Registration document 2007 - Total.com

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9 In equity affiliates, the book value of goodwill is included in the book value of the investment. Other intangible assets (except goodwill) have a finite useful life and are amortized on a straightline basis over 10 to 40 years depending on the useful life of the assets. Research and development Research costs are charged to expense as incurred. Development expenses are capitalized when the following can be demonstrated: • the technical feasibility of the project and the availability of the appropriate resources for the completion of the intangible asset; • the ability of the asset to generate probable future economic benefits; • the ability to measure reliably the expenditures attributable to the asset. Advertising costs are charged to expense as incurred. J. Other property, plant and equipment Other property, plant and equipment are carried at cost, after deducting any accumulated depreciation and accumulated impairment losses. This includes interest expenses incurred until assets are placed in service. Investment subsidies are deducted from the cost of the related expenditures. Routine maintenance and repairs are charged to expense as incurred. The costs of major turnarounds of refineries and large petrochemical units are capitalized as incurred and depreciated over the period of time between two major turnarounds. Other property, plant and equipment are depreciated using the straight-line method over their useful life, as follows: • Furniture, office equipment, machinery and tools 3-12 years • Transportation equipments 5-20 years • Storage tanks and related equipment 10-15 years • Specialized complex installations and pipelines 10-30 years • Buildings 10-50 years K. Leases A finance lease transfers substantially all the risks and rewards incidental to ownership from the lessor to the lessee. These contracts are capitalized as assets at fair value or if lower at the present value of the minimum lease payments according to the contract. A corresponding financial debt is recognized as financial liabilities. These assets are depreciated over the useful life used by the Group. Leases that are not financial leases as defined above are recorded as operating leases. 176 Appendix 1 – Consolidated financial statements Notes to the consolidated financial statement TOTAL – Registration Document 2006 Certain arrangements do not take the legal form of a lease but convey the right to use an asset or a group of assets in return for fixed payments. Such arrangements are accounted for as leases and are analyzed to determine whether they should be classified as operating leases or as financial leases. L. Impairment of long-lived assets The recoverable amounts of intangible assets and property, plant and equipment are tested for possible impairment as soon as there is any indication that the assets may be impaired. This test is performed at least annually for goodwill. The recoverable value is the higher of the sale price (net of sale expenses) and its useful value. For this purpose, assets are grouped into cash-generating units (or CGUs). A cash-generating unit is a group of assets that generates cash inflows that are largely independent of the cash inflows from other groups of assets. The recoverable amount of a CGU is determined by reference to the discounted future cash flows expected from it, based upon management’s expectation of future economic and operating conditions. If the recoverable amount is less than the carrying amount, an impairment loss on property, plant and equipment and leaseholds rights, or on other intangible assets is recognized either in “Depreciation, depletion and amortization of tangible assets and leaseholds rights” or in “Other expense”, respectively. In priority, this impairment loss is recorded against goodwill. Impairment losses recognized in prior periods could be reversed up to the net book value that the asset would have had, had the impairment loss not been recognized. Impairment losses recognized for goodwill are not reversed. M. Financial assets and liabilities Financial assets and liabilities are financial loans and receivables, investments in non-consolidated companies, publicly-traded equity securities, financial derivatives, current and non-current financial liabilities. The accounting treatment of these financial assets and liabilities is as follows. (i) Financial loans and receivables Financial loans and receivables are recognized at amortized cost. They are tested for impairment, the net book value being compared to estimates of the discounted future recoverable cash flows. These tests are conducted as soon as there is any evidence that their fair value is less than their net book value, and at least annually. The potential loss is recorded in the statement of income. (ii) Investments in non-consolidated companies and publicly-traded equity securities These assets are classified as available for sale and therefore measured at their fair value. For listed securities, this fair value is
equal to the market price. For unlisted securities, if the fair value is not reliably determinable, securities are recorded at their historical value. Changes in fair value are recorded in shareholders’ equity. If there is any evidence of a significant or long-lasting loss, an impairment loss is recorded in the consolidated statement of income. This impairment is only reversed in the statement of income when the securities are sold. (iii) Derivative instruments The Group uses derivative instruments in order to manage its exposure to movements in interest rates, foreign exchange rates and commodity price fluctuations. Changes in fair value of derivative instruments are recognized in the statement of income or in shareholders’ equity and are recognized in the balance sheet in the accounts corresponding to their nature, according to the risk management strategy described in note 29 to the consolidated financial statements. 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 in reference to 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 income statement. The balance sheet value of those instruments is included in “Current financial assets” or “Other current financial liabilities”. - Long-term financing (other than euro) When an external long-term financing is set up, specifically to finance subsidiaries in a currency other than the euro, which is mainly the case for subsidiaries whose functional currency is the dollar, and when this financing involves currency and interest rate derivatives, these instruments qualify as fair value hedges 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 income statement as are changes in fair value of financial debts and loans to subsidiaries. The fair value of those hedging instruments of long-term financing is included in the assets under “Hedging instruments on non-current financial debt” or in the liabilities under “Non-current financial debt” for the non-current part. The current part (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 hedge, the amount paid or received is recognized in the income statement 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 income statement. • If the hedged items remain in the balance sheet, the adjustment previously recorded as revaluation of those hedged items is spread over the remaining life of those items. Appendix 1 – Consolidated financial statements Notes to the consolidated financial statement - 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 dollar). They qualify as “net investment hedges”. Changes in fair value are recorded in shareholders’ equity. The fair value of these instruments is recorded under “Current financial assets” or ”Other current financial liabilities”. - Financial instruments related to commodity contracts Financial instruments related to commodity contracts, including all the crude oil, petroleum products, natural gas and power purchasing/selling contracts related to the trading activities, together with the commodity contract derivative instruments such as energy contracts and forward freight agreements, are used to adjust the Group’s exposure to price fluctuations with reference to global trading limits. These instruments are considered, according to the industry practice, as held for trading. Changes in fair value are recorded in the income statement. The fair value of these instruments is recorded in the appropriate operating third party headings “Accounts receivable and other current assets” or “Accounts payable and other creditors” depending on whether they are assets or liabilities. Detailed information about the closing balances is disclosed in notes 20, 27 and 29 to the consolidated financial statements. (iv) Current and non-current financial liabilities Current and non-current financial liabilities (excluding derivatives) are recognized at amortized cost, except those for which a hedge accounting can be applied as described in the previous paragraph. (v) Fair value of financial instruments 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. The estimation of fair values, based in particular on principles such as discounting to present value of future cash flows, must be weighted by the fact that the value of a financial instrument at a given time may be modified depending on the market environment (liquidity especially), and also the fact that subsequent changes in interest rates and exchange rates are not taken into account. In some cases, the estimates have been made based on simplifying assumptions. As a consequence, the use of different estimates, methodologies and assumptions may have a material effect on the estimated fair value amounts. The methods used are as follows: 9 • financial debts, swaps: the market value of swaps and of debenture loans that are hedged by those swaps, have been determined on an individual basis by discounting future cash TOTAL – Registration Document 2006 177
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Registration Document 2006
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Registration Document 2006 This is
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Key figures Selected financial info
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116,842 Key figures Operating and m
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Refined product sales including Tra
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Business overview History and strat
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Upstream TOTAL’s Upstream segment
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Exploration & Production Exploratio
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Production For the full year 2006,
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Presentation of production activiti
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Europe Business overview Exploratio
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Africa TOTAL has been present in Af
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this zone through its subsidiaries
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North America Since 2004, TOTAL has
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Trinidad & Tobago TOTAL holds a 30%
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TOTAL also has a 50% interest in th
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Europe TOTAL’s production in Euro
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K6-GT platform, in anticipation of
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The Group also holds a 20% interest
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Gas & Power The Gas & Power divisio
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Asia Pacific The Hazira re-gasifica
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In Morocco, Temasol, in which TOTAL
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Refining & Marketing As of December
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Refined products The table below se
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capacity oil recycling plant in Fra
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In 2006, the principal market bench
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Base Chemicals TOTAL’s Base Chemi
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Specialties TOTAL’s Specialties s
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Investments Main investments made o
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Property, Plant and Equipment TOTAL
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Board of Directors Executive Commit
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Management Report of the Board of D
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Market environment 2006 2005 2004 E
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Upstream results Liquids and gas pr
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Downstream results For the full yea
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Liquidity and capital resources Lon
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Research and development Research a
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Trends and outlook Outlook Since th
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Risk Factors Market risks p. 76 •
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The Group has implemented strict po
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The non-current debt in dollars des
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Grande Paroisse An explosion occurr
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Myanmar Under the Belgian “univer
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Risk management Risk evaluations le
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TOTAL, like other major internation
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Insurance and risk management Organ
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Corporate Governance Board of Direc
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Daniel Bouton 56 years old. Inspect
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Bertrand Jacquillat 62 years old. A
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Michel Pébereau 64 years old. Hono
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Management General Management On Ma
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Corporate Governance Compensation o
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Pensions and other commitments (Art
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Within this framework, the Board’
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Members of the Audit Committee may
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Messrs. Bouton, Collomb, Desmarais,
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establishes and maintains procedure
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Employees, Share Ownership, Stock O
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Corporate Governance Employees, Sha
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TOTAL stock options Corporate Gover
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Restricted share plans as of Decemb
Page 127 and 128: TOTAL and its shareholders Listing
Page 129 and 130: Four-for-one stock split The Genera
Page 131 and 132: Information Summary TOTAL and its s
Page 133 and 134: Dividends Dividend policy In accord
Page 135 and 136: Share buybacks The General Meeting
Page 137 and 138: Summary table of transactions compl
Page 139 and 140: cancels and replaces the unused por
Page 141 and 142: which was approved by the French Co
Page 143 and 144: Shareholder structure Distribution
Page 145 and 146: Non-resident individual taxpayers e
Page 147 and 148: The Committee also worked on the co
Page 149 and 150: 2007 Calendar February 14 Results f
Page 151 and 152: Financial information Historical fi
Page 153 and 154: Additional information Financial in
Page 155 and 156: General information Share capital p
Page 157 and 158: Pursuant to this authorization, the
Page 159 and 160: Potential capital as of December 31
Page 161 and 162: General information Share capital J
Page 163 and 164: Directors’ Charter and Committees
Page 165 and 166: Other matters Employee incentives a
Page 167 and 168: Information on holdings General inf
Page 169 and 170: Statutory auditors’ report on the
Page 171 and 172: Consolidated statement of income TO
Page 173 and 174: Consolidated statement of cash flow
Page 175 and 176: On February 13, 2007, the Board of
Page 177: G. Earnings per share Earnings per
Page 181 and 182: The net periodic pension cost is re
Page 183 and 184: (iii) Portion of intangible assets
Page 185 and 186: A. Information by business segment
Page 187 and 188: Appendix 1 - Consolidated financial
Page 195 and 196: ADJUSTMENTS TO OPERATING INCOME 200
Page 197 and 198: In 2006, gains and losses on sales
Page 201 and 202: Property, plant and equipment prese
Page 203 and 204: 14) Other non-current assets As of
Page 205 and 206: The variation of the weighted-avera
Page 207 and 208: 18) Employee benefits obligations P
Page 209 and 210: The components of the net periodic
Page 211 and 212: 20) Financial debt and related fina
Page 215 and 216: Impact on net income The amount of
Page 217 and 218: 23) Commitments and contingencies A
Page 219 and 220: Other guarantees given Non-consolid
Page 223 and 224: 25) Payroll and staff For the year
Page 225 and 226: The classification by strategy and
Page 227 and 228: B) Financial instruments related to
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29) Market risks Oil and gas market
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As a result of its policy for manag
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3) The Group has recorded provision
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Appendix 1 - Consolidated financial
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53.2% 95.7% Elf Aquitaine 99.5% 100
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Oil and gas reserves p. 238 • Cha
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Changes in liquids reserves Appendi
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Changes in liquids and gas reserves
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Costs incurred in oil and gas prope
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Appendix 2 - Supplemental oil and g
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Other information Accounting for ex
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Appendix 3 - TOTAL S.A. Special aud
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(Free translation of a French langu
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Balance Sheet (TOTAL S.A.) Appendix
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Statement of changes in Shareholder
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2) Property, plant and equipment As
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6) Shareholders’ equity A) Common
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7) Contingency reserves As of Decem
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11) Translation adjustment The appl
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20) Commitments As of December 31 (
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TOTAL share purchase options plans
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Appendix 3 - TOTAL S.A. Parent comp
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List of marketable securities held
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Distribution of earnings 2006 Net d
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Social and environmental informatio
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AVERAGE COMPENSATION PER MONTH - TO
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Environment Pursuant to French law
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Consolidated financial information
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European Cross Reference List 10. C
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TOTAL S.A. Registered Office: 2, pl
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Registration document 2007 - Total.com

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