annual report - inner - TOTAL Nigeria Plc

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SIGNIFICANT ACCOUNTING POLICIES For the year ended 31st December, 2011 The following is a summary of the significant accounting policies adopted by the Company in the preparation of these financial statements. 1. Basis of accounting The financial statements are prepared under the historical cost convention. 2. Turnover Turnover comprises the net value of sales invoiced to third parties. 3. Fixed assets Fixed assets are stated at cost less accumulated depreciation. 4. Depreciation Fixed assets are depreciated at the following rates which are expected to write off their cost on a straight line basis over the anticipated useful lives: Freehold land Annual rate/basis Not depreciated Buildings and leasehold property: Industrial buildings 5% Non – Industrial buildings 4% Leasehold improvements Plant, equipment and vehicles: Plant and machinery 20% Generators 33.3% Tanks 10% Motor cars and vans 25% Lorries and forklift trucks 25% Furniture and fittings 25% House and office equipment 25% Duration of the lease Computer equipment 25% Capital work-in-progress Not depreciated 5. Stocks Stocks are valued at the lower of cost and net realisable value. Cost comprises suppliers' invoice prices and, where applicable, freight, labour, and other overheads incurred to bring the stock to their location and condition. Cost is determined by the use of the weighted average method. 6. Investments Investments are stated at cost less any diminution in value. 7. Debtors Debtors are stated after deduction of specific provision for debts considered to be doubtful of collection. 8. Foreign currencies Transactions in foreign currencies are recorded in Naira at the rate of exchange ruling on the dates of the transactions. Assets and liabilities denominated in foreign currencies are converted to Naira at the rates of exchange ruling at the balance sheet date. All differences arising on the conversion of balances in foreign currencies to Naira are taken to the profit and loss account. 9. Repairs and renewals Repairs and renewals are charged against revenue during the year in which they are incurred. 2011 Annual Report & Accounts 25
SIGNIFICANT ACCOUNTING POLICIES (Cont’d) For the year ended 31st December, 2011 10. Deferred taxation Deferred tax is provided using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Currently enacted tax rates are used to determine deferred income tax. The principal temporary differences arise from rates used for depreciation of fixed assets and the rates of capital allowances granted for tax purposes. 11. Taxation Income tax and education tax are provided for by applying the current statutory rate on the taxable profit and adjusted profit respectively. 12. Retirement benefits The Company operates a Pension Scheme in accordance with the provisions of the Pension Reform Act 2004. The scheme applies to all confirmed staff of the company and is funded through monthly contribution of 11.5% and 7.5% of the consolidated basic salary (which comprises of basic salary, transport and housing allowance) by both the Company and the employee respectively. In addition, the Company currently operates a gratuity scheme for members of staff employed not later than 31st December, 2000. Effective February 2010, the company changed from Defined Benefits Scheme which entitled a retiree to a benefit equal to one month of the total annual emolument for each completed year of service, to Defined Contribution Scheme. Under the Defined Contribution Scheme, the gratuity is computed based on 9.5% of Total Annual Emolument and paid monthly to the Fund Managers as chosen by employees. 13. Bridging claims Bridging claims are costs of transporting white products (PMS, AGO, DPK) except ATK from specific depots to approved zones which are claimable from the Federal Government. On the other hand, Bridging Contributions are mandatory contributions per litre of all white products (except ATK) lifted to assist the Federal Government defray the Bridging Claims. Bridging Claims and Bridging Contributions are handled by the Petroleum Equalization Fund Board. Bridging Claims and Bridging Contributions are reconciled with the Board in determining what is due to or from the Fund. 14. Provisions Provisions are recognized when the Company has a present obligation whether legal or constructive, as a result of a past event for which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations and a reliable estimate can be made of the amount of the obligation. 15. Segment reporting The Company's business segments have been presented by products that are subject to similar risks and returns. 16. Finance lease Assets under finance leases are capitalised and depreciated over the estimated useful life in line with the Company's policy for assets of the same class. Finance charges are allocated over lease term. 17. Long term Prepayments Long term Prepayments are recognised when prepaid charges on leases and rents are due after more than one year of balance sheet date. 26 2011 Annual Report & Accounts
Page 2 and 3: CORPORATE PROFILE Total S.A. (the p
Page 4 and 5: CONTENTS Page Board of Directors, P
Page 6 and 7: HEAD OFFICE, SALES TERRITORIES AND
Page 8 and 9: NOTICE OF MEETING NOTICE IS HEREBY
Page 10 and 11: CHAIRMAN’S STATEMENT (Cont’d)
Page 12 and 13: BOARD OF DIRECTORS (Cont’d) Chief
Page 14 and 15: THE DIRECTORS’ PROFILE (Cont’d)
Page 16 and 17: REPORT OF THE DIRECTORS (Cont’d)
Page 25: REPORT OF AUDIT COMMITTEE TO THE ME
Page 29 and 30: PROFIT AND LOSS ACCOUNT For the yea
Page 31 and 32: STATEMENT OF CASH FLOWS For the yea
Page 33 and 34: NOTES TO THE FINANCIAL STATEMENTS (
Page 47: FIVE-YEAR FINANCIAL SUMMARY 2011 20
Page 51 and 52: “ COLLABORATION: A PATH FOR TOMOR
Page 53 and 54: “ COLLABORATION: A PATH FOR TOMOR
Page 55 and 56: SHARE CAPITAL HISTORY 1. The author
Page 57 and 58: LIST OF MAJOR DISTRIBUTORS (Cont’
Page 60 and 61: PROXY FORM I/We TOTAL NIGERIA PLC.

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