Total: Creation of the Integrated Gas, Renewabl...

Restatement of key figures of the business segments for the years 2017 and 2018

Total: Creation of the Integrated Gas, Renewables & Power Business Segment

TOTAL

The profitable growth in the gas and low carbon electricity integrated value chains is one of the key axes of Total’s (Paris:FP) (LSE:TTA) (NYSE:TOT) strategy. In order to give more visibility to these businesses, a new reporting structure for the business segments’ financial information has been put in place, effective January 1, 2019 and organized around four business segments: Exploration & Production (EP), Integrated Gas, Renewables & Power segment (iGRP), Refining & Chemicals (RC) and Marketing & Services (MS).

The iGRP segment spearheads Total’s ambitions in integrated gas (including LNG, liquefied natural gas) and low carbon electricity businesses. It consists of the upstream and midstream LNG activity that was previously reported in the EP segment (refer to the indicative list of assets in the Annex) and the activity previously reported in the Gas Renewables & Power segment. The new EP segment is adjusted accordingly.

The RC and MS segments are not affected.

The tables below show the key figures for the years 2017 and 2018 restated in order to reflect these changes.

Group hydrocarbon production                        
    2017   2018   1Q18   2Q18   3Q18   4Q18
Group production (kboe/d)   2,566   2,775   2,703   2,717   2,804   2,876
EP (kboe/d)   2,229   2,394   2,359   2,375   2,433   2,408
iGRP (kboe/d)   337   381   344   342   371   468
                         
Group production (kboe/d)   2,566   2,775   2,703   2,717   2,804   2,876
Oil (including bitumen) (kb/d) 1,167 1,378 1,297 1,400 1,431 1,382

Gas (including Condensates and associated LPG)
(kboe/d)

   1,398   1,397   1,406   1,317   1,373   1,493
                         
Group production (kboe/d)   2,566   2,775   2,703   2,717   2,804   2,876
Liquids (kb/d) 1,346 1,566 1,481 1,582 1,611 1,589
Gas (Mcf/d)   6,662   6,599   6,664   6,176   6,557   6,994

EP – Exploration-Production (redefined scope)

> Production

Hydrocarbon production   2017   2018   1Q18   2Q18   3Q18   4Q18
EP (kboe/d)   2,229   2,394   2,359   2,375   2,433   2,408
Liquids (kb/d)   1,310   1,527   1,445   1,544   1,575   1,541
Gas (Mcf/d)   4,995   4,724   4,976   4,536   4,678   4,710

> Key financial metrics

In millions of dollars   2017   2018   1Q18   2Q18   3Q18   4Q18
Adjusted operating income   6,208   13,408   2,902   3,726   3,947   2,833
Effective tax rate   40.5%   46.2%   48.7%   46.6%   47.5%   41.2%
Adjusted net operating income   4,541   8,547   1,817   2,315   2,439   1,976
including income from equity affiliates   827   1140   228   327   316   269
Investments   10,005   13,789   5,545   2,612   2,472   3,160
Divestments   1,793   3,674   2,176   466   494   538
Organic investments   9,110   7,953   1,798   1,785   1,605   2,765
Operating cash flow before working capital changes *   12,758   17,832   3,921   4,800   5,200   3,911
Cash flow from operations *   10,719   18,537   3,322   4,474   4,431   6,310

* Excluding financial charges

Note: For definitions, refer to the Group quarterly result press release

iGRP - Integrated Gas, Renewables & Power

> Production and LNG sales

Hydrocarbon production   2017   2018   1Q18   2Q18   3Q18   4Q18
iGRP (kboe/d)   337   381   344   342   371   468
Liquids (kb/d)   36   40   36   38   36   48
Gas (Mcf/d)   1,668   1,875   1,688   1,640   1,879   2,284
Liquefied natural gas (Mt)   2017   2018   1Q18   2Q18   3Q18   4Q18
Overall LNG sales   15.6   21.8   3.8   3.9   6.2   7.9
incl. sales from equity production*   11.2   11.1   2.5   2.5   2.8   3.3

incl. sales by Total from equity production and
third party

 

  7.6   17.1   2.6   2.7   5.1   6.7

* Equity production can be sold either by Total or by JV

> Key financial metrics

In millions of dollars   2017   2018   1Q18   2Q18   3Q18   4Q18
Adjusted operating income   1,435   1,174   235   217   373   349
Adjusted net operating income   1,929   2,419   481   565   697   676
including income from equity affiliates   804   1,249   228   250   324   447
                         
Investments   3,594   5,032   575   447   3,325   685
Divestments   198   2,209   153   439   198   1,419
Organic investments   2,553   1,745   336   388   407   614
Operating cash flow before working capital changes *   2,289   2,055   393   492   553   617
Cash flow from operations *   3,157   596   68   258   (164)   434

* Excluding financial charges

ANNEX

Indicative list of assets reported in EP segment until end-2018 and in iGRP segment from January 1, 2019 onwards

Country   Asset   % equity
Angola   Angola LNG   13.60%
Australia   Gladstone LNG   27.50%
Australia   Ichthys   26.00%
Indonesia   Mahakam   Until end 2017 (Mahakam license expired)
Nigeria   Nigeria LNG   15.00%
Nigeria   OML 58   40.00%
Norway   Snohvit   18.40%
Oman   Oman LNG   5.54%
Oman   Qalhat LNG   2.04%. indirect participation through Oman LNG
Papua New Guinea   Papua LNG   40.10%
Qatar   Qatargas 1 Upstream   20.00%
Qatar   Qatargas 1 Downstream   10.00%
Qatar   Qatargas 2 Train 5   16.70%
Russia   Arctic LNG 2*  

10.00% direct working interest (21.64 % including
indirect interest** and considering a 60%
participation of Novatek in the project)

Russia   Yamal LNG  

20.02% direct working interest (29.72% including
indirect interest**)

United Arab Emirates   ADNOC LNG   5.00%
USA   Barnett Shale ***   90.92% in average
Yemen   Yemen LNG   39.62%

* Total signed definitive agreements for entry into Arctic LNG 2 on the 5th of March 2019
** The iGRP segment includes the interests that Total holds in Arctic LNG 2 and Yamal LNG projects through its 19.4% ownership in Novatek. The other Novatek assets remain included in the EP figures.
*** Barnett shale consolidated in iGRP reporting along with the other Group’s LNG assets, such as the Group’s equity in Cameron LNG or Tellurian Inc., which were already reported in GRP end-2018

The restated data presented herein have been derived from TOTAL’s internal reporting system and have not been audited by TOTAL’s statutory auditors. Such related financial data are presented solely for information purposes. To the extent permitted by law, TOTAL S.A. disclaims all liability from the use of the restated financial data.

The list of assets in the Annex is presented for indicative purposes, and mentions the assets previously reported in the EP reporting segment, which are, as from January 1, 2019, reported in the iGRP reporting segment. This list refers to assets or contractual rights which may group the contributions of multiple subsidiaries and/or consolidated entities.

Financial information by business segment is reported in accordance with the internal reporting system and shows internal segment information that is used to manage and measure the performance of TOTAL. In addition to IFRS measures, certain alternative performance indicators are presented, such as performance indicators excluding the adjustment items described below (adjusted operating income, adjusted net operating income, adjusted net income). These indicators are meant to facilitate the analysis of the financial performance of TOTAL and the comparison of income between periods. They allow investors to track the measures used internally to manage and measure the performance of the Group. These 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 asset 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) 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 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 price differentials 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 an adjustment item reflects, for some transactions, differences between internal measures 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, whose future effects are recorded at fair value in Group’s internal economic performance. IFRS precludes recognition of this fair value effect.

The adjusted results (adjusted operating income, adjusted net operating income, adjusted net income) are defined as replacement cost results, adjusted for special items, excluding the effect of changes in fair value.

Additional information concerning the risk factors and uncertainties that may have an impact on the Group's financial results or activities is available in the most recent versions of the Registration Document (Document de référence) filed with the French Autorité des marchés financiers (AMF) and the Annual Report on Form 20-F filed with the United States Securities and Exchange Commission (SEC).

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