SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
Form 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of February 2018
Eni S.p.A.
(Exact name of Registrant as specified in its charter)
Piazzale Enrico Mattei 1 -- 00144 Rome, Italy
(Address of principal executive offices)
_________________________
(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F x Form 40-F ¨
_________________________
(Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2b under the Securities Exchange Act of 1934.)
Yes ¨ No x
(If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): )
Table of contents
- Press release dated February 16, 2018.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorised.
Eni S.p.A. | ||
/s/ Vanessa Siscaro | ||
Name: Vanessa Siscaro | ||
Title: Head of Corporate | ||
Secretary’s Staff Office |
Date: February 28, 2018
Registered Head Office, Piazzale Enrico Mattei, 1 00144 Rome Tel. +39 06598.21 www.eni.com |
San Donato Milanese
February 16, 2018
Eni: full year 2017 and fourth quarter results
Key operating and financial results |
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||||
2017 | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | ||||||||||||||||||||||||
52.08 | Brent dated | $/bbl | 61.39 | 49.46 | 24 | 54.27 | 43.69 | 24 | ||||||||||||||||||||||
1.175 | Average EUR/USD exchange rate | 1.177 | 1.079 | 9 | 1.130 | 1.107 | 2 | |||||||||||||||||||||||
44.34 | Brent dated | €/bbl | 52.14 | 45.84 | 14 | 48.03 | 39.47 | 22 | ||||||||||||||||||||||
1,803 | Hydrocarbon production | kboe/d | 1,892 | 1,856 | 2 | 1,816 | 1,759 | 3 | ||||||||||||||||||||||
947 | Adjusted operating profit (loss) (a) | € million | 1,995 | 1,286 | 55 | 5,795 | 2,315 | 150 | ||||||||||||||||||||||
1,046 | of which: E&P | 1,864 | 1,400 | 33 | 5,170 | 2,494 | 107 | |||||||||||||||||||||||
(193) | G&P | 213 | (72) | .. | 212 | (390) | .. | |||||||||||||||||||||||
337 | R&M e Chemicals | 114 | 75 | 52 | 992 | 583 | 70 | |||||||||||||||||||||||
229 | Adjusted net profit (loss) (a) | 975 | 459 | 112 | 2,411 | (340) | .. | |||||||||||||||||||||||
0.06 | - per share (€) | 0.27 | 0.13 | 0.67 | (0.09) | |||||||||||||||||||||||||
344 | Net profit (loss) (b) | 2,100 | 340 | 518 | 3,427 | (1,464) | .. | |||||||||||||||||||||||
0.10 | - per share (€) | 0.58 | 0.09 | 0.95 | (0.41) | |||||||||||||||||||||||||
1,938 | Adjusted net cash before changes in working capital (c) | 2,423 | 2,123 | 14 | 9,256 | 6,179 | 50 | |||||||||||||||||||||||
2,124 | Underlying net cash provided by operating activities (d) | 3,218 | 3,546 | (9) | 9,986 | 7,971 | 25 | |||||||||||||||||||||||
1,463 | Net capital expenditure (d) (e) | 1,891 | 2,256 | (16) | 7,619 | 9,275 | (18) | |||||||||||||||||||||||
Net disposals (d) | 2,323 | 3,797 | ||||||||||||||||||||||||||||
14,965 | Net borrowings | 10,916 | 14,776 | (26) | 10,916 | 14,776 | (26) | |||||||||||||||||||||||
0.32 | Leverage | 0.23 | 0.28 | 0.23 | 0.28 |
(a) Non-GAAP measure. For further information see the paragraph "Non-GAAP measures" on page 18 of the Press Release on Full Year 2017 and fourth quarter results.
(b) Attributable to Eni's shareholders - 2016 results refer to continuing and discontinued operations.
(c) Non-GAAP measure. Net cash provided by operating activities before changes in working capital excluding inventory holding gains or losses and certain non-recurring items. For further information see page 15 of the Press Release on Full Year 2017 and fourth quarter results.
(d) For further information see page 15 of the Press Release on Full Year 2017 and fourth quarter results.
(e) Include capital contribution to equity accounted entities.
Yesterday, Eni’s Board of Directors approved the Group results for the fourth quarter and the full year of 2017 (unaudited). Commenting on the results, Claudio Descalzi, CEO of Eni, remarked:
“We close 2017 with excellent results which underline how the process of intense change started in 2014 has transformed Eni into a company able to grow and create value even in difficult market conditions. In Upstream we beat our historical record of production having even reduced our development capex by 40% vs. the 2014 baseline, continued to record outstanding results from our exploration programme and started our most significant projects in record time, in particular the jewel in our crown, Zohr. In Mid-Downstream, Gas & Power returned to positive structural results a year ahead of schedule, while we achieved our best full year results in eight years for Refining & Marketing and record numbers in our Chemicals business Versalis. Consequently, our cash generation increased 50% compared with an increase in Brent of 22% and our cash-neutrality decreased to 57 $/bl. We also strengthened our capital structure, also through divestments over the course of the year. Looking to the future, we see excellent growth prospects for all of our businesses. However, growth must be sustainable and we will pursue it in a disciplined way with great respect for the possibility of the most difficult operating conditions. Nevertheless, should conditions be more favourable, we will be in a position to create substantial surplus value for our shareholders. On this basis, I will propose a dividend of €0.80 per share in 2017 to the Board of Directors, on March 15.”
-1- |
Highlights |
Exploration & Production
· | Hydrocarbon production at record level: |
- | reached 1.92 million boe/d in December 2017, marking an all-time high for Eni; |
- | produced an average of 1.89 million boe/d in the fourth quarter, the highest quarterly production in the last seven years (up by 1.9%); FY production averaged 1.82 million boe/d (up by 3.2% y-o-y), its highest ever level. Excluding price effects at PSAs and OPEC cuts, production was up by 3.7% in the fourth quarter and by 5.3% for the FY 2017; |
- | start-ups and ramp-ups additions: added 243 kboe/d on average over the FY, leveraging on Eni’s integrated model of exploration and development, designed to optimize new projects’ time-to-market (Zohr in Egypt, East-Hub in Angola, OCTP in Ghana, Jangkrik in Indonesia, all in 2017) and to accelerate fields ramp-up (as in the case of the Noroos project). |
· | Achieved production start-up at the super-giant Zohr gas field in record time-to-market: in less than two years from the FID and two and a half years from discovery. |
· | Exploration resources: discovered 1 billion boe of new resources, of which 800 million from in house exploration with a discovery cost of approximately 1 $/bbl. |
· | Successfully completed the exploration campaign in Area 1, offshore Mexico: the appraisal of Tecoalli discovery, which followed that of Amoca and Miztòn, resulted in a rise in estimated hydrocarbons in place of the Area to 2 billion boe, of which approximately 90% oil. |
· | Renewed the exploration portfolio adding approximately 97,000 Km2 of new acreage: |
- | obtained 50% of the mineral rights of the Isatay Block in the Kazakh Caspian Sea; |
- | signed an exploration and production sharing agreement of Block 52, offshore Oman (Eni 85%); |
- | acquired new exploration licenses in Morocco, Mexico, Cyprus, Ivory Coast and Norway. |
· | Proved hydrocarbon reserves: 7 billion boe with an organic replacement ratio of 103%. Excluding the de-booking of a volume of PUD reserves to unproved in Venezuela due to the Country’s current outlook, the ratio increases to 151%. |
· | Dual Exploration Model success: Eni closed the divestment of a 25% stake in Area 4 in Mozambique to Exxon Mobil in the fourth quarter of 2017. |
· | E&P adjusted operating profit: €1.86 billion in the fourth quarter of 2017 (up by 33%); more than doubled y-o-y at €5.17 billion. |
Gas & Power
· | Structurally positive EBIT a year ahead of expectations thanks to business restructuring. |
· | Retail business: better performance in converting revenues into cash; growth in the customer base, excluding the impact of disposals. |
· | Portfolio rationalization: divested the retail activity in Belgium; signed a preliminary agreement to dispose of the gas distribution business in Hungary. |
· | G&P adjusted operating profit: €0.21 billion in the fourth quarter and in the full year of 2017, a substantial improvement both q-o-q (up by €0.29 billion) and y-o-y (up by €0.6 billion). |
-2- |
Refining & Marketing and Chemicals
· | Refining breakeven margin below 4 $/barrel in the FY of 2017. |
· | Achieving value from our expertise: signed a licensing agreement with Sinopec, the largest refining company in the world, for the use of the EST conversion proprietary technology. |
· | International development of Versalis: started operations at the Lotte-Versalis Elastomers joint venture for the production of elastomers in South Korea. |
· | R&M adjusted operating profit: €77 million in the fourth quarter of 2017, up by 13% despite the partial downtime of the Sannazzaro refinery and a negative scenario. Best full year result in the last eight years at €532 million, up by 91% y-o-y. |
· | Record results in the Chemical business: adjusted operating profit of €37 million in the fourth quarter of 2017 (up by 400%) and €460 million in the FY 2017 (up by 51%). |
Group results
· | Strong increase in adjusted operating profit: up by 55% q-o-q to €1.99 billion; FY operating profit more than doubled to €5.79 billion (up by €3.48 billion). |
· | Adjusted net profit: more than doubled in the fourth quarter of 2017 to €0.98 billion; €2.41 billion in the full year of 2017 compared to a net loss in 2016. |
· | Net profit: €2.10 billion in the fourth quarter; €3.43 billion in the full year of 2017. |
· | Strong structural improvement in underlying cash generation1: €3.22 billion in the fourth quarter and €9.99 billion in the full year of 2017. |
· | Adjusted cash flow from operations before changes in working capital at replacement cost2: €2.42 billion in the fourth quarter and €9.26 billion in the full year of 2017. |
· | FY net capex: €7.6 billion1, down by 18% y-o-y. Self-financing ratio of net capex at approximately 130%. |
· | Organic cash neutrality covering capex and dividend at a Brent price of 57$/bl; 39$/bl, factoring in proceeds from disposals. |
· | FY net disposals3: cashed in €3.8 billion, mainly relating to the Dual Exploration Model. |
· | Net debt: €10.92 billion. |
· | 2017 dividend proposal4: €0.80, of which €0.40 already paid as interim dividend. |
1 See note (d) in the table of page 1.
2 See note (c) in the table of page 1.
3 See note (d) in the table of page 1.
4 The Board of Directors intends to submit a proposal for distributing a dividend of €0.80 per share (€0.80 in 2016) at the Annual Shareholders’ Meeting convened for May 10, 2018. Included in this annual payment is €0.40 per share paid as interim dividend in September 2017. The balance of €0.40 per share is payable to shareholders on May 23, 2018, the ex-dividend date being May 21, 2018.
-3- |
Outlook |
Eni’s business outlook and financial and operational targets of the 2018-2021 industrial plan will be illustrated during a strategy presentation scheduled March 16, 2018. The key strategic guidelines and targets will be disclosed in a press release to be published on March 16, 2018, that will be available at our website “eni.com” and publicly disseminated as required by applicable listing standards. The outlook for the year 2018 is summarized below:
Exploration & Production
Expected a 3% growth rate in 2018 FY production. This will be driven by ramp-ups of fields entered into operation in 2017, mainly in Egypt, Angola and Indonesia and start-up of a number of satellites phases at giant producing fields (Libya, Angola and Ghana).
Gas & Power
Expected an enhanced performance with an adjusted EBIT projected at €0.3 billion due to new renegotiation of long-term supply contracts, reduction of logistic costs and synergies from upstream integration in the LNG business.
Refining & Marketing and Chemicals
Expected a refining breakeven margin at around 3 $/barrel at 2018 year end, leveraging on new initiatives of plants set-up and supply optimization.
Group
2018 FY capex projected at approximately €8 billion.
Sustainability |
2017 | 2016 | % Ch. | ||||||||||||
Total recordable injury rate (TRIR) | (total recordable injury rate/worked hours) x 1,000,000 | 0.33 | 0.35 | (6.8) | ||||||||||
Direct GHG emissions E&P/production | (tonnes CO2 eq./toe) | 0.163 | 0.167 | (2.7) | ||||||||||
Direct GHG emissions | (mmtonnes CO2 eq.) | 41.49 | 40.18 | 3.3 | ||||||||||
- of which CO2 from combustion and process | 31.62 | 30.71 | 3.0 | |||||||||||
- of which CO2 eq from methane | 1.45 | 2.40 | (39.4) | |||||||||||
- of which CO2 eq from flaring | 6.83 | 5.40 | 26.5 | |||||||||||
- of which CO2 eq from venting | 1.58 | 1.67 | (5.3) | |||||||||||
Oil spills due to operations (>1 barrel) | (barrels) | 3,228 | 1,231 | .. | ||||||||||
Water reinjection | (%) | 59 | 58 |
· | Total recordable injury rate (down by 6.8% y-o-y) confirmed the improving trend, benefitting from performances recorded by both employees (down by 17.2%) and contractors (down by 2%). |
· | Direct GHG emissions E&P/production: 0.163 tCO2 eq/toe, declining by 2.7% y-o-y. |
Direct GHG emissions from combustion and process increased, reflecting higher production level in the E&P segment (in particular for Libyan activities and start-ups in Ghana, Angola and Indonesia) and G&P (due to higher power generation and natural gas volumes transported).
Emissions from methane were down by 39.4% due to the regular maintenance and monitoring of fugitive emissions in the E&P and G&P segments.
Emissions from flaring in the E&P segment were up by 26.5% due to the aforementioned start-ups and the restart of Abu Attifel field in Libya.
· | Water reinjection at the E&P segment was 59%, an increase from 2016, benefitting from the Abu Attifel restart in Libya and the continuous positive performance in water reinjection in Ecuador and Egypt. |
-4- |
Business segments operating review |
Exploration & Production
Production, reserves and prices
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||||
2017 | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | ||||||||||||||||||||||||
Production | ||||||||||||||||||||||||||||||
885 | Liquids | kbbl/d | 861 | 906 | (5.0) | 852 | 878 | (3.0) | ||||||||||||||||||||||
5,012 | Natural gas | mmcf/d | 5,625 | 5,184 | 8.2 | 5,261 | 4,807 | 9.6 | ||||||||||||||||||||||
1,803 | Hydrocarbons | kboe/d | 1,892 | 1,856 | 1.9 | 1,816 | 1,759 | 3.2 | ||||||||||||||||||||||
Adjusted net proved reserves | mmboe | 6,990 | 7,142 | (2.1) | ||||||||||||||||||||||||||
Adjusted reserves replacement ratio | (%) | 151 | 139 | |||||||||||||||||||||||||||
Reserves replacement ratio | 103 | 193 | ||||||||||||||||||||||||||||
Average realizations | ||||||||||||||||||||||||||||||
48.03 | Liquids | $/bbl | 57.64 | 44.56 | 29.4 | 50.06 | 39.18 | 27.8 | ||||||||||||||||||||||
3.80 | Natural gas | $/kcf | 3.89 | 3.50 | 10.9 | 3.69 | 3.27 | 12.8 | ||||||||||||||||||||||
35.14 | Hydrocarbons | $/boe | 39.12 | 32.95 | 18.7 | 35.06 | 29.14 | 20.3 |
· | In the fourth quarter of 2017, oil and natural gas production averaged 1,892 kboe/d, up by 1.9% from the same period a year ago, the highest level achieved in the last seven years. For the full year of 2017, production was 1,816 kboe/d, up by 3.2% and a record level. This performance was driven by new project start-ups and the ramp-ups at fields started up in 2016, mainly in Angola, Egypt, Ghana, Indonesia and Kazakhstan as well as by restarting production at certain Libyan fields thanks to better safety conditions. These positives were partly offset by OPEC production cuts, negative price effects at PSAs contracts and lower production as a result of planned and unplanned shutdowns in Norway, the United Kingdom and the Gulf of Mexico, as well as declines from mature fields. When excluding price effects at PSAs contracts and OPEC cuts (overall 32 kboe/d and 35 kboe/d in the fourth quarter and in the full year of 2017, respectively), hydrocarbon production increased by 3.7% (up by 5.3% in the full year of 2017). |
· | Liquids production (861 kbbl/d) decreased by 45 kbbl/d, or 5% from the fourth quarter of 2016 (852 kbbl/d in the full year of 2017, down by 3%). Price effect, OPEC cuts and shutdowns in Norway, the United Kingdom and the Gulf of Mexico were partly offset by start-ups and ramp-ups of the period and higher production in Libya. |
· | Natural gas production (5,625 mmcf/d) increased by 441 mmcf/d, or 8.2% compared to the fourth quarter of 2016 (5,261 mmcf/d in the full year of 2017, up by 9.6%). Start-ups and ramp-ups of producing assets in Indonesia and Egypt and the increasing production in Libya were partly offset by shutdowns, mature fields decline and price effect. |
-5- |
Net proved hydrocarbon reserves
(mmboe) | ||||||||
Net proved reserves at December 31, 2016 | 7,490 | |||||||
40% sale of Zohr reserves signed in 2016 | (348) | |||||||
Adjusted net proved reserves at December 31, 2016 | 7,142 | |||||||
Organic additions (a) | 999 | |||||||
Production (b) | (663) | |||||||
De-booking of the Perla Phase 2 project reserves (c) | (315) | |||||||
Portfolio: 25% sale of Area 4 in Mozambique and other (d) | (173) | |||||||
Net proved reserves at December 31, 2017 | 6,990 | |||||||
Adjusted reserves replacement ratio | (a/b) | (%) | 151 | |||||
Reserves replacement ratio, organic | (a+c/b) | 103 | ||||||
Adjusted reserves replacement ratio, all sources | (a+c+d/b) | 77 |
· | In 2017, net proved reserves were 6,990 million boe. Additions to proved reserves booked in 2017 were 684 mmboe and mainly derived from the final investment decisions made for the Coral project offshore Mozambique and the Johan Castberg project offshore Norway and progress in development activities at the Zohr, Jangkrik and Kashagan projects. These additions were partly offset by the de-booking of 315 million boe of proved undeveloped reserves at the Perla gas project in Venezuela due to the Country’s current outlook. Production for the year was 663 million boe. Disposals of minerals in place were 521 million boe and related to the divestment of a 40% stake in the Zohr project and of a 25% interest in Area 4 in Mozambique where the Coral project is located. Therefore, the organic reserves replacement ratio was 103%. The ratio increased to 151% when excluding the Venezuelan de-booking. The all-sources replacement ratio was 77% considering the disposal of a 25% interest in Area 4 offshore Mozambique, while the divestment of a 40% stake in Zohr, substantially finalized in 2016, is considered in reduction of the reserves opening balance. The reserves life index was 10.5 years (11.6 years in 2016). More information on our reserve activities will be reported in the Annual Report on Form 20-F for the 2017 fiscal year. |
-6- |
Results
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
1,041 | Operating profit (loss) | 4,149 | 1,720 | .. | 7,669 | 2,567 | .. | |||||||||||||||||||||
5 | Exclusion of special items | (2,285) | (320) | (2,499) | (73) | |||||||||||||||||||||||
1,046 | Adjusted operating profit (loss) | 1,864 | 1,400 | 33.1 | 5,170 | 2,494 | .. | |||||||||||||||||||||
(39 | ) | Net finance (expense) income | (39) | 123 | (50) | (55) | ||||||||||||||||||||||
104 | Net income (expense) from investments | 118 | 77 | 409 | 68 | |||||||||||||||||||||||
(670 | ) | Income taxes | (847) | (741) | (2,801) | (1,999) | ||||||||||||||||||||||
60.3 | tax rate (%) | 43.6 | 46.3 | 50.7 | 79.7 | |||||||||||||||||||||||
441 | Adjusted net profit (loss) | 1,096 | 859 | .. | 2,728 | 508 | .. | |||||||||||||||||||||
Results also include: | ||||||||||||||||||||||||||||
69 | Exploration expenses: | 135 | 73 | 84.9 | 525 | 374 | 40.4 | |||||||||||||||||||||
61 | - prospecting, geological and geophysical expenses | 73 | 45 | 62.2 | 273 | 204 | 33.8 | |||||||||||||||||||||
8 | - write-off of unsuccessful wells (a) | 62 | 28 | .. | 252 | 170 | 48.2 | |||||||||||||||||||||
1,343 | Capital expenditure | 1,781 | 1,871 | (4.8) | 7,739 | 8,254 | (6.2) |
(a) Also includes write-off of unproved exploration rights, if any, related to projects with negative outcome.
· | In the fourth quarter of 2017, the Exploration & Production segment reported an adjusted operating profit of €1,864 million, an increase of 33% from the fourth quarter of 2016. This improvement reflected the recovery in crude oil prices (with the Brent price up by 24%) and production growth. These positives were partly offset by a weaker dollar compared to the euro, lower appreciation of Eni’s average realizations than the Brent benchmark, which has not been yet fully reflected in gas prices due to the time lags in oil-linked price formulas, and higher depreciation charges taken in connection with project start-ups and ramp-ups. For the FY 2017, adjusted operating profit was €5,170 million, more than doubled y-o-y (up by €2,676 million from 2016), due to the same drivers mentioned in the quarter, except for a lower penalization due to EUR/USD exchange rate movements than in the quarter. |
· | In the fourth quarter of 2017, adjusted net profit was €1,096 million compared to €859 million in the fourth quarter of 2016, up by €237 million (an increase of approximately €2.2 billion in the full year of 2017 compared to the previous year). This was due to a recovery in operating performance and a reduced tax rate (down by approximately 2 percentage points, from 46% to 44%) due to higher profit before taxes, which helped improve the deductibility of operating expenses including those incurred in connection with PSA schemes and reduce the incidence of non-deductible expenses. Furthermore, in the FY 2017 the tax rate reported a more pronounced reduction (from 80% to 51%) due to the recognition of certain deferred tax assets in connection with the FID of the Coral project in Mozambique and with the production start-up at the Ghana project. |
For the disclosure of the business segment special charges/gains see page 12.
-7- |
Gas & Power
Sales
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||||
2017 | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | ||||||||||||||||||||||||
192 | PSV | €/kcm | 241 | 202 | 19.3 | 211 | 168 | 25.6 | ||||||||||||||||||||||
171 | TTF | 202 | 182 | 11.0 | 183 | 148 | 23.6 | |||||||||||||||||||||||
Natural gas sales | bcm | |||||||||||||||||||||||||||||
7.93 | Italy | 9.62 | 10.25 | (6.1) | 37.43 | 38.43 | (2.6) | |||||||||||||||||||||||
8.21 | Rest of Europe | 10.26 | 11.79 | (13.0) | 38.23 | 42.43 | (9.9) | |||||||||||||||||||||||
0.97 | of which: Importers in Italy | 0.99 | 1.15 | (13.9) | 3.89 | 4.37 | (11.0) | |||||||||||||||||||||||
7.24 | European markets | 9.27 | 10.64 | (12.9) | 34.34 | 38.06 | (9.8) | |||||||||||||||||||||||
1.30 | Rest of World | 1.60 | 1.22 | 31.1 | 5.17 | 5.45 | (5.1) | |||||||||||||||||||||||
17.44 | Worldwide gas sales | 21.48 | 23.26 | (7.7) | 80.83 | 86.31 | (6.3) | |||||||||||||||||||||||
8.91 | Power sales | Twh | 8.66 | 9.79 | (11.5) | 35.33 | 37.05 | (4.6) |
· | In the fourth quarter of 2017, natural gas sales were 21.48 bcm, down by 7.7% from the fourth quarter of 2016, in line with the reduction of take-or-pay contracts obligations. Sales in Italy were down by 6.1% to 9.62 bcm, due to declining sales across all the market segments, partly offset by higher sales at the thermoelectric segment driven by lower production from renewable sources and lower power imports. Sales in European markets (9.27 bcm) decreased by 12.9% reflecting lower sales in France, the United Kingdom, Benelux and the Iberian Peninsula. On a yearly basis, natural gas sales were 80.83 bcm, down by 6.3% or by 5.48 bcm from the full year of 2016. Sales in Italy decreased by 2.6% from 2016 to 37.43 bcm due to the same drivers mentioned in the quarter. Lower sales in European markets (34.34 bcm) mainly reflected the disposal of the retail business in Belgium and Hungary as well as lower volumes sold in France and Germany/Austria. |
· | Power sales were 8.66 TWh in the fourth quarter of 2017, down by 11.5% (35.33 TWh in 2017, down by 4.6% from 2016) mainly due to lower volumes sold to the wholesale segment and to the middle market, partly offset by higher sales to the industries segment. |
Results
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
(120 | ) | Operating profit (loss) | 201 | 5 | .. | 70 | (391) | .. | ||||||||||||||||||||
15 | Exclusion of inventory holding (gains) losses | 29 | (56) | 90 | ||||||||||||||||||||||||
(88 | ) | Exclusion of special items | (17) | (21) | 142 | (89) | ||||||||||||||||||||||
(193 | ) | Adjusted operating profit (loss) | 213 | (72) | .. | 212 | (390) | .. | ||||||||||||||||||||
3 | Net finance (expense) income | 1 | (1) | 10 | 6 | |||||||||||||||||||||||
(2 | ) | Net income (expense) from investments | (4) | (8) | (9) | (20) | ||||||||||||||||||||||
53 | Income taxes | (97) | 50 | (162) | 74 | |||||||||||||||||||||||
.. | tax rate (%) | 46.2 | .. | 76.1 | .. | |||||||||||||||||||||||
(139 | ) | Adjusted net profit (loss) | 113 | (31) | .. | 51 | (330) | .. | ||||||||||||||||||||
33 | Capital expenditure | 60 | 53 | 13.2 | 142 | 120 | 18.3 |
· | In the fourth quarter of 2017, the Gas & Power segment reported an adjusted operating profit of €213 million, up by €285 million from the loss reported in the fourth quarter of 2016. This result reflected better margins from the renegotiation of long-term supply contracts, including some contract terminations, lower logistic costs, as well as the improved performance in trading, LNG and Power businesses. In the full year of 2017, the Gas & Power segment reported an adjusted operating profit of €212 million (up by €602 million from 2016), the best result over the latest seven years, targeting structural positive profit one year ahead of plans due to the drivers disclosed in the fourth quarter. From 2017, the profit/loss on stock has been included in the business underlying performance due to a changed regulatory framework on gas storage in Italy, on which basis management has elected to leverage gas stocks as a way to improve margins. |
· | Adjusted net profit amounted to €113 million, an improvement of €144 million from the fourth quarter of 2016. In the full year of 2017, adjusted net profit was €51 million. |
For the disclosure of the business segment special charges/gains see page 12.
-8- |
Refining & Marketing and Chemicals
Production and sales
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||||
2017 | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | ||||||||||||||||||||||||
6.4 | Standard Eni Refining Margin (SERM) | $/bbl | 4.3 | 4.7 | (8.5) | 5.0 | 4.2 | 19.0 | ||||||||||||||||||||||
5.63 | Throughputs in Italy | mmtonnes | 5.46 | 5.22 | 4.6 | 21.15 | 21.61 | (2.1) | ||||||||||||||||||||||
0.76 | Throughputs in the rest of Europe | 0.72 | 0.75 | (4.0) | 2.87 | 2.91 | (1.4) | |||||||||||||||||||||||
6.39 | Total throughputs | 6.18 | 5.97 | 3.5 | 24.02 | 24.52 | (2.0) | |||||||||||||||||||||||
0.08 | Green throughputs | 0.07 | 0.06 | 16.7 | 0.24 | 0.21 | 14.3 | |||||||||||||||||||||||
Marketing | ||||||||||||||||||||||||||||||
2.24 | Retail sales | mmtonnes | 2.11 | 2.08 | 1.4 | 8.54 | 8.59 | (0.6) | ||||||||||||||||||||||
1.56 | Retail sales in Italy | 1.49 | 1.47 | 1.4 | 6.01 | 5.93 | 1.3 | |||||||||||||||||||||||
0.68 | Retail sales in the rest of Europe | 0.62 | 0.61 | 1.6 | 2.53 | 2.66 | (4.9) | |||||||||||||||||||||||
25.2 | Retail market share in Italy | % | 25.1 | 24.3 | 25.0 | 24.3 | ||||||||||||||||||||||||
2.83 | Wholesale sales | mmtonnes | 2.71 | 2.92 | (7.2) | 10.66 | 11.34 | (6.0) | ||||||||||||||||||||||
2.04 | Wholesale sales in Italy | 1.94 | 2.08 | (6.7) | 7.64 | 8.16 | (6.4) | |||||||||||||||||||||||
0.79 | Wholesale sales in the rest of Europe | 0.77 | 0.84 | (8.3) | 3.02 | 3.18 | (5.0) | |||||||||||||||||||||||
Chemicals | ||||||||||||||||||||||||||||||
1,360 | Production of petrochemical products | ktonnes | 1,425 | 1,337 | 6.6 | 5,818 | 5,646 | 3.0 | ||||||||||||||||||||||
68.1 | Average plant utilization rate | % | 70.8 | 66.1 | 72.8 | 71.4 |
· | In the fourth quarter of 2017, the Eni’s Standard Refining Margin (SERM) decreased by 8.5% y-o-y at a level of 4.3 $/barrel due to compressed relative prices of products compared to the cost of the petroleum feedstock reflecting the swift upward movements in the Brent price reported in the last part of 2017 (in the full year of 2017, SERM increased by 19% to 5 $/barrel). |
· | Eni refining throughputs were 6.18 mmtonnes, up by 3.5% from the fourth quarter of 2016 reflecting higher throughputs at the Livorno refinery due to fewer shutdowns and improved performance of the Taranto and Milazzo refineries, partially offset by the downtime of the EST plant at the Sannazzaro refinery. Refining throughputs in the full year of 2017 (24.02 mmtonnes) decreased by 2% from 2016 and were mainly affected by the downtime of some plants at Sannazzaro refinery and the shutdown at the Taranto refinery, partly offset by a better performance of Milazzo and Livorno refineries. |
· | Green throughputs processed at the Venice green refinery increased by 16.7% in the fourth quarter of 2017 (up by 14.3% in the full year of 2017). |
· | Retail sales in Italy of 1.49 mmtonnes increased by 1.4% in the fourth quarter (6.01 mmtonnes, up by 1.3% in the full year of 2017) despite declining consumption, due to higher volumes mainly sold at company-owned fuel stations partially offset by lower sales in the highway and lease concession segment. Eni’s retail market share was 25.1%, higher than in the fourth quarter of 2016 (24.3%) and was also driven by effective marketing initiatives. |
· | Wholesale sales in Italy were 1.94 mmtonnes, down by 6.7% compared to the fourth quarter of 2016 (7.64 mmtonnes in the full year of 2017; down by 6.4% compared to 2016). Lower sales of gasoil and bunkering were partly offset by higher sales of jet fuel and bitumen. |
· | Retail and wholesale sales in the rest of Europe decreased by 4.1% in the fourth quarter of 2017 (down by 5% in the full year of 2017) due to lower sales volumes in the wholesale business in France and Austria, partly offset by higher sales in Germany. |
· | Petrochemical production of 1,425 ktonnes increased by 6.6% in the fourth quarter compared to 2016 reflecting higher productions of polyethylene and elastomers. In the full year of 2017, production was 5,818 ktonnes, up by 3%. |
-9- |
Results
IIIQ | IVQ | Full year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
367 | Operating profit (loss) | 218 | 168 | 29.8 | 982 | 723 | 35.8 | |||||||||||||||||||||
(95) | Exclusion of inventory holding (gains) losses | (174) | (181) | (213) | (406) | |||||||||||||||||||||||
65 | Exclusion of special items | 70 | 88 | 223 | 266 | |||||||||||||||||||||||
337 | Adjusted operating profit (loss) | 114 | 75 | 52.0 | 992 | 583 | 70.2 | |||||||||||||||||||||
224 | - Refining & Marketing | 77 | 68 | 13.2 | 532 | 278 | 91.4 | |||||||||||||||||||||
113 | - Chemicals | 37 | 7 | 428.6 | 460 | 305 | 50.8 | |||||||||||||||||||||
1 | Net finance (expense) income | 2 | 1 | 5 | 1 | |||||||||||||||||||||||
15 | Net income (expense) from investments | 5 | 9 | 21 | 32 | |||||||||||||||||||||||
(111) | Income taxes | (56) | (35) | (357) | (197) | |||||||||||||||||||||||
31.4 | tax rate (%) | 46.3 | 41.2 | 35.1 | 32.0 | |||||||||||||||||||||||
242 | Adjusted net profit (loss) | 65 | 50 | 30.0 | 661 | 419 | 57.8 | |||||||||||||||||||||
188 | Capital expenditure | 290 | 303 | (4.3) | 729 | 664 | 9.8 |
· | In the fourth quarter of 2017, the Refining & Marketing and Chemicals segment reported an adjusted operating profit of €114 million (€992 million in the full year of 2017), an increase compared to the fourth quarter of 2016 (up by 52% and 70% in the quarter and in the full year of 2017 respectively). |
· | In the fourth quarter of 2017, the Refining & Marketing business reported an adjusted operating profit of €77 million, an increase of €9 million or 13% q-o-q. This was driven by lower facility downtime at the Livorno and Milazzo plants and a gain from the licensing of the EST conversion technology to Sinopec, which helped offset an unfavorable SERM scenario and the Sannazzaro shutdown. Marketing activity’s performance was barely unchanged from the comparative period. In the full year of 2017 adjusted operating profit amounted to €532 million (up by €254 million or 91% compared to the full year of 2016), benefitting from the initiatives implemented over the last years, which were designed to improve the set-up of Eni’s refining system allowing to reduce the break-even margin below the 4 $/barrel threshold. The improved cost structure enabled the Company to fully capture the upside in the scenario recorded in the first nine months of 2017. The marketing business reported a positive performance driven by the effective commercial initiatives, which supported the premium segments. |
· | In the fourth quarter of 2017, the Chemical business reported an adjusted operating profit of €37 million representing a five-fold increase compared to the same period of 2016, benefitting from the restructuring plan to optimize plant setup at core hubs and reposition the product portfolio towards higher-value segments. Thanks to a streamlined industrial structure, the business was able to fully capture the upside in the trading environment and to achieve volume upsides. In the full year of 2017, adjusted operating profit achieved a record of €460 million (up by 51% from 2016). This result represents the best performance reported in the recent history of Eni’s Chemical business and demonstrates the value of the progress in the turnaround process. |
· | Adjusted net profit amounting to €65 million in the fourth quarter (€661 million in the full year of 2017) increased by €15 million in the fourth quarter (up by €242 million in the full year of 2017). |
For the disclosure on the business segment special charges see page 12.
-10- |
Group results |
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
15,684 | Net sales from operations | 17,547 | 15,807 | 11.0 | 66,921 | 55,762 | 20.0 | |||||||||||||||||||||
998 | Operating profit (loss) | 4,350 | 1,640 | .. | 8,022 | 2,157 | .. | |||||||||||||||||||||
(63 | ) | Exclusion of inventory holding (gains) losses | (149) | (237) | (219) | (175) | ||||||||||||||||||||||
12 | Exclusion of special items (a) | (2,206) | (117) | (2,008) | 333 | |||||||||||||||||||||||
947 | Adjusted operating profit (loss) | 1,995 | 1,286 | 55.1 | 5,795 | 2,315 | 150.3 | |||||||||||||||||||||
Breakdown by segment: | ||||||||||||||||||||||||||||
1,046 | Exploration & Production | 1,864 | 1,400 | 33.1 | 5,170 | 2,494 | 107.3 | |||||||||||||||||||||
(193 | ) | Gas & Power | 213 | (72) | 395.8 | 212 | (390) | 154.4 | ||||||||||||||||||||
337 | Refining & Marketing and Chemicals | 114 | 75 | 52.0 | 992 | 583 | 70.2 | |||||||||||||||||||||
(151 | ) | Corporate and other activities | (116) | (118) | 1.7 | (542) | (452) | (19.9) | ||||||||||||||||||||
(92 | ) | Impact of unrealized intragroup profit elimination and other consolidation adjustments (b) | (80) | 1 | (37) | 80 | ||||||||||||||||||||||
344 | Net profit (loss) attributable to Eni's shareholders - continuing operations | 2,100 | 340 | 517.6 | 3,427 | (1,051) | 426.1 | |||||||||||||||||||||
(45 | ) | Exclusion of inventory holding (gains) losses | (105) | (162) | (156) | (120) | ||||||||||||||||||||||
(70 | ) | Exclusion of special items (a) | (1,020) | 281 | (860) | 831 | ||||||||||||||||||||||
229 | Adjusted net profit (loss) attributable to Eni's shareholders - continuing operations | 975 | 459 | 112.4 | 2,411 | (340) | 809.1 | |||||||||||||||||||||
344 | Net profit (loss) attributable to Eni's shareholders | 2,100 | 340 | .. | 3,427 | (1,464) | .. | |||||||||||||||||||||
344 | Net profit (loss) attributable to Eni's shareholders - continuing operations | 2,100 | 340 | 517.6 | 3,427 | (1,051) | 426.1 | |||||||||||||||||||||
Net profit (loss) attributable to Eni's shareholders - discontinued operations | (413) | .. |
(a) For further information see table "Breakdown of special items"
(b) Unrealized intragroup profit elimination mainly pertained to intra-group sales of commodities and services recorded in the assets of the purchasing business segment as of the end of the period.
Adjusted results
· | In the fourth quarter of 2017, Eni’s consolidated adjusted operating profit increased by 55% to €1.99 billion (up by €0.71 billion). The improvement was driven by an excellent performance of the E&P segment (up by €0.46 billion) due to an ongoing recovery in crude oil prices (the Brent benchmark in dollar terms was up by 24%; however, it was up by 14% in euro terms) and production growth. All the other Eni’s businesses reported steady performances. The G&P segment, driven by an acceleration in the fourth quarter (€0.21 billion of EBIT, up by €0.29 billion from the fourth quarter of 2016) achieved the target of structural positive results one year ahead of plans. This was driven by the renegotiation of long-term supply contracts, the reduction in logistic costs and other optimizations. The R&M and Chemicals segment reported an improvement of 52% y-o-y, even in a less favorable trading environment, leveraging on continued initiatives to improve the breakeven margin and optimization of plant set-up. |
· | In the full-year of 2017, all of Eni’s businesses recorded markedly better performances y-o-y, leveraging on a strategy based on the reduction in the time-to-market of reserves, efficiency actions, the renegotiation of gas supply contracts and plant restructuring in the R&M and Chemicals business. These actions enabled the Company to fully capture the recovery in the commodity scenario. The consolidated adjusted operating profit of €5.79 billion increased by €3.48 billion (up by 150%) due to a strong performance in the E&P segment (up by €2.68 billion), the return to profitability in the G&P business for the first time in seven years (up by €0.60 billion), and record results reported by the R&M and Chemicals segment with a total operating profit of approximately €1 billion (up by €0.41 billion). The €3.5 billion increase was explained for €3.1 billion by scenario effects and for €0.6 billion by volumes growth and efficiency and optimization gains, partly offset by OPEC cuts and one-off effects (€0.2 billion). |
· | Adjusted net profit for the quarter of €0.98 billion improved by €0.52 billion compared to the fourth quarter of 2016, driven by the increasing operating performance and a reduced tax rate (down by 9 |
-11- |
percentage points, from 58% in the fourth quarter of 2016 to 49% in the fourth quarter of 2017). This trend reflected improved profitability mainly in the E&P segment, which allowed higher deductibility of operating expenses including those incurred in connection with PSA schemes, as well as a lower incidence of non-deductible expenses. In the full year of 2017, adjusted net profit was €2.41 billion compared to a loss of €0.34 billion in 2016. The full-year result benefitted from better operating performance and a sharp decline in the adjusted Group tax rate (from 121% to 56%), which was due to the quarter’s drivers and to the recognition of deferred tax assets due to the start-up of the execution phase of the Coral project in Mozambique and to the production start-up of the Ghana project by mid of 2017.
Special items
Special items were represented by net gains of €1,020 million in the fourth quarter and €860 million in the full year of 2017. The business segment breakdown is disclosed below:
· | E&P: the main gains were recorded on the disposal of a 40% interest in the Zohr asset (€1,281 million) and of a 25% interest in the exploration Area 4 offshore Mozambique where development is underway (€1,985 million). Furthermore, previously recorded impairment losses were reversed at certain oil&gas CGUs (€349 million) driven by upward reserve revisions and the impact of the new tax laws in the USA, as well as improved market fundamentals factored in the upward revision of management’s long-term assumption for the benchmark Brent price to 72 $/barrel from the previous 70 $/barrel adopted in the impairment review of 2016. Extraordinary charges mainly related to impairment losses recorded at certain oil&gas projects in Venezuela and the associated trade receivables owed by the National Oil Company PDVSA, respectively for €623 million and €135 million, driven by the Venezuelan financial crisis, which was factored in the evaluation of assets recoverability, also considering lower future capex. Other charges related to a valuation allowance for doubtful accounts in connection with cost recovery and other matters due to the limited progress made in the course of 2017 for recovering the disputed amounts (for an amount of €258 million), as well as the recognition of losses on certain contractual and commercial disputes (for an amount of €298 million in the year), accounted for mainly in the quarter; |
· | G&P: the main charges comprised the effects of fair-valued commodity derivatives that lacked the formal criteria to be accounted as hedges under IFRS (net loss of €157 million in the year), an adjustment of €125 million in the fourth quarter and €223 million in the year to the allowance for doubtful accounts of the retail G&P business (included in the G&P reportable segment) to include the allowance determination made in accordance with the “expected loss” accounting model thus replacing the incurred loss accounting method, provisions for redundancy incentives (€38 million in the year), as well as a downward revision of revenues accrued on the sale of gas and power in past reporting periods (€22 million in the fourth quarter and €64 million in the year). The G&P adjusted operating result also includes the negative balance of €172 million in the year, related to derivative financial instruments entered to manage margin exposure to foreign currency exchange rate movements and exchange translation differences of commercial payables and receivables. These charges were totally or partly offset by the reversal of asset impairment losses recorded in previous reporting periods for €142 million, mainly relating to the alignment of the book value of the Hungarian gas distribution activity to its fair value, being a sale negotiation ongoing at the balance sheet date in order to close the transaction in 2018. Furthermore, extraordinary gains included the one recorded on the divestment of the retail activity in Belgium (€163 million) in the year; |
· | R&M and Chemicals: as far as R&M is concerned, net charges were mainly composed of the write down of capital expenditure relating to certain Cash Generating Units, which were impaired in previous reporting periods and continued to lack any profitability prospects (€41 million in the fourth quarter and €130 million in the year) as well as environmental provisions (€73 million in the fourth quarter and €111 million in the year). Referring to Versalis, the asset impairment reversal of €76 million reflects improved profitability prospects of the unique Cash Generation Unit of the Chemical business, environmental provisions and restoration costs of certain no more operation industrial hubs (€20 million in the quarter and €48 milion in the year) as well as the impairment of Eni’s interest and the financial receivables due to Eni by an industrial joint venture because of lower profitability prospects (€207 million). |
· | Special items of taxes included the tax effects relating to operating special items, the write-off of deferred tax asset of subsidiaries in the USA following the recognition of the impact of the newly enacted |
-12- |
tax regime, offset by the recognition of higher deferred tax assets at Versalis driven by the projection of improving future taxable profit.
Reported results
Net profit attributable to Eni’s shareholders for the full year of 2017 was €3,427 million, a substantial improvement y-o-y. In 2016, a loss of €1,464 million was incurred from both continuing and discontinued operations, with the latter including a one-off charge of €400 million on the Saipem shareholding following the loss of control over the investee. The reported operating profit for the full year of 2017 was €8,022 million, representing a three-fold increase from the full year of 2016 (up by €5,865 million). Net of the Saipem transaction, the Eni Group recorded a substantial recovery in profitability across all business segments. This trend benefitted from the progress in the implementation of the Group’s strategy, in terms of accelerating the time-to-market of discoveries, production growth, efficiency gains, restructuring of long-term gas contracts portfolio, as well as the restructuring of the refinery and petrochemical plant setup.
Leveraging on the turnaround achievements, Eni was able to fully captured an ongoing recovery in the oil price scenario, supported by growing demand and shrinking oversupplies due to the production curtailment from members of OPEC and other non-member countries. The downstream businesses were helped by higher global demand for commodities. These market trends drove a rebound in crude oil prices (the marker Brent was up by 24% y-o-y), in the SERM refining margin (up by 19%) and a substantial increase in petrochemical margins. The 2017 net profit benefitted not only from an improved operating performance but also from approximately €2.7 billion of net gains achieved in connection with the Dual Exploration Model, i.e. the closing of the disposal of a 40% stake of Zohr and a 25% interest in Area 4 in Mozambique. Two-thirds of these positives were offset by non-recurring charges mainly relating to the impairment of oil&gas projects in Venezuela and trade receivables towards the Country.
Furthermore, the increase in net profit for the full year of 2017 (€4.48 billion, excluding Saipem) reflected the normalization of the tax rate as disclosed in the adjusted results. Similar trends featured in the fourth quarter of 2017 with operating profit increasing by 165% y-o-y (up by €2.71 billion) and net profit improving by €1.76 billion.
-13- |
Net borrowings and cash flow from operations
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||
345 | Net profit (loss) | 2,100 | 341 | 1,759 | 3,430 | (1,044) | 4,474 | |||||||||||||||||||||
Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | ||||||||||||||||||||||||||||
1,991 | - depreciation, depletion and amortization and other non monetary items | 2,175 | 1,740 | 435 | 8,688 | 7,773 | 915 | |||||||||||||||||||||
(159) | - net gains on disposal of assets | (2,951) | (11) | (2,940) | (3,446) | (48) | (3,398) | |||||||||||||||||||||
678 | - dividends, interests and taxes | 1,471 | 749 | 722 | 3,672 | 2,229 | 1,443 | |||||||||||||||||||||
376 | Changes in working capital related to operations | 1,275 | 1,455 | (180) | 1,401 | 2,112 | (711) | |||||||||||||||||||||
(1,070) | Dividends received, taxes paid, interests (paid) received | (748) | (1,026) | 278 | (3,624) | (3,349) | (275) | |||||||||||||||||||||
2,161 | Net cash provided by operating activities | 3,322 | 3,248 | 74 | 10,121 | 7,673 | 2,448 | |||||||||||||||||||||
(1,570) | Capital expenditure | (2,184) | (2,250) | 66 | (8,677) | (9,180) | 503 | |||||||||||||||||||||
(453) | Investments | (7) | (6) | (1) | (510) | (1,164) | 654 | |||||||||||||||||||||
368 | Disposal of consolidated subsidiaries, businesses tangible and intangible assets and investments | 4,463 | 33 | 4,430 | 5,455 | 1,054 | 4,401 | |||||||||||||||||||||
1,128 | Other cash flow related to capital expenditure, investments and disposals | (1,742) | 614 | (2,356) | (375) | 465 | (840) | |||||||||||||||||||||
1,634 | Free cash flow | 3,852 | 1,639 | 2,213 | 6,014 | (1,152) | 7,166 | |||||||||||||||||||||
(10) | Borrowings (repayment) of debt related to financing activities | 450 | 42 | 408 | 336 | 5,271 | (4,935) | |||||||||||||||||||||
754 | Changes in short and long-term financial debt | (2,789) | (798) | (1,991 | ) | (1,713) | (766) | (947) | ||||||||||||||||||||
(1,440) | Dividends paid and changes in non-controlling interests and reserves | (33) | 33 | (2,883) | (2,885) | 2 | ||||||||||||||||||||||
(14) | Effect of changes in consolidation, exchange differences and cash and cash equivalent related to discontinued operations | (13) | 22 | (35 | ) | (65) | (3) | (62) | ||||||||||||||||||||
924 | NET CASH FLOW | 1,500 | 872 | 628 | 1,689 | 465 | 1,224 |
Change in net borrowings
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | Change | 2017 | 2016 | Change | |||||||||||||||||||||
1,634 | Free cash flow | 3,852 | 1,639 | 2,213 | 6,014 | (1,152) | 7,166 | |||||||||||||||||||||
(3) | Net borrowings of divested companies | 264 | 264 | 261 | 5,848 | (5,587) | ||||||||||||||||||||||
311 | Exchange differences on net borrowings and other changes | (67) | (374) | 307 | 468 | 284 | 184 | |||||||||||||||||||||
(1,440) | Dividends paid and changes in non-controlling interest and reserves | (33) | 33 | (2,883) | (2,885) | 2 | ||||||||||||||||||||||
502 | CHANGE IN NET BORROWINGS | 4,049 | 1,232 | 2,817 | 3,860 | 2,095 | 1,765 |
Cash flow from operating activities amounted to €10.12 billion in the full year of 2017, €3.32 billion in the fourth quarter of 2017. Income taxes on the disposals of Eni’s interests in Zohr and in Area 4 in Mozambique (€0.44 billion) were netted against cash flow from disposals, as provided by international accounting standards. In the full year of 2017, cash flow from operations was also influenced by a higher level of receivables due beyond the end of the reporting period being sold to financing institutions compared to the amount sold at the end of the previous reporting period (approximately €0.3 billion).
-14- |
Adjusted cash flow from operating activities
Adjusted cash flow from operating activities amounted to €2,423 million in the quarter and €9,256 million in the full year of 2017 and was determined by excluding from net cash provided by operating activities the movements of working capital, the profit/loss on stock and an extraordinary valuation allowance (see page 12).
(€ million) |
GAAP measures | Profit/loss on stock | Extraordinary allowance for trade receivables | Tax settlement (a) | Advances on future gas supplies to the Egyptian partners to fund the Zohr project | Purchase of trade receivables from the JV Cardon IV | Other | Non-GAAP measures | |||||||||||||||||||||||||||
Full year 2017 | ||||||||||||||||||||||||||||||||||
Net cash before changes in working capital | 8,720 | (219 | ) | 616 | 150 | (11 | ) | 9,256 | Adjusted net cash before changes in working capital | |||||||||||||||||||||||||
Changes in working capital | 1,401 | 219 | (616 | ) | (192 | ) | 68 | 880 | ||||||||||||||||||||||||||
Net cash provided by operating activities | 10,121 | (192 | ) | 57 | 9,986 | Underlying net cash provided by operating activities | ||||||||||||||||||||||||||||
IVQ 2017 | ||||||||||||||||||||||||||||||||||
Net cash before changes in working capital | 2,047 | (149 | ) | 518 | 7 | 2,423 | Adjusted net cash before changes in working capital | |||||||||||||||||||||||||||
Changes in working capital | 1,275 | 149 | (518 | ) | (112 | ) | 1 | 795 | ||||||||||||||||||||||||||
Net cash provided by operating activities | 3,322 | (112 | ) | 8 | 3,218 | Underlying net cash provided by operating activities | ||||||||||||||||||||||||||||
Full year 2016 | ||||||||||||||||||||||||||||||||||
Net cash before changes in working capital | 5,561 | (175 | ) | 688 | 105 | 6,179 | Adjusted net cash before changes in working capital | |||||||||||||||||||||||||||
Changes in working capital | 2,112 | 175 | (688 | ) | (105 | ) | 298 | 1,792 | ||||||||||||||||||||||||||
Net cash provided by operating activities | 7,673 | 298 | 7,971 | Underlying net cash provided by operating activities | ||||||||||||||||||||||||||||||
IVQ 2016 | ||||||||||||||||||||||||||||||||||
Net cash before changes in working capital | 1,793 | (237 | ) | 568 | (1 | ) | 2,123 | Adjusted net cash before changes in working capital | ||||||||||||||||||||||||||
Changes in working capital | 1,455 | 237 | (568 | ) | 298 | 1 | 1,423 | |||||||||||||||||||||||||||
Net cash provided by operating activities | 3,248 | 298 | 3,546 | Underlying net cash provided by operating activities |
(a) In 2017 includes tax settlement in Angola not accrued in the year.
Organic coverage of capex and floor dividend
Management is disclosing below certain alternative measures of cash performance to factor in the retroactive economic effects of the disposals of the Dual Exploration Model, namely a 40% interest in Zohr located in Egypt sold to BP and Rosneft and a 25% interest of Area 4 located in Mozambique divested to ExxonMobil, whereby the consideration of these disposals included the share of 2017 capex incurred until the completion date and attributable to the buyers. In addition, in 2017 Eni cashed in advances for €0.2 billion on future gas supplies to the Egyptian State-owned partners, with the aim of financing their capex share in the Zohr project. Therefore, cash flow from operating activities including changes in working capital was netted of those advances and other minor items to €9.99 billion, whereas capex for the FY 2017 was netted of the share reimbursed by the buyers of the minority interests in the Zohr and Mozambique projects and other minor items to €7.62 billion, respectively, yielding a surplus of approximately €2.3 billion, which funded approximately 80% of the total amount of the cash dividend (€2.9 billion). Consequently, on the basis of the Group cash flow sensitivity to the Brent scenario which is assuming an increase of approximately €0.2 billion in free cash flow for each one-dollar increase in the Brent price (and vice versa), the organic cash neutrality for funding FY capex and the floor dividend is achieved at 57$/bbl, better than management’s expectations at 60$/bbl and in line with the long-term Company’s target of a cash neutrality structurally below the 60$/bbl threshold. 2017 disposals net of the share of the transaction price relating to capex reimbursements amounted to €3.80 billion. When considering this cash inflow, the Brent level at which cash neutrality was achieved in 2017 reduced to 39$/bbl.
(€ million) | Full year 2017 | ||||||||||||||||||||||||||||
GAAP measures | Advances on future gas supplies to the Egyptian partners to fund the Zohr project | Share of 2017 capex reimbursed at closing of the disposals relating to the Dual Exploration Model | Non-recurring items | Reimbursement of net debt as part of the Area 4 deal (25% sale to Exxon) | Zohr disposal expected to be cashed-in 2018 and 2019 | Non-GAAP measures | |||||||||||||||||||||||
Net cash provided by operating activities | 10,121 | (192) | 57 | 9,986 | Underlying net cash provided by operating activities | ||||||||||||||||||||||||
Capital expenditure | (9,187) | 192 | 1,227 | 149 | (7,619) | Net capital expenditure | |||||||||||||||||||||||
Disposals | 5,455 | (1,151) | (48) | 185 | (644) | 3,797 | Net disposals |
-15- |
Summarized Group Balance Sheet
Sept. 30, 2017
| Change
| (€ million) | Dec. 31, 2017
| Dec. 31, 2016
| Change
| |||||||||||||||
73,001 | (1,532) | Fixed assets | 71,469 | 79,729 | (8,260) | |||||||||||||||
Net working capital | ||||||||||||||||||||
4,638 | (20) | Inventories | 4,618 | 4,637 | (19) | |||||||||||||||
9,886 | 324 | Trade receivables | 10,210 | 11,186 | (976) | |||||||||||||||
(9,522) | (1,369) | Trade payables | (10,891) | (11,038) | 147 | |||||||||||||||
(3,018) | 596 | Tax payables and provisions for, net deferred tax liabilities | (2,422) | (3,073) | 651 | |||||||||||||||
(13,410) | 4 | Provisions | (13,406) | (13,896) | 490 | |||||||||||||||
834 | (565) | Other current assets and liabilities | 269 | 1,171 | (902) | |||||||||||||||
(10,592) | (1,030) | (11,622) | (11,013) | (609) | ||||||||||||||||
(880) | (142) | Provisions for employee post-retirements benefits | (1,022) | (868) | (154) | |||||||||||||||
13 | 223 | Assets held for sale including related liabilities | 236 | 14 | 222 | |||||||||||||||
61,542 | (2,481) | CAPITAL EMPLOYED, NET | 59,061 | 67,862 | (8,801) | |||||||||||||||
46,529 | 1,567 | Eni's shareholders equity | 48,096 | 53,037 | (4,941) | |||||||||||||||
48 | 1 | Non-controlling interest | 49 | 49 | ||||||||||||||||
46,577 | 1,568 | Shareholders' equity | 48,145 | 53,086 | (4,941) | |||||||||||||||
14,965 | (4,049) | Net borrowings | 10,916 | 14,776 | (3,860) | |||||||||||||||
61,542 | (2,481) | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 59,061 | 67,862 | (8,801) | |||||||||||||||
0.32 | (0.09) | Leverage | 0.23 | 0.28 | (0.05) | |||||||||||||||
0.24 | (0.06) | Gearing | 0.18 | 0.22 | (0.04) |
· Net borrowings5 at December 31, 2017 was €10.92 billion, lower by €3.86 billion from 2016 leveraging on the business operations and the finalization of portfolio transactions due to the Dual Exploration Model and other non-strategic assets (retail activity in Belgium).
· As of December 31, 2017, the ratio of net borrowings to shareholders’ equity including non-controlling interest – leverage6 – was 0.23, down from 0.28 as of December 31, 2016. This was driven by a reduction in net borrowings, partly offset by a decrease in total equity (down by €4.94 billion) driven by unfavorable foreign currency translation differences (about €5.56 billion) and the payment of the 2016 final dividend and the 2017 interim dividend (€2.88 billion), partly offset by the income of the period.
· As of December 31, 2017, gearing – the ratio of net borrowings to net capital employed – was 0.18, lower than 0.22 at December 31, 2016.
5 Details on net borrowings are furnished on page 27.
6 Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information see the section “Non-GAAP measures” of this press release. See pages 18 and subsequent.
-16- |
Other information, basis of presentation and disclaimer
Article No. 15 (former Article No. 36) of Italian regulatory exchanges (Consob Resolution No. 20249 published on December 28, 2017).
Continuing listing standards about issuers that control subsidiaries incorporated or regulated in accordance with laws of extra-EU Countries. Certain provisions have been enacted to regulate continuing Italian listing standards of issuers controlling subsidiaries that are incorporated or regulated in accordance with laws of extra-EU Countries, also having a material impact on the consolidated financial statements of the parent company. Regarding the aforementioned provisions, as of December 31, 2017, Eni’s subsidiaries - Eni Congo SA, Eni Norge AS, Eni Petroleum Co Inc, Nigerian Agip Oil Co Ltd, Nigerian Agip Exploration Ltd, Eni Finance USA Inc, Eni Trading & Shipping Inc, Eni Canada Holding Ltd, Eni Turkmenistan Ltd and Eni Ghana Exploration and Production Ltd – fall within the scope of the new continuing listing standards. Eni has already adopted adequate procedures to ensure full compliance with the new regulations.
This press release for the fourth quarter and full year of 2017 has been prepared on a voluntary basis according to article 82-ter, Regulations on issuers (Consob Regulation No. 11971 of May 14, 1999 and subsequent amendments and inclusions). The disclosure of results and business trends on a quarterly basis is consistent with Eni’s policy to provide the market and investors with regular information about the Company’s financial and industrial performances and business prospects considering the reporting policy followed by oil&gas peers who are communicating results each quarter. Results and cash flow are presented for the third and fourth quarter of 2017, the full year of 2017 and for the fourth quarter and the full year of 2016. Information on the Company’s financial position relates to end of the periods as of December 31, September 30, 2017 and December 31, 2016.
Accounts set forth herein have been prepared in accordance with the evaluation and recognition criteria set by the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and adopted by the European Commission according to the procedure set forth in Article 6 of the European Regulation (CE) No. 1606/2002 of the European Parliament and European Council of July 19, 2002. These criteria are unchanged from the 2016 Annual report on form 20-F filed with the US SEC on March 22, 2017, which investors are urged to read.
Non-GAAP financial measures and other alternative performance indicators disclosed throughout this press release are accompanied by explanatory notes and tables in line with guidance provided by ESMA guidelines on alternative performance measures (ESMA/2015/1415), published on October 5, 2015. For further information see the section “Alternative performance measures (Non-GAAP measures)” of this press release.
Eni’s Chief Financial Officer, Massimo Mondazzi, in his position as manager responsible for the preparation of the Company’s financial reports, certifies that data and information disclosed in this press release correspond to the Company’s evidence and accounting books and records, pursuant to rule 154-bis paragraph 2 of Legislative Decree No. 58/1998.
* * *
Disclaimer
This press release, in particular the statements under the section “Outlook”, contains certain forward-looking statements particularly those regarding capital expenditure, development and management of oil and gas resources, dividends, allocation of future cash flow from operations, future operating performance, gearing, targets of production and sales growth, new markets and the progress and timing of projects. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Actual results may differ from those expressed in such statements, depending on a variety of factors, including the timing of bringing new fields on stream; management’s ability in carrying out industrial plans and in succeeding in commercial transactions; future levels of industry product supply; demand and pricing; operational issues; general economic conditions; political stability and economic growth in relevant areas of the world; changes in laws and governmental regulations; development and use of new technology; changes in public expectations and other changes in business conditions; the actions of competitors and other factors discussed elsewhere in this document. Due to the seasonality in demand for natural gas and certain refined products and the changes in a number of external factors affecting Eni’s operations, such as prices and margins of hydrocarbons and refined products, Eni’s results from operations and changes in net borrowings for the fourth quarter of the year cannot be extrapolated on an annual basis.
The all sources reserve replacement ratio disclosed elsewhere in this press release is calculated as ratio of changes in proved reserves for the year resulting from revisions of previously reported reserves, improved recovery, extensions, discoveries and sales or purchases of minerals in place, to production for the year. A ratio higher than 100% indicates that more proved reserves were added than produced in a year. The Reserve Replacement Ratio is a measure used by management to indicate the extent to which production is replaced by proved oil and gas reserves. The Reserve Replacement Ratio is not an indicator of future production because the ultimate development and production of reserves is subject to a number of risks and uncertainties. These include the risks associated with the successful completion of large-scale projects, including addressing ongoing regulatory issues and completion of infrastructure, as well as changes in oil and gas prices, political risks and geological and other environmental risks.
* * *
Company Contacts
Press Office: +39.0252031875 - +39.0659822030
Freephone for shareholders (from Italy): 800940924
Freephone for shareholders (from abroad): +80011223456
Switchboard: +39-0659821
ufficio.stampa@eni.com
segreteriasocietaria.azionisti@eni.com
investor.relations@eni.com
website: www.eni.com
* * *
Eni
Società per Azioni Rome, Piazzale Enrico Mattei, 1
Share capital: €4,005,358,876 fully paid.
Tax identification number 00484960588
Tel.: +39 0659821 - Fax: +39 0659822141
This press release for the fourth quarter and the full year of 2017 (unaudited) is also available on Eni’s website eni.com.
-17- |
Alternative performance measures (Non-GAAP measures) |
Management evaluates underlying business performance on the basis of Non-GAAP financial measures under IFRS (“Alternative performance measures”), such as adjusted operating profit and adjusted net profit, which are arrived at by excluding inventory holding gains or losses, special items and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income. From 2017, the recognition of the inventory holding (gains) losses has been revised in the Gas & Power segment considering a recently-enacted, less restrictive regulatory framework relating the legal obligation on part of gas wholesalers to retain gas volumes in storage to ensure an adequate level of modulation to the retail segment. On this basis, management has progressively reduced gas quantities held in storage and has commenced to leverage those quantities to improve margins by seeking to capture the seasonality in gas prices existing between the phase of gas injection (which typically occurs in summer months) vs. the phase of gas off-take (which typically occurs during the winter months). Therefore, from the closure of the statutory period of gas injection, i.e. from the fourth quarter of 2017, the determination of the stock profit or loss in the Gas&Power segment has changed and currently gas off-takes from storage are valued at the average cost incurred during the injection period net of the effects of hedging derivatives, ensuring when the purchased volumes are matched by the corresponding sales (net of the effects of hedging derivatives) the proper measurement and accountability of the economic performances.
The adjusted operating profit of each business segment reports gains and losses on derivative financial instruments entered into to manage exposure to movements in foreign currency exchange rates, which affect industrial margins and translation of commercial payables and receivables. Accordingly, also currency translation effects recorded through profit and loss are reported within business segments’ adjusted operating profit. The taxation effect of the items excluded from adjusted operating or net profit is determined based on the specific rate of taxes applicable to each of them. Management includes them in order to facilitate a comparison of base business performance across periods, and to allow financial analysts to evaluate Eni’s trading performance on the basis of their forecasting models. Non-GAAP financial measures should be read together with information determined by applying IFRS and do not stand in for them. Other companies may adopt different methodologies to determine Non-GAAP measures.
Follows the description of the main alternative performance measures adopted by Eni. The measures reported below refer to the performance of the reporting periods disclosed in this press release:
Adjusted operating and net profit
Adjusted operating and net profit are determined by excluding inventory holding gains or losses, special items and, in determining the business segments’ adjusted results, finance charges on finance debt and interest income. The adjusted operating profit of each business segment reports gains and losses on derivative financial instruments entered into to manage exposure to movements in foreign currency exchange rates, which impact industrial margins and translation of commercial payables and receivables. Accordingly, also currency translation effects recorded through profit and loss are reported within business segments’ adjusted operating profit. The taxation effect of the items excluded from adjusted operating or net profit is determined based on the specific rate of taxes applicable to each of them. Finance charges or income related to net borrowings excluded from the adjusted net profit of business segments are comprised of interest charges on finance debt and interest income earned on cash and cash equivalents not related to operations. Therefore, the adjusted net profit of business segments includes finance charges or income deriving from certain segment operated assets, i.e., interest income on certain receivable financing and securities related to operations and finance charge pertaining to the accretion of certain provisions recorded on a discounted basis (as in the case of the asset retirement obligations in the Exploration & Production segment).
Inventory holding gain or loss
This is the difference between the cost of sales of the volumes sold in the period based on the cost of supplies of the same period and the cost of sales of the volumes sold calculated using the weighted average cost method of inventory accounting as required by IFRS.
Special items
These include certain significant income or charges pertaining to either: (i) infrequent or unusual events and transactions, being identified as non-recurring items under such circumstances; (ii) certain events or transactions which are not considered to be representative of the ordinary course of business, as in the case of environmental provisions, restructuring charges, asset impairments or write ups and gains or losses on divestments even though they occurred in past periods or are likely to occur in future ones; in this respect, from the reporting period 2017 special items comprise an adjustment to align the doubtful credit allowance of the retail G&P business (included in the G&P reportable segment) to the “expected loss” accounting model replacing the criteria of the incurred loss in the evaluation of the recoverability of trade receivables. The new criterion will be adopted in GAAP accounts effective January 1, 2018. This result adjustment is consistent with management assessment of this business performance and improves the correlation between revenues and costs incurred in the period with respect to the current accounting method; or (iii) exchange rate differences and derivatives relating to industrial activities and commercial payables and receivables, particularly exchange rate derivatives to manage commodity pricing formulas which are quoted in a currency other than the functional currency. Those items are reclassified in operating profit with a corresponding adjustment to net finance charges, notwithstanding the handling of foreign currency exchange risks is made centrally by netting off naturally-occurring opposite positions and then dealing with any residual risk exposure in the exchange rate market.
As provided for in Decision No. 15519 of July 27, 2006 of the Italian market regulator (CONSOB), non-recurring material income or charges are to be clearly reported in the management’s discussion and financial tables. Also, special items allow to allocate to future reporting periods gains and losses on re-measurement at fair value of certain non hedging commodity derivatives and exchange rate derivatives relating to commercial exposures, lacking the criteria to be designed as hedges, including the ineffective portion of cash flow hedges and certain derivative financial instruments embedded in the pricing formula of long-term gas supply agreements of the Exploration & Production segment.
Leverage
Leverage is a Non-GAAP measure of the Company’s financial condition, calculated as the ratio between net borrowings and shareholders’ equity, including non-controlling interest. Leverage is the reference ratio to assess the solidity and efficiency of the Group balance sheet in terms of incidence of funding sources including third-party funding and equity as well as to carry out benchmark analysis with industry standards.
-18- |
Gearing
Gearing is calculated as the ratio between net borrowings and capital employed net and measures how much of capital employed net is financed recurring to third-party funding.
Adjusted cash flow
Adjusted cash flow is defined as net cash provided from operating activities before changes in working capital at replacement cost.
Free cash flow
Free cash flow represents 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. Free cash flow 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; (ii) changes 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.
Net borrowings
Net borrowings is calculated as total finance debt less cash, cash equivalents and certain very liquid investments not related to operations, including among others non-operating financing receivables and securities not related to operations. Financial activities are qualified as “not related to operations” when these are not strictly related to the business operations.
(€ million) | ||||||||||||||||||||||||
Full Year 2017 | Exploration
& | Gas & Power | Refining
& | Corporate | Impact
of | GROUP | ||||||||||||||||||
Reported operating profit (loss) | 7,669 | 70 | 982 | (668) | (31) | 8,022 | ||||||||||||||||||
Exclusion of inventory holding (gains) losses | (213) | (6) | (219) | |||||||||||||||||||||
Exclusion of special items: | ||||||||||||||||||||||||
environmental charges | 46 | 136 | 26 | 208 | ||||||||||||||||||||
impairment losses (impairment reversals), net | (142) | (142) | 54 | 25 | (205) | |||||||||||||||||||
net gains on disposal of assets | (3,269) | (13) | (1) | (3,283) | ||||||||||||||||||||
risk provisions | 333 | 82 | 415 | |||||||||||||||||||||
provision for redundancy incentives | 19 | 38 | (6) | (2) | 49 | |||||||||||||||||||
commodity derivatives | 157 | (11) | 146 | |||||||||||||||||||||
exchange rate differences and derivatives | (68) | (172) | (9) | (249) | ||||||||||||||||||||
other | 582 | 261 | 72 | (4) | 911 | |||||||||||||||||||
Special items of operating profit (loss) | (2,499) | 142 | 223 | 126 | (2,008) | |||||||||||||||||||
Adjusted operating profit (loss) | 5,170 | 212 | 992 | (542) | (37) | 5,795 | ||||||||||||||||||
Net finance (expense) income (a) | (50) | 10 | 5 | (723) | (758) | |||||||||||||||||||
Net income (expense) from investments (a) | 409 | (9) | 21 | 70 | 491 | |||||||||||||||||||
Income taxes (a) | (2,801) | (162) | (357) | 187 | 19 | (3,114) | ||||||||||||||||||
Tax rate (%) | 50.7 | 76.1 | 35.1 | 56.3 | ||||||||||||||||||||
Adjusted net profit (loss) | 2,728 | 51 | 661 | (1,008) | (18) | 2,414 | ||||||||||||||||||
of which: | ||||||||||||||||||||||||
- Adjusted net profit (loss) of non-controlling interest | 3 | |||||||||||||||||||||||
- Adjusted net profit (loss) attributable to Eni's shareholders | 2,411 | |||||||||||||||||||||||
Reported net profit (loss) attributable to Eni's shareholders | 3,427 | |||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | (156) | |||||||||||||||||||||||
Exclusion of special items | (860) | |||||||||||||||||||||||
Adjusted net profit (loss) attributable to Eni's shareholders | 2,411 |
(a) Excluding special items.
-19- |
(€ million) | ||||||||||||||||||||||||||||||||
Full Year 2016 | Exploration
& | Gas
& Power | Refining
& | Corporate
| Impact
of unrealized intragroup profit elimination | GROUP | DISCONTINUED OPERATIONS | CONTINUING OPERATIONS | ||||||||||||||||||||||||
Reported operating profit (loss) | 2,567 | (391) | 723 | (681) | (61) | 2,157 | 2,157 | |||||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | 90 | (406) | 141 | (175) | (175) | |||||||||||||||||||||||||||
Exclusion of special items: | ||||||||||||||||||||||||||||||||
environmental charges | 1 | 104 | 88 | 193 | 193 | |||||||||||||||||||||||||||
impairment losses (impairment reversals), net | (684) | 81 | 104 | 40 | (459) | (459) | ||||||||||||||||||||||||||
impairment of exploration projects | 7 | 7 | 7 | |||||||||||||||||||||||||||||
net gains on disposal of assets | (2) | (8) | (10) | (10) | ||||||||||||||||||||||||||||
risk provisions | 105 | 17 | 28 | 1 | 151 | 151 | ||||||||||||||||||||||||||
provision for redundancy incentives | 24 | 4 | 12 | 7 | 47 | 47 | ||||||||||||||||||||||||||
commodity derivatives | 19 | (443) | (3) | (427) | (427) | |||||||||||||||||||||||||||
exchange rate differences and derivatives | (3) | (19) | 3 | (19) | (19) | |||||||||||||||||||||||||||
other | 461 | 270 | 26 | 93 | 850 | 850 | ||||||||||||||||||||||||||
Special items of operating profit (loss) | (73) | (89) | 266 | 229 | 333 | 333 | ||||||||||||||||||||||||||
Adjusted operating profit (loss) | 2,494 | (390) | 583 | (452) | 80 | 2,315 | 2,315 | |||||||||||||||||||||||||
Net finance (expense) income (a) | (55) | 6 | 1 | (721) | (769) | (769) | ||||||||||||||||||||||||||
Net income (expense) from investments (a) | 68 | (20) | 32 | (6) | 74 | 74 | ||||||||||||||||||||||||||
Income taxes (a) | (1,999) | 74 | (197) | 188 | (19 | ) | (1,953) | (1,953) | ||||||||||||||||||||||||
Tax rate (%) | 79.7 | .. | 32.0 | 120.6 | 120.6 | |||||||||||||||||||||||||||
Adjusted net profit (loss) | 508 | (330) | 419 | (991) | 61 | (333) | (333) | |||||||||||||||||||||||||
of which: | ||||||||||||||||||||||||||||||||
- Adjusted net profit (loss) of non-controlling interest | 7 | 7 | ||||||||||||||||||||||||||||||
- Adjusted net profit (loss) attributable to Eni's shareholders | (340) | (340) | ||||||||||||||||||||||||||||||
Reported net profit (loss) attributable to Eni's shareholders | (1,464) | 413 | (1,051) | |||||||||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | (120) | (120) | ||||||||||||||||||||||||||||||
Exclusion of special items | 1,244 | (413) | 831 | |||||||||||||||||||||||||||||
Adjusted net profit (loss) attributable to Eni's shareholders | (340) | (340) |
(a) Excluding special items.
-20- |
(€ million) | ||||||||||||||||||||||||
IVQ 2017 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate
and other activities | Impact
of unrealized intragroup profit elimination | GROUP | ||||||||||||||||||
Reported operating profit (loss) | 4,149 | 201 | 218 | (142) | (76) | 4,350 | ||||||||||||||||||
Exclusion of inventory holding (gains) losses | 29 | (174) | (4) | (149) | ||||||||||||||||||||
Exclusion of special items: | ||||||||||||||||||||||||
environmental charges | 46 | 83 | 8 | 137 | ||||||||||||||||||||
impairment losses (impairment reversals), net | (143) | (137) | (35) | 16 | (299) | |||||||||||||||||||
net gains on disposal of assets | (2,926) | (11) | (2,937) | |||||||||||||||||||||
risk provisions | 246 | 3 | 249 | |||||||||||||||||||||
provision for redundancy incentives | 12 | 4 | (10) | (4) | 2 | |||||||||||||||||||
commodity derivatives | 4 | (4) | ||||||||||||||||||||||
exchange rate differences and derivatives | (36) | (14) | 2 | (48) | ||||||||||||||||||||
other | 516 | 126 | 45 | 3 | 690 | |||||||||||||||||||
Special items of operating profit (loss) | (2,285) | (17) | 70 | 26 | (2,206) | |||||||||||||||||||
Adjusted operating profit (loss) | 1,864 | 213 | 114 | (116) | (80) | 1,995 | ||||||||||||||||||
Net finance (expense) income (a) | (39) | 1 | 2 | (187) | (223) | |||||||||||||||||||
Net income (expense) from investments (a) | 118 | (4) | 5 | 24 | 143 | |||||||||||||||||||
Income taxes (a) | (847) | (97) | (56) | 31 | 29 | (940) | ||||||||||||||||||
Tax rate (%) | 43.6 | 46.2 | 46.3 | 49.1 | ||||||||||||||||||||
Adjusted net profit (loss) | 1,096 | 113 | 65 | (248) | (51) | 975 | ||||||||||||||||||
of which: | ||||||||||||||||||||||||
- Adjusted net profit (loss) of non-controlling interest | ||||||||||||||||||||||||
- Adjusted net profit (loss) attributable to Eni's shareholders | 975 | |||||||||||||||||||||||
Reported net profit (loss) attributable to Eni's shareholders | 2,100 | |||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | (105) | |||||||||||||||||||||||
Exclusion of special items | (1,020) | |||||||||||||||||||||||
Adjusted net profit (loss) attributable to Eni's shareholders | 975 | |||||||||||||||||||||||
(a) Excluding special items. |
-21- |
(€ million) | ||||||||||||||||||||||||
IVQ 2016 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate and other activities | Impact
of unrealized intragroup profit elimination | GROUP | ||||||||||||||||||
Reported operating profit (loss) | 1,720 | 5 | 168 | (254) | 1 | 1,640 | ||||||||||||||||||
Exclusion of inventory holding (gains) losses | (56) | (181) | (237) | |||||||||||||||||||||
Exclusion of special items: | ||||||||||||||||||||||||
environmental charges | 1 | 18 | 9 | 28 | ||||||||||||||||||||
impairment losses (impairment reversals), net | (789) | 81 | 40 | 28 | (640) | |||||||||||||||||||
net gains on disposal of assets | (3) | (3) | (6) | |||||||||||||||||||||
risk provisions | (1) | 17 | 27 | 43 | ||||||||||||||||||||
provision for redundancy incentives | 19 | 3 | 7 | 4 | 33 | |||||||||||||||||||
commodity derivatives | (265) | (14) | (279) | |||||||||||||||||||||
exchange rate differences and derivatives | (1) | 33 | 5 | 37 | ||||||||||||||||||||
other | 455 | 109 | 8 | 95 | 667 | |||||||||||||||||||
Special items of operating profit (loss) | (320) | (21) | 88 | 136 | (117) | |||||||||||||||||||
Adjusted operating profit (loss) | 1,400 | (72) | 75 | (118) | 1 | 1,286 | ||||||||||||||||||
Net finance (expense) income (a) | 123 | (1) | 1 | (391) | (268) | |||||||||||||||||||
Net income (expense) from investments (a) | 77 | (8) | 9 | 4 | 82 | |||||||||||||||||||
Income taxes (a) | (741) | 50 | (35) | 81 | 5 | (640) | ||||||||||||||||||
Tax rate (%) | 46.3 | .. | 41.2 | 58.2 | ||||||||||||||||||||
Adjusted net profit (loss) | 859 | (31) | 50 | (424) | 6 | 460 | ||||||||||||||||||
of which: | ||||||||||||||||||||||||
- Adjusted net profit (loss) of non-controlling interest | 1 | |||||||||||||||||||||||
- Adjusted net profit (loss) attributable to Eni's shareholders | 459 | |||||||||||||||||||||||
Reported net profit (loss) attributable to Eni's shareholders | 340 | |||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | (162) | |||||||||||||||||||||||
Exclusion of special items | 281 | |||||||||||||||||||||||
Adjusted net profit (loss) attributable to Eni's shareholders | 459 | |||||||||||||||||||||||
(a) Excluding special items. |
-22- |
(€ million) | ||||||||||||||||||||||||
IIIQ 2017 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate and other activities | Impact
of unrealized intragroup profit elimination | GROUP | ||||||||||||||||||
Reported operating profit (loss) | 1,041 | (120) | 367 | (181) | (109) | 998 | ||||||||||||||||||
Exclusion of inventory holding (gains) losses | 15 | (95) | 17 | (63) | ||||||||||||||||||||
Exclusion of special items: | ||||||||||||||||||||||||
environmental charges | 29 | 29 | ||||||||||||||||||||||
impairment losses (impairment reversals), net | 1 | 31 | 1 | 33 | ||||||||||||||||||||
net gains on disposal of assets | (1) | (1) | (2) | |||||||||||||||||||||
risk provisions | (1) | 30 | 29 | |||||||||||||||||||||
provision for redundancy incentives | 2 | 1 | (1) | 2 | ||||||||||||||||||||
commodity derivatives | (90) | 1 | (89) | |||||||||||||||||||||
exchange rate differences and derivatives | (20) | (64) | (4) | (88) | ||||||||||||||||||||
other | 25 | 65 | 7 | 1 | 98 | |||||||||||||||||||
Special items of operating profit (loss) | 5 | (88) | 65 | 30 | 12 | |||||||||||||||||||
Adjusted operating profit (loss) | 1,046 | (193) | 337 | (151) | (92) | 947 | ||||||||||||||||||
Net finance (expense) income (a) | (39) | 3 | 1 | (146) | (181) | |||||||||||||||||||
Net income (expense) from investments (a) | 104 | (2) | 15 | 18 | 135 | |||||||||||||||||||
Income taxes (a) | (670) | 53 | (111) | 29 | 28 | (671) | ||||||||||||||||||
Tax rate (%) | 60.3 | .. | 31.4 | 74.5 | ||||||||||||||||||||
Adjusted net profit (loss) | 441 | (139) | 242 | (250) | (64) | 230 | ||||||||||||||||||
of which: | ||||||||||||||||||||||||
- Adjusted net profit (loss) of non-controlling interest | 1 | |||||||||||||||||||||||
- Adjusted net profit (loss) attributable to Eni's shareholders | 229 | |||||||||||||||||||||||
Reported net profit (loss) attributable to Eni's shareholders | 344 | |||||||||||||||||||||||
Exclusion of inventory holding (gains) losses | (45) | |||||||||||||||||||||||
Exclusion of special items | (70) | |||||||||||||||||||||||
Adjusted net profit (loss) attributable to Eni's shareholders | 229 | |||||||||||||||||||||||
(a) Excluding special items. |
-23- |
Breakdown of special items
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
29 | Environmental charges | 137 | 28 | 208 | 193 | |||||||||||||||
33 | Impairment losses (impairment reversals), net | (299) | (640) | (205) | (459) | |||||||||||||||
Impairment of exploration projects | 7 | |||||||||||||||||||
(2) | Net gains on disposal of assets | (2,937) | (6) | (3,283) | (10) | |||||||||||||||
29 | Risk provisions | 249 | 43 | 415 | 151 | |||||||||||||||
2 | Provisions for redundancy incentives | 2 | 33 | 49 | 47 | |||||||||||||||
(89) | Commodity derivatives | (279) | 146 | (427) | ||||||||||||||||
(88) | Exchange rate differences and derivatives | (48) | 37 | (249) | (19) | |||||||||||||||
98 | Other | 690 | 667 | 911 | 850 | |||||||||||||||
12 | Special items of operating profit (loss) | (2,206) | (117) | (2,008) | 333 | |||||||||||||||
103 | Net finance (income) expense | 244 | 56 | 478 | 166 | |||||||||||||||
of which: | ||||||||||||||||||||
88 | - exchange rate differences and derivatives reclassified to operating profit (loss) | 48 | (37) | 249 | 19 | |||||||||||||||
(162) | Net income (expense) from investments | 454 | 362 | 358 | 817 | |||||||||||||||
of which: | ||||||||||||||||||||
(164) | - gains on disposal of assets | 1 | (5) | (163) | (57) | |||||||||||||||
2 | - impairment/revaluation of equity investments | 453 | 415 | 523 | 896 | |||||||||||||||
(23) | Income taxes | 488 | (20) | 312 | (72) | |||||||||||||||
of which: | ||||||||||||||||||||
- net impairment of deferred tax assets of Italian subsidiaries | 122 | 170 | ||||||||||||||||||
- net impairment of deferred tax assets of upstream business outside Italy | 6 | 6 | ||||||||||||||||||
- USA tax reform | 115 | 115 | ||||||||||||||||||
(23) | - taxes on special items of operating profit and other special items | 373 | (148) | 197 | (248) | |||||||||||||||
(70) | Total special items of net profit (loss) | (1,020) | 281 | (860) | 1,244 |
-24- |
Analysis of Profit and Loss account items |
Net sales from operations
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
4,628 | Exploration & Production | 5,571 | 4,855 | 14.7 | 19,525 | 16,089 | 21.4 | |||||||||||||||||||||
11,430 | Gas & Power | 13,540 | 11,986 | 13.0 | 50,622 | 40,961 | 23.6 | |||||||||||||||||||||
5,449 | Refining & Marketing and Chemicals | 5,802 | 5,125 | 13.2 | 22,110 | 18,733 | 18.0 | |||||||||||||||||||||
4,440 | - Refining & Marketing | 4,787 | 4,141 | 15.6 | 17,688 | 14,932 | 18.5 | |||||||||||||||||||||
1,120 | - Chemicals | 1,134 | 1,082 | 4.8 | 4,855 | 4,196 | 15.7 | |||||||||||||||||||||
(111) | - Consolidation adjustments | (119) | (98) | (433) | (395) | |||||||||||||||||||||||
344 | Corporate and other activities | 431 | 391 | 10.2 | 1,462 | 1,343 | 8.9 | |||||||||||||||||||||
(6,167) | Consolidation adjustments | (7,797) | (6,550) | (26,798) | (21,364) | |||||||||||||||||||||||
15,684 | 17,547 | 15,807 | 11.0 | 66,921 | 55,762 | 20.0 |
Operating expenses
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
12,064 | Purchases, services and other | 14,307 | 12,346 | 15.9 | 52,437 | 44,124 | 18.8 | |||||||||||||||||||||
58 | of which: other special items | 390 | 87 | 627 | 360 | |||||||||||||||||||||||
702 | Payroll and related costs | 687 | 741 | (7.3) | 2,951 | 2,994 | (1.4) | |||||||||||||||||||||
2 | of which: provision for redundancy incentives and other | 2 | 33 | 49 | 47 | |||||||||||||||||||||||
12,766 | 14,994 | 13,087 | 14.6 | 55,388 | 47,118 | 17.6 |
DD&A, impairments, reversals and write-off
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
1,761 | Exploration & Production | 1,583 | 1,757 | (9.9) | 6,748 | 6,772 | (0.4) | |||||||||||||||||||||
83 | Gas & Power | 85 | 92 | (7.6) | 345 | 354 | (2.5) | |||||||||||||||||||||
88 | Refining & Marketing and Chemicals | 93 | 106 | (12.3) | 360 | 389 | (7.5) | |||||||||||||||||||||
75 | - Refining & Marketing | 77 | 95 | (18.9) | 304 | 359 | (15.3) | |||||||||||||||||||||
13 | - Chemicals | 16 | 11 | 45.5 | 56 | 30 | 86.7 | |||||||||||||||||||||
14 | Corporate and other activities | 15 | 17 | .. | 60 | 72 | (16.7) | |||||||||||||||||||||
(8) | Impact of unrealized intragroup profit elimination | (7) | (7) | (29) | (28) | |||||||||||||||||||||||
1,938 | Total depreciation,
depletion and amortization | 1,769 | 1,965 | (10.0) | 7,484 | 7,559 | (1.0) | |||||||||||||||||||||
33 | Impairment losses (impairment reversals), net | (303) | (656) | 53.8 | (209) | (475) | 56.0 | |||||||||||||||||||||
1,971 | Depreciation, depletion, amortization, impairments and reversals | 1,466 | 1,309 | 12.0 | 7,275 | 7,084 | 2.7 | |||||||||||||||||||||
9 | Write-off of tangible and intangible assets | 61 | 212 | (71.2) | 263 | 350 | (24.9) | |||||||||||||||||||||
1,980 | 1,527 | 1,521 | 0.4 | 7,538 | 7,434 | 1.4 |
-25- |
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
33 | Asset impairments | 777 | 849 | 893 | 1,067 | |||||||||||||||
Impairment reversals | (1,080) | (1,505) | (1,102) | (1,542) | ||||||||||||||||
33 | Subtotal | (303) | (656) | (209) | (475) | |||||||||||||||
Impairment of receivables identified as non-recurring activities | 4 | 16 | 4 | 16 | ||||||||||||||||
33 | Total impairment losses (impairment reversals), net | (299) | (640) | (205) | (459) |
Income (expense) from investments
(€ million) | ||||||||||||||||||||
Full Year 2017 | Exploration
& Production | Gas
& Power | Refining
& Marketing and Chemicals | Corporate and other activities | Group | |||||||||||||||
Share of gains (losses) from equity-accounted investments | (98) | (10) | (55) | (39) | (202) | |||||||||||||||
Dividends | 179 | 25 | 1 | 205 | ||||||||||||||||
Net gains (losses) on disposals | 163 | 163 | ||||||||||||||||||
Other income (expense), net | (2) | (35) | (3) | 7 | (33) | |||||||||||||||
79 | 118 | (33) | (31) | 133 |
-26- |
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 to shareholders’ equity, including non-controlling 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 benchmark analysis with industry standards.
Sept.
30, 2017 | Change | (€ million) | Dec.
31, 2017 | Dec.
31, 2016 | Change | |||||||||||||||
27,508 | (2,801) | Total debt | 24,707 | 27,239 | (2,532) | |||||||||||||||
7,108 | (2,581) | - Short-term debt | 4,527 | 6,675 | (2,148) | |||||||||||||||
20,400 | (220) | - Long-term debt | 20,180 | 20,564 | (384) | |||||||||||||||
(5,863) | (1,500) | Cash and cash equivalents | (7,363) | (5,674) | (1,689) | |||||||||||||||
(6,365) | 146 | Securities held for trading and other securities held for non-operating purposes | (6,219) | (6,404) | 185 | |||||||||||||||
(315) | 106 | Financing receivables held for non-operating purposes | (209) | (385) | 176 | |||||||||||||||
14,965 | (4,049) | Net borrowings | 10,916 | 14,776 | (3,860) | |||||||||||||||
46,577 | 1,568 | Shareholders' equity including non-controlling interest | 48,145 | 53,086 | (4,941) | |||||||||||||||
0.32 | (0.09) | Leverage | 0.23 | 0.28 | (0.05) |
Net borrowings are calculated under Consob provisions on Net Financial Position (Com. no. DEM/6064293 of 2006).
Bonds maturing in the 18-months period starting on December 31, 2017
(€ million) | ||||
Issuing entity | Amount
at Dec. 31, 2017 (a) | |||
Eni SpA | 1,795 | |||
Eni Finance International SA | 404 | |||
2,199 | ||||
(a) Amounts include interest accrued and discount on issue. |
Bonds issued in the full year of 2017 (guaranteed by Eni Spa)
Issuing entity | Nominal
amount (€ million) | Currency | Amount
at Dec. 31, 2017 (a) (€ million) | Maturity | Rate | % | ||||||||||||||
Eni SpA | 750 | EUR | 754 | 2027 | fixed | 1.50 | ||||||||||||||
Eni SpA | 650 | EUR | 649 | 2025 | fixed | 1.00 | ||||||||||||||
Eni Finance International SA | 417 | USD | 414 | 2026 | variable | |||||||||||||||
1,817 | 1,817 | |||||||||||||||||||
(a) Amounts include interest accrued and discount on issue. |
-27- |
Consolidated financial statements |
BALANCE SHEET
(€ million) | ||||||||||||
Sept. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | ||||||||||
ASSETS | ||||||||||||
Current assets | ||||||||||||
5,863 | Cash and cash equivalents | 7,363 | 5,674 | |||||||||
6,157 | Other financial activities held for trading | 6,013 | 6,166 | |||||||||
208 | Other financial assets available for sale | 206 | 238 | |||||||||
15,117 | Trade and other receivables | 15,741 | 17,593 | |||||||||
4,638 | Inventories | 4,618 | 4,637 | |||||||||
286 | Current tax assets | 193 | 383 | |||||||||
896 | Other current tax assets | 729 | 689 | |||||||||
1,263 | Other current assets | 1,573 | 2,591 | |||||||||
34,428 | 36,436 | 37,971 | ||||||||||
Non-current assets | ||||||||||||
65,336 | Property, plant and equipment | 63,134 | 70,793 | |||||||||
1,209 | Inventory - compulsory stock | 1,283 | 1,184 | |||||||||
2,956 | Intangible assets | 2,925 | 3,269 | |||||||||
4,360 | Equity-accounted investments | 3,586 | 4,040 | |||||||||
222 | Other investments | 220 | 276 | |||||||||
1,804 | Other financial assets | 1,675 | 1,860 | |||||||||
4,071 | Deferred tax assets | 4,126 | 3,790 | |||||||||
1,483 | Other non-current assets | 1,323 | 1,348 | |||||||||
81,441 | 78,272 | 86,560 | ||||||||||
13 | Assets held for sale | 323 | 14 | |||||||||
115,882 | TOTAL ASSETS | 115,031 | 124,545 | |||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||||||
Current liabilities | ||||||||||||
2,712 | Short-term debt | 2,241 | 3,396 | |||||||||
4,396 | Current portion of long-term debt | 2,286 | 3,279 | |||||||||
15,948 | Trade and other payables | 16,739 | 16,703 | |||||||||
388 | Income taxes payable | 470 | 426 | |||||||||
2,310 | Other taxes payable | 1,489 | 1,293 | |||||||||
1,323 | Other current liabilities | 1,517 | 2,599 | |||||||||
27,077 | 24,742 | 27,696 | ||||||||||
Non-current liabilities | ||||||||||||
20,400 | Long-term debt | 20,180 | 20,564 | |||||||||
13,410 | Provisions for contingencies | 13,406 | 13,896 | |||||||||
880 | Provisions for employee benefits | 1,022 | 868 | |||||||||
6,017 | Deferred tax liabilities | 5,976 | 6,667 | |||||||||
1,521 | Other non-current liabilities | 1,473 | 1,768 | |||||||||
42,228 | 42,057 | 43,763 | ||||||||||
Liabilities directly associated with assets held for sale | 87 | |||||||||||
69,305 | TOTAL LIABILITIES | 66,886 | 71,459 | |||||||||
SHAREHOLDERS' EQUITY | ||||||||||||
48 | Non-controlling interest | 49 | 49 | |||||||||
Eni shareholders' equity: | ||||||||||||
4,005 | Share capital | 4,005 | 4,005 | |||||||||
63 | Reserve related to the fair value of cash flow hedging derivatives net of tax effect | 240 | 189 | |||||||||
43,156 | Other reserves | 42,446 | 52,329 | |||||||||
(581 | ) | Treasury shares | (581 | ) | (581 | ) | ||||||
(1,441 | ) | Interim dividend | (1,441 | ) | (1,441 | ) | ||||||
1,327 | Net profit (loss) | 3,427 | (1,464 | ) | ||||||||
46,529 | Total Eni shareholders' equity | 48,096 | 53,037 | |||||||||
46,577 | TOTAL SHAREHOLDERS' EQUITY | 48,145 | 53,086 | |||||||||
115,882 | TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 115,031 | 124,545 |
-28- |
GROUP PROFIT AND LOSS ACCOUNT
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
REVENUES | ||||||||||||||||||||
15,684 | Net sales from operations | 17,547 | 15,807 | 66,921 | 55,762 | |||||||||||||||
99 | Other income and revenues | 3,334 | 347 | 4,059 | 931 | |||||||||||||||
15,783 | Total revenues | 20,881 | 16,154 | 70,980 | 56,693 | |||||||||||||||
OPERATING EXPENSES | ||||||||||||||||||||
12,064 | Purchases, services and other | 14,307 | 12,346 | 52,437 | 44,124 | |||||||||||||||
702 | Payroll and related costs | 687 | 741 | 2,951 | 2,994 | |||||||||||||||
(39 | ) | Other operating (expense) income | (10) | 94 | (32) | 16 | ||||||||||||||
1,938 | Depreciation, Depletion and Amortization | 1,769 | 1,965 | 7,484 | 7,559 | |||||||||||||||
33 | Impairment Losses (Impairment reversals), net | (303) | (656) | (209) | (475) | |||||||||||||||
9 | Write-off of tangible and intangible assets | 61 | 212 | 263 | 350 | |||||||||||||||
998 | OPERATING PROFIT (LOSS) | 4,350 | 1,640 | 8,022 | 2,157 | |||||||||||||||
FINANCE INCOME (EXPENSE) | ||||||||||||||||||||
985 | Finance income | 665 | 1,898 | 3,922 | 5,850 | |||||||||||||||
(1,424 | ) | Finance expense | (1,225) | (1,920) | (5,879) | (6,232) | ||||||||||||||
(41 | ) | Income (expense) from other financial activities held for trading | (25) | 68 | (117) | (21) | ||||||||||||||
196 | Derivative financial instruments | 118 | (370) | 838 | (482) | |||||||||||||||
(284 | ) | (467) | (324) | (1,236) | (885) | |||||||||||||||
INCOME (EXPENSE) FROM INVESTMENTS | ||||||||||||||||||||
79 | Share of profit (loss) of equity-accounted investments | (366) | (199) | (202) | (326) | |||||||||||||||
218 | Other gain (loss) from investments | 55 | (81) | 335 | (54) | |||||||||||||||
297 | (311) | (280) | 133 | (380) | ||||||||||||||||
1,011 | PROFIT (LOSS) BEFORE INCOME TAXES | 3,572 | 1,036 | 6,919 | 892 | |||||||||||||||
(666 | ) | Income taxes | (1,472) | (695) | (3,489) | (1,936) | ||||||||||||||
345 | Net profit (loss) - continuing operations | 2,100 | 341 | 3,430 | (1,044) | |||||||||||||||
Net profit (loss) - discontinued operations | (413) | |||||||||||||||||||
345 | Net profit (loss) | 2,100 | 341 | 3,430 | (1,457) | |||||||||||||||
Eni's shareholders: | ||||||||||||||||||||
344 | - continuing operations | 2,100 | 340 | 3,427 | (1,051) | |||||||||||||||
- discontinued operations | (413) | |||||||||||||||||||
344 | 2,100 | 340 | 3,427 | (1,464) | ||||||||||||||||
Non controlling interest | ||||||||||||||||||||
1 | - continuing operations | 1 | 3 | 7 | ||||||||||||||||
- discontinued operations | ||||||||||||||||||||
1 | 1 | 3 | 7 | |||||||||||||||||
Net profit (loss) per share attributable to Eni's shareholders (€ per share) | ||||||||||||||||||||
0.10 | - basic | 0.58 | 0.09 | 0.95 | (0.41) | |||||||||||||||
0.10 | - diluted | 0.58 | 0.09 | 0.95 | (0.41) | |||||||||||||||
Net profit (loss) per share - continuing operations attributable to Eni's shareholders (€ per share) | ||||||||||||||||||||
0.10 | - basic | 0.58 | 0.09 | 0.95 | (0.29) | |||||||||||||||
0.10 | - diluted | 0.58 | 0.09 | 0.95 | (0.29) |
-29- |
COMPREHENSIVE INCOME
IVQ | Full Year | |||||||||||||||
(€ million) | 2017 | 2016 | 2017 | 2016 | ||||||||||||
Net profit (loss) | 2,100 | 341 | 3,430 | (1,457) | ||||||||||||
Items that may not be reclassified to profit in later periods | (4) | (19) | (4) | (19) | ||||||||||||
Remeasurements of defined benefit plans | (33) | 16 | (33) | 16 | ||||||||||||
Taxation | 29 | (35) | 29 | (35) | ||||||||||||
Items that may be reclassified to profit in later periods | (535) | 2,574 | (5,501) | 1,889 | ||||||||||||
Currency translation differences | (656) | 2,291 | (5,563) | 1,198 | ||||||||||||
Change in the fair value of cash flow hedging derivatives | 157 | 391 | (6) | 883 | ||||||||||||
Change in the fair value of other available-for-sale financial instruments | (4) | 2 | (4) | |||||||||||||
Share of "Other comprehensive income" on equity-accounted entities | (12) | 65 | 32 | |||||||||||||
Taxation | (36) | (92) | 1 | (220) | ||||||||||||
Total other items of comprehensive income (loss) | (539) | 2,555 | (5,505) | 1,870 | ||||||||||||
Total comprehensive income (loss) | 1,561 | 2,896 | (2,075) | 413 | ||||||||||||
attributable to: | ||||||||||||||||
Eni's shareholders | 1,561 | 2,895 | (2,078) | 406 | ||||||||||||
- continuing operations | 1,561 | 2,895 | (2,078) | 819 | ||||||||||||
- discontinued operations | (413) | |||||||||||||||
Non-controlling interest | 1 | 3 | 7 | |||||||||||||
- continuing operations | 1 | 3 | 7 | |||||||||||||
- discontinued operations |
CHANGES IN SHAREHOLDERS’ EQUITY
(€ million) | ||||||||
Shareholders' equity at January 1, 2016: | 57,409 | |||||||
Total comprehensive income (loss) | 413 | |||||||
Dividends paid to Eni's shareholders | (2,881) | |||||||
Deconsolidation of Saipem's non-controlling interest | (1,872) | |||||||
Dividends distributed by consolidated subsidiaries | (4) | |||||||
Other changes | 21 | |||||||
Total changes | (4,323) | |||||||
Shareholders' equity at Dec. 31, 2016: | 53,086 | |||||||
attributable to: | ||||||||
- Eni's shareholders | 53,037 | |||||||
- Non-controlling interest | 49 | |||||||
Shareholders' equity at January 1, 2017: | 53,086 | |||||||
Total comprehensive income (loss) | (2,075) | |||||||
Dividends paid to Eni's shareholders | (2,881) | |||||||
Dividends distributed by consolidated subsidiaries | (3) | |||||||
Other changes | 18 | |||||||
Total changes | (4,941) | |||||||
Shareholders' equity at Dec. 31, 2017: | 48,145 | |||||||
attributable to: | ||||||||
- Eni's shareholders | 48,096 | |||||||
- Non-controlling interest | 49 |
-30- |
GROUP CASH FLOW STATEMENT
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
345 | Net profit (loss) | 2,100 | 341 | 3,430 | (1,044 | ) | ||||||||||||||
Adjustments to reconcile net profit (loss) to net cash provided by operating activities: | ||||||||||||||||||||
1,938 | Depreciation, depletion and amortization | 1,769 | 1,965 | 7,484 | 7,559 | |||||||||||||||
33 | Impairment losses (impairment reversals), net | (303 | ) | (656 | ) | (209 | ) | (475 | ) | |||||||||||
9 | Write-off of tangible and intangible assets | 61 | 212 | 263 | 350 | |||||||||||||||
(79 | ) | Share of (profit) loss of equity-accounted investments | 366 | 199 | 202 | 326 | ||||||||||||||
(159 | ) | Gains on disposal of assets, net | (2,951 | ) | (11 | ) | (3,446 | ) | (48 | ) | ||||||||||
(59 | ) | Dividend income | (77 | ) | (66 | ) | (205 | ) | (143 | ) | ||||||||||
(117 | ) | Interest income | (68 | ) | (41 | ) | (283 | ) | (209 | ) | ||||||||||
188 | Interest expense | 144 | 161 | 671 | 645 | |||||||||||||||
666 | Income taxes | 1,472 | 695 | 3,489 | 1,936 | |||||||||||||||
78 | Other changes | 286 | 20 | 910 | (9 | ) | ||||||||||||||
Changes in working capital: | ||||||||||||||||||||
132 | - inventories | (119 | ) | (145 | ) | (343 | ) | (273 | ) | |||||||||||
(102 | ) | - trade receivables | (294 | ) | (648 | ) | 636 | 1,286 | ||||||||||||
123 | - trade payables | 1,483 | 1,827 | 283 | 1,495 | |||||||||||||||
(156 | ) | - provisions for contingencies | 78 | (280 | ) | 55 | (1,043 | ) | ||||||||||||
379 | - other assets and liabilities | 127 | 701 | 770 | 647 | |||||||||||||||
376 | Cash flow from changes in working capital | 1,275 | 1,455 | 1,401 | 2,112 | |||||||||||||||
12 | Net change in the provisions for employee benefits | (4 | ) | 38 | 22 | |||||||||||||||
75 | Dividends received | 114 | 83 | 291 | 212 | |||||||||||||||
28 | Interest received | 53 | 70 | 104 | 160 | |||||||||||||||
(181 | ) | Interest paid | (90 | ) | (360 | ) | (582 | ) | (780 | ) | ||||||||||
(992 | ) | Income taxes paid, net of tax receivables received | (825 | ) | (819 | ) | (3,437 | ) | (2,941 | ) | ||||||||||
2,161 | Net cash provided by operating activities | 3,322 | 3,248 | 10,121 | 7,673 | |||||||||||||||
Investing activities: | ||||||||||||||||||||
(1,551 | ) | - tangible assets | (2,139 | ) | (2,185 | ) | (8,486 | ) | (9,067 | ) | ||||||||||
(19 | ) | - intangible assets | (45 | ) | (65 | ) | (191 | ) | (113 | ) | ||||||||||
(453 | ) | - investments | (7 | ) | (6 | ) | (510 | ) | (1,164 | ) | ||||||||||
(142 | ) | - securities | (105 | ) | (53 | ) | (321 | ) | (1,336 | ) | ||||||||||
(57 | ) | - financing receivables | (216 | ) | (268 | ) | (657 | ) | (1,208 | ) | ||||||||||
(229 | ) | - change in payables in relation to investing activities and capitalized depreciation | (164 | ) | 42 | 150 | (8 | ) | ||||||||||||
(2,451 | ) | Cash flow from investing activities | (2,676 | ) | (2,535 | ) | (10,015 | ) | (12,896 | ) | ||||||||||
Disposals: | ||||||||||||||||||||
44 | - tangible assets | 2,138 | 7 | 2,745 | 19 | |||||||||||||||
- intangible assets | 2 | 2 | ||||||||||||||||||
301 | - consolidated subsidiaries and businesses net of cash and cash equivalent disposed of | 2,361 | 2,662 | (362 | ) | |||||||||||||||
- income taxes paid on disposals | (436 | ) | (436 | ) | ||||||||||||||||
23 | - investments | 398 | 26 | 482 | 508 | |||||||||||||||
11 | - securities | 188 | 4 | 224 | 20 | |||||||||||||||
123 | - financing receivables | 545 | 777 | 999 | 8,063 | |||||||||||||||
1,412 | - change in receivables in relation to disposals | (1,540 | ) | 154 | (434 | ) | 205 | |||||||||||||
1,914 | Cash flow from disposals | 3,656 | 968 | 6,244 | 8,453 | |||||||||||||||
(537 | ) | Net cash used in investing activities (*) | 980 | (1,567 | ) | (3,771 | ) | (4,443 | ) |
-31- |
GROUP CASH FLOW STATEMENT (continued)
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
650 | Increase in long-term debt | 437 | 272 | 1,842 | 4,202 | |||||||||||||||
(22) | Repayments of long-term debt | (2,682) | (143) | (2,973) | (2,323) | |||||||||||||||
126 | Increase (decrease) in short-term debt | (544) | (927) | (582) | (2,645) | |||||||||||||||
754 | (2,789) | (798) | (1,713) | (766) | ||||||||||||||||
(1,440) | Dividends paid to Eni's shareholders | (33) | (2,880) | (2,881) | ||||||||||||||||
Dividends paid to non-controlling interests | (3) | (4) | ||||||||||||||||||
(686) | Net cash used in financing activities | (2,789) | (831) | (4,596) | (3,651) | |||||||||||||||
Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | (4) | 7 | (5) | |||||||||||||||||
Effect of cash and cash equivalents relating to discontinued operations | 889 | |||||||||||||||||||
(14) | Effect of exchange rate changes on cash and cash equivalents and other changes | (13) | 26 | (72) | 2 | |||||||||||||||
924 | Net cash flow for the period | 1,500 | 872 | 1,689 | 465 | |||||||||||||||
4,939 | Cash and cash equivalents - beginning of the period (excluding discontinued operations) | 5,863 | 4,802 | 5,674 | 5,209 | |||||||||||||||
5,863 | Cash and cash equivalents - end of the period (excluding discontinued operations) | 7,363 | 5,674 | 7,363 | 5,674 |
(*) Net cash used in investing activities included investments and divestments (on net basis) in held-for-trading financial assets and other investments/divestments in certain short-term financial assets. Due to their nature and the circumstance that they are very liquid, these financial assets are netted against finance debt in determing net borrowings. Cash flows of such investments were as follows:
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
(10) | Net cash flow from financing activities | 450 | 42 | 336 | 5,271 |
SUPPLEMENTAL INFORMATION
IIIQ | IVQ | Full Year | ||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | 2017 | 2016 | |||||||||||||||
Effect of disposals of consolidated subsidiaries and businesses | ||||||||||||||||||||
144 | Current assets | 22 | 166 | 6,526 | ||||||||||||||||
123 | Non-current assets | 691 | 1 | 814 | 8,615 | |||||||||||||||
12 | Net borrowings | (264) | (252) | (5,415) | ||||||||||||||||
(133) | Current and non-current liabilities | (72) | (205) | (6,334) | ||||||||||||||||
146 | Net effect of disposals | 377 | 1 | 523 | 3,392 | |||||||||||||||
Reclassification of exchange rate differences included in other comprehensive income | 7 | |||||||||||||||||||
Current value of residual interests following the loss of control | (1,006) | |||||||||||||||||||
164 | Gains (losses) on disposal | 1,984 | (1) | 2,148 | 11 | |||||||||||||||
Non-controlling interest | (1,872) | |||||||||||||||||||
310 | Selling price | 2,361 | 2,671 | 532 | ||||||||||||||||
less: | ||||||||||||||||||||
(9) | Cash and cash equivalents disposed of | (9) | (894) | |||||||||||||||||
301 | Cash flow on disposals | 2,361 | 2,662 | (362) |
-32- |
Capital expenditure
IIIQ | IVQ | Full Years | ||||||||||||||||||||||||||
2017 | (€ million) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
1,404 | Exploration & Production | 1,854 | 1,916 | (3.2) | 8,012 | 8,458 | (5.3) | |||||||||||||||||||||
- acquisition of proved and unproved properties | 5 | 5 | 2 | |||||||||||||||||||||||||
61 | - g&g costs | 73 | 45 | 62.2 | 273 | 204 | 33.8 | |||||||||||||||||||||
102 | - exploration | 56 | 134 | (58.2) | 442 | 417 | 6.0 | |||||||||||||||||||||
1,229 | - development | 1,698 | 1,725 | (1.6) | 7,236 | 7,770 | (6.9) | |||||||||||||||||||||
12 | - other expenditure | 22 | 12 | 83.3 | 56 | 65 | (13.8) | |||||||||||||||||||||
33 | Gas & Power | 60 | 53 | 13.2 | 142 | 120 | 18.3 | |||||||||||||||||||||
188 | Refining & Marketing and Chemicals | 290 | 303 | (4.3) | 729 | 664 | 9.8 | |||||||||||||||||||||
132 | - Refining & Marketing | 215 | 184 | 16.8 | 526 | 421 | 24.9 | |||||||||||||||||||||
56 | - Chemical | 75 | 119 | (37.0) | 203 | 243 | (16.5) | |||||||||||||||||||||
13 | Corporate and other activities | 58 | 26 | .. | 87 | 55 | 58.2 | |||||||||||||||||||||
(7) | Impact of unrealized intragroup profit elimination | (5) | (3) | (20) | 87 | |||||||||||||||||||||||
1,631 | Capital expenditure | 2,257 | 2,295 | (1.7) | 8,950 | 9,384 | (4.6) | |||||||||||||||||||||
61 | Cash out in net cash flow from operating activities | 73 | 45 | 62.2 | 273 | 204 | 33.8 | |||||||||||||||||||||
1,570 | Cash out in net cash flow from investment activities | 2,184 | 2,250 | (2.9) | 8,677 | 9,180 | (5.5) |
In the full year of 2017, capital expenditure amounted to €8,677 million (€9,180 million in the FY 2016) and mainly related to:
- development activities (€7,236 million) deployed mainly in Egypt, Ghana, Angola, Congo, Algeria, Iraq and Norway; exploration activities (€442 million) concerned mainly Cyprus, Norway, Mexico, Egypt, Libya and Ivory Coast;
- refining activity in Italy and outside Italy (€395 million) aimed at assets integrity, reconversion of refinery system, as well as initiatives in the field of health, security and environment; marketing activity, mainly regulation compliance and stay in business initiatives in the refined product retail network in Italy and in the Rest of Europe (€131 million);
- initiatives relating to gas marketing (€102 million) as well as initiatives to improve flexibility and upgrade combined-cycle power plants (€36 million).
Cash-outs comprised in net cash from operating activities (€273 million) relate to geological and geophysical studies as part of the exploration activities, which are charged to expenses.
-33- |
Exploration & Production
PRODUCTION OF OIL AND NATURAL GAS BY REGION
IIIQ | IVQ | Full Year | ||||||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
1,803 | Production of oil and natural gas (a) (b) | (kboe/d) | 1,892 | 1,856 | 1,816 | 1,759 | ||||||||||||||||
136 | Italy | 146 | 159 | 134 | 133 | |||||||||||||||||
174 | Rest of Europe | 163 | 240 | 189 | 201 | |||||||||||||||||
685 | North Africa | 782 | 680 | 713 | 647 | |||||||||||||||||
374 | Sub-Saharan Africa | 365 | 334 | 347 | 339 | |||||||||||||||||
118 | Kazakhstan | 130 | 133 | 132 | 111 | |||||||||||||||||
137 | Rest of Asia | 139 | 103 | 119 | 127 | |||||||||||||||||
160 | America | 144 | 184 | 160 | 177 | |||||||||||||||||
19 | Australia and Oceania | 23 | 23 | 22 | 24 | |||||||||||||||||
156.3 | Production sold (a) | (mmboe) | 165.0 | 161.1 | 622.3 | 608.6 |
PRODUCTION OF LIQUIDS BY REGION
IIIQ | IVQ | Full Year | ||||||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
885 | Production of liquids (a) | (kbbl/d) | 861 | 906 | 852 | 878 | ||||||||||||||||
56 | Italy | 64 | 67 | 53 | 47 | |||||||||||||||||
96 | Rest of Europe | 80 | 140 | 102 | 109 | |||||||||||||||||
243 | North Africa | 251 | 241 | 233 | 244 | |||||||||||||||||
277 | Sub-Saharan Africa | 265 | 237 | 250 | 249 | |||||||||||||||||
77 | Kazakhstan | 83 | 78 | 83 | 65 | |||||||||||||||||
56 | Rest of Asia | 47 | 58 | 54 | 78 | |||||||||||||||||
78 | America | 69 | 82 | 75 | 83 | |||||||||||||||||
2 | Australia and Oceania | 2 | 3 | 2 | 3 |
PRODUCTION OF NATURAL GAS BY REGION
IIIQ | IVQ | Full Year | ||||||||||||||||||||
2017 | 2017 | 2016 | 2017 | 2016 | ||||||||||||||||||
5,012 | Production of natural gas (a) (b) | (mmcf/d) | 5,625 | 5,184 | 5,261 | 4,807 | ||||||||||||||||
436 | Italy | 448 | 504 | 442 | 471 | |||||||||||||||||
424 | Rest of Europe | 453 | 543 | 476 | 502 | |||||||||||||||||
2,413 | North Africa | 2,900 | 2,394 | 2,620 | 2,197 | |||||||||||||||||
527 | Sub-Saharan Africa | 545 | 527 | 533 | 493 | |||||||||||||||||
222 | Kazakhstan | 256 | 301 | 264 | 254 | |||||||||||||||||
447 | Rest of Asia | 502 | 247 | 357 | 265 | |||||||||||||||||
449 | America | 407 | 555 | 464 | 511 | |||||||||||||||||
94 | Australia and Oceania | 114 | 113 | 105 | 114 |
(a) Includes Eni’s share of production of equity-accounted entities.
(b) Includes volumes of gas consumed in operation (578 and 556 mmcf/d in the fourth quarter of 2017 and 2016, respectively, 527 mmcf/d and 478 mmcf/d in the FY 2017 and 2016, respectively, and 527 mmcf/d in the third quarter 2017).
-34- |
Gas & Power
Natural gas sales by market
IIIQ | IVQ | Full Year | ||||||||||||||||||||||||||
2017 | (bcm) | 2017 | 2016 | % Ch. | 2017 | 2016 | % Ch. | |||||||||||||||||||||
7.93 | ITALY | 9.62 | 10.25 | (6.1) | 37.43 | 38.43 | (2.6) | |||||||||||||||||||||
1.03 | - Wholesalers | 2.25 | 2.55 | (11.8) | 8.36 | 7.93 | 5.4 | |||||||||||||||||||||
2.75 | - Italian exchange for gas and spot markets | 2.31 | 2.63 | (12.2) | 10.81 | 12.98 | (16.7) | |||||||||||||||||||||
1.04 | - Industries | 1.09 | 1.19 | (8.4) | 4.42 | 4.54 | (2.6) | |||||||||||||||||||||
0.14 | - Medium-sized enterprises and services | 0.27 | 0.44 | (38.6) | 0.93 | 1.72 | (45.9) | |||||||||||||||||||||
1.17 | - Power generation | 0.52 | 0.25 | .. | 2.22 | 0.77 | .. | |||||||||||||||||||||
0.25 | - Residential | 1.54 | 1.53 | 0.7 | 4.51 | 4.39 | 2.7 | |||||||||||||||||||||
1.55 | - Own consumption | 1.64 | 1.66 | (1.2) | 6.18 | 6.10 | 1.3 | |||||||||||||||||||||
9.51 | INTERNATIONAL SALES | 11.86 | 13.01 | (8.8) | 43.40 | 47.88 | (9.4) | |||||||||||||||||||||
8.21 | Rest of Europe | 10.26 | 11.79 | (13.0) | 38.23 | 42.43 | (9.9) | |||||||||||||||||||||
0.97 | - Importers in Italy | 0.99 | 1.15 | (13.9) | 3.89 | 4.37 | (11.0) | |||||||||||||||||||||
7.24 | - European markets | 9.27 | 10.64 | (12.9) | 34.34 | 38.06 | (9.8) | |||||||||||||||||||||
1.31 | Iberian Peninsula | 1.24 | 1.52 | (18.4) | 5.06 | 5.28 | (4.2) | |||||||||||||||||||||
1.53 | Germany/Austria | 1.91 | 1.84 | 3.8 | 6.95 | 7.81 | (11.0) | |||||||||||||||||||||
0.96 | Benelux | 1.35 | 1.68 | (19.6) | 5.06 | 7.03 | (28.0) | |||||||||||||||||||||
Hungary | 0.93 | .. | ||||||||||||||||||||||||||
0.40 | UK | 0.56 | 0.95 | (41.1) | 2.21 | 2.01 | 10.0 | |||||||||||||||||||||
2.14 | Turkey | 2.08 | 1.99 | 4.5 | 8.03 | 6.55 | 22.6 | |||||||||||||||||||||
0.87 | France | 1.94 | 2.46 | (21.1) | 6.38 | 7.42 | (14.0) | |||||||||||||||||||||
0.03 | Other | 0.19 | 0.20 | (5.0) | 0.65 | 1.03 | (36.9) | |||||||||||||||||||||
1.30 | Rest of World | 1.60 | 1.22 | 31.1 | 5.17 | 5.45 | (5.1) | |||||||||||||||||||||
17.44 | WORLDWIDE GAS SALES | 21.48 | 23.26 | (7.7) | 80.83 | 86.31 | (6.3) |
-35- |
Eni SpA parent company accounts
Profit and loss account
(€ million) | ||||||||
Full year | ||||||||
2017 | 2016 | |||||||
REVENUES | ||||||||
Net sales from operations | 28,983 | 27,718 | ||||||
Other income and revenues | 2,316 | 547 | ||||||
Total Revenues | 31,299 | 28,265 | ||||||
OPERATING EXPENSES | ||||||||
Purchases, services and other | (27,362) | (27,247) | ||||||
Payroll and related costs | (1,159) | (1,179) | ||||||
OTHER OPERATING (EXPENSE) INCOME | (239) | (50) | ||||||
DEPRECIATION, DEPLETION AND AMORTIZATION | (727) | (815) | ||||||
IMPAIRMENT LOSSES (IMPAIRMENT REVERSALS), NET | (124) | (443) | ||||||
WRITE-OFF OF TANGIBLE AND INTANGIBLE ASSETS | (5) | (209) | ||||||
OPERATING PROFIT (LOSS) | 1,683 | (1,678) | ||||||
FINANCE INCOME (EXPENSE) | ||||||||
Finance income | 1,682 | 2,149 | ||||||
Finance expense | (2,698) | (2,540) | ||||||
Income (expense) from other financial activities held for trading | (110) | (21) | ||||||
Derivative financial instruments | 481 | (34) | ||||||
(645) | (446) | |||||||
INCOME (EXPENSE) FROM INVESTMENTS | 2,702 | 6,058 | ||||||
NET PROFIT BEFORE TAXES - continuing operations | 3,740 | 3,934 | ||||||
Income taxes | (218) | 232 | ||||||
NET PROFIT - continuing operations | 3,522 | 4,166 | ||||||
NET PROFIT - discontinued operations | 355 | |||||||
NET PROFIT | 3,522 | 4,521 |
-36- |
Balance sheet
(€ million) | ||||||||
Dec. 31, 2017 | Dec. 31, 2016 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 6,214 | 4,583 | ||||||
Other financial activities held for trading | 5,793 | 6,062 | ||||||
Trade and other receivables: | 8,587 | 15,658 | ||||||
- financial receivables | 2,700 | 7,763 | ||||||
- trade and other receivables | 5,887 | 7,895 | ||||||
Inventories | 1,389 | 1,277 | ||||||
Current income tax assets | 59 | 92 | ||||||
Other current tax assets | 267 | 346 | ||||||
Other current assets | 693 | 1,011 | ||||||
23,002 | 29,029 | |||||||
Non-current assets | ||||||||
Property, plant and equipment | 7,166 | 8,046 | ||||||
Inventory - compulsory stock | 1,297 | 1,172 | ||||||
Intangible assets | 195 | 1,205 | ||||||
Equity-accounted investments | 42,337 | 40,009 | ||||||
Other financial assets | 4,832 | 1,428 | ||||||
Deferred tax assets | 1,104 | 1,185 | ||||||
Other non-current receivables | 481 | 700 | ||||||
57,412 | 53,745 | |||||||
Discontinued operations and assets held for sales | 2 | 4 | ||||||
TOTAL ASSETS | 80,416 | 82,778 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Short-term debt | 4,146 | 4,159 | ||||||
Current portion of long-term debt | 1,973 | 3,014 | ||||||
Trade and other payables | 6,226 | 6,209 | ||||||
Income taxes payable | 64 | 4 | ||||||
Other taxes payable | 809 | 887 | ||||||
Other current liabilities | 872 | 1,205 | ||||||
14,090 | 15,478 | |||||||
Non-current liabilities | ||||||||
Long-term debt | 18,843 | 19,554 | ||||||
Provisions for contingencies | 3,785 | 4,054 | ||||||
Provisions for employee benefits | 353 | 391 | ||||||
Other non-current liabilities | 880 | 1,366 | ||||||
23,861 | 25,365 | |||||||
TOTAL LIABILITIES | 37,951 | 40,843 | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital | 4,005 | 4,005 | ||||||
Legal reserve | 959 | 959 | ||||||
Other reserves | 36,001 | 34,472 | ||||||
Interim dividend | (1,441) | (1,441) | ||||||
Treasury shares | (581) | (581) | ||||||
Net profit | 3,522 | 4,521 | ||||||
TOTAL SHAREHOLDERS’ EQUITY | 42,465 | 41,935 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 80,416 | 82,778 |
-37- |
Cash Flow Statement
(€ million) | ||||||||
Full Year | ||||||||
2017 | 2016 | |||||||
Net profit | 3,583 | 4,166 | ||||||
Adjustments to reconcile net profit to net cash provided by operating activities: | ||||||||
Depreciation, depletion and amortization | 727 | 815 | ||||||
Impairment losses (impairment reversals), net | 124 | 443 | ||||||
Write-off of tangible and intangible assets | 5 | 209 | ||||||
Impairment losses (impairment reversals) of investments | 367 | 374 | ||||||
Gain on disposal of assets, net | (1,996 | ) | 29 | |||||
Dividend income | (3,061 | ) | (6,486 | ) | ||||
Interest income | (204 | ) | (161 | ) | ||||
Interest expense | 599 | 588 | ||||||
Income taxes | 218 | (232 | ) | |||||
Other changes | 230 | 159 | ||||||
Changes in working capital: | ||||||||
- inventories | (238 | ) | (66 | ) | ||||
- trade receivables | 241 | 1,353 | ||||||
- trade payables | 335 | 93 | ||||||
- provisions for contingencies | (192 | ) | (30 | ) | ||||
- other assets and liabilities | (194 | ) | (585 | ) | ||||
Cash flow from changes in working capital | (48 | ) | 765 | |||||
Net change in the provisions for employee benefits | 42 | 16 | ||||||
Dividends received | 3,076 | 6,458 | ||||||
Interest received | 201 | 165 | ||||||
Interest paid | (576 | ) | (692 | ) | ||||
Income taxes paid, net of tax receivables received | 55 | 7 | ||||||
Net cash provided from operating activities | 3,281 | 6,623 | ||||||
Investing activities: | ||||||||
- tangible assets | (738 | ) | (788 | ) | ||||
- intangible assets | (35 | ) | (58 | ) | ||||
- consolidated subsidiaries and businesses | (2,586 | ) | (8,299 | ) | ||||
- securities held for operating purposes | ||||||||
- financing receivables held for operating purposes | (3,041 | ) | (1,585 | ) | ||||
- change in payables and receivables in relation to investments and capitalized depreciation | (507 | ) | ||||||
Cash flow from investments | (6,400 | ) | (11,237 | ) | ||||
Disposals: | ||||||||
- tangible assets | 14 | 5 | ||||||
- intangible assets | ||||||||
- consolidated subsidiaries and businesses net of cash and cash equivalent disposed of | 2,062 | |||||||
- income taxes paid on disposals | (301 | ) | ||||||
- investments | 1,033 | 2,209 | ||||||
- securities | 1 | |||||||
- financing receivables held for operating purposes | 1,901 | 5,405 | ||||||
- change in payables and receivables in relation to disposals | 382 | |||||||
Cash flow from disposals | 5,392 | 7,619 | ||||||
Net cash used in investing activities | (1,008 | ) | (3,618 | ) |
-38- |
Cash Flow Statement (continued)
(€ million) | ||||||||
Full Year | ||||||||
2017 | 2016 | |||||||
Other financial activities held for trading | 1 | (1,257) | ||||||
New borrowings (repayments) of long-term finance debt | (1,345) | 2,135 | ||||||
Increase (decrease) in short-term financial debt | 26 | 548 | ||||||
Financing receivables held for non-operating purposes | 3,556 | (1,105) | ||||||
Dividends paid to Eni's shareholders | (2,880) | (2,881) | ||||||
Net cash used in financing activities | (642) | (2,560) | ||||||
Effect of change in consolidation (inclusion/exclusion of significant/insignificant subsidiaries) | 6 | |||||||
Net cash flow for the period | 1,631 | 451 | ||||||
Cash and cash equivalents - beginning of the period | 4,583 | 4,132 | ||||||
Cash and cash equivalents - end of the period | 6,214 | 4,583 |
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