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Summarized Group Cash Flow Statement

Eni’s summarized group cash flow statement derives from the statutory statement of cash flows. It enables investors to understand the link existing between changes in cash and cash equivalents (deriving from the statutory cash flows statement) and in net borrowings (deriving from the summarized cash flow statement) that occurred from the beginning of the period to the end of period. The measure enabling such a link is represented by the free cash flow which is the cash in excess of capital expenditure needs. Starting from free cash flow it is possible to determine either:

(i) changes in cash and cash equivalents for the period by adding/deducting cash flows relating to financing debts/receivables (issuance/repayment of debt and receivables related to financing activities), shareholders’ equity (dividends paid, net repurchase of own shares, capital issuance) and the effect of changes in consolidation and of exchange rate differences; and (ii) change in net borrowings for the period by adding/deducting cash flows relating to shareholders’ equity and the effect of changes in consolidation and of exchange rate differences. The free cash flow is a non-GAAP measure of financial performance.

Summarized Group Cash Flow Statement (a)

2010 (€ million) 2011 2012 Change
7,264 Net profit - continuing operations 7,877 4,941 (2,936)
Adjustments to reconcile net profit to net cash provided by operating activities:
8,521 - depreciation, depletion and amortization and other non monetary items 8,606 11,354 2,748
(558) - net gains on disposal of assets (1,176) (875) 301
8,829 - dividends, interests, taxes and other changes 9,918 11,923 2,005
(1,158) Changes in working capital related to operations (1,696) (3,373) (1,677)
(8,758) Dividends received, taxes paid, interest (paid) received (9,766) (11,614) (1,848)
14,140 Net cash provided by operating activities - continuing operations 13,763 12,356 (1,407)
554 Net cash provided by operating activities - discontinued operations 619 15 (604)
14,694 Net cash provided by operating activities 14,382 12,371 (2,011)
(12,450) Capital expenditure - continuing operations (11,909) (12,761) (852)
(1,420) Capital expenditure - discontinued operations (1,529) (756) 773
(13,870) Capital expenditure (13,438) (13,517) (79)
(410) Investments and purchase of consolidated subsidiaries and businesses (360) (569) (209)
1,113 Disposals 1,912 6,014 4,102
228 Other cash flow related to capital expenditure, investments and disposals 627 (136) (763)
1,755 Free cash flow 3,123 4,163 1,040
(26) Borrowings (repayment) of debt related to financing activities (b) 41 (83) (124)
2,272 Changes in short and long-term financial debt 1,104 5,947 4,843
(4,099) Dividends paid and changes in non-controlling interest and reserves (4,327) (3,746) 581
39 Effect of changes in consolidation and exchange differences 10 (16) (26)
(59) NET CASH FLOW (49) 6,265 6,314

Change in net borrowings

2010 (€ million) 2011 2012 Change
1,755 Free cash flow 3,123 4,163 1,040
(33) Net borrowings of acquired companies   (2) (2)
Net borrowings of divested companies (192) 12,446 12,638
(687) Exchange differences on net borrowings and other changes (517) (340) 177
(4,099) Dividends paid and changes in non-controlling interest and reserves (4,327) (3,746) 581
(3,064) CHANGE IN NET BORROWINGS (1,913) 12,521 14,434
  1. For a reconciliation to the statutory statement of cash flow see the paragraph “Reconciliation of Summarized Group Balance Sheet and Statement of Cash Flow to Statutory Schemes”.
  2. This item includes investments in certain financial instruments not related to operations (securities, escrow accounts) to absorb temporary surpluses of cash or as a part of our ordinary management of financing activities. Due to their nature and the circumstance that they are very liquid, these financial instruments are netted against finance debt in determining net borrowings. Cash flows of such investments/disposals were as follows:
2010 (€ million) 2011 2012 Change
Financing investments:
(50) - securities (21)   21
(13) - financing receivables (26) (1,131) (1,105)
(63) (47) (1,131) (1,084)
Disposal of financing investments:
5 - securities 71 4 (67)
32 - financing receivables 17 1,044 1,027
37 88 1,048 960
(26) Cash flows of financial investments not related to operations 41 (83) (124)

Net cash provided by operating activities of continuing operations (€12,356 million) and proceeds from disposals of €6,014 million funded cash outflows relating to capital expenditure totalling €12,761 million and investments (€569 million) relating to the acquisition of Nuon in Belgium and joint venture projects, as well as dividend payments amounting to €4,379 million (of which €1,956 million relating to the 2012 interim dividend and €1,884 million to the balance dividend for fiscal year 2011 to Eni’s shareholders and the remaining part related to other dividend payments to non-controlling interests). Disposals of assets mainly regarded the divestment of 30% interest less one share in Snam to Cassa Depositi e Prestiti (€3,517 million), two tranches of the interest in Galp for an overall amount of €963 million (a 5% interest sold to Amorim BV and a 4% sold through an accelerated book-building procedure), a 10% interest in the Karachaganak field (approximately €500 million) and other non-strategic assets in the Exploration & Production Division (€695 million). The proceeds on the divestment of a 5% interest in Snam before loss of control to institutional investors (€612 million) were recognized as an equity transaction.

Capital expenditure

2010 (€ million) 2011 2012 Change % Ch.
9,690 Exploration & Production 9,435 10,307 872 9.2
- acquisition of proved and unproved properties 754 43
1,012 - exploration 1,210 1,850
8,578 - development 7,357 8,304
100 - other expenditure 114 110
265 Gas & Power 192 225 33 17.2
248 - marketing 184 212
17 - international transport 8 13
711 Refining & Marketing 866 842 (24) (2.8)
446 - refining, supply and logistics 629 622
246 - marketing 228 220
19 - other activities 9
251 Chemicals 216 172 (44) (20.4)
1,552 Engineering & Construction 1,090 1,011 (79) (7.2)
22 Other activities 10 14 4 ..
109 Corporate and financial companies 128 152 24 18.8
(150) Impact of unrealized intragroup profit elimination (28) 38 66
12,450 Capital expenditure - continuing operations 11,909 12,761 852 7.2
1,420 Capital expenditure - discontinued operations 1,529 756 (773) (50.6)
13,870 Capital expenditure 13,438 13,517 79 0.6

In 2012, capital expenditure of continuing operations amounted to €12,761 million, mainly relating to:

  • development activities deployed mainly in Norway, the United States, Congo, Italy, Kazakhstan, Angola and Algeria, and exploratory activities of which 98% was spent outside Italy, primarily in Mozambique, Liberia, Ghana, Indonesia, Nigeria, Angola and Australia;
  • upgrading of the fleet used in the Engineering & Construction Division (€1,011 million);
  • refining, supply and logistics with projects designed to improve the conversion rate and flexibility of refineries(€622 million),
  • in particular at the Sannazzaro refinery, as well as upgrading and rebranding of the refined product retail network (€220 million);
  • initiatives to improve flexibility of the combined cycle power plants (€131 million).

Dividends paid and changes in non-controlling interests and reserves amounting to €3,746 million mainly related to the payment of cash dividends to Eni shareholders (€3,840 million of which €1,956 million, relating to the 2012 interim dividend) and the distribution of dividends to non-controlling interest by Snam, Saipem and other consolidated subsidiaries (€539 million), as well as the proceeds on the divestment of an interest of 5% in Snam before loss of control to institutional investors (€612 million) recognized as an equity transaction.

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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.