performance
main results
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Financial highlights
in a Brent price scenario of 53 $/bl
Capex
-17%Upstream opex
-13%G&A
-€0.6 blnSaipem disposal
boe/d
- Key data
- Summary financial data
-
Key financial data(*)
(€ million)
2013
2014
2015
(*)
Pertaining to continuing operations. Following the divestment plan of Saipem and Versalis, the two operating segments E&C and Chemical have been classified as discontinued operations based on the guidelines of IFRS 5. The comparative reporting periods have been restated consistently.
(a)
Attributable to Eni’s shareholders.
Net sales from operations
98,547
93,187
67,740
Group operating profit (loss)
8,888
7,917
(4,561)
Group adjusted operating profit (loss)
12,650
11,574
4,315
Group net profit loss(a) – (continuing + discontinued operations)
5,160
1,291
(8,783)
Group adjusted net profit (loss)(a)
4,430
3,707
436
Net cash provided from operating activities
11,026
15,110
11,903
Capital expenditure
12,800
12,240
11,556
Shareholders' equity including non-controlling interests at year end
61,049
62,209
53,669
Net borrowings at year end
14,963
13,685
16,863
Net capital employed at year end
76,012
75,894
70,532
-
Summary financial data
2013
2014
2015
(a)
Fully diluted. Ratio of net profit (loss)/cash flow and average number of shares outstanding in the period. Dollar amounts are converted on the basis of the average EUR/USD exchange rate quoted by ECB for the period presented.
(b)
One American Depositary Receipt (ADR) is equal to two Eni ordinary shares.
(c)
Ratio of dividend for the period and the average price of Eni shares as recorded in December.
Net profit (loss) - continuing operations
- per share(a)
(€)
0.96
0.03
(2.13)
- per ADR(a)(b)
($)
2.55
0.08
(4.73)
Adjusted net profit (loss) - continuing operations
- per share(a)
(€)
0.69
0.61
(0.19)
- per ADR(a)(b)
($)
1.83
1.62
(0.42)
Cash flow - continuing operations
- per share(a)
(€)
3.20
3.65
3.10
- per ADR(a)(b)
($)
8.49
9.69
6.89
Adjusted return on average capital employed (ROACE)
(%)
8.2
6.6
1.2
Leverage
0.25
0.22
0.31
Current ratio
1.5
1.5
1.4
Debt coverage
77.4
96.2
66.3
Dividends pertaining to the year
(€ per share)
1.10
1.12
0.80
Pay-out
(%)
80
313
(33)
Dividend yield(c)
(%)
6.5
7.6
5.7
of resources discovered in the year
at year end
progressing for the eleventh consecutive year
Financial review
Capital expenditure |
|||||
|
|
|
|
|
|
(€ million) |
2013 |
2014 |
2015 |
Change |
% Ch. |
Exploration & Production |
10,475 |
10,524 |
10,234 |
(290) |
(2.8) |
- acquisition of proved and unproved properties |
109 |
|
|
|
|
- exploration |
1,669 |
1,398 |
820 |
|
|
- development |
8,580 |
9,021 |
9,341 |
|
|
- other expenditure |
117 |
105 |
73 |
|
|
Gas & Power |
229 |
172 |
154 |
(18) |
(10.5) |
Refining & Marketing |
672 |
537 |
408 |
(129) |
(24.0) |
Corporate and other activities |
211 |
113 |
64 |
(49) |
.. |
Impact of unrealized intragroup profit elimination |
(3) |
(82) |
(85) |
(3) |
|
Capital expenditure - continuing operations |
11,584 |
11,264 |
10,775 |
489) |
(4.3) |
Capital expenditure - discontinued operations |
1,216 |
976 |
781 |
(195) |
(20.0) |
Capital expenditure |
12,800 |
12,240 |
11,556 |
(684) |
(5.6) |
Adjusted results(*) |
|||||||
|
|
|
|
|
|
||
(€ million) |
2013 |
2014 |
2015 |
Change |
% Ch. |
||
|
|||||||
Adjusted operating profit (loss) - continuing operations |
11,280 |
10,447 |
3,795 |
(6,652) |
(63.7) |
||
Reinstatement of intercompany transactions vs. disc. Op. |
1,856 |
995 |
309 |
|
|
||
Adjusted operating profit (loss) - continuing operations on a standalone basis |
13,136 |
11,442 |
4,104 |
(7,338) |
(64.1) |
||
|
|
|
|
|
|
||
Net profit (loss) attributable to Eni's shareholders - continuing operations |
3,472 |
101 |
(7,680) |
(7,781) |
.. |
||
Exclusion of inventory holding (gains) losses |
291 |
890 |
561 |
|
|
||
Exclusion of special items |
(1,264) |
1,209 |
6,421 |
|
|
||
Adjusted net profit (loss) attributable to Eni's shareholders - continuing operations |
2,499 |
2,200 |
(698) |
(2,898) |
.. |
||
Reinstatement of intercompany transactions vs. disc. Op. |
1,355 |
1,654 |
1,032 |
|
|
||
Adjusted net profit (loss) attributable to Eni's shareholders on a standalone basis |
3,854 |
3,854 |
334 |
(3,520) |
(91.3) |
||
Tax Rate (%) |
63.2 |
65.3 |
93.0 |
|
|
||
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 the proportion of net borrowings to shareholders’ equity (leverage) intended to evaluate whether Eni’s financing structure is sound and well-balanced.
Summarized Group Balance Sheet |
|||
|
|
|
|
(€ million) |
December 31, 2014 |
December 31, 2015 |
Change |
Fixed assets |
|
|
|
Property, plant and equipment |
71,962 |
63,795 |
(8,167) |
Inventories - Compulsory stock |
1,581 |
909 |
(672) |
Intangible assets |
3,645 |
2,433 |
(1,212) |
Equity-accounted investments and other investments |
5,130 |
3,263 |
(1,867) |
Receivables and securities held for operating purposes |
1,861 |
2,026 |
165 |
Net payables related to capital expenditure |
(1,971) |
(1,276) |
695 |
|
82,208 |
71,150 |
(11,058) |
Net working capital |
|
|
|
Inventories |
7,555 |
3,910 |
(3,645) |
Trade receivables |
19,709 |
12,022 |
(7,687) |
Trade payables |
(15,015) |
(9,345) |
5,670 |
Tax payables and provisions for net deferred tax liabilities |
(1,865) |
(3,133) |
(1,268) |
Provisions |
(15,898) |
(15,266) |
632 |
Other current assets and liabilities |
222 |
1,804 |
1,582 |
|
(5,292) |
(10,008) |
(4,716) |
Provisions for employee post-retirement benefits |
(1,313) |
(1,056) |
257 |
Discontinued operations and assets held for sale including related liabilities |
291 |
10,446 |
10,155 |
CAPITAL EMPLOYED, NET |
75,894 |
70,532 |
(5,362) |
Eni shareholders' equity |
59,754 |
51,753 |
(8,001) |
Non-controlling interest |
2,455 |
1,916 |
(539) |
Shareholders’ equity |
62,209 |
53,669 |
(8,540) |
Net borrowings |
13,685 |
16,863 |
3,178 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
75,894 |
70,532 |
(5,362) |
The summarized Group balance sheet was affected by a sharp movement in the EUR/USD exchange rate which determined an increase in net capital employed, net borrowings and total equity by €4,670 million, €136 million and €4,534 million respectively. This was due to translation into euros of the financial statements of US-denominated subsidiaries reflecting a 10.3% appreciation of the US dollar against the euro (1 EUR= 1.089 USD at December 31, 2015 compared to 1.214 at December 31, 2014).
Fixed assets (€71,150 million) decreased by €11,058 million from December 31, 2014 mainly due to the reclassification of the tangible and intangible assets of Saipem and Versalis as discontinued operations. Other changes related to impairment losses and DD&A at continuing operations (€14,480 million), which were partly offset by currency movements and capital expenditure (€10,775 million). The reduction in the line item “Equity-accounted investments and other investments” was due to the divestment of Eni’s interest in Snam and Galp.
Net working capital was in negative territory at minus €10,008 million and decreased by €4,716 million year-on-year. This mainly reflected the mentioned reclassification of the disposal groups Saipem and Versalis as discontinued operations. In addition, the G&P segment reduced its working capital, while the carrying amount of oil and gas inventories declined due to the impact of lower prices on the weighted-average cost accounting method as well as the destocking of products and gas inventories as part of ongoing optimization measures. These decreases were partly offset by the increased balance of other current assets and liabilities. This was due to increased working capital exposure to joint venture partners in E&P. This latter increase was partly offset by the reversal of the deferred costs related to pre-paid gas volumes in previous reporting periods in the G&P segment following the off-taken of the underlying gas; while an opposite trend was recorded due to our long-term buyers off-taking Eni’s gas. Finally, the change in the balance of tax payables and provisions for deferred taxes (up by €1,268 million) reflected the write-off of Italian deferred tax assets (€885 million) due to projections of lower future taxable profit at Italian subsidiaries as well as deferred tax assets of subsidiaries located outside Italy of the upstream segment (€1,058 million) and the reimbursement/transferring to financing institutions of taxes receivables in Italy (approximately €900 million).
Discontinued operations and assets held for sale including related liabilities (€10,446 million) comprised: i) Saipem and its subsidiaries considering the arrangements signed on October 2015 with the Fondo Strategico Italiano (FSI). These include the sale of a 12.503% stake of the share capital of Saipem to FSI and a concurrent shareholder agreement with Eni intended to establish joint control over the target entity; ii) the chemical operating segment. As of the reporting date, negotiations were underway to define an agreement with an industrial partner who, by acquiring a controlling stake of Versalis, would support Eni in implementing the industrial plan designed to upgrade this segment. In addition, the book value of goodwill and of the non-current assets of the two disposal groups have been aligned to the fair value of the underlying net assets. This item also includes non-strategic assets in the Refining & Marketing and Gas & Power businesses.
Shareholders’ equity including non-controlling interest was €53,669 million, representing a decrease of €8,540 million from December 31, 2014. This was due to net loss in comprehensive income for the year (€5,032 million) given by net loss of €9,378 million partly offset by positive foreign currency translation differences (€4,534 million). Also affecting the total equity was dividend distribution and other changes of €3,478 million (€3,457 million being the 2014 final dividend and the interim dividend for 2015 paid to Eni’s shareholders and dividends to other non-controlling interests).
Summarized Group Cash Flow Statement |
||||
|
|
|
|
|
(€ million) |
2013 |
2014 |
2015 |
Change |
Net profit (loss) - continuing operations |
3,896 |
192 |
(7,127) |
(7,319) |
Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
|
- depreciation, depletion and amortization and other non monetary items |
8,917 |
10,919 |
15,521 |
4,602 |
- net gains on disposal of assets |
(3,877) |
(99) |
(559) |
(460) |
- dividends, interests, taxes and other changes |
9,203 |
6,822 |
3,259 |
(3,563) |
Changes in working capital related to operations |
121 |
2,148 |
4,450 |
2,302 |
Dividends received, taxes paid, interests (paid) received during the period |
(9,128) |
(6,820) |
(4,363) |
2,457 |
Net cash provided by operating activities - continuing operations |
9,132 |
13,162 |
11,181 |
(1,981) |
Net cash provided by operating activities - discontinued operations |
1,894 |
1,948 |
722 |
(1,226) |
Net cash provided by operating activities |
11,026 |
15,110 |
11,903 |
(3,207) |
Capital expenditure - continuing operations |
(11,584) |
(11,264) |
(10,775) |
489 |
Capital expenditure - discontinued operations |
(1,216) |
(976) |
(781) |
195 |
Capital expenditure |
(12,800) |
(12,240) |
(11,556) |
684 |
Investments and purchase of consolidated subsidiaries and businesses |
(317) |
(408) |
(228) |
180 |
Disposals |
6,360 |
3,684 |
2,258 |
(1,426) |
Other cash flow related to capital expenditure, investments and disposals |
(243) |
435 |
(1,351) |
(1,786) |
Free cash flow |
4,026 |
6,581 |
1,026 |
(5,555) |
Borrowings (repayment) of debt related to financing activities |
(3,981) |
(414) |
(300) |
114 |
Changes in short and long-term financial debt |
1,715 |
(628) |
2,126 |
2,754 |
Dividends paid and changes in non-controlling interests and reserves |
(4,225) |
(4,434) |
(3,477) |
957 |
Effect of changes in consolidation, exchange differences and cash and cash equivalent related to discontinued operations |
(40) |
78 |
(789) |
(867) |
NET CASH FLOW FOR THE PERIOD |
(2,505) |
1,183 |
(1,414) |
(2,597) |
Net cash provided by operating activities on standalone basis |
10,818 |
14,387 |
12,189 |
(2,198) |
Change in net borrowings |
||||
|
|
|
|
|
(€ million) |
2013 |
2014 |
2015 |
Change |
Free cash flow |
4,026 |
6,581 |
1,026 |
(5,555) |
Net borrowings of acquired companies |
(21) |
(19) |
|
19 |
Net borrowings of divested companies |
(23) |
|
83 |
83 |
Exchange differences on net borrowings and other changes |
349 |
(850) |
(810) |
40 |
Dividends paid and changes in non-controlling interest and reserves |
(4,225) |
(4,434) |
(3,477) |
957 |
CHANGE IN NET BORROWINGS |
106 |
1,278 |
(3,178) |
(4,456) |
In 2015, net cash provided by operating activities from continuing operations amounted to €12,189 million and was impacted by the eliminations of intercompany flows with discontinued operations. Proceeds from disposals were €2,258 million and mainly related to an interest in Snam due to exercise of the conversion right by bondholders (€911 million), an interest in Galp (€658 million) and the divestment of non-strategic assets mainly in the Exploration & Production business. These inflows funded part of capital expenditure (€10,775 million), other changes relating to capital expenditure and the payment of Eni’s dividend (balance dividend for fiscal 2014 and the 2015 interim dividend totaling €3,457 million). When considering the cash flow of discontinued operations, the Group’s net debt increased by €3,178 million to €16,863 million, net of negative exchange rate differences and the reclassification of Saipem net cash in the discontinued operations.
Net cash provided by operating activities from continuing operations on a standalone basis was €12,189 million for 2015 and it fully funded capital expenditure. The Group cash flow performance was excellent (down by 15% from 2014) in spite of sharply lower oil prices. This result was driven by optimization initiatives in working capital performed mainly in the G&P segment, with the substantial recovery of prepaid gas volumes and other renegotiation benefits, and in the R&M segment as well as in corporate activities. Non-recurring effects of the working capital positively influenced cash flow by approximately €2.2 billion.
Results by segment
Exploration & Production
The Exploration & Production segment reported an adjusted operating profit of €4,108 million, down by €7,443 million or 64.4% y-o-y. This change was driven by lower oil and gas realizations in dollar terms (down by 47.8% and 33.8%, respectively), reflecting the lower price for the marker Brent (down by 47%) and lower gas prices in Europe and in the United States. The price effect was only partially offset by a favorable exchange rate environment, higher production volumes, opex efficiencies and lower exploration expenses.
Adjusted net profit amounted to €752 million, decreasing by €3,671 million or 83% from 2014, due to lower operating performance and an increased adjusted tax rate (81.5%) due to: (i) the recognition of a major part of the positive pre-tax results in PSAs contracts which, although more resilient in a low-price environment nonetheless, bear higher-than-average rates of tax; ii) a higher incidence of non-deductible expenses on the pre-tax profit that has been lowered by the scenario.
Excluding the impact of the higher incidence on pre-tax profit of certain non-deductible expenses, because this incidence is expected to prospectively come down due to the effect of lower amortization charges going forward as a result of the impairment losses recorded in 2015 driven by the price outlook, and also restating the Group operating profit in accordance with the successful-effort-method accounting of exploration expenses, net of impaired exploration projects, the E&P tax rate has been re-determined in 70% and 60% for 2015 and 2014, respectively. In 2015, taxes paid represent approximately 34% of cash flow by operating activities of the E&P segment before changes in working capital and income taxes paid, slightly lower than in 2014.
Gas & Power
The Gas & Power segment reported an adjusted operating loss of €126 million, down by €294 million from an adjusted operating profit of €168 million in 2014. The change reflected the one off economic benefits associated to certain contracts renegotiation recorded in the fourth quarter of 2014 as well as the negative outcome of a commercial arbitration in the fourth quarter of 2015. The Gas & Power segment reported an adjusted net loss of €168 million in the full year 2015, down by €254 million compared to the €86 million profit reported in the same period of a year ago due to the weaker operating performance and lower results of equity-accounted entities.
Refining & Marketing
The Refining & Marketing segment reported an adjusted operating profit of €387 million, up by €452 million from the adjusted net loss of €65 million reported in 2014. This strong performance was driven by an improved refining margin scenario and efficiency and optimization gains, which helped lower margin to around $5 per barrel, anticipating the EBIT break-even of the refining business to 2015 versus an original guidance for the year 2017 indicated in the 2015-2018 strategic plan.
Adjusted operating profit by segment |
|||
|
|
|
|
(€ million) |
2013 |
2014 |
2015 |
Exploration & Production |
14,643 |
11,551 |
4,108 |
Gas & Power |
(622) |
168 |
(126) |
Refining & Marketing |
(472) |
(65) |
387 |
Corporate and other activities |
(542) |
(443) |
(369) |
Impact of unrealized intragroup profit elimination |
(1,727) |
(764) |
(205) |
|
11,280 |
10,447 |
3,795 |
Risk factors and uncertainties
The risks described in this section may have a material effect on our operational and financial performance. We invite our investors to consider these risks carefully.
Integrated performance
Operating and sustainability data(*) |
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|
|
|
|
|
||||||||
|
|
2013 |
2014 |
2015 |
||||||||
|
||||||||||||
Employees at period end |
(number) |
30,970 |
29,403 |
29,053 |
||||||||
of which - women(*) |
|
7,504 |
7,370 |
7,254 |
||||||||
- outside Italy |
|
13,343 |
12,672 |
12,333 |
||||||||
Female managers(*) |
(%) |
23.5 |
23.8 |
24.2 |
||||||||
Training hours |
(thousand hours) |
1,493 |
1,032 |
915 |
||||||||
Employees injury frequency rate |
(No. of accidents per million of worked hours) |
0.28 |
0.29 |
0.21 |
||||||||
Contractors injury frequency rate |
|
0.49 |
0.35 |
0.18 |
||||||||
Fatality index |
(Fatal injuries per one hundred millions of worked hours) |
0.00 |
1.08 |
0.39 |
||||||||
Total recordable injury rate of workforce |
(Total recordable injuries/worked hours) x 1.000.000 |
0.75 |
0.62 |
0.40 |
||||||||
Oil spills due to operations |
(barrels) |
1,762 |
1,161 |
1,603 |
||||||||
Direct GHG emissions |
(mmtonnes CO2 eq) |
43.9 |
38.9 |
38.5 |
||||||||
R&D expenditure(b) |
(€ million) |
142 |
134 |
139 |
||||||||
Expenditure for the territory(c) |
|
100 |
96 |
97 |
||||||||
- Exploration & Production
- Gas & Power
- Refining & Marketing
-
Exploration & Production
2013
2014
2015
(d)
Related to consolidated subsidiaries.
(e)
Three-year average.
Net proved reserves of hydrocarbon
(mmboe)
6,535
6,602
6,890
Average reserve life index
(year)
11.1
11.3
10.7
Hydrocarbon production
(kboe/d)
1,619
1,598
1,760
Profit per boe(d)€
($/boe)
16.1
13.8
7.4
Opex per boe(d)
8.3
8.4
7.2
Cash flow per boe
31.9
30.1
20.1
Finding & Development cost per boe(e)
19.2
21.5
19.3
Direct GHG emissions
(mmtonnes CO2 eq)
27.4
23.4
22.8
Produced water re-injected
(%)
55
56
56
Community investment
(€ million)
53
63
71
-
Gas & Power
2013
2014
2015
(f)
The average evaluation reflects results of customers interviews based on clarity, courtesy and waiting time.
Worldwide gas sales
(bcm)
93.17
89.17
90.88
- Italy
35.86
34.04
38.44
- outside Italy
57.31
55.13
52.44
Customers in Italy
(million)
8.00
7.93
7.88
Electricity sold
(TWh)
35.05
33.58
34.88
Water withdrawals per KWheq produced
(cm/kWeq)
0.017
0.017
0.015
Customer satisfaction rate(f)
(scale from 0 to 100)
80.0
81.4
85.6
-
Refining & Marketing
2013
2014
2015
Refinery throughputs on own account
(mmtonnes)
27.38
25.03
26.41
Retail market share in Italy
(%)
27.5
25.5
24.5
Retail sales of refined products in Europe
(mmtonnes)
9.69
9.21
8.89
Service stations in Europe at year end
(number)
6,386
6,220
5,846
Average throughput of service stations in Europe
(kliters)
1,828
1,725
1,754
SOx emissions (sulphur oxide)
(ktonnes SO2eq)
10.80
5.70
5.97
Customer satisfaction index
(likert scale)
8.1
8.2
8.3
