XML 114 R22.htm IDEA: XBRL DOCUMENT v3.8.0.1
Financial structure and financial costs
12 Months Ended
Dec. 31, 2017
Financial structure and financial costs  
Financial structure and financial costs

15) Financial structure and financial costs

15.1) Financial debt and related financial instruments

A)  Non-current financial debt and related financial instruments

 

 

 

 

 

 

 

As of December 31, 2017

 

 

 

 

 

 

(M$)

 

 

 

 

 

 

(Assets) / Liabilities

    

Secured

    

Unsecured

    

Total

Non-current financial debt

 

1,310

 

40,030

 

41,340

of which hedging instruments of non-current financial debt (liabilities)

 

 —

 

1,082

 

1,082

Non-current financial assets

 

 —

 

(679)

 

(679)

of which hedging instruments of non-current financial debt (assets)

 

 —

 

(606)

 

(606)

Non-current financial debt and related financial instruments

 

1,310

 

39,351

 

40,661

Bonds after fair value hedge

 

 —

 

20,620

 

20,620

Fixed rate bonds and bonds after cash flow hedge

 

 —

 

16,469

 

16,469

Other floating rate debt

 

70

 

1,692

 

1,762

Other fixed rate debt

 

123

 

623

 

746

Financial lease obligations

 

1,117

 

 —

 

1,117

Non-current instruments held for trading

 

 —

 

(53)

 

(53)

Non-current financial debt and related financial instruments

 

1,310

 

39,351

 

40,661

 

 

 

 

 

 

 

 

As of December 31, 2016

 

 

 

 

 

 

(M$)

 

 

 

 

 

 

(Assets) / Liabilities

    

Secured

    

Unsecured

    

Total

Non-current financial debt

 

572

 

42,495

 

43,067

of which hedging instruments of non-current financial debt (liabilities)

 

 —

 

3,651

 

3,651

Non-current financial assets

 

 —

 

(908)

 

(908)

of which hedging instruments of non-current financial debt (assets)

 

 —

 

(845)

 

(845)

Non-current financial debt and related financial instruments

 

572

 

41,587

 

42,159

Bonds after fair value hedge

 

 —

 

29,147

 

29,147

Fixed rate bonds and bonds after cash flow hedge

 

 —

 

10,315

 

10,315

Other floating rate debt

 

76

 

1,291

 

1,367

Other fixed rate debt

 

185

 

892

 

1,077

Financial lease obligations

 

311

 

 —

 

311

Non-current instruments held for trading

 

 —

 

(58)

 

(58)

Non-current financial debt and related financial instruments

 

572

 

41,587

 

42,159

 

 

 

 

 

 

 

 

As of December 31, 2015

 

 

 

 

 

 

(M$)

 

 

 

 

 

 

(Assets) / Liabilities

    

Secured

    

Unsecured

    

Total

Non-current financial debt

 

655

 

43,809

 

44,464

of which hedging instruments of non-current financial debt (liabilities)

 

 —

 

2,891

 

2,891

Non-current financial assets

 

 —

 

(1,219)

 

(1,219)

of which hedging instruments of non-current financial debt (assets)

 

 —

 

(1,219)

 

(1,219)

Non-current financial debt and related financial instruments

 

655

 

42,590

 

43,245

Bonds after fair value hedge

 

 —

 

34,435

 

34,435

Fixed rate bonds and bonds after cash flow hedge

 

 —

 

6,494

 

6,494

Other floating rate debt

 

34

 

1,110

 

1,144

Other fixed rate debt

 

326

 

551

 

877

Financial lease obligations

 

295

 

 —

 

295

Non-current instruments held for trading

 

 —

 

 —

 

 —

Non-current financial debt and related financial instruments

 

655

 

42,590

 

43,245

 

The fair value of bonds, as of December 31, 2017, after taking into account currency and interest rates swaps, is detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value

 

Fair value

 

Fair value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

after

 

after

 

after

 

 

 

 

 

 

 

 

 

 

 

 

 

 

hedging as of

 

hedging as of

 

hedging as of

 

Range

 

Range of initial

 

 

Bonds after fair value hedge and variable rate bonds

 

Currency of

 

December 31,

 

December 31,

 

December 31,

 

of current

 

current rate before

 

 

(M$)

    

issuance

    

2017

    

2016

    

2015

    

Maturities

   

hedging instruments

 

 

Bond

 

USD

 

7,266

 

11,036

 

13,754

 

2018-2024

 

 

1.450

%

-

3.750

%

 

Bond

 

USD

 

1,385

 

1,385

 

2,385

 

2018-2020

 

USLIBOR 3 mois

 

 

+

0.03

%

 

 

 

  

 

  

 

  

 

  

 

  

 

USLIBOR 3 mois

 

 

+

0.75

%

 

Bond

 

CHF

 

391

 

1,441

 

1,910

 

2018

 

 

 

 

 

3.135

%

 

Bond

 

NZD

 

252

 

251

 

251

 

2019-2020

 

 

4.750

%

-

5.000

%

 

Bond

 

AUD

 

850

 

1,211

 

1,360

 

2018-2025

 

 

3.750

%

-

4.250

%

 

Bond

 

EUR

 

8,266

 

10,958

 

11,365

 

2019-2044

 

 

0.250

%

-

4.875

%

 

Bond

 

EUR

 

1,639

 

1,638

 

1,638

 

2020

 

EURIBOR 3 mois

 

 

+

0.30

%

 

 

 

  

 

  

 

  

 

  

 

  

 

EURIBOR 3 mois

 

 

+

0.31

%

 

Bond

 

CAD

 

188

 

289

 

289

 

2018-2020

 

 

2.125

%

-

2.375

%

 

Bond

 

GBP

 

1,855

 

2,215

 

2,225

 

2018-2022

 

 

2.250

%

-

3.875

%

 

Bond

 

GBP

 

470

 

469

 

469

 

2019

 

GBLIB3M

 

 

+

0.30

%

 

Bond

 

NOK

 

103

 

355

 

566

 

2018

 

 

 

 

 

2.500

%

 

Bond

 

HKD

 

212

 

392

 

394

 

2019-2025

 

 

2.920

%

-

4.180

%

 

Bond

 

SEK

 

  

 

  

 

95

 

  

 

 

 

 

 

  

 

 

Current portion (less than one year)

 

  

 

(4,156)

 

(4,391)

 

(4,164)

 

  

 

 

 

 

 

  

 

 

Total Principal Financing Entities(a)

 

  

 

18,721

 

27,249

 

32,537

 

  

 

 

 

 

 

  

 

 

TOTAL S.A.(b)

 

  

 

1,201

 

1,200

 

1,200

 

2022

 

 

 

 

 

0.500

%

 

Other Consolidated Subsidiaries

 

  

 

698

 

698

 

698

 

  

 

 

 

 

 

  

 

 

Total bonds after fair value hedge

 

  

 

20,620

 

29,147

 

34,435

 

  

 

 

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fair value

 

Fair value

 

Fair value

 

 

 

 

 

 

 

 

 

Bonds after cash flow

 

 

 

after

 

after

 

after

 

 

 

 

 

 

 

 

 

hedge

 

 

 

hedging as of

 

hedging as of

 

hedging as of

 

Range

 

Range of initial

 

 

and fixed rate bonds

 

Currency of

 

December 31,

 

December 31,

 

December 31,

 

of current

 

current rate before

 

 

(M$)

    

issuance

    

2017

    

2016

    

2015

    

maturities

 

hedging instruments

 

 

Bond

 

EUR

 

9,337

 

5,248

 

2,077

 

2019-2029

 

0.750

%

-

5.125

%

 

Bond

 

USD

 

5,000

 

4,250

 

3,750

 

2020-2024

 

2.750

%

-

4.450

%

 

Bond

 

CNY

 

164

 

153

 

164

 

2018

 

 

 

 

3.750

%

 

Bond

 

HKD

 

188

 

 

 

 

 

2026

 

 

 

 

3.090

%

 

Bond

 

CHF

 

1,037

 

 

 

 

 

2024-2027

 

0.510

%

-

1.010

%

 

Bond

 

GBP

 

324

 

 

 

 

 

2024

 

 

 

 

1.250

%

 

Current portion (less than one year)

 

  

 

(164)

 

  

 

  

 

  

 

 

 

 

  

 

 

Total Principal Financing Entities (a)

 

  

 

15,886

 

9,651

 

5,991

 

  

 

 

 

 

  

 

 

Other consolidated subsidiaries

 

  

 

583

 

664

 

503

 

  

 

 

 

 

  

 

 

Total bonds after cash flow hedge and fixed rate bonds

 

  

 

16,469

 

10,315

 

6,494

 

  

 

 

 

 

  

 

 

 

(a)  All debt securities issued through the following subsidiaries are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due :

- TOTAL CAPITAL is a wholly-owned subsidiary of TOTAL S.A.. It acts as a financing vehicle for the Group.

- TOTAL CAPITAL CANADA Ltd. is a wholly-owned subsidiary of TOTAL S.A.. It acts as a financing vehicle for the activities of the Group in Canada.

- TOTAL CAPITAL INTERNATIONAL is a wholly-owned subsidiary of TOTAL S.A.. It acts as a financing vehicle for the Group.

(b)  Debt financing of $1.2 billion through a structure combining the issue of cash-settled convertible bonds with the purchase of cash-settled call options to hedge TOTAL's exposure to the exercise of the conversion rights under the bonds. 

 

Loan repayment schedule (excluding current portion)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

of which hedging

    

 

    

of which hedging

    

 

    

 

 

 

 

 

 

instruments

 

 

 

instruments

 

Non-current

 

 

 

 

 

 

 

of non‑current

 

Non‑current

 

of non-current

 

financial debt and

 

 

 

As of December 31, 2017

 

Non‑current

 

financial debt

 

financial

 

financial debt

 

 related financial

 

 

 

(M$)

 

financial debt

 

(liabilities)

 

assets

 

(assets)

 

instruments

 

%

 

2019

 

6,005

 

164

 

(75)

 

(68)

 

5,930

 

15

%

2020

 

5,119

 

222

 

(2)

 

 —

 

5,117

 

13

%

2021

 

3,810

 

96

 

(15)

 

 —

 

3,795

 

 9

%

2022

 

5,026

 

165

 

(67)

 

(67)

 

4,959

 

12

%

2023 and beyond

 

21,380

 

435

 

(520)

 

(471)

 

20,860

 

51

%

Total

 

41,340

 

1,082

 

(679)

 

(606)

 

40,661

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

of which hedging

    

 

    

of which hedging

    

 

    

 

 

 

 

 

 

instruments

 

 

 

instruments

 

Non-current

 

 

 

 

 

 

 

of non‑current

 

Non‑current

 

of non-current

 

financial debt and

 

 

 

As of December 31, 2016

 

Non‑current

 

financial debt

 

financial

 

financial debt

 

 related financial

 

 

 

(M$)

 

financial debt

 

(liabilities)

 

assets

 

(assets)

 

instruments

 

%

 

2018

 

4,572

 

249

 

(252)

 

(235)

 

4,320

 

10

%

2019

 

5,812

 

327

 

(110)

 

(104)

 

5,702

 

14

%

2020

 

4,956

 

564

 

(4)

 

 —

 

4,952

 

12

%

2021

 

3,609

 

237

 

(31)

 

(7)

 

3,578

 

 8

%

2022 and beyond

 

24,118

 

2,274

 

(511)

 

(499)

 

23,607

 

56

%

Total

 

43,067

 

3,651

 

(908)

 

(845)

 

42,159

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

of which hedging

    

 

    

of which hedging

    

 

    

 

 

 

 

 

 

instruments

 

 

 

instruments

 

Non-current

 

 

 

 

 

 

 

of non‑current

 

Non‑current

 

of non-current

 

financial debt and

 

 

 

As of December 31, 2015

 

Non‑current

 

financial debt

 

financial

 

financial debt

 

 related financial

 

 

 

(M$)

 

financial debt

 

(liabilities)

 

assets

 

(assets)

 

instruments

 

%

 

2017

 

 4,729

 

 213

 

 (127)

 

 (127)

 

 4,602

 

 11

%

2018

 

 4,803

 

 218

 

 (383)

 

 (383)

 

 4,420

 

 10

%

2019

 

 5,716

 

 124

 

 (174)

 

 (174)

 

 5,542

 

 13

%

2020

 

 4,965

 

 434

 

 —

 

 —

 

 4,965

 

 11

%

2021 and beyond

 

 24,251

 

 1,902

 

 (535)

 

 (535)

 

 23,716

 

 55

%

Total

 

 44,464

 

 2,891

 

 (1,219)

 

 (1,219)

 

 43,245

 

 100

%

 

Analysis by currency and interest rate

These analyses take into account interest rate and foreign currency swaps to hedge non-current financial debt.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

    

    

    

    

 

    

    

    

    

 

    

    

    

 

(M$)

    

2017

    

%

    

 

2016

    

%

    

 

2015

    

%

    

U.S. Dollar

 

38,703

 

95

%

 

39,963

 

95

%

 

40,337

 

93

%

Euro

 

724

 

 2

%

 

977

 

 2

%

 

1,681

 

 4

%

Norwegian krone

 

975

 

 2

%

 

928

 

 2

%

 

907

 

 2

%

Other currencies

 

259

 

 1

%

 

291

 

 1

%

 

320

 

 1

%

Total

 

40,661

 

100

%

 

42,159

 

100

%

 

43,245

 

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(M$)

    

2017

    

%

    

 

2016

    

%

    

 

2015

    

%

    

Fixed rate

 

18,332

 

45

%

 

11,703

 

28

%

 

7,666

 

18

%

Floating rate

 

22,329

 

55

%

 

30,456

 

72

%

 

35,579

 

82

%

Total

 

40,661

 

100

%

 

42,159

 

100

%

 

43,245

 

100

%

 

B)  Current financial assets and liabilities

Current borrowings consist mainly of commercial paper or treasury bills or drawings on bank loans. These instruments bear interest at rates that are close to market rates.

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

 

(M$)

 

 

 

 

 

 

 

(Assets) / Liabilities

    

2017

    

2016

    

2015

 

Current financial debt(a)

 

6,396

 

9,469

 

7,836

 

Current portion of non-current financial debt

 

4,700

 

4,451

 

4,652

 

Current borrowings (note 14)

 

11,096

 

13,920

 

12,488

 

Current portion of hedging instruments of debt (liabilities)

 

157

 

212

 

127

 

Other current financial instruments (liabilities)

 

88

 

115

 

44

 

Other current financial liabilities (note 14)

 

245

 

327

 

171

 

Current deposits beyond three months

 

(2,970)

 

(4,413)

 

(5,858)

 

Current portion of hedging instruments of debt (assets)

 

(172)

 

(41)

 

(220)

 

Other current financial instruments (assets)

 

(251)

 

(94)

 

(112)

 

Current financial assets (note 14)

 

(3,393)

 

(4,548)

 

(6,190)

 

Current borrowings and related financial assets and liabilities, net

 

7,948

 

9,699

 

6,469

 

 

(a)

As of December 31, 2017,  December 31, 2016 and December 31, 2015, the current financial debt includes a commercial paper program in Total Capital Canada Ltd.. Total Capital Canada Ltd. is a wholly-owned subsidiary of TOTAL S.A. It acts as a financing vehicle for the activities of the Group in Canada. Its debt securities are fully and unconditionally guaranteed by TOTAL S.A. as to payment of principal, premium, if any, interest and any other amounts due.

C)  Cash flow from (used in) financing activities

The variations of financial debt are detailed as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-cash changes

 

 

 

    

 

    

 

    

Change in

    

 

    

 

    

 

    

 

    

 

 

 

 

 

 

 

 scope,

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

 

 including IFRS

 

 

 

 

 

Reclassification

 

 

 

As of

 

 

 January 1,

 

Cash

 

 5

 

Foreign

 

Changes in

 

 Non-current /

 

 

 

 December

(M$)

 

2017

 

 changes

 

 reclassification

 

 currency

 

 fair value

 

 Current

 

Other

 

 31, 2017

Non-current financial instruments - assets (a)

 

(908)

 

 —

 

 —

 

(62)

 

291

 

 —

 

 —

 

(679)

Non-current financial debt

 

43,067

 

2,277

 

 2

 

203

 

(451)

 

(4,713)

 

955

 

41,340

Non-current financial debt and related financial instruments

 

42,159

 

2,277

 

 2

 

141

 

(160)

 

(4,713)

 

955

 

40,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current financial instruments - assets (a)

 

(135)

 

 —

 

 —

 

(34)

 

(254)

 

 —

 

 —

 

(423)

Current borrowings

 

13,920

 

(7,175)

 

(50)

 

(585)

 

290

 

4,713

 

(17)

 

11,096

Current financial instruments - liabilities (a)

 

327

 

 —

 

 —

 

18

 

(100)

 

 —

 

 —

 

245

Current financial debt and related financial instruments

 

14,112

 

(7,175)

 

(50)

 

(601)

 

(64)

 

4,713

 

(17)

 

10,918

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial debt classified as held for sale

 

21

 

 —

 

(21)

 

 —

 

 —

 

 —

 

 —

 

 —

Financial debt

 

56,292

 

(4,898)

 

(69)

 

(460)

 

(224)

 

 —

 

938

 

51,579

 

(a): Fair value or cash flow hedge instruments and other non-hedge debt-related derivative instruments

Monetary changes in non-current financial debt are detailed as follows:

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

 

 

 

 

 

 

(M$)

    

2017

    

2016

    

2015

 

Issuance of non-current debt

 

2,959

 

4,096

 

4,468

 

Repayment of non-current debt

 

(682)

 

(520)

 

(302)

 

Net amount

 

2,277

 

3,576

 

4,166

 

 

D)  Cash and cash equivalents

Accounting policies

Cash and cash equivalents are comprised of cash on hand and highly liquid short-term investments that are easily convertible into known amounts of cash and are subject to insignificant risks of changes in value.

Investments with maturity greater than three months and less than twelve months are shown under “Current financial assets”.

Changes in current financial assets and liabilities are included in the financing activities section of the Consolidated Statement of Cash Flows.

 

Cash and cash equivalents are detailed as follows:

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

 

 

 

 

 

 

(M$)

    

2017

    

2016

    

2015

 

Cash

 

13,427

 

12,129

 

12,291

 

Cash equivalents

 

19,758

 

12,468

 

10,978

 

Total

 

33,185

 

24,597

 

23,269

 

 

Cash equivalents are mainly composed of deposits less than three months deposited in government institutions or deposit banks selected in accordance with strict criteria.

As of December 31, 2017, the cash and cash equivalents include $1,487 million subject to restrictions particularly due to a regulatory framework or due to the fact they are owned by affiliates located in countries with exchange controls.

E) Net-debt-to-equity ratio

For its internal and external communication needs, the Group calculates a debt ratio by dividing its net financial debt by equity. Adjusted shareholders’ equity for the year ended December 31, 2017 is calculated after payment of a 2017 dividend of €2.48 per share, subject to approval by the shareholders’ meeting on June 1st, 2018.

The net-debt-to-equity ratio is calculated as follows:

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

 

(M$)

    

 

    

 

    

 

 

(Assets) / Liabilities

    

2017

    

2016

    

2015

    

Current borrowings

 

11,096

 

13,920

 

12,488

 

Other current financial liabilities

 

245

 

327

 

171

 

Current financial assets

 

(3,393)

 

(4,548)

 

(6,190)

 

Net financial assets and liabilities held for sale or exchange

 

 —

 

(140)

 

141

 

Non-current financial debt

 

41,340

 

43,067

 

44,464

 

Non-current financial assets

 

(679)

 

(908)

 

(1,219)

 

Cash and cash equivalents

 

(33,185)

 

(24,597)

 

(23,269)

 

Net financial debt

 

15,424

 

27,121

 

26,586

 

Shareholders’ equity – Group share

 

111,556

 

98,680

 

92,494

 

Distribution of the income based on existing shares at the closing date

 

(1,874)

 

(1,581)

 

(1,545)

 

Non-controlling interests

 

2,481

 

2,894

 

2,915

 

Adjusted shareholders’ equity

 

112,163

 

99,993

 

93,864

 

Net-debt-to-equity ratio

 

13.8

%  

27.1

%  

28.3

%  

 

15.2) Fair value of financial instruments (excluding commodity contracts)

 

Accounting policies

The Group uses derivative instruments to manage its exposure to risks of changes in interest rates, foreign exchange rates and commodity prices. Changes in fair value of derivative instruments are recognized in the statement of income or in other comprehensive income and are recognized in the balance sheet in the accounts corresponding to their nature, according to the risk management strategy. The derivative instruments used by the Group are the following:

-     Cash management

Financial instruments used for cash management purposes are part of a hedging strategy of currency and interest rate risks within global limits set by the Group and are considered to be used for transactions (held for trading). Changes in fair value are systematically recorded in the statement of income. The balance sheet value of those instruments is included in “Current financial assets” or “Other current financial liabilities”.

-     Long-term financing

When an external long-term financing is set up, specifically to finance subsidiaries, and when this financing involves currency and interest rate derivatives, these instruments are qualified as:

i.     Fair value hedge of the interest rate risk on the external debt and of the currency risk of the loans to subsidiaries. Changes in fair value of derivatives are recognized in the statement of income as are changes in fair value of underlying financial debts and loans to subsidiaries.

The fair value of those hedging instruments of long-term financing is included in assets under “Non-current financial assets” or in liabilities under “Non-current financial debt “for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”.

In case of the anticipated termination of derivative instruments accounted for as fair value hedges, the amount paid or received is recognized in the statement of income and:

     If this termination is due to an early cancellation of the hedged items, the adjustment previously recorded as revaluation of those hedged items is also recognized in the statement of income;

     If the hedged items remain in the balance sheet, the adjustment previously recorded as a revaluation of those hedged items is spread over the remaining life of those items.

ii.    Cash flow hedge when the Group implements a strategy of fixing interest rate on the external debt. Changes in fair value are recorded in Other comprehensive Income for the effective portion of the hedging and in the statement of income for the ineffective portion of the hedging. Amounts recorded in equity are transferred to the income statement when the hedged transaction affects profit or loss.

The fair value of those hedging instruments of long-term financing is included in assets under “Non-current financial assets” or in liabilities under “Non-current financial debt“ for the non-current portion. The current portion (less than one year) is accounted for in “Current financial assets” or “Other current financial liabilities”.

If the hedging instrument expires, is sold or terminated by anticipation, gains or losses previously recognized in equity remain in equity. Amounts are recycled to the income statement only when the hedged transaction affects profit or loss.

-     Foreign subsidiaries’ equity hedge

Certain financial instruments hedge against risks related to the equity of foreign subsidiaries whose functional currency is not the euro (mainly the dollar). These instruments qualify as “net investment hedges” and changes in fair value are recorded in other comprehensive income for the effective portion of the hedging and in the statement of income for the ineffective portion of the hedging. Gains or losses on hedging instruments previously recorded in equity, are reclassified to the statement of income in the same period as the total or partial disposal of the foreign activity.

The fair value of these instruments is recorded under “Current financial assets” or ”Other current financial liabilities”.

-     Commitments to purchase shares held by non-controlling interests (put options written on minority interests)

Put options granted to non-controlling-interest shareholders are initially recognized as financial liabilities at the present value of the exercise price of the options with a corresponding reduction in shareholders’ equity. The financial liability is subsequently measured at fair value at each balance sheet date in accordance with contractual clauses and any variation is recorded in the statement of income (cost of debt).

 

A)  Impact on the statement of income per nature of financial instruments

Assets and liabilities from financing activities

The impact on the statement of income of financing assets and liabilities mainly includes:

·

Financial income on cash, cash equivalents, and current financial assets (notably current deposits beyond three months) classified as “Loans and receivables”;

·

Financial expense of long term subsidiaries financing, associated hedging instruments (excluding ineffective portion of the hedge detailed below) and financial expense of short term financing classified as “Financing liabilities and associated hedging instruments”;

·

Ineffective portion of bond hedging; and

·

Financial income, financial expense and fair value of derivative instruments used for cash management purposes classified as “Assets and liabilities held for trading”.

Financial derivative instruments used for cash management purposes (interest rate and foreign exchange) are considered to be held for trading. Based on practical documentation issues, the Group did not elect to set up hedge accounting for such instruments. The impact on income of the derivatives is offset by the impact of loans and current liabilities they are related to. Therefore these transactions taken as a whole do not have a significant impact on the Consolidated Financial Statements.

 

 

 

 

 

 

 

For the year ended December 31,

    

 

    

 

    

 

(M$)

 

2017

    

2016

    

2015

Loans and receivables

 

53

 

82

 

121

Financing liabilities and associated hedging instruments

 

(1,395)

 

(1,111)

 

(965)

Fair value hedge (ineffective portion)

 

(1)

 

 3

 

(1)

Assets and liabilities held for trading

 

(191)

 

(78)

 

(28)

Impact on the cost of net debt

 

(1,534)

 

(1,104)

 

(873)

 

 

B)  Impact of the hedging strategies

Fair value hedge

The impact on the statement of income of the bond hedging instruments which is recorded in the item “Financial interest on debt” in the Consolidated Statement of Income is detailed as follows:

 

 

 

 

 

 

 

 

For the year ended December 31,

    

 

    

 

    

 

(M$)

 

2017

    

2016

    

2015

Revaluation at market value of bonds

 

(2,519)

 

693

 

2,133

Swap hedging of bonds

 

2,518

 

(690)

 

(2,134)

Ineffective portion of the fair value hedge

 

(1)

 

 3

 

(1)

 

The ineffective portion is not representative of the Group’s performance considering the Group’s objective to hold swaps to maturity. The current portion of the swaps valuation is not subject to active management.

Net investment hedge

These instruments are recorded directly in other comprehensive income under “Currency translation adjustments”. The variations of the period are detailed in the table below:

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31,

 

    

As of

    

 

 

 

    

As of

(M$)

 

 

January 1,

 

Variations

 

Disposals

 

December 31

2017

 

 

(658)

 

(104)

 

 —

 

(762)

2016

 

 

(674)

 

16

 

 —

 

(658)

2015

 

 

(511)

 

(163)

 

 —

 

(674)

 

As of December 31, 2017, 2016 and 2015 the Group had no open forward contracts under these hedging instruments.

Cash flow hedge

The impact on the statement of income and other comprehensive income of the hedging instruments qualified as cash flow hedges is detailed as follows :

 

 

 

 

 

 

 

For the year ended December 31,

 

 

    

 

 

 

(M$)

 

2017

    

2016

    

2015

Profit (Loss) recorded in equity during the period

    

253

    

308

    

(185)

Recycled amount from equity to the income statement during the period

 

266

 

(52)

 

(205)

 

As of December 31, 2017, 2016 and 2015, the ineffective portion of these financial instruments is nil.

 

C)  Maturity of derivative instruments

The maturity of the notional amounts of derivative instruments, excluding the commodity contracts, is detailed in the following table:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2017

 

 

 

Notional

 

 

 

Notional value schedule

(M$)

 

Fair

 

value

 

Fair

 

2019

 

 

 

 

 

 

 

 

 

2023

Assets / (Liabilities)

 

value

 

2018

 

value

 

and after

 

2019

 

2020

 

2021

 

2022

 

and after

Fair value hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swaps hedging  bonds (assets)

    

172

  

2,391

    

337

    

5,075

    

 —

 

 —

 

 —

 

 —

 

 —

Swaps hedging  bonds (liabilities)

 

(157)

 

1,840

 

(951)

 

14,669

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedging  bonds

 

15

 

4,231

 

(614)

 

19,744

 

3,247

 

3,346

 

1,945

 

4,336

 

6,870

Cash flow hedge

 

  

 

  

 

 

 

  

 

  

 

  

 

  

 

  

 

  

Swaps hedging  bonds (assets)

 

 —

 

 —

 

269

 

9,466

 

 —

 

 —

 

 —

 

 —

 

 —

Swaps hedging  bonds (liabilities)

 

 —

 

 —

 

(131)

 

11,288

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedgings  bonds

 

 —

 

 —

 

138

 

20,754

 

969

 

 —

 

 —

 

 —

 

19,785

Forward exchange contracts related to operational activites (assets)

 

 2

 

55

 

 —

 

28

 

 —

 

 —

 

 —

 

 —

 

 —

Forward exchange contracts related to operational activites (liabilities)

 

 —

 

 —

 

 —

 

 0

 

 —

 

 —

 

 —

 

 —

 

 —

Total forward exchange contracts related to operating activities

 

 2

 

55

 

 —

 

28

 

24

 

 4

 

 —

 

 —

 

 —

Held for trading

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Other interest rate swaps (assets)

 

32

 

36,775

 

64

 

2,300

 

 —

 

 —

 

 —

 

 —

 

 —

Other interest rate swaps (liabilities)

 

(17)

 

13,905

 

(3)

 

370

 

 —

 

 —

 

 —

 

 —

 

 —

Total other interest rate swaps

 

15

 

50,680

 

61

 

2,670

 

41

 

50

 

1,000

 

 —

 

1,579

Currency swaps and forward exchange contracts (assets)

 

219

 

15,132

 

 9

 

175

 

 —

 

 —

 

 —

 

 —

 

 —

Currency swaps and forward exchange contracts (liabilities)

 

(71)

 

6,048

 

(17)

 

229

 

 —

 

 —

 

 —

 

 —

 

 —

Total currency swaps and forward exchange contracts

 

148

 

21,180

 

(8)

 

404

 

222

 

128

 

46

 

 7

 

 1

 

Notional amounts set the levels of commitment and are indicative nor of a contingent gain or loss neither of a related debt.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2016

 

 

 

Notional

 

 

 

Notional value schedule

(M$)

    

Fair

 

value

 

Fair

 

2018

 

 

 

 

 

 

 

 

 

2022

Assets / (Liabilities)

 

value

 

2017

 

value

 

and after

 

2018

 

2019

 

2020

 

2021

 

and after

Fair value hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swaps hedging  bonds (assets)

 

41

    

2,213

    

716

    

7,618

    

 —

    

 —

    

 —

    

 —

    

 —

Swaps hedging bonds (liabilities)

 

(212)

 

2,175

 

(3,007)

 

20,549

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedging fixed-rates bonds

 

(171)

 

4,388

 

(2,291)

 

28,167

 

4,097

 

3,172

 

3,346

 

1,945

 

15,607

Cash flow hedge

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Swaps hedging  bonds (assets)

 

 —

 

 —

 

129

 

3,457

 

 —

 

 —

 

 —

 

 —

 

 —

Swaps hedging  bonds (liabilities)

 

 —

 

 —

 

(644)

 

5,679

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedging  bonds

 

 —

 

 —

 

(515)

 

9,136

 

 —

 

969

 

 —

 

 —

 

8,167

Forward exchange contracts related to operational activites (assets)

 

 3

 

30

 

 1

 

13

 

 —

 

 —

 

 —

 

 —

 

 —

Forward exchange contracts related to operational activites (liabilities)

 

(26)

 

296

 

(5)

 

80

 

 —

 

 —

 

 —

 

 —

 

 —

Total forward exchange contracts related to operational activites

 

(23)

 

326

 

(4)

 

93

 

93

 

 —

 

 —

 

 —

 

 —

Held for trading

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Other interest rate swaps (assets)

 

 7

 

16,582

 

35

 

1,859

 

 —

 

 —

 

 —

 

 —

 

 —

Other interest rate swaps (liabilities)

 

(5)

 

24,642

 

(4)

 

603

 

 —

 

 —

 

 —

 

 —

 

 —

Total other interest rate swaps

 

 2

 

41,224

 

31

 

2,462

 

1,291

 

 —

 

 —

 

1,000

 

171

Currency swaps and forward exchange contracts (assets)

 

87

 

6,714

 

28

 

578

 

 —

 

 —

 

 —

 

 —

 

 —

Currency swaps and forward exchange contracts (liabilities)

 

(110)

 

3,803

 

(1)

 

 6

 

 —

 

 —

 

 —

 

 —

 

 —

Total currency swaps and forward exchange contracts

 

(23)

 

10,517

 

27

 

584

 

322

 

137

 

80

 

43

 

   2

 

Notional amounts set the levels of commitment and are indicative nor of a contingent gain or loss neither of a related debt.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the year ended December 31, 2015

 

 

 

Notional

 

 

 

Notional value schedule

 

(M$)

 

Fair

 

value

 

Fair

 

2017

 

 

 

 

 

 

 

 

 

2021

Assets / (Liabilities)

 

value

 

2016

 

value

 

and after

 

2017

 

2018

 

2019

 

2020

 

and after

Fair value hedge

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Swaps hedging  bonds (assets)

 

220

 

2,709

 

1,075

 

11,701

 

 —

 

 —

 

 —

 

 —

 

 —

Swaps hedging bonds (liabilities)

 

(127)

 

579

 

(2,891)

 

21,835

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedging  bonds

 

93

 

3,288

 

(1,816)

 

33,536

 

4,410

 

4,129

 

3,190

 

3,346

 

18,461

Cash flow hedge

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Swaps hedging  bonds (assets)

 

 —

 

 —

 

144

 

2,221

 

 —

 

 —

 

 —

 

 —

 

 —

Swaps hedging  bonds (liabilities)

 

 —

 

 —

 

(1)

 

36

 

 —

 

 —

 

 —

 

 —

 

 —

Total swaps hedging bonds

 

 —

 

 —

 

143

 

2,257

 

 —

 

 —

 

969

 

 —

 

1,288

Forward exchange contracts related to operational activites (assets)

 

 9

 

145

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

Forward exchange contracts related to operational activites (liabilities)

 

(61)

 

497

 

(42)

 

376

 

 —

 

 —

 

 —

 

 —

 

 —

Total forward exchange contracts related to operational activites

 

(52)

 

642

 

(42)

 

376

 

296

 

80

 

 —

 

 —

 

 —

Held for trading

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

 

  

Other interest rate swaps (assets)

 

 7

 

17,220

 

 1

 

90

 

 —

 

 —

 

 —

 

 —

 

 —

Other interest rate swaps (liabilities)

 

(9)

 

26,914

 

 —

 

59

 

 —

 

 —

 

 —

 

 —

 

 —

Total other interest rate swaps

 

(2)

 

44,134

 

 1

 

149

 

82

 

67

 

 —

 

 —

 

 —

Currency swaps and forward exchange contracts (assets)

 

82

 

5,476

 

22

 

627

 

 —

 

 —

 

 —

 

 —

 

 —

Currency swaps and forward exchange contracts (liabilities)

 

(35)

 

3,970

 

 —

 

33

 

 —

 

 —

 

 —

 

 —

 

 —

Total currency swaps and forward exchange contracts

 

47

 

9,446

 

22

 

660

 

290

 

226

 

58

 

41

 

45

 

Notional amounts set the levels of commitment and are indicative nor of a contingent gain or loss neither of a related debt.

 

D)  Fair value hierarchy

 

Accounting policies

Fair values are estimated for the majority of the Group’s financial instruments, with the exception of publicly traded equity securities and marketable securities for which the market price is used.

Estimations of fair value, which are based on principles such as discounting future cash flows to present value, must be weighted by the fact that the value of a financial instrument at a given time may be influenced by the market environment (liquidity especially), and also the fact that subsequent changes in interest rates and exchange rates are not taken into account.

As a consequence, the use of different estimates, methodologies and assumptions could have a material effect on the estimated fair value amounts.

The methods used are as follows:

-     Financial debts, swaps

The market value of swaps and of bonds that are hedged by those swaps has been determined on an individual basis by discounting future cash flows with the zero coupon interest rate curves existing at year-end.

-     Other financial instruments

The fair value of the interest rate swaps and of FRA’s (Forward Rate Agreements) are calculated by discounting future cash flows on the basis of zero coupon interest rate curves existing at year-end after adjustment for interest accrued but unpaid. Forward exchange contracts and currency swaps are valued on the basis of a comparison of the negotiated forward rates with the rates in effect on the financial markets at year-end for similar maturities.

Exchange options are valued based on the Garman-Kohlhagen model including market quotations at year-end.

 

The fair value hierarchy for financial instruments, excluding commodity contracts, is as follows:

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Prices based

    

 

 

 

Quoted prices in

 

Prices based

 

on non

 

 

 

 

active markets

 

on observable

 

observable

 

 

As of December 31, 2017

 

for identical assets

 

data

 

data

 

 

(M$)

 

(level 1)

 

(level 2)

 

(level 3)

 

            Total

Fair value hedge instruments

 

 —

 

(599)

 

 —

 

(599)

Cash flow hedge instruments

 

 —

 

140

 

 —

 

140

Assets and liabilities held for trading

 

 —

 

216

 

 —

 

216

Assets available for sale

 

100

 

 —

 

 —

 

100

Total

 

100

 

(243)

 

 —

 

(143)

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Prices based

    

 

 

 

Quoted prices in

 

Prices based

 

on non

 

 

 

 

active markets

 

on observable

 

observable

 

 

As of December 31, 2016

 

for identical assets

 

data

 

data

 

 

(M$)

 

(level 1)

 

(level 2)

 

(level 3)

 

            Total

Fair value hedge instruments

 

 —

 

(2,462)

 

 —

 

(2,462)

Cash flow hedge instruments

 

 —

 

(542)

 

 —

 

(542)

Assets and liabilities held for trading

 

 —

 

37

 

 —

 

37

Assets available for sale

 

120

 

 —

 

 —

 

120

Total

 

120

 

(2,967)

 

 —

 

(2,847)

 

 

 

 

 

 

 

 

 

 

 

    

 

    

 

    

Prices based

    

 

 

 

Quoted prices in

 

Prices based

 

on non

 

 

 

 

active markets

 

on observable

 

observable

 

 

As of December 31, 2015

 

for identical assets

 

data

 

data

 

 

(M$)

 

(level 1)

 

(level 2)

 

(level 3)

 

            Total

Fair value hedge instruments

 

 —

 

(1,723)

 

 —

 

(1,723)

Cash flow hedge instruments

 

 —

 

49

 

 —

 

49

Assets and liabilities held for trading

 

 —

 

68

 

 —

 

68

Assets available for sale

 

59

 

 —

 

 —

 

59

Total

 

59

 

(1,606)

 

 —

 

(1,547)

 

15.3) Financial risks management

 

Financial markets related risks

As part of its financing and cash management activities, the Group uses derivative instruments to manage its exposure to changes in interest rates and foreign exchange rates. These instruments are mainly interest rate and currency swaps. The Group may also occasionally use futures contracts and options. These operations and their accounting treatment are detailed in Notes 14, 15.1 and 15.2 to the Consolidated Financial Statements.

Risks relative to cash management operations and to interest rate and foreign exchange financial instruments are managed according to rules set by the Group’s senior management, which provide for regular pooling of available cash balances, open positions and management of the financial instruments by the Treasury Department. Excess cash of the Group is deposited mainly in government institutions, deposit banks, or major companies through deposits, reverse repurchase agreements and purchase of commercial paper. Liquidity positions and the management of financial instruments are centralized by the Treasury Department, where they are managed by a team specialized in foreign exchange and interest rate market transactions.

The Cash Monitoring-Management Unit within the Treasury Department monitors limits and positions per bank on a daily basis and results of the Front Office. This unit also prepares marked-to-market valuations of used financial instruments and, when necessary, performs sensitivity analysis.

Counterparty risk

The Group has established standards for market transactions under which bank counterparties must be approved in advance, based on an assessment of the counterparty’s financial soundness (multi-criteria analysis including a review of market prices and of the Credit Default Swap (CDS), its ratings with Standard & Poor’s and Moody’s, which must be of high quality, and its overall financial condition).

An overall authorized credit limit is set for each bank and is allotted among the subsidiaries and the Group’s central treasury entities according to their needs.

To reduce the market value risk on its commitments, in particular for swaps set as part of bonds issuance, the Treasury Department has concluded margin call contracts with counterparties.

Short-term interest rate exposure and cash

Cash balances, which are primarily composed of euros and dollars, are managed according to the guidelines established by the Group’s senior management (to maintain an adequate level of liquidity, optimize revenue from investments considering existing interest rate yield curves, and minimize the cost of borrowing) over a less than twelve-month horizon and on the basis of a daily interest rate benchmark, primarily through short-term interest rate swaps and short-term currency swaps, without modifying currency exposure.

Interest rate risk on non-current debt

The Group’s policy consists, according to general corporate needs, of incurring non-current debt at a floating rate or at a fixed rate, depending on the interest rates at the time of issue, in dollars or in euros. Long-term interest rate and currency swaps may be used to hedge bonds at their issuance in order to create a variable or fixed rate synthetic debt. In order to partially modify the interest rate structure of the long-term debt, TOTAL may also enter into long-term interest rate swaps.

Currency exposure

The Group generally seeks to minimize the currency exposure of each entity to its functional currency (primarily the dollar , the euro, the pound sterling and the Norwegian krone).

For currency exposure generated by commercial activity, the hedging of revenues and costs in foreign currencies is typically performed using currency operations on the spot market and, in some cases, on the forward market. The Group rarely hedges future cash flows, although it may use options to do so.

With respect to currency exposure linked to non-current assets, the Group has a hedging policy of financing these assets in their functional currency.

Net short-term currency exposure is periodically monitored against limits set by the Group’s senior management.

The non-current debt described in Note 15.1 to the Consolidated Financial Statements is generally raised by the corporate treasury entities either directly in dollars or in euros, or in other currencies which are then exchanged for dollars or euros through swap issues to appropriately match general corporate needs. The proceeds from these debt issuances are loaned to affiliates whose accounts are kept in dollars or in euros. Thus, the net sensitivity of these positions to currency exposure is not significant.

The Group’s short-term currency swaps, the notional value of which appears in Note 15.2 to the Consolidated Financial Statements, are used to attempt to optimize the centralized cash management of the Group. Thus, the sensitivity to currency fluctuations which may be induced is likewise considered negligible.

Sensitivity analysis on interest rate and foreign exchange risk

The tables below present the potential impact of an increase or decrease of 10 basis points on the interest rate yield curves for each of the currencies on the fair value of the current financial instruments as of December 31, 2017, 2016 and 2015.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in fair value due to a change in

 

 

 

 

 

 

interest rate by

Assets / (Liabilities)

 

Carrying

 

Estimated

 

+10 basis

 

‑10 basis

(M$)

 

amount

 

fair value

 

points

 

points

As of December 31, 2017

    

  

    

  

    

  

    

  

Bonds (non-current portion, before swaps)

 

(36,613)

 

(38,159)

 

191

 

(191)

 

 

 

 

 

 

 

 

 

Swaps hedging fixed-rates bonds (liabilities)

 

(1,082)

 

(1,082)

 

 —

 

 —

Swaps hedging fixed-rates bonds (assets)

 

606

 

606

 

 —

 

 —

Total swaps hedging fixed-rates bonds (assets and liabilities)

 

(476)

 

(476)

 

(83)

 

83

 

 

 

 

 

 

 

 

 

Current portion of non-current debt after swap (excluding capital lease obligations)

 

(4,646)

 

(4,645)

 

 1

 

(1)

 

 

 

 

 

 

 

 

 

Other interest rates swaps

 

76

 

76

 

12

 

(12)

 

 

 

 

 

 

 

 

 

Currency swaps and forward exchange contracts

 

142

 

142

 

 —

 

 —

 

 

 

 

 

 

 

 

 

As of December 31, 2016

 

  

 

  

 

  

 

  

Bonds (non-current portion, before swaps)

 

(36,656)

 

(37,757)

 

221

 

(221)

 

 

 

 

 

 

 

 

 

Swaps hedging fixed-rates bonds (liabilities)

 

(3,651)

 

(3,651)

 

 —

 

 —

Swaps hedging fixed-rates bonds (assets)

 

845

 

845

 

 —

 

 —

Total swaps hedging fixed-rates bonds (assets and liabilities)

 

(2,806)

 

(2,806)

 

(117)

 

117

 

 

 

 

 

 

 

 

 

Current portion of non-current debt after swap (excluding capital lease obligations)

 

(4,614)

 

(4,614)

 

 5

 

(4)

 

 

 

 

 

 

 

 

 

Other interest rates swaps

 

33

 

33

 

 7

 

(7)

 

 

 

 

 

 

 

 

 

Currency swaps and forward exchange contracts

 

(23)

 

(23)

 

 —

 

 —

 

 

 

 

 

 

 

 

 

As of December 31, 2015

 

  

 

  

 

  

 

  

Bonds (non-current portion, before swaps)

 

(39,257)

 

(40,087)

 

156

 

(156)

 

 

 

 

 

 

 

 

 

Swaps hedging fixed-rates bonds (liabilities)

 

(2,891)

 

(2,891)

 

 —

 

 —

Swaps hedging fixed-rates bonds (assets)

 

1,219

 

1,219

 

 —

 

 —

Total swaps hedging fixed-rates bonds (assets and liabilities)

 

(1,672)

 

(1,672)

 

(144)

 

144

 

 

 

 

 

 

 

 

 

Current portion of non-current debt after swap (excluding capital lease obligations)

 

(4,518)

 

(4,518)

 

 5

 

(5)

 

 

 

 

 

 

 

 

 

Other interest rates swaps

 

(1)

 

(1)

 

 8

 

(8)

 

 

 

 

 

 

 

 

 

Currency swaps and forward exchange contracts

 

(26)

 

(26)

 

 —

 

 —

 

The impact of changes in interest rates on the cost of net debt before tax is as follows:

 

 

 

 

 

 

 

For the year ended December 31,

    

 

    

 

    

 

(M$)

 

2017

    

2016

    

2015

Cost of net debt

 

(1,534)

 

(1,104)

 

(873)

Interest rate translation of :

 

  

 

  

 

  

+ 10 basis points

 

(6)

 

(17)

 

(20)

‑10 basis points

 

 6

 

17

 

20

+  100 basis points

 

(63)

 

(172)

 

(204)

‑100 basis points

 

63

 

172

 

204

 

As a result of the policy for the management of currency exposure previously described, the Group’s sensitivity to currency exposure is primarily influenced by the net equity of the subsidiaries whose functional currency is the euro and the ruble, and to a lesser extent, the pound sterling, the Norwegian krone.

This sensitivity is reflected in the historical evolution of the currency translation adjustment recorded in the statement of changes in consolidated shareholders’ equity which, over the course of the last three years, is essentially related to the fluctuation of the euro, the ruble and the pound sterling and is set forth in the table below:

 

 

 

 

 

 

 

 

 

    

Dollar / Euro exchange

    

 Dollar / Pound sterling

    

Dollar / Ruble exchange

 

 

rates

 

exchange rates

 

rates

December 31, 2017

 

0.83

 

0.74

 

57.86

December 31, 2016

 

0.95

 

0.81

 

61.00

December 31, 2015

 

0.92

 

0.67

 

74.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2017

    

 

    

 

    

 

    

Pound

    

 

    

Other

(M$)

 

Total

 

Euro

 

Dollar

 

sterling

 

Ruble

 

currencies

Shareholders’ equity at historical exchange rate

 

119,450

 

44,930

 

51,674

 

6,467

 

7,366

 

9,013

Currency translation adjustment before net investment hedge

 

(7,908)

 

(1,903)

 

 —

 

(1,543)

 

(3,076)

 

(1,386)

Net investment hedge – open instruments

 

14

 

14

 

 —

 

 —

 

 —

 

 —

Shareholders’ equity at exchange rate as of December 31, 2017

 

111,556

 

43,041

 

51,674

 

4,924

 

4,290

 

7,627

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2016

    

 

    

 

    

 

    

Pound

    

 

    

Other

(M$)

 

Total

 

Euro

 

Dollar

 

sterling

 

Ruble

 

currencies

Shareholders’ equity at historical exchange rate

 

112,551

 

38,645

 

51,863

 

5,997

 

7,227

 

8,819

Currency translation adjustment before net investment hedge

 

(13,871)

 

(6,845)

 

 —

 

(1,978)

 

(3,286)

 

(1,762)

Net investment hedge – open instruments

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

Shareholders’ equity at exchange rate as of December 31, 2016

 

98,680

 

31,800

 

51,863

 

4,019

 

3,941

 

7,057

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015

    

 

    

 

    

 

    

Pound

    

 

    

Other

(M$)

 

Total

 

Euro

 

Dollar

 

sterling

 

Ruble

 

currencies

Shareholders’ equity at historical exchange rate

 

104,613

 

37,345

 

46,272

 

5,926

 

6,816

 

8,254

Currency translation adjustment before net investment hedge

 

(12,119)

 

(5,337)

 

 —

 

(1,145)

 

(3,936)

 

(1,701)

Net investment hedge – open instruments

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

Shareholders’ equity at exchange rate as of December 31, 2015

 

92,494

 

32,008

 

46,272

 

4,781

 

2,880

 

6,553

 

Based on the 2017 financial statements, a conversion using rates different from + or - 10% for each of the currencies below would have the following impact on shareholders equity and net income (Group share) :

 

 

 

 

 

 

 

As of December 31, 2017

    

 

 

Pound

    

 

(M$)

 

Euro

 

        sterling

 

        Ruble

Impact of an increase of 10% of exchange rates on :

 

  

 

  

 

  

– shareholders equity

 

4,304

 

492

 

429

– net income (Group share)

 

465

 

19

 

29

Impact of a decrease of 10% of exchange rates on :

 

  

 

  

 

  

– shareholders equity

 

(4,304)

 

(492)

 

(429)

– net income (Group share)

 

(465)

 

(19)

 

(29)

 

Stock market risk

The Group holds interests in a number of publicly-traded companies (see Note 8 to the Consolidated Financial Statements). The market value of these holdings fluctuates due to various factors, including stock market trends, valuations of the sectors in which the companies operate, and the economic and financial condition of each individual company.

Liquidity risk

TOTAL S.A. has confirmed lines of credit granted by international banks, which are calculated to allow it to manage its short-term liquidity needs as required.

As of December 31, 2017, these lines of credit amounted to $11,478 million, of which $11,478 million was unused. The agreements for the lines of credit granted to TOTAL S.A. do not contain conditions related to the Company’s financial ratios, to its financial ratings from specialized agencies, or to the occurrence of events that could have a material adverse effect on its financial position. As of December 31, 2017, the aggregate amount of the principal confirmed lines of credit granted by international banks to Group companies, including TOTAL S.A., was $12,323 million, of which $12,205 million was unused. The lines of credit granted to Group companies other than TOTAL S.A. are not intended to finance the Group’s general needs; they are intended to finance either the general needs of the borrowing subsidiary or a specific project.

The following tables show the maturity of the financial assets and liabilities of the Group as of December 31, 2017, 2016 and 2015 (see Note 15 to the Consolidated Financial Statements).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2017

    

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets/(Liabilities)

 

Less than

    

 

    

 

    

 

    

 

    

More than

    

 

(M$)

 

one year

 

1-2 years

 

2-3 years

 

3-4 years

 

4-5 years

 

5 years

 

Total

Non-current financial debt (notional value excluding interests)

 

 —

 

(5,930)

 

(5,117)

 

(3,795)

 

(4,959)

 

(20,860)

 

(40,661)

Current borrowings

 

(11,096)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(11,096)

Other current financial liabilities

 

(245)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(245)

Current financial assets

 

3,393

 

 —

 

 —

 

 —

 

 —

 

 —

 

3,393

Assets and liabilities available for sale or exchange

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

 

 —

Cash and cash equivalents

 

33,185

 

 —

 

 —

 

 —

 

 —

 

 —

 

33,185

Net amount before financial expense

 

25,237

 

(5,930)

 

(5,117)

 

(3,795)

 

(4,959)

 

(20,860)

 

(15,424)

Financial expense on non-current financial debt

 

(805)

 

(779)

 

(636)

 

(545)

 

(454)

 

(1,093)

 

(4,312)

Interest differential on swaps

 

(193)

 

(223)

 

(257)

 

(245)

 

(198)

 

(681)

 

(1,797)

Net amount

 

24,239

 

(6,932)

 

(6,010)

 

(4,585)

 

(5,611)

 

(22,634)

 

(21,533)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2016

    

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets/(Liabilities)

 

Less than

    

 

    

 

    

 

    

 

    

More than

    

 

(M$)

 

one year

 

1-2 years

 

2-3 years

 

3-4 years

 

4-5 years

 

5 years

 

Total

Non-current financial debt (notional value excluding interests)

 

 —

 

(4,320)

 

(5,702)

 

(4,952)

 

(3,578)

 

(23,607)

 

(42,159)

Current borrowings

 

(13,920)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(13,920)

Other current financial liabilities

 

(327)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(327)

Current financial assets

 

4,548

 

 —

 

 —

 

 —

 

 —

 

 —

 

4,548

Assets and liabilities available for sale or exchange

 

140

 

 —

 

 —

 

 —

 

 —

 

 —

 

140

Cash and cash equivalents

 

24,597

 

 —

 

 —

 

 —

 

 —

 

 —

 

24,597

Net amount before financial expense

 

15,038

 

(4,320)

 

(5,702)

 

(4,952)

 

(3,578)

 

(23,607)

 

(27,121)

Financial expense on non-current financial debt

 

(799)

 

(783)

 

(682)

 

(552)

 

(465)

 

(1,271)

 

(4,552)

Interest differential on swaps

 

(79)

 

(56)

 

(201)

 

(253)

 

(272)

 

(910)

 

(1,771)

Net amount

 

14,160

 

(5,159)

 

(6,585)

 

(5,757)

 

(4,315)

 

(25,788)

 

(33,444)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31, 2015

    

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets/(Liabilities)

 

Less than

    

 

    

 

    

 

    

 

    

More than

    

 

(M$)

 

one year

 

1-2 years

 

2-3 years

 

3-4 years

 

4-5 years

 

5 years

 

Total

Non-current financial debt (notional value excluding interests)

 

 —

 

(4,602)

 

(4,420)

 

(5,542)

 

(4,965)

 

(23,716)

 

(43,245)

Current borrowings

 

(12,488)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(12,488)

Other current financial liabilities

 

(171)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(171)

Current financial assets

 

6,190

 

 —

 

 —

 

 —

 

 —

 

 —

 

6,190

Assets and liabilities available for sale or exchange

 

(141)

 

 —

 

 —

 

 —

 

 —

 

 —

 

(141)

Cash and cash equivalents

 

23,269

 

 —

 

 —

 

 —

 

 —

 

 —

 

23,269

Net amount before financial expense

 

16,659

 

(4,602)

 

(4,420)

 

(5,542)

 

(4,965)

 

(23,716)

 

(26,586)

Financial expense on non-current financial debt

 

(763)

 

(813)

 

(747)

 

(663)

 

(524)

 

(1,104)

 

(4,614)

Interest differential on swaps

 

131

 

171

 

48

 

(55)

 

(126)

 

(610)

 

(441)

Net amount

 

16,027

 

(5,244)

 

(5,119)

 

(6,260)

 

(5,615)

 

(25,430)

 

(31,641)

 

The following table sets forth financial assets and liabilities related to operating activities as of December 31, 2017, 2016 and 2015 (see Note 14 of the Notes to the Consolidated Financial Statements).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

Assets/(Liabilities)

    

 

 

 

 

 

(M$)

 

2017

    

2016

    

2015

Accounts payable

 

(26,479)

 

(23,227)

 

(20,928)

Other operating liabilities

 

(10,135)

 

(9,616)

 

(9,914)

including financial instruments related to commodity contracts

 

(1,794)

 

(2,077)

 

(1,609)

Accounts receivable, net

 

14,893

 

12,213

 

10,629

Other operating receivables

 

9,336

 

10,218

 

10,909

including financial instruments related to commodity contracts

 

1,987

 

2,425

 

3,379

Total

 

(12,385)

 

(10,412)

 

(9,304)

 

These financial assets and liabilities mainly have a maturity date below one year.

 

Credit risk

Credit risk is defined as the risk of the counterparty to a contract failing to perform or pay the amounts due.

The Group is exposed to credit risks in its operating and financing activities. The Group’s maximum exposure to credit risk is partially related to financial assets recorded on its balance sheet, including energy derivative instruments that have a positive market value.

The following table presents the Group’s maximum credit risk exposure:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of December 31,

 

 

 

 

 

 

Assets/(Liabilities)

    

 

 

 

 

 

(M$)

 

2017

    

2016

    

2015

Loans to equity affiliates (note 8)

 

5,135

 

4,718

 

4,378

Loans and advances (note 6)

 

2,878

 

3,048

 

3,407

Other non-current financial assets related to operational activities (note 6)

 

937

 

1,069

 

891

Non-current financial assets (note 15.1)

 

679

 

908

 

1,219

Accounts receivable (note 5)

 

14,893

 

12,213

 

10,629

Other operating receivables (note 5)

 

9,336

 

10,218

 

10,909

Current financial assets (note 15.1)

 

3,393

 

4,548

 

6,190

Cash and cash equivalents (note 15.1)

 

33,185

 

24,597

 

23,269

Total

 

70,436

 

61,319

 

60,892

 

The valuation allowance on accounts receivable, other operating receivables and on loans and advances is detailed in Notes 5 and 6 to the Consolidated Financial Statements.

As part of its credit risk management related to operating and financing activities, the Group has developed margining agreements with certain counterparties. As of December 31, 2017, the net margin call paid amounted to $870 million (against $2,605 million paid as of December 31, 2016 and $124 million paid as of December 31, 2015).

The Group has established a number of programs for the sale of receivables, without recourse, with various banks, primarily to reduce its exposure to such receivables. As a result of these programs the Group retains no risk of payment default after the sale, but may continue to service the customer accounts as part of a service arrangement on behalf of the buyer and is required to pay to the buyer payments it receives from the customers relating to the receivables sold. As of December 31, 2017, the net value of receivables sold amounted to $7,845 million. The Group has substantially transferred all the risks and rewards related to receivables. No financial asset or liability remains recognized in the consolidated balance sheet after the date of sale.

Furthermore, in 2017 the Group conducted several operations of reverse factoring for a value of $300 million.

Credit risk is managed by the Group’s business segments as follows:

Exploration & Production segment

Risks arising under contracts with government authorities or other oil companies or under long-term supply contracts necessary for the development of projects are evaluated during the project approval process. The long-term aspect of these contracts and the high-quality of the other parties lead to a low level of credit risk.

Risks related to commercial operations, other than those described above (which are, in practice, directly monitored by subsidiaries), are subject to procedures for establishing credit limits and reviewing outstanding balances.

Customer receivables are subject to provisions on a case-by-case basis, based on prior history and management’s assessment of the facts and circumstances.

Gas, Renewables & Power segment

·

Gas activities

Trading Gas activities deal with counterparties in the energy, industrial and financial sectors throughout the world. Financial institutions providing credit risk coverage are highly rated international bank and insurance groups.

Potential counterparties are subject to credit assessment and approval before concluding transactions and are thereafter subject to regular review, including re-appraisal and approval of the limits previously granted.

The creditworthiness of counterparties is assessed based on an analysis of quantitative and qualitative data regarding financial standing and business risks, together with the review of any relevant third party and market information, such as data published by rating agencies. On this basis, credit limits are defined for each potential counterparty and, where appropriate, transactions are subject to specific authorizations.

Credit exposure, which is essentially an economic exposure or an expected future physical exposure, is permanently monitored and subject to sensitivity measures.

Credit risk is mitigated by the systematic use of industry standard contractual frameworks that permit netting, enable requiring added security in case of adverse change in the counterparty risk, and allow for termination of the contract upon occurrence of certain events of default.

About the Professionals and Retail Gas and Power Sales activities, credit risk management policy is adapted to the type of customer either through the use of procedures of prepayments and appropriate collection, especially for mass customers or through credit insurances and sureties/guarantees obtaining.  For the Professionals segment, the separation of responsibilities between the commercial and financial teams allows a “a priori” positions risky control.

 

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Renewables & Power

Internal procedures for the Renewables division and the Innovation & Energy Efficiency division include rules on credit risk management. Procedures to monitor customer risk are defined at the local level, especially for SunPower and Saft (rules for the approval of credit limits, use of guarantees, monitoring and assessment of the receivables portfolio, provisioning of doubtful debts...).

 

Refining & Chemicals segment

 

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Refining & Chemicals

Credit risk is primarily related to commercial receivables. Internal procedures of Refining & Chemicals include rules for the management of credit describing the fundamentals of internal control in this domain. Each Business Unit implements the procedures of the activity for managing and provisioning credit risk according to the size of the subsidiary and the market in which it operates. The principal elements of these procedures are:

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implementation of credit limits with different authorization procedures;

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use of insurance policies or specific guarantees (letters of credit);

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regular monitoring and assessment of overdue accounts (aging balance), including collection procedures;

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provisioning of bad debts on a customer-by-customer basis, according to payment delays and local payment practices (provisions may also be calculated based on statistics).

Counterparties are subject to credit assessment and approval prior to any transaction being concluded. Regular reviews are made for all active counterparties including a re-appraisal and renewing of the granted credit limits. The limits of the counterparties are assessed based on quantitative and qualitative data regarding financial standing, together with the review of any relevant third party and market information, such as that provided by rating agencies and insurance companies.

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Trading & Shipping

Trading & Shipping deals with commercial counterparties and financial institutions located throughout the world. Counterparties to physical and derivative transactions are primarily entities involved in the oil and gas industry or in the trading of energy commodities, or financial institutions. Credit risk coverage is arranged with financial institutions, international banks and insurance groups selected in accordance with strict criteria.

The Trading & Shipping division applies a strict policy of internal delegation of authority governing establishment of country and counterparty credit limits and approval of specific transactions. Credit exposures contracted under these limits and approvals are monitored on a daily basis.

Potential counterparties are subject to credit assessment and approval prior to any transaction being concluded and all active counterparties are subject to regular reviews, including re-appraisal and approval of granted limits. The creditworthiness of counterparties is assessed based on an analysis of quantitative and qualitative data regarding financial standing and business risks, together with the review of any relevant third party and market information, such as ratings published by Standard & Poor’s, Moody’s Investors Service and other agencies.

Contractual arrangements are structured so as to maximize the risk mitigation benefits of netting between transactions wherever possible and additional protective terms providing for the provision of security in the event of financial deterioration and the termination of transactions on the occurrence of defined default events are used to the greatest permitted extent.

Credit risks in excess of approved levels are secured by means of letters of credit and other guarantees, cash deposits and insurance arrangements. In respect of derivative transactions, risks are secured by margin call contracts wherever possible.

Marketing & Services segment

Internal procedures for the Marketing & Services division include rules on credit risk that describe the basis of internal control in this domain, including the separation of authority between commercial and financial operations.

Credit policies are defined at the local level and procedures to monitor customer risk are implemented (credit committees at the subsidiary level, the creation of credit limits for corporate customers, etc.). Each entity also implements monitoring of its outstanding receivables. Risks related to credit may be mitigated or limited by subscription of credit insurance and/or requiring security or guarantees.

Bad debts are provisioned on a case-by-case basis at a rate determined by management based on an assessment of the risk of credit loss.