Registration Document 2005 - Total.com

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9 Appendix 1 – Consolidated financial statements Notes to the consolidated financial statements The financial data for 2004 and 2003 were presented under French GAAP in the 2004 Annual Report. 1. Accounting policies The main consolidated financial statements have been prepared on a historical cost basis, except for some financial assets and liabilities that have been measured at fair value. The accounting policies used by the Group are described below. A. Principles of consolidation The subsidiaries that are directly controlled by the parent company or indirectly controlled by other consolidated subsidiaries are fully consolidated. Investments in jointly controlled entities are proportionately consolidated. Investment in associates, in which the Group has significant influence, are accounted for by the equity method. Significant influence is presumed when the Group holds, directly or indirectly (e.g. through subsidiaries), 20% or more of the voting rights. Companies in which ownership interest is less than 20%, but over which the Company has the ability to exercise significant influence, are also accounted for by the equity method. All significant intercompany balances, transactions and income have been eliminated. B. Foreign currency translation The financial statements of subsidiaries are prepared in the currency that most clearly reflects their business environment. This is referred to as their functional currency. (i) Monetary transactions Transactions denominated in foreign currencies are translated at the exchange rate prevailing at the transaction date. At each balance sheet date, monetary assets and liabilities are translated at the closing rate and the resulting exchange differences are recognized in “Other income” or “Other expense”. (ii) Translation of financial statements denominated in foreign currencies Assets and liabilities of foreign entities are translated into euros on the basis of the exchange rates at the end of the period. The income and cash flow statements are translated using the average exchange rates of the period. Foreign exchange differences resulting from such translations are either recorded in Shareholders’ equity under “Cumulative translation adjustments” (for the Group share) or under “Minority interests” as deemed appropriate. 170 TOTAL - Registration Document 2005 C. Sales and revenues from sales Revenues from sales are recognized when the significant risks and rewards of ownership have been passed to the buyer and the amount can be reasonably measured. Sales figures include excise taxes collected by the Group within the course of its oil distribution operations. Excise taxes are deducted from sales in order to obtain the “Revenues from sales” indicator. Revenues from sales of crude oil, natural gas and coal are recorded upon transfer of title, according to the terms of the sales contracts. Revenues from the production of crude oil and natural gas properties in which the Group has an interest with other producers are recognized on the basis of the Group’s net working interest. Revenues from gas transport are recognized when the services are rendered, based on the quantities transported and measured according to procedures defined in each service contract. Revenues from sales of electricity, from refining and marketing activities and from the sales of chemicals products are recorded upon transfer of title, according to the terms of the related contracts. Revenues from services are recognized when the services have been rendered. Shipping revenues and expenses from charters activity are recognized ratably over the estimated length of each voyage. Voyages are calculated on a discharge-to-discharge basis. Shipping revenues recognition starts only when a Charter has been agreed to by both the Group and the customer. Oil and gas sales are inclusive of quantities delivered that represent production royalties and taxes when paid in cash and outside the US and Canada. Some transactions within the trading activities (contracts involving quantities that are purchased outside the Group then resold outside the Group) are shown at their net value in sales. Exchanges of crude oil and petroleum products within normal trading activities do not generate any income: flows are shown at their net value in both the income statement and the balance sheet. D. Share-based payments The Group applies IFRS 2 “Share-based payments” to employee stock option and share purchase plans and to employee-reserved capital increases. The benefits are determined at fair value by reference to the granted instruments. The fair value of the options is calculated using the Black & Scholes method at the grant date. The expense is allocated on a straightline basis between the grant date and vesting date.
The cost of employee-reserved capital increases is immediately expensed. A discount reduces the expense in order to take into account the non-transferability of the shares awarded to the employees over a period of five years according to French regulations. These employee benefits are recognized as expenses against shareholders’ equity. E. Income taxes Income taxes disclosed in the income statement include the current tax expense (income) and the deferred tax expense (income). The Group uses the liability method whereby deferred income taxes are recorded based on the temporary differences between the financial statement and tax basis of assets and liabilities, and for carry forwards of unused tax losses and tax credits. Deferred tax assets and liabilities are measured using the tax rates that have been enacted or officially proposed at the balance sheet date. The tax rates used depend on the maturity of renewal of temporary differences, tax losses and other tax credits. The effect of the change in tax rate is recognized either in the consolidated statement of income or in equity depending on the item it is related to. Deferred tax assets are recognized when future recovery is probable. Deferred tax liabilities on temporary differences resulting from the variation in difference between the carrying value of the equitymethod investments and the taxable basis of these investments are recognized. The deferred tax calculation is based on the expected future tax effect (dividend distribution rate or tax rate on the gain or loss upon sale of these investments). Taxes paid on Upstream production are included in operating expenses, including those related to historical concessions held by the Group in the Middle East producing countries. F. Earnings per share Earnings per share are calculated by dividing net income by the weighted-average number of common shares outstanding during the period. Fully-diluted earnings per share are calculated by dividing net income by the fully-diluted weighted-average number of common shares outstanding during the period. Treasury shares held by the parent company, TOTAL S.A., and, by the Group subsidiaries, which are deducted from consolidated shareholders’ equity are not considered outstanding for purposes of this calculation which also takes into account the dilutive effect of stock-options, restricted shares, and capital increases with a subscription period closing after the end of the fiscal year. Appendix 1 – Consolidated financial statements Notes to the consolidated financial statements 9 The weighted-average number of fully-diluted shares is calculated in accordance with the treasury stock method provided for by IAS 33. The proceeds, which would be recovered in the event of an exercise of rights related to dilutive instruments, are presumed to be a buy back of shares at the average market price over the period. The number of shares thereby obtained leads to a reduction in the total number of shares that would result from the exercise of rights. G. Oil and gas exploration and producing properties The Group also applies IFRS 6 “Exploration for and Evaluation of Mineral Resources”. Oil and gas exploration and production properties and assets are accounted for in accordance with the successful efforts method. (i) Exploration costs Geological and geophysical costs, including seismic surveys for exploration purposes are expensed as incurred. Exploration leasehold rights acquisition costs are capitalized as intangible assets when acquired. Depreciation is recorded, property by property, on the basis of the results of the exploratory activity and management evaluation. In the event of a discovery, the unproved leasehold rights are transferred to proved leasehold rights at their net book value as soon as proved reserves are booked. Exploratory wells are accounted for as follows: • • • costs of exploratory wells that have found proved reserves are capitalized. Capitalized successful exploration wells are then depreciated using the unit-of-production method based on proved developed reserves; costs of dry exploratory wells and wells that have not found proved reserves are charged to expense; costs of exploratory wells are temporarily capitalized until a determination is made as to whether the well has found proved reserves if both of the following conditions are met: − the well has found a sufficient quantity of reserves to justify its completion as a producing well, if appropriate, assuming that the required capital expenditures are made. − the Group is making sufficient progress assessing the reserves and the economic and operating viability of the project. This progress is evaluated on the basis of indicators such as whether additional exploratory works are under way or firmly planned (wells, seismic or significant studies), whether costs are being incurred for development studies and whether the Group is waiting for governmental or other third-party authorization of a proposed project, or availability of capacity on an existing transport or processing facility. TOTAL - Registration Document 2005 171
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Registration Document 2005
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Registration Document 2005 This is
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Key figures Selected financial info
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104,652 2003 French GAAP Sales (M
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DOWNSTREAM Refined product sales (k
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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 TOTAL’s average daily
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Presentation of production activiti
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Europe Year of entry into the count
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Africa TOTAL has been present in Af
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Libya The Group’s share of produc
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North America The Group’s presenc
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On the Yucal Placer field, the init
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Commonwealth of Independent States
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The Netherlands TOTAL is the second
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Kuwait Since 1997, the Group has pr
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Gas & Power The Gas & Power sector
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Middle East In Qatar, negotiations
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TOTAL is pursuing decentralized rur
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Refining & Marketing On December 31
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Marketing The Group is one of the l
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the provinces of Shanghai, Jiangsu
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All of TOTAL’s trading activities
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Base Chemicals TOTAL’s Base Chemi
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Specialties TOTAL’s Specialties s
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trademarks. It is present on three
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Other activities E-Commerce In 2005
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Organizational structure Position o
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Executive Committee Trading & Shipp
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Management Report of the Board of D
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Market environment Management Repor
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Upstream results (in millions of eu
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Downstream results (in millions of
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Adoption of IFRS rules The principa
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Liquidity and capital resources Lon
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Research and development Research a
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Risk factors Market risks p. 76 •
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Financial markets related risks Wit
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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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ILSA - Other US regulations In 2001
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Insurance and risk management Organ
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Corporate governance Board of Direc
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Anne Lauvergeon 46 years old. Indep
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Additional information required und
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Statutory auditors Statutory audito
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Executive Officers’ Compensation
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Report of the Chairman of the Board
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july 19: • estimated earnings for
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Nominating & Compensation Committee
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The hydrocarbon reserves are review
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Headcount, Employee shareholdings,
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Allocation of TOTAL share subscript
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TOTAL share subscription and purcha
Page 121 and 122: Allocation of TOTAL restricted shar
Page 123 and 124: Elf Aquitaine share subscription op
Page 125 and 126: TOTAL and its shareholders TOTAL sh
Page 127 and 128: Four-for-one stock split A proposal
Page 129 and 130: TOTAL share over the last 18 months
Page 131 and 132: Dividend payment on Stock Certifica
Page 133 and 134: • were repurchased under the auth
Page 135 and 136: These transactions may be carried o
Page 137 and 138: Shareholders Relationship between T
Page 139 and 140: The holdings of the principal share
Page 141 and 142: Shareholders Estimate of capital di
Page 143 and 144: The above-mentioned French forms ar
Page 145 and 146: • • • • On November 18 and
Page 147 and 148: 2006 Calendar February 15 Results f
Page 149 and 150: Financial information Historical fi
Page 151 and 152: Additional information Financial in
Page 153 and 154: General information Share capital p
Page 155 and 156: • Authority to grant restricted e
Page 157 and 158: Potential capital as of December 31
Page 159 and 160: General information Articles of inc
Page 161 and 162: Shareholders’ Meetings Notices of
Page 163 and 164: Documents on display The documents
Page 165 and 166: Statutory auditors’ report on the
Page 167 and 168: Consolidated statement of income TO
Page 169 and 170: Consolidated statement of cash flow
Page 171: Notes to the consolidated financial
Page 175 and 176: K. Impairment of long-lived assets
Page 177 and 178: Crude oil costs include raw materia
Page 179 and 180: Fair value option In June 2005, the
Page 181 and 182: A. Information by business segment
Page 183 and 184: Appendix 1 - Consolidated financial
Page 187 and 188: C. Adjusting items by business segm
Page 189 and 190: 7. Other income and other expense A
Page 191 and 192: RECONCILIATION BETwEEN PROVISION FO
Page 193 and 194: 12. Equity affiliates: investments
Page 195 and 196: 14. Other non-current assets Append
Page 197 and 198: Capital increase reserved for Group
Page 199 and 200: The Group expects to contribute 371
Page 201 and 202: 19. Other non-current liabilities A
Page 203 and 204: (in millions of euros) TOTAL CAPITA
Page 205 and 206: Impact on net income Appendix 1 - C
Page 207 and 208: 23. Commitments and contingencies A
Page 209 and 210: B. TOTAL share purchase plan Append
Page 211 and 212: 25. Payroll and staff Appendix 1 -
Page 215 and 216: B. Financial instruments related to
Page 217 and 218: Management of short-term interest r
Page 221 and 222: 31. Other information A. Research a
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The consolidated balance sheet and
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Note 32.6: IFRS restatements with a
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Fixed assets Component Impairment o
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Fixed assets Component Impairment o
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53.2% 95.7% Elf Aquitaine 99.5% 100
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Oil and gas reserves p. 232 • 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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Standardized measure of discounted
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Other information Accounting for ex
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Appendix 3 - TOTAL S.A. Special aud
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Statutory auditors’ report on the
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Summary balance sheet at December 3
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Other five-year financial data TOTA
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Employment and environmental inform
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4) Compensation TOTAL - Registratio
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Environment Pursuant to French Law
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Five-year consolidated financial in
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10. CAPITAL RESOURCES 10.1. Informa
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TOTAL S.A. Registered Offi ce: 2, p
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Registration Document 2005 - Total.com

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