The methods used to calculate value added, the injury frequency rate and injury severity rate, the refining energy intensity index, the emission index and the value generated by research are shown below.
Value added represents the wealth generated by the Company in carrying out its activities. The form chosen for this report is total added value net of amortization. Total net added value is divided between the following beneficiaries: employees (direct remuneration composed of wages, salaries and TFR - employee termination indennity - and indirect remuneration consisting of social welfare contributions); Public Administration (income tax); financial backers (medium and long-term interest paid for the availability of borrowed capital); shareholders (dividends distributed); the Company (retained earnings).
With regard to safety performance, injury frequency and severity rates are shown for employees and contractors. The frequency rate is calculated as the number of accidents leading to days of absence (including fatalities) divided by millions of worked hours; the severity rate is defined as the ratio between the days of absence 24 due to accident (excluding fatalities) and thousands of worked hours. The calculation of the injury frequency rate and severity rate does not take into account accidents while travelling.
The energy intensity index of refineries represents the total value of energy actually used in a given year in the various refinery processing plants, divided by the corresponding value determined on the basis of predefined standard consumption values for each processing plant.
For comparisons between years, 2005 data have been taken as the baseline (100%). In order to highlight medium and long-term performance on CO2 emissions, three indexes have been defined to represent the following operating contexts: hydrocarbon production, refining and electricity generation. These indexes take into account the substantial differences in working conditions recorded over the years and allow for performance comparison by normalization of the emissions based on operating data.
The indexes of refineries are calculated from the equivalent distillation capacity provided by a third party entity; the hydrocarbon production indexes cover effective net production; and the energy sector indexes measure electrical and thermal energy produced in equivalent kWh. Greenhouse gas emissions (GHG) relate to CO2 and CH4 (methane); methane is converted into CO2eq using a Global Warming Potential (GWP) of 21.
The new method for assessing the value generated from research allows the benefits of R&D to be calculated in terms of both tangible value and intangible value. The tangible benefits measure the value created for the Company through the application of innovative product/process technologies. This value is calculated using the operating data of the division/company or official models used to assess the value of industrial projects as a starting point. The assumptions applied on a case by case basis for the calculation are shared with the relevant technical structures/business lines. The tangible benefits are identified in a “what if” scenario, that is as the difference derived from comparison with the application of the best alternative technology or, in the case of new products, as the difference compared to the margin generated by the products replaced. The benefits may be identified based on actual results or expected value (net present value - NPV). In particular, benefits of E&P projects are entirely taken into account, including the shares of partners. Intangible benefits are identified by assessing on the one hand the effectiveness and efficiency of Company innovative capacity over time through the number of first time patent applications filed and, on the other, the spread of specialist know-how and the effectiveness of research in providing support for operating activities.