001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina I Interim Consolidated Report as of June 30, 2015 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina II Mission Pursuing the satisfaction of our clients in the energy industry, we tackle each challenge with safe, reliable and innovative solutions. We entrust our competent and multi-local teams to provide sustainable development for our Company and for the communities where we operate. Our core values Commitment to health and safety, openness, flexibility, integration, innovation, quality, competitiveness, teamwork, humility, internationalisation, responsibility and integrity. Disclaimer By their nature, forward-looking statements are subject to risk and uncertainty since they are dependent upon circumstances which should or are considered likely to occur in the future and are outside of the Company’s control. These include, but are not limited to: monetary exchange and interest rate fluctuations, commodity price volatility, credit and liquidity risks, HSE risks, the levels of capital expenditure in the oil and gas industry and other sectors, political instability in areas where the Group operates, actions by competitors, success of commercial transactions, risks associated with the execution of projects (including ongoing investment projects), in addition to changes in stakeholders’ expectations and other changes affecting business conditions. Actual results could therefore differ materially from the forward-looking statements. The financial reports contain in-depth analyses of some of the aforementioned risks. Forward-looking statements are to be considered in the context of the date of their release. Saipem SpA is under no obligation to review, update or correct them subsequently, except where this is a mandatory requirement of the applicable legislation. The forward-looking statements given herein are not intended to constitute an invitation to invest or to provide legal, accounting, tax or investment advice and should not be relied upon in that regard. Countries in which Saipem operates EUROPE Austria, Belgium, Bulgaria, Croatia, Cyprus, Denmark, France, Italy, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, Turkey, United Kingdom AMERICAS Bolivia, Brazil, Canada, Chile, Colombia, Dominican Republic, Ecuador, Mexico, Peru, Suriname, Trinidad and Tobago, United States, Venezuela CIS Azerbaijan, Georgia, Kazakhstan, Russia, Turkmenistan, Ukraine AFRICA Algeria, Angola, Congo, Egypt, Gabon, Ghana, Libya, Mauritania, Morocco, Mozambique, Nigeria, South Africa, Uganda MIDDLE EAST Iraq, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates FAR EAST AND OCEANIA Australia, China, India, Indonesia, Japan, Malaysia, Pakistan, Papua New Guinea, Singapore, South Korea, Thailand, Vietnam Board of Directors and auditors of Saipem SpA BOARD OF DIRECTORS1 BOARD OF STATUTORY AUDITORS2 Chairman Chairman Paolo Andrea Colombo Mario Busso Chief Executive Officer (CEO) Statutory Auditors Stefano Cao Anna Gervasoni Massimo Invernizzi Directors Maria Elena Cappello, Federico Ferro-Luzzi, Francesco Antonio Ferrucci, Alternate Auditors Guido Guzzetti, Flavia Mazzarella, Nicla Picchi, Stefano Siragusa Paolo Sfameni Giulia De Martino3 (1) Appointed by the Shareholders on April 30, 2015. (2) Appointed by the Shareholders on May 6, 2014. (3) Appointed by the Shareholders on April 30, 2015 to replace Elisabetta Maria Corvi, who resigned on January 14, 2015. Independent Auditors Reconta Ernst & Young SpA Saipem is a subsidiary of Eni SpA 001-058SaipemSem15Ing.qxd 6-08-2015 18:38 Pagina 1 2 Interim results 3 Saipem Group structure Operating and Financial Review 8 Saipem SpA share performance 10 Glossary 13 Operating review 13 Market conditions 13 New contracts and backlog 15 Capital expenditure 16 Offshore Engineering & Construction 21 Onshore Engineering & Construction 25 Offshore Drilling 27 Onshore Drilling 29 Financial and economic results 29 Results of operations 33 Balance sheet and financial position 35 Reclassified cash flow statement 36 Key profit and financial indicators 37 Sustainability 38 Research and development 40 Quality, Safety and Environment 42 Human resources and health 45 Information technology 47 Risk management 54 Additional information 57 Reconciliation of reclassified balance sheet, income statement Condensed consolidated and cash flow statement to statutory schemes interim financial statements 60 Financial statements 66 Notes to the condensed consolidated interim financial statements 110 Management certification 111 Independent Auditors’ Review report Approved by the Board of Directors on July 28, 2015 001-058SaipemSem15Ing.qxd 6-08-2015 16:51 Pagina 2 Saipem Interim Consolidated Report as of June 30, 2015 / Interim results Interim results The principal cause of the rapid deterioration seen during the first half of 2015 in the market environment in which Saipem operates was the low price of oil, whose downward trajectory commenced towards the end of the previous year. This highly deteriorated environment led in turn to the following: - delays and cancellations of orders already underway, as well as the adoption by clients of an increasingly inflexible attitude during negotiations for change orders and claims, related to projects underway; - an increased credit risk in certain geographical areas; - the need to rethink Saipem’s operating strategy. Accordingly, a turnaround plan called ‘Fit for the future’ has been launched, which involves the rationalisation of fabrication yards and vessels that are no longer viable in the new market environment; - the need to review the Company’s negotiating strategy with a view to reaching settlements with clients, aiming to keep potential disputes to a minimum and seeking to secure an immediate financial benefit. The result for the first half of 2015, as impacted by the cancellation of the South Stream contract and the write-downs described above, were as follows: - Adjusted EBIT1: -€579 million; -EBIT: -€790 million, including €211 million in write-downs of non-current assets; - Adjusted net result: -€709 million; - Net result: -€920 million; - Capital expenditure: €268 million (€329 million in the first half of 2014); - Net debt at June 30, 2015: €5,531 million (€4,424 million at December 31, 2014), including the negative cash impact of €502 million relating to foreign exchange hedging derivatives maturing during the period; - New contracts: €3,500 million (€13,132 million in the first half of 2014); -Backlog: €19,018 million2 at June 30, 2015 (€22,147 million at December 31, 2014). (1) Adjusted EBIT and the adjusted net result do not include a €211 million decrease in net capital employed resulting from the write-down of non-current assets. (2) Cancelled from backlog €1,232 million relating to the South Stream contract and €24 million relating to a contract for the semi-submersible rig Scarabeo 5. 2 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 3 Saipem Interim Consolidated Report as of June 30, 2015 / Saipem Group structure Saipem Group structure (subsidiaries) 3 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 4 Saipem SpA 60.00% 100.00% 99.00% 100.00% 100.00% 1.00% Smacemex Saipem Andromeda Snamprogetti Saipem Scarl International Consultoria Tecnica e Netherlands BV Offshore BV Representações Ltda Norway AS 100.00% 60.00% Snamprogetti 70.00% Sigurd Rück AG Sajer Iraq Llc Engineering & Contracting Co Ltd 100.00% 100.00% 99.00% 100.00% Global Snamprogetti Petroprojects Saipem Snamprogetti 100.00% Asia Sdn Bhd Romania Srl Ltd Saipem (Portugal) Services AG Comércio Maritimo 31.45% 1.00% Sociedade Unipessoal Lda Saipem do Brasil 100.00% 68.55% 99.00% Snamprogetti Serviçõs de PT Saipem Lummus Petroleo Ltda Indonesia Gas Ltd 60.00% 95.00% Snamprogetti 5.00% Saudi Arabian Saudi Arabia Saipem Ltd Co Ltd Llc 100.00% 60.00% 40.00% ERS Equipment Saipem Libya Rental & Services Llc BV SA.LI.CO. Llc 100.00% 99.00% 1.00% Saipem Drilling Saipem Norway AS Ukraine Llc 0.04% Saipem Misr for 99.92% 49.73% 50.27% Petroleum Saipem Drilling Co Private Ltd 0.04% Services (S.A.E.) Saipem 97.94% 41.94% Saipem Contracting (Malaysia) (Nigeria) Ltd Sdn Bhd 100.00% 50.00% 50.00% Saipem Ingenieria ER SAI Caspian Professional Y Construcciones Contractor Llc Training Center Llc SLU 89.41% 100.00% Saipem Saipem (Nigeria) Ltd Canada Inc 100.00% 100.00% Sonsub North Caspian International Service Co Pty Ltd 100.00% 100.00% 100.00% Saipem Moss Moss Norge AS Maritime AS Maritime Inc 100.00% 100.00% Saipem America Inc Petrex SA 100.00% 100.00% , Saipem Saipem (Beijing) Technical Australia Pty Ltd Services Co Ltd Saipem 100.00% 100.00% Contracting Saipem Ltd Netherlands BV 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 5 0% 100.00% 99.90% 100.00% 55.00% 100.00% Saipem Maritime Snamprogetti Servizi Energia Asset Management Chiyoda sas Saipem SA Denuke Scarl Italia SpA Luxembourg Sàrl di Saipem SpA 100.00% Snamprogetti Engineering BV 100.00% 100.00% 100.00% 100.00% Saipem Saipem Boscongo SA Sofresid SA Luxembourg SA Singapore Pte Ltd Saipem 100.00% 100.00% 99.99% Saimexicana Sofresid India Projects Engineering SA Private Ltd SA de Cv 100.00% 100.00% 100.00% SAIMEP Saipem Saipem Limitada Services México Contracting SA de Cv Algérie SpA 100.00% Saigut SA de Cv The chart only shows subsidiaries 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 6 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 7 Operating and Financial Review saipem 001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 8 Saipem Interim Consolidated Report as of June