Registration document 2007 - Total.com
Registration document 2007 - Total.com
Registration document 2007 - Total.com
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3<br />
2006 overview<br />
Conditions in the oil market remained globally favorable in 2006.<br />
Crude oil prices, on average, increased relative to 2005, driven<br />
by robust demand and sustained production capacity utilization<br />
rate. Refinery margins, while significantly lower than in 2005,<br />
remained on average at satisfactory levels.<br />
Adjusted net in<strong>com</strong>e (1) rose to 12,585 M€ in 2006, an increase of<br />
5% <strong>com</strong>pared to 2005. Earnings per share expressed in dollars (2)<br />
increased by 8%, benefiting from the oil environment, despite<br />
pressure from rising costs and the 5% decrease in production.<br />
Profitability at the business segment level was 29%, reflecting the<br />
<strong>com</strong>pany’s portfolio quality and investment discipline.<br />
Excluding acquisitions, the Group invested $13.9 billion in 2006,<br />
<strong>com</strong>pared to $12.1 billion in 2005, more than 75% of that in the<br />
Upstream to future fuel production growth. The successful startup<br />
of the Dalia field at year-end 2006 confirmed the outlook for a<br />
return to a period of strong growth for the hydrocarbon<br />
production. Equally important, exploration success <strong>com</strong>bined<br />
62<br />
Management Report of the Board of Directors<br />
Summary of results and financial position<br />
Summary of results and financial position<br />
2006 results<br />
TOTAL – <strong>Registration</strong> Document 2006<br />
with the Group’s entry into Brass LNG and Ichthys LNG further<br />
strengthens the long-term growth potential for TOTAL.<br />
In 2006, the return to shareholders from both dividends and<br />
share buybacks represented close to 6.5% of the end-2005<br />
market capitalization. The spin-off of Arkema represented an<br />
additional 1.5% return to shareholders. The proposal to increase<br />
the 2006 dividend by 15% demonstrates the confidence of the<br />
Group in its ability to pursue its profitable growth strategy.<br />
Since the beginning of <strong>2007</strong>, the Group has had a number of<br />
new exploration successes, notably in Angola, in Nigeria and in<br />
Thailand. In addition, the Dalia field is ramping up according to<br />
forecasts.<br />
Under IFRS rules for discontinued operations, the statements of in<strong>com</strong>e with the exception of net in<strong>com</strong>e, and ROACE have been restated<br />
to exclude the contribution of Arkema.<br />
(in M€) 2006 2005 2004<br />
Sales 153,802 137,607 116,842<br />
Adjusted operating in<strong>com</strong>e from business segments 25,166 23,468 17,039<br />
Adjusted net operating in<strong>com</strong>e from business segments 12,377 11,912 9,126<br />
Adjusted net in<strong>com</strong>e 12,585 12,003 9,131<br />
Net in<strong>com</strong>e (Group share) 11,768 12,273 10,868<br />
Earnings per share (euros) (a) 5.44 5.08 3.76<br />
Cash flow from operations 16,061 14,669 14,662<br />
Investments 11,852 11,195 8,904<br />
Divestments at selling price 2,278 1,088 1,192<br />
Return on average capital employed (ROACE) 26% 29% 26%<br />
Return on equity 33% 35% 33%<br />
Number of fully-diluted weighted-average shares (in millions) (a) 2,312.3 2,362.0 2,426.4<br />
(a) Adjusted retroactively to take into account the four-for-one stock split <strong>com</strong>pleted on May 18, 2006.<br />
(1) Adjusted in<strong>com</strong>e is defined as in<strong>com</strong>e using replacement cost, adjusted for special items and excluding TOTAL’s equity share of amortization of intangibles related to the Sanofi-Aventis merger.<br />
(2) Dollar amounts represent euro amounts converted at the average €/$ exchange rate for the period (1.2556 $/€ for 2006, 1.2441 $/€ for 2005 and 1.2439 $/€ for 2004).