Registration document 2007 - Total.com

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3 2006 overview Conditions in the oil market remained globally favorable in 2006. Crude oil prices, on average, increased relative to 2005, driven by robust demand and sustained production capacity utilization rate. Refinery margins, while significantly lower than in 2005, remained on average at satisfactory levels. Adjusted net income (1) rose to 12,585 M€ in 2006, an increase of 5% compared to 2005. Earnings per share expressed in dollars (2) increased by 8%, benefiting from the oil environment, despite pressure from rising costs and the 5% decrease in production. Profitability at the business segment level was 29%, reflecting the company’s portfolio quality and investment discipline. Excluding acquisitions, the Group invested $13.9 billion in 2006, compared to $12.1 billion in 2005, more than 75% of that in the Upstream to future fuel production growth. The successful startup of the Dalia field at year-end 2006 confirmed the outlook for a return to a period of strong growth for the hydrocarbon production. Equally important, exploration success combined 62 Management Report of the Board of Directors Summary of results and financial position Summary of results and financial position 2006 results TOTAL – Registration Document 2006 with the Group’s entry into Brass LNG and Ichthys LNG further strengthens the long-term growth potential for TOTAL. In 2006, the return to shareholders from both dividends and share buybacks represented close to 6.5% of the end-2005 market capitalization. The spin-off of Arkema represented an additional 1.5% return to shareholders. The proposal to increase the 2006 dividend by 15% demonstrates the confidence of the Group in its ability to pursue its profitable growth strategy. Since the beginning of 2007, the Group has had a number of new exploration successes, notably in Angola, in Nigeria and in Thailand. In addition, the Dalia field is ramping up according to forecasts. Under IFRS rules for discontinued operations, the statements of income with the exception of net income, and ROACE have been restated to exclude the contribution of Arkema. (in M€) 2006 2005 2004 Sales 153,802 137,607 116,842 Adjusted operating income from business segments 25,166 23,468 17,039 Adjusted net operating income from business segments 12,377 11,912 9,126 Adjusted net income 12,585 12,003 9,131 Net income (Group share) 11,768 12,273 10,868 Earnings per share (euros) (a) 5.44 5.08 3.76 Cash flow from operations 16,061 14,669 14,662 Investments 11,852 11,195 8,904 Divestments at selling price 2,278 1,088 1,192 Return on average capital employed (ROACE) 26% 29% 26% Return on equity 33% 35% 33% Number of fully-diluted weighted-average shares (in millions) (a) 2,312.3 2,362.0 2,426.4 (a) Adjusted retroactively to take into account the four-for-one stock split completed on May 18, 2006. (1) Adjusted income is defined as income using replacement cost, adjusted for special items and excluding TOTAL’s equity share of amortization of intangibles related to the Sanofi-Aventis merger. (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 $/€ for 2004).
Market environment 2006 2005 2004 Euro-dollar exchange rate 1.26 1.24 1.24 Brent ($/b) 65.1 54.5 38.3 European refining margins TRCV ($/t) 28.9 41.6 32.8 Adjustments to operating income from business segments (in M€) 2006 2005 2004 Impact of special items on operating income from business segments (177) (97) (383) • Restructuring charges (25) (19) (50) • Impairments (61) (71) (278) • Other (91) (7) (55) Pre-tax difference of FIFO vs. replacement cost (a) (314) 1,265 719 Total adjustments affecting operating income from business segments (491) 1,168 336 (a) See note 1M to the consolidated financial statements. Adjustments to net income (Group share) (in M€) 2006 2005 2004 Impact of special items on net income (Group share) (150) (467) 1,345 • Equity share of special items recorded by Sanofi-Aventis (includes the gain on dilution from the 2004 merger) (81) (207) 2,399 • Gain on asset sales 304 - 53 • Restructuring charges (154) (130) (143) • Impairments (40) (215) (772) • Other (179) 85 (192) Adjustment related to the Sanofi-Aventis merger (share of amortization of intangible assets) (309) (335) (113) After-tax difference of FIFO vs. replacement cost (a) (358) 1,072 505 Total adjustments affecting net income (817) 270 1,737 (a) See note 1 M to the consolidated financial statements. Consolidated sales Consolidated sales increased by 12% to 153,802 M€ in 2006 from 137,607 M€ in 2005. Operating income Compared to 2005, the average oil market environment in 2006 was marked by higher oil prices (+19% for Brent to 65.1 $/b) and lower refining margins (-31% for the TRCV European refining margin indicator to 28.9 $/t). The environment for Chemicals is generally comparable for the two years. The euro/dollar exchange rate was 1.26 $/€ in 2006 compared to 1.24 $/€ in 2005. In this context, adjusted operating income from the business segments increased by 7% to 25,166 M€ in 2006. Special items affecting operating income from the business segments had a negative impact of 177 M€ in 2006. They included mainly restructuring charges, write-downs and environmental provisions in the Chemicals segment. In 2005, special items had a negative impact of 97 M€. They were comprised mainly of restructuring charges and write-downs in the Chemicals segment. Management Report of the Board of Directors Summary of results and financial position 3 Adjusted net operating income from the business segments rose by 4% to 12,377 M€ in 2006 from 11,912 M€ in 2005. The lower percentage increase relative to the 7% increase in operating income is mainly a function of the Upstream segment having a higher effective tax rate and representing a larger proportion of the results in 2006 compared to 2005. Expressed in dollars, the increase in adjusted net operating income from 2005 to 2006 was $0.7 billion and can be analyzed as follows: • +$1.85 billion related to the stronger oil environment (including +$2.5 billion related to higher hydrocarbon prices and -$0.65 billion related to lower refining margins); • -$0.55 billion related to lower volumes and changes in the portfolio; • -$0.5 billion related to higher production costs (including -$0.2 billion related to higher exploration expenses) partially offset by +$0.4 billion related to performance improvement in the Downstream and Chemicals segment; and • -$0.5 billion related to changes in tax terms, mainly in the United Kingdom and Venezuela. TOTAL – Registration Document 2006 63
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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
Page 13 and 14: Upstream TOTAL’s Upstream segment
Page 15 and 16: Exploration & Production Exploratio
Page 17 and 18: Production For the full year 2006,
Page 19 and 20: Presentation of production activiti
Page 21 and 22: Europe Business overview Exploratio
Page 23 and 24: Africa TOTAL has been present in Af
Page 25 and 26: this zone through its subsidiaries
Page 27 and 28: North America Since 2004, TOTAL has
Page 29 and 30: Trinidad & Tobago TOTAL holds a 30%
Page 31 and 32: TOTAL also has a 50% interest in th
Page 33 and 34: Europe TOTAL’s production in Euro
Page 35 and 36: K6-GT platform, in anticipation of
Page 37 and 38: The Group also holds a 20% interest
Page 39 and 40: Gas & Power The Gas & Power divisio
Page 41 and 42: Asia Pacific The Hazira re-gasifica
Page 43 and 44: In Morocco, Temasol, in which TOTAL
Page 45 and 46: Refining & Marketing As of December
Page 47 and 48: Refined products The table below se
Page 49 and 50: capacity oil recycling plant in Fra
Page 51 and 52: In 2006, the principal market bench
Page 53 and 54: Base Chemicals TOTAL’s Base Chemi
Page 55 and 56: Specialties TOTAL’s Specialties s
Page 57 and 58: Investments Main investments made o
Page 59 and 60: Property, Plant and Equipment TOTAL
Page 61 and 62: Board of Directors Executive Commit
Page 63: Management Report of the Board of D
Page 67 and 68: Upstream results Liquids and gas pr
Page 69 and 70: Downstream results For the full yea
Page 71 and 72: Liquidity and capital resources Lon
Page 73 and 74: Research and development Research a
Page 75 and 76: Trends and outlook Outlook Since th
Page 77 and 78: Risk Factors Market risks p. 76 •
Page 79 and 80: The Group has implemented strict po
Page 81 and 82: The non-current debt in dollars des
Page 83 and 84: Grande Paroisse An explosion occurr
Page 85 and 86: Myanmar Under the Belgian “univer
Page 87 and 88: Risk management Risk evaluations le
Page 89 and 90: TOTAL, like other major internation
Page 91 and 92: Insurance and risk management Organ
Page 93 and 94: Corporate Governance Board of Direc
Page 95 and 96: Daniel Bouton 56 years old. Inspect
Page 97 and 98: Bertrand Jacquillat 62 years old. A
Page 99 and 100: Michel Pébereau 64 years old. Hono
Page 101 and 102: Management General Management On Ma
Page 103 and 104: Corporate Governance Compensation o
Page 105 and 106: Pensions and other commitments (Art
Page 107 and 108: Within this framework, the Board’
Page 109 and 110: Members of the Audit Committee may
Page 111 and 112: Messrs. Bouton, Collomb, Desmarais,
Page 113 and 114: 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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G. Earnings per share Earnings per
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equal to the market price. For unli
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The net periodic pension cost is re
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(iii) Portion of intangible assets
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A. Information by business segment
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Appendix 1 - Consolidated financial
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ADJUSTMENTS TO OPERATING INCOME 200
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In 2006, gains and losses on sales
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Property, plant and equipment prese
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14) Other non-current assets As of
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The variation of the weighted-avera
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18) Employee benefits obligations P
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The components of the net periodic
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20) Financial debt and related fina
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Impact on net income The amount of
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23) Commitments and contingencies A
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Other guarantees given Non-consolid
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25) Payroll and staff For the year
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The classification by strategy and
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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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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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