,219)

 

Adjusted net operating income

 

3,217

 

439

 

4,195

 

1,559

 

(136)

 

 —

 

9,274

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(827)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

(160)

 

Adjusted net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

8,287

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2016

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(M$)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

 

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Total expenditures

 

16,085

 

1,221

 

1,861

 

1,245

 

118

 

 —

 

20,530

 

Total divestments

 

2,187

 

166

 

88

 

424

 

12

 

 —

 

2,877

 

Cash flow from operating activities

 

9,010

 

538

 

4,585

 

1,754

 

634

 

 —

 

16,521

 

Balance sheet as of December 31, 2016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, intangible assets, net

 

109,617

 

2,834

 

9,293

 

5,225

 

364

 

 —

 

127,333

 

Investments & loans in equity affiliates

 

15,853

 

883

 

3,303

 

537

 

 —

 

 —

 

20,576

 

Other non-current assets

 

6,835

 

1,222

 

568

 

962

 

57

 

 —

 

9,644

 

Working capital

 

1,451

 

869

 

2,641

 

701

 

(3,314)

 

 —

 

2,348

 

Provisions and other non-current liabilities

 

(26,139)

 

(832)

 

(3,569)

 

(1,330)

 

218

 

 —

 

(31,652)

 

Assets and liabilities classified as held for sale

 

 —

 

 —

 

446

 

 —

 

 —

 

 —

 

446

 

Capital Employed (balance sheet)

 

107,617

 

4,976

 

12,682

 

6,095

 

(2,675)

 

 —

 

128,695

 

Less inventory valuation effect

 

 —

 

 —

 

(1,064)

 

(211)

 

 3

 

 —

 

(1,272)

 

Capital Employed (Business segment information)

 

107,617

 

4,976

 

11,618

 

5,884

 

(2,672)

 

 —

 

127,423

 

ROACE as a percentage

 

 3

%

 9

%

38

%

27

%

 —

%

 —

%

 7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

For the year ended December 31, 2015

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

10,297

 

9,149

 

70,623

 

75,282

 

 6

 

 —

 

165,357

 

Intersegment sales

 

18,419

 

1,246

 

26,794

 

911

 

218

 

(47,588)

 

 —

 

Excise taxes

 

 —

 

 —

 

(4,107)

 

(17,829)

 

 —

 

 —

 

(21,936)

 

Revenues from sales

 

28,716

 

10,395

 

93,310

 

58,364

 

224

 

(47,588)

 

143,421

 

Operating expenses

 

(15,725)

 

(10,265)

 

(87,674)

 

(56,065)

 

(866)

 

47,588

 

(123,007)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(15,660)

 

(307)

 

(1,092)

 

(634)

 

(27)

 

 —

 

(17,720)

 

Operating income

 

(2,669)

 

(177)

 

4,544

 

1,665

 

(669)

 

 —

 

2,694

 

Net income (loss) from equity affiliates and other items

 

1,944

 

(75)

 

1,724

 

467

 

558

 

 —

 

4,618

 

Tax on net operating income

 

(361)

 

19

 

(1,106)

 

(537)

 

172

 

 —

 

(1,813)

 

Net operating income

 

(1,086)

 

(233)

 

5,162

 

1,595

 

61

 

 —

 

5,499

 

Net cost of net debt

 

 

 

 

 

 

 

 

 

 

 

 

 

(713)

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

301

 

Net income - group share

 

 

 

 

 

 

 

 

 

 

 

 

 

5,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2015

 

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjustments) (a)

    

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

 —

 

(519)

 

 —

 

 —

 

 —

 

 —

 

(519)

 

Intersegment sales

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Excise taxes

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

Revenues from sales

 

 —

 

(519)

 

 —

 

 —

 

 —

 

 —

 

(519)

 

Operating expenses

 

(559)

 

(38)

 

(1,035)

 

(283)

 

 —

 

 —

 

(1,915)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(6,591)

 

(192)

 

(70)

 

(24)

 

 —

 

 —

 

(6,877)

 

Operating income (b)

 

(7,150)

 

(749)

 

(1,105)

 

(307)

 

 —

 

 —

 

(9,311)

 

Net income (loss) from equity affiliates and other items

 

(273)

 

(184)

 

1,165

 

224

 

(19)

 

 —

 

913

 

Tax on net operating income

 

2,007

 

133

 

263

 

87

 

 7

 

 —

 

2,497

 

Net operating income (b)

 

(5,416)

 

(800)

 

323

 

 4

 

(12)

 

 —

 

(5,901)

 

Net cost of net debt

 

 

 

 

 

 

 

 

 

 

 

 

 

(11)

 

Non-controlling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

481

 

Net income - group share

 

 

 

 

 

 

 

 

 

 

 

 

 

(5,431)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(b) Of which inventory valuation effect

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On operating income

    

 —

    

 —

    

(859)

    

(254)

    

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

On net operating income

 

 —

 

 —

 

(590)

 

(169)

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2015

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(adjusted)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

(M$) (a)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Non-Group sales

 

10,297

 

9,668

 

70,623

 

75,282

 

 6

 

 —

 

165,876

 

Intersegment sales

 

18,419

 

1,246

 

26,794

 

911

 

218

 

(47,588)

 

 —

 

Excise taxes

 

 —

 

 —

 

(4,107)

 

(17,829)

 

 —

 

 —

 

(21,936)

 

Revenues from sales

 

28,716

 

10,914

 

93,310

 

58,364

 

224

 

(47,588)

 

143,940

 

Operating expenses

 

(15,166)

 

(10,227)

 

(86,639)

 

(55,782)

 

(866)

 

47,588

 

(121,092)

 

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(9,069)

 

(115)

 

(1,022)

 

(610)

 

(27)

 

 —

 

(10,843)

 

Adjusted operating income

 

4,481

 

572

 

5,649

 

1,972

 

(669)

 

 —

 

12,005

 

Net income (loss) from equity affiliates and other items

 

2,217

 

109

 

559

 

243

 

577

 

 —

 

3,705

 

Tax on net operating income

 

(2,368)

 

(114)

 

(1,369)

 

(624)

 

165

 

 —

 

(4,310)

 

Adjusted net operating income

 

4,330

 

567

 

4,839

 

1,591

 

73

 

 —

 

11,400

 

Net cost of net debt

 

  

 

  

 

  

 

  

 

  

 

  

 

(702)

 

Non-controlling interests

 

  

 

  

 

  

 

  

 

  

 

  

 

(180)

 

Adjusted net income - group share

 

  

 

  

 

  

 

  

 

  

 

  

 

10,518

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2015

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

    

 

 

(M$)

 

&

 

Renewables

 

&

 

&

 

 

 

 

 

 

 

 

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Intercompany

 

Total

 

Total expenditures

 

24,233

 

588

 

1,875

 

1,267

 

70

 

 —

 

28,033

 

Total divestments

 

2,880

 

418

 

3,494

 

767

 

25

 

 —

 

7,584

 

Cash flow from operating activities

 

11,567

 

(384)

 

6,435

 

2,323

 

 5

 

 —

 

19,946

 

Balance sheet as of December 31, 2015

 

 

 

 

 

 

 

 

 

 

 

  

 

 

 

Property, plant and equipment, intangible assets, net

 

108,204

 

1,248

 

9,317

 

4,989

 

309

 

 —

 

124,067

 

Investments & loans in equity affiliates

 

14,711

 

1,126

 

3,075

 

472

 

 —

 

 —

 

19,384

 

Other non-current assets

 

7,230

 

1,245

 

640

 

964

 

(501)

 

 —

 

9,578

 

Working capital

 

885

 

1,363

 

1,828

 

675

 

(2,975)

 

 —

 

1,776

 

Provisions and other non-current liabilities

 

(27,720)

 

(643)

 

(3,784)

 

(1,339)

 

(150)

 

 —

 

(33,636)

 

Assets and liabilities classified as held for sale

 

482

 

 —

 

 —

 

344

 

 —

 

 —

 

826

 

Capital Employed (balance sheet)

 

103,791

 

4,340

 

11,076

 

6,105

 

(3,317)

 

 —

 

121,995

 

Less inventory valuation effect

 

 —

 

 —

 

(622)

 

(230)

 

 —

 

 —

 

(852)

 

Capital Employed (Business segment information)

 

103,791

 

4,340

 

10,454

 

5,875

 

(3,317)

 

 —

 

121,143

 

ROACE as a percentage

 

 4

%  

13

%  

40

%  

25

%  

 —

%

 —

%

 9

%

 

B)  Reconciliation of the information by business segment with Consolidated Financial Statements

The table below presents the impact of adjustment items on the consolidated statement of income:

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Consolidated

For the year ended December 31, 2017

 

 

 

 

 

statement

(M$)

 

Adjusted

 

Adjustments(a)

 

of income

Sales

 

171,513

 

(20)

 

171,493

Excise taxes

 

(22,394)

 

 —

 

(22,394)

Revenues from sales

 

149,119

 

(20)

 

149,099

Purchases, net of inventory variation

 

(99,534)

 

123

 

(99,411)

Other operating expenses

 

(24,427)

 

(539)

 

(24,966)

Exploration costs

 

(864)

 

 —

 

(864)

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(11,441)

 

(4,662)

 

(16,103)

Other income

 

772

 

3,039

 

3,811

Other expense

 

(389)

 

(645)

 

(1,034)

Financial interest on debt

 

(1,367)

 

(29)

 

(1,396)

Financial income and expense from cash & cash equivalents

 

(138)

 

 —

 

(138)

Cost of net debt

 

(1,505)

 

(29)

 

(1,534)

Other financial income

 

957

 

 —

 

957

Other financial expense

 

(642)

 

 —

 

(642)

Net income (loss) from equity affiliates

 

2,574

 

(559)

 

2,015

Income taxes

 

(3,858)

 

829

 

(3,029)

Consolidated net income

 

10,762

 

(2,463)

 

8,299

Group share

 

10,578

 

(1,947)

 

8,631

Non-controlling interests

 

184

 

(516)

 

(332)

 

(a)   Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

 

 

 

 

 

 

 

 

    

 

    

 

    

Consolidated

For the year ended December 31, 2016

 

 

 

 

 

statement

(M$)

 

Adjusted

 

Adjustments(a)

 

of income

Sales

 

149,974

 

(231)

 

149,743

Excise taxes

 

(21,818)

 

 —

 

(21,818)

Revenues from sales

 

128,156

 

(231)

 

127,925

Purchases, net of inventory variation

 

(83,916)

 

539

 

(83,377)

Other operating expenses

 

(23,832)

 

(470)

 

(24,302)

Exploration costs

 

(914)

 

(350)

 

(1,264)

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(11,294)

 

(2,229)

 

(13,523)

Other income

 

964

 

335

 

1,299

Other expense

 

(537)

 

(490)

 

(1,027)

Financial interest on debt

 

(1,085)

 

(23)

 

(1,108)

Financial income and expense from cash & cash equivalents

 

 4

 

 —

 

 4

Cost of net debt

 

(1,081)

 

(23)

 

(1,104)

Other financial income

 

971

 

 —

 

971

Other financial expense

 

(636)

 

 —

 

(636)

Net income (loss) from equity affiliates

 

2,531

 

(317)

 

2,214

Income taxes

 

(1,965)

 

995

 

(970)

Consolidated net income

 

8,447

 

(2,241)

 

6,206

Group share

 

8,287

 

(2,091)

 

6,196

Non-controlling interests

 

160

 

(150)

 

10

 

(a)   Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

 

 

 

 

 

 

 

 

    

 

    

 

    

Consolidated

For the year ended December 31, 2015

 

 

 

 

 

statement

(M$)

 

Adjusted

 

Adjustments(a)

 

of income

Sales

 

165,876

 

(519)

 

165,357

Excise taxes

 

(21,936)

 

 —

 

(21,936)

Revenues from sales

 

143,940

 

(519)

 

143,421

Purchases, net of inventory variation

 

(95,558)

 

(1,113)

 

(96,671)

Other operating expenses

 

(23,984)

 

(361)

 

(24,345)

Exploration costs

 

(1,550)

 

(441)

 

(1,991)

Depreciation, depletion and impairment of tangible assets and mineral interests

 

(10,843)

 

(6,877)

 

(17,720)

Other income

 

1,468

 

2,138

 

3,606

Other expense

 

(405)

 

(1,172)

 

(1,577)

Financial interest on debt

 

(956)

 

(11)

 

(967)

Financial income and expense from cash & cash equivalents

 

94

 

 —

 

94

Cost of net debt

 

(862)

 

(11)

 

(873)

Other financial income

 

882

 

 —

 

882

Other financial expense

 

(654)

 

 —

 

(654)

Net income (loss) from equity affiliates

 

2,414

 

(53)

 

2,361

Income taxes

 

(4,150)

 

2,497

 

(1,653)

Consolidated net income

 

10,698

 

(5,912)

 

4,786

Group share

 

10,518

 

(5,431)

 

5,087

Non-controlling interests

 

180

 

(481)

 

(301)

 

(a)   Adjustments include special items, inventory valuation effect and the effect of changes in fair value.

C) Additional information on adjustment items

The main adjustment items for 2017 are the following:

1)

The line "Gains (losses) on disposals of assets" includes the 2017 gains and losses on disposals, mainly, in the Refining & Chemicals segment with the sale of Atotech for an amount of $2,139 million.

2)

The line "Asset impairment charges" amounting to $(4,662) million in operating income and $(3,884) million in net income Group share includes non-current assets impairment charges recorded in 2017. Impairment testing methodology and asset impairment charges recorded during the year are detailed in the paragraph D of Note 3.

3)

“Other elements” amount to $(724) million in operating income and $(715) million in net income, Group share and especially include a provision for future expenses related to an “agreement on the transition from work to retirement” in France ($(201) million in operating income and $(132) million in net income, Group share) and the impact of the tax rate reform in the US ($(97) million in net income, Group share).

 

Adjustments to operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2017

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

344

 

13

 

 —

 

357

Effect of changes in fair value

 

 —

 

(20)

 

 —

 

 —

 

 —

 

(20)

Restructuring charges

 

(42)

 

 —

 

(4)

 

(3)

 

 —

 

(49)

Asset impairment charges

 

(4,308)

 

(291)

 

(53)

 

(10)

 

 —

 

(4,662)

Other items

 

(77)

 

(389)

 

(173)

 

(21)

 

(64)

 

(724)

Total

 

(4,427)

 

(700)

 

114

 

(21)

 

(64)

 

(5,098)

 

Adjustments to net income, Group share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2017

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

295

 

(13)

 

 —

 

282

Effect of changes in fair value

 

 —

 

(16)

 

 —

 

 —

 

 —

 

(16)

Restructuring charges

 

(11)

 

(11)

 

(42)

 

(2)

 

 —

 

(66)

Asset impairment charges

 

(3,583)

 

(238)

 

(53)

 

(10)

 

 —

 

(3,884)

Gains (losses) on disposals of assets

 

188

 

 —

 

2,139

 

125

 

 —

 

2,452

Other items

 

(287)

 

(293)

 

73

 

(30)

 

(178)

 

(715)

Total

 

(3,693)

 

(558)

 

2,412

 

70

 

(178)

 

(1,947)

 

Adjustments to operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2016

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

695

 

(43)

 

 —

 

652

Effect of changes in fair value

 

 —

 

(4)

 

 —

 

 —

 

 —

 

(4)

Restructuring charges

 

(19)

 

(18)

 

 —

 

 —

 

 —

 

(37)

Asset impairment charges

 

(2,089)

 

(139)

 

 —

 

(1)

 

 —

 

(2,229)

Other items

 

(672)

 

(288)

 

(70)

 

(93)

 

 —

 

(1,123)

Total

 

(2,780)

 

(449)

 

625

 

(137)

 

 —

 

(2,741)

 

Adjustments to net income, Group share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2016

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

498

 

(19)

 

 —

 

479

Effect of changes in fair value

 

 —

 

(3)

 

 —

 

 —

 

 —

 

(3)

Restructuring charges

 

(4)

 

(28)

 

 —

 

 —

 

 —

 

(32)

Asset impairment charges

 

(1,867)

 

(131)

 

(78)

 

(18)

 

(3)

 

(2,097)

Gains (losses) on disposals of assets

 

287

 

 5

 

 —

 

(25)

 

 —

 

267

Other items

 

(293)

 

(237)

 

(91)

 

(84)

 

 —

 

(705)

Total

 

(1,877)

 

(394)

 

329

 

(146)

 

(3)

 

(2,091)

 

Adjustments to operating income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2015

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

(859)

 

(254)

 

 —

 

(1,113)

Effect of changes in fair value

 

 —

 

(16)

 

 —

 

 —

 

 —

 

(16)

Restructuring charges

 

(43)

 

 —

 

 —

 

(5)

 

 —

 

(48)

Asset impairment charges

 

(6,591)

 

(192)

 

(70)

 

(24)

 

 —

 

(6,877)

Other items

 

(516)

 

(541)

 

(176)

 

(24)

 

 —

 

(1,257)

Total

 

(7,150)

 

(749)

 

(1,105)

 

(307)

 

 —

 

(9,311)

 

Adjustments to net income, Group share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Exploration

    

Gas,

    

Refining

    

Marketing

    

 

    

 

For the year ended December 31, 2015

 

&

 

Renewables

 

&

 

&

 

 

 

 

(M$)

 

Production

 

& Power

 

Chemicals

 

Services

 

Corporate

 

Total

Inventory valuation effect

 

 —

 

 —

 

(590)

 

(157)

 

 —

 

(747)

Effect of changes in fair value

 

 —

 

(9)

 

 —

 

 —

 

 —

 

(9)

Restructuring charges

 

(10)

 

(5)

 

(52)

 

(5)

 

 —

 

(72)

Asset impairment charges

 

(5,057)

 

(270)

 

(59)

 

(49)

 

(12)

 

(5,447)

Gains (losses) on disposals of assets

 

162

 

 —

 

1,288

 

360

 

 —

 

1,810

Other items

 

(148)

 

(421)

 

(264)

 

(133)

 

 —

 

(966)

Total

 

(5,053)

 

(705)

 

323

 

16

 

(12)

 

(5,431)

 

 

D) Asset impairment

 

 

 

 

 

 

Accounting principles

The recoverable amounts of intangible assets and property, plant and equipment are tested for impairment as soon as any indication of impairment exists. This test is performed at least annually for goodwill.

The recoverable amount is the higher of the fair value (less costs to sell) or its value in use.

Assets are grouped into cash-generating units (or CGUs) and tested. A CGU is a homogeneous set of assets that generates cash inflows that are largely independent of the cash inflows from other groups of assets.

The value in use of a CGU is determined by reference to the discounted expected future cash flows, based upon the management’s expectation of future economic and operating conditions. When this value is less than the carrying amount of the CGU, an impairment loss is recorded. It is allocated first to goodwill with a corresponding amount in "Other expenses". Any further losses are then allocated to property, plant and mineral interests with a corresponding amount in "Depreciation, depletion and impairment of tangible assets and mineral interests" and to other intangible assets with a corresponding amount in "Other expenses".

Impairment losses recognized in prior periods can be reversed up to the original carrying amount, had the impairment loss not been recognized. Impairment losses recognized for goodwill cannot be reversed.

 

For the financial year 2017, asset impairments were recorded for an amount of $4,662 million in operating income and $3,884 million in net income, Group share. These impairments were qualified as adjustments items of the operating income and net income, Group share.

Impairments relate to certain cash-generating units (CGUs) for which indicators of impairment have been identified, due to changes in operating conditions or the economic environment of the activities concerned.

The principles applied are as follows:

-

The future cash flows were determined using the assumptions included in the 2018 budget and in the long-term plan of the Group approved by the Group Executive Committee and the Board of Directors. These assumptions, including in particular future prices of products, operational costs, estimation of oil and gas reserves, future volumes produced and marketed, represent the best estimate of the Group management of all economic and technical conditions over the remaining life of the assets.

-

The Group, notably relying on data on global energy demand from the “World Energy Outlook” issued by IEA in 2016 and on its own supply assessments, determines the oil & gas prices scenarios based on assumptions about the evolution of core indicators of the Upstream activity (demand for oil & gas products in different markets, investment forecasts, decline in production fields, changes in oil & gas reserves and supply by area and by nature of oil & gas products), of the Downstream activity (changes in refining capacity and demand for petroleum products) and by integrating the climate issue.

These price scenarios, first prepared within the Strategy and Climate Department, are also reviewed by the Group segments which bring their own expertise. They also integrate studies issued by international agencies, banks and independent consultants. They are then eventually approved by the Executive Committee and the Board of directors.

The IEA 2017 World Energy Outlook anticipates three scenarios (New Policies Scenario (NPS), Current Policies Scenario (CPS) and Sustainable Development Scenario (SDS)). Among these scenarios, the Group uses as main references the New Policies Scenario (central scenario of the IEA) and Sustainable Development Scenario (which replaces the scenario 450 or 2 ° of WEO 2016).

The New Policies Scenario takes into account the measures already implemented by countries in the energy field as well as the effects of the policies announced by these within the framework of officially communicated objectives. In particular, the Nationally Determined Contributions (NDC) decided under the Paris Climate Agreement support the IEA estimates in this scenario. The Sustainable Development Scenario takes into account the measures needed to achieve the energy-related goals set in the 2030 Agenda for Sustainable Development adopted in 2015 by the UN members.

Based on the same economic and demographic assumptions, the NPS sees a significant increase in demand for oil and gas until 2025 and then a slower growth until 2040 (despite a significant penetration of electric vehicles revised up in 2017), while the SDS sees declining demand after 2025 for oil and after 2030 for gas due to substitution efforts and efficiency gains assumed by the IEA. At the same time, ample shale gas and oil resources in North America (whose estimates have been revised upwards between 2016 and 2017) mitigate the impact of demand growth during the first half of the forecast. Despite the revisions that led the IEA to correct its prices slightly downward versus 2016, the Group is comforted in its price assumptions by the IEA's main scenarios which take into account climate policies.

In this context:

o

For crude oil, the price level used for 2018 to determine the recoverable value of CGUs in 2017 amounts to 50 dollars per barrel of Brent. This price rises progressively from 2018 to reach 80 dollars in 2021 and inflates after 2023.

o

For gas, the Group estimates that due to new market dynamics that emerged in 2017, in particular a strong increase in supply, prices will strengthen like those of crude oil prices. The price level used in determining the recoverable value of concerned CGUs for 2018 amounts to $5 per million BTU for the NBP price (Europe). It reaches $7 per million BTU in 2020, and will inflate after 2023.

 

-

The future operational costs were determined by taking into account the existing technologies, the fluctuation of prices for petroleum services in line with market developments and the internal cost reduction programs effectively implemented.

-

The future cash flows are estimated over a period consistent with the life of the assets of the CGUs. They are prepared post-tax and take into account specific risks related to the CGUs' assets. They are discounted using a 7% post-tax discount rate, this rate being the weighted-average cost of capital estimated from historical market data. This rate was 7% in 2016 and 2015. The value in use calculated by discounting the above post-tax cash flows using a 7% post-tax discount rate is not materially different from the value in use calculated by discounting pre-tax cash flows using a pre-tax discount rate determined by an iterative computation from the post-tax value in use. These pre-tax discount rates range from 7% to 16% in 2017.

The CGUs for the Exploration & Production segment are defined as oil and gas fields or groups of oil and gas fields with industrial assets enabling the production, treatment and evacuation of the oil and gas. For the year 2017, impairments of assets were recognized over CGUs of the Exploration & Production segment for an impact of $4,308 million in operating income and $3,583 million in net income, Group share. These impairments were mainly recognized on the following assets:

-

Fort Hills project assets, in Canada -following the operator announcement of the increase of the project’s costs- for an amount of $1,544 million in operating income and $1,312 million in net income, Group share;

-

Gas assets related to the GLNG project in Australia for an amount of $509 million in operating income and $381 million in net income, Group share;

-

Oil assets in Congo for an amount of $1,392 million in operating income and $1,220 million in net income, Group share;

-

Gas assets in the United Kingdom for $451 million in operating income and $271 million in net income, Group share;

-

And other assets in the United States and in Norway.

As for the sensitivity analysis:

-

a decrease by one point in the discount rate would have a positive impact of approximately $0.5 billion in operating income and $0.3 billion in net income, Group share;

-

an increase by one point in the discount rate would have an additional negative impact of approximately $1 billion in operating income and approximately $0.8 billion in net income, Group share;

-

a variation of (10)% of the oil and gas prices over the long term plan would have an additional negative impact of approximately $4.9 billion in operating income and $4.2 billion in net income, Group share.

The most sensitive assets would be:

-

the assets already impaired in 2017 or before (impact of approximately $2.8 billion in operating income and $2.7 billion in net income, Group share), especially GLNG in Australia and assets in Congo;

-

other assets (impact of approximately $2.1 billion in operating income and $1.5 billion in net income, Group share), especially in Canada.

The CGUs of the Gas, Renewables & Power segment are subsidiaries or groups of subsidiaries organized by activity or geographical area. In year 2017, the Group recorded impairments on CGUs in the Gas, Renewables & Power segment for $291 million in operating income and $238 million in net income, Group share. These impairments mainly concern SunPower in the United States given the depressed economic environment of the solar activity.

The CGUs for the Refining & Chemicals segment are defined as legal entities with operational activities for refining and petrochemicals activities. Future cash flows are based on the gross contribution margin (calculated on the basis of net sales after purchases of crude oil and refined products, the effect of inventory valuation and variable costs). The other activities of the segment are global divisions, each division gathering a set of businesses or homogeneous products for strategic, commercial and industrial plans. Future cash flows are determined from the specific margins of these activities, unrelated to the price of oil. In year 2017, the Group recorded impairments on CGUs in the Refining and Chemicals segment for $53 million in net income, Group share. A variation of -5% or +5% of the gross margin on variable costs under identical operating conditions or -1% or +1% of the discount rate would have no impact on the operating profit or the net profit, Group share.

The CGUs of the Marketing & Services segment are subsidiaries or groups of subsidiaries organized by geographical area. In year 2017 no significant impairment has been recorded.

For year 2016, the Group recorded impairments in Exploration & Production, Gas, Renewables & Power and Marketing & Services segments for an amount of $2,229 million in operating income and $2,097 million in net income, Group share. These impairments were qualified as adjustments items of the operating income and net income, Group share.

In 2015, the Group recognized impairments of assets in the Exploration & Production, Refining & Chemicals and Marketing & Services segments for an impact of $6,877 million in operating income and of $5,447 income and net income, Group share. These impairments were qualified as adjustments items of the operating income and net income, Group share.

No significant reversal of impairment was accounted for in respect of the years 2015, 2016 and 2017.