Balance sheet and financial position

Saipem Group - Reclassified consolidated balance sheet (1)

The reclassified consolidated balance sheet aggregates asset and liability amounts from the statutory balance sheet according to function, under three basic areas: operating, investing and financing.

Management believes that the reclassified consolidated balance sheet provides useful information in assisting investors to assess Saipem’s capital structure and to analyse its sources of funds and investments in fixed assets and working capital.

(€ million)Dec. 31, 2012 approved Dec. 31, 2012 restated Dec. 31, 2013 
Net tangible assets    8,254    8,254    7,972 
Net intangible assets    756    756    758 
    9,010    9,010    8,730 
- Offshore Engineering & Construction  4,064    4,064    3,849   
- Onshore Engineering & Construction  513    513    589   
- Offshore Drilling  3,535    3,535    3,351   
- Onshore Drilling  898    898    941   
Investments    116    116    126 
Non-current assets    9,126    9,126    8,856 
Net current assets    922    687    828 
Employee termination indemnities    (217)    (255)    (233) 
Capital employed, net    9,831    9,558    9,451 
Shareholders’ equity   5,405    5,132    4,652 
Minority interest    148    148    92 
Net debt    4,278    4,278    4,707 
Funding    9,831    9,558    9,451 
Leverage ((net borrowings/shareholders’ equity including minority interest)    0.77    0.77    0.99 
No. shares issued and outstanding        441,410,900    441,410,900 

(1) See ‘Reconciliation of reclassified balance sheet, income statement and cash flow statement to statutory schemes’ on page 63.

Management uses the reclassified consolidated balance sheet to calculate key ratios such as the Return On Average Capital Employed (ROACE) and leverage (used to indicate the robustness of the company’s capital structure).

Non-current assets at December 31, 2013 stood at €8,856 million, representing a decrease of €270 million compared to December 31, 2012. The decrease was the result of capital expenditure of €908 million, positive changes in investments accounted for using the equity method of €13 million, depreciation and amortisation of €724 million, disposals of fixed assets of €255 million relating principally to the sale of the FPSO Firenze to Eni, a write off of €108 million relating principally to the sinking on July 1, 2013 of the jack-up Perro Negro 6 and negative changes of €104 million deriving mainly from the translation of financial statements in foreign currencies.

Net current assets increased by €141 million, from €687 million to €828 million. From an operating perspective, net current assets fell by €94 million, from €922 million at December 31, 2012 to €828 million at December 31, 2013, due to an increase in working capital that related principally to the sale of the FPSO Firenze to Eni.

The provision for employee benefits amounted to €233 million, representing an increase of €16 million compared with December 31, 2012.

As a result of the above, net capital employed decreased by €352 million, reaching €9,451 million at December 31, 2013, compared with €9,831 million at December 31, 2012.

Shareholders’ equity, including minority interest, decreased by €536 million, to €4,744 million at December 31, 2013, versus €5,280 million at December 31, 2012. From an operating perspective, shareholders’ equity, including minority interest, decreased by €809 million to €4,744 million at December 31, 2013, compared with €5,553 million at December 31, 2012.

This decrease reflected the negative effect of the net result for the year of -€381 million, dividend distribution of €375 million, the translation into euro of financial statements expressed in foreign currencies and other variations amounting to €99 million and the effect of the application of IAS 19 of €28 million, which was partially offset by fair value gains of €37 million on exchange rate and commodity hedging instruments as well as positive effects of €37 million deriving mainly from the transfer of the business division Snamprogetti Ltd.

The decrease in net capital employed, which was smaller than the decrease in shareholders’ equity, led to an increase of €429 million in net borrowings, from €4,278 million at December 31, 2012, to €4,707 million at December 31, 2013.

Analysis of net borrowings

(€ million)Dec. 31, 2012 Dec. 31, 2013 
Financing receivables due after one year  (1)  (1) 
Payables to banks due after one year  200  200 
Payables to other financial institutions due after one year  3,343  2,659 
Net medium/long-term debt  3,542  2,858 
Accounts c/o bank, post office and Group finance companies  (1,320)  (1,348) 
Available-for-sale securities  - (26) 
Cash and cash on hand  (5)  (4) 
Financing receivables due within one year  (79)  (30) 
Payables to banks due within one year  211  192 
Payables to other financial institutions due within one year  1,929  3,065 
Net short-term debt  736  1,849 
Net debt  4,278  4,707 

The fair value of derivative assets (liabilities) is detailed in Note 7 ‘Other current assets’, Note 18 ‘Other current liabilities’ and Note 23 ‘Other non-current liabilities’.

A breakdown by currency of gross debt, amounting to €6,116 million, is provided in Note 14 ‘Short-term debt’ and Note 19 ‘Long-term debt and current portion of long-term debt’.

Statement of comprehensive income

(€ million)Dec. 31, 2012 approved Dec. 31, 2012 restated Dec. 31, 2013 consistent Dec. 31, 2013 
Net profit (loss) for the year  956  713  (381)  (136) 
Other items of comprehensive income         
Items that will not be reclassified subsequently to profit or loss:         
- remeasurements of defined benefit plans for employees  - (19)  12  12 
- income tax on items that will not be reclassified to profit or loss  - (3)  (3) 
Items that may be reclassified subsequently to profit or loss:        
- change in the fair value of cash flow hedges (1)  131  131  45  45 
- share of other comprehensive income of investments accounted for using the equity method  - - - -
- exchange rate differences arising from the translation into euro of financial statements currencies other than the euro  (33)  (33)  (95)  (95) 
- income tax on items that may be reclassified subsequently to profit or loss  (24)  (24)  (8)  (8) 
Total other items of comprehensive income, net of taxation  74  61  (49)  (49) 
Total comprehensive income (loss) for the year  1,030  774  (430)  (185) 
Attributable to:         
- Saipem Group  979  723  (449)  (204) 
- minority interest  51  51  19  19 

(1) The change in the fair value of cash flow hedges relates almost exclusively to transactions with the parent company Eni.

Shareholders’ equity including minority interest

(€ million) 
Shareholders’ equity including minority interest at December 31, 2012  5,280 
Total comprehensive income  (185) 
Dividend distribution  (375) 
Sale of treasury shares  -
Other changes  24 
Total changes  (781) 
Shareholders’ equity including minority interest at December 31, 2013   
Attributable to:   
- Saipem Group  4,652 
- minority interest  92 

Reconciliation of statutory net result and shareholders’ equity to consolidated net result and shareholders’ equity

 Shareholders’ equityNet profit (loss) 
(€ million)Dec. 31, 2012 restatedDec. 31, 2013 Dec. 31, 2012 restatedDec. 31, 2013 
As reported in Saipem SpA’s financial statements  1,454  1,460  267  277 
Difference between the equity value and results of consolidated companies and the equity value and results of consolidated companies as accounted for in SpA’s financial financial statements 3,388  2,849  536  (445) 
Consolidation adjustments, net of effects of taxation:         
- difference between purchase cost and underlying book value of shareholders’ equity 818  812  (5)  (5) 
- elimination of unrealized intercompany profits  (402)  (399)  (18) 
- other adjustments  22  22  (67)  36 
Total shareholders’ equity 5,280  4,744  713  (136) 
Minority interest  (148)  (92)  (54)  (23) 
As reported in the consolidated financial statements  5,132  4,652  659  (159)