Registration document 2007 - Total.com

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Net income
Adjusted net income increased by 5% to 12,585 M€ from
12,003 M€ in 2005. This excludes the after-tax inventory effect,
special items, and the Group’s equity share of amortization of
intangibles related to the Sanofi-Aventis merger.
The after-tax inventory effect (FIFO vs. replacement cost) had a
negative impact of 358 M€ in 2006 and a positive impact of
1,072 M€ in 2005.
Special items affecting net income had a negative impact of
150 M€ in 2006. They included the after-tax effects of
restructuring charges, provisions and write-downs in the
Chemicals segment and TOTAL’s equity share of special items
taken by Sanofi-Aventis in the amount of 81 M€, partially offset
by capital gains related to the disposal of non-strategic financial
assets.
Special items had a negative impact of 467 M€ on 2005 net
income. They included the after-tax effects of restructuring
charges, provisions and write-downs in the Chemicals segment
and TOTAL’s equity share of special items taken by
Sanofi-Aventis in the amount of 207 M€.
The Group’s equity share of amortization of intangibles related to
the Sanofi-Aventis merger had an impact on net income that was
a negative 309 M€ in 2006 and a negative 335 M€ in 2005.
Reported net income in Group’s share was 11,768 M€ in 2006
compared to 12,273 M€ in 2005.
The effective tax rate for the Group was 56% in 2006 compared
to 53% in 2005. The higher rate was mainly due to the increase
in UK petroleum tax, higher hydrocarbon prices, and the larger
share of the Upstream segment in the results.
In 2006, the Group bought back 75.9 million of its shares (1) , or
nearly 3% of its capital, for 3,975 M€.
The number of fully-diluted shares at December 31, 2006 was
2,285.2 million compared to 2,344.1 million at December 31,
2005, representing a decrease of close to 3%.
Adjusted fully-diluted earnings per share, based on 2,312.3
million fully-diluted weighted-average shares rose to 5.44 euros in
2006 from 5.08 euros in 2005, an increase of 7%, which is a
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Management Report of the Board of Directors
Summary of results and financial position
(1) Excludes 2.3 million shares reserved for share grants as per the decision of the Board on July 18, 2006.
(2) Excluding the change in accounting presentation for exploration costs directly charged to expense, the increase was 10%.
(3) Based on adjusted net operating income and average capital employed at replacement cost.
TOTAL – Registration Document 2006
higher percentage increase than shown for the adjusted net
income thanks to the accretive effect of the share buybacks.
Investments
Investments rose to 11,852 M€ in 2006 from 11,195 M€ in 2005.
Expressed in dollars, investments increased by 7% to
$14.9 billion (2) . Excluding acquisitions (Ichthys LNG, Tahiti, etc),
investments were $13.9 billion in 2006 compared to $12.1 billion
in 2005.
Divestments in 2006 were 2,278 M€ compared to 1,088 M€ in
2005 and include the sale of Upstream assets in the United
States and in France as well as the reimbursement of carried
investments on Akpo in Nigeria and the sale of non-strategic
financial assets.
Net investments (investments minus divestments) were $12 billion
in 2006, a decrease of 4% compared to 2005.
Profitability
The return on average capital employed (ROACE (3) ) for the Group
was 26% in 2006 (29% for the business segments), at the level of
the best in the industry. Return on equity was 33% in 2006
compared to 35% in 2005.