Registration Document 2005 - Total.com

3
Management Report of the Board of Directors
Summary of results and financial position
Summary of results and financial position
Overview of the 2005 fiscal year for TOTAL
Market conditions were favorable for the oil industry in 2005. In a
context of continued demand growth, the tension on production
capacity, aggravated by the effect of hurricanes in the Gulf of
Mexico, raised oil prices and refining margins to high levels.
Adjusted net income (1) rose to 12,003 million euros in 2005, an
increase of 31% compared to 2004. Adjusted earnings per share
increased by 35%, reflecting the Group’s ability to benefit from the
stronger market environment despite inflationary pressure from
service companies. TOTAL’s performance ranks among the best of
the majors in terms of the increase in adjusted earnings per share
and in terms of return on capital employed, which rose to 27% in
2005 versus 24% in 2004 and 19% in 2003.
Continued exploration success, the launching of Yemen LNG and
the acquisition of Deer Creek in Canada, among other things, have
allowed the Group to increase the level of proved and probable
reserves (2) to 20 billion equivalent barrels at the end of 2005, which
represents close to 22 years of production at the current rate.
2005 results
(in millions of euros) 2005
IFRS
62 TOTAL - Registration Document 2005
The Group invested 13.9 billion dollars in 2005 (3) , a 26% increase
compared to 2004. Investments are expected to continue at
comparable levels from now through 2010 and should allow the
Group mainly to increase production by close to 4% per year on
average over the 2005-2010 period in a 40 $/b Brent environment.
It should also allow the Group to upgrade its refining system in
Europe and the US to adapt to changes in the supply-demand
balance as well as to expand its petrochemical activities in Asia.
Since the beginning of 2006, the Group has had a number of
exploration successes, notably in Africa and in Australia. The
Tyrihans project in Norway was launched with an expected
start-up date in 2009. TOTAL has also signed an agreement
with PetroChina for the development of the onshore Sulige Block
in China.
2004
IFRS
2004
French GAAP
2003
French GAAP
Sales 143,168 121,998 122,700 104,652
Adjusted operating income from business segments 23,669 17,217 17,123 13,004
Net adjusted operating income from business segments 11,902 8,957 8,792 6,973
Adjusted net income 12,003 9,131 9,039 7,344
Net income (Group share) 12,273 10,868 9,612 7,025
Earnings per share (euros) (4) (5) 20.33 15.05 14.68 11.56
Cash flow from operations 14,669 14,662 14,429 12,487
Investments 11,195 8,904 8,668 7,728
Divestments at selling price 1,088 1,192 1,192 1,878
Return on average capital employed 27% 24% 24% 19%
Return on equity 35% 33% 31% 26%
Number of fully-diluted weighted-average shares (in millions) 590.5 606.6 615.9 635.1
(1) Adjusted IFRS results (adjusted operating result, adjusted net operating result, adjusted net income, adjusted earnings per share) are defined as the results using replacement cost
(Group share) adjusted for special items and excluding Total’s share of amortization of intangibles related to the Sanofi-Aventis merger.
(2) Limited to proved and probable reserves covered by E&P contracts on fields that have been drilled and for which technical studies have demonstrated economic development
in a 40 $/b Brent environment, including the portion of heavy oil in the Joslyn field developed by mining.
(3) Dollar amounts represent euro amounts converted at the average €/$ exchange rate for the period (1.2441 for 2005 and 1.2439 for 2004).
(4) Under IFRS : excluding special items, inventory effect and TOTAL’s equity share of amortization of intangibles related to the Sanofi-Aventis merger.
(5) Under French GAAP : excluding special items and TOTAL’s equity share of amortization of intangibles and goodwills related to the Sanofi-Aventis merger.