Total Produce Share Discussion Threads

[cosimodo] 01/9/2007 13:08

Wipo1
I think the Digital Look forecasts are generally OK. The covering analysts are from Dublin or Dundalk as Total is based in Eire.All the company reports are in Euros. The Aim listing is definitely a secondary one. The volumes traded here are about 16% of those in The Irish Stock Exchange. The prices when you convert to GBP are very similar varying by a few pence either way and average out even closer over time. I think in an attempt to produce an up to date foreword p/e DL have mixed currencies but have got the yield right. It is only a matter of taking the Euro share price figure from the Total Produce Web Site or multiplying the p/e by 1.47998. Hence

Y/e 31/12/07 forecast p/e = 11.1
Y/e 31/12/08 forecast p/e = 10.7


I am hoping the share price will improve after a couple of annual reports have been published reducing uncertainty and providing a solid base for forecasts. The DL p/e ratios looked to good to be true for a company whose earnings should be fairly consistent.

[wipo1] 31/8/2007 10:52

Cosimodo, thanks for pointing that out. Do you what profit forecasts and market cap in euros are then? I only bought a very small amount.

[cosimodo] 30/8/2007 20:39

wipo1 Beware!
Digital Look's forward p/e's for Total Produce are misleading they have mixed Euros and GBP. The forcast EPS are in Euro cents and they have taken the LSE share price price in Sterling. They were told in July.
I nearly sold mine In April/May and possibly, had DL used the correct figures I might.
I am sorry that I had not read this BB recently but felt it wise to respond anyway.

[nobbygnome] 28/8/2007 07:20

Anybody out there who knows about Totaltrak?

Nobby

[waldron] 20/8/2007 06:29

Oil prices lower as Hurricane Dean veers from US coast for now
Date : 20/08/2007 @ 04:55
Source : TFN


Oil prices lower as Hurricane Dean veers from US coast for now


SINGAPORE (Thomson Financial) - Oil prices fell in Asian trade Monday as
energy facilities in the United States appeared to be safe for the time being
from the fury of Hurricane Dean.
At 10:20 am (0220 GMT), New York's main contract, light sweet crude for
September delivery had fallen 82 cents to 71.16 US dollars a barrel from 71.98
dollars in late US trades Friday.
Brent North Sea crude for October delivery dropped 92 cents to 69.52
dollars.
"Its trajectory is proving to be far way south... it's becoming less of a
worry for the oil market," said Tobin Gorey, a commodity strategist with the
Commonwealth Bank of Australia in Sydney.
"As the hurricane (threat) fades, they are focusing on the market turmoil,"
he said, referring to last week's turbulence in the financial markets,
particularly equities, stemming from the troubled US subprime mortgage sector.
The US Federal Reserve's move to slash its discount rate also calmed
financial markets but there is still a "question mark over demand for oil," said
Gorey.
Oil traders are still trying to determine the fallout from the US subprime
market crisis on economic growth which will subsequently affect energy demand,
he said.
In a move aimed at boosting the liquidity of commercial banks, the US
central bank on Friday slashed its discount rate -- the short-term loan rate it
charges banks -- by a half-percentage point to 5.75 percent.
Meanwhile, Hurricane Dean unleashed the full force of its 230 kilometers
(145 miles) per hour winds on Jamaica Sunday, after leaving a trail of
destruction in the Caribbean where it killed at least five people.
The US National Hurricane Center in its latest report at 0000 GMT placed
Dean 115 kilometers (70 miles) southwest of the Jamaican capital, Kingston, and
425 kilometers (265 miles) southeast of the Caymans, and moving west at about 32
kilometers an hour.
It holds the potential to become a category five hurricane in the
northwestern Caribbean sea on Monday -- the top strength on the scale.
afp/zr

mb/zr

[waldron] 15/8/2007 13:52

Oil prices higher on storm fears; gains capped by weak European equities UPDATE
Date : 15/08/2007 @ 11:47
Source : TFN


Oil prices higher on storm fears; gains capped by weak European equities UPDATE


(Updates headline, recasts lead, updates prices, adds detail)
LONDON (Thomson Financial) - Oil prices were higher on fears a gathering
storm in the Gulf of Mexico could affect production.
But gains were capped by falling European equities, with global markets
continuing to be shaken by the fallout from the US subprime mortgage crisis.
Speculators have been exiting the oil market in recent weeks, as funds look
to cash in on commodities to cover losses elsewhere in their portfolios,
stripping away support from crude.
"The prices are being affected by the number of storms going through the
Gulf right now," said CMC Markets analyst Adrian Bingham-Walker. "However, a lot
of funds have come out of oil and other commodities recently as they have had to
cover their losses in equities, so no-one's really driving it right now."
At 11.17 am, London's benchmark Brent crude contracts for September delivery
were up 40 cents at 70.91 usd per barrel, while New York crude contracts for
September delivery rose 41 cents to 72.79 usd per barrel.
Energy companies are monitoring the development of the tropical depression
in the centre of the Gulf of Mexico, home to around a third of domestic US crude
production.
Shell has already chosen to evacuate non-essential personnel because of the
strengthening storm.
Traders will also be watching the movement of Tropical Storm Dean, which
formed between Africa and the Lesser Antilles on Tuesday.
Dean is forecast to become the first Atlantic hurricane this year, with
maximum sustained winds currently at around 50 mph. The National Weather Service
in the US predicts the tropical storm will strengthen over the next 24 hours as
it continues to move west.
"This is the first real hurricane threat of the season, and with the peak of
the season one month hence, this is where the market will focus its attention,"
said Dennis Gartman, editor of the Gartman Letter trading note.
Storm activity during hurricane season adds a premium to oil prices, as
market players fear the impact a hurricane may have on US refining or production
capability.
Elsewhere, the news US hedge fund Sentinel had asked the Commodity Futures
Trading Commission if it could stop allowing withdrawals reignited subprime
fears.
Markets remain nervous about a global credit crunch, with fears liquidity
may dry up in the wake of the US subprime debacle.
With many banks still to calculate losses, and fears end-of-year results may
be worse than predicted, global markets remain jittery with European equities
showing further declines today.
Analysts predict funds could liquid more positions in oil to meet margin
calls, weighing on crude prices. Added to this is the fear oil demand may ease
should the current crisis precede a general economic slowdown.
Aside from potential hurricane activity and the problems in the wider
financial world, market players will be keeping one eye on the weekly snapshot
of US energy inventories, released at 3.30pm London time today by the Energy
Information Administration.
Industry analysts are predicting a fall in crude oil stocks of 2.45 mln
barrels and gasoline to drop by 300,000 barrels, while distillate inventories --
which include heating oil -- are expected to rise by 1 mln barrels in the week
to Aug 10.
However, despite the predictions for a fall in crude and gasoline
inventories, which would generally be seen as bullish for prices, analysts
expect the report to be overshadowed by broader concerns.
"Similar to last week, we think these will be more of a sideshow to the
continued turmoil we are seeing in the bond and equity markets. In the current
atmosphere, we think the inclination will be to sell first and think about
buying later," said MF Global analyst Ed Meir.
Elsewhere, natural gas for September delivery on the Intercontinental
Exchange rose to 26.00 pence per thermal unit from 25.49 pence per thermal unit.
Natural gas for September delivery in New York on the Nymex exchange rose to
7.120 usd per million British thermal units (mmbtu) from 6.940 usd per mmbtu.
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[nobbygnome] 13/8/2007 07:23

I would be very interested to talk to anyone who has bought into TotalTrak via JS Knight. In fact I would like to make contact with anybody who knows anything about TotalTrak or who has experience using JS Knight.

Regards

Nobby

[gateside] 30/7/2007 07:13

30 July 2007


Stock Exchange Announcement

Total Produce acquires Wholefoods Wholesale Ltd.

Total Produce plc, Europe's leading fresh produce company, announces that it has
acquired 92% of Wholefoods Wholesale Ltd. ('Wholefoods'), the health foods
distributor.

Wholefoods is the leading distributor to independent health food stores in
Ireland of high quality health products, including natural foods, vitamins and
mineral supplements. Total Produce welcomes the opportunity to become involved
in this sector which has grown strongly in recent years. The company recorded a
turnover of €18 million in 2006.

Total Produce expects the acquisition to be earnings enhancing from the date of
completion.

[grupo guitarlumber] 14/7/2007 09:22

Russian energy

Behind the Gazprom-Total deal
Jul 13th 2007 | MOSCOW
From Economist.com

Beware Russians bearing gifts

Jupiter
ON THE eve of Bastille Day Russia's president, Vladimir Putin, handed a royal present to the newly elected president of France, Nicolas Sarkozy, by allowing a national French company into Russia's mightily tempting energy sector. After years of deliberations, Gazprom, Russia's state-controlled energy behemoth that doubles up as the Kremlin's foreign-policy arm, has chosen France's Total to develop a giant offshore gas field in the Arctic.

There is little doubt that the deal was struck personally between Mr Putin and Mr Sarkozy. A day before it was announced the two presidents discussed it by phone. Mr Sarkozy must understand that it was not a gift made lightly. For the past five years Gazprom had pondered what to do with the $20 billion Shtokman project, rich enough to supply the entire world's demand for gas for a year. It negotiated with several foreign firms and made them supply detailed bids; it announced a shortlist of companies which included Norway's Statoil and Norsk Hydro and America's Chevron, then last autumn, in a fit of energy nationalism, rejected them all in favour of working alone.

Now it has agreed to give Total a 25% stake in the infrastructure company that will develop the field and share the profit. A further 24% could still be doled out to Norwegian or American companies, while Gazprom will retain 51% of the infrastructure company and 100% of the actual reserves. So why a sudden turn-around, just when Russia's relationship with the West is so cool? One obvious reason is that Gazprom needs foreign expertise and money to develop deposits which lie more than 300 metres under the surface of the Barents Sea, 600km off the coast of Murmansk. Gazprom has limited experience with offshore fields, particularly in such treacherous conditions.

Gazprom needs to compensate for falling production in its other giant fields in western Siberia. If it does not develop Shtokman fast (its target is 2013) the much-trumpeted Nord Stream pipeline now being built across the Baltic Sea to Germany will be empty. Nor would Gazprom's ambition to get a share of the liquefied natural gas market in America-another destination for Shtokman gas-be fulfilled.

Yet this does not explain why Gazprom chose Total, which had been considered the least likely winner. The answer is politics. The decision fits in with the Kremlin's tactic of striking bilateral energy deals within European countries and converting their national energy companies into fervent lobbyists for Moscow's commercial and political interests. The expansion of Gazprom and other national champions into Western markets has long been a Kremlin ambition, but direct and often clumsy approaches have not worked. Now it has powerful agents in the European Union.

The deal with Total completes a set of joint ventures that Gazprom has built in Germany, Italy, Britain and now France. In Germany, Gazprom has a joint venture with BASF and a close relationship with Ruhrgas which owns about 7% of Gazprom and has a seat on its board. Germany's former chancellor, Gerhard Schröder, is the boss of a joint Russo-German consortium that is building the Nord Stream pipeline to Germany. He is one of the Kremlin's most vocal advocates.

In Italy, Gazpom has a warm relationship with ENI and Enel. This year the two Italian companies (also after Mr Putin held a phone conversation with the country's prime minister, Romano Prodi) got a bit of Russian gas reserves. ENI is Gazprom's partner to build an extension of the Blue Stream pipeline across the Black Sea. And just as the relationship between Russia and Britain reached a nadir, BP agreed to form a joint venture and swap assets with Gazprom in exchange for receiving compensation for the loss of the Kovykta gas field. Gazprom may still give BP its 25% in Kovykta back, but it plainly expects favours in return.

The Kremlin's deal with Total is more of the same but it has an additional political dimension. Mr Sarkozy's predecessor, Jacques Chirac, was one of Mr Putin's staunchest supporters in the EU. Many observers have suggested that Mr Sarkozy might take a tougher line. By offering a lucrative deal to Total, Mr Putin has made a pre-emptive strike and has suggested that Mr Sarkozy should emulate his predecessor in his relationship with Russia. The timing is particularly sensitive as the EU and Russia head towards a collision over Kosovo. As Mr Sarkozy celebrates the deal he helped to secure for Total, he may ponder what Moscow expects from him in return.

[gateside] 17/6/2007 09:48

India's war of the vegetables
Market traders are ready to wreck a retail revolution. By Richard Orange in Mumbai

Published: 17 June 2007

"A riot will happen. In Jharkand, it was only one shop. In Mumbai, we could destroy 100 shops."

Ever since mid-May, when an angry crowd of vegetable vendors tore apart a newly-opened Reliance Fresh supermarket in India's Jharkand state, young men like Shamrao Patil at the Vashi vegetable market in Mumbai have been waiting for Reliance Industries to bring its retail revolution to town.

The rumour among the traders is that Reliance will be there within weeks.

"Everybody here's talking about Jharkand," says Sanas, a tomato wholesaler, "and, yes, when Reliance opens in Mumbai we will do the same."

In November Reliance Industries, India's largest private company, began the most rapid roll-out of a supermarket chain in history. In three to four years, Mukesh Ambani, the billionaire behind the chain, plans to have 4,000 to 5,000 shops - twice the number of Tesco's UK supermarkets. Together they will cover 10 million square feet - an area that Reliance says has historically taken 30 to 40 years to achieve in the US or Europe.

The prize? A slice of an Indian food retail market estimated at $200bn (£100bn), which is today entirely in the hands of independent traders like those at Vashi, where all the vegetables needed to feed Mumbai's 18 million population are collected and distributed. Reliance aims to replace India's traditional food-supply chain - its network of growers, wholesalers and farmers' markets - with its own, rationalised system. When the roll-out is complete, the group expects to employ 500,000 people.

Mumbai's vegetable trade union has close to 150,000 members and they know Reliance's arrival spells trouble.

Bhupendra Bhosle, a union member, says: "If Ambani starts collecting vegetables directly from the farmers, the middle men are going to face a lot of unemployment problems."

Starting at 2.30am every day, more than a thousand garishly painted Tata trucks roll up next to Vashi's vast concrete hangar, loaded with chillies and green peas from Chennai, and sacks full of onions, aubergines and green peppers, or crates of tomatoes, from Mumbai's Maharashtra state. They are met by more than 5,000 loaders, who bring the goods to the 1,000 independent wholesalers inside.

Few will willingly reveal their cut. Rather than risk competitors overhearing their quotes, buyers join hands and negotiate in code using their fingers.

But there's certainly much for Reliance to play for. One trader, Dinakar Patil, says he buys 40 to 50 sacks of green chillies, between 2.30am and 4am every day, from an agent at Vashi who in turn imports from Chennai. He pays around 90 rupees for 10kg, which he then sells on for 120-130 rupees a kilo to smaller wholesalers at the Byculla and Dadar markets in central Mumbai.

The speed of the supermarket roll-out is causing growing tension. One week after the violence in Jharkand, a Reliance store was vandalised in Indore in Madhya Pradesh, and the chain has been forced to delay opening in Bhopal in the face of mounting protests.

Politicians are jumping on the bandwagon. Prakash Karat, general secretary of the Communist Party of India (Marxist), a critical block in the ruling United Progressive Alliance, has called for a licence system with strict quotas to limit the spread of local supermarket chains, and an outright ban on the involvement of Wal-Mart, Tesco, Carrefour et al.

Dharmendra Kumar, campaign organiser for No FDI in Retail, a group opposed to international companies in the Indian sector, says: "There's a lot of heat going on, particularly against Reliance Fresh, and the protests are going to become more and more intense in the coming days."

On 9 August, he plans to launch a national campaign called Corporations Quit Retail, which he hopes will bring hundreds of thousands on to the streets across India. But the test will be when Wal-Mart arrives in the early months of next year, opening the first hypermarket of a chain that it hopes will cover 10 million sq feet by 2015. "Wal-Mart is very much a target, says Mr Kumar. "People see it as enemy number one. They have a huge capacity to source goods from outside, which will not only hurt the small retailer but small manufacturers."

Wal-Mart is not necessarily destined to lose. Even at Vashi, not everyone sees the need to protest. Some doubt whether big corporations are as unbeatable as campaigners such as Mr Kumar imagine. Others see exactly which way the tide is turning, and know that Mr Ambani, with his billions, will not be easily deterred by a few broken windows

[ariane] 04/6/2007 12:06

Total, Shell, Esso, Elf charged with dangerous handling of fuel at Nice Airport


PARIS (Thomson Financial) - Total, Royal Dutch Shell, Exxon Mobil unit Esso
and Total division Elf are all to appear in court on Sept 25 charged with
dangerous storage and handling of kerosene fuel at Nice Airport in southern
France, legal sources told Agence France-Presse.
According to the public prosecutor, the companies have kept some of their
fuel in storage trucks on the airport's tarmac, in view of a lack of capacity at
the airport's storage facilities.
The local chamber of commerce is also being prosecuted for allegedly
allowing this situation to occur.
The defendants face fines of 375,000 eur each.

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[gateside] 31/5/2007 22:42

Mumbai-based Tata Chemicals is planning to exploit its rural network to purchase fruits and vegetables from farmers and supply to retail centres via a recently-developed logistics venture. The rural initiative is expected cost to the company Rs 300 million initially, reports Economic Times.

The company planning to set up 2 distribution centres this year in Ludhiana and Kolkata, hopes to increase it 20 over next three years, said Homi Khusrokhan, MD Tata Chemicals .

The company will buy farm produce through its 800-outlet strong Tata Kisan Sansar and distribute it via the joint venture company Total Produce, formed in February with Ireland`s Total Produce.

[waldron] 07/5/2007 16:31

May 07, 2007
TOT: Common Size Analysis of Total SA
By William Trent, CFA of Stock Market Beat

For a book project we are working on we conducted a common size analysis of Total SA's (TOT) financial statements. We figured it would be something worth passing along here.

Total's common-size statements are presented below. The first step in conducting a common-size analysis is to review both the common-size income statements and common-size balance sheets to look for changes and trends that warrant further review. Once the trends are identified, explanations should be sought. Management's discussion of financial performance and the financial statement footnotes are good starting points, provided the reader maintains a healthy skepticism of management's explanations. These internal perspectives should be balanced by external sources such as industry reports, economic data, peer company financial statements and news reports. We present a common-size analysis of Total below including an initial assessment, income statement analysis and balance sheet analysis.

Exhibit 1: Horizontal Common Size Income Statement


Exhibit 2: Vertical Common Size Income Statement


Exhibit 3: Horizontal Common Size Balance Sheet


Exhibit 4: Vertical Common Size Balance Sheet


Initial Assessment

Total's horizontal common-size income statement is presented in Exhibit 1. Revenues grew 22.8% in 2005 and 39.2% cumulatively between 2004 and 2006. Total's horizontal common-size balance sheet is presented in Exhibit 3. Total assets increased by 22.3% in 2005 and declined slightly in 2006 for a cumulative increase of 21.3%. Assets grew at about the same rate as sales in 2005, but fewer assets produced a higher level of sales in 2006, indicating that Total used its assets more efficiently that year.

In Total's Form 20-F filed with the U.S. Securities and Exchange Commission, management notes that the "average oil market environment in 2006 was marked by higher oil prices, with the average Brent oil price increasing 19% to $65.10/b from $54.50/b in 2005." They further disclose that "Oil and gas production in 2006 was 2,356 kboe/d compared to 2,489 kboe/d in 2005, a decrease of 5% due principally to the impacts of the price effect (1) (-2%), shutdowns of production in the Niger Delta area because of security issues (-2%) and changes in the Group's perimeter (-1%). Excluding these items, the positive impact of new field start-ups was offset by normal production declines at mature fields and shutdowns in the North Sea." This explains the apparent productivity increase: rather than producing more petroleum with fewer assets the company produced less. However, due to higher oil prices the revenue from the production more than offset the decline in quantity. By comparing output rather than revenue we see that output declined 5% and assets declined less than 1%. By this measure, efficiency actually decreased rather than increased. Since management has control over production but not commodity prices, this may be a more appropriate measure.

Income Statement

An examination of Total's vertical common-size income statement, presented as Exhibit 2, shows that the while the company was profitable the entire time net profit margin declined steadily from 9.5% in 2004 to 9.2%in 2005 and just 7.9% in 2006. Investors will want to know if this trend is more likely to continue or to reverse. To do this we analyze the components of the income statement.

Excise taxes declined steadily throughout the period, which increased net revenue available to the company. Whatever caused the decline in profit margin had to overcome this positive effect. Purchases offer a partial explanation. Rising crude oil prices hurt operating margins for the refining and retail businesses. However, while this expense grew substantially faster than sales during the three years (48.8% compared to net revenue growth of 39.2%) it does not account for the entire decline in net margins. In fact, Figure 5-1 shows that operating income as a percentage of sales increased in 2005 and the decline in 2006 still left the income from operations higher than it was in 2004. Instead, we see that the decline in net profitability was due to non-operating items: specifically "other income" and an increase in income taxes.

Turning to the 20-F for information, we learn that the biggest reason for the decline was a one-time gain recognized in 2004: "The gains (losses) on sales of assets included a pre-tax dilution gain on the Sanofi-Aventis merger of 2,969 M € in 2004." Without the gain in 2004, other income would only have been 0.1% of sales, and the apparent decline in margins would not have occurred.

With regard to income tax, the effective tax rate has been rising relative to pre-tax income, with the major factor being the difference between French tax rates and foreign tax rates. In particular, "The Venezuelan government has modified the initial agreement for the Sincor project several times. In May, 2006, the organic law on hydrocarbons was amended with immediate effect to establish a new extraction tax, calculated on the same basis as for royalties and bringing the overall tax rate to 33.33%. In September, 2006, the corporate income tax was modified to increase the rate on oil activities (excluding natural gas) to 50%. This new tax rate will come into effect in 2007."

Some expenses can be crucial to a company's future success. For example, pharmaceutical companies rely heavily on research and development. Improved margins due to lower R&D spending may actually be bad news. For oil companies, the equivalent of R&D is exploration costs – expenses related to trying to find new sources of oil. Total's exploration costs were fairly stable as a percentage of revenue.

Another industry-specific expense is depletion, which is the counterpart to exploration and the equivalent of depreciation for fixed assets. When new oil discoveries are made an estimate of the total available oil is added to assets. The depletion charge represents the amount used up each year from the resources.

For forecasting future net margins, we would probably want to use the more recent years as a guideline. Tax rate increases should be considered permanent, and the 2004 net gain appears to have been a one-time event.

Balance Sheet

Note that Total presents its balance sheet with long-term assets and liabilities above current assets and liabilities. This presentation is fairly common outside the United States.

Remember that revenues grew 22.8% in 2005 and 39.2% cumulatively between 2004 and 2006. Total assets increased by 22.3% in 2005 and declined slightly in 2006 for a cumulative increase of 21.3%. When reviewing common-size balance sheets, particular attention should be paid to individual items that are not in line with this trend.

Assets

Beginning with long-term assets, intangible assets rose faster than sales or total assets while tangible assets (property, plant and equipment) grew slower. By their nature intangible assets are difficult to value, and subjective judgment is involved. Investors should always investigate the composition of intangible assets. Looking at Note 10 in Total's 20-F we find that the increase in 2005 was mostly due to acquired mineral rights. Assuming the valuation was performed appropriately this is a valid asset. In 2006 acquisitions of other companies resulted in the change. Rapidly growing intangible assets and slow-growing property and equipment indicates the company may be pursuing a "buy versus build" strategy. In aggregate, long-term tangible and intangible assets amounted to 43.9% of total assets in 2004, 42.3% in 2005 and 43.1% in 2006 – a fairly constant proportion. Equity and other investments also stayed fairly consistent as a percentage of assets.

Hedging instruments of non-current financial debt declined as a percentage of assets. However, looking further down the balance sheet we see that the non-current debt increased in both absolute and percentage terms. It is possible that the company reduced the amount of overall hedges, or that the hedges declined in value (which would normally be offset by a similar change in the fair value of the hedged liability.) The discussion in the 20-F reveals losses is limited to the change between 2005 and 2006, so it is necessary to refer to the 2005 20-F to learn about the large decline between 2004 and 2005. In doing so, we find that currency and interest rate swaps lost value. Currency and interest rate movements were of a favorable direction, so any currency and interest rate hedges were unfavorable. Although the amount of debt changed year/year it is possible to gauge the overall impact by comparing debt maturing in specific years. For example, in 2004 Total had $2,241 million of bonds issued that mature in 2008. In 2005, the amount of 2008 maturities was similar at $2,256. However, the fair value of interest and currency swaps on the 2008 maturities had fallen from $398 million to $117 million. Similar declines were seen across other maturity dates.

From 2005 to 2006 there was a decline in "other non-current financial assets." Note 14 of the 20-F explains that the company used up some deferred tax assets during the year. As discussed in Chapter 3, deferred tax assets represent differences between earnings reported to shareholders and earnings reported to the tax authorities. Assets arise when book earnings are lower than tax earnings, frequently because of tax loss carry-forwards. As the company earns money in future periods it can use these carry-forwards to offset current period taxes. By contrast, deferred tax liabilities arise when the company's reported book earnings are higher than reported tax earnings. This can be caused by use of accelerated depreciation for tax purposes, for example, and represents a tax payment that has been recognized in the income statement but not yet paid. Looking further down the balance sheet, we see that deferred tax liabilities grew in both years, though at a slower rate than either sales or total assets. As a result, they declined as a percentage of assets from 7.2% in 2004 to 6.8% in 2006. In aggregate, non-current assets declined from 62.0% of total assets in 2004 to 59.3% in 2006.

Turning to current assets, both inventories and accounts receivable grew faster than sales or assets in 2005, but declined in 2006. Over the entire two-year period inventories grew faster than total assets but slower than sales. Since sales are made directly from inventory and often result in accounts receivable, the comparison to sales indicates that working capital was efficiently managed in 2006.

Prepaid expenses and other current assets rose faster than assets and in line with sales for the entire period. Investors frequently devote special attention to the "other" category because changes there sometimes indicate earnings management since such assets arise when more earnings appear on the income statement than are collected in cash. Here the 20-F doesn't help, as Note 16 provides a table breaking the category down further but the drivers of the change remain classified as "other."
Cash and equivalents declined considerably. Half of the decline in 2006 was due to currency issues. Current financial assets were up sharply over the two years, which also contributed to the cash decline. According to the 20-F, "Certain financial instruments hedge against risks related to the equity of foreign subsidiaries whose functional currency is not the euro (mainly the U.S. dollar). They qualify as "net investment hedges". Changes in fair value are recorded in shareholders' equity. The fair value of these instruments is recorded under "Current financial assets" or "Other current financial liabilities"." Given that the latter category declined considerably, favorable changes in the value of such hedges would seem to be a likely explanation for both shifts.

Liabilities

Total's long-term liabilities grew just 7.1% in 2005 and declined in 2006. As a percentage of total assets they fell from 18.8% to 15.6%. The main driver of the overall decline was a reduced liability for employee benefits. Looking at Note 18 in the 20F, we find that the expected future obligation has been reduced by approximately €900 million between 2005 and 2006. Specifically, the reduction was due to actuarial gains and losses, which reduced the reported obligation by €1.15 billion but merely reflect actuarial estimates. In addition, currency translation adjustments reduced the expected future liability by €900 million. Investors might want to ignore these adjustments or make their own adjustments to reflect their arbitrary and possibly unsustainable nature. Without these two adjustments the liability would have increased rather than decreased. Non-current debt increased 25.6% cumulatively, which was faster than the growth in total assets but slower than the growth in sales.

Short-term borrowings increased substantially, particularly in 2006. This resulted from a larger portion of the non-current debt coming due in 2007.

Accounts payable ballooned in 2005 but were reduced in 2006 such that cumulative growth was in line with the growth in sales and assets. The large increase in 2005 could have been resulted from an unusually large amount of purchases late in the year. Other current liabilities grew at a slower rate than sales or assets in both periods.

Disclosure: Author is long UNITED STS OIL FD LP UNITS (USO) at time of publication.