Registration document 2007 - Total.com
Registration document 2007 - Total.com
Registration document 2007 - Total.com
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Market environment<br />
2006 2005 2004<br />
Euro-dollar exchange rate 1.26 1.24 1.24<br />
Brent ($/b) 65.1 54.5 38.3<br />
European refining margins TRCV ($/t) 28.9 41.6 32.8<br />
Adjustments to operating in<strong>com</strong>e from business segments<br />
(in M€) 2006 2005 2004<br />
Impact of special items on operating in<strong>com</strong>e from business segments (177) (97) (383)<br />
• Restructuring charges (25) (19) (50)<br />
• Impairments (61) (71) (278)<br />
• Other (91) (7) (55)<br />
Pre-tax difference of FIFO vs. replacement cost (a) (314) 1,265 719<br />
<strong>Total</strong> adjustments affecting operating in<strong>com</strong>e from business segments (491) 1,168 336<br />
(a) See note 1M to the consolidated financial statements.<br />
Adjustments to net in<strong>com</strong>e (Group share)<br />
(in M€) 2006 2005 2004<br />
Impact of special items on net in<strong>com</strong>e (Group share) (150) (467) 1,345<br />
• Equity share of special items recorded by Sanofi-Aventis (includes the gain on dilution<br />
from the 2004 merger) (81) (207) 2,399<br />
• Gain on asset sales 304 - 53<br />
• Restructuring charges (154) (130) (143)<br />
• Impairments (40) (215) (772)<br />
• Other (179) 85 (192)<br />
Adjustment related to the Sanofi-Aventis merger (share of amortization of intangible assets) (309) (335) (113)<br />
After-tax difference of FIFO vs. replacement cost (a) (358) 1,072 505<br />
<strong>Total</strong> adjustments affecting net in<strong>com</strong>e (817) 270 1,737<br />
(a) See note 1 M to the consolidated financial statements.<br />
Consolidated sales<br />
Consolidated sales increased by 12% to 153,802 M€ in 2006<br />
from 137,607 M€ in 2005.<br />
Operating in<strong>com</strong>e<br />
Compared to 2005, the average oil market environment in 2006<br />
was marked by higher oil prices (+19% for Brent to 65.1 $/b) and<br />
lower refining margins (-31% for the TRCV European refining<br />
margin indicator to 28.9 $/t). The environment for Chemicals is<br />
generally <strong>com</strong>parable for the two years. The euro/dollar<br />
exchange rate was 1.26 $/€ in 2006 <strong>com</strong>pared to 1.24 $/€ in<br />
2005.<br />
In this context, adjusted operating in<strong>com</strong>e from the business<br />
segments increased by 7% to 25,166 M€ in 2006.<br />
Special items affecting operating in<strong>com</strong>e from the business<br />
segments had a negative impact of 177 M€ in 2006. They<br />
included mainly restructuring charges, write-downs and<br />
environmental provisions in the Chemicals segment.<br />
In 2005, special items had a negative impact of 97 M€. They<br />
were <strong>com</strong>prised mainly of restructuring charges and write-downs<br />
in the Chemicals segment.<br />
Management Report of the Board of Directors<br />
Summary of results and financial position<br />
3<br />
Adjusted net operating in<strong>com</strong>e from the business segments rose<br />
by 4% to 12,377 M€ in 2006 from 11,912 M€ in 2005. The<br />
lower percentage increase relative to the 7% increase in<br />
operating in<strong>com</strong>e is mainly a function of the Upstream segment<br />
having a higher effective tax rate and representing a larger<br />
proportion of the results in 2006 <strong>com</strong>pared to 2005.<br />
Expressed in dollars, the increase in adjusted net operating<br />
in<strong>com</strong>e from 2005 to 2006 was $0.7 billion and can be analyzed<br />
as follows:<br />
• +$1.85 billion related to the stronger oil environment (including<br />
+$2.5 billion related to higher hydrocarbon prices and -$0.65<br />
billion related to lower refining margins);<br />
• -$0.55 billion related to lower volumes and changes in the<br />
portfolio;<br />
• -$0.5 billion related to higher production costs<br />
(including -$0.2 billion related to higher exploration expenses)<br />
partially offset by +$0.4 billion related to performance<br />
improvement in the Downstream and Chemicals segment;<br />
and<br />
• -$0.5 billion related to changes in tax terms, mainly in the<br />
United Kingdom and Venezuela.<br />
TOTAL – <strong>Registration</strong> Document 2006 63