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Summarized Group Balance Sheet

The summarized group balance sheet aggregates the amount of assets and liabilities derived from the statutory balance sheet in accordance with functional criteria which consider the enterprise conventionally divided into the three fundamental areas focusing on resource investments, operations and financing. Management believes that this summarized group balance sheet is useful information in assisting investors to assess Eni’s capital structure and to analyze its sources of funds and investments in fixed assets and working capital. Management uses the summarized group balance sheet to calculate key ratios such as return on capital employed (ROACE) and the proportion of net borrowings to shareholders’ equity (leverage) intended to evaluate whether Eni’s financing structure is sound and well-balanced.

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Summarized Group Balance Sheet (a)

(€ million) December 31,
2011
December 31,
2012
Change
Fixed assets
Property, plant and equipment 73,578 63,466 (10,112)
Inventories – Compulsory stock 2,433 2,538 105
Intangible assets 10,950 4,487 (6,463)
Equity-accounted investments and other investments 6,242 9,350 3,108
Receivables and securities held for operating purposes 1,740 1,457 (283)
Net payables related to capital expenditure (1,576) (1,142) 434
  93,367 80,156 (13,211)
Net working capital
Inventories 7,575 8,496 921
Trade receivables 17,709 19,966 2,257
Trade payables (13,436) (14,993) (1,557)
Tax payables and provisions for net deferred tax liabilities (3,503) (3,318) 185
Provisions (12,735) (13,603) (868)
Other current assets and liabilities 281 2,347 2,066
  (4,109) (1,105) 3,004
Provisions for employee post-retirement benefits (1,039) (982) 57
Assets held for sale including related liabilities 206 155 (51)
CAPITAL EMPLOYED, NET 88,425 78,224 (10,201)
Eni shareholders’ equity 55,472 59,199 3,727
Non-controlling interest 4,921 3,514 (1,407)
Shareholders’ equity 60,393 62,713 2,320
Net borrowings 28,032 15,511 (12,521)
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 88,425 78,224 (10,201)
  1. For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flows to Statutory Schemes”.

The Group’s Balance Sheet as of December 31, 2012 was impacted by the appreciation of the euro against the US dollar, which was up by 2% from December 31, 2011 (from 1.294 to 1.319 dollars per euro as of December 31, 2012). This trend decreased net capital employed and net equity by €709 million and €717 million, respectively, as well as increased net borrowings by €8 million, as a result of exchange rate differences.

At December 31, 2012, net capital employed totaled €78,224 million, representing a decrease of €10,201 million from December 31, 2011 reflecting the deconsolidation of Snam and its subsidiaries’ assets, following loss of control as part of the transaction with Cassa Depositi e Prestiti.

Fixed assets

Fixed assets amounted to €80,156 million, representing a decrease of €13,211 million from December 31, 2011, reflecting the deconsolidation of Snam and its subsidiaries’ assets and depreciation, depletion, amortization and impairment charges (€13,561 million), partly offset by capital expenditure incurred by continuing operations (€12,761 million).

The item “Equity-accounted investments and other investments” increased by €3,108 million due to the increased book value of Eni’s residual interests in Snam and Galp which were reclassified as available-for-sale financial assets and initially measured at market fair value through profit at the date of loss of control and of the significant influence in the investees, and then re-measured at market fair value at the balance sheet date. At the balance sheet date, the residual interest of 20.2% in Snam was substantially unchanged from the initial recognition value equal to €2,408 million. Furthermore, the residual stake in Galp (an interest of 24.34%) was valued at €2,374 million, and included: (i) Eni’s share of the gain on the capital increase made by Galp’s subsidiary Petrogal whereby a new shareholder, Sinopec subscribed for its share of the capital increase by contributing a cash amount which was in excess of the net book value of the interest acquired (€835 million); (ii) the market fair value evaluation at the date of loss of significant influence (€865 million) and the re-measurement at market fair value at the balance sheet date (€198 million), net of the 5% interest sold to Amorim BV and the 4% interest sold through an accelerated book-building procedure, for a total amount of €652 million.

Net payables related to investing activities decreased following recognition of a receivable relating to the divestment of a 10% interest in the Karachaganak project to the Kazakh partner KazMunaiGas, amounting to €212 million as at the balance sheet date, as the first tranches were reimbursed as part of the settlement agreement.

Net working capital

Net working capital amounted to a negative €1,105 million, representing an increase of €3,004 million mainly due to:

  • increased “Other current assets, net” (up by €2,006 million) referring mainly to: i) the deconsolidation of Snam; ii) the payment of payables due to the Company’s gas suppliers which were recorded on the take-or-pay position accrued in 2012 including payment of outstanding receivables at the beginning of the year (approximately €500 million);
  • increasing oil, gas and petroleum products inventories, in particular contracts work in progress (up €921 million);
  • increasing the balance between trade receivables and payables (up € 700 million), in particular in the Gas & Power Division.

Those increases were partly absorbed by higher risk provisions mainly accrued in connection with the price revision at certain gas contracts and estimate revisions caused by a reduction in interest rates used to discount the liabilities.

Net assets held for sale including related liabilities

(€155 million) mainly related to non-strategic assets of the Exploration & Production Division and the company Super Octanos in the Refining & Marketing Division.

Leverage and net borrowings

Leverage is a measure used by management to assess the Company’s level of indebtedness. It is calculated as a ratio of net borrowings – which is calculated by excluding cash and cash equivalents and certain very liquid assets from financial debt to shareholders’ equity, including minority interest. Management periodically reviews leverage in order to assess the soundness and efficiency of the Group balance sheet in terms of optimal mix between net borrowings and net equity, and to carry out a benchmarking analysis with industry standards.

 (€ million) December 31,
2011
December 31,
2012
Change
Total debt: 29,597 24,463 (5,134)
- Short-term debt 6,495 5,184 (1,311)
- Long-term debt 23,102 19,279 (3,823)
Cash and cash equivalents (1,500) (7,765) (6,265)
Securities held for non-operating purposes (37) (34) 3
Financing receivables for non-operating purposes (28) (1,153) (1,125)
Net borrowings 28,032 15,511 (12,521)
Shareholders’ equity including non-controlling interest 60,393 62,713 2,320
Leverage 0.46 0.25 (0.21)

Net borrowings as of December 31, 2012 amounted to €15,511 million and decreased by €12,521 million from December 31, 2011 mainly due to the divestment of a 30% interest in Snam to Cassa Depositi e Prestiti (€3,517 million) and, following the loss of control in this entity, the deconsolidation of Snam net borrowings of €12,448 million. Prior to the divestment, Snam had already reimbursed intercompany loans.

Total debt amounted to €24,463 million, of which €5,184 million were short-term (including the portion of long-term debt due within 12 months equal to €2,961 million) and €19,279 million were long-term.

Financing receivables for non-operating purposes amounted to €1,153 million including receivables vs. Cassa Depositi e Prestiti related to the third tranche of the payment of Snam transaction (€879 million), paid in February 2013.

The ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage – decreased to 0.25 at December 31, 2012, from 0.46 as of December 31, 2011.

Comprehensive income

2010 (€ million) 2011 2012
7,383 Net profit 7,803 8,673
Other items of comprehensive income:
2,169 Foreign currency translation differences 1,031 (717)
  Fair value evaluation of Eni’s interest in Galp   133
  Fair value evaluation of Eni’s interest in Snam   8
443 Change in the fair value of cash flow hedging derivatives 352 (102)
(9) Change in the fair value of available-for-sale securities (6) 16
(10) Share of "Other comprehensive income" on equity-accounted entities (13) 7
(175) Taxation (128) 32
2,418 1,236 (623)
9,801 Total comprehensive income 9,039 8,050
Attributable to:
8,699 - Eni’s shareholders 8,097 7,183
1,102 - Non-controlling interest 942 867

Changes in Shareholders’ equity

(€ million)
Shareholders’ equity including non-controlling interest at December 31, 2011 60,393
Comprehensive income 8,050
Dividends distributed to Eni’s shareholders (3,840)
Dividends distributed by consolidated subsidiaries (686)
Impact of Snam divestment on non-controlling interest (1,602)
Gain on the divestment of Eni’s stake in Snam 371
Sale of treasury shares of Saipem 29
Stock options expired (7)
Acquisition of non-controlling interest relating to Altergaz SA and Tigáz Zrt (7)
Other changes 12
Total changes 2,320
Shareholders’ equity including non-controlling interest at December 31, 2012 62,713
Attributable to:
- Eni’s shareholders 59,199
- Non-controlling interest 3,514

Shareholders’ equity including non-controlling interest was €62,713 million, representing an increase of €2,320 million from December 31, 2011. This was due to comprehensive income for the year (€8,050 million) as a result of net profit (€8,673 million), the revaluation of Eni’s residual interests in Galp and Snam at market fair value through equity at period end (up €133 million and €8 million, respectively) as they were classified as a financial instrument excluding those portions of interest revaluation that were recognized through profit as management elected the fair value option for the shares underlying convertible bonds in accordance with IFRS. Shareholders’ equity was negatively impacted by foreign currency translation differences (€717 million). In addition, total equity increased following the divestment of a 5% non-controlling interest in Snam to institutional investors that occurred in July 2012, i.e. before loss of control which also determined an increase in the Group’s equity as the transaction consideration was higher than the corresponding book value disposed of (€371 million). These additions were partly absorbed by dividend payments to Eni’s shareholders and non-controlling interest (for a total amount of €4,526 million) and by the impact on non-controlling interest following the deconsolidation of Snam (€1,602 million).

Reconciliation of net profit and shareholders’ equity of the parent company Eni SpA to consolidated net profit and shareholders’ equity

 Net profit Shareholders’ equity
(€ million) 2011 2012 Dec. 31,
2011
Dec. 31,
2012
As recorded in Eni SpA’s financial statements 4,213 9,078 35,255 40,577
Excess of net equity in individual accounts of consolidated subsidiaries over their
corresponding carrying amounts in the statutory accounts of the parent company
3,972 258 24,355 21,663
Consolidation adjustment:        
- differences between purchase cost and underlying carrying amounts of net equity (320) (2,683) 4,400 1,503
- elimination of tax adjustments and compliance with Group account policies (248) 1,222 (673) 739
- elimination of unrealized intercompany profits 115 638 (4,291) (2,652)
- deferred taxation 71 160 1,337 873
- other adjustments     10 10
  7,803 8,673 60,393 62,713
Non-controlling interest (943) (885) (4,921) (3,514)
As recorded in the Consolidated Financial Statements 6,860 7,788 55,472 59,199

Eni S.p.a. - Registered Head Office
Piazzaie Enrico Mattei, 1
00144 Roma

Branches
Via Emilia, 1
e Piazza Ezio Vanoni, 1
20097 - San Donato Milanese (MI)

VAT number
n. 00905811006

Company share capital
€ 4.005.358.876,00 paid up.

Rome Company Register
Tax Identification Number. 00484960588

Mission
We are a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges, continuous improvement, excellence and particularly value people, the environment and integrity.