Registration Document 2005 - Total.com

Note 32.6: IFRS restatements with an impact
on the net income
Note 32.6a: Amortization of goodwill
Pursuant to IFRS 3 “Business combinations”, goodwill is no longer
amortized. Instead, it is tested for impairment annually. The impact
on 2004 net income is 161 million euros, due to the cancellation of
goodwill amortization.
Note 32.6b: Share-based payments
The Group applies IFRS 2 “Share-based payments” as published
by the International Accounting Standards Board (IASB).
This standard applies to employee stock-option and share
purchase plans and to capital increases reserved for employees
retrospectively and not solely to the share transactions that were
granted after November 7, 2002.
These employee benefits are recognized as expenses with a
corresponding credit to shareholders’ equity.
The cost of options is valued according to the Black & Scholes
method and allocated on a straight-line basis between the grant
date and vesting date. For employee-reserved capital increases, the
cost is immediately recognized as an expense.
The 2004 net income is adjusted due to an expense relating to
employee share option and purchase plans and to the employeereserved
capital increase in 2003. The corresponding charge is
estimated at approximately 138 million euros.
Appendix 1 – Consolidated financial statements
Notes to the consolidated financial statements 9
Note 32.6c: Equity-method affiliates’ IFRS restatement
This restatement primarily relates to the implementation of IFRS
in the equity-method affiliates’ financial statements, Sanofi-Aventis
and Cepsa.
Within the financial statements prepared in compliance with IFRS
by Sanofi-Aventis, in-progress R&D costs of Aventis have been
capitalized as at the date of the merger. According to French GAAP,
the R&D costs were directly charged to expense. The impact of
this restatement amounts to 746 million euros on the net income
– Group share.
The effect on net income of IFRS restatements related to
inventories and share-based payments, as indicated previously,
may change in the future depending on the volatility in prices of raw
materials and specific provisions included within employee share
purchase or option plans, respectively.
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