Purchase of treasury shares
No treasury shares were purchased on the market during 2013. Saipem SpA holds 1,939,832 treasury shares (1,996,482 at December 31, 2012), amounting to €43 million (€43 million at December 31, 2012). These are ordinary shares of Saipem SpA with a nominal value of €1 each.
At March 14, 2014, the share capital amounted to €441,410,900. On the same day, the number of shares in circulation was 439,471,068.
Consob Regulation on MarketsArticle 36 of Consob Regulation on Markets: conditions for the listing of shares of companies with control over companies established and regulated under the law of non-EU countries
With regard to the regulations setting out conditions for the listing of shares of companies with control over companies established and regulated under the law of non-EU countries that are deemed to be of material significance in relation to the consolidated financial statements, the Company discloses that at December 31, 2013, the following seventeen Saipem subsidiaries fell within the scope of application of the regulation in question:
- Saipem Australia Pty Ltd;
- Petrex SA;
- Snamprogetti Saudi Arabia Co Ltd Llc;
- Saipem Contracting (Nigeria) Ltd;
- PT Saipem Indonesia;
- ER SAI Caspian Contractor Llc;
- Saipem Misr for Petroleum Services (S.A.E.);
- Saipem (Nigeria) Ltd;
- Saudi Arabian Saipem Ltd;
- Global Petroprojects Services AG;
- Saipem America Inc;
- Saipem Asia Sdn Bhd;
- Saipem do Brasil Serviçõs de Petroleo Ltda;
- Saipem Contracting Algérie SpA;
- Saipem Canada Inc;
- Saipem Offshore Norway AS;
- Saipem Drilling Norway AS.
Procedures designed to ensure full compliance with Article 36 have already been adopted.
No further Regulatory Compliance Plans are scheduled for 2014.
Article 37 of Consob Regulation on Markets: conditions preventing the admission to trading on an Italian regulated market of the shares of subsidiaries subject to management and coordination by another company
Pursuant to the requirements set out in paragraph 9 of Article 2.6.2 of the Rules of the Markets organised and managed by Borsa Italiana SpA, the Board of Directors in its meeting of March 14, 2014, ascertained that the Company satisfies the conditions set out in Article 37 of Consob Regulation on Markets for the admission to trading on an Italian regulated market of the shares of subsidiaries subject to management and coordination by another company.
The Board of Directors meeting on March 14, 2014 also verified that the composition of the Board itself, as appointed by the Shareholders’ Meeting of May 4, 2011, and of its internal Committees, was in accordance with letter d), paragraph 1 of Article 37. The Board is in fact made up of a majority of independent directors and the Committees (the Compensation and Nomination Committee and the Audit and Risk Committee) are composed exclusively of independent directors.
Disclosure of transactions with related partiesTransactions with related parties entered into by Saipem and identified by IAS 24 concern mainly the exchange of goods, the supply of services, and the provision and utilisation of financial resources, including entering into derivative contracts. All such transactions are an integral part of ordinary day-to-day business and are carried out on an arm’s length basis (i.e. at conditions which would be applied between independent parties) and in the interest of Group companies.
Directors, general managers and senior managers with strategic responsibilities must declare, every 6 months, any transactions they enter into with Saipem SpA or its subsidiaries, directly or through a third party, in accordance with the provisions of IAS 24.
The amounts of trade, financial or other operations with related parties are provided in Note 44 to the consolidated financial statements.
Transactions with the parent company Eni and companies subject to its direction and coordination
Saipem is subject to the direction and coordination of Eni SpA. Transactions with Eni SpA and with entities subject to its direction and coordination constitute transactions with related parties and are commented on in Note 44 ‘Transactions with related parties’ in the notes to the consolidated financial statements.
Events subsequent to year-endNew contracts
In the first few weeks of 2014, Saipem was awarded contracts amounting to approximately €800 million. The main acquisitions concern Canada and the Republic of Congo. In Canada, CNRL (Canadian Natural Resources) awarded Saipem a number of Onshore E&C contracts for the development of the Hydrotreater Phase 3 of the Horizon Oil Sands Project, in the Athabasca region.
The scope of the contracts includes engineering, procurement and construction of a combined Hydrotreating Unit, a Sour Water Concentrator Unit and a Sulphur Recovery Train Unit, along with the construction works of supporting units. The project will be completed in the first half 2017.
In the Republic of Congo, Eni Congo awarded Saipem a contract for an onshore treatment plan to treat the feed stream from the Litchendjili offshore platform, located south of Pointe-Noire which, transported through a dedicated pipeline, will produce treated gas and stabilised condensate. The scope of work includes engineering, procurement, construction, transport, early gas production, pre-commissioning, commissioning and start-up of the Litchendjili gas treatment plant.
The work will be completed in the second half of 2016.
In February 2014, Saipem was awarded new Offshore Engineering & Construction contracts in Indonesia and the Republic of the Congo with a total value of US $520 million. Details of the contracts can be found in the Company’s press release of February 24, 2014.
In March 2014, Saipem was awarded a contract by Stream Transport BV for the construction of the first line of the South Stream Offshore Pipeline, from Russia to Bulgaria across the Black Sea, for a total value of approximately €2 billion.
OutlookAs in the second half of 2013, delays by Oil Companies in awarding new contracts have led to reduced visibility with regard to expected order backlog levels, which consequently makes it harder to forecast associated revenues and margins.
For this reason, Saipem has chosen to adopt a policy of cautious guidance, reflecting the increased level of uncertainty in today’s market.
For 2014, Saipem expects revenues of between €12.5 and €13.6 billion, EBIT of between €600 and €750 million and a net profit of between €280 and €380 million.
Final results will depend on the outcome of current tenders, on the timing of project awards and on the start date of operations, since this will determine the extent to which revenues and margins earned may be recognised in 2014.
However, the commercial market outlook remains positive, with a large number of contracts to be awarded in the near future for which Saipem holds a solid competitive position, including pipe-laying projects in ultra-deep waters, subsea developments in deep and ultra-deep waters, FPSO construction projects and large highly-technologically complex onshore projects.
Investments are expected to total approximately €750 million and net financial debt is expected to be approximately €4.2 billion, both figures representing decreases on 2013 levels.
2014 should be a year of transition with a return to profitability. The extent of the recovery will depend not only on the pace of contract awards, but also on the efficient operational and commercial execution of low-margin contracts still in the backlog, which in 2014 should account for approximately €5 billion.
Committees of the Board of Directors
In compliance with the provisions of the new Corporate Governance Code for listed companies, the Board of Directors resolved to form:
- the Executive Committee, whose role is to advise the CEO in relation to key business decisions and provide evaluations regarding significant or critical aspects, e.g. reviews of the operating results of the business areas or the Company’s economic-financial performance;
- the Risks Committee, which is responsible for advising the CEO on strategies for managing Saipem’s principal risks;
- the Regulatory System Compliance Committee and the Regulatory System Technical Committee, whose role is to systematically verify that the Company’s regulatory systems are consistent with the compliance and governance models.
Non-GAAP measuresSome of the performance indicators used in the ‘Directors’ Report’ are not included in the IFRS (i.e. they are what are known as non- GAAP measures).
Non-GAAP measures are disclosed to enhance the user’s understanding of the Group’s performance and are not intended to be considered as a substitute for IFRS measures.
The non-GAAP measures used in the ‘Directors’ Report’ are as follows:
- cash flow: the sum of net profit plus depreciation and amortisation;
- capital expenditure: calculated by excluding investments in equity interests from total investments;
- EBITDA: a useful measure for evaluating the operating performance of the Group as a whole and of the individual sectors of activity, in addition to operating profit. EBITDA is an intermediate measure, which is calculated by adding depreciation and amortisation to operating profit;
- non-current assets: the sum of net tangible assets, net intangible assets and investments;
- net current assets: includes working capital and provisions for contingencies;
- net capital employed: the sum of non-current assets, working capital and the provision for employee benefits;
- funding: shareholders’ equity, minority interest and net borrowings.
Pursuant to Article 2428 of the Italian Civil Code, the Company declares that it has a secondary office in Cortemaggiore (PC), Via Enrico Mattei, 20.