Registration Document 2005 - Total.com

Fair value option
In June 2005, the IASB published the definitive amendment
to IAS 39 concerning the fair value option. Standard IAS 39
(December 2003 version) had introduced the possibility of applying
the fair value option to any financial asset or liability, to allow their
valuation at fair value through the income statement. The “fair value
option” amendment is intended to limit the possibilities for using the
option by limiting it to certain cases specified by the standard.
Financial guarantee contracts and credit insurance:
In July 2005, the IASB published an amendment to standard
IAS 39 dealing with financial guarantees and credit insurance.
Financial guarantees that meet the definition of an insurance
contract by the issuer of the guarantee are now recognized by the
issuer of the guarantee in accordance with the valuation principles
applicable to insurance contracts as defined by standard IFRS 4
“Insurance Contracts”.
These amendments to IAS 39 apply for the annual period beginning
on or after January 1, 2006. Application of these amendments
should have no material impact on the Group’s balance sheet,
income statement and consolidated shareholders’ equity.
(iv) IFRIC 4: Determining whether an arrangement
contains a lease
In December 2004, the IFRIC issued interpretation IFRIC 4
“Determining whether an arrangement contains a lease”. The
purpose of this interpretation is to determine whether an arrangement
that does not have a legal form essentially contains a lease. If the
arrangement contains a lease, it must be analyzed to determine
whether the contract constitutes a finance lease or an operating lease
pursuant to the provisions of IAS 17 “Leases”. IFRIC 4 applies to the
annual period beginning on or after January 1, 2006. The application
of interpretation IFRIC 4 is being studied by the Group and should
not have a material effect on the Group’s balance sheet, income
statement or consolidated shareholders’ equity.
(v) IFRIC 5: Rights to interests arising from decommissioning,
restoration and environmental rehabilitation funds
In December 2004, the IFRIC published interpretation IFRIC 5
“Rights to interests arising from decommissioning, restoration and
environmental funds”. The interpretation applies when an entity
that has obligations related to the closing or the restoration of
a site pays into a management fund created for the purpose of
reimbursing in time the decommissioning costs when they are
incurred. The interpretation applies to annual period beginning on
or after January 1, 2006. The application of interpretation IFRIC 5
is being studied and is not expected to have a material impact
on the Group’s balance sheet, income statement or consolidated
shareholders’ equity.
Appendix 1 – Consolidated financial statements
Notes to the consolidated financial statements 9
(vi) IFRIC 7: Applying the restatement approach under IAS 29
In November 2005, the IFRIC published interpretation IFRIC 7,
which stipulates the practical procedures for restating financial
statements under IAS 29 when an entity identifies for an accounting
period the existence of hyperinflation in the economy of its
operating currency, when this economy was not in hyperinflation the
previous year. The interpretation applies to annual period beginning
on or after January 1, 2006. The application of interpretation
IFRIC 7 is not expected to have a material impact on the Group’s
balance sheet, income statement or consolidated shareholders’
equity.
2. Main indicators of the information by business segment
The financial information for each business segment is reported in
accordance with the Group internal reporting system used by the
management to assess the financial performance and the allocation
of resources.
Adjusting items
Due to their unusual nature or particular significance, some
transactions qualified as “special items” are monitored at Group
level and excluded from the business segment figures. In general,
special items relate to transactions that are significant, infrequent
or unusual. However, in some instances, transactions such as
restructuring costs or assets disposals, which are not considered
to be representative of the normal course of business, may be
qualified as special items although they may have occurred within
prior years or are likely to occur again within the coming years.
Special items, together with the inventory valuation effect (described
in note 1 M to the consolidated financial statements) and portion of
intangible assets amortization related to the Sanofi-Aventis merger,
form the adjusting items. The detail of these adjusting items is
presented in note 4 to the consolidated financial statements.
Performance indicators excluding the adjusting items, such as
adjusted operating income, adjusted net operating income and
adjusted net income, are meant to facilitate the analysis of the
financial performance and the comparison of income between
periods.
Operating income (measure used to evaluate
operating performance)
Revenues from sales after deducting cost of goods sold and
inventory variations, other operating expenses, exploration
expenses and depreciation, depletion and amortization.
Operating income excludes the amortization and depreciation of
intangible assets other than leasehold rights, currency translation
adjustments and gains or losses on the sale of assets.
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