Registration document 2007 - Total.com

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• property, plant and equipment, and intangible assets are
measured using historical cost model instead of revaluation
model;
• interest expense incurred during the construction and
acquisition period of tangible and intangible assets are
capitalized, as provided for under IAS 23 “Borrowing Costs”;
• actuarial gains and losses on pension and other postemployment
benefit obligations are recognized according to
the corridor method as from January 1, 2004 (see note 1R to
the consolidated financial statements);
• jointly-controlled entities are consolidated using the
proportionate method, as provided for in IAS 31 “Interests in
Joint Ventures”.
X. New accounting principles not yet in effect
The standards or interpretations published respectively by the
International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee
(IFRIC) which were not yet in effect at December 31, 2006, were
as follows:
(i) IFRS 7 “Financial Instruments: disclosures”
In August 2005, the IASB issued IFRS 7 “Financial Instruments:
Disclosures”. The new standard replaces IAS 30 “Disclosures in
financial statements of Banks and Similar Financial Institutions”
and provides amendments to IAS 32 “Financial Instruments:
Disclosure and Presentation”. IFRS 7 requires disclosure of
qualitative and quantitative information about exposure to risks
resulting from financial instruments. Entities shall apply IFRS 7 to
annual periods beginning on or after January 1, 2007. The
application of IFRS 7 should not have any material impact for the
Group given the disclosures already presented in the
consolidated statements for the year ended December 31, 2006.
(ii) IFRS 8 “Operating segments”
In November 2006, the IASB issued IFRS 8 “Operating
segments”. The new standard replaces IAS 14 “Segment
reporting”. It requires entities to adopt an approach based on
internal information used by the management of the entity to
determine reportable segments, whereas IAS14 is based on
segment risks and profitability. Entities shall apply IFRS 8 to
annual periods beginning on or after January 1, 2009. The
application of IFRS 8 should not have any material impact for the
Group given the disclosures already presented in the
consolidated financial statements of the Group.
(iii) IFRIC 9 “Reassessment of Embedded Derivatives”
In March 2006, the IFRIC published interpretation IFRIC 9
“Reassessment of Embedded Derivatives”. The interpretation
addresses embedded derivatives within the scope of IAS 39
relating to Financial Instruments and their reassessment. IFRIC 9
concludes that an entity must assess whether an embedded
derivative is required to be separated from the host contract and
accounted for as a derivative when the entity first becomes a
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Appendix 1 – Consolidated financial statements
Notes to the consolidated financial statement
TOTAL – Registration Document 2006
party to the contract. Subsequent reassessment is prohibited
unless there is a significant change in the terms of the contract.
IFRIC 9 is effective for annual periods beginning on or after
June 1, 2006. The application of IFRIC 9 should not have any
material effect on the Group’s balance sheet, income statement
and consolidated shareholder’s equity.
(iv) IFRIC 10 “Interim Financial Reporting and Impairment”
In July 2006, the IFRIC published interpretation IFRIC 10 “Interim
Financial Reporting and Impairment”. In accordance with IFRIC
10, an entity shall not reverse an impairment loss recognized in a
previous interim period in respect of goodwill or an investment in
either an equity instrument or a financial asset carried at cost, in
subsequent interim or annual period. IFRIC 10 is effective for
annual periods beginning on or after November 1, 2006. The
application of IFRIC 10 should not have any material effect on the
Group’s balance sheet, income statement and consolidated
shareholder’s equity.
2) Main indicators – information by business segment
Performance indicators excluding the adjustment items, such as
adjusted operating income, adjusted net operating income,
adjusted net income are meant to facilitate the analysis of the
financial performance and the comparison of income between
periods.
Adjustment items:
(i) Special items
Due to their unusual nature or particular significance, certain
transactions qualified as “special items” are excluded from the
business segment figures. In general, special items relate to
transactions that are significant, infrequent or unusual. However,
in certain instances, transactions such as restructuring costs or
assets disposals, which are not considered to be representative
of the normal course of business, may be qualified as special
items although they may have occurred within prior years or are
likely to occur again within the coming years.
(ii) The inventory valuation effect
The adjusted results of the Downstream and Chemical segments
are also presented according to the replacement cost method.
This method is used to assess the segments’ performance and
ensure the comparability of the segments’ results with those of
its competitors, mainly North-American.
In the replacement cost method, which approximates the LIFO
(Last-In, First-Out) method, the variation of inventory values in the
income statement is determined by 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.