Registration document 2007 - Total.com

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9 28) Related parties The main transactions and balances with related parties (principally all the investments carried under the equity method and subsidiaries excluded from consolidation) are detailed as follows: As of December 31 (in M€) 2006 2005 Balance Sheet Receivables Debtors and other debtors 411 353 Loans (excl. loans to equity companies) 457 465 Payables Creditors and other creditors 424 406 Debts 25 19 As of December 31 (in M€) 2006 2005 Income Statement Sales 1,996 1,593 Purchases 3,123 2,482 Financial expenses - - Financial income 60 56 Compensation for the administration and management bodies The aggregate amount paid directly or indirectly by the French and foreign affiliates of the Company as compensation to the executive officers of TOTAL (the members of the Management Committee and the Treasury) was 19.7 M€ in 2006 (31 persons) compared with 18.8 M€ in 2005 (30 persons). The compensation allocated to members of the Board of Directors for directors’ fees totaled 0.82 M€ in 2006, pursuant to the resolution of the Shareholders’ Meeting of May 17, 2005. The expense recorded for share-based payments to the executive officers of the Group was 16.6 M€ in 2006 (13 M€ in 2005). The benefits provided for the executive officers, excluding employee severance packages or retirement plans, are post-retirement plans financed by the Company, which represent 109.7 M€ provisioned as of December 31, 2006 compared with 108.9 M€ as of December 31, 2005. In 2006, the expense recorded amounted to 13.7 M€ (9.2 M€ in 2005). 226 Appendix 1 – Consolidated financial statements Notes to the consolidated financial statement TOTAL – Registration Document 2006
29) Market risks Oil and gas market related risks Due to the nature of its business, the Group has a significant involvement in oil and gas trading as part of its normal operations in order to attempt to optimize revenues from its crude oil and gas production and obtain favorable pricing for supplies for its refineries. In its international oil trading activities, the Group follows a policy of not selling its future oil and gas production for future delivery. However, in connection with these trading activities, the Group, like most other oil companies, uses energy derivative instruments to adjust its exposure to price fluctuations of crude oil, refined products, natural gas and electricity. Furthermore, the Group also uses freight-rate derivative contracts in its shipping activities in order to adjust its exposure to freight-rate fluctuations. In order to hedge against this risk, the Group uses various instruments such as futures, forwards, swaps and options on organized markets or over-the-counter markets. To measure market risks related to the prices of oil and gas products as well as the price of electricity, the Group uses a “value at risk” method. Under this method, for the Group's trading activities of crude oil, refined products and freight rate derivatives, there is a 97.5% probability that unfavorable daily market variations would result in a loss of less than 11.4 M€ per day, defined as the “value at risk”, based on positions as of December 31, 2006. Over the year 2006, the average value at risk was 8.6 M€, the lowest value at risk was 4.3 M€, the highest value at risk was 12.9 M€. As part of its gas and electricity trading activity, the Group also uses derivative instruments such as futures, forwards, swaps and options in both organized and over-the-counter markets. In general, the transactions are settled at maturity date through physical delivery. There is a 97.5% probability that unfavorable daily market variations would result in a loss of less than 6.0 M€ per day, based on positions as of December 31, 2006. Over the year 2006, the average value at risk was 9.1 M€, the lowest value at risk was 3.5 M€, and the highest value at risk was 21.7 M€. The Group has implemented strict policies and procedures to manage and monitor these market risks. Trading and financial controls are carried out separately and an integrated information system enables real-time monitoring of trading activities. Limits on trading positions are approved by the Group’s Executive Committee and are monitored daily. To increase flexibility and encourage liquidity, hedging operations are performed with numerous independent operators, including other oil companies, major energy consumers and financial institutions. The Group has established limits for each counterpart, and outstanding amounts for each counterpart are monitored on a regular basis. Appendix 1 – Consolidated financial statements Notes to the consolidated financial statement 9 Financial markets related risks Within its financing and cash management activities, the Group uses derivative instruments in order to manage its exposure to changes in interest rates and foreign exchange rates. This includes mainly interest rates and currency swaps. The Group might also use on an occasional basis futures, caps, floors and options contracts. The current operations and their accounting treatment are detailed in notes 1 M, 20 and 27 to the consolidated financial statements. Risks relative to cash management activities and to interest rate and foreign exchange financial instruments are managed in accordance with rules set by the Group’s Management. Liquidity positions and the management of financial instruments are centralized in the Treasury Department. Cash management activities are organized into a specialized department for operations on financial markets. The Financial Control Department handles the daily monitoring of limits and positions and calculates results. It values financial instruments and, if necessary, performs sensitivity analysis. Management of currency exposure The Group seeks to minimize the currency exposure of each exposed entity by reference to its functional currency (primarily the euro, dollar, pound sterling, and 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 estimated flows and, in this case, may use options. With respect to currency exposure linked to non-current assets accounted in another currency than the euro, the Group has a hedging policy which results in reducing the associated currency exposure by financing in the same currency. Short-term net currency exposure is periodically monitored with limits set by the Group’s executive management. The Group’s central treasury entities manage this currency exposure and centralizes borrowing activities on the financial markets (the proceeds of which are then loaned to the borrowing subsidiaries), cash centralization for the Group companies and investments of these funds on the monetary markets. Management of short-term interest rate exposure and cash Cash balances, which are primarily composed of euros and dollars, are managed with three main objectives set out by management (to maintain maximum liquidity, to optimize revenue from investments considering existing interest rate yield curves, and to minimize the cost of borrowing), over a horizon of less than twelve months and on the basis of a daily interest rate TOTAL – Registration Document 2006 227
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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
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TOTAL and its shareholders Listing
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Four-for-one stock split The Genera
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Information Summary TOTAL and its s
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Dividends Dividend policy In accord
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Share buybacks The General Meeting
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Summary table of transactions compl
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cancels and replaces the unused por
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which was approved by the French Co
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Shareholder structure Distribution
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Non-resident individual taxpayers e
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The Committee also worked on the co
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2007 Calendar February 14 Results f
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Financial information Historical fi
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Additional information Financial in
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General information Share capital p
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Pursuant to this authorization, the
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Potential capital as of December 31
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General information Share capital J
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Directors’ Charter and Committees
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Other matters Employee incentives a
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Information on holdings General inf
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Statutory auditors’ report on the
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Consolidated statement of income TO
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Consolidated statement of cash flow
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On February 13, 2007, the Board of
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Page 179 and 180: equal to the market price. For unli
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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: B) Financial instruments related to
Page 231 and 232: As a result of its policy for manag
Page 233 and 234: 3) The Group has recorded provision
Page 237 and 238: 53.2% 95.7% Elf Aquitaine 99.5% 100
Page 239 and 240: Oil and gas reserves p. 238 • Cha
Page 241 and 242: Changes in liquids reserves Appendi
Page 243 and 244: Changes in liquids and gas reserves
Page 245 and 246: Costs incurred in oil and gas prope
Page 247 and 248: Appendix 2 - Supplemental oil and g
Page 249 and 250: Other information Accounting for ex
Page 251 and 252: Appendix 3 - TOTAL S.A. Special aud
Page 253 and 254: (Free translation of a French langu
Page 255 and 256: Balance Sheet (TOTAL S.A.) Appendix
Page 257 and 258: Statement of changes in Shareholder
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Page 261 and 262: 6) Shareholders’ equity A) Common
Page 263 and 264: 7) Contingency reserves As of Decem
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Page 267 and 268: 20) Commitments As of December 31 (
Page 269 and 270: TOTAL share purchase options plans
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Page 275 and 276: Distribution of earnings 2006 Net d
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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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