001 058SaipemSem15Ing SA 100 Saipem Sem15Ing

User Manual: SA-100

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Interim Consolidated Report as of June 30, 2015

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina I

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.

BOARD OF DIRECTORS1

Chairman

Paolo Andrea Colombo

Chief Executive Officer (CEO)

Stefano Cao

Directors

Maria Elena Cappello, Federico Ferro-Luzzi, Francesco Antonio Ferrucci,

Guido Guzzetti, Flavia Mazzarella, Nicla Picchi, Stefano Siragusa

BOARD OF STATUTORY AUDITORS2

Chairman

Mario Busso

Statutory Auditors

Anna Gervasoni

Massimo Invernizzi

Alternate Auditors

Paolo Sfameni

Giulia De Martino3

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

Independent Auditors

Reconta Ernst & Young SpA

Saipem is a subsidiary of Eni SpA

(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.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina II

2Interim results

3Saipem Group structure

Operating and Financial

Review

Condensed consolidated

interim financial statements

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

and cash flow statement to statutory schemes

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 18:38 Pagina 1

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 million2at June 30, 2015 (€22,147 million at December 31, 2014).

Interim results

Saipem Interim Consolidated Report as of June 30, 2015 / Interim results

(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.

001-058SaipemSem15Ing.qxd 6-08-2015 16:51 Pagina 2

Saipem Group structure

(subsidiaries)

Saipem Interim Consolidated Report as of June 30, 2015 / Saipem Group structure

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 3

100.00% ,

95.00%

Saipem

SpA

Saipem

International

Sigurd Rück AG

Saipem

Asia Sdn Bhd

Global

Petroprojects

Services AG

PT Saipem

Indonesia

Saipem (Portugal)

Comércio Maritimo

Sociedade Unipessoal Lda

Saipem do Brasil

Serviçõs de

Petroleo Ltda

Saudi Arabian

Saipem Ltd

Saipem

Ukraine Llc

Saipem

Contracting

(Nigeria) Ltd

Saipem Ingenieria

Y Construcciones

SLU

Saipem

(Nigeria) Ltd

Saipem

(Malaysia)

Sdn Bhd

ER SAI Caspian

Contractor Llc

Saipem

Canada Inc

North Caspian

Service Co

ERS Equipment

Rental & Services

Saipem Drilling

Norway AS

100.00%

60.00%

100.00%

68.55%

99.00%

100.00% 50.00%

100.00%

Moss

Maritime Inc

100.00%

5.00%

100.00%

60.00%

97.94%

89.41%

41.94%

100.00%

Moss

Maritime AS

Petrex SA

Andromeda

Consultoria Tecnica e

Representações Ltda

100.00%

99.00%

Snamprogetti

Netherlands BV

100.00%

Snamprogetti

Ltd

Snamprogetti

Romania Srl

Snamprogetti

Lummus

Gas Ltd

99.00%

1.00%

100.00%

99.00%

1.00%

Sonsub

International

Pty Ltd

Saipem

Norge AS

100.00%

99.92%

Saipem Misr for

Petroleum

Services (S.A.E.)

0.04%

Saipem

Australia Pty Ltd

Snamprogetti

Saudi Arabia

Co Ltd Llc

Saipem

America Inc

100.00%

1.00%

Saipem Drilling

Co Private Ltd

49.73%

100.00%

Saipem Ltd

Saipem

(Beijing) Technical

Services Co Ltd

100.00%

50.27%

31.45%

100.00%

Saipem Libya

Llc

SA.LI.CO. Llc

60.00% 40.00%

Sajer Iraq Llc

100.00%

Saipem

Contracting

Netherlands BV

Saipem

Offshore

Norway AS

100.00%

Professional

Training Center Llc

50.00%

70.00%

Snamprogetti

Engineering

& Contracting Co Ltd

60.00%

Smacemex

Scarl

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 4

The chart only shows subsidiaries

Servizi Energia

Italia SpA

Snamprogetti

Chiyoda sas

di Saipem SpA

Saipem

Luxembourg SA Sofresid SA

Boscongo SA

Sofresid

Engineering SA

Saipem

India Projects

Private Ltd

Saimexicana

SA de Cv

100.00%99.90%

Saipem SA

100.00%

Saipem

Services México

SA de Cv

100.00%

Saigut SA de Cv

100.00%

Saipem

Contracting

Algérie SpA

100.00%

Saipem Maritime

Asset Management

Luxembourg Sàrl

100.00%

Saipem

Singapore Pte Ltd

100.00%

99.99%

Snamprogetti

Engineering BV

100.00%

Denuke Scarl

55.00%

SAIMEP

Limitada

100.00%

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 5

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 6

Operating and Financial Review saipem

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 7

During the first half of 2015, the value of Saipem ordinary shares

on the Milan Stock Exchange registered an increase of 8.7%,

reaching a price of €9.52 at June 30, 2015, versus €8.76 at the

beginning of January.

In the same period, the FTSE MIB index, which records the

performance of the 40 most liquid and capitalised Italian stocks,

reported a gain of 17.4%.

The first few days of the year saw the Saipem share continue the

downward trajectory that began midway through 2014. This was

mainly due to the sharp fall in oil prices, as well as to the

suspension of the South Stream contract in December 2014.

The share price hit its period low of €7.29 on January 20. However,

already by the end of January 2015, the price had begun to reverse

the downward trend, registering a gradual upturn that was

supported by the financial community’s positive reaction to the

presentation of Saipem’s annual results for 2014 in mid-February.

From April 2015, the oil price recovery helped consolidate the

upturn in the share price, fostering a climate of renewed

confidence with regard to the Company’s future prospects.

An added boost was provided by the appointment of a new Board

of Directors at the helm of the Company, with a three-year

mandate. On April 16, the share price reached €12.29.

The end of the suspension of the South Stream contract

announced at the end of May, coupled with reports from financial

analysts that were optimistic with regard to the outlook for the

Company and the sector in general helped push the Saipem share

towards its period high of €12.76 on May 13.

Subsequently, in the wake of an announcement made by a

competitor on the evening of July 6 after trading had closed of a

significant deterioration in its results, the oil services sector

registered a sharp fall in prices, causing the Saipem share to lose

6.7% on the previous day’s price and close the day at €8.41.

Saipem’s market capitalisation at period end was approximately

€4.2 billion. In terms of share liquidity, shares traded during the

period totalled 1,074 million, versus the 391 million registered in

the same period of 2014. The average number of shares traded

daily during the period totalled approximately 8.6 million

(3.1 million in the first half of 2014), while the value of shares

traded amounted to €10.6 billion, compared with €7 billion in the

first half of 2014.

The period saw a high level of share price volatility, due in part to

the growing presence of investors employing a speculative

approach, based on a short-term investment horizon.

On April 30, the Saipem Board of Directors approved the payment

of a preferential dividend of €0.05 per share on savings shares

only, in accordance with the limit of 5% of the nominal value of the

share, pursuant to Article 6 of the Articles of Association.

The price of savings shares, which are convertible at par with

ordinary shares, and are of limited number (109,326 at June 30,

2015), decreased by 15% over the period, closing at €15.30 on

June 30, 2015.

Saipem SpA share performance

Saipem Interim Consolidated Report as of June 30, 2015 / Saipem SpA share performance

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 8

Share prices on the Milan Stock Exchange (€)2011 2012 2013 2014 First half

2015

Ordinary shares:

- maximum 38.60 39.78 32.18 20.89 12.76

- minimum 23.77 29.07 12.60 8.31 7.29

- average 33.89 35.52 19.31 16.59 9.98

- period end 32.73 29.41 15.54 8.77 9.52

Savings shares:

- maximum 39.25 39.40 35.00 20.99 18.05

- minimum 30.00 30.00 16.00 16.22 15.30

- average 34.89 34.72 24.50 18.58 17.58

- period end 30.00 35.00 17.10 18.05 15.30

1234567891011121234567891011121234567891011121234567891011121234567891011121234567

2010 2011 2013 20152012 2014

Price in euro of Saipem shares FTSE MIB

Value

Saipem and FTSE MIB - Average monthly prices January 2010-July 2015

Saipem FTSE MIB

12,000

21,000

16,500

25,500

30,000

48,000

39,000

43,500

34,500

39.00

7,00

11.00

15.00

35.00

31.00

27.00

23.00

19.00

Saipem Interim Consolidated Report as of June 30, 2015 / Saipem SpA share performance

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 9

Financial terms

-Adjusted operating result/net result operating result/net

result adjusted to exclude special items.

-EBIT Earnings Before Interest and Tax (operating result).

-EBITDA Earnings Before Interest, Taxes, Depreciation and

Amortisation.

-IFRS International Financial Reporting Standards. Accounting

standards issued by the IASB (International Accounting

Standards Board) and adopted by the European Commission,

which comprise International Financial Reporting Standards

(IFRS), International Accounting Standards (IAS), and the

interpretations issued by the International Financial Reporting

Interpretation Committee (IFRIC) and the Standing

Interpretations Committee (SIC) adopted by the IASB.

The name International Financial Reporting Standards (IFRS)

has been adopted by the IASB for standards issued after May

2003. Standards issued before May 2003 have maintained

the denomination IAS.

-Leverage a measure of a company’s level of indebtedness,

calculated as the ratio between net borrowings and

shareholders’ equity including non-controlling interests.

-OECD Organisation for Economic Cooperation and

Development.

-ROACE Return On Average Capital Employed, calculated as the

ratio between the net result before non-controlling interests,

plus net finance charges on net borrowings less the related

tax effect and net average capital employed.

-Special items items of income arising from events or

transactions that are non-recurring or that are not considered

to be representative of the ordinary course of business.

Operational terms

-Buckle detection system that utilises electromagnetic waves

during pipelaying to signal collapse of or deformations to

pipeline laid.

-Carbon Capture and Storage technology which enables the

carbon present in gaseous effluents from hydrocarbon

combustion and treatment plants to be captured and stored

over long periods of time in underground geological

formations, thus reducing or eliminating carbon dioxide

emissions into the atmosphere.

-Central Processing Facility production unit performing the

first transformation of crude oil or natural gas.

-Commissioning series of processes and procedures

undertaken in order to start operations of a gas pipeline,

associated plants or equipment.

-Concrete coating reinforced concrete coating for subsea

pipelines in order to ballast and protect them from damage

and corrosion.

-Conventional waters water depths of up to 500 metres.

-Cracking chemical-physical process, typically employed in

dedicated refinery plants, whose objective is to break down

the heavy hydrocarbon molecules obtained from primary

distillation into lighter fractions.

-Deck area of a vessel or platform where process plants,

equipment, accommodation modules and drilling units are

located.

-Decommissioning process undertaken in order to end

operations of a gas pipeline, associated plant or equipment.

Decommissioning may occur at the end of the life of the plant,

following an accident, for technical or financial reasons,

and/or on environmental or safety grounds.

-Deep waters water depths of over 500 metres.

-Downstream all operations that follow exploration and

production operations in the oil sector.

-Drillship vessel capable of self-propulsion, designed to carry

out drilling operations in deep waters.

-Dry-tree wellhead located above the water on a floating

production platform.

-Dynamically Positioned Heavy Lifting Vessel vessel

equipped with a heavy-lift crane, capable of holding a precise

position through the use of thrusters, thereby counteracting

the force of the wind, sea, current, etc.

-EPC (Engineering, Procurement, Construction) type of

contract typical of the Onshore construction sector,

comprising the provision of engineering services,

procurement of materials and construction. The term ‘turnkey’

is used to indicate that the system is delivered to the client

ready for operations, i.e. already commissioned.

-EPCI (Engineering, Procurement, Construction, Installation)

type of contract typical of the Offshore construction sector,

which relates to the realisation of a complex project where the

global or main contractor (usually a construction company or

a consortium) provides the engineering services,

procurement of materials, construction of the system and its

infrastructure, transport to site, installation and

commissioning/preparatory activities for the start-up of

operations.

-Fabrication yard yard at which offshore structures are

fabricated.

-Facilities auxiliary services, structures and installations

required to support the main systems.

-FDS (Field Development Ship) dynamically-positioned

multi-purpose crane and pipelay vessel.

-FEED (Front-End Engineering and Design) basic engineering

and preliminary activities carried out before beginning a

complex project to evaluate its technical aspects and enable

an initial estimate of the investment required.

-Flare tall metal structure used to burn off gas produced by

oil/gas separation in oil fields when it is not possible to utilise

it on site or ship it elsewhere.

Glossary

Saipem Interim Consolidated Report as of June 30, 2015 / Glossary

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 10

-FLNG Floating Liquefied Natural Gas unit used for the

treatment, liquefaction and storage of gas which is

subsequently transferred onto vessels for transportation to

end-use markets.

-Floatover type of module installation on offshore platforms

that does not require lifting operations. A specialised vessel

transporting the module uses a ballast system to position

itself directly above the location where the module is to be

installed. Once this has been completed, the vessel backs off

and the module is secured to the support structure.

-Flowline pipeline used to connect individual wells to a

manifold or to gathering and processing facilities.

-FPSO vessel Floating Production, Storage and Offloading

system comprising a large tanker equipped with a

high-capacity production facility. This system, moored at the

bow to maintain a geo-stationary position, is effectively a

temporarily fixed platform that uses risers to connect the

subsea wellheads to the on-board processing, storage and

offloading systems.

-FSRU (Floating Storage Regasification Unit) a floating terminal

in which liquefied natural gas is stored and then regasified

before being transported by pipeline.

-Gas export line pipeline for carrying gas from the subsea

reservoirs to the mainland.

-Hydrocracker installation in which large hydrocarbon

molecules are broken down into smaller ones.

-Hydrotesting operation involving high pressure water being

pumped into a pipeline to ensure that it is devoid of defects.

-Hydrotreating refining process aimed at improving the

characteristics of oil fractions.

-International Oil Companies privately-owned, typically

publicly traded, oil companies engaged in various fields of the

upstream and/or downstream oil industry.

-Jacket platform underside structure fixed to the seabed using

piles.

-Jack-up mobile self-lifting unit comprising a hull and

retractable legs used for offshore drilling operations.

-J-laying method of pipelaying that utilises an almost vertical

launch ramp, making the pipe configuration resemble the

letter ‘J’. This configuration is suited to deep water pipe laying.

-Leased FPSO FPSO vessel for which a lease contract is in

place between a client/lessee (i.e. an oil company) and a

contractor/lessor, whereby the lessee makes lease payments

to the lessor for use of the vessel for a specific period of time.

At the end of the lease term, the lessee has the option to

purchase the FPSO.

-LNG Liquefied Natural Gas, obtained by cooling natural gas to

minus 160° C at normal pressure. The gas is liquefied to

facilitate its transportation from the place of extraction to that

of processing and/or utilisation. A tonne of LNG is equivalent

to 1,500 cubic metres of gas.

-Local Content policy whereby a company develops local

capabilities, transfers its technical and managerial know-how

and enhances the local labour market and businesses

through its own business activities.

-LPG (Liquefied Petroleum Gas) produced in refineries through

the fractionation of crude oil and subsequent processes, liquid

petroleum gas exists in a gaseous state at ambient

temperatures and atmospheric pressure, but changes to a

liquid state under moderate pressure at ambient

temperatures, thus enabling large quantities to be stored in

easy-to-handle metal pressure vessels.

-LTI (Lost Time Injury) any work-related injury that renders the

injured person temporarily unable to perform any regular job

or restricted work on any day/shift after the day or shift on

which the injury occurred.

-Midstream sector comprising all those activities relating to

the construction and management of the oil transport

infrastructure.

-Moon pool opening in the hull of a drillship to allow for the

passage of operational equipment.

-Mooring buoy offshore mooring system.

-Multipipe system subsea gas/liquid gravity separation

system using a series of small diameter vertical separators

operating in parallel (for deep water application).

-National Oil Companies State-owned/controlled companies

engaged in oil exploration, production, transportation and

conversion.

-NDT (Non Destructive Testing) series of inspections and tests

used to detect structural defects conducted using methods

that do not alter the material under inspection.

-NDT Phased Array non-destructive testing method that

employs ultrasound to detect structural or welding defects.

-Offshore/Onshore the term offshore indicates a portion of

open sea and, by extension, the activities carried out in this

area, while onshore refers to land operations.

-Oil Services Industry companies that provide services to the

oil exploration and production sector but which are not

directly engaged themselves in oil production.

-Pig piece of equipment used to clean, descale and survey a

pipeline internally.

-Piggy backed pipeline small-diameter pipeline, fixed to a

larger pipeline, used to transport a product other than that of

the main line.

-Pile long, heavy steel pylon driven into the seabed. A system

of piles is used as the foundation for anchoring a fixed

platform or other offshore structures.

-Pipe-in-pipe subsea pipeline system comprising 2 coaxial

pipes, used to transport hot fluids (oil and gas). The inner pipe

transports the fluid, whereas the outer pipe carries the

insulating material necessary to reduce heat loss to the sea.

The outer pipe also protects the pipeline from water pressure.

-Pipe-in-pipe forged end forged end of a coaxial double pipe.

-Pipelayer vessel used for subsea pipelaying.

Saipem Interim Consolidated Report as of June 30, 2015 / Glossary

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 11

-Pipeline pipes and auxiliary equipment used principally for

transporting crude oil, oil products and natural gas to the

point of delivery.

-Pipe Tracking System (PTS) an electronic system used to

ensure the full traceability of the components of subsea pipes

installed on a project.

-Piping and Instrumentation Diagram (P&ID) diagram

showing all plant equipment, piping and instrumentation with

associated shutdown and safety valves.

-Pre-commissioning phase comprising pipeline cleaning out

and drying.

-Pre-drilling template support structure for a drilling platform.

-Pre-Salt layer geological formation present on the continental

shelves offshore Brazil and Africa.

-Pre-Travel Counselling health and medical advice designed to

take into account the health of the individual worker and

ensure that he/she is furnished with adequate information on

the specific risks present in his/her country of destination

and the preventive measures that should be adopted.

-Pulling minor operations on oil wells for maintenance or

marginal replacements.

-QHSE Quality, Health, Safety, Environment.

-Rig drilling installation comprising the derrick, the drill deck

(which supports the derrick), and ancillary installations that

enable the descent, ascent and rotation of the drill unit, as

well as mud extraction.

-Riser manifold connecting the subsea wellhead to the surface.

-ROV (Remotely Operated Vehicle) unmanned vehicle, piloted

and powered via umbilical, used for subsea surveys and

operations.

-Shale gas unconventional gas extracted from shale deposits.

-Shallow waters see Conventional waters.

-Sick Building Syndrome a combination of ailments associated

with a person’s place of work. The exact causes of the

syndrome are not known but the presence of volatile organic

compounds, formaldehyde, moulds and dust mites may be

contributing factors.

-S-laying method of pipelaying that utilises the elastic

properties of steel, making the pipe configuration resemble

the letter ‘S’, with one end on the seabed and the other under

tension on-board the ship. This configuration is suited to

medium to shallow-water pipelaying.

-Slug catcher equipment for the purification of gas.

-Sour water water containing dissolved pollutants.

-Spar floating production system, anchored to the seabed by

means of a semi-rigid mooring system, comprising a vertical

cylindrical hull supporting the platform structure.

-Spare capacity relationship between crude oil production and

production capacity, i.e. quantity of oil that is not currently

needed to meet demand.

-Spool connection between a subsea pipeline and the platform

riser, or between the terminations of two pipelines.

-Spoolsep unit used to separate water from oil as part of the

crude oil treatment process.

-Stripping process through which volatile compounds are

removed from the liquid solution or the solid mass in which

they have been diluted.

-Subsea processing operations performed in offshore oil

and/or natural gas field developments, especially relating to

the equipment and technology employed for the extraction,

treatment and transportation of oil or gas below sea level.

-Subsea tiebacks lines connecting new oil fields with existing

fixed or floating facilities.

-Subsea treatment new process for the development of

marginal fields. The system involves the injection and

treatment of sea-water directly on the seabed.

-SURF (Subsea, Umbilicals, Risers, Flowlines) facilities,

pipelines and equipment connecting the well or subsea

system to a floating unit.

-Tandem Offloading method used for the transfer of liquids

(oil or LNG) between two offshore units in a line via aerial,

floating or subsea lines (unlike side-by-side offloading, where

the two units are positioned next to each other).

-Tar sands mixture of clay, sand, mud, water and bitumen.

The bitumen in tar sands is composed principally of high

molecular weight hydrocarbons and can be converted into a

variety of oil products.

-Template rigid modular subsea structure where the oilfield

well-heads are located.

-Tender Assisted Drilling unit (TAD) offshore platform

complete with drilling tower, connected to a drilling support

tender vessel housing all necessary ancillary infrastructures.

-Tendon pulling cables used on tension leg platforms to ensure

platform stability during operations.

-Tension Leg Platform (TLP) fixed-type floating platform held

in position by a system of tendons and anchored to ballast

caissons located on the seabed. These platforms are used in

ultra-deep waters.

-Tie-in connection between a production line and a subsea

wellhead or simply a connection between two pipeline

sections.

-Tight oil oil ‘trapped’ in liquid form deep below the earth’s

surface in low permeability rock formations, which it is

difficult to extract using conventional methods.

-Topside portion of a platform above the jacket.

-Train series of units that perform a complex refining,

petrochemical, liquefaction or natural gas regasification

process. A plant can be made up of one or more trains of

equal capacity operating in parallel.

-Trenching burying of offshore or onshore pipelines.

-Trunkline oil pipeline connecting large storage facilities to the

production facilities, refineries and/or onshore terminals.

-Umbilical flexible connecting sheath, containing flexible pipes

and cables.

-Upstream relating to exploration and production operations.

-Vacuum second stage of oil distillation.

-Wellhead fixed structure separating the well from the outside

environment.

-Wellhead Barge (WHB) vessel equipped for drilling, workover

and production (partial or total) operations, connected to

process and/or storage plants.

-Workover major maintenance operation on a well or

replacement of subsea equipment used to transport the oil to

the surface.

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001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 12

Market conditions

Global market conditions further deteriorated in the first half of

2015.

The causes of the deterioration are essentially a change in the

energy market scenario triggered by oil supply outstripping

demand, leading to a collapse in oil prices that saw West Texas

Intermediate fall to below 50 dollars a barrel, before stabilising at

around 60 dollars a barrel in the second quarter. The declining

trend began towards the end of 2014, with the decision by the

Organisation of the Petroleum Exporting Countries (OPEC) not to

regulate the market by reducing their production output. OPEC’s

decision has had a negative adverse impact on oil company

investments, as well as on all oil-producing countries, who have

seen significant drops in their revenues. Recent months have

seen these new conditions take its toll on the market. With new

construction projects on the table constantly growing in

complexity, the principal impact has been the award of a limited

number of contracts, as well as the adoption by clients of an

increasingly inflexible attitude during negotiations for change

orders and claims.

New contracts and backlog

New contracts awarded to the Saipem Group during the first half

of 2015 amounted to €3,500 million (€13,132 million in the first

half of 2014).

Saipem Group - New contracts awarded during the first half of 2015

Financial year 2014 (€million) First half 2014 First half 2015

Amount % Amount % Amount %

5,729 32 Saipem SpA 3,568 27 659 19

12,242 68 Group companies 9,564 73 2,841 81

17,971 100 Total 13,132 100 3,500 100

10,043 56 Offshore Engineering & Construction 8,238 63 2,742 78

6,354 36 Onshore Engineering & Construction 4,328 33 431 12

722 4 Offshore Drilling 142 1 189 6

852 4 Onshore Drilling 424 3 138 4

17,971 100 Total 13,132 100 3,500 100

529 3 Italy 406 3 136 4

17,442 97 Outside Italy 12,726 97 3,364 96

17,971 100 Total 13,132 100 3,500 100

1,434 8 Eni Group 1,040 8 214 6

16,537 92 Third parties 12,092 92 3,286 94

17,971 100 Total 13,132 100 3,500 100

New contracts by geographical area

(€3,500 million)

€136 Italy

€145 Rest of Europe

€1,663 CIS

€43 Far East

€700 Middle East

€32 North Africa

€468 West Africa and rest of Africa

€313 Americas

Operating review

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

78% of all contracts awarded were in the Offshore Engineering

& Construction sector, 12% in the Onshore Engineering

& Construction sector, 6% in the Offshore Drilling sector and 4% in

the Onshore Drilling sector.

New contracts to be carried out abroad made up 96% and

contracts awarded by Eni Group companies 6% of the overall

figure. Orders awarded to the parent company Saipem SpA

amounted to 19% of the total.

The backlog of the Saipem Group as at June 30, 2015 stood at

€19,018 million. This was impacted by the effects of the

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 13

Saipem Group - Backlog as at June 30, 2015

Dec. 31, 2014 (€million) June 30, 2014 June 30, 2015

Amount % Amount % Amount %

7,167 32 Saipem SpA 7,071 29 5,176 27

14,980 68 Group companies 17,144 71 13,842 73

22,147 100 Total 24,215 100 19,018 100

11,161 51 Offshore Engineering & Construction 13,374 55 9,283 49

6,703 30 Onshore Engineering & Construction 6,552 27 6,086 32

2,920 13 Offshore Drilling 2,976 12 2,547 13

1,363 6 Onshore Drilling 1,313 6 1,102 6

22,147 100 Total 24,215 100 19,018 100

689 3 Italy 928 4 613 3

21,458 97 Outside Italy 23,287 96 18,405 97

22,147 100 Total 24,215 100 19,018 100

2,458 11 Eni Group 2,850 12 2,067 11

19,689 89 Third parties 21,365 88 16,951 89

22,147 100 Total 24,215 100 19,018 100

Backlog by geographical area

(€19,018 million)

€613 Italy

€784 Rest of Europe

€3,519 CIS

€841 Far East

€5,215 Middle East

€37 North Africa

€5,834 West Africa and rest of Africa

€2,174 Americas

cancellation of outstanding orders totalling €1,232 million from

the South Stream contract, which was terminated by the client

under a termination for convenience provision, and the

suspension by the client Statoil of a €24 million contract for the

charter of the semi-submersible rig Scarabeo 5.

The breakdown of the backlog by sector is as follows: 49% in the

Offshore Engineering & Construction sector, 32% in the Onshore

Engineering & Construction sector, 13% in Offshore Drilling and 6%

in Onshore Drilling.

97% of orders are on behalf of overseas clients, while orders from

Eni Group companies represent 11% of the overall backlog.

The parent company Saipem SpA accounted for 27% of the total

order backlog.

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 14

Capital expenditure

Year First half

2014 (€million) 2014 2015

117 Saipem SpA 48 24

577 Group companies 281 244

694 Total 329 268

260 Offshore Engineering & Construction 135 82

55 Onshore Engineering & Construction 20 17

180 Offshore Drilling 105 107

199 Onshore Drilling 69 62

694 Total 329 268

Capital expenditure

Capital expenditure in the first half of 2015 amounted to €268

million (€329 million in the first half of 2014) and mainly related

to:

-€82 million in the Offshore Engineering & Construction sector,

relating mainly to the maintenance and upgrading of the

existing asset base;

-€17 million in the Onshore Engineering & Construction sector

relating to the purchase of equipment and the maintenance of

existing assets;

-€107 million in the Offshore Drilling sector, relating mainly to

class reinstatement works on the drillships Saipem 10000 and

Saipem 12000 and on the drilling jack-up Perro Negro 8, as well

as maintenance and upgrading to the existing asset base;

-€62 million in the Onshore Drilling sector, relating to upgrading

work on the existing asset base.

The following table provides a breakdown of capital expenditure in

the first half of 2015:

Details of capital expenditure for the individual business units are

provided in the following pages.

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General overview

The Saipem Group possesses a strong, technologically advanced

and highly versatile fleet, as well as world class engineering and

project management expertise. These unique capabilities and

competencies, together with a long-standing presence in strategic

frontier markets, represent an industrial model that is particularly

well suited to EPCI projects.

The latest addition to the fleet is the Castorone – a 330-metre

long, 39-metre wide mono-hull pipelay vessel equipped with a

class 3 dynamic positioning (DP) system, an S-lay system and

features allowing for the installation of a J-lay tower.

The Castorone has been designed for challenging large-diameter,

deep-water pipelay projects, but it also possesses the flexibility

and productivity necessary for effective deployment on less

complex projects. The vessel’s distinctive features include a class

3 DP system, the capacity to fabricate and lay triple joint pipes of

up to 48” in diameter (60” including coating) with a tensioning

capacity of up to 750 tonnes (up to 1,500 tonnes in flooded pipe

conditions, using a special patented clamp), a highly automated

firing line made up of 7 workstations (3 welding and

4 completion/inspection stations), an articulated stinger for

pipelaying in shallow and deep water with an advanced control

system, and the capacity to operate in extreme environments

(Ice Class A0).

Meanwhile, the current trend for deep-water field developments

continues to drive the success of the FDS 2, which is a 183-metre

long, 32-metre wide mono-hull equipped with a cutting-edge class

3 DP system and a pipeline fabrication system. The FDS 2 has a

vertical J-lay tower with a holding capacity of 2,000 tonnes

capable of laying quad joint sealines of up to 36” in diameter and

also possesses the capability to lay pipe in S-lay mode.

With its 1,000 tonne crane and two 750 and 500 tonne capstan

winches (the latter featuring a heave compensation system), the

FDS 2 is suited to even the most challenging of deep-water

projects.

Saipem’s fleet of technologically advanced vessels also includes

the Saipem 7000, which is equipped with a dynamic positioning

system, has a 14,000-tonne lifting capacity, is capable of laying

subsea pipelines in ultra-deep waters using the J-lay system and

can handle a suspended load of up to 1,450 tonnes during pipelay

operations. The fleet further comprises the Castoro Sei, a

semi-submersible pipelay vessel capable of laying large diameter

subsea pipelines, the Field Development Ship (FDS), which is a

special purpose vessel used in the development of deep-water

fields, equipped with a dynamic positioning system, a 600-tonne

lifting capacity crane and a vertical pipelaying system capable of

operating in water depths of over 2,000 metres and the Saipem

3000, which is capable of laying flexible pipelines and installing

umbilicals and mooring systems in deep waters and installing

subsea structures of up to 2,200 tonnes.

Saipem is involved on an ongoing basis in the management and

development of its fleet, carrying out constant maintenance and

continuous upgrading and improvement of its assets in line with

technological developments and client requirements, with the aim

of maintaining its operating capacity and high safety standards in

a continuously evolving market.

With its portfolio of cutting-edge mobile assets, such as ROVs and

specially equipped robots capable of carrying out complex

deep-water interventions on pipelines, Saipem also enjoys a

strong position in the subsea market.

Finally, the Company is active in the Leased FPSO segment, with a

fleet comprising the Cidade de Vitoria and the Gimboa, which are

currently operating in Brazil and Angola, respectively.

The review of Saipem’s competitive positioning in a highly

deteriorated market environment has led to the rationalisation of

a fabrication yard and the disposal of vessels for which there is

poor visibility with regard to their future deployment (Castoro

Sette, S355 and Saibos 230). Following the revision of the

depreciation schedule on December 31, 2014, Semac 1, which has

been slated for scrapping, was fully depreciated as of June 30,

2015.

Market conditions

2015 is shaping up to be a year of growth, with global GDP

forecast to increase by approximately 3.5 % against 2014. Levels

of growth in advanced countries are exceeding expectations and

would appear to be capable of offsetting an overall slowdown in

emerging markets. The price of Brent crude remained significantly

below the levels recorded in 2014, contributing to major market

uncertainty and leading to a significant contraction in orders from

oil companies, as well as repeated postponements of major

projects compared with the previous year. Overall, the contraction

is greater for North American and Brazilian operators. Current

market conditions have led oil companies to adopt a more prudent

approach, with the current goal continuing to be cost

containment. As a consequence, a number of investments, such

as North Sea field developments Johan Castberg and Snorre C, the

deep-water field Bonga SW/Aporo in West Africa and the Jupiter

field in Brazil, have either been postponed or cancelled.

Another sign, in addition to the significant revisions and delays to

development plans, of the difficult period the market is

Offshore Engineering & Construction

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experiencing has been the adoption by clients of an increasingly

rigid negotiating position. Since continuous interaction with clients

with a view to overcoming any difficulties that may arise during

project execution is a typical feature of the construction sector,

this change in client attitudes during negotiations is proving to be

a major critical factor in project operations.

In the subsea developments market, activities recorded in the

first six months of the year were in line with 2014. Installations

continue to be driven by activities in the North Sea, the Gulf of

Mexico and South America, where the major projects assigned in

recent years, such as Goliat and Roncador (Eni and Petrobras,

respectively) are nearing completion.

The pipelay segment on the other hand is undergoing a

contraction in 2015, with a significant number of projects either

cancelled or delayed, particularly in Northern Europe and North

America. The flowlines segment is also experiencing a decline in

volumes. This is being driven in particular by the Asia-Pacific

Region, which is seeing a significant slowdown, with numerous

projects awarded in recent years now close to completion.

The decline in installations is affecting both the shallow and

ultra-deep water markets, with the former affected mainly by the

trend in South-East Asia and the latter influenced by a drop-off in

areas that have historically been very active, such as the Gulf of

Mexico and Brazil.

The fixed platform fabrication segment is continuing to experience

numerous delays on major investment projects, such as Kasawari

in Malaysia (Petronas) and West White Rose (Husky) – a sign of

the difficult period the segment is at present undergoing. In terms

of platform type, the biggest contribution to activities at this

halfway stage of the year has been from lighter platform

installations in South-East Asia, with larger size platform

installations so far relatively few in number.

In the FPSO segment, 2015 is expected to come in below

expectations after a good 2014. At present, there have been only

two awards, in Ghana (Eni) and Iran (PEDCO) and a limited

number of orders for new units are expected during the remainder

of the year. A large number of projects are experiencing delays

and difficulties securing a final investment decision, such as

Camelia and Chissonga in Africa, Gendalo/Gehem in the

Asia-Pacific Region and Johan Castberg in North Europe. In Brazil,

after the large number of contract awards registered in recent

years, activities are expected to be concentrated on the

completion of units currently under construction, with forecasts

showing a drastic slowdown in new unit orders in the area.

The first half of the year brought no new FLNG contract awards,

mainly due to the uncertainty prevailing with regard to the market

outlook, especially in relation to the LNG supply and demand

balance and the technical complexity of projects in this sector.

A number of projects have been recently cancelled, such as the

FLNG unit slated for construction in Guinea, and others may be

set to experience delays, such as Browse FLNG in the Asia-Pacific

Region (Woodside) and Lavaca Bay in North America (Excelerate).

There are, however, a number of other initiatives that are

continuing to move through the approval process with their

respective operators which may in 2015 receive a FID, such as

Abadi (Inpex) in Indonesia, Coral (Eni) in Mozambique and

Scarborough (Exxon) in Australia. At present, there are six FLNG

units under construction.

New contracts

The most significant contracts awarded to the Group during the

period were as follows:

- a contract with the North Caspian Operating Co (NCOC) for the

construction of two 95 kilometre pipelines, which will connect D

island in the Caspian Sea to the Karabatan onshore plant in

Kazakhstan. The scope of work includes the engineering, the

supply of welding materials, the conversion and the preparation

of the vessels, dredging, and the installation, burial and

pre-commissioning of the two pipelines. Construction is due to

be completed by the end of 2016;

- an EPC contract in Saudi Arabia encompassing the engineering,

procurement, fabrication, transportation and installation of new

offshore structures, three production modules, and

approximately 5 kilometres of subsea pipelines and cables,

under the Long Term Agreement with Saudi Aramco, which was

recently renewed until 2021.

Capital expenditure

Capital expenditure in the Offshore Engineering & Construction

sector mainly related to maintenance and upgrading of the

existing asset base.

Work performed

The biggest and most important projects underway or completed

during the first half of 2015 were as follows.

In Saudi Arabia, for Saudi Aramco:

-under the Long Term Agreement for the engineering,

procurement, construction, transport and installation of

structures, platforms and pipelines, construction work was

completed on two jackets, two pipelines and a deck, while

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work is underway on the construction and installation of three

decks;

- installation work has almost been completed as part of the Al

Wasit Gas Program for the development of the Arabiyah and

Hasbah offshore fields. The contract encompasses the

engineering, procurement, construction and installation of 15

fixed platforms, an export pipeline, offshore lines, and subsea

and control cables. Operations are also underway under the

same contract supplementing the scope of work with the

engineering, procurement, transport, installation and

commissioning of 2 trunklines in the Arabiyah and Hasbah

fields;

- work continued on the Marjan Zuluf contract for the

engineering, procurement, fabrication, transport and

installation of new offshore facilities, including three platforms,

three jackets and associated pipelines and subsea cables.

Engineering and procurement work is ongoing, while fabrication

work has just commenced, for Eni Muara in Indonesia on the

Jangrik EPCI project. The project encompasses engineering,

procurement and fabrication of the FPU and the installation of a

mooring system, as well as hook-up, commissioning and

assistance to the start-up.

Pipelaying activities are currently in full swing in Australia for

Inpex on the Ichthys LNG project, which consists of the

engineering, procurement, construction and installation of a

subsea pipeline connecting the offshore central processing

facility to the onshore processing facility in Darwin.

In West Africa:

- work was completed for ExxonMobil, in Angola, on the Kizomba

Satellite Phase 2 project at the yards in Soyo and Ambriz.

The scope of work included engineering, procurement,

fabrication and installation of production and water injection

pipelines and flowlines, rigid jumpers and other related subsea

structures;

- work was completed for Eni Congo, in Congo, on two contracts

– WP4 and WP10 – encompassing the engineering,

procurement, fabrication and transportation of the Litchendjili

jacket, piles and related appurtenances;

- project management and procurement work continued for Total,

in Angola, on the Kaombo Field Development Project, which

comprises engineering, procurement and commissioning of

two FPSO vessels;

- work continued for Total Upstream Nigeria Ltd on the EPCI

contract for the subsea development of the Egina field.

The scope of work includes engineering, procurement,

fabrication, installation and pre-commissioning of subsea oil

production and gas export pipelines, flexible jumpers, and

umbilicals;

- work continued for Cabinda Gulf Oil Co Ltd (CABGOC), in Angola,

on the Mafumeira 2 project, comprising engineering,

procurement, fabrication, installation and pre-commissioning of

URF (umbilical, riser and flowline) facilities and export

pipelines;

- work continued for CABGOC, in Angola, on the EPCI 3 contract

encompassing the engineering, procurement and

pre-fabrication activities for subsequent offshore modifications

and tie-ins on the existing Mafumeira Norte platform and the

future Mafumeira Sul production platforms;

- work continued for Total Exploration and Production on the GirRI

(Girassol Resources Initiatives) contract, in Block 17, in

Angola, which encompasses engineering, procurement,

fabrication, installation and commissioning of changes to the

topside of the pumping system on the FPSOs Girassol and Dalia;

- work continued for CABGOC on the fourth and fifth installation

campaign of the Congo River Crossing Pipeline project, in

Angola, which comprises engineering, procurement, fabrication

and the installation of three subsea pipelines and subsea

spools, as well as trenching and crossing works. The project is

being carried out off the coasts of Angola and the Democratic

Republic of the Congo;

- work continued for Aker Solutions, in Congo, on the fabrication

of subsea structures, including suction anchors, for the Moho

Nord project.

In the North Sea:

- work continued for Det Norske Oljeselskap ASA on a contract

encompassing the transportation and installation of the Ivar Aasen

jacket and topside, in the Norwegian sector of the North Sea;

- in addition, various structures were installed using the Saipem

7000 for ConocoPhillips (Eldfisk), Statoil (Statoil

decommissioning), Nexen (Golden Eagle) and Lundin.

In Russia, work was completed for Lukoil-Nizhnevolzhskneft on

the Filanovsky contract for the engineering, procurement,

fabrication and installation of an oil pipeline and a gas pipeline in a

maximum water depth of 6 metres, along with related onshore

pipelines connecting the riser block in the offshore field to the

onshore shut-off valves. Work was also completed on the

additional scope, which comprised the transport and installation

of four platforms.

In Azerbaijan, work continued for BP on a T&I contract involving

the transportation and installation of jackets, topsides, subsea

production systems and subsea structures for stage 2 of the Shah

Deniz field development project.

In Kazakhstan:

- work began on a contract with the North Caspian Operating Co

(NCOC) for the construction of two 95-kilometre pipelines,

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which will connect D island in the Caspian Sea to the Karabatan

onshore plant in Kazakhstan. The scope of work includes the

engineering, the supply of welding materials, the conversion

and the preparation of the vessels, dredging, and the

installation, burial and pre-commissioning of the two pipelines;

- work continued for Agip Kazakhstan North Caspian Operating Co

NV on the contract for the EP Clusters 2 and 3 project in the

framework of the Kashagan field development. The contract

includes engineering, procurement, fabrication, and

transportation of three topside production manifold modules;

- work continued for North Caspian Production Operations Co BV

on the Major Maintenance Services project. The contract

encompasses the provision of maintenance and services for

offshore (D island) and onshore (OPF) facilities;

- work continued for Teniz Burgylau Llp on the fabrication,

outfitting and commissioning of a jack-up rig in consortium

with Keppel Kazakhstan Llp.

In the Gulf of Mexico, engineering and procurement work started

on the Lakach project for Pemex. The contract encompasses the

engineering, procurement, construction and installation of the

system connecting the offshore field with the onshore gas

conditioning plant.

In Brazil, for Petrobras:

- work continued on the Sapinhoà Norte and Cernambi Sul

project, encompassing the engineering, procurement,

fabrication, installation and pre-commissioning of the SLWR

(Steel Lazy Wave Riser) for the collection system at the

Sapinhoà Norte field, and of the FSHR (Free Standing Hybrid

Risers) for the gas export systems at the Sapinhoà Norte and

Cernambi Sul fields. Work also continued on the Sapinhoà Norte

and Iracema Sul project;

- work continued on the contract for the construction of the Rota

Cabiúnas gas export trunkline, situated in the Santos Basin

Pre-Salt Region. The development comprises the engineering

and procurement of subsea equipment and the installation of a

gas pipeline in a maximum water depth of 2,200 metres.

The pipeline will connect the Central Gathering Manifold in the

Lula field, in the Santos Basin, to the onshore processing plant

of Cabiúnas, located in the Macaé district, in the State of Rio de

Janeiro;

- work continued on the Lula Norte, Lula Sul and Lula Extremo

Sul project, which encompasses the engineering, procurement,

fabrication and installation of three offshore pipelines and two

Free Standing Hybrid Risers for the gas export systems.

In Venezuela:

- work has almost been completed for Cardon IV on the Perla EP

project encompassing the transport and installation of three

platforms and three pipelines;

- work continued for PDVSA on the construction of the Dragon -

CIGMA project involving the transportation and installation of a

gas pipeline which will connect the Dragon gas platform to the

CIGMA complex.

In Italy, work is underway for Eni E&P as part of its 2015 Offshore

Campaign on a contract for the transportation and installation of

two platforms and two subsea pipelines in the Mediterranean Sea.

In the Leased FPSO segment, the following vessels carried out

operations during the period:

-the FPSO Cidade de Vitoria carried out operations as part of an

eleven-year contract with Petrobras on the second phase of

development of the Golfinho field, situated off the coast of

Brazil at a water depth of 1,400 metres;

-the FPSO Gimboa carried out operations on behalf of Sonangol

P&P under a contract for the provision and operation of an FPSO

unit for the development of the Gimboa field, located in Block

4/05 offshore Angola, at a water depth of 700 metres.

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Offshore fleet at June 30, 2015

Saipem 7000 Self-propelled, semi-submersible, dynamically positioned crane and pipelay vessel capable of lifting

structures of up to 14,000 tonnes and J-laying pipelines at depths of up to 3,000 metres.

Saipem FDS Dynamically positioned vessel utilised for the development of deep-water fields at depths of over

2,000 metres. Capable of launching 22” diameter pipes in J-lay configuration with a holding capacity of up to

550 tonnes (upgrade to 750 tonnes currently underway) and a lifting capacity of up to 600 tonnes.

Saipem FDS 2 Dynamically positioned vessel utilised for the development of deep water fields, capable of launching pipes

with a maximum diameter of 36” in J-lay mode with a holding capacity of up to 2,000 tonnes. Also capable of

operating in S-lay mode with a lifting capacity of up to 1,000 tonnes.

Castoro Sei Semi-submersible pipelay vessel capable of laying large diameter pipe at depths of up to 1,000 metres.

Castorone Self-propelled, dynamically positioned pipe-laying vessel operating in S-lay mode with a 120-metre long S-lay

stern ramp composed of 3 articulated and adjustable stinger sections for shallow and deep-water operation, a

holding capacity of up to 750 tonnes (expandable to 1,000 tonnes), pipelay capability of up to 60 inches,

onboard fabrication facilities for triple and double joints and large pipe storage capacity in cargo holds.

Castoro Otto Derrick pipelay ship capable of laying pipes of up to 60” diameter and lifting structures weighing up to

2,200 tonnes.

Saipem 3000 Self-propelled, dynamically positioned derrick crane ship, capable of laying flexible pipes and umbilicals in

deep waters and lifting structures of up to 2,200 tonnes.

Bar Protector Dynamically positioned, multi-purpose support vessel used for deep water diving operations and offshore

works.

Castoro II Derrick lay barge capable of laying pipe of up to 60” diameter and lifting structures of up to 1,000 tonnes.

Castoro 10 Trench/pipelay barge capable of burying pipes of up to 60” diameter and of laying pipes in shallow waters.

Castoro 12 Pipelay barge capable of laying pipes of up to 40” diameter in ultra-shallow waters of a minimum depth of

1.4 metres.

Castoro 16 Post-trenching and back-filling barge for pipes of up to 40” diameter in ultra-shallow waters of a minimum

depth of 1.4 metres.

Ersai 1 Heavy lifting barge equipped with 2 crawler cranes, capable of carrying out installations whilst grounded on

the seabed. The lifting capacities of the 2 crawler cranes are 300 and 1,800 tonnes, respectively.

Ersai 2 Work barge equipped with a fixed crane capable of lifting structures of up to 200 tonnes.

Ersai 3 Support barge with storage space, workshop and offices for 50 people.

Ersai 4 Support barge with workshop and offices for 150 people.

Ersai 400 Accommodation barge for up to 400 people, equipped with antigas shelter for H2S leaks.

Castoro 9 Cargo barge.

Castoro XI Heavy-duty cargo barge.

Castoro 14 Cargo barge.

Castoro 15 Cargo barge.

S42 Cargo barge, currently used for storing the J-lay tower of the Saipem 7000.

S43 Cargo barge.

S44 Launch cargo barge, for structures of up to 30,000 tonnes.

S45 Launch cargo barge, for structures of up to 20,000 tonnes.

S46 Cargo barge.

S47 Cargo barge.

S 600 Launch cargo barge, for structures of up to 30,000 tonnes.

FPSO - Cidade de Vitoria FPSO unit with a production capacity of 100,000 barrels a day.

FPSO - Gimboa FPSO unit with a production capacity of 60,000 barrels a day.

With poor visibility into their prospects of deployment on future projects, the vessels Castoro Sette, S355 and Saibos 230 were written

down during the first half of 2015 and have been slated for scrapping. Following the revision of the depreciation schedule on December

31, 2014, Semac 1, which has been slated for scrapping, was fully depreciated as of June 30, 2015.

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Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

General overview

The Saipem Group’s Onshore Engineering & Construction expertise

is focused on the execution of large-scale projects with a high

degree of complexity in terms of engineering, technology and

operations, with a strong bias towards challenging projects in

difficult environments and remote areas.

Saipem enjoys a worldwide leading position in the Onshore sector,

providing a complete range of integrated basic and detailed

engineering, procurement, project management and construction

services, principally to the oil&gas, complex civil and marine

infrastructure and environmental markets. The Company places

great emphasis on maximising Local Content during project

execution phase in a large number of the areas in which it operates.

The review of Saipem’s competitive positioning in the light of a

significant deterioration in market conditions led to the

rationalisation of a fabrication yard and has made more complex

the negotiations for the recognition of change orders and claims

with clients.

Market conditions

The volume of EPC contracts assigned on the Onshore E&C market

(Upstream, Midstream and Downstream) in the first half of 2015

dropped significantly compared with the same period of previous

years.

At global level, a significant share of EPC project awards were

located in the United States in the Pipeline, Petrochemical, LNG

and Fertilizer segments. In the Middle East (Kuwait and United

Arab Emirates), awards were almost exclusively concentrated in

the Upstream segment. In the CIS (Russia and Azerbaijan), the

principle focus of contracting activity were the Refining, Fertilizer

and Petrochemical segments. Central Africa (Uganda) registered

the award of a project in the Refining segment, while in Europe

(Slovak Republic), the period saw a project awarded for the

construction of a Fertilizer facility.

The value of EPC contracts awarded in the Upstream segment

during the first half of 2015 were comparable with the average for

the same period in recent years – confirmation that the market is

holding up in spite of the unfavourable conditions.

Most new EPC contracts awarded during the reporting period were

concentrated in the Middle East, confirming both its strategic

importance and its countercyclical nature, while important

contracts were also awarded in Kuwait and the United Arab

Emirates. Canada on the other hand saw a sudden and dramatic

fall-off in contracting activity, which saw the cancellation and

postponement of planned projects.

The Upstream segment continues to show good short to medium

term growth potential driven by gas and oil field discoveries and

developments, but there is an increasingly pressing need for

investments to maintain gradually declining production levels in

existing fields.

Activity during the period in the Pipeline segment was driven by

the award of a major EPC contract award in China for the

construction of a third gas pipeline on the West-East China Gas

Pipeline (Stage 2) project. Smaller gas pipeline awards were also

made in the Middle East (Kuwait) and South America.

With the pipeline segment heavily driven by the abundance of

available gas and, consequently, by the need to transport the gas

from the production fields to the end user markets, recent years

have seen projects to build new gas pipelines or to expand

existing ones outnumbering oil pipeline initiatives. This trend is

expected to continue in the short to medium term, particularly in

countries opting to develop non-conventional fields, as this will

require them to make investments to upgrade their distribution

infrastructure.

Following a year in which awards were abundant, the LNG

segment registered a downturn, with relatively few awards

registered, mainly in North America (United States), but also in

Asia-Pacific (Malaysia), either for the construction of additional

units or the expansion of existing facilities.

North America’s growing role as an exporter of LNG is being driven

by a continuous and constant abundance of gas from

non-conventional fields, which is enabling natural gas to be

produced at low cost. Henry Hub natural gas prices are currently

much lower than gas prices on the rest of the world’s markets,

and with American gas likely to remain affordable in the short to

medium term, liquefaction terminal projects represent an

increasingly attractive investment opportunity.

The Refining segment – which has always been one of the drivers

of the E&C market in terms of EPC contract awards – saw a

considerable drop in the overall value of contract awards

compared with prior years. The fall in awards notwithstanding, the

first half of 2015 nevertheless saw two contracts assigned in the

CIS (Russia) and the construction of a refinery in Central Africa

(Uganda).

The increasingly strict environmental legislation in force,

particularly in OECD countries (and especially in Europe), is

requiring the refining industry to modernise continually, with

existing facilities forced to revamp constantly in pursuit of

process efficiencies. The effect of this has been to encourage

small and medium size investments, the closure of outdated

refineries and the construction of new Mega Export Refineries in

crude producing countries, particularly in the Middle East.

In the short to medium term, the volume of future investments

continues to be considerable and pertains to all of the

geographical areas being monitored by the Company.

The largest investments are planned in Asia-Pacific and the Middle

East, although all other geographical areas continue to present

interesting opportunities.

Onshore Engineering & Construction

001-058SaipemSem15Ing.qxd 6-08-2015 12:44 Pagina 21

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

After a year featuring a large number of important major project

awards in 2014, the Petrochemical segment experienced a

significant downward turn in the first few months of 2015.

The period saw the award of a project for the construction of an

ethylene plant in the United States, as well as contracts for two

smaller facilities in the Asia-Pacific Region (China and Singapore).

The Fertilizer segment also registered a significant drop in overall

volumes of awards compared with the same period of 2014, but

there were important contract awards for the construction of

ammonia plants in both Russia and the United States.

New contracts

The most significant contract awarded to Saipem during the

period was a contract for Fermaca relating to the El Encino

Pipeline project situated in Mexico, encompassing the

engineering, procurement, construction and commissioning

support for a compressor station at El Encino.

Capital expenditure

Capital expenditure in the Onshore Engineering & Construction

sector focused mainly on the acquisition of equipment and the

maintenance of the existing asset base.

Work performed

The biggest and most important projects underway or completed

during the first half of 2015 were:

In Saudi Arabia:

- work continued for Petrorabigh (a joint venture between Saudi

Aramco and Sumitomo Chemical) on the contract for the

Naphtha and Aromatics Package of the Rabigh II project, which

encompasses the engineering, procurement, construction and

pre-commissioning of two processing units: a naphtha reformer

unit and an aromatics complex;

- work continued for Saudi Aramco on two EPC contracts

(Packages 1 & 2) relating to the Jazan Integrated Gasification

Combined Cycle project to be undertaken approximately

80 kilometres from the city of Jazan, in south western Saudi

Arabia. The Package 1 contract comprises the gasification,

soot/ash removal, acid gas removal and hydrogen recovery

units. The Package 2 contract includes six sulphur recovery

units (SRU) trains and relevant storage facilities. The scopes of

work of both packages include engineering, procurement,

construction, pre-commissioning, assistance to commissioning

and performance tests of the concerned facilities;

- work continued for Saudi Aramco on the Complete Shedgum -

Yanbu Pipeline Loop 4&5 contract, encompassing detailed

engineering, the procurement of all materials except for the

pipeline supplied by the client Aramco, installation,

commissioning and start up assistance for two pipelines;

- work commenced for Saudi Aramco on the EPC project relating

to the expansion of the onshore production centres at the

Khurais, Mazajili and Adu Jifan fields;

- work continued for Safco on the Safco V contract, which

encompasses the engineering, procurement and construction of

a urea production plant, together with associated utilities and off-

site systems and interconnecting structures to existing plants.

In the United Arab Emirates:

- construction work for the three product lines (sales gas, natural

gas liquids and condensate) have almost been completed on

the contract for Abu Dhabi Gas Development Co Ltd forming part

of the development of the high sulphur content Shah sourgas

field. The development project encompasses the treatment of

28 million cubic metres of gas a day from the Shah field, the

separation of the sulphur from the gas, the transportation of the

gas product lines by pipeline to Habshan (where it is injected

into the national gas network) and to Ruwais, and the

transportation of the sulphur by separate pipeline to the

granulation facility at Habshan and from there to Ruwais by

railway. Negotiations are underway to secure approval by the

client of change orders and claims occurring during project

execution;

- work continued on a project for the Etihad Rail Co in Abu Dhabi,

encompassing the engineering and construction of a railway

line for the transportation of granulated sulphur, linking the

natural gas production fields of Shah and Habshan (located

inland) to the port of Ruwais.

In Kuwait, work continued for Kuwait Oil Co (KOC) on the BS 171

contract, which encompasses the engineering, procurement,

construction and commissioning of a new gas booster station

comprising three high and low-pressure gas trains for the

production of dry gas and condensate. Negotiations are underway

to secure approval by the client of change orders and claims

occurring during project execution.

In Iraq:

- work continued for Fluor Transworld Services Inc and Morning

Star for General Services Llc on the West Qurna project.

The contract comprises engineering, procurement,

construction, pre-commissioning and commissioning of water

treatment and conveyance infrastructure, a pipeline and a

water injection system;

- work started for Shell Iraq Petroleum Development on the FCP

GAS project, encompassing the installation of two

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 22

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

turbocompressors and auxiliary equipment, as well as tie-ins to

existing facilities. The facilities will supply gas to the North

Rumaila power plant;

- construction work is underway for Basrah Gas Co (BGC) on the

Inlet Booster Compressors (IBC) project, encompassing the

installation of three turbocompressors and related auxiliary

systems, as well as interconnections to the existing facility;

- work continued on the Zubair Gathering System project for

Morning Star for General Services Llc and ExxonMobil Iraq Ltd,

which encompasses the construction of a gathering system,

flowlines and interconnecting facilities, as well as the

distribution node.

In Turkey, work continued for Star Refinery AS on the Aegean

Refinery project, encompassing the engineering, procurement

and construction of a refinery.

In Nigeria:

- complex work is underway for Southern Swamp Associated Gas

Solution (SSAGS) on the Southern Swamp contract, comprising

engineering, procurement, construction and commissioning of

compression facilities at four sites and of new central

production facilities at one of the sites, which will treat the

routed associated gas;

- work continued for Dangote Fertilizer Ltd on the Dangote

project for a new ammonia and urea production complex.

The facility was originally due to be located in Edo State, but

was reallocated by the client to the Lekki Free Trade Zone in

Lagos State. The scope of work encompasses engineering,

procurement and construction of two twin production streams

and related utilities and off-site facilities;

- work continued for Total Exploration and Production Nigeria Ltd

(TEPNG) on the Northern Option Pipeline project, comprising

engineering, procurement, construction and commissioning of

a pipeline that will connect Rumuji to Imo River;

- work is underway for Shell Petroleum Development Co on the

Otumara-Saghara-Escravos Pipeline contract, which

encompasses the engineering, procurement, fabrication and

commissioning of a network of pipelines in a swamp area, to

connect the client’s flowstations in the Otumara, Saghara and

Escravos fields;

- work continued for the Government of Rivers State (Nigeria) on the

contract for the engineering, procurement and construction of the

first and second train of the Independent Power Plant at Afam.

In Congo, work continued for Eni Congo on the Litchendjili project

for the construction of an onshore treatment facility which will

treat the feed stream from the Litchendjili Offshore Platform and

separate the fluid into two main streams: the gas product

(delivered to Centrale Electrique du Congo) and liquid

hydrocarbons.

In Italy:

- work is underway for Rete Ferroviaria Italiana SpA (Ferrovie

dello Stato Group) on the contract for the detailed engineering,

project management and construction of a 39-kilometre section

of high-speed railway line and of an additional 12 kilometres of

interconnections with the existing conventional railway, along

the Treviglio-Brescia section across the Milan, Bergamo and

Brescia provinces, as well as all associated works, such as

power lines, works to reduce road interference, road crossings

and environmental mitigation;

- work started on an EPC contract for Versalis-Ferrara IT for the

construction of a fourth production line to operate alongside

three existing lines, in addition to increasing production

capacity and upgrading the plant’s outside battery limit

auxiliary systems.

In Poland, engineering work continued for Polskie LNG on the

Polskie contract for a re-gasification terminal. The contract

encompasses the engineering, procurement and construction of

the regasification facilities, including two liquid gas storage tanks.

On certain Canadian projects in relation to which the clients

(Canadian Natural Resources Ltd and Husky Oil) announced the

contract termination, the parties are in the process of

negotiations relating to claims and change orders. From an

operating point of view, the period saw the completion of the

U&O/Williams projects, while Phase 3 and SRU-SWC continue

according to schedule.

In Mexico:

- work is underway for Transcanada (Transportadora de Gas

Natural Norte - Noroeste) on the El Encino project, comprising

engineering, procurement and construction of a pipeline from

El Encino (Chihuahua State) to Topolobampo (Sinaloa State).

The project includes two compressor stations and three

metering stations;

- work continued for Pemex on the Tula and Salamanca contract

for the construction of two desulphurisation units and two

amine regeneration units to be built at two of the client’s

refineries. The facilities will be built at the Miguel Hidalgo

refinery, located 2,000 metres above sea level near the town of

Tula and at the Antonio M. Amor refinery, located 1,700 metres

above sea level near the town of Salamanca.

In Suriname, for Staatsolie, work has almost been completed on

the contract encompassing engineering, procurement, fabrication

and construction for the expansion of the Tout Lui Faut refinery,

located south of the capital Paramaribo.

In Azerbaijan and Georgia, work is underway for the Shah Deniz

consortium on the SPCX Pipeline contract, which encompasses

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 23

the construction of two pipelines and associated above ground

installations.

In Australia, work was completed for Gladstone LNG Operations Pty

Ltd on the Gladstone LNG contract involving the engineering,

procurement and construction of a gas pipeline connecting the

Bowen and Surat fields to the Gladstone State Development Area

(GSDA) near the city of Gladstone, Queensland, where an LNG

liquefaction and export plant is due to be built. Negotiations are

underway to secure approval by the client of change orders and

claims occurring during project execution.

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 24

General overview

At June 30, 2015, the Saipem offshore drilling fleet consisted of

fifteen vessels: seven deep-water units for operations at depths in

excess of 1,000 metres (the drillships Saipem 10000 and Saipem

12000 and the semi-submersible drilling rigs Scarabeo 5,

Scarabeo 6, Scarabeo 7, Scarabeo 8 and Scarabeo 9), one for

mid-water operations at depths of up to 500 metres

(the semi-submersible Scarabeo 3), two high specification

jack-ups for operations at depths of up to 375 feet (Perro Negro 7

and Perro Negro 8), four standard jack-ups for activities at depths

up to 300 feet (Perro Negro 2, Perro Negro 3, Perro Negro 4 and

Perro Negro 5) and one tender-assisted drilling rig (TAD). All units

are the property of Saipem. The fleet also includes other minor

units operating offshore Peru. During the first half of 2015,

Saipem’s offshore drilling fleet operated in the Norwegian sector

of the North Sea and the Barents Sea, in the Mediterranean Sea

(Italy, Egypt and Cyprus), the Red Sea, the Persian Gulf, in West

Africa, Indonesia, offshore Ecuador and Peru.

The semi-submersible platform Scarabeo 4 was fully written down

during the first half of 2015 and slated for scrapping.

Market conditions

The negative cycle that commenced in 2014 continued to prevail

during the first few months of 2015, with the oil price environment

remaining fairly weak, and the general climate of uncertainty

surrounding the medium term outlook, which emerged during the

second half of 2014, continuing to obtain.

The unfavourable market conditions in the offshore drilling

segment impacted principally on spending by oil and gas

companies. The declining trend affecting spending on drilling

services, which began in 2014, continued during the period, with a

fall of 13% registered compared to forecasts made at year end

2014. Data for rig utilisation continued to follow a general

downward trend, with all types of rig affected. Only the latest

models (i.e. deep water floaters and high spec jack-ups) were able

to maintain rates close to 90%. The negative cycle affecting the oil

and gas industry also led to a number of industry operators opting

to retire and dismantle older units. Since year end 2014, over

30 rigs have been retired from the market due to a lack of work

and poor medium-term prospects. The trend has had a particularly

significant impact on the mid-water segment, where the number

of rigs dropped by approximately 20% compared with 2014.

Day rates for contracts awarded during the period continued the

downward trend that began in 2014, with falls registered in

particular for ultra-deep water operations (where rates have

stabilised at below $400,000 per day, even dipping below

$300,000 per day, compared with rates in excess of $600,000

per day in 2013) and high spec jack-ups (which went from peaks

in 2013 of more than $200,000 per day to $110,000 per day in

the first half of 2015).

The significant number of orders placed in previous years enabled

new offshore drilling rig construction activities to remain at

healthy levels, with 176 new rigs under construction

(115 jack-ups, 21 semi-submersibles and 40 drillships),

156 of which are slated for delivery by the end of 2016. Overall,

only 43 of these units have already secured contracts, while the

remainder will in the short to medium term contribute to a

significant increase in the global drilling services fleet. The

negative cycle affecting the market has however led to a number

of client companies postponing their newbuild rig deliveries

pending improved market conditions. The significant number of

new builds scheduled for delivery in the medium term, combined

with the retirements of a portion of the existing fleet cited above

represent a structural change in the offshore drilling segment

that may have significant effects over the medium to long term.

New contracts

The most significant contract awarded to Saipem during the

period was with National Drilling of Abu Dhabi in the United Arab

Emirates, involving the charter of the Perro Negro 8 for a

thirty-month period starting June 2015.

Capital expenditure

The principal investments made in the Offshore Drilling sector

during the first half of 2015 related principally to class

reinstatement works on the drillships Saipem 10000 and Saipem

12000 and on the drilling jack-up Perro Negro 8, as well as

maintenance and upgrading works on the existing asset base.

Work performed

In the first half of 2015, Saipem’s offshore units drilled 42 wells

totalling 84,848 metres.

The fleet was deployed as follows:

- deep-water units: the drillship Saipem 12000 continued to

operate in Angola for Total, while the drillship Saipem 10000

operated under a long-term contract with Eni in Cyprus and

then started planned maintenance operations; the

semi-submersible rig Scarabeo 9 operated in Angola on a

long-term contract with Eni; the semi-submersible rig

Scarabeo 8 continued to work in the Norwegian sector of the

Barents Sea for Eni Norge; the semi-submersible rig Scarabeo 7

continued to operate in Indonesia for Eni Muara Bakau under a

long-term contract; the semi-submersible rig Scarabeo 6

Offshore Drilling

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 25

Vessel Days under contract (1)

Semi-submersible platform Scarabeo 3 144

Semi-submersible platform Scarabeo 4 (2) 95

Semi-submersible platform Scarabeo 5 175

Semi-submersible platform Scarabeo 6 174

Semi-submersible platform Scarabeo 7 181

Semi-submersible platform Scarabeo 8 181

Semi-submersible platform Scarabeo 9 180

Drillship Saipem 10000 90

Drillship Saipem 12000 152

Jack-up Perro Negro 2 107

Jack-up Perro Negro 3 181

Jack-up Perro Negro 4 171

Jack-up Perro Negro 5 179

Jack-up Perro Negro 7 181

Jack-up Perro Negro 8 -

Tender Assisted Drilling Unit 172

Ocean Spur (3) 96

(1) For the remaining days (to 181) the vessel underwent class reinstatement and maintenance works as a result of technical issues.

(2) Vessel fully written down and slated for scrapping.

(3) Third party rig returned to client.

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

continued to operate in Egypt for Burullus; in mid-February the

semi-submersible rig Scarabeo 5 recommenced work in the

Norwegian sector of the North Sea for Statoil. Operations had

previously been suspended by the client due to adverse market

conditions. The vessel received the standby rate during this idle

period, which was used to complete upgrades;

- mid-water units: the semi-submersible rig Scarabeo 4

continued activities in Egypt on a contract for International

Egyptian Oil Co (IEOC) and was subsequently transferred to

Cyprus, placed in standby and slated for scrapping; after

completing operations in Nigeria for Addax,

the semi-submersible rig Scarabeo 3 carried out planned

maintenance operations and then began preparations for work

for FASL, which started towards the end of the reporting

period;

- high specifications jack-ups: the Perro Negro 8 completed

maintenance and upgrades before starting operations for

National Drilling Co (NDC) in the United Arab Emirates towards

the end of the period; the Perro Negro 7 continued operations

for Saudi Aramco offshore Saudi Arabia;

- standard jack-ups: the Perro Negro 3 and Perro Negro 2

continued operations in the United Arab Emirates for NDC, while

the Perro Negro 5 continued work for Saudi Aramco in Saudi

Arabia; the Perro Negro 4 continued to operate in the Red Sea

for Petrobel; the Ocean Spur, which is operated by Saipem and

owned by third parties, completed operations in Ecuador for

Petroamazonas and was then returned to its owners;

- other activities: in Congo, the tender assisted drilling unit TAD

continued work for Eni Congo SA, while operation of the

Loango-Zatchi platforms also proceeded; offshore Peru, work

was carried out for Pacific Offshore Energy and Savia.

Utilisation of vessels

Vessel utilisation in the first half of 2015 was as follows:

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 26

General overview

At June 30, 2015, Saipem’s onshore drilling rig fleet was

composed of 107 units. Of these, 100 are owned by Saipem, while

7 are owned by third parties but operated by Saipem. The areas of

operations were South America (Peru, Bolivia, Colombia, Ecuador,

Chile and Venezuela), Saudi Arabia, the Caspian Sea Region

(Kazakhstan and Turkmenistan), Africa (Congo), and Europe

(Italy).

Market conditions

The overall volume of investments by oil companies during the

first half of 2015 was down compared with the previous year.

Unlike in the previous period, where the Onshore Drilling segment

was less affected by the unfavourable market conditions than its

offshore counterpart, in the first half of 2015 the negative

market cycle and the weak oil price environment had a more

significant impact overall.

One of the geographical areas registering the biggest drops in

activity was the United States. During the second half of 2014,

the general market slowdown had been offset by the increase in

gas demand to meet storage requirements for winter use, but in

the first half of 2015, with this no longer a requirement, there

was a drastic fall in active rigs of approximately 50% compared

with the previous year.

Levels of activity on the international market, on which Saipem

operates, were not immune to the negative cycle either.

South America, which historically has always been an oil price

sensitive region, recorded the biggest fall in activity, of

approximately 30%. Given the Company’s significant deployment

of vessels in the country, the situation in Venezuela is

particularly critical for Saipem. The drops in activity seen in other

regions were smaller, although the only exception to the

declining trend was the Middle East, where levels of activity

remained substantially stable, thanks to the region’s key market,

Saudi Arabia, as well as to other countries with significant major

development programmes in place, such as Kuwait.

New contracts

New contracts for the use of fourteen drilling rigs in Italy and

South America, with durations ranging in length from four months

to two years, were awarded to the Group during the reporting

period by various clients.

Capital expenditure

The main investments made during the period in the Onshore

Drilling segment related to upgrading work on the existing asset

base.

Work performed

204 wells were drilled during the period, totalling approximately

401,837 metres drilled.

In South America, Saipem operated in a number of countries:

in Peru, work was carried out for various clients, including Cepsa,

China National Petroleum Corp, Pluspetrol, Gran Tierra, Perenco,

Hunt, and Savia, deploying nineteen company-owned rigs and

operating five rigs owned by clients or third parties; in Bolivia,

four rigs were deployed for YPFB Andina, Pluspetrol and Repsol;

in Chile, work continued for Empresa Nacional del Petróleo

(ENAP), deploying one rig, while operations on a second rig

started for Yacimientos Petrolíferos Fiscales (YPF); in Colombia,

where Saipem has six rigs, work was performed for various

clients, including Equion, Canacol, and Ecopetrol, while operations

were completed for Schlumberger; in Ecuador, four

company-owned rigs were deployed for various clients, including

Agip Oil and Petroamazonas, while work was completed for

Tecpeservices; finally, in Venezuela, work continued for PDVSA

involving the deployment of twenty-eight rigs.

In Saudi Arabia, Saipem deployed twenty-six rigs, continuing

operations for Saudi Aramco under previously acquired long-term

contracts.

In the Caspian Sea Region, Saipem operated in Kazakhstan for

various clients, including Karachaganak Petroleum Operating BV,

Agip KCO, and Zhaikmunai, using 4 rigs supplied by a partner and

4 owned rigs, one of which operated until May and then, at the

client’s request, was stacked due to adverse market conditions.

The stacking period will be paid for by the client. Operations with

the rig are due to start up again in October. In Turkmenistan, work

continued for Burren/Rheinisch-Westfälisches Elektrizitätswerk

AG using one rig.

In West Africa, Saipem continued to operate in Congo for Eni

Congo SA, using one company-owned rig and operating one

client-owned rig.

Saipem has one rig in both Tunisia and Mauritania. Neither rig

carried out operations during the first half of 2015.

Operations in Italy saw the deployment of one rig which

performed work for Total in the Tempa Rossa area. Another rig is

currently undergoing upgrading works in the country.

Onshore Drilling

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 27

Saipem Interim Consolidated Report as of June 30, 2015 / Operating review

Utilisation of rigs

The average utilisation of rigs in the first half of 2015 was 93.5%

(96.5% in the first half of 2014). At June 30, 2015,

company-owned rigs amounted to 100, located as follows: 28 in

Venezuela, 28 in Saudi Arabia, 19 in Peru, 6 in Colombia, 4 in

Kazakhstan, 4 in Bolivia, 4 in Ecuador, 2 in Italy, 1 in Chile, 1 in

Congo, 1 in Mauritania, 1 in Tunisia, and 1 in Turkmenistan.

Additionally, 5 third-party rigs were deployed in Peru, 1 in Congo

and 1 in Chile.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 28

Financial and economic results

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

As previously stated, revenues and associated profit levels,

particularly in the Engineering & Construction sectors, and, to a

lesser extent, in the Drilling sector, are not consistent over time,

as they are influenced not only by market performance but also

by climatic conditions and individual project schedules.

Consequently, the results from any one particular fiscal period

can vary significantly, thereby precluding a direct comparison

with the same period in other fiscal years or extrapolation of

figures from a single quarter to the entire year.

Given the conditions described over the preceding pages, market

prospects in the oil services sector are steadily worsening. Clients

are focusing on cost reduction, which results in a more rigid

approach to negotiations, demands for greater efficiency on

awarded projects, delays in new contract awards and, in some

cases, the cancellation of already approved projects.

Results of operations

Saipem Group - Income statement

Year First half

2014 (€million) 2014 2015 % Ch.

12,873 Net sales from operations 5,966 5,373 (9.9)

9 Other income and revenues 4-

(9,262) Purchases, services and other costs (4,118) (4,349)

(2,408) Payroll and related costs (1,197) (1,221)

1,212 Gross operating result (EBITDA) 655 (197) ..

(1,157) Depreciation, amortisation and impairment (362) (593)

55 Operating result (EBIT) 293 (790) ..

(199) Net finance expense (110) (110)

24 Net income from investments 17 7

(120) Result before income taxes 200 (893) ..

(118) Income taxes (64) (13)

(238) Result before non-controlling interests 136 (906) ..

8 Non-controlling interests -(14)

(230) Net result 136 (920) ..

Net sales from operations for the first half of 2015 amounted to

€5,373 million, representing a decrease of 9.9% compared to the

same period of 2014.

The gross operating result (EBITDA) amounted to -€197 million.

Depreciation and amortisation of tangible and intangible assets

amounted to €593 million.

The operating result (EBIT) for the first half of 2015 was -€790

million. The largest variations are analysed in detail in the

subsequent sections describing the performance of the various

business units.

Net finance expense increased by €110 million, which was in line

with the first half of 2014.

Net income from investments amounted to €7 million.

The result before income taxes amounted to -€893 million.

Income taxes amounted to €13 million. The decrease compared

to the first half of 2014 was principally due to a decrease in

taxable income.

The net result for the period was -€920 million.

Year First half

2014 (€million) 2014 2015

55 Operating result (EBIT) 293 (790)

410 Depreciation -211

465 Adjusted operating result (EBIT) 293 (579)

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 29

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

In the first half of 2015, the Saipem Group reported net sales from

operations of €5,373 million, representing a decrease of

€593 million compared to the same period of the previous year.

This was mainly due to lower volumes registered in the Middle

East, Australia and North America.

Production costs (which include direct costs of sales and

depreciation of vessels and equipment) amounted to

€5,690 million, representing an increase of €255 million over the

first half of 2014. This was mainly due to the effect of the

write-downs of non-current assets and the increase in the

country risk.

Idle costs increased by €25 million, mainly due to the

semi-submersible Scarabeo 3, which was not under contract in

March, as well as to inactivity of a number of vessels in South

America.

Selling expenses amounted to €63 million.

Research and development costs included in operating costs

increased by €1 million.

General and administrative expenses amounted to €99 million,

representing an increase of €5 million.

The results of the business units were as follows:

Year First half

2014 (€million) 2014 2015 % Ch.

12,873 Net sales from operations 5,966 5,373 (9.9)

(11,916) Production costs (5,435) (5,690)

(116) Idle costs (61) (86)

(143) Selling expenses (70) (63)

(11) Research and development costs (5) (6)

(21) Other operating income (expenses) (8) (8)

(201) General and administrative expenses (94) (99)

465 Adjusted operating result (EBIT) 293 (579) ..

Operating result and costs by function

The write-down of €211 million against non-current assets is

related to vessels that are due to be scrapped because they are

no longer commercially viable for the execution of projects in the

order backlog and to Saipem’s components within logistics bases

that have been affected by the rescheduling and/or cancellation

of projects by their main clients, leading to reduced utilisation

compared with forecasts.

Year First half

2014 (€million) 2014 2015 % Ch.

12,873 Net sales from operations 5,966 5,373 (9.9)

9 Other income and revenues 4-

(9,262) Purchases, services and other costs (4,118) (4,349)

(2,408) Payroll and related costs (1,197) (1,221)

1,212 Gross operating result (EBITDA) 655 (197) ..

(747) Depreciation, amortisation and impairment (362) (382)

465 Adjusted operating result (EBIT) 293 (579) ..

(199) Net finance expense (110) (110)

24 Net income from investments 17 7

290 Adjusted result before income taxes 200 (682) ..

(118) Income taxes (64) (13)

172 Adjusted result before non-controlling interests 136 (695) ..

8 Non-controlling interests -(14)

180 Adjusted net result 136 (709) ..

001-058SaipemSem15Ing.qxd 7-08-2015 9:56 Pagina 30

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

Revenues for the first six months of 2015 amounted to €1,048

million, representing a 44.6% decrease compared to the same

period of 2014. This was mainly attributable to lower volumes

recorded in the Middle East, Australia and North America.

The cost of sales, which amounted to €1,735 million, also

decreased compared with the same period of the previous year.

Depreciation and amortisation amounted to €21 million, which

was in line with the figure for the same period of 2014.

Adjusted operating result (EBIT) for the first half of 2015

amounted to -€708 million, compared with €81 million for the

same period of 2014. This was mainly due to lower revenues

generated by projects in the Middle East and Australia.

The operating result (EBIT) for the first half of 2015 amounted to

negative €758 million, compared with -€81 million for the same

period of 2014 due to the write-down of a yard.

Offshore Engineering & Construction

Year First half

2014 (€million) 2014 2015

7,202 Net sales from operations 3,184 3,388

(6,470) Cost of sales (2,857) (3,192)

732 EBITDA 327 196

(297) Depreciation, amortisation and impairment (147) (160)

435 Adjusted operating result (EBIT) 180 36

(160) Impairment -(150)

275 Operating result (EBIT) 180 (114)

Onshore Engineering & Construction

Year First half

2014 (€million) 2014 2015

3,765 Net sales from operations 1,890 1,048

(4,138) Cost of sales (1,952) (1,735)

(373) EBITDA (62) (687)

(38) Depreciation, amortisation and impairment (19) (21)

(411) Adjusted operating result (EBIT) (81) (708)

- Impairment -(50)

(411) Operating result (EBIT) (81) (758)

Revenues for the first half of 2015 amounted to €3,388 million,

representing a 6.4% increase compared to the same period of

2014, due mainly to higher volumes recorded in Azerbaijan and

Kazakhstan, which offset lower volumes registered in North and

South America.

The cost of sales amounted to €3,192 million, increasing

compared with the first half of 2014 consistently with the increase

registered in volumes. Depreciation and amortisation rose by

€13 million compared to the first six months of 2014, due to an

adjustment of the economic useful life of a vessel at December 31,

2014, which led to a revision of its depreciation schedule.

Adjusted operating result (EBIT) for the first half of 2015 amounted

to €36 million, compared with €180 million for the same period of

2014. This was mainly due to the cancellation of the South Stream

project and to lower revenues from projects in South America.

Operating result (EBIT) for the first half of 2015 amounted to

-€114 million versus €180 million in the first half of 2014, due to

write-downs of one yard and certain vessels.

Offshore Drilling

Year First half

2014 (€million) 2014 2015

1,192 Net sales from operations 556 538

(580) Cost of sales (278) (274)

612 EBITDA 278 264

(262) Depreciation, amortisation and impairment (123) (113)

350 Adjusted operating result (EBIT) 155 151

(250) Impairment -(11)

100 Operating result (EBIT) 155 140

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 31

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

Onshore Drilling

Year First half

2014 (€million) 2014 2015

714 Net sales from operations 336 399

(473) Cost of sales (224) (369)

241 EBITDA 112 30

(150) Depreciation, amortisation and impairment (73) (88)

91 Operating result (EBIT) 39 (58)

Revenues for the first half of 2015 amounted to €399 million,

representing an increase of 18.8% compared with the same period

of 2014, due principally to an increase in activity in Saudi Arabia

and South America.

The cost of sales increased by €145 million compared with the

same period of 2014, principally due to an increase in the country

risk.

Depreciation and amortisation amounted to €88 million,

representing an increase of €15 million compared with the same

period of 2014, due mainly to a higher level of activities in Saudi

Arabia and South America.

EBIT for the first half of the year totalled -€58 million compared

with €39 million for the first half of 2014 due to the write-down

recorded against a portion of overdue receivables in the light of an

increase in the country risk.

Revenues for the first half of 2015 amounted to €538 million,

down 3.2% on the same period of 2014. This was due to decreases

in revenue from the drillship Saipem 10000 and the drilling

jack-up Perro Negro 8 as a result of class reinstatement works

performed during the period and from the semi-submersible

platform Scarabeo 3, which was not under contract in March.

The drop in revenue from the above vessels was partially offset

by an increase in revenue from the Scarabeo 7, which was fully

operative during the period, having undergone preparatory works

during the same period of 2014.

The cost of sales €274 million was almost in line with the same

period of 2014.

Depreciation and amortisation fell by €4 million compared with

the first half of 2014.

Adjusted operating result (EBIT) for the first half of 2015

amounted to €151 million, compared with €155 million in the

first half of 2014, with the margin on revenues remaining almost

unchanged.

The operating result (EBIT) for the first half of 2015 amounted to

€140 million, compared to €155 million in the first half of 2014,

while the margin on revenues fell from 27.9% to 26% due to the

write-down of the semi-submersible Scarabeo 4.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 32

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

Management uses the reclassified consolidated balance sheet to

calculate key ratios such as the Return On Average Capital

Employed (ROACE) and leverage (used to indicate the robustness

of a company’s capital structure).

Non-current assets at June 30, 2015 stood at €8,248 million, a

decrease of €225 million compared to December 31, 2014.

The decrease was the result of capital expenditure of €269

million; negative changes in investments accounted for using the

equity method of €11 million, depreciation and amortisation of

€382 million, write-downs of €211 million and the positive effect

of €110 million deriving mainly from the translation of financial

statements in foreign currencies and other changes.

Net current assets increased by €572 million, from positive

€297 million at December 31, 2014 to positive €869 million at

June 30, 2015.

The provision for employee benefits amounted to €240 million,

representing an increase of €3 million compared with December

31, 2014.

As a result of the above, net capital employed increased by

€275 million, reaching €8,877 million at June 30, 2015,

compared with €8,602 million at December 31, 2014.

Shareholders’ equity, including non-controlling interests,

decreased by €832 million, to €3,346 million at June 30, 2015,

compared with €4,178 million at December 31, 2014.

This decrease reflected the negative effect of the net result for the

period of €906 million, the negative effect of changes in the fair

value of exchange rate and commodity hedging instruments of

€15 million and the positive effect of the translation into euro of

financial statements expressed in foreign currencies and other

variations amounting to €89 million.

The increase in net capital employed, which was greater than the

increase in shareholders’ equity, led to an increase in net

borrowings which, at June 30, 2015, stood at €5,531 million,

compared with €4,424 million at December 31, 2014,

representing an increase of €1,107 million.

The reclassified consolidated balance sheet aggregates asset and

liability amounts from the statutory balance sheet according to

function, under three basic areas: operating, investing and

financing.

Management believes that the reclassified consolidated balance

sheet provides useful information that helps investors to assess

Saipem’s capital structure and to analyse its sources of funds and

investments in fixed assets and working capital.

June 30, 2014 (€million) Dec. 31, 2014 June 30, 2015

7, 910 N e t t a n g i b l e a s s e t s 7, 6 01 7, 3 83

759 Net intangible assets 760 758

8,669 8,361 8,141

3,804 - Offshore Engineering & Construction 3,666 3,462

590 - Onshore Engineering & Construction 590 544

3,332 - Offshore Drilling 3,034 3,031

943 - Onshore Drilling 1,071 1,104

169 Investments 112 107

8,838 Non-current assets 8,473 8,248

1,308 Net current assets 297 869

(221) Employee termination indemnities (237) (240)

- Assets (liabilities) available for sale 69 -

9,925 Net capital employed 8,602 8,877

4,773 Shareholders’ equity 4,137 3,288

48 Non-controlling interests 41 58

5,104 Net debt 4,424 5,531

9,925 Funding 8,602 8,877

Leverage (net borrowings/shareholders’ equity

1.06 including non-controlling interests) 1.06 1.63

441,410,900 No. shares issued and outstanding 441,410,900 441,410,900

(1) See ‘Reconciliation of reclassified balance sheet, income statement and cash flow statement to statutory schemes’ on page 57

Balance sheet and financial position

Saipem Group - Reclassified consolidated balance sheet (1)

001-058SaipemSem15IngxTipo.qxd 8-09-2015 10:51 Pagina 33

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

A breakdown by currency of gross debt, amounting to

€7,001 million, is provided in Note 14 ‘Short-term debt’ and Note

19 ‘Long-term debt and current portion of long-term debt’.

Statement of comprehensive income

First half

(€million) 2014 2015

Net profit (loss) for the period 136 (906)

Other comprehensive income:

- change in the fair value of cash flow hedges (*) (48) (68)

- exchange rate differences arising from the translation into euro of financial statements currencies other than the euro 19 86

- share of other comprehensive income of investments accounted for using the equity method (1) -

- income tax relating to other items of comprehensive income 17 53

Total other comprehensive income, net of taxation (13) 71

Total comprehensive income (loss) for the period 123 (835)

Attributable to:

- Saipem Group 123 ( 852)

- non-controlling interests -17

(*) The change in the fair value of cash flow hedges relates almost exclusively to transactions with the parent company Eni.

Shareholders’ equity including non-controlling interests

(€million)

Shareholders’ equity including non-controlling interests at December 31, 2014 4,178

Total comprehensive income for the period (906)

Dividend distribution -

Sale of treasury shares -

Other changes 74

Total changes (832)

Shareholders’ equity including non-controlling interests at June 30, 2015 3,346

Attributable to:

- Saipem Group 3,288

- non-controlling interests 58

Analysis of net borrowings

June 30, 2014 (€million) Dec. 31, 2014 June 30, 2015

(1) Financing receivables due after one year (1) (1)

- Payables to banks due after one year 250 -

3,125 Payables to other financial institutions due after one year 3,064 3,477

3,124 Net medium/long-term debt 3,313 3,476

(1,393) Accounts c/o bank, post and Group finance companies (1,595) (1,424)

- Available-for-sale securities (9) (8)

(8) Cash and cash on hand (7) (5)

(55) Financing receivables due within one year (58) (32)

465 Payables to banks due within one year 277 465

2,971 Payables to other financial institutions due within one year 2,503 3,059

1,980 Net short-term debt 1,111 2,005

5,104 Net debt 4,424 5,531

The fair value of derivative assets (liabilities) is detailed in Note 7 ‘Other current assets’ and Note 18 ‘Other current liabilities’.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 34

Saipem’s reclassified cash flows statement derives from the

statutory cash flow statement. It enables investors to understand

the link existing between changes in cash and cash equivalents

(deriving from the statutory cash flow statement) and in net

borrowings (deriving from the reclassified cash flows statement)

that occurred between the beginning and the end of the period.

The measure enabling such a link is represented by the free cash

flow, which is the cash in excess of capital expenditure

requirements. 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 treasury shares, capital issuance) and the

effect of changes in consolidation and of exchange differences; or

(ii) changes in net borrowings for the year by adding/deducting

cash flows relating to shareholders’ equity and the effect of

changes in consolidation and of exchange rate differences.

Reclassified cash flow statement (1)

Year First half

2014 (€million) 2014 2015

(230) Net result for the period 136 (920)

(8) Non-controlling interests -14

Adjustments to reconcile cash generated from operating result before changes in working capital:

1,011 Depreciation, amortisation and other non-monetary items 338 487

(2) Net (gains) losses on disposal and write-off of assets (3) (17)

291 Dividends, interests and income taxes 145 106

1,062 Net cash generated from operating result before changes in working capital 616 (330)

569 Changes in working capital related to operations (382) (334)

(433) Dividends received, income taxes paid, interest paid and received (184) (188)

1,198 Net cash flow from (used in) operations 50 (852)

(694) Capital expenditure (329) (268)

(9) Investments and purchase of consolidated subsidiaries and businesses (2) (1)

15 Disposals 797

- Other cash flow related to capital expenditures, investments and disposals - -

510 Free cash flow (274) (1,024)

(10) Borrowings (repayment) of debt related to financing activities 1 28

(170) Changes in short and long-term financial debt 414 817

- Sale of treasury shares --

(45) Cash flow from capital and reserves (44) 1

18 Effect of changes in consolidation and exchange differences 5 5

303 NET CASH FLOW FOR THE PERIOD 102 (173)

510 Free cash flow (274) (1,024)

- Sale of treasury shares --

(45) Cash flow from capital and reserves (44) 1

(129) Exchange differences on net borrowings and other changes (26) (84)

336 CHANGE IN NET BORROWINGS (344) (1,107)

(1) See ‘Reconciliation of reclassified balance sheet, income statement and cash flow statement to statutory schemes’ on page 57.

Net cash flow used in operations (negative €852 million)

together with capital expenditures of €172 million generated a

negative free cash flow of €1,024 million.

Cash flow from capital and reserves amounted to €1 million; the

effect of exchange differences on net borrowings and other

changes produced a net negative effect of €84 million.

As a result, net borrowings increased by €1,107 million.

In particular:

Net cash generated from operating result before changes in

working capital of negative €330 million related to:

- the net result for the period of negative €906 million;

- depreciation, amortisation and impairment of tangible and

intangible assets of €593 million, after negative changes in

investments accounted for using the equity method of

€11 million and other changes of negative €117 million;

- net gains on the disposal of assets, which had an impact of

negative €17 million;

- net finance expense of €93 million and income taxes of

€13 million.

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 35

Saipem Interim Consolidated Report as of June 30, 2015 / Financial and economic results

The negative change in working capital related to operations of

€334 million was due to financial flows of projects underway.

Dividends received, income taxes paid, interest paid and received

during the first half of 2015 of €188 million were mainly related

to taxes paid and refunded and to the purchase and sale of tax

credits.

Capital expenditure on tangible and intangible assets amounted to

€268 million. Details of investments by sector are as follows:

Offshore Drilling (€107 million), Offshore Engineering

&Construction (€82 million), Onshore Drilling (€62 million) and

Onshore Engineering & Construction (€17 million). Additional

information concerning capital expenditure during the first half of

2015 can be found in the ‘Operating Review’ section.

Investments and purchase of consolidated subsidiaries and

businesses amounted to €1 million.

Cash flow generated by disposals amounted to €97 million.

Return On Average Capital Employed

(ROACE)

Return On Average Capital Employed is calculated as the ratio

between adjusted net result before minority interest, plus net

finance charges on net borrowings less the related tax effect and

net average capital employed. The tax rate applied on finance

charges is 27.5%, as per the applicable tax legislation.

Return On Average Operating Capital

To calculate the Return On Average Operating Capital, the average

capital employed is netted of investments in progress that did not

contribute to net result for the period, which amounted to €0

million at December 31, 2014, €295 million for the twelve-month

period ended June 30, 2014 and €0 million for the twelve-month

period ended June 30, 2015.

Key profit and financial indicators

Dec. 31, 2014 June 30, 2014 June 30, 2015

Net result (€million) (238) 322 (1,280)

Exclusion of finance costs on borrowings (net of tax effect) (€million) 144 151 144

Unlevered net result (€million) (94) 473 (1,136)

Capital employed, net: (€million)

- at the beginning of the period 9,504 9,193 9,925

- at the end of the period 8,602 9,925 8,877

Average capital employed, net (€million) 9,053 9,559 9,406

ROACE (%) (1.04) 4.9 (12.1)

Return On Average Operating Capital (%) (1.05) 5.1 (12.3)

Net borrowings and leverage

Saipem management uses leverage ratios to assess the

soundness and efficiency of the Group’s capital structure in terms

of an optimal mix between net borrowings and shareholders’

equity, and to carry out benchmark analyses against industry

standards. Leverage is a measure of a Company’s level of

indebtedness, calculated as the ratio between net borrowings and

shareholders’ equity, including non-controlling interests.

June 30, 2014 June 30, 2015

Leverage 1.06 1.63

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 36

Sustainability

Saipem Interim Consolidated Report as of June 30, 2015 / Sustainability

Saipem operates a complex network of activities, each of which is

expected to contribute to ensuring balanced and sustainable

development in the communities and geographical areas in which

the Company operates in order to improve competitiveness and

help maintain a long-term license to operate. For this reason, it is

of primary importance for Saipem to be able to build and maintain

strong relations with all of its stakeholders, engaging and

involving them and endeavouring to fully understand their needs

and their expectations.

The Sustainability Committee1, which exercises a sustainability

strategy-setting role and is chaired by the CEO, meets to discuss

and approve the Company’s sustainability strategy, to verify its

implementation on the ground and to monitor the progress being

made on the sustainability initiatives planned at its operating

companies. One of the tools used to do this is a Management by

Objectives system, whose aim is to ensure that sustainability

principles and values are translated into concrete business

actions. The first half of 2015 brought the completion of the

definition of the MBOs targets for the year for 60 managers at

Saipem SpA and Group operating companies, in accordance with

high level Company targets set by top management and focusing

particularly on the material issues identified as a result of the

materiality analysis carried out in 2014.

The Sustainability Committee met in an official capacity during the

first half of the year to discuss the results achieved in 2014, to

approve the 2014 Sustainability Report, and to lay down lines of

action for the forthcoming year. The Committee is scheduled to

meet again during the first half of 2015 to discuss planned

activities and projects underway and to monitor progress being

made.

Measuring value creation

in local communities

Increasing the level of Local Content is one of the key elements of

Saipem’s sustainability strategy. The Company actively pursues

the objective of promoting sustainable development and creating

wealth and well-being by maximising the number of local

employees and suppliers and by contributing to developing their

capabilities and know-how.

Since 2009, Saipem has used a model developed in-house known

as SELCE (Saipem Externalities Local Content Evaluation) that

enables the analysis and quantification of the value generated

(i.e. the direct, indirect and induced effects, measured in terms of

economic value, employment and human capital development) by

the Local Content strategy over a given time frame and in a

specific geographical situation.

The first half of 2015 saw the completion of the model’s

application on the El Encino-Topolobampo project in Mexico at the

request of the client. The principal indicators used by the model

showed a total economic impact of approximately €420 million

for the 2013-2014 period and a contribution of 0.03% to the

country’s GDP in 2014. The model was applied to Chihuahua and

Sinaloa states only, which are the geographical areas most

affected by operations. Respectively, total economic impacts of

€160 million and €64 million and contributions to state GDP of

0.40% and 0.20% were calculated for 2014.

During the second half of the year, the model will be applied to the

other significant operating companies of the Saipem Group.

Saipem continued during the first half of the year with its efforts

to monitor and improve the social impacts of its operations,

particularly in relation to human rights. This drive saw Saipem

dialogue with its external stakeholders, such as ratings agencies

and clients, on initiatives currently underway, including major

projects such as South Stream, as well as working on a Social

Responsibility campaign aimed at Saipem vendors and a Human

Rights Training Programme.

Sustainability reporting

The first half of 2015 saw the completion and publication of the

annual sustainability reporting documents ‘Sustainability

Performance 2014’ – published as an addendum to the Annual

Report – and ‘Saipem Sustainability 2014’. Both documents, which

are approved by the Board of Directors and audited by the

independent auditor Reconta Ernst & Young SpA, are prepared in

accordance with the international guidelines of the Global

Reporting Initiative (GRI - version G3) and are designed to furnish

readers with greater detail with regard to the commitments

undertaken, the initiatives carried out and the results achieved by

Saipem in relation to the issues identified by the materiality

analysis, which is conducted in collaboration with the Company’s

stakeholders.

(1) The Saipem Sustainability Committee is composed of the Chief Executive Officer (Chairman) plus the heads of the Company’s business areas and managers of key functions.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 37

Saipem Interim Consolidated Report as of June 30, 2015 / Research and development

Research and development

Technological innovation is one of the key drivers of Saipem’s

competitiveness. An essential factor in the Company’s success in

most of our activities, innovation enables us to identify and

anticipate the future needs of the Oil & Gas industry and offer our

clients the most advanced solutions, capture new and challenging

opportunities, achieve improved operational performance and

reduce the environmental impact of our construction activities.

Technological innovations at Saipem are usually developed in

steps, from idea through to application or conceived on projects or

the Company’s proprietary assets and vessels as the result of a

problem-solving approach.

Research and development activities at Saipem are organised into

thematic areas directly coinciding with the activities of the

business units with the aim of ensuring clearer alignment with

their strategies and fostering an effective transfer of the fruits of

Saipem’s technology development efforts to the business areas.

During the first half of 2015, the Offshore Business Unit focused

its development efforts primarily on the Subsea (SURF and

Subsea Processing) and pipelines areas. In addition, work was

carried out in relation to materials technologies, which are of

interdisciplinary interest for both of the first two areas.

Significant results were achieved during the reporting period in

the SURF (Subsea, Umbilicals, Risers and Flowlines) segment,

including:

- the first commercial application of an innovative downline for

commissioning and intervention operations on subsea

pipelines;

- work continued during the period for the industrialisation of a

J-lay installation method adapted to plastic-lined pipes.

Tests simulating offshore installation conditions were

conducted successfully;

- in relation to active heating using pipe-in-pipe technology, a

campaign of demonstration tests for the development and

qualification of a technology suitable for J-lay installation was

completed in early 2015. The design arrangement and the

solution for the connection of electrical cables and of the

temperature monitoring system were confirmed. Further

qualification activities are planned for the remainder of 2015.

In the subsea processing segment, work continued during the

period on the development of a number of innovative subsea

processing systems in partnership with various leading oil

companies.

- a second qualification campaign to achieve design

improvements is being carried out on the proprietary ‘Spoolsep’

liquid/liquid gravity separation system. In parallel, a JIP (Joint

Industry Project) funded by leading oil companies and focusing

on the application of the system in cases of specific interest to

the partners was launched in early 2015;

- technology refinements continued during the period on the

subsea water treatment system developed jointly with

Total/Veolia for the removal of sulphates present in seawater.

In parallel with the technology development activities mentioned

above, following the completion of a study to develop

standardised interfaces for subsea processing plants (‘subsea

factories’) carried out in collaboration with Statoil, a programme

for the industrialisation of subsea production technologies

developed by Saipem is now underway.

A number of innovative laying technologies for export lines and

trunklines are ready for commercial application, including:

- development activities for the Anti-Flooding Tool (AFT) system,

which prevents the flooding of the pipe during the installation

phase, were completed and two units have been installed and

are ready for use on a pipelay vessel;

- industrialised versions of the new IAU acoustic measurement

tool for remotely measuring internal pipe ovality to prevent

buckling during S and J-lay operations have been installed on a

number of pipelay vessels and are awaiting final

commissioning. Currently, technological qualification is being

conducted on the measurement system;

- a new automated field joint coating system for sealines,

capable of significantly reducing coating cycle times in the

firing line, was built, qualified and successfully tested on board

a pipelay vessel.

Meanwhile, the plasma welding technology developed in recent

years, which enhances weld seam quality and production rates on

carbon steel and clad pipelines, has seen increasing and

successful application on commercial projects.

The focus of the Floater business line during the half-year period

was primarily on high-end technological solutions, such as FLNG

and floaters for harsh/Arctic conditions. In the Floating LNG

technology segment, the focus was on the following areas:

- creation of innovative solutions for floating liquefaction

facilities with the objective of achieving more efficient and safer

gas production under increasingly challenging conditions;

- qualification of a tandem LNG offloading system using floating

flexible hoses in collaboration with an industrial partner.

The Drilling Business Unit concentrated mainly on the adoption of

new drilling techniques and rigs for harsh conditions. This

involved:

- monitoring of methods and equipment for the Managed

Pressure Drilling market;

- development of designs for drilling rigs suited to Arctic

conditions.

In addition, a recently developed package of new technologies

based on a ‘green design’ approach became available.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 38

Saipem Interim Consolidated Report as of June 30, 2015 / Research and development

The package offers solutions designed to minimise the

environmental impact and maximise the energy-saving

capabilities of the next generation of drilling semi-submersibles

and drillships (Moss EcoDriveTM, Moss EcoLNGTM and Moss

EcoGreenTM).

The Onshore E&C Business Unit focused mainly on the

optimisation of proprietary licensed process technologies and

innovative solutions for selected non-proprietary business

segments (LNG, heavy oil, gas monetisation) in order to increase

the value proposition to clients, principally in the energy

efficiency and environment fields.

Implementation started of a long-term development plan designed

to ensure that the competitiveness of proprietary fertilizer

production technology ‘SnamprogettiTM Urea’ is maintained at

maximum levels. Activities underway as part of this drive include:

- yield improvement through the use of the innovative

‘SupercupsTM’ trays in the reactor, which were successfully

tested in two commercial facilities in 2014 and which are now

ready to bring to market;

- improved corrosion resistance and cost reductions through the

development of new construction materials;

- a reduction in energy consumption through the optimisation of

utility systems;

- reduction of environmental impact (‘Urea Zero Emissions’

programme) through highly innovative solutions currently

under development.

In relation to non-proprietary technologies, work done during the

period included a comprehensive study of the regasification of

liquefied natural gas, which is nearing completion. The study is

looking at a number of different options for reducing energy

consumption compared with currently technology.

Other work focused on developments to improve energy efficiency

and reduce environmental impacts, with a wide range of potential

applications (e.g. use of renewable energy in process facilities,

optimisation of Life Cycle Assessment methodologies).

The period also saw an increased effort devoted to two significant

cross-business themes, Oil Spill Response and Pipeline Integrity

Management.

Lastly, the 15 patent applications filed by the Company during the

first half of the year provided confirmation of the significant

efforts made by Saipem in the area of technological innovations

during the period.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 39

Quality, Safety and Environment

Saipem Interim Consolidated Report as of June 30, 2015 / Quality, Safety and Environment

Quality

As part of the Bring Quality to the Next Level programme, work

was carried out for the homogenisation and migration of the

Document Management System at all subsidiaries from November

until its conclusion in January. System content can be accessed

by all Saipem employees.

A gap analysis between existing documentation and the new

Corporate documentation under development has been

commenced at all subsidiaries, with the aim of cutting down on

the number of local documents.

The analysis of processes performed on the project identified

improvements to cross-cutting processes relating to welding and

plant completion.

The final part of the previous year saw the creation of two

cross-cutting work groups. Work on the cross-cutting welding

processes ended with the sharing of a series of responsibility

matrices. A procedure is currently in the process of being issued.

As part of the Cost Structure Optimisation project, the period saw

the start of an analysis of Quality cost centres used worldwide

with the aim of homogenising them and monitoring costs

allocated to them.

A quality management review approved the ISO 9001 multi-sites

certification model. Use of this model will produce a cost saving

and will lead to ISO 9001 certification of the Corporate quality

management system at all companies and branches where it is

required.

Currently, work is being carried out to select the certifying body

which will provide certification services worldwide.

The process will run from December 2015 until recertification of

Saipem SpA. During the subsequent three-year period, Saipem

subsidiaries and branches will also gradually achieve certification.

The period also saw the continuation of the following activities:

- issue of corporate standards and technical instructions with the

aim of ensuring uniformity and integration of quality assurance

and quality control at the business lines (approximately forty

documents issued in the period);

- improvement and redefinition of Technical and Vessel

Document Systems;

- a review of the reporting system launched in 2013 for quality

activities at branches/subsidiaries (Company and project level);

- review of KPIs for all processes in accordance with output of

‘Regulatory System Improvement’ project;

- modification to Quality System Internal Audit planning and

performance in accordance with new Process definition and

Process Owners;

- measurement of customer satisfaction.

Safety

Saipem’s safety performance in the first half of 2015 was

generally in line with the overall performance recorded in 2014.

The recordable incidents index (TRIFR) stood at 1.10, which is very

close to the final result of 1.09 posted in the previous year.

This positive outcome is closely correlated to a series of technical

and cultural initiatives conducted at the Company. The main

initiatives conducted during the reporting period were as follows:

- ongoing delivery to personnel of the cultural change

programme, Leadership in Health and Safety, which from 2007

has seen the participation of Saipem personnel at all levels.

The initial one and a half day interactive workshop for Company

management has now been delivered more than 900 times,

while the cascading event designed to ensure direct

dissemination by management to their own team of the

messages contained in the opening workshop has been held on

over a thousand occasions. Saipem-wide delivery of both the

internal training program, ‘Five Stars’, whose aim is to ensure

the effective management of unsafe behaviours and the

‘Leading Behaviours’ campaign, designed to foster the spread

and embedding within the Saipem DNA of the 5 non-negotiable

behaviours, also continued during the period. Meanwhile, the

fifth phase of LiHS program ‘Choose Life’, which is designed to

raise awareness among employees of the importance of a

healthy lifestyle, reached its 500th edition during the first half

of 2015;

- in parallel with the LiHS programme’s training initiatives, on the

occasion of the World Day for Safety and Health at work on April

28, the LHS Foundation and Saipem launched a three-day

initiative called ‘Italia loves sicurezza’ (Italy loves safety) in

three Italian cities, as part of an international campaign to raise

public awareness about emerging trends in the field of health

and safety at work, with the ultimate goal of furthering the

prevention of occupational injury and illness on a global level;

- the initiatives organised in connection with the day also

included the launch of an in-house competition connected with

the ‘Sharing Love For Health And Safety’ campaign.

The competition, entitled the ‘Safe & Sound Contest’, received

more than 40 video entries from all around the Saipem world;

- also in April, the LHS Foundation and Saipem supported the

participation by Saipem employees in the ‘Milano Relay

Marathon 2015’, with the objective of helping to promote the

adoption of active healthy lifestyles within the Company;

- the ‘Keep Your Hands Safe’ campaign continued during the

period at a number of the Group’s operating sites.

The campaign, which aims to reduce the frequency of hand

injuries, saw a number of workshops connected with the theme

‘Know Your Barriers’ held at various offshore drilling rigs;

- the campaign to promote the ‘Life-Saving Rules’ developed by

the OGP (International Association of Oil & Gas Producers) will

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 40

Saipem Interim Consolidated Report as of June 30, 2015 / Quality, Safety and Environment

shortly be finalised and launched. The campaign aims to step

up efforts to call attention to the life-saving rules and to shine a

spotlight on dangerous activities and on the actions that

individuals can take to protect both themselves and others;

- in terms of information tools and systems, work ongoing during

the period included updates to the HSE training portal ‘Delphi’,

the release of HSE audit application ‘Corinth’, which will enable a

shared database to be established, and the deployment of a

‘Safety Dashboard’, which will enable users to monitor Saipem

accident and incident trends in real-time, with data viewable for

the Group as a whole, by business unit and by activity.

Meanwhile, testing continued on new accident management

application ‘Prometheus’, which is designed to facilitate the

statistical analysis of HSE incidents at the Company.

Environment

Saipem aims to achieve the continuous improvement of its

environmental performance and adopts strategies designed to

reduce all types of impact and to promote the conservation and

enhancement of natural resources.

To achieve this goal means promoting a high level degree of

environmental awareness at all Saipem projects, sites and offices.

During the first half of 2015, Saipem once again stepped up its

effort in relation to a wide number of aspects, including:

- Energy efficiency: energy diagnostics were planned and

conducted at a number of offices and an onshore drilling rig.

Energy diagnostics are also due to be conducted in the coming

months at a fabrication yard. The objective of energy

diagnostics is to identify technical solutions for achieving

enhanced energy efficiency that will be implemented in

2015-2016. Saipem also aims to gather together all of the

‘best practices’ adopted in relation energy efficiency.

- Waste management: Saipem organised a technical workshop on

waste management and related legislative developments in

Italy. Meanwhile, from an operational point of view the Company

focused on reducing the quantity and hazardousness of the

waste it produces.

- Environmental awareness raising initiatives: to coincide with

‘World Environmental Day’ (WED), which was celebrated in

June, a number of initiatives were launched to motivate and

raise the awareness of personnel with regard to environmental

sustainability.

As always, all of the health, safety and environment initiatives

mentioned above are part of a wider process of continuous

improvement based on the careful analysis of incidents and

accidents, the findings of HSE audits and HSE management

reviews. Reviews are conducted at individual business unit level

to ensure a greater depth of analysis.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 41

Human resources and health

Human Resources Management

The first period of 2015 saw the Human Resources Management

function continue its efforts to define and implement internal cost

structure optimisation initiatives and to align contractual and

expatriation instruments and procedures with developments in

the applicable national and international legislation, pursuant to

its role of guidance, coordination and control over decentralised

Human Resources functions (business and geographical area HR

functions in Italy and abroad).

Meanwhile, the review of Company documentation relating to key

human resource processes currently underway continued during

the period. The aim of the review is to ensure continuous updating

of human resource management processes in accordance with all

relevant developments in national and international legislation

and regulations, as well as to achieve their continuous

improvement. One of the key outcomes of the review was the

issue of a new Company standard, which will enable all Saipem

Group companies around the world to establish shared rules for

assigning company cars.

Process roll-out/digitalisation actions also continued, in step with

the latest relevant technological developments, bringing during

the period the development of dedicated information tools

designed to ensure an even more effective and accurate

monitoring of Human Resource activities. This included the roll out

to a number of important Saipem companies of various tools that

were already in place in Italian offices, thus increasing the

integration of Saipem’s process governance systems.

Industrial Relations

The Company has for many years now been working to

consolidate a model of industrial relations that aims to harmonise

and achieve optimal management of relations with trade unions,

employers’ associations, institutions and public bodies in line with

Company policies.

In view of the global nature of the environment in which Saipem

operates today, which encompasses a wide range of

socio-economic, political, industrial and legislative situations and

conditions, continuous monitoring of the industrial relations

model in place is fundamental.

In Italy, the first half of 2015 saw a large number of important

moments of discussion and dialogue, which were conducted in

accordance with the consolidated working relationship already

established with trade union organisations.

With a view to further reinforcing the participatory model of

Industrial Relations, the Company and the trade union

organisations continued discussions focused on establishing an

Industrial Relations protocol that recognises the centrality of

communication, negotiation and dialogue.

Internationally, the reporting period saw the renewal of important

collective labour agreements in Nigeria, in the engineering and

construction sector, in Peru and Nigeria, in the drilling sector and,

finally, in Canada, in the fabrication sector.

The signing of the new agreements was also an opportunity to

consolidate the provisions of the agreements, through the

introduction of enhanced resolution mechanisms for industrial

disputes and the inclusion of clear references to the Code of

Ethics. The aim of this latter aspect was to encourage our trade

union partners to take full ownership of the fundamental

principles underlying Saipem’s business approach, with the aim of

securing maximum applicability and buy-in, through a

commitment by the unions to respect the principles and to work

to promote them amongst the Saipem workforce.

Finally, the first half of 2015 also brought the renewal for the

2015-2018 period of the Construction Barge Agreement with the

International Transport Workers’ Federation (ITF), which covers

maritime personnel working on twelve vessels in the Saipem fleet.

Development, Organisation,

Compensation and Senior Manager

Administration

In terms of organisational developments, the first half of 2015

brought a redefinition of the operating model for engineering

activities, which saw the Business Units assigned direct

management of engineering competencies specific to their

respective areas, as well as governance of project engineering

activities.

Work also continued during the period to align the organisational

structures of subsidiaries and branches with the newly

introduced organisational models adopted for engineering and

fabrication activities.

The following measures were taken with a view to securing the

continuous improvement of company governance and the system

of internal controls and risk management:

- drive to secure adoption by joint ventures of instruments of

organisational governance;

- continuation of the programme of improvements currently

underway on the Company regulatory system with a view to

achieving rationalisation and simplification.

Saipem’s 2015 Remuneration Policy was again defined in

accordance with the governance model adopted by the Company

Saipem Interim Consolidated Report as of June 30, 2015 / Human resources and health

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 42

Saipem Interim Consolidated Report as of June 30, 2015 / Human resources and health

and the recommendations included in the Corporate Governance

Code, with the aim of attracting and retaining highly skilled

professional and managerial resources and aligning the interests

of management with the priority objective of value creation for the

shareholders in the medium-long term.

The 2015 Remuneration Report was prepared in compliance with

the legal obligations pursuant to Article 123-ter of Legislative

Decree No. 58/1998 and with Article 84-quater of the Consob

Issuers’ Regulation. The Saipem Board of Directors approved the

2015 Remuneration Report on March 10, 2015, while the

Company’s shareholders voted in favour of the First Section of the

Report at their meeting on April 30, 2015.

The 2015 Remuneration Policy Guidelines call for the setting of

challenging 2015 goals, which will be built into management

assessments.

In keeping with the Company’s Strategic Plan, the performance

targets assigned are designed to allow the guidance, monitoring

and assessment of actions related to cost containment and to the

monitoring, development and promotion of skills critical for

business requirements and for the attainment of long-term

business objectives.

In order to provide an incentive-based loyalty program for the

Company’s key managers, with the aim of strengthening their

participation in business risk, improving the Company’s

performances, and maximising value for shareholders in the long

term, the Company confirmed the adoption of the Long-Term

Monetary Incentive Plan for critical managerial resources for the

three-year period 2015-2017 which, as with the plan approved in

2014, uses both Total Shareholder Return and ROACE as

performance parameters. The Plan was approved by the Saipem

Board of Directors on March 10, 2015, while the Company’s

shareholders voted in favour of its adoption at their meeting on

April 30, 2015.

During the first half of 2015, an analysis and review of the

development, training, selection and skill management processes

was launched with a view to consolidating the alignment between

the business strategy and the people strategy and to improving,

simplifying, and increasing the effectiveness of the processes

and tools in place.

The work focused on segmenting criteria, strategic resource

planning, succession plans and the performance assessment

system.

Actions were implemented designed to enable Saipem and its

employees to maintain and enhance their critical personal and

professional skills. This included the launch of an analysis of

competencies, which was accompanied by a review of the

methods deployed in the recruitment, training and skill

management processes.

Meanwhile, the basic framework of an On-the-Job Training model

was defined during the period. The model, whose aim is to

maximise and promote employee competencies and knowledge

sharing, is set for a worldwide roll-out within Saipem, together

with a set of operating tools.

First half consolidated companies

Year as per IFRS 10 and 11

2014 (units) Average workforce 2014 Average workforce 2015

16,840 Offshore Engineering & Construction 15,774 19,980

19,831 Onshore Engineering & Construction 20,425 15,662

2,725 Offshore Drilling 2,671 2,710

7,892 Onshore Drilling 7, 76 4 7, 759

1,679 Staff positions 1,895 1,493

48,967 Total 48,529 47,604

7,491 Italian personnel 7, 4 9 8 7, 4 5 6

41,476 Other nationalities 41,031 40,148

48,967 Total 48,529 47,604

6,722 Italian personnel under open-ended contract 6,722 6,716

769 Italian personnel under fixed-term contract 776 740

7, 4 91 To t a l 7, 4 9 8 7, 4 5 6

Dec. 31, 2014 (units) June 30, 2014 June 30, 2015

7,908 Number of engineers 7,7 9 8 7,7 62

49,580 Number of employees 49,497 46,527

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 43

Saipem Interim Consolidated Report as of June 30, 2015 / Human resources and health

Saipem continues to invest in employer branding initiatives aimed

at top universities and secondary level technical schools.

The effectiveness and penetration of these initiatives will be

increased by a global roll-out of e-recruitment technologies, which

will also benefit the overall selection process.

With the complex and increasingly challenging market conditions

requiring Saipem to maintain high standards of excellence, the

Company has also designed and is in the process of rolling out a

new responsible leadership model applicable to all levels of the

Company. The aim of the model is to foster the development of

managers capable of making decisions that successfully

reconcile integrity requirements and business needs, working

towards long-term value creation.

The ultimate goal of the model is to provide the Company with

leaders who, while recognising and working towards their own

personal objectives, are capable of effectively translating the

Company mission into daily actions, strategies, programmes and

procedures, have a strong sense of the effects of their actions on

all stakeholders, and who act to promote the principles of the

model to their teams.

A Compliance and Governance training matrix has been defined

for application at Group level with the aim of consolidating

awareness of Compliance and Governance issues and injecting

the numerous training initiatives launched over the last two years

with a greater degree of clarity and consistency of purpose.

The matrix maps out the initiatives designed to meet specific

Compliance and Governance training needs/gaps for all company

roles. Its introduction will also allow training delivery to all of the

company workforce to be monitored.

Investments have been commenced to enhance the e-learning

training system. In addition, the roll-out of the new training

management application ‘Peoplearning’ continued during the

period. So far, the roll-out has covered France, United States,

Canada and Mexico. During the remainder of the year, the

application will be extended to other Group companies and to the

training centres.

Finally, the Safety training required by Legislative Decree

No. 81/2008 for Employers, Safety Managers, Safety Supervisors

and Safety Officers continues to be a main priority for the

Company.

Health

With regard to work done in connection with health and

occupational medicine related issues in Italy (Saipem SpA), the

first half of 2015 saw Saipem consolidate its routine activities and

promote a series of new initiatives.

- 3,370 preventive and periodical medical check-ups were carried

out at Saipem SpA in Italy and abroad; 439 further medical

examinations and 10 alcohol and drug tests were carried out.

- The diffusion of the ‘Pre-Travel Counselling’ programme for all

Saipem SpA personnel due to work abroad, which includes

updates based on international health alerts, continued during

the period, with 579 employees receiving counselling.

The program has been in place since 2008 and has so far seen

a total of 6,700 employees receive health and medical advice

related to the specific risks present in his/her country of

destination, in accordance with the applicable legislation.

- The sessions to raise vaccine awareness, which focus on

mandatory and strongly recommended vaccines, continued

during the first six months of the year for all Saipem SpA

personnel due to work in Italy and abroad. Meanwhile, the frame

agreement signed with the local health authority in San Donato

Milanese for yellow fever vaccination also continued.

- An update of the ‘Sì Viaggiare’ international travellers’ handbook

application, which is available in Android, Apple and Windows 8

versions, was completed during the period. The new version

now features up-to-date information on epidemiological

emergencies. 11,000 downloads of the application have so far

have been registered.

- The period also saw ongoing work under agreements with a

variety of organisations on a wide range of issues.

These included partnerships with the IRCCS Policlinico di San

Donato Milanese for health promotion initiatives (One Stop

Clinic) and emergency medical assistance provided to Saipem

employees at the hospital’s A&E unit and with the IRCCS San

Raffaele on a Work-Related Stress assessment programme.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 44

Information technology

Saipem Interim Consolidated Report as of June 30, 2015 / Information technology

Saipem’s ICT efforts in 2014 and the first half of 2015 focused on

a substantial review of ICT activities in accordance with the cost

containment objectives the ICT function is pursuing. Change

initiatives implemented on the Company’s information

management systems during the reporting period were therefore

focused on the consolidation of results already obtained in

relation to both applications and infrastructure, in keeping with

the policies set by top management.

A large number of ICT service contracts were subjected to review

with a view to securing conditions and prices that were in line

with management’s expectations. A procurement plan was

prepared for contract reviews. Most of these focused on

renegotiating the Company’s key infrastructure contracts –

producing significant cost savings in relation to

telecommunication services (British Telecom, NewSat and

Fastweb) and data infrastructure services (HP and EMC2) – and

its key application management contracts.

In terms of management applications, the period saw the

completion of the release of the new Business Intelligence and

Consolidated Financial Statements environments. Saipem’s

adoption of high-performance platform SAP HANA – an in-memory

database supporting columnar storage – enabled the unification

of enterprise data warehouse environment SAP BW, and the SAP

BPC environment, on which consolidated financial statements

application SAP SEM is based. The unification of the two previously

separate environments not only produced cost savings but also

led to a significant performance improvement, with the time

required to produce reports and to perform consolidations falling

considerably.

In terms of new Business Intelligence initiatives, the first half of

2015 saw releases of dashboards for Procurement and HR, as well

as new solutions in the Offshore E&C and Drilling business areas.

The period also saw the roll-out at Saipem’s Mexican companies of

SAP R/3, as well as the follow-up to the roll-out of the system at

Saipem do Brasil. Meanwhile, the roll-out plan for the inventory

management application SAP Material Ledger was completed at all

of the main Group companies.

Alongside SAP R/3, new e-Procurement system SAP SRM has

reached full maturity, with significant results achieved in terms of

use of the platform for e-tenders and more than 16,000 vendors

now registered. In addition, catalogue ordering functionality is

now operational for stationery items and is also ready for

extension to more complex items.

In the Human Resources area, the release of the Talent

Management module on the Peoplesoft HCM application has been

completed. Meanwhile, the roll-out of the Saipem developed

international payroll solution continued with success.

Development and maintenance of the payroll software, as well as

related HR management activities have been assigned to Saipem

India Projects Private Ltd in Chennai, producing significant cost

savings. Finally, also in HR, development of the new Falcon suite –

a comprehensive HR management application – is currently

ongoing. At Saipem SA in Paris, France, the first release of new

recruitment solution Oracle Taleo got underway during the period,

with subsequent releases of the application also scheduled for

Saipem locations in other countries. Taleo is one of the first

‘cloud-based’ solutions to be employed by Saipem, with the

application based on information systems provided by the

supplier at its own premises, which are accessed via a web

browser. The use of a dedicated single tenant operating

environment ensures adequate data security.

Finally, work started during the period on the new Saipem

website. As well as offering a high degree of usability, the site’s

responsive design makes it suitable for access from a variety of

devices.

These initiatives were accompanied by a broad range of business

support initiatives underlining the Company’s firm commitment to

its strategy of work process digitalisation.

Business support development initiatives carried out during the

period focused on the adoption of innovative tools targeted at

increasing the efficiency and quality of engineering design and

construction activities and on the automation of business

processes through the optimisation of existing applications.

This second area of intervention, named Project Information

Management, is an improvement initiative that the ICT function is

carrying out for the Engineering, Project Management and Quality

functions, which aims to identify areas in which improvements in

efficiency can be targeted, as well as to enhance the quality of the

engineering data Saipem is able to offer to its clients.

One of the most important innovations introduced during 2014

concerned the completion of the Knowledge Sharing project

sponsored by Saipem Top Management and the release of

e-collaboration application K-hub, which is based on Microsoft

Sharepoint. The initiative has proved a significant success in

terms of both numbers of registered users and contributions.

New processes for automated drawing generation based on

modelling tool Intergraph SmartPlant 3D were also developed and

new engineering data control procedures based on Aveva

Engineering were released with the aim of improving data quality.

These solutions have now been leveraged on a large number of

contracts, providing the Company with a genuine competitive

edge.

In terms of new business support initiatives, the period saw use of

the new Spool Tracking System for on site pipe spool management

continue to grow. The system, which provides integrated

management of pipe spool fabrication activities together with the

related technical documentation, is emblematic of the type of

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 45

Saipem Interim Consolidated Report as of June 30, 2015 / Information technology

applications ICT is currently working on for the business areas.

The period also saw the deployment of specialised solutions for

enhanced management of project documentation, including an

integrated client comment management system, as well as

applications designed for managing technical documentation on

board vessels and at fabrication yards.

A review was conducted of the development plan established by

Onshore Business Management for implementation of the new

construction management suite, which features integrated site

activity planning using Oracle Primavera, as well as functionalities

for job accounting and the development of quality plans.

Some recent developments have now been abandoned in favour of

a more efficient and less costly revisitation of tried and tested

applications included in the Construction Management suite

SICON, developed in-house.

In terms of infrastructure, following a period of limited

investment, a number of initiatives have now been launched,

including the deployment of applications such as Splunk for the

management and optimisation of centralised infrastructure and

the roll-out of Webex, an inexpensive videoconferencing product

developed by Cisco.

The period also saw the continued development according to plan

of the ICT function’s presence in Chennai, India, which was set up

in 2013 to enable the offshoring of a number of infrastructure

activities. International infrastructure management services have

been operational since July 2014, meaning the Saipem Group

enjoys 24x7 first level support for its international servers and

local networks. During the reporting period coverage was

extended to ICT security and some technical monitoring activities.

Approximately 70% of service tickets for international server

management issues were managed and resolved by the Chennai

team, meaning service levels were raised despite a reduction in

overall costs.

Governance, compliance and security processes were all carried

out successfully and according to schedule during the period.

Deployment of the RCM Role & Compliance Manager System

developed by CA Technologies, which allows the definition of

standard user application profiles, has now been extended to all

SAP environments, to Peoplesoft HCM and to all of the main

software applications. This completes the automation of the role

assignment process, allowing internal client managers to perform

the controls required by the relevant legislation. This was

combined with a cutting-edge use of IT security technologies

designed to mitigate the security risks associated with data

processing by the company information systems. Finally, in

terms of security, the period saw the extension of the coverage of

credential management system, Oracle FastLogon, which enables

users to access the principal Company applications on a Single

Sign-On basis.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 46

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

Saipem implements and maintains an adequate system of

internal controls and risk management, composed of instruments,

organisational structures and Company regulations designed to

safeguard Company assets and to ensure the effectiveness and

efficiency of Company processes, reliable financial reporting, and

compliance with all laws and regulations, the Articles of

Association and Company procedures. The structure of Saipem’s

internal control system constitutes an integral part of the

Organisational and Management Model of the Company. It assigns

specific roles to the Company’s management bodies, compliance

committees, control bodies, Company management and all

personnel and is based on the principles contained in the Code of

Ethics and the Corporate Governance Code, taking into account

the applicable legislation, the CoSO report and national and

international best practices.

Additional information on the internal control system and risk

management, including details concerning its architecture,

instruments and design, as well as the roles, responsibilities and

duties of its key actors, is contained in the Corporate Governance

Report and Shareholding Structure document.

The main industrial risks that Saipem faces and is actively

monitoring and managing are as follows:

(i) the market risk deriving from exposure to fluctuations in

interest rates and exchange rates between the euro and the

other currencies used by the Company and the risk deriving

from exposure to commodity price volatility;

(ii) the credit risk deriving from the possible default of a

counterparty;

(iii) the liquidity risk, i.e. the risk that suitable sources of funding

for the Group’s operations may not be available;

(iv) the HSE risk associated with the potential occurrence of

accidents, malfunctions, or failures with injury to persons

and damage to the environment and impacts on operating

and financial results;

(v) the country risk;

(vi) the project risk associated mainly with the executions phase

of engineering and construction contracts undertaken by the

Onshore E&C and Offshore E&C Business Units.

Financial risks are managed in accordance with guidelines

defined by the parent company, with the objective of aligning and

coordinating Group companies’ policies on financial risks.

Market risk

Market risk is the possibility that changes in currency exchange

rates, interest rates or commodity prices will adversely affect

the value of the Group’s financial assets, liabilities or expected

future cash flows. Saipem manages market risk in accordance

with the above-mentioned guidelines and with procedures that

provide a centralised model of conducting finance and treasury

operations based on the Group’s Treasury functions.

Exchange rate risk

Exchange rate risk derives from the fact that Saipem’s operations

are conducted in currencies other than the euro and that

revenues and costs from a significant portion of projects are

denominated and settled in non-euro currencies. This impacts on:

- individual profits, which may be significantly affected by

exchange rate fluctuations on specific transactions arising from

the time lag existing between the execution of a given

transaction and the definition of the relevant contractual terms

(economic risk) and by the conversion of foreign

currency-denominated trade and financial payables and

receivables (transaction risk);

- the Group’s reported results and shareholders equity, as

financial statements of subsidiaries denominated in currencies

other than the euro are translated from their functional

currency into euro.

Saipem’s foreign exchange risk management policy is to minimise

economic and transactional exposures. Saipem does not

undertake any hedging activity for risks deriving from the

translation of foreign currency denominated profits or assets and

liabilities of subsidiaries that prepare financial statements in a

currency other than the euro.

Saipem uses a number of different types of derivative contract to

reduce economic and transaction exposure, such as currency

swaps, forwards and options. The fair value of exchange rate

derivatives is determined by the Corporate Finance Unit of Eni SpA

on the basis of standard valuation models and market prices/input

provided by specialised sources. Planning, coordination and

management of this activity at Group level is the responsibility of

the Saipem Treasury Department, which closely monitors the

correlation between derivatives and their underlying flows, as well

as ensuring their correct accounting representation in compliance

with the International Financial Reporting Standards (IFRS).

An exchange rate sensitivity analysis was performed for those

currencies other than the euro for which exchange risk exposure

in the first half of 2015 was highest, in order to calculate the

effect on the income statement and shareholders’ equity of

hypothetical positive and negative variations of 10% in the

exchange rates.

The analysis was performed for all relevant financial assets and

liabilities denominated in the currencies considered and regarded

in particular the following items:

Risk management

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 47

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

- exchange rate derivatives;

- trade and other receivables;

- trade and other payables;

- cash and cash equivalents;

- short and long-term financial liabilities.

For exchange rate derivatives, the sensitivity analysis on fair

value was conducted by comparing the conditions underlying the

forward price fixed in the contract (i.e. spot exchange rate and

interest rate) with spot rates and interest rate curves

corresponding to the relevant contractual maturity dates, on the

basis of period-end exchange rates subjected to hypothetical

positive and negative changes of 10%, with the resulting effects

weighted on the basis of the notional amounts.

The analysis did not examine the effect of exchange rate

fluctuations on the measurement of work-in-progress because

work-in-progress does not constitute a financial asset under IAS

32. Moreover, the analysis regards exposure to exchange rate risk

in accordance with IFRS 7 and therefore does not consider the

effects of the conversion of financial statements of consolidated

companies with functional currencies other than the euro.

A positive variation in exchange rates between the foreign

currencies examined and the euro (i.e. depreciation of the euro

against the other currencies) would have produced an overall

effect on the pre-tax result of -€76 million (-€46 million at

December 31, 2014) and an overall effect on shareholders’ equity,

before related tax effects, of -€427 million (-€377 million at

December 31, 2014).

A negative variation in exchange rates between the foreign

currencies examined and the euro (i.e. appreciation of the euro

against the other currencies) would have produced an overall

effect on the pre-tax result of €76 million (€46 million at

December 31, 2014) and an overall effect on shareholders’ equity,

before related tax effects, of €427 million (€377 million at

December 31, 2014).

The increases/decreases with respect to the previous period are

essentially due to the currency exchange rates on the two

reference dates and to variations in the assets and liabilities

exposed to exchange rate fluctuations.

Interest rate risk

Interest rate fluctuations affect the market value of the

Company’s financial assets and liabilities and its net finance

expenses. The purpose of risk management is to reduce interest

rate risk to a minimum in pursuit of the financial structuring

objectives set and approved by management.

When entering into long-term financing agreements with variable

rates, the Treasury Department of the Saipem Group assesses

their compliance with objectives and, where necessary, uses

Interest Rate Swaps (IRS) to manage the risk exposure arising

from interest rate fluctuations. Planning, coordination and

management of this activity at Group level is the responsibility of

the Saipem Finance function, which closely monitors the

correlation between derivatives and their underlying flows, as well

as ensuring their correct accounting representation in compliance

with the International Financial Reporting Standards (IFRS).

Such derivatives are evaluated by the Corporate Finance Unit of

Eni SpA at fair value on the basis of standard valuation models

and market prices/input provided by specialised sources. To

measure sensitivity to interest rate risk, a sensitivity analysis

was performed. The analysis calculated the effect on the income

statement and shareholders’ equity of hypothetical positive and

negative variations of 10% in interest rates.

The analysis was performed for all relevant financial assets and

liabilities exposed to interest rate fluctuations and regarded in

particular the following items:

- cash and cash equivalents;

- short and long-term debt.

For interest rate derivatives, the sensitivity analysis on fair value

was conducted by comparing the interest rate conditions

(fixed and variable rate) underlying the contract and used to

calculate future interest rate differentials with discount curves for

variable interest rates on the basis of period-end interest rates

subjected to hypothetical positive and negative changes of 10%,

with the resulting changes weighted on the basis of the notional

amounts. For cash and cash equivalents, the analysis used the

average balance for the period and the average rate of return for

the period, while for short and long-term financial liabilities, the

average exposure for the period and average interest rate for the

period were considered.

A positive variation in interest rates would have produced an

overall effect on the pre-tax result of -€6 million (-€11 million at

December 31, 2014) and an overall effect on shareholders’ equity,

before related tax effects of -€6 million (-€11 million at

December 31, 2014). A negative variation in interest rates would

have produced an overall effect on the pre-tax result of €6 million

(€11 million at December 31, 2014) and an overall effect on

shareholders’ equity, before related tax effects of €6 million

(€11 million at December 31, 2014).

The increases/decreases with respect to the previous period are

essentially due to the interest rates on the two reference dates

and to variations in the assets and liabilities exposed to interest

rate fluctuations.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 48

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

Commodity price risk

Saipem’s results are affected by changes in the prices of oil

products (fuel oil, lubricants, bunker oil, etc.) and raw materials,

since they represent associated costs in the running of vessels,

offices and yards and the implementation of projects and

investments.

In order to reduce its commodity risk, in addition to adopting

solutions at a commercial level, Saipem also trades over the

counter derivatives (swap and bullet swaps in particular) whose

underlying commodities are oil products (mainly gasoil and

naphtha) through Eni Trading & Shipping (ETS) on the organised

markets of ICE and NYMEX where the relevant physical

commodity market is well correlated to the financial market and

is price efficient.

As regards commodity price risk management, derivative

instruments on commodities are entered into by Saipem to hedge

underlying contractual commitments. Hedge transactions may

also be entered into in relation to future underlying contractual

commitments, provided these are highly probable.

The fair value of such derivatives is determined by the Treasury

Department of Eni SpA on the basis of standard valuation models

and market prices/input provided by specialised sources.

With regard to commodity risk hedging instruments, a 10%

positive variation in the underlying rates would have produced no

significant effect on the net result or shareholders’ equity

(€1 million at December 31, 2014). A 10% negative variation in

the underlying rates would have produced no significant effect on

the net result or shareholders’ equity (-€1 million at December

31, 2014).

The increase (decrease) with respect to the previous period is

essentially due to the differences between the prices used in

calculating the fair value of the instrument at the two reference

dates.

Credit risk

Credit risk represents Saipem’s exposure to potential losses in the

event of non-performance by a counterparty. With regard to

counterparty risk in commercial contracts, credit management is

the responsibility of the business units and of specific corporate

finance and administration functions operating on the basis of

standard business partner evaluation and credit worthiness

procedures. For counterparty financial risk deriving from the

investment of surplus liquidity, from positions in derivative

contracts and from physical commodities contracts with financial

counterparties, Group companies adopt guidelines defined by the

Treasury Department of Saipem in compliance with the

centralised treasury model of Eni.

The critical situation that has developed on the financial markets

has led to additional preventative measures being adopted to

avoid the concentration of risk and assets. This situation has also

required the setting of limits and conditions for operations

involving derivative instruments.

At June 30, 2015, the area with the biggest concentration of credit

risk was South America, where the total exposure amounted to

€478 million.

Liquidity risk

Liquidity risk is the risk that suitable sources of funding for the

Group may not be available (funding liquidity risk), or that the

Group is unable to sell its assets on the market place (asset

liquidity risk), making it unable to meet its short-term finance

requirements and settle obligations. Such a situation would

negatively impact the Group’s results as it would result in the

Company incurring higher borrowing expenses to meet its

obligations or, under the worst of conditions, the inability of the

Company to continue as a going concern. As part of its financial

planning process, Saipem manages liquidity risk by targeting a

capital structure that guarantees a level of liquidity adequate for

the Group’s needs, optimising the opportunity cost of

maintaining liquidity reserves and achieving an efficient balance

in terms of maturity and composition of debt in accordance with

business objectives and prescribed limits.

At present, in spite of the current market conditions, Saipem

believes it has access to sufficient funding and borrowing

facilities to meet currently foreseeable requirements, thanks to a

use of credit lines that is both flexible and targeted to meet

business needs.

The liquidity management policies used have the objective of

ensuring both adequate funding to meet short-term

requirements and obligations and a sufficient level of operating

flexibility to fund Saipem’s development plans, while maintaining

a balance in terms of debt composition and maturity profile, as

well as adequate credit facilities.

As of June 30, 2015, Saipem maintained unused borrowing

facilities of €2,478 million. In addition, Eni SpA provides lines of

credit to Saipem SpA under Eni Group centralised treasury

arrangements. These facilities were under interest rates that

reflected market conditions. Fees charged for unused facilities

were not significant.

The following tables show total contractual payments (including

interest payments) and maturities on financial debt and

payments and due dates for trade and other payables.

001-058SaipemSem15Ing.qxd 6-08-2015 12:38 Pagina 49

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

Outstanding contractual obligations

In addition to the financial and trade debt recorded in the balance

sheet, the Saipem Group has contractual obligations relating to

non-cancellable operating leases whose performance will entail

payments being made in future years. The following table shows

undiscounted payments due in future years in relation to

outstanding contractual obligations.

Trade and other payables

Maturity

(€million) 2016 2017-2019 After Total

Trade payables 3,295 - - 3,295

Other payables and advances 2,493 - - 2,493

Maturity

(€million) 2016 2017 2018 2019 After Total

Non-cancellable operating leases 151 107 72 69 251 650

Operating leases mainly relate to office buildings, long-term time

charters and land.

The table below Saipem’s investment commitments on major

projects, for which procurement contracts will normally have

already been entered into.

Maturity

(€million) 2015 2016

Committed on major projects 2-

Committed on other investments 12 144

14 144

Finance debt

Maturity

(€million) 2016 2017 2018 2019 After Total

Long-term debt 736 1,059 638 1,487 44 3,964

Short-term debt 3,037----3,037

Derivative liabilities 347 1 - - - 348

4,120 1,060 638 1,487 44 7,349

Interest on debt 163 88 49 24 1 325

HSE (Health, Safety & Environment) risk

Saipem’s business activities conducted both in and outside Italy

are subject to a broad range of national legislation and

regulations, including laws implementing international protocols

and conventions relating to specific sectors of activity.

Saipem is fully committed to a process of continuous

improvement of its safety, health, and environmental

performance, to minimising the impact of its operations and to

ensuring compliance with all applicable legislation.

An ongoing process of risk identification, evaluation and

mitigation is at the heart of HSE management operations in all

phases of activity and for all business units. This process is

implemented through the adoption of effective management

procedures and systems designed to suit the specific

characteristics of each activity and the sites in which they take

place and with a view to achieving the continuous improvement of

plant and processes.

The Saipem HSE organisational model establishes varying levels

of responsibility, starting from the persons closest to the risk

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Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

sources, who are best positioned to assess the potential impact

of risks and to ensure adequate preventive measures are put in

place. In addition, HSE departments perform a governance,

coordination, support and control role and issue and update

guidelines, procedures and best practices designed to ensure

continuous improvement.

In addition, campaigns to secure improvements and raise

awareness on health, safety and environmental issues are

designed, developed and launched centrally, and subsequently

rolled out on projects and work sites. In recent years, campaigns

have included ‘Leadership in Health and Safety’, ‘Choose Life’,

‘Working at Height & in Confined Spaces’, ‘Keep your hands safe’,

and ‘Life saving rules’. A number of these campaigns form part of

a broader initiative which aims to completely eliminate workplace

fatalities, called ‘We Want Zero’.

Saipem has always invested heavily in HSE training and continues

to work to promote and facilitate training, not just at a theoretical

level, but also in terms of effective practical training experiences,

particularly on key HSE issues.

All HSE initiatives and management of HSE issues are subjected

to periodic audits conducted by independent bodies, who verify

that the Company’s HSE management system is compliant with

international standards ISO 14001 (Environment) and OHSAS

18001 (Health and Safety). Both Saipem SpA, as well as a

number of other Group companies have already achieved and

maintain this certification. HSE monitoring is also planned and

carried out either directly or indirectly for key Saipem contractor

companies.

Country risk

Substantial portions of Saipem’s operations are performed in

countries outside the EU and North America, certain of which may

be politically, socially or economically less stable. Developments

in the political framework, economic crises, internal social unrest

and conflicts with other countries may temporarily or

permanently compromise Saipem’s ability to operate cost

efficiently in such countries and may require specific measures

(where possible in compliance with Saipem corporate policy) to

be taken at an organisational or management level in order to

enable the continuation of activities underway in conditions that

differ from those originally anticipated. If Saipem’s ability to

operate is temporarily compromised, demobilisation is planned

according to criteria designed to guarantee the protection of

Company assets that remain on site and to minimise the

business interruption by employing solutions that accelerate and

reduce the cost of business recovery once favourable conditions

have returned. Such measures may be costly and have an impact

on expected results. Further risks associated with activities in

such countries include: (i) lack of well-established and reliable

legal systems and uncertainties surrounding the enforcement of

the rights of foreign companies in the event of non-performance

of contractual obligations by private parties or governments;

(ii) unfavourable developments in/unfavourable applications of

laws and regulations, and unilateral contract changes, leading to

reductions in the value of assets, forced sales and expropriations;

(iii) restrictions of various kinds on construction, drilling, import

and export activities; (iv) tax increases; (v) civil and social unrest

leading to sabotage, attacks, violence and similar incidents.

Such events are predictable only to a very limited extent and may

occur and develop at any time, causing a materially adverse

impact on Saipem’s financial position and results.

Saipem regularly monitors political, social and economic risk in

countries in which it operates or intends to invest, drawing on

reports on principal project risks and related trends prepared in

accordance with Corporate risk management procedures and

standards, as well as on security reports prepared in accordance

with Corporate guidelines and standards on security activities.

The risk assessment model used by Saipem is compliant with

Legislative Decree No. 81/2008 (the Consolidated Act on Health

and Safety at the workplace), which requires employers to adopt

instruments to reduce and, where possible, eliminate risks.

Article 28 of the decree states that ‘the assessment pursuant to

Article 17, paragraph 1, letter a) [...] shall take into account all

risks to the health and safety of workers, including those for

groups of workers who are exposed to particular risks...’. In terms

of security, this means risks deriving from unlawful acts

committed by physical or legal persons which may expose the

Company and its assets, people and image to potential damage.

To manage the security risks to which it is exposed in the

countries in which it operates, Saipem has adopted a security

model based on the criteria of prevention, planning, protection,

information, promotion and participation, with the aim of

protecting the safety of employees, contractors and the public, as

well as the integrity of assets and brand reputation.

The Company’s Security function has implemented a

comprehensive security management system, which provides an

organisational, legal and procedural tool for minimising and

managing the consequences of security-related events.

The system is designed for the management of risks deriving

from unlawful acts committed by physical or legal persons which

may expose the Company and its assets, people and image to

potential damage. This is made possible by synergies between the

Security functions and the units in charge of the Company’s

maritime certification and logistics bases.

The Security management system, which is designed to suit the

specific characteristics of Saipem’s business, has the following

key features:

- a strong central security structure which monitors and provides

guidelines for security issues to an extensive local security

network equipped with adequate powers and resources;

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 51

- an information system supporting project Security Risk

Management activities during the commercial and execution

phases;

- the coordination of security training, planning, reporting and

audits.

As a global contractor, Saipem applies the highest standards of

security, meeting all company and client requirements and

adhering to all relevant international best practices. The Saipem

Security function provides support to operations in all contractual

phases, from the bid phase through to project execution, to ensure

all operations are carried out in conditions of security for all

personnel and assets.

Specific project risks

The Industrial Risk Management function is structured to enable it

to meet all of the following objectives:

- ensure the application of the Risk Management methodology

during the commercial and execution phases of projects

managed by Business Units, as well as on the Company’s

principal investment projects;

- assure periodic reporting to management on principal project

risks and on trends observed, aggregated by Business Unit and

at global level. Implement project portfolio analyses in order to

support management decisions and provide an understanding

of the external macro risk factors on projects that may impact

on Company results, enabling management to intervene by

deploying the appropriate risk management tools of avoidance,

mitigation, transfer or acceptance;

- assure the spread of a Risk Management culture within Saipem

with a view to achieving structured management of risk and

opportunity during business activities and contributing also to

improved management of contingencies;

- provide advice, support and guidelines to the Business Units

and projects in terms of the implementation of mitigation and

improvement measures for risk management and the

optimisation of opportunities, respectively;

- define, develop and update tools and methods for collecting

and organising lessons learned and making them available to

projects;

- ensure adequate training to commercial and project

management teams;

- ensure that Corporate Guidelines, Procedures and Standards

are constantly updated in accordance with international

Standards and Codes of Practice, promoting full compliance and

correct application within Saipem and its subsidiaries;

- contribute to promoting the observance of the Golden Rules

and Silver Guidelines, the tool for regulating risk

assumption through which Saipem assigns responsibility for

decisions to assume significant risks to the appropriate

managerial levels.

The standards and procedures in force at Saipem are in line with

the principal international risk management standards.

Insurance

The Corporate Insurance function, in close cooperation with top

management, defines annual Saipem Group guidelines for

insurance coverage against the risk of damage to property, third

party liability, as well as risks related to the performance of

contracts.

An Insurance Programme is defined on the basis of the guidelines,

which identifies specific excess and maximum limit coverage for

each type of risk based on an analysis that takes into account

claim statistics for recent years, industry statistics and conditions

offered by the international insurance market.

The Saipem Insurance Programme is structured in such a way as

to appropriately transfer risks deriving from operations to the

insurance market, in particular the risks associated with the

management of the fleet, equipment and other assets, including

third party liability risks and risks deriving from the performance

of contracts awarded by its clients.

In view of the coverage offered by the insurance market and the

changing circumstances on the energy market in which Saipem

operates, it is not possible to guarantee that all circumstances and

events will be adequately covered by the Insurance Programme.

Equally, due to the volatility of the insurance market, it cannot be

guaranteed that it will be possible in the future to reasonably

maintain adequate insurance coverage at the current rates, terms

and conditions.

Within the Saipem Insurance Programme, a distinction can be

made between insurance cover for Group assets (‘Corporate

insurance policies’) and the insurance cover connected with

project execution.

Corporate insurance policies

The Corporate insurance programme is structured with an

initial band of risk that is self-insured through a captive

reinsurance company, with amounts in excess covered by a

catastrophic insurance programme taken out on the insurance

market.

The catastrophic Insurance Programme is composed of policies

that cover damage to property, and maritime and non-maritime

third party liability. Cover can be broken down as follows:

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 52

Saipem Interim Consolidated Report as of June 30, 2015 / Risk management

Damage to property

- ‘Fleet Insurance’ policy: covers the entire fleet against events

that cause partial or total damage to vessels;

- ‘Equipment’ policy: covers all onshore and offshore equipment,

for example site equipment, onshore drilling rigs, subsea

Remote Operating Vehicles (ROV), etc.;

- ‘Transport’ policy: covers transport, handling and storage of

assets and equipment by land, sea or air;

- ‘Buildings and Sites’ policy: covers owned or rented buildings,

offices, storage facilities and shipyards;

- ‘Other minor risks’ policy: covers minor risks such as theft and

employee dishonesty.

Third-party liability

- ‘Protection & Indemnity’ (‘P&I’) policy: shipowners’ liability

cover through a P&I Club that is part of the International Group

of P&I Clubs for events occurring during transit and for events

occurring during offshore drilling and construction operations;

- ‘Comprehensive General Liability’ policy: covers all other types

of general and third party liability claims arising from Saipem’s

industrial activities and supplements the specific P&I coverage;

- ‘Employer’s Liability’ and ‘Personal Accident’ policies: these

cover employer liability and employee accident risks

respectively on the basis of the specific regulations in force in

each country where the Group operates.

A key tool in the management of Saipem’s insurable risks is the

captive reinsurance company Sigurd Rück AG, which covers the

initial part of risk.

Sigurd Rück AG in turn carries out risk mitigation by re-insuring its

portfolio on primary securities markets.

Project execution insurance policies

For all contracts awarded, specific project insurance coverage

must be taken out. Generally, the contractual responsibility for

such insurance lies with the client.

Where the responsibility lies with the contractor, Saipem takes out

insurance that will cover all risks connected with the project for

its entire duration.

Usually, it takes out ‘Builders’ All Risks’ insurance, which covers

the scope of work of the contract, i.e. damage to the works under

construction, as well as to equipment, products and materials

required for its construction and third party liability for all works

to be performed by the Group during all phases of project

execution (engineering, transportation, construction, assembly,

and testing) including the warranty period.

The high insurance premiums and excesses on such policies are

an incentive to Saipem in its efforts to achieve the continuous

improvement of its prevention and protection processes in terms

of quality, health, safety and environmental impact.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 53

Saipem Interim Consolidated Report as of June 30, 2015 / Additional information

Purchase of treasury shares

As of June 30, 2015, the share capital amounted to

€441,410,900. On the same day, the number of shares in

circulations was 439,471,068. No treasury shares were purchased

on the market during the period.

Consob Regulation on Markets

Article 36 of Consob Regulation on Markets:

conditions for the listing of shares of companies

with control over companies established

and regulated under the law of non-EU countries

With regard to the regulations setting out conditions for the listing

of shares of companies with control over companies established

and regulated under the law of non-EU countries that are deemed

to be of material significance in relation to the consolidated

financial statements, the Company discloses that at June 30,

2015, the following twenty Saipem subsidiaries fell within the

scope of application of the regulation in question:

- Saipem Australia Pty Ltd;

- Petrex SA;

- Snamprogetti Saudi Arabia Co Ltd Llc;

- Saipem Contracting (Nigeria) Ltd;

- PT Saipem Indonesia;

- ER SAI Caspian Contractor Llc;

- Saipem Misr for Petroleum Services (S.A.E.);

- Saipem (Nigeria) Ltd;

- Saudi Arabian Saipem Ltd;

- Global Petroprojects Services AG;

- Saipem America Inc;

- Saipem Asia Sdn Bhd;

- Saipem do Brasil Serviçõs de Petroleo Ltda;

- Saipem Contracting Algérie SpA;

- Saipem Canada Inc;

- Saipem Offshore Norway AS;

- Saipem Drilling Norway AS;

- Sajer Iraq Llc;

- Boscongo SA;

- Saimexicana SA de Cv.

Procedures designed to ensure full compliance with Article 36

have already been adopted.

Article 37 of Consob Regulation on Markets:

conditions preventing the admission to trading

on an Italian regulated market of the shares

of subsidiaries subject to management

and coordination by another company

Pursuant to the requirements set out in paragraph 10 of Article

2.6.2 of the Rules of the Markets organised and managed by

Borsa Italiana SpA, the Board of Directors in its meeting of March

10, 2015, ascertained that the Company satisfies the conditions

set out in Article 37 of Consob Regulation on Markets for the

admission to trading on an Italian regulated market of the shares

of subsidiaries subject to management and coordination by

another company.

The Board of Directors Meeting on March 10, 2015 verified that the

composition of the Board itself, as appointed by the Shareholders’

Meeting of May 6, 2014, and of its internal Committees, was in

accordance with letter d), paragraph 1 of Article 37. The Board was

found to be made up of a majority of independent directors, while

the Committees (the Compensation and Nomination Committee

and the Audit and Risk Committee) were found to be composed

exclusively of independent directors.

Following the appointment of the Board of Directors by the

Shareholders on April 30, 2015, the Board of Directors Meeting on

April 30, 2015 verified that the composition of the new Board was

in accordance with letter d), paragraph 1 of Article 37. The Board

was found to be made up of a majority of independent directors.

The Board of Statutory Auditors verified the correct application of

the relevant criteria by the Board of Directors.

On May 15, 2015, the Board of Directors appointed the members

of the Board Committees. The Committees required by the

Corporate Governance Code (the Compensation and Nomination

Committee and the Audit and Risk Committee) are composed

exclusively of independent directors, in accordance with letter d),

paragraph 1 of Article 37 of the Consob Regulation on Markets.

Disclosure of transactions

with related parties

Transactions with related parties entered into by Saipem and

identified by IAS 24 concern mainly the exchange of goods, the

supply of services, and the provision and utilisation of financial

resources, including entering into derivative contracts.

All such transactions are an integral part of ordinary day-to-day

business and are carried out on an arm’s length basis

(i.e. at conditions which would be applied between independent

parties) and in the interest of Group companies.

Directors and senior managers with strategic responsibilities

must declare, every 6 months, any transactions they enter into

with Saipem SpA or its subsidiaries, directly or through a third

party, in accordance with the provisions of IAS 24.

The amounts of trade, financial or other operations with related

parties are provided in Note 43 of the ‘Notes to the condensed

consolidated interim financial statements’.

Additional information

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Saipem Interim Consolidated Report as of June 30, 2015 / Additional information

Transactions with the parent company

Eni and companies subject to its direction

and coordination

Saipem is subject to the direction and coordination of Eni SpA.

Transactions with Eni SpA and with entities subject to its direction

and coordination constitute transactions with related parties and

are commented on in Note 43 ‘Transactions with related parties’ of

the ‘Notes to the condensed consolidated interim financial

statements’.

Events subsequent to period end

On July 8, South Stream Transport BV, following the suspension of

the contract on December 30, 2014 and its partial reopening on

May 8, 2015, has definitively terminated the South Stream project

under a convenience termination provision. The contract

encompassed the installation design and the construction of the

first line of the South Stream Offshore Pipeline, from Russia to

Turkey across the Black Sea.

The sale for scrapping of the semi-submersible Scarabeo 4 to

Simsekler Gida Gemi Sokum Ins in Turkey was completed on July 18.

‘Fit for the future’:

Saipem’s turnaround plan

In the current oil price environment the outlook for the oil services

industry is continuing to deteriorate. Clients are focusing on cost

reduction, resulting in them adopting a more rigid approach to

negotiations, constant pressure on supply-chain margins, delays

in new contract awards and in some cases in the cancellation of

already approved projects.

To maximise its competitive capabilities and create value in this

new market scenario, Saipem has launched a turnaround and cost

cutting programme which will achieve savings of €1,300 million

over the period 2015-2017.

This programme involves a rationalisation of the Company’s asset

portfolio to refocus on higher-value areas and businesses.

In terms of its geographical footprint, operations in certain

countries, such as Canada and Brazil, will be downsized. The fleet

will see the scrapping of 5 vessels which are not commercially

viable in the current market. Furthermore, a review of the

organisation and processes is currently ongoing within Saipem in

order to increase the speed and efficiency of operations.

These measures are expected to yield a workforce reduction of

8,800 people between 2015 and 2017, mainly as a result of the

conclusion of certain large projects and the rationalisation of the

Company’s business operations and geographical presence.

This turnaround plan also entails a review of the Company’s

investment plans, with effects on capital expenditure starting

from 2015. This year’s investments are now forecast at below

€600 million.

Further details of Saipem’s turnaround plan will be provided in an

update of the Company’s strategic plan prior to the date scheduled

for the release of the third quarter results.

Management outlook for 2015

In the context of the continuing low oil price environment,

Saipem’s results for 2015 will be affected by the termination of

the South Stream contract and write-downs carried out during the

first six months of the year.

The Company expects to achieve revenues of €12 billion, at the

lower end of the previously-released range. EBIT is forecast at

around -€450 million. The reported net result is expected to be

-€800 million.

Capital expenditure will amount to less than €600 million, a

saving of €50 million compared to previous long-term indications,

thanks to the measures adopted to improve efficiency.

Finally, net debt at year end is expected below €5 billion,

excluding the impact of exchange rate fluctuations. Based on the

current prevailing foreign exchange rates, we expect the cash

impact of hedging derivatives to affect net debt by approximately

€500 million at year end.

Non-GAAP measures

Some of the performance indicators used in the ‘Operating and

Financial Review’ are not included in the IFRS (i.e. they are what

are known as Non-GAAP measures).

Non-GAAP measures are disclosed to enhance the user’s

understanding of the Group’s performance and are not intended to

be considered as a substitute for IFRS measures.

The Non-GAAP measures used in the Operating and Financial

Review are as follows:

- cash flow: the sum of the net result plus depreciation and

amortisation;

- capital expenditure: calculated by excluding investments in

equity interests from total investments;

- EBITDA: a useful measure for evaluating the operating

001-058SaipemSem15Ing.qxd 7-08-2015 9:57 Pagina 55

Saipem Interim Consolidated Report as of June 30, 2015 / Additional information

performance of the Group as a whole and of the individual

sectors of activity, in addition to operating profit. EBITDA is an

intermediate measure, which is calculated by adding

depreciation and amortisation to operating profit;

- non-current assets: the sum of net tangible assets, net

intangible assets and investments;

- net current assets: includes working capital and provisions for

contingencies;

- net capital employed: the sum of non-current assets, working

capital and the provision for employee benefits;

- funding: shareholders’ equity, non-controlling interests and net

borrowings;

- special items: (i) non-recurring events or transactions;

(ii) events or transactions that are not considered to be

representative of the ordinary course of business.

Secondary offices

Pursuant to Article 2428 of the Italian Civil Code, the Company

declares that it has a secondary office in Cortemaggiore (PC), Via

Enrico Mattei, 20.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 56

Saipem Interim Consolidated Report as of June 30, 2015 / Reconciliation of reclassified balance sheet, income statement and cash flow statement to statutory schemes

Reconciliation of reclassified balance sheet, income statement

and cash flow statement to statutory schemes

Reclassified balance sheet

(€million) Dec. 31, 2014 June 30, 2015

Partial amounts Amounts Partial amounts Amounts

Reclassified balance sheet items from reclassified from reclassified from reclassified from reclassified

(where not stated otherwise, items comply with statutory scheme) scheme scheme scheme scheme

A) Net tangible assets 7, 6 01 7, 3 83

Note 8 - Property, plant and equipment 7,601 7,383

B) Net intangible assets 760 758

Note 9 - Intangible assets 760 758

C) Investments 112 107

Note 10 - Investments accounted for with the equity method 120 124

Reclassified from E) - provisions for losses related to investments (8) (17)

D) Working capital 576 1,116

Note 3 - Trade and other receivables 3,391 3,466

Reclassified to I) - financing receivables not related to operations (58) (32)

Note 4 - Inventories 2,485 2,531

Note 5 - Current tax assets 317 311

Note 6 - Other current tax assets 307 399

Note 7 - Other current assets 520 359

Note 11 - Other financial assets 1 1

Reclassified to I) - financing receivables not related to operations (1) (1)

Note 12 - Deferred tax assets 297 482

Note 13 - Other non-current assets 115 111

Note 15 - Trade and other payables (5,669) (5,788)

Note 16 - Income tax payables (134) (128)

Note 17 - Other current tax liabilities (184) (181)

Note 18 - Other current liabilities (838) (380)

Note 22 - Deferred tax liabilities (40) (29)

Note 23 - Other non-current liabilities (2) (5)

Note 24 - Assets held for sale 69 -

E) Provisions for contingencies (210) (247)

Note 20 - Provisions for contingencies (218) (264)

Reclassified to C) - provisions for losses related to investments 8 17

F) Provision for employee benefits (237) (240)

Note 21 - Provisions for employee benefits (237) (240)

CAPITAL EMPLOYED, NET 8,602 8,877

G) Shareholders’ equity 4,137 3,288

Note 26 - Saipem shareholders’ equity 4,137 3,288

H) Non-controlling interests 41 58

Note 25 - Non-controlling interests 41 58

I) Net debt 4,424 5,531

Note 1 - Cash and cash equivalents (1,602) (1,429)

Note 2 - Other financial assets held for trading or available for sale (9) (8)

Note 14 - Short-term debt 2,186 3,037

Note 19 - Long-term debt 3,314 3,477

Note 19 - Current portion of long-term debt 594 487

Reclassified from D) - financing receivables not related to operations (Note 3) (58) (32)

Reclassified from D) - financing receivables not related to operations (Note 11) (1) (1)

FUNDING 8,602 8,877

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 57

Saipem Interim Consolidated Report as of June 30, 2015 / Reconciliation of reclassified balance sheet, income statement and cash flow statement to statutory schemes

Reclassified income statement

The only items of the reclassified income statement which differ

from the statutory scheme are those stated hereafter:

- ‘finance income’ (€516 million), ‘finance expenses’

(-€607 million) and ‘derivatives’ (-€19 million), which are

indicated separately under the statutory scheme, are stated

under the item ‘net finance expense’ (-€110 million) in the

reclassified income statement.

All other items are unchanged.

Reclassified cash flow statement

The only items of the reclassified cash flow statement which differ

from the statutory scheme are those stated hereafter:

- the items ‘depreciation and amortisation’ (€382 million),

‘net impairment of tangible and intangible assets’ (€211

million), ‘other changes’ (-€117 million) and the ‘effect of

accounting using the equity method’ (€11 million), indicated

separately and included in cash generated from operating profit

in the statutory scheme, are shown net under the item

‘depreciation/amortisation and other non-monetary items’

(€487 million);

- the items ‘interest expense’ (€96 million), ‘income taxes’

(€13 million) and ‘interest income’ (-€3 million), indicated

separately and included in cash generated from operating profit

in the statutory scheme, are shown net under the item

‘dividends, interests and taxes’ (€106 million);

- the items regarding ‘trade payables’ (-€41 million),

‘trade receivables’ (€277 million), ‘provisions for

contingencies’ (€37 million), changes in ‘inventories’

(€6 million) and ‘other assets and liabilities’ (-€613 million),

indicated separately and included in cash generated from

operating profit in the statutory scheme, are shown net under

the item ‘changes in working capital related to operations’

(-€334 million);

- the items ‘dividends received’ (€4 million), ‘interest received’

(€7 million), ‘income taxes paid net of refunds of tax credits’

(-€102 million) and ‘interest paid’ (-€97 million), indicated

separately and included in cash generated from operating profit

in the statutory scheme, are shown net under the item

‘dividends received, income taxes paid and interest paid and

received’ (-€188 million);

- the items relating to investments in ‘tangible assets’

(€265 million) and ‘intangible assets’ (€3 million), indicated

separately and included in cash flow from investing activities in

the statutory scheme, are shown net under the item ‘capital

expenditure’ (€268 million);

- the items relating to disposals of ‘securities’ (€1 million) and

‘financing receivables’ (€27 million), indicated separately and

included in cash flow used in investing activities in the

statutory scheme, are shown under the item ‘borrowings

(repayment) of debt related to financing activities’

(€28 million);

- the items ‘proceeds from long-term debt’ (€739 million),

‘increase (decrease) in short-term debt’ (€551 million) and

‘repayments of long-term debt’ (-€473 million), indicated

separately and included in net cash flow used in financing

activities in the statutory scheme, are shown net under the

item ‘changes in short and long-term financial debt’

(€817 million).

All other items are unchanged.

001-058SaipemSem15Ing.qxd 6-08-2015 11:41 Pagina 58

Condensed consolidated interim financial statements saipem

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 59

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

Balance sheet

Dec. 31, 2014 June 30, 2015

of which with of which with

related related

(€million) Note Total parties

(1)

Total parties

(1)

ASSETS

Current assets

Cash and cash equivalents (No. 1) 1,602 885 1,429 678

Other financial assets held for trading or available for sale (No. 2) 9 8

Trade and other receivables (No. 3) 3,391 868 3,466 756

Inventories (No. 4) 2,485 2,531

Current tax assets (No. 5) 317 311

Other current tax assets (No. 6) 307 399

Other current assets (No. 7) 520 360 359 218

Total current assets 8,631 8,503

Non-current assets

Property, plant and equipment (No. 8) 7,601 7,383

Intangible assets (No. 9) 760 758

Investments accounted for using the equity method (No. 10) 120 124

Other financial assets (No. 11) 1 1

Deferred tax assets (No. 12) 297 482

Other non-current assets (No. 13) 115 2 111 12

Total non-current assets 8,894 8,859

Assets held for sale (No. 24) 69 -

TOTAL ASSETS 17,594 17,362

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

Short-term debt (No. 14) 2,186 1,873 3,037 2,530

Current portion of long-term debt (No. 19) 594 594 487 487

Trade and other payables (No. 15) 5,669 382 5,788 238

Income tax payables (No. 16) 134 128

Other current tax liabilities (No. 17) 184 181

Other current liabilities (No. 18) 838 828 380 344

Total current liabilities 9,605 10,001

Non-current liabilities

Long-term debt (No. 19) 3,314 3,064 3,477 3,477

Provisions for contingencies (No. 20) 218 264

Provisions for employee benefits (No. 21) 237 240

Deferred tax liabilities (No. 22) 40 29

Other non-current liabilities (No. 23) 2 - 5 4

Total non-current liabilities 3,811 4,015

TOTAL LIABILITIES 13,416 14,016

SHAREHOLDERS’ EQUITY

Non-controlling interests (No. 25) 41 58

Saipem shareholders’ equity: (No. 26) 4,137 3,288

- share capital (No. 27) 441 441

- share premium reserve (No. 28) 55 55

- other reserves (No. 29) (209) (150)

- retained earnings 4,123 3,905

- net profit (loss) for the period (230) (920)

- treasury shares (No. 30) (43) (43)

Total shareholders’ equity 4,178 3,346

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 17,594 17,362

(1) For an analysis of figures shown as ‘of which with related parties’, see Note 43 ‘Transactions with related parties’.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 60

Income statement

First half 2014 First half 2015

of which with of which with

related related

(€million) Note Total parties

(1)

Total parties

(1)

REVENUES

Net sales from operations (No. 32) 5,966 968 5,373 890

Other income and revenues (No. 33) 12 8 1 -

Total revenues 5,978 5,374

Operating expenses

Purchases, services and other costs (No. 34) (4,126) (154) (4,350) (103)

Payroll and related costs (No. 35) (1,197) - (1,221) (1)

Depreciation, amortisation and impairment (No. 36) (362) (593)

Other operating income (expense) ----

OPERATING PROFIT 293 (790)

Finance income (expense)

Finance income 333 - 516 -

Finance expense (373) (67) (607) (80)

Derivative financial instruments (70) (71) (19) (18)

Total finance income (expense) (No. 37) (110) (110)

Income (expense) from investments

Share of profit (loss) of equity-accounted investments 13 (11)

Other income from investments 4 18

Total income (expense) from investments (No. 38) 17 7

RESULT BEFORE INCOME TAXES 200 (893)

Income taxes (No. 39) (64) (13)

NET RESULT 136 (906)

Attributable to:

- Saipem 136 (920)

- non-controlling interests (No. 40) - 14

Earnings (loss) per share attributable to Saipem (€per share)

Basic earnings (loss) per share (No. 41) 0.310 (2.094)

Diluted earnings (loss) per share (No. 41) 0.309 (2.093)

(1) For an analysis of figures shown as ‘of which with related parties’, see Note 43 ‘Transactions with related parties’.

Statement of comprehensive income

First half First half

(€million) 2014 2015

Net profit (loss) for the period 136 (906)

Other items of comprehensive income

Items that will not be reclassified subsequently to profit or loss

Remeasurements of defined benefit plans for employees --

Share of other comprehensive income of investments accounted for using the equity method relating to remeasurements of defined benefit plans - -

Income tax relating to items that will not be reclassified --

Items that may be reclassified subsequently to profit or loss

Change in the fair value of cash flow hedges

(1)

(48) (68)

Exchange rate differences arising from the translation into euro of financial statements currencies other than the euro 19 86

Share of other comprehensive income of investments accounted for using the equity method (1) -

Income tax on items that may be reclassified subsequently to profit or loss 17 53

Total other items of comprehensive income net of taxation (13) 71

Total comprehensive income (loss) for the period 123 (835)

Attributable to:

- Saipem Group 123 ( 852)

- non-controlling interests -17

(1) The change in the fair value of cash flow hedges relates almost exclusively to transactions with the parent company Eni.

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 61

Statement of changes in shareholders’ equity

Saipem shareholders’ equity

(€million)

Balance at December 31, 2013 441 55 7 88 - 85 (100) (5) 4,283 (159) (43) 4,652 92 4,744

Net profit (loss)

for the first half of 2014 ---------136-136-136

Other items

of comprehensive income

Items that will not be reclassified

subsequently to profit or loss

Remeasurements of defined benefit plans

for employees, net of tax --------------

Share of other comprehensive

income of investments accounted for

using the equity method relating

to remeasurements of defined benefit plans

for employees, net of tax --------------

Items that may be reclassified

subsequently to profit or loss

Change in the fair value of cash flow hedging

derivatives, net of the tax effect -----(31)-----(31)-(31)

Currency translation differences of financial

statements currencies other than euro ------25-(6)--19-19

Share of other comprehensive

income of investments accounted for

using the equity method --------(1)--(1)-(1)

Total comprehensive income (loss)

for the first half of 2014 -----(31)25-(7)136-123-123

Transactions with shareholders

Dividend distribution for the first half of 2014 ------------(44)(44)

Retained earnings --------(159)159----

Other changes in shareholders’ equity

Other changes ------(1)-(1)--(2)-(2)

Transactions with companies

under common control ------ -------

Total ------(1)-(160)159-(2)(44)(46)

Balance at June 30, 2014 441 55 7 88 - 54 (76) (5) 4,116 136 (43) 4,773 48 4,821

Net profit (loss)

for the second half of 2014 ---------(366)-(366)(8)(374)

Other items

of comprehensive income

Items that will not be reclassified

subsequently to profit or loss

Remeasurements of defined benefit plans

for employees, net of tax -------(15)---(15)(1)(16)

Share of other comprehensive

income of investments accounted for

using the equity method relating

to remeasurements of defined benefit plans

for employees, net of tax -------1---1-1

Items that may be reclassified

subsequently to profit or loss

Change in the fair value of cash flow hedging

derivatives, net of the tax effect -----(328)-----(328)(3)(331)

Currency translation differences of financial

statements currencies other than euro ------68-2--70676

Share of other comprehensive

income of investments accounted for

using the equity method --(1)-----1-----

Share capital

Share premium

reserve

Other reserves

Legal reserve

Reserve for

treasury shares

Cash flow hedge

reserve, net of tax

Cumulative

currency translation

differences

Employee defined

benefits reserve,

net of tax

Retained earnings

Net profit (loss)

for the period

Treasury shares

Total

Non-controlling

interests

Total

shareholders’ equity

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 62

cont’d Statement of changes in shareholders’ equity

Saipem shareholders’ equity

(€million)

Total comprehensive income (loss)

for the second half of 2014 - - (1) - - (328) 68 (14) 3 (366) - (638) (6) (644)

Transactions with shareholders

Dividend distribution in the second half of 2014------------(1)(1)

Other changes in shareholders’ equity

Expired stock options --------(1)--(1)-(1)

Other changes -----(1)(1)-5--3-3

Transactions with companies

under common control --------------

Total -----(1)(1)-4--2(1)1

Balance at December 31, 2014 441 55 6 88 - (275) (9) (19) 4,123 (230) (43) 4,137 41 4,178

Net profit (loss)

for the first half of 2015 ---------(920)-(920)14(906)

Other items

of comprehensive income

Items that will not be reclassified

subsequently to profit or loss

Remeasurements of defined benefit plans

for employees, net of tax -------(1)---(1)1-

Share of other comprehensive

income of investments accounted for

using the equity method relating

to remeasurements of defined benefit plans

for employees, net of tax --------------

Items that may be reclassified

subsequently to profit or loss

Change in the fair value of cash flow hedging

derivatives, net of the tax effect -----(14)-----(14)(1)(15)

Currency translation differences of financial

statements currencies other than euro ------74-9--83386

Share of other comprehensive income

of investments accounted for

using the equity method --------------

Total comprehensive income (loss)

for the first half of 2015 -----(14)74(1)9(920)-(852)17(835)

Transactions with shareholders

Dividend distribution for the first half of 2015 --------------

Retained earnings --------(230)230----

Contribution from non-controlling interests

Snamprogetti Engineering & Contracting Co Ltd------------11

Total --------(230)230--11

Other changes in shareholders’ equity

Other changes --------3--3(1)2

Transactions with companies

under common control --------------

Total --------3--3(1)2

Balance at June 30, 2015 441 55 6 88 - (289) 65 (20) 3,905 (920) (43) 3,288 58 3,346

Share capital

Share premium

reserve

Other reserves

Legal reserve

Reserve for

treasury shares

Cash flow hedge

reserve, net of tax

Cumulative

currency translation

differences

Employee defined

benefits reserve,

net of tax

Retained earnings

Net profit (loss)

for the period

Treasury shares

Total

Non-controlling

interests

Total

shareholders’ equity

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 63

Cash flow statement

(€million) Note First half 2014 First half 2015

Net profit (loss) for the period 136 (920)

Non-controlling interests -14

Adjustments to reconcile net profit to cash flow from operations:

- depreciation and amortisation (No. 35) 362 382

- net impairment of tangible and intangible assets (No. 35) - 211

- share of profit (loss) of equity accounted investments (No. 38) (13) 11

- net (gains) losses on disposal of assets (3) (17)

- interest income (2) (3)

- interest expense 83 96

- income taxes (No. 39) 64 13

- other changes (13) (117)

Changes in working capital:

- inventories (835) 6

- trade receivables 419 277

- trade payables (34) (41)

- provisions for contingencies (27) 38

- other assets and liabilities 95 (614)

Cash flow from working capital 232 (664)

Change in the provision for employee benefits 2 -

Dividends received 14

Interest received 17

Interest paid (78) (97)

Income taxes paid net of refunds of tax credits (108) (102)

Net cash flow from operations 50 (852)

of which with related parties

(1)

(No. 43) 585 642

Investing activities:

- tangible assets (No. 8) (324) (265)

- intangible assets (No. 9) (5) (3)

- investments (No. 10) (2) (1)

- financing receivables (39) (1)

- change in payables and receivables relating to investments - 1

Cash flow used in investing activities (370) (269)

Disposals:

- tangible assets --

- consolidated subsidiaries and businesses - -

- investments 797

- financing receivables 14 27

- securities 26 1

Cash flow from disposals 47 125

Net cash flow used in investing activities

(2)

(323) (144)

of which with related parties

(1)

(No. 43) (29) 14

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

059-112SemSaipem15IngxTipo.qxd 8-09-2015 10:49 Pagina 64

Saipem Condensed consolidated interim financial statements 2015 / Financial statements

cont’d Cash flow statement

(€million) Note First half 2014 First half 2015

Proceeds from long-term debt 504 739

Repayments of long-term debt (207) (473)

Increase (decrease) in short-term debt 117 551

414 817

Net capital contributions from non-controlling shareholders - 1

Dividend distribution (44) -

Sale of treasury shares --

Net cash flow from financing activities 370 818

of which with related parties

(1)

(No. 43) 360 963

Effect of changes in consolidation - (2)

Effect of exchange rate changes

and other changes on cash and cash equivalents 5 7

Net cash flow for the period 102 (173)

Cash and cash equivalents - beginning of period (No. 1) 1,299 1,602

Cash and cash equivalents - end of period (No. 1) 1,401 1,429

(1) For an analysis of figures shown as ‘of which with related parties’, see Note 43 ‘Transactions with related parties’.

(2) Net cash used in investing activities included investments in certain financial assets to absorb temporary surpluses of cash or as part of our ordinary management of financing activities. Due to their

nature and the fact that they are very liquid, these financial assets are netted against finance debt in determining net borrowings. For the definition of net borrowings, see the ‘Financial and economic

results’ section of the ‘Operating and Financial Review’.

The cash flows of these investments were as follows:

First half First half

(€million) 2014 2015

Financing investments:

- financing receivables (39) -

(39) -

Disposal of financing investments:

- securities 26 1

- financing receivables 14 27

40 28

Net cash flows from investments/disposals related to financing activities 1 28

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 65

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Basis of presentation

The condensed consolidated interim financial statements have been

prepared in accordance with IAS 34 ‘Interim Financial Reporting’. The

structure of the financial statements is the same as that used in the

annual report.

The condensed consolidated interim financial statements have been

prepared in accordance with the same principles of consolidation and

evaluation criteria described in the annual report, with the exception of

the International Accounting Standards that became into effect as of

January 1, 2015, as illustrated in the ‘Recent accounting principles’

section of the 2014 Annual Report.

The notes to these financial statements have been prepared in a

condensed format. Current income taxes are determined on the basis of

estimated taxable income at the balance sheet date. Current income tax

assets and liabilities are measured at the amount expected to be paid

to/recovered from the tax authorities, using tax laws that have been

enacted or substantively enacted by the end of the reporting period and

tax rates estimated on an annual basis.

Consolidated companies, non-consolidated subsidiaries, interests in joint

ventures and joint operations and associated companies are indicated in

the section ‘Scope of consolidation’, which constitutes an integral part of

these notes. The same section contains a list detailing the changes that

occurred in the scope of consolidation during the period. The condensed

consolidated interim financial statements as of June 30, 2015, approved

by Saipem’s Board of Directors on July 28, 2015, were subjected to a

limited review by the independent auditor Reconta Ernst & Young SpA.

A limited review is substantially less in scope than an audit performed in

accordance with generally accepted auditing standards.

Amounts stated in the financial statements and the notes thereto are in

millions of euros.

Foreign currency translation

Financial statements of foreign companies having a functional currency

other than euro are converted into euro applying: (i) closing exchange

rates for assets and liabilities; (ii) historical exchange rates for equity

accounts; and (iii) the average rates for the period to the income

statement (source: Bank of Italy).

Cumulative exchange rate differences resulting from this translation are

recognised in shareholders’ equity under the caption ‘Cumulative

currency translation differences’ for the portion relating to the Group’s

interest and under ‘Non-controlling interests’ for the portion related to

non-controlling shareholders. Cumulative exchange differences are taken

to profit or loss when an investment is fully disposed of or when the

investment ceases to qualify as a controlled company. In the event of a

partial disposal that does not result in the loss of control, the portion of

exchange differences relating to the interest disposed of is attributed to

non-controlling interests in equity.

The financial statements used for translation into euros are those

denominated in the functional currency, i.e. the local currency or the

currency in which most financial transactions and assets and liabilities

are denominated.

The exchange rates that have been applied for the translation of financial

statements in foreign currencies are as follows:

Notes to the condensed consolidated interim financial statements

US Dollar 1.2141 1.1189 1.11579

British Pound Sterling 0.7789 0.7114 0.732325

Algerian Dinar 106.607 110.698 106.76

Angolan Kwanza 124.884 135 .972 121.283

Argentine Peso 10.2755 10.1653 9.83968

Australian Dollar 1.4829 1.455 1.42608

Brazilian Real 3.2207 3.4699 3.31015

Canadian Dollar 1.4063 1.3839 1.37736

Egyptian Pound 8.68519 8.53421 8.43588

Indian Rupee 76.719 71.1873 70.1244

Indonesian Rupee 15,076.1 14,938.4 14,469.2

Malaysian Ringgit 4.2473 4.2185 4.06212

Nigerian Naira 223.693 222.697 219.547

Norwegian Kroner 9.042 8.791 8.64826

Peruvian New Sol 3.63265 3.55333 3.45828

Qatari Riyal 4.42155 4.0728 4.0623

Romanian New Leu 4.4828 4.4725 4.44793

Russian Rouble 72.337 62.355 64.6407

Saudi Arabian Riyal 4.55733 4.19622 4.18599

Singapore Dollar 1.6058 1.5068 1.50608

Swiss Franc 1.2024 1.0413 1.05673

Currency

Exchange rate

at Dec. 31, 2014

Exchange rate

at June 30, 2015

2015 average

exchange rate

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 66

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Use of accounting estimates

The preparation of financial statements and interim reports in accordance

with generally accepted accounting standards requires management to

make accounting estimates based on complex or subjective judgements,

past experience and assumptions deemed reasonable and realistic

based on the information available at the time. The use of these

estimates and assumptions affects the reported amounts of assets and

liabilities and the disclosure of contingent assets and liabilities at the

balance sheet date and the reported amounts of income and expenses

during the reporting period. Actual results may differ from these

estimates given the uncertainty surrounding the assumptions and

conditions upon which the estimates are based.

Accounting estimates are a critical factor in the preparation of

consolidated financial statements and interim reports because they

require management to make a large number of subjective judgements,

assumptions and estimates regarding matters that are inherently

uncertain. Changes in the conditions underlying such judgements,

assumptions and estimates may have a significant effect on future

results.

For a description of the accounting estimates used, see the 2014 Annual

Report.

Changes to accounting criteria

European Commission Regulation No. 2015/29 dated December 17, 2014,

approved the amendments to IAS 19 ‘Defined Benefit Plans: Employee

Contributions’, which allow defined benefit plan contributions from

employees or third parties to be recognised as a reduction in the service

cost in the period in which the related service is rendered, provided that

the contributions: (i) are set out in the formal terms of the plan; (ii) are

linked to service; and (iii) are independent of the number of years of

service (e.g. a fixed percentage of the employee’s salary, a fixed amount

throughout the service period or contributions that are dependent on the

employee’s age).

European Commission Regulation No. 2015/28 dated December 17, 2014,

approved the document ‘Annual Improvements to IFRSs 2010-2012

Cycle’, which essentially consists of changes of a technical and editorial

nature to existing standards.

The adoption rules required the amendments to be adopted for annual

periods beginning on or after February 2015, with earlier application

permitted. Saipem has taken the early application option, applying the

provisions as from the 2015 annual period. The adoption of these

principles did not generate a significant effect.

The other changes to accounting standards that became applicable as

from January 1, 2015 did not produce any significant effects.

Recent accounting principles

See the most recent annual report for a description of recently published

accounting principles.

Saipem is currently reviewing these new standards to determine if their

adoption will have a significant impact on the financial statements.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 67

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Scope of consolidation at June 30, 2015

Parent company

Saipem SpA San Donato Milanese EUR 441,410,900 Eni SpA 42.91

Saipem SpA 0.44

Third parties 56.65

Subsidiaries

Italy

Denuke Scarl San Donato Milanese EUR 10,000 Saipem SpA 55.00 55.00 F.C.

Third parties 45.00

Servizi Energia Italia SpA San Donato Milanese EUR 291,000 Saipem SpA 100.00 100.00 F.C.

Smacemex Scarl San Donato Milanese EUR 10,000 Saipem SpA 60.00 60.00 F.C.

Third parties 40.00

Snamprogetti Chiyoda sas San Donato Milanese EUR 10,000 Saipem SpA 99.90 99.90 F.C.

di Saipem SpA Third parties 0.10

Outside Italy

Andromeda Consultoria Tecnica Rio de Janeiro BRL 5,494,210 Saipem SpA 99.00 100.00 F.C.

e Representações Ltda (Brazil) Snamprogetti 1.00

Netherlands BV

Boscongo SA Pointe-Noire XAF 1,597,805,000 Saipem SA 100.00 100.00 F.C.

(Congo)

ER SAI Caspian Contractor Llc Almaty KZT 1,105,930,000 Saipem International BV 50.00 50.00 F.C.

(Kazakhstan) Third parties 50.00

ERS - Equipment Rental & Services BV Amsterdam EUR 90,760 Saipem International BV 100.00 100.00 F.C.

(Netherlands)

Global Petroprojects Services AG Zurich CHF 5,000,000 Saipem International BV 100.00 100.00 F.C.

(Switzerland)

Moss Maritime AS Lysaker NOK 40,000,000 Saipem International BV 100.00 100.00 F.C.

(Norway)

Moss Maritime Inc Houston USD 145,000 Moss Maritime AS 100.00 100.00 F.C.

(USA)

North Caspian Service Co Almaty KZT 1,910,000,000 Saipem International BV 100.00 100.00 F.C.

(Kazakhstan)

Petrex SA Iquitos PEN 762,729,045 Saipem International BV 100.00 100.00 F.C.

(Peru)

Professional Training Center Llc Karakiyan District, KZT 1,000,000 ER SAI Caspian 100.00 50.00 F.C.

Mangistau Oblast Contractor Llc

(Kazakhstan)

PT Saipem Indonesia Jakarta USD 152,778,100 Saipem International BV 68.55 100.00 F.C.

(Indonesia) Saipem Asia Sdn Bhd 31.45

SAGIO - Companhia Angolana Luanda AOA 1,600,000 Saipem International BV 60.00 60.00 E.M.

de Gestão de Instalaçao Offshore Ltda (Angola) Third parties 40.00

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

(*) F.C. = full consolidation, W.I. = working interest, E.M. = equity method, Co. = cost method

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 68

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Saigut SA de Cv Delegacion Cuauhtemoc MXN 90,050,000 Saimexicana SA de Cv 100.00 100.00 F.C.

(Mexico)

SAIMEP Lda Maputo MZN 70,000,000 Saipem SA 99.98 100.00 F.C.

(Mozambique) Saipem International BV 0.02

Saimexicana SA de Cv Delegacion Cuauhtemoc MXN 1,528,188,000 Saipem SA 100.00 100.00 F.C.

(Mexico)

Saipem (Beijing) Technical Beijing USD 1,750,000 Saipem International BV 100.00 100.00 F.C.

Services Co Ltd (China)

Saipem (Malaysia) Sdn Bhd Kuala Lumpur MYR 1,033,500 Saipem International BV 41.94 100.00 F.C.

(Malaysia) Third parties 58.06

Saipem (Nigeria) Ltd Lagos NGN 259,200,000 Saipem International BV 89.41 89.41 F.C.

(Nigeria) Third parties 10.59

Saipem (Portugal) Comércio Marítimo, Caniçal EUR 299,278,738 Saipem International BV 100.00 100.00 F.C.

Sociedade Unipessoal Lda (Portugal)

Saipem America Inc Wilmington USD 50,000,000 Saipem International BV 100.00 100.00 F.C.

(USA)

Saipem Argentina de Perforaciones, Buenos Aires ARS 1,805,300 Saipem International BV 99.90 99.90 E.M.

Montajes y Proyectos Sociedad Anónima, (Argentina) Third parties 0.10

Minera, Industrial, Comercial

y Financiera

(**) (***)

Saipem Asia Sdn Bhd Kuala Lumpur MYR 8,116,500 Saipem International BV 100.00 100.00 F.C.

(Malaysia)

Saipem Australia Pty Ltd West Perth AUD 10,661,000 Saipem International BV 100.00 100.00 F.C.

(Australia)

Saipem Canada Inc Montreal CAD 100,100 Saipem International BV 100.00 100.00 F.C.

(Canada)

Saipem Contracting (Nigeria) Ltd Lagos NGN 827,000,000 Saipem International BV 97.94 97.94 F.C.

(Nigeria) Third parties 2.06

Saipem Contracting Algérie SpA Algeri DZD 1,556,435,000 Sofresid SA 100.00 100.00 F.C.

(Algeria)

Saipem Contracting Netherlands BV Amsterdam EUR 20,000 Saipem International BV 100.00 100.00 F.C.

(Netherlands)

Saipem do Brasil Rio de Janeiro BRL 1,154,796,299 Saipem International BV 100.00 100.00 F.C.

Serviçõs de Petroleo Ltda (Brazil)

Saipem Drilling Co Private Ltd Mumbai INR 50,273,400 Saipem International BV 49.73 100.00 F.C.

(India) Saipem SA 50.27

Saipem Drilling Norway AS Sola NOK 100,000 Saipem International BV 100.00 100.00 F.C.

(Norway)

Saipem East Africa Ltd Kampala UGX 50,000,000 Saipem International BV 51.00 51.00 E.M.

(Uganda) Third parties 49.00

Saipem India Projects Private Ltd Chennai INR 407,000,000 Saipem SA 100.00 100.00 F.C.

(India)

Saipem Ingenieria Madrid EUR 80,000 Saipem International BV 100.00 100.00 F.C.

y Construcciones SLU (Spain)

Saipem International BV Amsterdam EUR 172,444,000 Saipem SpA 100.00 100.00 F.C.

(Netherlands)

Saipem Libya LLC - SA.LI.CO. Llc Tripoli LYD 10,000,000 Saipem International BV 60.00 100.00 F.C.

(Libya) Snamprogetti 40.00

Netherlands BV

Saipem Ltd Kingston upon Thames, Surrey EUR 7,500,000 Saipem International BV 100.00 100.00 F.C.

(United Kingdom)

Saipem Luxembourg SA Luxembourg EUR 31,002 Saipem Maritime Asset 99.99 100.00 F.C.

(Luxembourg)

Management Luxembourg Sàrl

Saipem (Portugal) Comércio 0.01

Marítimo, Sociedade

Unipessoal Lda

Saipem Maritime Asset Luxembourg USD 378,000 Saipem SpA 100.00 100.00 F.C.

Management Luxembourg Sàrl (Luxembourg)

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

(*) F.C. = full consolidation, W.I. = working interest, E.M. = equity method, Co. = cost method

(**) In liquidation.

(***) Inactive throughout the period.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 69

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Saipem Misr Port Said EUR 2,000,000 Saipem International BV 99.92 100.00 F.C.

for Petroleum Services (S.A.E.) (Egypt) ERS - Equipment Rental 0.04

& Services BV

Saipem (Portugal) Comércio 0.04

Marítimo, Sociedade

Unipessoal Lda

Saipem Norge AS Sola NOK 100,000 Saipem International BV 100.00 100.00 F.C.

(Norway)

Saipem Offshore Norway AS Sola NOK 120,000 Saipem SpA 100.00 100.00 F.C.

(Norway)

Saipem SA Montigny le Bretonneux EUR 26,488,695 Saipem SpA 100.00 100.00 F.C.

(France)

Saipem Services México SA de Cv Delegacion Cuauhtemoc MXN 50,000 Saimexicana SA de Cv 100.00 100.00 F.C.

(Mexico)

Saipem Singapore Pte Ltd Singapore SGD 28,890,000 Saipem SA 100.00 100.00 F.C.

(Singapore)

Saipem Ukraine Llc Kiev EUR 106,061 Saipem International BV 99.00 100.00 F.C.

(Ukraine) Saipem Luxembourg SA 1.00

Sajer Iraq Co for Petroleum Services, Baghdad IQD 300,000,000 Saipem International BV 60.00 60.00 F.C.

Trading, General Contracting (Iraq) Third parties 40.00

& Transport Llc

Saudi Arabian Saipem Ltd Al-Khobar SAR 5,000,000 Saipem International BV 60.00 60.00 F.C.

(Saudi Arabia) Third parties 40.00

Sigurd Rück AG Zurich CHF 25,000,000 Saipem International BV 100.00 100.00 F.C.

(Switzerland)

Snamprogetti Engineering Al-Khobar SAR 10,000,000 Snamprogetti 70.00 70.00 F.C.

& Contracting Co Ltd (Saudi Arabia) Netherlands BV

Third parties 30.00

Snamprogetti Engineering BV Amsterdam EUR 18,151 Saipem Maritime 100.00 100.00 F.C.

(Netherlands) Asset Management

Luxembourg Sàrl

Snamprogetti Ltd

(**)

London GBP 9,900 Snamprogetti 100.00 100.00 F.C.

(United Kingdom) Netherlands BV

Snamprogetti Lummus Gas Ltd Sliema EUR 50,000 Snamprogetti 99.00 99.00 F.C.

(Malta) Netherlands BV

Third parties 1.00

Snamprogetti Netherlands BV Amsterdam EUR 203,000 Saipem SpA 100.00 100.00 F.C.

(Netherlands)

Snamprogetti Romania Srl Bucharest RON 5,034,100 Snamprogetti 99.00 100.00 F.C.

(Romania) Netherlands BV

Saipem International BV 1.00

Snamprogetti Saudi Arabia Co Ltd Llc Al-Khobar SAR 10,000,000 Saipem International BV 95.00 100.00 F.C.

(Saudi Arabia) Snamprogetti 5.00

Netherlands BV

Sofresid Engineering SA Montigny le Bretonneux EUR 1,267,143 Sofresid SA 99.99 100.00 F.C.

(France) Third parties 0.01

Sofresid SA Montigny le Bretonneux EUR 8,253,840 Saipem SA 100.00 100.00 F.C.

(France)

Sonsub International Pty Ltd Sydney AUD 13,157,570 Saipem International BV 100.00 100.00 F.C.

(Australia)

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

(*) F.C. = full consolidation, W.I. = working interest, E.M. = equity method, Co. = cost method

(**) In liquidation.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 70

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Associated and jointly-controlled companies

Italy

ASG Scarl San Donato Milanese EUR 50,864 Saipem SpA 55.41 55.41 E.M.

Third parties 44.59

Baltica Scarl

(***)

Rome EUR 10,000 Saipem SpA 50.00 50.00 E.M.

Third parties 50.00

CEPAV (Consorzio Eni San Donato Milanese EUR 51,646 Saipem SpA 52.00 52.00 E.M.

per l’Alta Velocità) Due Third parties 48.00

CEPAV (Consorzio Eni San Donato Milanese EUR 51,646 Saipem SpA 50.36 50.36 E.M.

per l’Alta Velocità) Uno Third parties 49.64

Consorzio F.S.B. Venice - Marghera EUR 15,000 Saipem SpA 28.00 28.00 Co.

Third parties 72.00

Consorzio Sapro San Giovanni Teatino EUR 10,329 Saipem SpA 51.00 51.00 Co.

Third parties 49.00

Modena Scarl

(**)

San Donato Milanese EUR 400,000 Saipem SpA 59.33 59.33 E.M.

Third parties 40.67

Rodano Consortile Scarl San Donato Milanese EUR 250,000 Saipem SpA 53.57 53.57 E.M.

Third parties 46.43

Rosetti Marino SpA Ravenna EUR 4,000,000 Saipem SA 20.00 20.00 E.M.

Third parties 80.00

Ship Recycling Scarl Genoa EUR 10,000 Saipem SpA 51.00 51.00 W.I.

Third parties 49.00

Outside Italy

02 Pearl Snc Montigny le Bretonneux EUR 1,000 Saipem SA 50.00 50.00 E.M.

(France) Third parties 50.00

CCS Netherlands BV

(***)

Amsterdam EUR 300,000 Saipem International BV 33.33 33.33 E.M.

(Netherlands) Third parties 66.67

Charville - Consultores e Serviços Lda Funchal EUR 5,000 Saipem International BV 50.00 50.00 E.M.

(Portugal) Third parties 50.00

CMS&A Wll Doha QAR 500,000 Snamprogetti 20.00 50.00 E.M.

(Qatar) Netherlands BV

Third parties 80.00

CSC Japan Godo Kaisha

(***)

Yokohama JPY 3,000,000 CCS Netherlands BV 100.00 33.33 E.M.

(Japan)

CSFLNG Netherlands BV Amsterdam EUR 600,000 Saipem SA 50.00 50.00 E.M.

(Netherlands) Third parties 50.00

FPSO Mystras (Nigeria) Ltd

(**) (***)

Victoria Island - Lagos NGN 15,000,000 FPSO Mystras - Produção 100.00 50.00 E.M.

(Nigeria) de Petròleo Lda

FPSO Mystras - Produção de Petròleo Lda Funchal EUR 50,000 Saipem International BV 50.00 50.00 E.M.

(Portugal) Third parties 50.00

Hazira Cryogenic Engineering Mumbai INR 500,000 Saipem SA 55.00 55.00 E.M.

& Construction Management Private Ltd (India) Third parties 45.00

KWANDA Suporte Logistico Lda Luanda AOA 25,510,204 Saipem SA 40.00 40.00 E.M.

(Angola) Third parties 60.00

LNG - Serviços e Gestao de Projectos Lda Funchal EUR 5,000 Snamprogetti 25.00 25.00 E.M.

(Portugal) Netherlands BV

Third parties 75.00

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

(*) F.C. = full consolidation, W.I. = working interest, E.M. = equity method, Co. = cost method

(**) In liquidation.

(***) Inactive throughout the period.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 71

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Mangrove Gas Netherlands BV Amsterdam EUR 2,000,000 Saipem International BV 50.00 50.00 E.M.

(Netherlands) Third parties 50.00

Petromar Lda Luanda USD 357,143 Saipem SA 70.00 70.00 E.M.

(Angola) Third parties 30.00

S.B.K. Baltica Società Consortile Gdan´sk PLN 10,000 Saipem SpA 49.00 50.00 Co.

a Responsabilità Limitata Spólka (Poland) Baltica Scarl 2.00

Komandytowa

(***)

Third parties 49.00

Sabella SAS Quimper EUR 5,263,495 Sofresid Engineering SA 22.04 22.04 E.M.

(France) Third parties 77.96

Saidel Ltd Victoria Island - Lagos NGN 236,650,000 Saipem International BV 49.00 49.00 E.M.

(Nigeria) Third parties 51.00

Saipar Drilling Co BV Amsterdam EUR 20,000 Saipem International BV 50.00 50.00 E.M.

(Netherlands) Third parties 50.00

Saipem Dangote E&C Ltd

(***)

Victoria Island - Lagos NGN 100,000,000 Saipem International BV 49.00 49.00 E.M.

(Nigeria) Third parties 51.00

Saipem Taqa Al Rushaid Dammam SAR 40,000,000 Saipem International BV 40.00 40.00 E.M.

Fabricators Co Ltd (Saudi Arabia) Third parties 60.00

Saipon Snc Montigny le Bretonneux EUR 20,000 Saipem SA 60.00 60.00 W.I.

(France) Third parties 40.00

Sairus Llc Krasnodar RUB 83,603,800 Saipem International BV 50.00 50.00 E.M.

(Russian Federation) Third parties 50.00

Société pour la Réalisation Anjra EUR 33,000 Saipem SA 33.33 33.33 E.M.

du Port de Tanger Méditerranée (Morocco) Third parties 66.67

Southern Gas Constructors Ltd Lagos NGN 10,000,000 Saipem International BV 50.00 50.00 E.M.

(Nigeria) Third parties 50.00

SPF - TKP Omifpro Snc Paris EUR 50,000 Saipem SA 50.00 50.00 E.M.

(France) Third parties 50.00

Sud-Soyo Urban Development Lda

(***)

Soyo AOA 20,000,000 Saipem SA 49.00 49.00 E.M.

(Angola) Third parties 51.00

Tchad Cameroon Maintenance BV Rotterdam EUR 18,000 Saipem SA 40.00 40.00 E.M.

(Netherlands) Third parties 60.00

Tecnoprojecto Internacional Porto Salvo - EUR 700,000 Saipem SA 42.50 42.50 E.M.

Projectos e Realizações Industriais SA Concelho de Oeiras Third parties 57.50

(Portugal)

T.C.P.I. Angola Tecnoprojecto Luanda AOA 9,000,000 Petromar Lda 35.00 24.50 E.M.

Internacional SA (Angola) Third parties 65.00

TMBYS SAS Guyancourt EUR 30,000 Saipem SA 33.33 33.33 E.M.

(France) Third parties 66.67

TSGI Mühendislik I

·ns¸aat Ltd S¸irketi Istanbul TRY 600,000 Saipem Ingenieria 30.00 33.33 E.M.

(Turkey) Y Construcciones SLU

Third parties 70.00

TSKJ II - Construções Internacionais, Funchal EUR 5,000 TSKJ - Servições 100.00 25.00 E.M.

Sociedade Unipessoal, Lda (Portugal) de Engenharia Lda

TSKJ - Nigeria Ltd Lagos NGN 50,000,000 TSKJ II - Construções 100.00 25.00 E.M.

(Nigeria) Internacionais, Sociedade

Unipessoal, Lda

TSKJ - Servições de Engenharia Lda Funchal EUR 5,000 Snamprogetti 25.00 25.00 E.M.

(Portugal) Netherlands BV

Third parties 75.00

Xodus Subsea Ltd London GBP 1,000,000 Saipem International BV 50.00 50.00 E.M.

(United Kingdom) Third parties 50.00

Company

Registered office

Currency

Share capital

Shareholders

% held

% Saipem’s

consolidation

Method

of consolidation

or accounting

principle

(*)

(*) F.C. = full consolidation, W.I. = working interest, E.M. = equity method, Co. = cost method

(***) Inactive throughout the period.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 72

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

The Saipem Group comprises 106 companies: 59 are consolidated using the full consolidation method, 2 using the working interest method, 42 using

the equity method and 3 using the cost method.

At June 30, 2015, the companies of Saipem SpA can be broken down as follows:

Subsidiaries Associates and jointly-controlled entities

Italy Outside Italy Total Italy Outside Italy Total

Subsidiaries/Joint operations and their participating interests 4 55 59 1 1 2

Companies consolidated using the full consolidation method 4 55 59 - - -

Companies consolidated using the working interest method - - - 1 1 2

Participating interests held by consolidated companies

(1)

-3393342

Accounted for using the equity method - 3 3 7 32 39

Accounted for using the cost method - - - 2 1 3

Total companies 4 58 62 10 34 44

(1) The participating interests held by subsidiaries and joint operations accounted for using the equity method and the cost method concern non-material entities and entities whose consolidation would not

have a material impact.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 73

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

Changes in the scope of consolidation

There were no significant changes in the scope of consolidation during

the first six months of 2015 with respect to the consolidated financial

statements at December 31, 2014. Changes are shown by order of

occurrence.

New incorporations, disposals, liquidations, mergers and changes to the

consolidation method:

- Construction Saipem Canada Inc, previously consolidated using the

full consolidation method, was merged by incorporation into Saipem

Canada Inc;

- 02 Pearl Snc, previously consolidated using the working interest

method, was consolidated using the equity method, as it became

immaterial;

- SPF - TKP Omifpro Snc, previously consolidated using the working

interest method, was consolidated using the equity method, as it

became immaterial;

- Baltica Scarl, with registered offices in Italy, was incorporated and is

accounted for using the equity method;

- Fertilizantes Nitrogenados de Oriente CEC, previously consolidated

using the cost method, was sold to third parties;

- Fertilizantes Nitrogenados de Oriente SA, previously consolidated

using the cost method, was sold to third parties;

- S.B.K. Baltica Società Consortile a Responsabilità Limitata Spólka

Komandytowa, with registered offices in Poland, was incorporated and

is accounted for using the cost method;

- Saipem UK Ltd, previously consolidated using the full consolidation

method, was removed from the Register of Companies;

- Barber Moss Ship Management AS, previously accounted for using the

equity method, was sold to third parties;

- Saipem Dangote E&C Ltd, with registered offices in Nigeria, was

incorporated and is accounted for using the equity method;

- PLNG 9 Snc di Chiyoda Corp e Servizi Energia Italia SpA, previously

accounted for using the equity method, was removed from the Register

of Companies.

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 74

Current assets

Cash and cash equivalents

Cash and cash equivalents amounted to €1,429 million, representing a decrease of €173 million compared with December 31, 2014 (€1,602 million).

Cash and equivalents at period-end, 29% of which are denominated in euro, 41% in US dollars and 30% in other currencies, received an average interest

rate of 0.295%. €678 million thereof (€885 million at December 31, 2014) are on deposit at Eni Group financial companies. Cash and cash equivalents

included cash and cash on hand of €5 million (€7 million at December 31, 2014).

Funds in two current accounts held by the subsidiary Saipem Contracting Algérie SpA (equivalent to €87 million at June 30, 2015) have been frozen

since February 2010 in connection with an investigation being conducted into third parties. The decrease of €3 million registered in the amount frozen

compared with the situation at December 31, 2014 was due to exchange rate differences.

The subsidiary Saipem Canada Inc has also deposited the equivalent of €7 million in trust funds in connection with disputes with a number of suppliers.

The breakdown of cash and cash equivalents of Saipem and other Group companies at June 30, 2015 by geographical area (based on the country where

the relevant position or account was domiciled) was as follows:

(€million) Dec. 31, 2014 June 30, 2015

Italy 173 225

Rest of Europe 1,069 807

CIS 11 16

Middle East 97 159

Far East 33 45

North Africa 104 94

West Africa and Rest of Africa 79 36

Americas 36 47

Total 1,602 1,429

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page 109.

Other financial assets held for trading or available for sale

Other financial assets held for trading or available for sale amounted to €8 million (€9 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Financing receivables for non-operating purposes

Listed bonds issued by sovereign states 65

Listed securities issued by financial institutions 33

Total 98

Listed bonds issued by sovereign states of €5 million at June 30, 2015 were as follows:

(€million)

Fixed rate bonds

France 3 3 2.50 2018 AA+

Spain 2 2 3.75 2020 BBB

Total 5 5

The listed securities issued by financial institutions amounting to €3 million carry a rating of Aaa (Moody’s).

Nominal value

Fair value

Nominal rate

of return %

Maturity

Rating - Moody’s

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 75

Trade and other receivables

Trade and other receivables of €3,466 million (€3,391 million at December 31, 2014) were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Trade receivables 2,808 2,716

Financing receivables for operating purposes 33

Financing receivables for non-operating purposes 58 32

Prepayments for services 341 465

Other receivables 181 250

Total 3,391 3,466

Receivables are stated net of a provision for impairment losses of €230 million.

(€million)

Trade receivables 110 135 (36) 3 - 212

Other receivables 36 - (18) - - 18

Total 146 135 (54) 3 - 230

Trade receivables amounted to €2,716 million, representing a decrease of €92 million, due principally to the write-down of a portion of overdue

receivables as the result of an increase in the country risk.

At June 30, 2015, Saipem had non-recourse non-notification factoring agreements relating to trade receivables, including not past due receivables,

amounting to €366 million (€512 million at December 31, 2014). Saipem is responsible for managing the collection of the assigned receivables and for

transferring the sums collected to the factors.

Trade receivables included retention amounts guaranteeing contract work-in-progress of €179 million (€162 million at December 31, 2014), of which

€64 million was due within one year and €115 million due after one year.

Financing receivables for operating purposes of €3 million (€3 million at December 31, 2014) were mainly related to a receivable held by Saipem SpA

from Serfactoring SpA.

The financing receivables for non-operating purposes of €32 million (€58 million at December 31, 2014) related mainly to the deposit paid by

Snamprogetti Netherlands BV in relation to the TSKJ matter of €25 million (see the ‘Legal proceedings’ section for full details).

Other receivables of €250 million were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Receivables from:

- insurance companies 73

- employees 29 37

Guarantee deposits 13 17

Other receivables 132 193

Total 181 250

Trade receivables and other receivables from related parties are detailed in Note 43 ‘Transactions with related parties’.

The fair value of trade and other receivables did not differ significantly from their carrying amount due to the short period of time elapsed between their

date of origination and their due date.

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page109.

Dec. 31, 2014

Additions

Deductions

Currency

translation

differences

Other changes

June 30, 2015

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059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 76

Inventories

Inventories amounted to €2,531 million (€2,485 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Raw and auxiliary materials and consumables 530 530

Contract work-in-progress 1,955 2,001

Total 2,485 2,531

The item ‘Raw and auxiliary materials and consumables’ includes spare parts for drilling and construction activities, as well as consumables for internal

use and not for sale. The item is stated net of a valuation allowance of €48 million.

(€million)

Raw and auxiliary materials and consumables valuation allowance 9 44 (5) - 48

Total 9 44 (5) - 48

Contract work-in-progress relates to timing differences between actual project progress and the achievement of contractual invoicing milestones, and

to the recognition of additional contract revenues deemed probable and reasonably estimated.

The amount of contract work-in-progress as presented in these condensed interim consolidated financial statements as at and for the six-month period

ended June 30, 2015 was affected by delays and cancellations of projects already underway, as well as by the adoption by clients of an increasingly

inflexible attitude during negotiations for change orders and claims.

The amount recorded in relation to contract work-in-progress was largely in line with the same period of the previous year, due to the combined effect of:

(i) the increase related to project progress made over the half year period pending the approval of milestones by clients, whose timeframe has been

affected by the prolongation of negotiations for additional work; (ii) the negative effect produced by estimation of a limited number of specific projects,

which were in part due to a change in the negotiating approach adopted in relation to certain positions.

Information on construction contracts accounted for in accordance with IAS 11 is provided in Note 42 ‘Segment information, geographical information

and construction contracts’.

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page 109.

Current tax assets

Current tax assets amounted to €311 million (€317 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Italian tax authorities 150 170

Foreign tax authorities 167 141

Total 317 311

Other current tax assets

Other current tax assets amounted to €399 million (€307 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Italian tax authorities 47 79

Foreign tax authorities 260 320

Total 307 399

Dec. 31, 2014

Additions

Deductions

Other changes

June 30, 2015

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 7-08-2015 9:58 Pagina 77

Other current assets

Other current assets amounted to €359 million (€520 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Fair value of hedging derivatives 193 136

Fair value of non-hedging derivatives 154 82

Other assets 173 141

Total 520 359

At June 30, 2015, derivative instruments had a positive fair value of €218 million (€347 million at December 31, 2014).

The fair value of derivative instruments was determined using valuation models commonly used in the financial sector and based on period-end market

data (exchange and interest rates).

The fair value of forward contracts (outrights, forwards and currency swaps) was determined by comparing the net present value at contractual

conditions of forward contracts outstanding at June 30, 2015, with their present value recalculated at period-end market conditions. The model used is

the Net Present Value model, which is based on the forward contract exchange rate, the period-end exchange rate and the respective forward interest

rate curves.

The table below shows the assets considered in the calculation of the fair value of derivative contracts, including the long-term portion, broken down by

type.

Assets Dec. 31, 2014 Assets June 30, 2015

Fair value Commitments Fair value Commitments

(€million) purchase sale purchase sale

1) Derivative contracts qualified for hedge accounting:

- forward currency contracts (Spot component)

. purchase 192 46

. sale 3 105

Total 195 151

- forward currency contracts (Forward component)

. purchase (2) 2

. sale - (7)

Total (2) 2,413 64 (5) 787 4,089

- forward commodity contracts (Forward component)

. purchase - -

Total - - - -

Total derivative contracts qualified for hedge accounting 193 2,413 64 146 787 4,089

2) Derivative contracts not qualified for hedge accounting:

- forward currency contracts (Spot component)

. purchase 135 47

. sale 21 36

Total 156 83

- forward currency contracts (Forward component)

. purchase - 1

. sale (2) (2)

Total (2) 3,367 229 (1) 835 1,183

- forward commodity contracts (Forward component)

. sale - -

Total 2-

Total derivative contracts not qualified for hedge accounting 154 3,367 231 82 835 1,183

Total 347 5,780 295 228 1,622 5,272

Cash flow hedge transactions related to forward purchase and sale transactions (outrights, forwards and currency swaps).

The cash flows and the income statement impact of hedged highly probably forecast transactions at June 30, 2015 are expected to occur up until 2017.

During the first half of 2015, there were no significant cases of hedged items being no longer considered highly probable.

The positive fair value of derivatives qualified for hedge accounting at June 30, 2015, including the long-term portion described in Note 13 ‘Other

non-current assets’, totalled €146 million (€193 million at December 31, 2014). The spot component of these derivatives of €151 million (€195 million

at December 31, 2014) was deferred in a hedging reserve in equity (€142 million; €171 million at December 31, 2014) and recorded as finance income

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 78

and expense (€9 million; €24 million at December 31, 2014), while the forward component, which was not designated as a hedging instrument, was

recognised as finance income and expense (€5 million; €2 million at December 31, 2014).

The negative fair value of derivatives qualified for hedge accounting at June 30, 2015, analysed in Note 18 ‘Other current liabilities’ and including the

long-term portion described in Note 23 ‘Other non-current liabilities’, was €221 million (€556 million at December 31, 2014). The spot component of

these derivatives of €221 million was deferred in a hedging reserve in equity (€181 million; €501 million at December 31, 2014) and recorded as

finance income and expense (€40 million; €52 million at December 31, 2014).

During the period, operating revenues and expenses were adjusted by a net negative amount of €267 million to reflect the effects of hedging.

Other assets at June 30, 2015 amounted to €141 million, representing a decrease of €32 million compared with December 31, 2014, and consisted

mainly of prepayments.

Other assets from related parties are shown in Note 43 ‘Transactions with related parties’.

Non-current assets

Property, plant and equipment

Property, plant and equipment amounted to €7,383 million (€7,601 million at December 31, 2014) and consisted of the following:

(€million)

Property, plant and equipment 13,639 6,038 7,601 265 (377) (211) (1) 106 - 7,383 14,071 6,688

Total 13,639 6,038 7,601 265 (377) (211) (1) 106 - 7,383 14,071 6,688

Capital expenditure in the first half of 2015 amounted to €265 million (€324 million in the first half of 2014) and mainly related to:

-€80 million in the Offshore Engineering & Construction sector, relating mainly to the maintenance and upgrading of the existing asset base;

-€16 million in the Onshore Engineering & Construction sector relating to the purchase of equipment and the maintenance of existing assets;

-€107 million in the Offshore Drilling sector, relating mainly to class reinstatement works on the drillships Saipem 10000 and Saipem 12000 and on

the drilling jack-up Perro Negro 8, as well as maintenance and upgrading of the existing asset base;

-€62 million in the Onshore Drilling sector relating to upgrading work on the existing asset base.

No finance expenses were capitalised during the period.

Exchange rate differences arising from the translation of financial statements prepared in currencies other than the euro, amounting to €106 million,

mainly related to companies whose functional currency is the US dollar.

Fully-depreciated property, plant and equipment that is still in use mainly consisted of project-specific equipment which has been fully depreciated over

the life of the project.

During the first half of the year, no government grants were recorded as a decrease of the carrying value of property, plant and equipment.

At June 30, 2015, all property, plant and equipment was free from pledges, liens and encumbrances.

The total commitment on current items of capital expenditure at June 30, 2015 amounted to €144 million (€174 million at December 31, 2014), as

indicated in the ‘Risk management’ section of the ‘Operating and Financial Review’.

Property, plant and equipment includes assets carried under finance leases amounting to the equivalent of €30 million, relating to finance leases for

the utilisation of two onshore drilling rigs in Saudi Arabia.

In accordance with the need to rethink Saipem’s operating strategy via the rationalisation of fabrication yards and vessels that are no longer viable in the

new market environment and with the guidelines set out in the turnaround plan ‘Fit for the future’, the first half of 2015 saw a write-down totalling

€41 million recorded against the vessels Scarabeo 4, Castoro Sette, S355 and Saibos 230, which have been slated for scrapping. In addition, write-downs

totalling €170 million were recorded in relation to components of two fabrication yards that will not be used in future activities. Finally, following the

revision of the depreciation schedule on December 31, 2014, the rig Semac 1, which has been slated for scrapping, was fully depreciated as of June 30,

2015.

In reviewing its impairment indicators, Saipem considers, among other factors, the relationship between its market capitalisation and net assets. At June

30, 2015, the Group’s market capitalisation was higher than its net assets. This notwithstanding, in the light of the size of the write-downs recorded

during the period against tangible assets that are not independent cash generating units and against contract work-in-progress and also in view of

ongoing market conditions characterised by low oil prices and a high degree of volatility, management deemed it necessary to update impairment tests

on all cash generating units. The cash generating units identified were as follows: two leased FPSO units, the other Offshore E&C assets, the Onshore E&C

sector, the Onshore Drilling sector and the individual offshore drilling rigs (15 separate rigs).

The analyses performed showed that the carrying amount of the cash generating units tested could be recovered through use.

Gross value

at Dec. 31, 2014

Accumulated depreciation

and impairment

at Dec. 31, 2014

Net value

at Dec. 31, 2014

Capital expenditure

Depreciation

Impairment

Disposals

Exchange differences

Other changes

Final net value

at June 30, 2015

Final gross value

at June 30, 2015

Accumulated depreciation

and impairment

at June 30, 2015

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 79

Intangible assets

Intangible assets amounted to €758 million (€760 million at December 31, 2014) and were as follows:

(€million)

Intangible assets with finite useful lives 191 159 32 3 (5) - - - (1) - 29 193 164

Other intangible assets with indefinite useful lives728-728-----1-729729-

Total 9191597603(5)-----758922164

Goodwill of €729 million related to the difference between the purchase price, including transaction costs, and the net assets of Saipem SA (€689

million), Sofresid SA (€21 million) and the Moss Maritime Group (€14 million) on the date that control was acquired.

For impairment purposes, goodwill has been allocated to the following cash-generating units:

(€million) June 30, 2015

Offshore E&C 415

Onshore E&C 314

Total 729

Management has retested the value in use of the CGUs to which goodwill has been allocated to verify the recoverability of their carrying amounts,

including allocated goodwill. The recoverable amount of the two cash generating units in question was determined based on value in use, calculated by

discounting the future cash flows expected to result from the use of each CGU.

The expected future cash flows for the explicit forecast period of four years were derived from Saipem’s 2015-2018 Strategic Plan, has been updated to

reflect the revision of results expected for 2015 and for the following years of the plan to take into account current business trends.

For all cash generating units, value in use was calculated by discounting expected future post-tax cash flows at a rate of 5.9% (down 1% compared with

2014). The discount rate was based on: (i) a cost of debt consistent with current interest rates and Eni’s rating; (ii) Eni’s leverage target; and (iii) the beta

of the Saipem share.

The terminal value (i.e. for subsequent years beyond the plan horizon) was estimated using the perpetuity model, applying a real growth rate of zero

(unchanged from 2014) reflecting expected long-term growth for the sectors, applied to the normalised free cash flow of the final projection year to take

into account the cyclical nature of the business.

Post-tax cash flows and discounting rates are used as they result in values similar to those resulting from a calculation using pre-tax cash flows and

discount rates.

The table below shows the amounts by which the recoverable amounts of the Offshore E&C and Onshore E&C cash generating units exceed their carrying

amounts, including allocated goodwill.

(€million)

Goodwill 415 314 729

Amount by which recoverable amount exceeds carrying amount 4,467 1,824 6,291

The key assumptions adopted for assessing recoverable amounts were principally the operating results of the CGU (based on a combination of various

factors, e.g. sales volumes, service prices, project profit margins, cost structure), the discount rate, and the growth rates adopted to determine the

terminal value.

Offshore E&C

Onshore E&C

Total

Gross value

at Dec. 31, 2014

Accumulated amortisation

and impairment

at Dec. 31, 2014

Net value

at Dec. 31, 2014

Investments

Amortisation

Impairment

Reversals

Disposals

Exchange differences

Other changes

Final net value

at June 30, 2015

Final gross value

at June 30, 2015

Accumulated amortisation

and impairment

at June 30, 2015

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059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 80

Investments accounted for using the equity method

Investments accounted for using the equity method of €124 million (€120 million at December 31, 2014) were as follows:

(€million)

Dec. 31, 2014

Investments in joint ventures

and associates 166 9 (3) 27 (3) (11) - 9 - (74) 120 -

Total 166 9 (3) 27 (3) (11) - 9 - (74) 120 -

June 30, 2015

Investments in joint ventures

and associates 120 1 - 8 (10) (1) - 5 - 1 124 -

Total 1201 -8(10)(1)-5 -1124 -

Investments in subsidiaries, jointly-controlled entities and associates are analysed in the section ‘Scope of consolidation at June 30, 2015’.

Acquisitions and subscriptions of €1 million related to the subscription of the share capital of Saipem Dangote E&C Ltd.

The share of profit of investments accounted for using the equity method of €8 million included profits for the period of €3 million recorded by the

jointly-controlled entity TSGI Mühendislik I

·ns¸aat Ltd S¸irketi, €4 million recorded by the associate KWANDA Suporte Logistico Lda and €1 million recorded

by other companies.

The share of losses of investments accounted for using the equity method of €10 million included losses for the period of €7 million recorded by the

jointly-controlled entities Petromar Lda (€5 million) and Xodus Subsea Ltd (€2 million) and a loss for the period of €3 million recorded by the associate

Saipem Taqa Al Rushaid Fabricators Co Ltd.

Deductions for dividends of €1 million related mainly to Rosetti Marino SpA.

The net carrying value of investments accounted for using the equity method related to the following companies:

(€million)

Rosetti Marino SpA 20.00 31 31

Petromar Lda 70.00 42 41

Other 47 52

Total investments in joint ventures and associates 120 124

The total carrying value of investments accounted for using the equity method does not include the provision for losses of €17 million (€8 million at

December 31, 2014) recorded under the provisions for contingencies.

Other financial assets

At June 30, 2015 other long-term financial assets amounted to €1 million (€1 million at December 31, 2014) and related to financing receivables held

for non-operating purposes by Sofresid SA.

Group

interest (%)

Net value

at Dec. 31, 2014

Net value

at June 30, 2015

Opening net value

Acquisitions

and subscriptions

Sales and redemption

Share of profit

of equity-accounted

investments

Share of loss

of equity-accounted

investments

Deduction

for dividends

Change in the scope

of consolidation

Currency translation

differences

Movements

in reserves

Other changes

Closing net value

Provision for impairment

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059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 81

Deferred tax assets

Deferred tax assets of €482 million (€297 million at December 31, 2014) are shown net of offsettable deferred tax liabilities.

(€million)

Deferred tax assets 297 279 11 (105) 482

Total 297 279 11 (105) 482

‘Other changes’, which amounted to negative €105 million, included: (i) offsetting of deferred tax assets against deferred tax liabilities at individual

entity level (negative €32 million); (ii) the negative tax effects (€69 million) of fair value changes of derivatives designated as cash flow hedges

reported in equity; and (iii) other changes (negative €4 million).

Net deferred tax assets consisted of the following:

(€million) Dec. 31, 2014 June 30, 2015

Deferred tax (314) (335)

Deferred tax assets available for offset 274 306

Deferred tax liabilities (40) (29)

Deferred tax assets 297 482

Net deferred tax assets (liabilities) 257 453

Taxes are shown in Note 39 ‘Income taxes’.

Other non-current assets

Other non-current assets of €111 million (€115 million at December 31, 2014) were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Fair value of hedging derivatives -10

Other receivables 16 16

Other non-current assets 99 85

Total 115 111

The fair value of hedging derivatives relates to foreign exchange risk hedges mainly entered into by Saipem SA and Sofresid SA with the Eni Group

maturing in 2016.

Other non-current assets mainly related to prepayments.

Other non-current assets from related parties are shown in Note 43 ‘Transactions with related parties’.

Current liabilities

Short-term debt

Short-term debt of €3,037 million (€2,186 million at December 31, 2014) consisted of the following:

(€million) Dec. 31, 2014 June 30, 2015

Banks 277 465

Other financial institutions 1,909 2,572

Total 2,186 3,037

Short-term debt increased by €851 million. Debt to banks include €250 million classified at December 31, 2014 under long-term debt relating to a loan

agreement signed in 2014 with covenants requiring Saipem to maintain specific financial and economic ratios. The loan has been reclassified under

short-term debt because the negative value recorded for EBITDA at June 30, 2015 is in breach of the one of the covenants, thus giving the lender the

ability to demand repayment of the loan.

The current portion of long-term debt, amounting to €487 million (€594 million at December 31, 2014), is detailed in Note 19 ‘Long-term debt and

current portion of long-term debt’.

Dec. 31, 2014

Additions

(Deductions)

Currency

translation

differences

Other changes

June 30, 2015

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 82

The breakdown of short-term debt by issuing institution, currency and average interest rate was as follows:

(€million)

Dec. 31, 2014 June 30, 2015

Interest rate % Interest rate %

Issuing institution Currency Amount from to Amount from to

Eni SpA Euro 124 1.518 1.518 363 1.510 1.510

Eni SpA US Dollar - - - 18 7.000 7.000

Serfactoring SpA Euro 7-----

Serfactoring SpA US Dollar 11 - - 20 - -

Serfactoring SpA Other 6-----

Eni Finance International SA Euro 697 0.657 2.157 749 0.660 1.510

Eni Finance International SA US Dollar 710 0.821 2.321 632 1.037 1.690

Eni Finance International SA Australian Dollar 197 3.150 3.150 235 2.650 2.650

Eni Finance International SA Canadian Dollar - - - 505 2.250 2.250

Eni Finance International SA Other 121 variable - - -

Eni Finance USA US Dollar - - - 8 1.687 1.687

Third parties Euro 5 1.018 1.018 257 0.940 1.585

Third parties US Dollar 4 1.351 1.571 1 0.417 8.000

Third parties Other 304 variable 249 variable

Total 2,186 3,037

At June 30, 2015, Saipem had unused lines of credit amounting to €2,478 million (€2,450 million at December 31, 2014). Commission fees on unused

lines of credit were not significant.

Short-term debt to related parties is shown in Note 43 ‘Transactions with related parties’.

Trade and other payables

Trade and other payables of €5,788 million (€5,669 million at December 31, 2014) consisted of the following:

(€million) Dec. 31, 2014 June 30, 2015

Trade payables 3,283 3,295

Deferred income and advances 1,980 1,990

Other payables 406 503

Total 5,669 5,788

Trade payables amounted to €3,295 million, representing an increase of €12 million compared with December 31, 2014.

Deferred income and advances of €1,990 million (€1,980 million at December 31, 2014), consisted mainly of adjustments to revenues from long-term

contracts of €1,381 million (€1,314 million at December 31, 2014) made on the basis of amounts contractually earned in accordance with the accruals

concept and advances on contract work in progress received by Saipem SpA and a number of foreign subsidiaries of €609 million (€666 million at

December 31, 2014).

Trade and other payables to related parties are shown in Note 43 ‘Transactions with related parties’.

Other payables of €503 million were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Payables to:

- employees 189 293

- national insurance/social security contributions 71 54

- insurance companies 55

- consultants and professionals 43

- Board Directors and Statutory Auditors 1-

Other payables 136 148

Total 406 503

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 83

The fair value of trade and other payables did not differ significantly from their carrying amount due to the short period of time elapsed between their

date of origination and their due date.

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page 109.

Income tax payables

Income tax payables of €128 million (€134 million at December 31, 2014) were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Italian tax authorities 312

Foreign tax authorities 131 116

Total 134 128

Other current tax liabilities

Other current tax liabilities amounted to €181 million (€184 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Italian tax authorities 13 -

Foreign tax authorities 171 181

Total 184 181

Other current liabilities

Other current liabilities amounted to €380 million (€838 million at December 31, 2014) and were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Fair value of hedging derivatives 555 216

Fair value of non-hedging derivatives 280 127

Other liabilities 337

Total 838 380

At June 30, 2015, derivative instruments had a negative fair value of €343 million (€835 million at December 31, 2014).

The following table shows the positive and negative fair values of derivative contracts at June 30, 2015.

(€million) Dec. 31, 2014 June 30, 2015

Positive fair value of derivative contracts 347 228

Negative fair value of derivative contracts (836) (348)

Total (489) (120)

The fair value of derivative instruments was determined using valuation models commonly used in the financial sector and based on period-end market

data (exchange and interest rates).

The fair value of forward contracts (outrights, forwards and currency swaps) was determined by comparing the net present value at contractual

conditions of forward contracts outstanding at June 30, 2015, with their present value recalculated at period-end market conditions. The model used is

the Net Present Value model, which is based on the forward contract exchange rate, the period-end exchange rate and the respective forward interest

rate curves.

A liability of €1 million (€1 million at December 31, 2014) relating to the fair value of an interest rate swap has been recorded under Note 19 ‘Long-term

debt’. The fair value of interest rate swaps was determined by comparing the net present value at contractual conditions of swaps outstanding at June

30, 2015, with their present value recalculated at period-end market conditions. The model used is the Net Present Value model, which is based on EUR

forward interest rates.

Saipem Condensed consolidated interim financial statements 2015 / Notes to the condensed consolidated interim financial statements

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 84

The table below shows the liabilities considered in the calculation of the fair value of derivative contracts, including the long-term portion, broken down

by type.

Liabilities Dec. 31, 2014 Liabilities June 30, 2015

Fair value Commitments Fair value Commitments

(€million) purchase sale purchase sale

1) Derivative contracts qualified for hedge accounting:

- interest rate contracts (Spot component)

. purchase 1 1

Total 1 250 1 250

- forward currency contracts (Spot component)

. purchase 27 47

. sale 525 173

Total 552 220

- forward currency contracts (Forward component)

. purchase (2) (4)

. sale - 4

Total (2) 582 6,047 - 2,036 2,143

- forward commodity contracts (Forward component)

. purchase 5 -

Total 5 16 - - 3 -

Total derivative contracts qualified for hedge accounting 556 848 6,047 221 2,289 2,143

2) Derivative contracts not qualified for hedge accounting:

- forward currency contracts (Spot component)

. purchase 19 17

. sale 261 109

Total 280 126

- forward currency contracts (Forward component)

. purchase (1) (1)

. sale 1 2

Total - 290 3,404 1 715 930

- forward commodity contracts (Forward component)

. purchase - -

. sale - -

Total - 1 - - 3 3

Total derivative contracts not qualified for hedge accounting 280 291 3,404 127 718 933

Total 836 1,139 9,451 348 3,007 3,076

For a comprehensive analysis of the fair value of hedging derivatives, see Note 7 ‘Other current assets’, Note 13 ‘Other non-current assets’ and Note 23

‘Other non-current liabilities’.

Other liabilities amounted to €37 million (€3 million at December 31, 2014).

Other liabilities to related parties are shown in Note 43 ‘Transactions with related parties’.

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059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 85

Non-current liabilities

Long-term debt and current portion of long-term debt

Long-term debt, including the current portion of long-term debt, amounted to €3,964 million (€3,908 million at December 31, 2014) and was as follows:

Dec. 31, 2014 June 30, 2015

Current Long-term Current Long-term

(€million) portion portion Total portion portion Total

Banks - 250 250 - - -

Other financial institutions 594 3,064 3,658 487 3,477 3,964

Total 594 3,314 3,908 487 3,477 3,964

The long-term portion of long-term debt is shown below by year of maturity:

(€million)

Other financial institutions 2016-2024 249 1,059 638 1,487 44 3,477

Total 249 1,059 638 1,487 44 3,477

The long-term portion of long-term debt amounted to €3,477 million, up €163 million against December 31, 2014 (€3,314 million).

The following table breaks down long-term debt, inclusive of the current portion, by issuing entity and currency and also shows maturities and average

interest rates:

(€million)

Dec. 31, 2014 June 30, 2015

Interest rate % Interest rate %

Issuing institution Currency Maturity Amount from to Amount from to

Eni SpA Euro 2015-2017 1,674 2.518 4.950 2,018 2.510 4.950

Eni Finance International SA Euro 2015-2024 1,319 0.757 2.507 1,337 0.760 2.510

Eni Finance International SA US Dollar 2015-2016 665 0.921 4.330 609 0.940 2.687

Third parties Euro 2017 250 1.585 1.585 - - -

Total 3,908 3,964

There was no debt secured by mortgages or liens on fixed assets of consolidated companies or by pledges on securities.

The fair value of long-term debt, including the current portion of long-term debt, amounted to €4,247 million (€4,189 million at December 31, 2014) and

was calculated by discounting the expected future cash flows at the following rates:

(%) 2014 2015

Euro 0.16-0.36 0.01-0.50

US Dollar 0.27-1.28 0.18-0.89

The difference between the fair value of long-term debt and its nominal value was mainly due to the debt of €750 million expiring in 2019.

Long-term debt to related parties is shown in Note 43 ‘Transactions with related parties’.

Type

Maturity range

2016

2017

2018

2019

After

Total

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The following table shows net borrowings as indicated in the section ‘Financial and economic results’ of the ‘Operating and Financial Review’:

Dec. 31, 2014 June 30, 2015

(€million) Current Non-current Total Current Non-current Total

A. Cash and cash equivalents 1,602 - 1,602 1,429 - 1,429

B. Available-for-sale securities 9 - 9 8 - 8

C. Liquidity (A+B) 1,611 - 1,611 1,437 - 1,437

D. Financing receivables 58 - 58 32 - 32

E. Short-term bank debt 277 - 277 465 - 465

F. Long-term bank debt - 250 250 - - -

G. Short-term related party debt 1,873 - 1,873 2,530 - 2,530

H. Long-term related party debt 594 3,064 3,658 487 3,477 3,964

I. Other short-term debt 36 - 36 42 - 42

L.Other long-term debt ------

M. Total borrowings (E+F+G+H+I+L) 2,780 3,314 6,094 3,524 3,477 7,001

N. Net financial position pursuant to Consob

communication No. DEM/6064293/2006 (M-C-D) 1,111 3,314 4,425 2,055 3,477 5,532

O. Non-current financing receivables - 1 1 - 1 1

P. Net borrowings (N-O) 1,111 3,313 4,424 2,055 3,476 5,531

Net borrowings include a liability relating to the interest rate swap but do not include the fair value of derivatives indicated in Note 7 ‘Other current

assets’, Note 13 ‘Other non-current assets’, Note 18 ‘Other current liabilities’ and Note 23 ‘Other non-current liabilities’.

Cash and cash equivalents included €94 million deposited in accounts that are frozen or placed in trust funds, as indicated in Note 1 ‘Cash and cash

equivalents’.

Provisions for contingencies

Provisions for contingencies of €264 million (€218 million at December 31, 2014) consisted of the following:

(€million)

Dec. 31, 2014

Provisions for taxes 55 4 (13) 2 48

Provisions for contractual penalties and disputes 14 19 (5) - 28

Provisions for losses of investments 8 4 - (4) 8

Provision for contractual expenses and losses on long-term contracts 83 63 (48) 4 102

Other provisions 44 50 (59) (3) 32

Total 204 140 (125) (1) 218

June 30, 2015

Provisions for taxes 48 1 (4) - 45

Provisions for contractual penalties and disputes 28 6 (19) 2 17

Provisions for losses of investments 8 9 - - 17

Provision for contractual expenses and losses on long-term contracts 102 88 (26) - 164

Other provisions 32 1 (10) (2) 21

Total 218 105 (59) - 264

The provisions for taxes amounted to €45 million and related principally to disputes with foreign tax authorities that are either ongoing or potential,

taking into account the results of recent assessments.

The provisions for contractual penalties and disputes amounted to €17 million and consisted of provisions set aside by Saipem SpA and a number of

foreign subsidiaries in relation to ongoing disputes.

Opening balance

Additions

Deductions

Other changes

Closing balance

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The provisions for losses of investments amounted to €17 million and related to provisions for losses of investments that exceed their carrying

amount. The provision related mainly to amounts set aside in connection with the investment held in the company Southern Gas Constructor Ltd by

Saipem International BV.

The provision for contractual expenses and losses on long-term contracts stood at €164 million and related to an estimate of expected losses on

long-term contracts in the Offshore and Onshore Engineering & Construction sectors.

Other provisions amounted to €21 million.

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page 109.

Provisions for employee benefits

Provisions for employee benefits at June 30, 2015 amounted to €240 million (€237 million at December 31, 2014).

Deferred tax liabilities

Deferred tax liabilities of €29 million (€40 million at December 31, 2014) are shown net of offsettable deferred tax assets of €306 million.

(€million)

Deferred tax liabilities 40 145 4 (160) 29

Total 40 145 4 (160) 29

The item ‘Other changes’, which amounted to negative €160 million, included: (i) offsetting of deferred tax assets against deferred tax liabilities at

individual entity level (negative €32 million); (ii) the negative tax effects (€122 million) of fair value changes of derivatives designated as cash flow

hedges reported in equity; and (iii) other changes (negative €6 million).

A breakdown of deferred tax assets is provided in Note 12 ‘Deferred tax assets’.

Tax losses

Tax losses amounted to €2,374 million (€1,427 million at December 31, 2014) of which a considerable part can be carried forward without limit. Tax

recovery corresponds to a tax rate of 27.5% for Italian companies and to an average tax rate of 28% for foreign companies.

Tax losses related mainly to foreign companies and can be used in the following periods:

(€million)

2015 --

2016 -62

2017 - 111

2018 -60

2019 -25

After 2019 -571

Without limit 285 1,260

Total 285 2,089

Other non-current liabilities

Other non-current liabilities of €5 million (€2 million at December 31, 2014) were as follows:

(€million) Dec. 31, 2014 June 30, 2015

Fair value of hedging derivatives -4

Trade and other payables 21

Total 25

The fair value of hedging derivatives relates to foreign exchange risk hedges entered into by Saipem SpA and Saipem SA with the Eni Group maturing in

2016.

Italian

subsidiaries

Foreign

subsidiaries

Dec. 31, 2014

Additions

(Deductions)

Currency

translation

differences

Other changes

June 30, 2015

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Assets held for sale

In January 2015, Snamprogetti Netherlands BV completed the sale of its interests in Fertilizantes Nitrogenados de Oriente CEC and Fertilizantes

Nitrogenados de Oriente SA. As of June 30, 2015 there were no assets held for sale.

Shareholders’ equity

Non-controlling interests

Non-controlling interests at June 30, 2015 amounted to €58 million (€41 million at December 31, 2014).

Saipem’s shareholders’ equity

Saipem’s shareholders’ equity at June 30, 2015 amounted to €3,288 million and was as follows:

(€million) Dec. 31, 2014 June 30, 2015

Share capital 441 441

Share premium reserve 55 55

Legal reserve 88 88

Cash flow hedge reserve (275) (289)

Cumulative currency translation differences (9) 65

Employee defined benefits reserve (19) (20)

Other 66

Retained earnings 4,123 3,905

Net profit (loss) for the period (230) (920)

Treasury shares (43) (43)

Total 4,137 3,288

Saipem’s shareholders’ equity at June 30, 2015 included distributable reserves of €3,830 million (€3,931 million at December 31, 2014), some of which

are subject to taxation upon distribution. A deferred tax liability has been recorded in relation to the share of reserves that may potentially be distributed

(€107 million).

Share capital

At June 30, 2015, the share capital of Saipem SpA, fully paid-up, amounted to €441 million, corresponding to 441,410,900 shares with a nominal value

of €1 each, of which 441,301,574 are ordinary shares and 109,326 savings shares.

On April 30, 2015, the Annual Shareholders’ Meeting resolved to forego the distribution of a dividend for ordinary shares and to distribute a dividend for

savings shares amounting to 5% of the nominal value, i.e. €0.05 per share.

Share premium reserve

The share premium reserve amounted to €55 million at June 30, 2015 and was unchanged from December 31, 2014.

Other reserves

At June 30, 2015, ‘Other reserves’ amounted to negative €150 million (€209 million at December 31, 2014) and consisted of the following items.

(€million) Dec. 31, 2014 June 30, 2015

Legal reserve 88 88

Cash flow hedge reserve (275) (289)

Cumulative currency translation differences (9) 65

Employee defined benefits reserve (19) (20)

Other 66

Total (209) (150)

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Legal reserve

At June 30, 2015, the legal reserve stood at €88 million. This represents the portion of profits, accrued as per Article 2430 of the Italian Civil Code, that

cannot be distributed as dividends. The reserve remained unchanged, having reached a fifth of share capital.

Cash flow hedge reserve

This reserve showed a negative balance at period end of €289 million (negative balance of €275 million at December 31, 2014), which related to the

fair value of interest rate swaps, commodity hedges and the spot component of foreign exchange risk hedges at June 30, 2015.

The cash flow hedge reserve is shown net of tax effects of €144 million (€91 million at December 31, 2014).

Cumulative currency translation differences

This reserve amounted to positive €65 million (negative €9 million at December 31, 2014) and related to exchange rate differences arising from the

translation into euro of financial statements denominated in functional currencies other than euro (mainly the US dollar).

Employee defined benefits reserve

This reserve is used to recognise remeasurements of employee defined benefit plans. At June 30, 2015, it had a negative balance of €20 million

(negative €19 million at December 31, 2014).

The reserve is shown net of tax effects of €8 million (€8 million at December 31, 2014) and includes a positive amount of €1 million relating to

investments accounted for using the equity method.

Other

This item amounted to €6 million (€6 million at December 31, 2014), relating to the allocation of part of 2005 net profit, pursuant to Article 2426, 8-bis

of the Italian Civil Code. It also contains the revaluation reserve set up by Saipem SpA in previous years, amounting to €2 million, and a reserve with a

negative balance of €1 million for cash flow hedges of investments accounted for using the equity method.

Treasury shares

Saipem SpA holds treasury shares to the value of €43 million (€43 million at December 31, 2014), consisting of 1,939,832 (1,939,832 at December 31,

2014) with a nominal value of €1 each.

Treasury shares were allocated under the 2002-2008 stock option plans. Operations involving treasury shares during the period were as follows:

Treasury shares repurchased

2003 (from May 2) 2,125,000 6.058 13 0.48

2004 1,395,000 7.044 10 0.32

2005 3,284,589 10.700 35 0.74

2006 1,919,355 18.950 36 0.43

2007 848,700 25.950 22 0.19

2008 2,245,300 25.836 58 0.51

Total 11,817,944 14.745 174 2.67

Less treasury shares allocated:

- without consideration, as stock grants 1,616,400

- against payment, as stock options 8,261,712

Treasury shares held at June 30, 2015 1,939,832

At June 30, 2015, there were 61,350 stock options outstanding for the purchase of Company shares.

Further information on stock option plans is provided in Note 35 ‘Payroll and related costs’.

Number

of shares

Average cost

(€)

Total cost

(€million)

Share capital

(%)

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Guarantees, commitments and risks

Guarantees

Guarantees amounted to €7,461 million (€8,169 million at December 31, 2014).

Dec. 31, 2014 June 30, 2015

Other Other

(€million) Unsecured guarantees Total Unsecured guarantees Total

Joint ventures and associates 283 184 467 300 180 480

Consolidated companies 126 2,331 2,457 126 2,115 2,241

Own 142 5,103 5,245 24 4,716 4,740

Total 551 7,618 8,169 450 7,011 7,461

Other guarantees issued for consolidated companies amounted to €2,115 million (€2,331 million at December 31, 2014) and related to independent

guarantees given to third parties relating mainly to bid bonds and performance bonds.

Guarantees issued to/through related parties are detailed in Note 43 ‘Transactions with related parties’.

For details on amounts relating to projects under execution in Algeria, see Note 47 ‘Additional information: Algeria’ on page 109.

Commitments

Saipem SpA has provided commitments towards customers and/or other beneficiaries (financial and insurance institutions, export credit agencies)

relating to the fulfilment of contractual obligations entered into by itself and/or by its subsidiaries, jointly-controlled entities or associated companies in

the event of non-performance and payment of any damages arising from non-performance.

These commitments guarantee contracts whose overall value amounted to €45,781 million (€40,912 million at December 31, 2014), including both

work already performed and the relevant portion of the backlog of orders at June 30, 2015.

Risk management

The main risks that the Company is facing and actively monitoring and managing are described in the ‘Risk management’ section of the ‘Operating and

Financial Review’.

FAIR VALUE MEASUREMENT

Below, financial assets and liabilities measured at fair value in the balance sheet are classified using the ‘fair value hierarchy’ based on the significance

of the inputs used in the measurement process. The fair value hierarchy consists of the following three levels:

a) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

b) Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly

(i.e. derived from prices);

c) Level 3: inputs for assets or liabilities that are not based on observable market data.

Financial instruments measured at fair value at June 30, 2015 are classified as follows:

June 30, 2015

(€million) Level 1 Level 2 Level 3 Total

Held for trading financial assets (liabilities):

- non-hedging derivatives - (45) - (45)

Available-for-sale financial assets:

- other available-for-sale financial assets 8 - - 8

Net hedging derivative assets (liabilities) - (75) - (75)

Total 8 (120) - (112)

There was no movement between Levels 1 and 2 during the first half of 2015.

Legal proceedings

Saipem is involved in civil and administrative proceedings and legal actions connected with the ordinary course of its business. Provisions for legal risks

are made on the basis of information currently available, including information acquired by external consultants providing the Company with legal

support. Information available to the Company for the purposes of risk assessment regarding criminal proceedings is by its very nature incomplete due

to the principle of pre-trial secrecy. A brief summary of the most important disputes is provided below.

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TSKJ Consortium - Investigations by the US, Italian and other overseas Authorities

Snamprogetti Netherlands BV holds a 25% interest in the TSKJ Consortium of companies. The remaining interests are held in equal shares of 25% by KBR,

Technip and JGC. From 1994, the TSKJ Consortium was involved in the construction of natural gas liquefaction facilities at Bonny Island, Nigeria.

Snamprogetti SpA, the parent company of Snamprogetti Netherlands BV, was a direct subsidiary of Eni SpA until February 2006, when an agreement was

entered into for the sale of Snamprogetti SpA to Saipem SpA. Snamprogetti SpA was merged into Saipem SpA as of October 1, 2008. As part of the sale of

Snamprogetti SpA, Eni agreed to indemnify Saipem for costs and potential losses resulting from the investigations into the TSKJ matter, including in

connection with all related subsidiaries.

A number of judicial authorities, including the Milan Public Prosecutor’s office, have carried out investigations into alleged improper payments made by

the TSKJ Consortium to certain Nigerian public officials. The proceedings in both the United States and Nigeria have been resolved through settlements.

The proceedings in Italy: the investigation regards events dating back to 1994 and also concerns the period subsequent to the introduction of Legislative

Decree No. 231 of June 8, 2001 regarding the administrative responsibility of companies. The proceedings brought by the Milan Public Prosecutor

against Eni SpA and Saipem SpA related to administrative responsibility under Legislative Decree No. 231/2001 arising from offences of international

corruption allegedly committed by former managers of Snamprogetti.

The Milan Public Prosecutor requested the application of precautionary measures pursuant to Legislative Decree No. 231/2001 consisting in Eni and

Saipem being debarred from activities involving – directly or indirectly – any agreement with the Nigerian National Petroleum Corp or its subsidiaries,

claiming the ineffectiveness and inadequacy and violation of the organisational, management and control model adopted to prevent the commission of

the alleged offences by persons subject to direction and supervision.

On November 17, 2009, the Judge for the Preliminary Investigation rejected the request for precautionary measures of disqualification filed by the

Milan Public Prosecutor, which subsequently appealed against this decision. On February 9, 2010, the Court of Appeal, exercising the function of judicial

review court, handed down its ruling, which dismissed as unfounded the appeal of the Milan Public Prosecutor and upheld the decision of the Judge

for the Preliminary Investigation. On September 30, 2010, an appeal against this decision filed by the Milan Public Prosecutor was upheld by the Court

of Cassation, which ruled that the request for precautionary measures was also admissible pursuant to Legislative Decree No. 231/2001 in cases of

alleged international corruption. The Milan Public Prosecutor’s office subsequently withdrew its request for precautionary measures against Eni and

Saipem following the payment by Snamprogetti Netherlands BV of a deposit of €24,530,580, which was also on behalf of Saipem SpA. The accusations

regarded alleged acts of corruption in Nigeria committed until and after July 31, 2004, with the aggravating circumstance of Snamprogetti SpA’s having

allegedly obtained significant financial gain (indicated as being not less than USD 65 million). On January 26, 2011, the Judge for the Preliminary

Hearing ordered Saipem SpA (as the legal entity incorporating Snamprogetti SpA) and five former Snamprogetti SpA employees to stand trial. In

February 2012, following a request made by the defence, the Court dismissed the charges against the physical persons under investigation, ruling that

the charges had expired under the statute of limitations. The Court also ordered a separate trial for the continuation of proceedings against the legal

person of Saipem only.

On July 11, 2013, the Court of Milan ruled that Saipem SpA had committed the unlawful administrative act, but accepted the existence of the attenuating

circumstances provided for by Article 12, No. 2, letter a) of Legislative Decree No. 231/2001. The Court sentenced the Company to pay a fine of €600,000

and also ordered it to pay court costs. Finally, the Court ordered the confiscation of the deposit of €24,530,580 posted by Snamprogetti Netherlands BV

with the Milan Public Prosecutor’s office. On February 19, 2015, the Court of Appeal upheld the ruling of the Court of Milan.

On July 3, 2015, Saipem filed an appeal against the decision of the Court of Appeal with the Italian Court of Cassation.

Saipem’s involvement in the investigation into the activity of the TSKJ Consortium in Nigeria during the period 1994-2004 is due solely to the fact that in

2006 Saipem SpA acquired Snamprogetti SpA, the parent company of Snamprogetti Netherlands BV, which holds a 25% stake in the TSKJ Consortium.

The decisions of the Court of Milan and the Milan Court of Appeal have no financial impact on Saipem since Eni SpA, at the time of the sale of Snamprogetti

SpA to Saipem, undertook to indemnify Saipem for costs and losses sustained in connection with the TSKJ matter.

Algeria

On February 4, 2011, the Milan Public Prosecutor’s office, through Eni, requested the transmission of documentation pursuant to Article 248 of the Italian

Code of Criminal Procedure, relating to the activities of Saipem Group companies in Algeria in connection with an allegation of international corruption.

The crime of ‘international corruption’ specified in the request is one of the offences punishable under Legislative Decree No. 231 of June 8, 2001 in

connection with the direct responsibility of collective entities for certain crimes committed by their own employees.

The collection of documentation was commenced in prompt compliance with the request, and on February 16, 2011, Saipem filed the material requested.

On November 22, 2012, Saipem received a notification of inquiry from the Milan Public Prosecutor’s office related to alleged unlawful administrative acts

arising from the crime of international corruption pursuant to Article 25, paragraphs 2 and 3 of Legislative Decree No. 231/2001, together with a request

to provide documentation regarding a number of contracts connected with activities in Algeria. This request was followed by notification of a seizure order

on November 30, 2012, two further requests for documentation on December 18, 2012 and February 25, 2013 and the issue of a search warrant on

January 16, 2013.

On February 7, 2013, a search was conducted, including at offices belonging to Eni SpA, to obtain additional documentation relating to intermediary

agreements and subcontracts entered into by Saipem in connection with its Algerian projects.

The subject of the investigations are allegations of corruption which, according to the Milan Public Prosecutor, occurred up until and after March 2010 in

relation to a number of contracts the Company was awarded in Algeria.

Several former employees of the Company are involved in the proceedings, including the former Deputy Chairman and CEO and the former Chief

Operating Officer of the Engineering & Construction Business Unit. The Company has collaborated fully with the Prosecutor’s office on every occasion

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and rapidly implemented decisive managerial and administrative restructuring measures, irrespective of any liability that might result from the

proceedings. In agreement with its Internal Control Bodies and the Compliance Committee, and having duly informed the Prosecutor’s office, Saipem

performed its own checks on the contracts that are subject to investigation, and to this end appointed an external legal firm. On July 17, 2013, the Board

of Directors analysed the conclusions reached by the external consultants following an internal investigation carried out in relation to a number of

brokerage contracts and subcontracts regarding projects in Algeria. The internal investigation was based on the examination of documents and

interviews with personnel from the Company and other companies in the Group, excluding those who, to the best knowledge of the Company, were

directly involved in the criminal investigation, so as not to interfere with the investigative activities of the Prosecutor. The Board, confirming its full

cooperation with the investigative authorities, decided to convey the findings of the external consultants to the Milan Public Prosecutor for assessment

and appropriate action within the wider context of the ongoing investigation. The consultants reported to the Board: (i) that they found no evidence of

payments to Algerian public officials through the intermediary agreements or subcontracts examined; and (ii) that they found violations deemed

detrimental to the interests of the Company of internal rules and procedures in force at that time in relation to the approval and management of

intermediary agreements and subcontracts examined and a number of activities in Algeria.

The Board decided to initiate legal action against certain former employees and suppliers in order to protect the interests of the Company, reserving the

right to take any further action necessary should additional information emerge.

On June 14, 2013, January 8, 2013 and July 23, 2014 the Milan Public Prosecutor’s office submitted requests for extensions to the preliminary

investigations. On October 24, 2014, notice was received of a request from the Milan Public Prosecutor for gathering evidence before trial, by way of

questioning of the former Chief Operating Officer of the Saipem Engineering & Construction Business Unit and another former manager of Saipem, who

are both being investigated in the criminal proceedings. After the request was granted, the Judge for the Preliminary Hearing in Milan set hearings for

December 1 and 2, 2014. On January 15, 2015, Saipem SpA defence counsel received notice from the Milan Public Prosecutor’s office of the conclusion

of preliminary investigations, pursuant to Article 415-bis of the Italian Code of Criminal Procedure. Notice was also received by eight physical persons

and the legal person of Eni SpA. In addition to the crime of ‘international corruption’ specified in the request from the Milan Public Prosecutor’s office, the

notice also contained an allegation against seven physical persons of a violation of Article 3 of Legislative Decree No. 74 of March 10, 2000 concerning

the filing of fraudulent tax returns, in connection with the recording in the books of Saipem SpA of ‘brokerage costs deriving from the agency agreement

with Pearl Partners signed on October 17, 2007, as well as Addendum No. 1 to the agency agreement signed entered into August 12, 2009’, which is

alleged to have led subsequently to the inclusion in the ‘consolidated tax return of Saipem SpA of profits that were lower than the real total by the

following amounts: 2008: -€85,935,000; 2009: -€54,385,926’. On February 5, 2015, the Milan tax unit of the Guardia di Finanza (Italian Finance Police)

conducted a tax inspection at Saipem SpA premises. The official minutes describe the inspection as having focused on: ‘a) Ires (Italian corporate income

tax) and Irap (Italian regional production tax) for tax periods from January 1, 2008 to December 31, 2010, as well as fiscally relevant aspects elements

emerging from checks performed as part of criminal proceedings No. 58461/14 - mod. 21 instituted by the Public Prosecutor’s office of the Court of Milan

(Substitute Public Prosecutors Fabio De Pasquale, Giordano Baggio and Isidoro Palma) [Algeria affair]. (omissis) b) identifying, for the 2010 tax period

only, transactions with companies resident or domiciled in non-EU countries or territories with preferential tax regimes (Article 110, paragraph 10 et seq.

of the Italian Consolidated Income Tax Act; - verifying the compliance of the tax position of company employees for the year 2015 up until the day of the

inspection’. In connection with point a) of the tax inspection, on April 14, 2015, the Guardia di Finanza served Saipem SpA with a tax audit report in which

the following costs are deemed as non-deductible because they are alleged to be ‘costs arising from the commission of crimes’ (pursuant to Article 14,

paragraph 4-bis of Law No. 437/1993):

- amounts paid in 2008 and 2009 by Snamprogetti SpA and Saipem SpA to Pearl Partners totalling approximately €140 million;

-approximately €41.5 million in costs allegedly over-invoiced to Saipem SpA by a subcontractor in 2009 and 2010.

Saipem SpA did not concur with the findings contained in the tax audit report and, on June 12, 2015, pursuant to Article 12, paragraph 5, of Law

No. 212/2000 (the Italian Taxpayers’ charter), presented its arguments in its defence, requesting that the question be closed, to the Large Taxpayers Unit

of the Italian revenue agency’s Lombardy Regional Tax Office, to which the Guardia di Finanza had transmitted the report. On July 9, 2015, the Large

Taxpayers Unit of the Italian revenue agency’s Lombardy Regional Tax Office served Saipem with four tax assessment notices relating to Ires and Irap

taxes for 2008 and 2009. The total amounts requested in the four notices for taxes due, interest and fines, amounted to approximately €155 million.

Saipem plans to file an appeal with the Provincial Tax Commission in accordance with the time limit prescribed by law, requesting that the assessment

notices be annulled and their enforcement suspended provisionally.

On February 26, 2015, Saipem SpA defence counsel received notice from the Judge for the Preliminary Hearing of the scheduling of a preliminary hearing,

together with a request for committal for trial filed by the Milan Public Prosecutor’s office on February 11, 2015. The same notice was also served on eight

physical persons, as well as on the legal person of Eni SpA. The hearing was scheduled by the Judge for the Preliminary Hearing for May 13, 2015. At the

hearing, the Italian revenue agency instituted civil proceedings, while other requests to bring civil proceedings were rejected.

The Judge for the Preliminary Investigation granted a request for adjournment made by the defence to allow time for the examination of the substantial

amount of documentation filed by the Milan Public Prosecutor’s office prior to the hearing. The hearing was adjourned until June 12, when the Prosecutor

commenced presentation of its arguments. Subsequent hearings before the Judge for the Preliminary Hearing were held on July 10, 21 and 22, 2015.

The decision regarding the request for committal to trial will be announced by the Judge for the Preliminary Hearing at the hearing scheduled for

September 30, 2015.

Meanwhile, at the request of the US Department of Justice (‘DoJ’), Saipem SpA entered into a ‘tolling agreement’ which extended by 6 months the

limitation period applicable to any possible violations of federal laws of the United States in relation to previous activities of Saipem and its subsidiaries.

The tolling agreement, which has been renewed until November 29, 2015, does not constitute an admission by Saipem SpA of having committed any

unlawful act, nor does it imply any recognition on the Company’s part of United States jurisdiction in relation to any investigation or proceedings. Saipem

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therefore intends to offer its complete cooperation in relation to investigations by the DoJ, which on April 10, 2014 made a request for documentation

relating to past activities of the Saipem Group in Algeria, with which Saipem has complied.

We also note that the investigations commenced in 2010 into the procedures used for the award by Sonatrach of the GK3 contract (the ‘Sonatrach 1’

investigation), in relation to which a number of Saipem Contracting Algérie SpA’s current accounts in local currency were frozen, are still currently

underway. Some of these accounts were subsequently unfrozen, although two in Algerian Dinars, containing in total the equivalent of €86,840,646

(calculated at the exchange rate prevailing on June 30, 2015) remain frozen. The two bank accounts in question relate to the MLE and GK3 projects. The

frozen MLE bank account is no longer used for MLE project payments, while the GK3 bank account is still being used to receive contractual payments in

Algerian Dinars due in relation to the project. The outstanding payments amount to an approximate equivalent of €4,539,405 (calculated at the

exchange rate prevailing on June 30, 2015). In relation to the investigations into the procedures used to award the GK3 contract, in 2012 Saipem

Contracting Algérie SpA received formal notice of the referral to the Chambre d’accusation at the Court of Algiers of an investigation underway into the

company regarding allegations that the company took advantage of the authority or influence of representatives of a government-owned industrial and

trading company in order to inflate prices in relation to contracts awarded by that company. At the beginning of 2013, the ‘Chambre d’accusation’ ordered

Saipem Contracting Algérie SpA to stand trial and further ordered that the aforementioned current accounts remain frozen. In April 2013 and in October

2014, the Algerian Supreme Court rejected a request to unfreeze the above-mentioned bank accounts that had been made by Saipem Contracting Algérie

SpA in 2010. The case was transferred to the Court of Algiers where, at the hearing of March 15, 2015 proceedings were adjourned to the next court

session, held on June 7, 2015. At this hearing, the Court adjourned proceedings, due to the absence of a number of witnesses, to the next court session,

which is due to begin in October 2015.

In March 2013, the legal representative of Saipem Contracting Algérie SpA was summoned to appear at the Court of Algiers, where he received verbal

notification from the local investigating judge of an investigation (‘Sonatrach 2’) underway ‘into Saipem for charges pursuant to Articles 25a, 32 and 53

of Anti-Corruption Law No. 01/2006’. The investigating judge also requested documentation (articles of association) and other information concerning

Saipem Contracting Algérie SpA, Saipem SpA and Saipem SA.

Kuwait

On June 21, 2011, an order requested by the Milan Public Prosecutor was served on Saipem SpA for the search of the office of a Saipem employee. The

order was issued in connection with alleged crimes committed by said employee together with third parties related to the award of tenders by Saipem

SpA to third party companies for a project in Kuwait. In connection with the same matter, the Public Prosecutor also served a notification of inquiry upon

Saipem SpA pursuant to Italian Legislative Decree No. 231/2001. In this regard, the Company believes that its position will be cleared, since it is the

injured party in respect of the illicit conduct under investigation.

Having consulted its lawyers, and in agreement with the Compliance Committee and the Internal Control Bodies, Saipem, through its Internal Audit

function, and also using an external consulting company, promptly undertook an Internal Audit of the project under investigation. On March 2, 2012

Saipem SpA was served a request to extend the preliminary investigations filed by the Public Prosecutor. As of such date, the Company has received no

further notifications, nor has there been any further news or evidence of any developments in the investigations.

EniPower - Enquiries by the Judiciary

In the frame of the inquiries commenced by the Milan Public Prosecutor (criminal proceedings 2460/2003 R.G.N.R. pending at the Milan Public

Prosecutor’s office) into contracts awarded by EniPower to various companies, Snamprogetti SpA (now Saipem SpA) as engineering and procurement

services contractor, together with other parties, were served a notification of inquiry pursuant to Article 25 of Legislative Decree No. 231/2001.

Preliminary investigations ended in August 2007, with a favourable outcome for Snamprogetti SpA, which was not included among the parties still under

investigation for whom committals for trial were requested. Snamprogetti subsequently brought proceedings against the physical and legal persons

implicated in transactions relating to the Company and reached settlements with a number of parties that requested the application of settlement

procedures. Following the conclusion of the preliminary hearing, criminal proceedings continued against former employees of the above companies, as

well as against employees and managers of a number of their suppliers, pursuant to Legislative Decree No. 231/2001. Eni SpA, EniPower SpA and

Snamprogetti SpA presented themselves as injured parties in the preliminary hearing. The preliminary hearing related to the main proceeding concluded

on April 27, 2009. The Judge for the Preliminary Hearing requested that all parties that did not request the application of plea agreements stand trial, with

the exception of a number of parties for whom the statute of limitations applied. At the hearing of March 2, 2010, the Court confirmed the admission as

plaintiffs of Eni SpA, EniPower SpA and Saipem SpA against the defendants under the provisions of Legislative Decree No. 31/2001. The defendants of the

other companies involved were also sued. Subsequently, at the hearing of September 20, 2011, sentence was passed which included several convictions

and acquittals for numerous physical and legal defendants, the latter being deemed responsible for unlawful administrative acts, with fines being

imposed and value confiscation for significant sums ordered. The Court also rejected the admission as plaintiffs against the parties accused of unlawful

administrative acts pursuant to Legislative Decree No. 231/2001. On December 19, 2011, the grounds for the ruling were filed with the office of the clerk

of the Court. The convicted parties promptly filed an appeal against the above sentence. On October 24, 2013, the Milan Court of Appeal essentially

confirmed the first instance ruling, which it modified only partially in relation to a number of physical persons, against whom it dismissed the charges,

ruling that they had expired under the statute of limitations. The accused parties have filed an appeal with the Court of Cassation. The hearing before the

Court of Cassation has been scheduled for September 30, 2015.

Fos Cavaou

With regard to the Fos Cavaou (‘FOS’) project for the construction of a regasification terminal, the client Société du Terminal Méthanier de Fos Cavaou

(‘STMFC’, now Fosmax LNG) in January 2012 commenced arbitration proceedings before the International Chamber of Commerce in Paris (‘Paris ICC’)

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against the contractor STS [a French ‘société en participation’ made up of Saipem SA (50%), Tecnimont SpA (49%) and Sofregaz SA (1%)]. On July 11,

2011, the parties signed a mediation protocol pursuant to the rules of Conciliation and Arbitration of the Paris ICC. With Fosmax LNG refusing to extend

the deadline, the mediation procedure ended on December 31, 2011, with no agreement having been reached.

The brief filed by Fosmax LNG in support of its request for arbitration included a demand for payment of approximately €264 million for damages

allegedly suffered, penalties for delays and costs for the completion of works (‘mise en régie’). Of the total sum demanded, approximately €142 million

was for loss of profit, an item excluded from the contract except for cases of wilful misconduct or gross negligence. STS filed its reply, including a

counterclaim for damages due to the excessive interference of Fosmax LNG in works execution and as payment for extra works not recognised by the

client (reserving the right to quantify the amount of such extra works at a later stage in proceedings). On October 19, 2012, Fosmax LNG lodged its

Statement of Claim. Against this, STS lodged its own Statement of Defence on January 28, 2013, in which it filed a counterclaim for €338 million. The final

hearing was held on April 1, 2014. On April 30, 2015, on the basis of the award issued by the Arbitration Panel on February 13, 2015, Fosmax LNG paid STS

€84,349,554.92 (including interest), 50% of which is due to Saipem SA. On June 26, 2015, Fosmax LNG lodged an appeal against the award with the

French Council of State, in which it requested the annulment of the award, claiming that the Arbitration Panel had mistakenly applied private law to what

was a public law case. STS has 60 days from the date of receipt of the notice of appeal to submit its own observations to the French Council of State.

Arbitration on Menzel Ledjmet Est project (‘MLE’), Algeria

On December 23, 2013, Saipem filed a request for arbitration with the International Chamber of Commerce in Paris (‘Paris ICC’) in connection with the

contract entered into on March 22, 2009, by Saipem SpA and Saipem Contracting Algérie SpA (collectively, ‘Saipem’) on the one hand, and Société

Nationale pour la Recherche, la Production, le Transport, la Transformation et la Commercialisation des Hydrocarbures SpA (‘Sonatrach’) and First Calgary

Petroleums LP (collectively, the ‘Client’) on the other, for the engineering, procurement and construction of a natural gas gathering and treatment plant

and related export pipelines in the Menzel Ledjmet Est field in Algeria. The Client was notified of the request on January 8, 2014. In its request for

arbitration, Saipem asked the arbitral tribunal to grant: (i) an extension of 14.5 months to the contractual term; and (ii) Saipem’s right to receive

approximately €580 million (not including the €145.8 million already paid by First Calgary Petroleums LP) relating to an increase in the contract price

for the extension of the contract terms, variation orders, unpaid invoices past due and spare parts, as well as a sum yet to be quantified for having

completed the works in advance of the contractually agreed term. Both Sonatrach and First Calgary Petroleums LP (this latter wholly owned by the Eni

Group since 2008) have appointed their arbitrator and, on March 28, 2014, filed their respective Answers to the Request for Arbitration. The Chairman of

the Arbitral Tribunal was appointed on May 26, 2014. On December 17, 2014, Saipem submitted a Statement of Claim, together with all of the relevant

supporting documentation, in which it requested a total equivalent of approximately €898.5 million from the Client.

Sonatrach and First Calgary Petroleums LP will file their Statements of Defence by August 14, 2015.

Arbitration proceedings regarding LPG project in Algeria

On March 14, 2014, Saipem filed a request for arbitration with the International Chamber of Commerce in Paris in connection with the contract for the

construction of the LDHP ZCINA plant for the ‘extraction des liquides des gaz associés Hassi Messaoud et séparation d’huile’ (LDHP ZCINA unit for

extraction of liquids from associated gas from the Hassi Messaoud field and oil-gas separation), entered into on November 12, 2008 between, on the one

hand, Sonatrach, and on the other, Saipem SA and Saipem Contracting Algérie SpA (collectively ‘Saipem’). In its request, Saipem asked the Arbitration

Tribunal to order Sonatrach to pay the equivalent of approximately €171.1 million for additional costs incurred as contractor during the execution of the

project in relation to variation orders, time extensions, force majeure, non-payment or late payment of invoices and related interest. Sonatrach, in its

answer to the request, which it filed on June 10, 2014, denied all liability and asserted a counterclaim requesting that Saipem be ordered to pay liquidated

damages for delays amounting to USD 70.8 million. The Arbitral Tribunal was officially constituted on September 16, 2014, following the Chairman of the

Arbitral Tribunal’s acceptance of his appointment. On November 13, 2014, the parties reached an agreement with regard to the procedural timetable, in

accordance with which Saipem filed its Statement of Claim by March 13, 2015, while Sonatrach is required to file its Statement of Defence by September

14, 2015. Arbitration hearings are scheduled to be held in October 2016.

Arbitration proceedings regarding LZ2 project in Algeria

On May 12, 2015, Saipem SpA and Saipem Contracting Algérie SpA (collectively ‘Saipem’) filed a request for arbitration against Sonatrach for payment of

€7,339,038 and 605,447,169 Algerian Dinars, plus interest, for wrongly applied liquidated damages, extra works and project extension costs, with the

International Chamber of Commerce in Paris. The request relates to the contract for the construction of a pipeline between Hassi R’Mel and Arzew in

Algeria entered into by Saipem and Sonatrach on November 5, 2007 (‘LZ2 project’). Saipem and Sonatrach have both appointed their arbitrators. The

respondent has until September 7, 2015 to file its reply.

Court of Cassation - Consob Resolution No. 18949 of June 18, 2014 - Actions for damages

With Resolution No. 18949 of June 18, 2014, Italian stock market regulator Consob fined Saipem SpA €80,000 for having allegedly delayed the profit

warning it issued on January 29, 2013. On July 28, 2014, Saipem SpA filed an appeal against the resolution with the Milan Court of Appeal, but this was

rejected by the Court in its ruling of December 11, 2014. The Company has lodged an appeal against the Court of Appeal’s decision with the Italian Court

of Cassation.

On April 28, 2015, Saipem received notice of legal proceedings before the Court of Milan by 64 investors claiming compensation for damages of

approximately €174 million allegedly incurred following the purchase of Saipem shares in the period between February 13, 2012 and June 14, 2013. The

first hearing is scheduled for November 17, 2015. Saipem SpA will challenge the claim in court.

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Significant tax disputes

Saipem SpA

On February 5, 2015, the Milan tax unit of the Italian financial police (“Guardia di Finanza”) commenced a tax verification of Saipem SpA, which is still

underway. As part of the verification, on April 14, 2015, the Guardia di Finanza served Saipem SpA with a tax audit report, full details of which are provided

in the ‘Algeria’ section of the note on legal proceedings.

Potential significant tax disputes

Saipem SpA

As part of the same tax verification process, on July 20, 2015, the Guardia di Finanza served Saipem SpA with a tax audit report at the conclusion of

checks carried out in relation to costs arising from transactions occurring in 2010 with companies resident or domiciled in territories with preferential

tax regimes, pursuant to Italian Ministerial Decree of January 23, 2002 (i.e. ‘black list costs’). In the report, the Guardia di Finanza notified the Italian

Revenue Agency of costs amounting to €235,502,590.30 it deemed non-deductible pursuant to Article 110, paragraph 10 of the Italian Income Tax Act,

in order to allow the Agency to carry out the checks provided for by paragraph 11 of the same article. If the checks confirm the conclusions contained in

the tax audit report either fully or partially, this may result in the issue of a tax assessment notice. Saipem may, within a 90-day period following receipt

of notification of the start of checks, file its own observations with the Italian Revenue Agency, as well as any further documentation demonstrating the

existence of one of the exonerating circumstances provided for by Italian anti-avoidance legislation, and may also request to be heard by the Agency in

an adversarial proceeding.

Saipem Drilling Norway AS

On December 18, 2014, following an audit conducted by the Norwegian revenue agency between January and May 2014 regarding the fiscal years 2012

and 2013, Saipem Drilling Norway AS was served with a report containing the preliminary findings of the inspection. The report does not constitute a tax

assessment and therefore does not represent a request for payment. The agency is contesting the value assigned to the rig Scarabeo 8 when it was

transferred from Saipem (Portugal) Comércio Marítimo, Sociedade Unipessoal Lda to Saipem Drilling Norway AS in July 2012, deeming it higher than its

market value, and proposes taxing the extra depreciation charges deducted in the years under consideration, which amount to NOK 630 million

(€72 million). The report also proposes a discretionary increase in the 2012 tax base of NOK 1.2 billion (€136 million), corresponding to the recovery

of the presumed negative value of the charter contract for the Scarabeo 8. On April 30, 2015, the company filed its response to the findings contained in

the report. Objecting to the conclusions of the authority, it attached a report prepared by a leading Norwegian Oil & Gas sector analyst, which provides

an extensive description of the Norwegian domestic offshore drilling market and its prospects at the moment the rig was purchased by Saipem Drilling

Norway AS. The report concludes with an estimate of the then market value of the rig that is substantially in line with the price at which the rig was

transferred between the two Saipem Group companies. Following the issue of the report on December 18, 2014, the statute of limitations on the tax

periods under examination were suspended. As a result, the Norwegian revenue agency may now proceed with its checks without a definite term and

may invite the company to submit further evidence or, alternatively, issue a definitive tax assessment. Should a definitive tax assessment confirm fully

or partially the request contained in the report, the company intends to file an appeal and enter into legal proceedings.

Revenues

The following is a summary of the main components of revenues. The most significant variations are analysed in the ‘Financial and economic results’

section of the ‘Operating and Financial Review’.

Net sales from operations

Net sales from operations were as follows:

First half First half

(€million) 2014 2015

Net sales from operations 5,128 5,365

Change in contract work-in-progress 838 8

Total 5,966 5,373

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Net sales by geographical area were as follows:

First half First half

(€million) 2014 2015

Italy 292 184

Rest of Europe 473 627

CIS 392 855

Middle East 1,246 1,103

Far East 570 346

North Africa 275 107

West Africa and Rest of Africa 1,130 1,219

Americas 1,588 932

Total 5,966 5,373

The disclosures required by IAS 11 are provided by business sector in Note 42 ‘Segment information, geographical information and construction

contracts’.

Contract revenues include the amount agreed in the initial contract, plus revenues from change orders and claims.

Change orders are changes to the contracted scope of work requested by the client, while claims are requests for the reimbursement of costs not

included in the contract price. Change orders and claims are included in revenues when: (a) contract negotiations with the client are at an advanced

stage and approval is probable; and (b) their amount can be reliably estimated.

The cumulative amount of additional payments for change orders and claims, including amounts pertaining to previous years, based on project progress

at June 30, 2015, totalled €788 million, down €254 million compared with the previous period. For projects where additional payments exceed €50

million, estimates are supported by a technical/legal opinion provided by third party consultants. Contributing factors in the decrease in revenues

compared with the same period of the previous year included the cancellation of specific orders, among which the South Stream project, and the

deterioration of the market environment, particularly in relation to a number of specific counterparties, as described in the operating and financial

review. Revenues from related parties are shown in Note 43 ‘Transactions with related parties’.

Other income and revenues

Other income and revenues were as follows:

First half First half

(€million) 2014 2015

Indemnities 2-

Other income 10 1

Total 12 1

Operating expenses

The following is a summary of the main components of operating expenses. The most significant variations are analysed in the ‘Financial and economic

results’ section of the ‘Operating and Financial Review’.

Purchases, services and other costs

Purchases, services and other costs included the following:

First half First half

(€million) 2014 2015

Production costs - raw, ancillary and consumable materials and goods 1,172 1,079

Production costs - services 2,367 2,511

Operating leases and other 608 622

Net provisions for contingencies (27) 40

Other expenses 15 95

less:

- capitalised direct costs associated with self-constructed tangible assets (7) (10)

- change in inventories of raw, ancillary and consumable materials and goods (2) 13

Total 4,126 4,350

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The variation in ‘Production costs - raw, ancillary and consumable materials and goods’ was related to work on projects underway during the period.

Costs for services included agency fees of €1 million (€1 million in the first half of 2014).

Provisions for contingencies are detailed in Note 20 ‘Provisions for contingencies’.

Purchase services and other costs to related parties are shown in Note 43 ‘Transactions with related parties’.

Payroll and related costs

Payroll and related costs were as follows:

First half First half

(€million) 2014 2015

Wages and salaries 1,204 1,226

less:

- capitalised direct costs associated with self-constructed/developed fixed assets (7) (5)

Total 1,197 1,221

Stock-based compensation plans for Saipem senior managers

Saipem discontinued its managerial incentive program involving the assignment of stock options to senior managers of Saipem SpA and its subsidiaries

in 2009. At June 30, 2015, the only stock option plan still in force was the 2008 plan approved by the Shareholders of Saipem SpA on April 28, 2008.

Neither the general plan conditions nor the other information provided in the consolidated financial statements at December 31, 2014 underwent any

significant changes during the period.

STOCK OPTIONS

The following table shows changes in the stock option plans:

2014 2015

Average Average

Number strike Market Number strike Market

(€thousand) of shares price price

(a)

of shares price price

(a)

Options as of January 1 259,500 25.979 4,038 61,350 25.872 538

New options granted - - - - - -

(Options exercised during the period) - - - - - -

(Options expiring during the period) (198,150) - 3,547 - - -

Options outstanding as of June 30 61,350 25.872 538 61,350 25.872 582

Of which: exercisable at June 30 61,350 25.872 538 61,350 25.872 582

(a) The market price of shares underlying options granted, exercised or expiring during the period corresponds to the average market value. The market price of shares underlying options outstanding at the

beginning and end of the period is the price recorded at January 1 and June 30.

At June 30, 2015, 61,350 options were outstanding for the purchase of the same amount of ordinary shares of Saipem SpA with a nominal value of €1

each. The options related to the following plans:

2008 plan 61,350 25.872 1 - 582

Total 61,350

Number

of shares

Strike price

(€)

Average

remaining life

(months)

Fair value (€)

for assignees

resident

in Italy

Fair value (€)

for assignees

resident

in France

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Average number of employees

The average number of employees, by category, for all consolidated companies was as follows:

First half First half

(number) 2014 2015

Senior managers 414 409

Junior managers 4,732 4,859

White collars 21,508 22,058

Blue collars 21,546 19,946

Seamen 329 332

Total 48,529 47,604

The average number of employees was calculated as the arithmetic mean of the number of employees at the beginning and end of the period. The

average number of senior managers included managers employed and operating in foreign countries whose position was comparable to senior manager

status.

Depreciation, amortisation and impairment

Depreciation, amortisation and impairment are detailed below:

First half First half

(€million) 2014 2015

Depreciation and amortisation:

- tangible assets 358 377

- intangible assets 45

Total 362 382

Impairment:

- tangible assets -211

- intangible assets --

Total -211

Total write-downs of tangible assets amounting to €211 million related to a write-down of €41 million recorded against four vessels slated for scrapping

and a write-down of €170 million recorded in relation to components of two fabrication yards that will not be used in future activities, as described in

Note 8 ‘Property, plant and equipment’.

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Finance income (expense)

Finance income (expense) was as follows:

First half First half

(€million) 2014 2015

Finance income (expense)

Finance income 333 516

Finance expense (373) (607)

Total (40) (91)

Derivatives (70) (19)

Total (110) (110)

Net finance income and expense was as follows:

First half First half

(€million) 2014 2015

Exchange gains (losses) 56 7

Exchange gains 331 511

Exchange losses (275) (504)

Finance income (expense) related to net borrowings (93) (95)

Interest and other income from Group financial companies - -

Interest from banks and other financial institutions 25

Interest and other expense due to Group financial companies (67) (80)

Interest and other expense due to banks and other financial institutions (28) (20)

Other finance income (expense) (3) (3)

Other finance income from third parties --

Finance income (expense) on defined benefit plans (3) (3)

Total finance income (expense) (40) (91)

Gains (losses) on derivatives consisted of the following:

First half First half

(€million) 2014 2015

Exchange rate derivatives (70) (18)

Interest rate derivatives - (1)

Total (70) (19)

Net expenses from derivatives of €19 million (expenses of €70 million in the first half of 2014) mainly related to the recognition in income of the change

in fair value of derivatives that do not qualify for hedge accounting under IFRS and the recognition of the forward component of derivatives that qualify

for hedge accounting.

Finance income (expense) with related parties is shown in Note 43 ‘Transactions with related parties’.

Income (expense) from investments

Effect of accounting using the equity method

The share of profit (loss) of investments accounted for using the equity method and other gains (losses) from investments were as follows:

First half First half

(€million) 2014 2015

Share of profit of investments accounted for using the equity method 13 8

Share of loss of investments accounted for using the equity method (1) (10)

Net additions to (deductions from) the provisions for losses related to investments accounted for using the equity method 1 (9)

Total 13 (11)

100

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The share of profit (losses) of investments accounted for using the equity method is commented on in Note 10 ‘Investments accounted for using the

equity method’.

Other income (expense) from investments

A gain of €18 million was registered during the period mainly in relation to the sale of the Venezuelan companies Fertilizantes Nitrogenados de Oriente

CEC and Fertilizantes Nitrogenados de Oriente SA (classified as held for sale at December 31, 2014).

Income taxes

Income taxes consisted of the following:

First half First half

(€million) 2014 2015

Current taxes:

- Italian companies 19 (4)

- foreign companies 84 151

Net deferred taxes:

- Italian companies (36) (217)

- foreign companies (3) 83

Total 64 13

First half First half

(€million) 2014 2015

Income taxes presented in consolidated income statement 64 13

Income tax related to items of other comprehensive income (17) (53)

Tax on total comprehensive income 47 (40)

Non-controlling interests

Profit attributable to non-controlling interests amounted to €14 million (no profit attributable to non-controlling interests recorded during the first half

of 2014).

Earnings (loss) per share

Basic earnings per ordinary share are calculated by dividing net profit (loss) for the period attributable to Saipem’s shareholders by the weighted average

of ordinary shares outstanding during the period, excluding treasury shares.

The number of shares outstanding used for the calculation of the basic earnings per share was 439,361,742 and 439,359,038 in 2015 and 2014,

respectively.

Diluted earnings per share are calculated by dividing net profit for the period attributable to Saipem’s shareholders by the weighted average of

fully-diluted shares issued and outstanding during the period with the exception of treasury shares and including the number of shares that could

potentially be issued. At June 30, 2015, shares that could potentially be issued only regarded shares granted under stock option plans. The average

number of shares outstanding used for the calculation of diluted earnings for 2015 and 2014 was 439,532,418 and 439,702,259, respectively.

Reconciliation of the average number of shares used for the calculation of basic and diluted earnings per share is as follows:

June 30, 2014 June 30, 2015

Average number of shares used for the calculation of the basic earnings per share 439,359,038 439,361,742

Number of potential shares following stock option plans 232,425 61,350

Number of savings shares convertible into ordinary shares 110,796 109,326

Average number of shares used for the calculation of the diluted earnings per share 439,702,259 439,532,418

Saipem’s net profit (loss) (€million) 136 (920)

Basic earnings (loss) per share (€per share) 0.310 (2.094)

Diluted earnings (loss) per share (€per share) 0.309 (2.093)

101

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Segment information, geographical information and construction contracts

Segment information

(€million)

First half 2014

Net sales from operations 3,990 2,331 747 420 - 7,488

less: intra-group sales 806 441 191 84 - 1,522

Net sales to customers 3,184 1,890 556 336 - 5,966

Operating result 180 (81) 155 39 - 293

Depreciation, amortisation and impairment 147 19 123 73 - 362

Net income from investments 12 5 - - - 17

Capital expenditure 135 20 105 69 - 329

Tangible and intangible assets 3,804 590 3,332 943 - 8,669

Investments 8382- 4-169

Current assets 2,696 2,554 579 491 1,923 8,243

Current liabilities 3,089 1,688 293 156 3,771 8,997

Provisions for contingencies 47 57 1 2 62 169

First half 2015

Net sales from operations 4,476 1,321 744 493 - 7,034

less: intra-group sales 1,088 273 206 94 - 1,661

Net sales to customers 3,388 1,048 538 399 - 5,373

Operating result (114) (758) 140 (58) - (790)

Depreciation, amortisation and impairment 310 71 124 88 - 593

Net income from investments (5) 12 - - - 7

Capital expenditure 82 17 107 62 - 268

Tangible and intangible assets 3,462 544 3,031 1,104 - 8,141

Investments 106 (4) - 5 - 107

Current assets 3,008 2,223 556 533 2,183 8,503

Current liabilities 3,688 2,018 255 207 3,833 10,001

Provisions for contingencies 49 132 1 2 63 247

Geographical information

Since Saipem’s business involves the deployment of a fleet on a number of different projects over a single year, it is difficult to allocate assets to a

specific geographic area. As a result, certain assets have been deemed not directly attributable.

The unallocated part of tangible and intangible assets and capital expenditure related to vessels and their related equipment and goodwill.

The unallocated part of current assets pertained to inventories related to vessels.

A breakdown of revenues by geographical area is provided in Note 32 ‘Net sales from operations’.

(€million)

First half 2014

Capital expenditure 846461765192329

Tangible and intangible assets 102 36 315 716 17 304 951 6,228 8,669

Identifiable assets (current) 249 1,416 491 2,321 501 763 1,666 836 8,243

First half 2015

Capital expenditure 7 3 15 58 - 2 26 157 268

Tangible and intangible assets 108 31 303 949 2 155 805 5,788 8,141

Identifiable assets (current) 403 1,419 811 1,667 356 956 1,819 1,072 8,503

Current assets were allocated by geographical area using the following criteria: (i) cash and cash equivalents and financing receivables were allocated

on the basis of the country in which individual company bank accounts were held; (ii) inventory was allocated on the basis of the country in which

onshore storage facilities were situated (i.e. excluding inventory in storage facilities situated on vessels); and (iii) trade receivables and other assets

were allocated to the geographical area to which the related project belonged.

Italy

Rest of Europe

CIS

Rest of Asia

North Africa

West Africa

Americas

Unallocated

Total

Offshore E&C

Onshore E&C

Offshore

Drilling

Onshore

Drilling

Unallocated

Total

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Non-current assets were allocated on the basis of the country in which the asset operates, except for offshore drilling and construction vessels, which

were included under ‘Unallocated’.

Construction contracts

Construction contracts were accounted for in accordance with IAS 11.

First half First half

(€million) 2014 2015

Construction contracts - assets 2,635 2,001

Construction contracts - liabilities (1,289) (1,545)

Construction contracts - net 1,346 456

Costs and margins (completion percentage) 6,464 5,943

Progress billings (5,137) (5,425)

Change in provision for future losses 19 (62)

Construction contracts - net 1,346 456

Transactions with related parties

Saipem SpA is a subsidiary of Eni SpA. Transactions with related parties entered into by Saipem SpA and/or companies within the scope of consolidation

concern mainly the supply of services, the exchange of goods, the provision and utilisation of financial resources, and entering into derivative contracts

with joint ventures, associates and unconsolidated subsidiaries, with subsidiaries, jointly-controlled entities and associates of Eni SpA, and with a

number of entities owned or controlled by the State. These transactions are an integral part of the ordinary course of its business and are carried out on

an arm’s length basis, i.e. at conditions which would be applied between willing and independent parties. All transactions were carried out for the mutual

benefit of the Saipem companies involved. Pursuant to disclosure requirements covered under Consob Regulation No. 17221 of March 12, 2010, the

following transactions with related parties were carried out in the first half of 2015:

- on January 8, 2015, Saipem Drilling Norway AS, an indirect subsidiary of Saipem SpA, signed with Eni Finance International SA, a subsidiary of Eni SpA,

a 3-year long-term revolving loan agreement for €300 million, carrying a variable rate of interest plus a spread of 250 basis points;

- on March 11, 2015, Saipem Canada Inc, an indirect subsidiary of Saipem SpA, signed with Eni Finance International SA, a subsidiary of Eni SpA, a

one-year loan agreement for 625 million Canadian Dollars carrying a variable rate of interest based on Libor plus a spread of 150 basis points;

- on March 17, 2015, Saimexicana SA de Cv, an indirect subsidiary of Saipem SpA, signed with Eni Finance International SA, a subsidiary of Eni SpA, a

one-year loan agreement for 200 million US dollars carrying a variable rate of interest based on Libor plus a spread of 150 basis points;

- on March 23, 2015, Sofresid SA, an indirect subsidiary of Saipem SpA, signed with Eni Finance International SA, a subsidiary of Eni SpA, a one-year loan

agreement for €300 million carrying a variable rate of interest based on Libor plus a spread of 150 basis points;

- on June 29, 2015, Snamprogetti Saudi Arabia Ltd, an indirect subsidiary of Saipem SpA, signed with Eni Finance International SA, a subsidiary of Eni

SpA, two loan agreements: the first is a two-year loan agreement for 290 million US dollars carrying a variable rate of interest based on Libor plus a

spread of 250 basis points, while the second is a one-year loan agreement for 280 million US dollars carrying a variable rate of interest based on Libor

plus a spread of 150 basis points;

- the transaction with Vodafone Omnitel BV which, pursuant to the provisions of Consob’s Regulation concerning transactions with related parties of

March 12, 2010 and Saipem’s internal procedure ‘Interests held by Board Directors and Statutory Auditors and transactions with related parties’, is

related to Eni SpA through a member of the Board of Directors. The transaction in question was carried out on an arm’s length basis and essentially

related to costs for mobile communication services amounting to €1 million.

The tables below show the value of transactions of a trade, financial or other nature entered into with related parties. The analysis by company is based

on the principle of relevance in relation to the total amount of transactions. Transactions not itemised because they are immaterial are aggregated under

the following captions:

- unconsolidated subsidiaries;

- associated and jointly-controlled companies;

- Eni subsidiaries;

- Eni associated and jointly-controlled companies;

-other related parties.

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Trade and other transactions

Trade and other transactions as of December 31, 2014 and for the six-month period ended June 30, 2014 were as follows:

(€million)

Dec. 31, 2014 First half 2014

Costs Revenues

Name Receivables Payables Guarantees Goods Services

(1)

Goods and services

Other

Unconsolidated subsidiaries

SAGIO - Companhia Angolana de Gestão de Instalaçao Offshore Lda - 2 - - 1 - -

Total unconsolidated subsidiaries - 2 - - 1 - -

Associated and jointly-controlled companies

ASG Scarl - 6 - - - - -

CEPAV (Consorzio Eni per l’Alta velocità) Due 114 152 150 - 68 69 -

CEPAV (Consorzio Eni per l’Alta velocità) Uno 21 12 278 - - 1 -

CSFLNG Netherlands BV - 1 - - - 7 -

Gruppo Rosetti Marino SpA - - - - 1 - -

KWANDA Suporte Logistico Lda 68 15 - - 4 4 -

Petromar Lda 90 4 39 - 1 31 -

PLNG 9 Snc di Chiyoda Corp e Servizi Energia Italia SpA 1 - - - - - -

Saipar Drilling Co BV - - - - - - -

Saipem Taqa Al Rushaid Fabricators Co Ltd 14 16 - - 17 3 -

Société pour la Réalisation du Port de Tanger Méditerranée 1 - - - - - -

Southern Gas Constructors Ltd 1 - - - - - -

TMBYS SAS 2 1 - - - 5 -

Others (for transactions not exceeding €500 thousand) 1 2 - - 1 2 -

Total associated and jointly-controlled companies 313 209 467 - 92 122 -

Eni consolidated subsidiaries

Eni SpA 5 11 4,742 - 8 - -

Eni SpA Exploration & Production Division 87 7 - - - 92 -

Eni SpA Gas & Power Division 1 1 - - 1 - -

Eni SpA Refining & Marketing Division 18 1 - 1 - 13 -

Agip Energy & Natural Resources (Nigeria) Ltd 2 - - - - - -

Agip Karachaganak BV 1 - - - - 1 -

Agip Oil Ecuador BV 2 - - - - 1 -

Banque Eni SA - - - - 1 - -

Eni Adfin SpA - 3 - - 2 - -

Eni Angola SpA 55 - - - - 62 -

Eni Congo SA 150 21 - - - 96 -

Eni Corporate University SpA - 3 - - 3 - -

Eni Cyprus Ltd 27 - - - - - -

Eni East Sepinggan Ltd 1 - - - - - -

Eni Finance International SA - 1 - - - - -

Eni Insurance Ltd - 5 - - 13 - 8

Eni Lasmo PLC 2 - - - - 3 -

Eni Mediterranea Idrocarburi SpA - - - - - 1 -

Eni Muara Bakau BV 35 25 - - - 3 -

Eni Norge AS 46 - - - - 85 -

EniPower SpA 2 - - - - 1 -

EniServizi SpA 1 17 - - 24 1 -

Eni Turkmenistan Ltd 2 - - - - - -

Floaters SpA 1 - - - - 3 -

Hindustan Oil Exploration Co Ltd 1 - - - - - -

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(€million)

Dec. 31, 2014 First half 2014

Costs Revenues

Name Receivables Payables Guarantees Goods Services

(1)

Goods and services

Other

Naoc - Nigerian Agip Oil Co Ltd 4 - - - - - -

Nigerian Agip Exploration Ltd 1 - - - - 11 -

Raffineria di Gela SpA - - - - - 3 -

Serfactoring SpA 3 13 - - 1 - -

Syndial SpA 9 - - - - 5 -

Versalis SpA 13 - - - - 27 -

Others (for transactions not exceeding €500 thousand) 1 - - - - 1 -

Total Eni consolidated subsidiaries 470 108 4,742 1 53 409 8

Unconsolidated Eni subsidiaries

Agip Kazakhstan North Caspian Operating Co NV - - - - - 84 -

Total Eni subsidiaries 470 108 4,742 1 53 493 8

Eni associated and jointly-controlled companies

Eni East Africa SpA 7 3 - - - 59 -

Greenstream BV 1 - - - - - -

Mellitah Oil&Gas BV 10 - - - - (1) -

Petrobel Belayim Petroleum Co 23 - - - - 42 -

Raffineria di Milazzo 6 - - - - - -

South Stream Transport BV - - - - - 230 -

Others (for transactions not exceeding €500 thousand) 1 - - - - 4 -

Total Eni associated and jointly-controlled companies 48 3 - - - 334 -

Total Eni companies 518 111 4,742 1 53 827 8

Entities controlled or owned by the State 16 60 - - 6 19 -

Pension funds: FOPDIRE - - - - 1 - -

Total transactions with related parties 847 382 5,209 1 153 968 8

Overall total 3,391 5,669 8,169 1,172 2,990 5,966 12

Incidence (%) 25.60

(2)

6.74 63.77 0.09 5.08

(3)

16.23 66.67

(1) The item ‘Services’ includes costs for services, costs for the use of third-party assets and other costs.

(2) Incidence includes receivables shown in the table ‘Financial transactions’.

(3) Incidence is calculated net of pension funds.

Trade transactions as at and for the six-month period ended June 30, 2015 were as follows:

(€million)

June 30, 2015 First half 2015

Costs Revenues

Name Receivables Payables Guarantees Goods Services

(1)

Goods and services

Other

Unconsolidated subsidiaries

SAGIO - Companhia Angolana de Gestão de Instalaçao Offshore Lda - 1 - - - - -

Total unconsolidated subsidiaries - 1 - - - - -

Associated and jointly-controlled companies

ASG Scarl - 6 - - - - -

CEPAV (Consorzio Eni per l’Alta velocità) Due 58 104 150 - - 81 -

CEPAV (Consorzio Eni per l’Alta velocità) Uno 15 8 291 - - - -

Charville - Consultores e Servicos, Lda - - - - - - -

CSFLNG Netherlands BV 22 - - - - 23 -

Fertilizantes Nitrogenados de Venezuela CEC - - - - - - -

Gruppo Rosetti Marino SpA 2 2 - 2 - - -

KWANDA Suporte Logistico Lda 68 12 - - 2 5 -

Petromar Lda 111 3 39 - 1 29 -

PLNG 9 Snc di Chiyoda Corp e Servizi Energia Italia SpA - - - - - - -

Saipar Drilling Co BV - - - - - 1 -

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(€million)

June 30, 2015 First half 2015

Costs Revenues

Name Receivables Payables Guarantees Goods Services

(1)

Goods and services

Other

Saipem Taqa Al Rushaid Fabricators Co Ltd 13 16 - - 48 (1) -

Southern Gas Constructors Ltd 1 - - - - - -

TMBYS SAS 2 1 - -- --

Others (for transactions not exceeding €500 thousand) 1 - - - 1 - -

Total associated and jointly-controlled companies 293 152 480 2 52 138 -

Eni consolidated subsidiaries

Eni SpA 4 10 3,783 - 9 - -

Eni SpA Downstream Gas Division - - - - 1 - -

Eni SpA Exploration & Production Division 79 5 - - - 52 -

Eni SpA Gas & Power Division 1 - - - - - -

Eni SpA Refining & Marketing Division 6 1 - 2 - 8 -

Agip Energy & Natural Resources (Nigeria) Ltd - - - - - - -

Agip Karachaganak BV 1------

Agip Oil Ecuador BV 2 - - - - 2 -

Banque Eni SA - - - - 1 - -

Eni Adfin SpA - 4 - - 2 - -

Eni Angola SpA 51 - - - - 124 -

Eni Congo SA 139 10 - - - 224 -

Eni Corporate University SpA - 3 - - 2 - -

Eni Cyprus Ltd - - - - - 42 -

Eni East Sepinggan Ltd - - - - - - -

Eni Finance International SA - - - - - - -

Eni Insurance Ltd 9 6 - - 3 - -

Eni Lasmo PLC 8 - - - - 7 -

Eni Mediterranea Idrocarburi SpA - - - - - - -

Eni Muara Bakau BV 30 5 - - - 128 -

Eni Norge AS 42 - - - - 78 -

EniPower SpA - - - -- --

EniServizi SpA - 21 - - 22 - -

Eni Trading & Shipping SpA - - - - 5 - -

Eni Turkmenistan Ltd 8 - - - - 7 -

Floaters SpA - - - -- --

Hindustan Oil Exploration Co Ltd 1 - - - - - -

Naoc - Nigerian Agip Oil Co Ltd 5 - - - - - -

Nigerian Agip Exploration Ltd - - - - - - -

Raffineria di Gela SpA 1 - - - - 1 -

Serfactoring SpA 3 17 - - 1 - -

Syndial SpA 4 - - - - 3 -

Versalis SpA 13 - - - - 9 -

Others (for transactions not exceeding €500 thousand) - 2 - - - 3 -

Total Eni consolidated subsidiaries 407 84 3,783 2 46 688 -

Unconsolidated Eni subsidiaries

Agip Kazakhstan North Caspian Operating Co NV - - - - - - -

Total Eni subsidiaries 407 84 3,783 2 46 688 -

Eni associated and jointly-controlled companies

Eni East Africa SpA 11 - - - - 20 -

Greenstream BV 2 - - - - 1 -

Mellitah Oil&Gas BV 10 - - - - - -

Petrobel Belayim Petroleum Co 15 - - - - 27 -

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(€million)

June 30, 2015 First half 2015

Costs Revenues

Name Receivables Payables Guarantees Goods Services

(1)

Goods and services

Other

Raffineria di Milazzo 1 - - - - 4 -

Others (for transactions not exceeding €500 thousand) - - - -- --

Total Eni associated and jointly-controlled companies 39 - - - - 52 -

Total Eni companies 446 84 3,783 2 46 740 -

Entities controlled or owned by the State 10 1 - - 1 12 -

Pension funds: FOPDIRE - - - - 1 - -

Total transactions with related parties 749 238 4,263 4 100 890 -

Overall total 3,466 5,788 7,461 1,079 3,228 5,373 1

Incidence (%) 21.81

(2)

4.11 57.14 0.37 3.07

(3)

16.56 0.00

(1) The item ‘Services’ includes costs for services, costs for the use of third-party assets and other costs.

(2) Incidence includes receivables shown in the table ‘Financial transactions’.

(3) Incidence is calculated net of pension funds.

The figures shown in the tables refer to Note 3 ‘Trade and other receivables’, Note 15 ‘Trade and other payables’, Note 31 ‘Guarantees, commitments and

risks’, Note 32 ‘Net sales from operations’, Note 33 ‘Other income and revenues’ and Note 34 ‘Purchases, services and other costs’.

The Saipem Group provides services to Eni Group companies in all sectors in which it operates, both in Italy and abroad.

Existing relations with entities controlled or owned by the State are mainly in relation to the Snam Group.

Other transactions consisted of the following:

Dec. 31, 2014 June 30, 2015

Other Other Other Other

(€million) receivables payables receivables payables

Eni SpA 356 805 226 332

Agip Oil Ecuador BV - - - 2

Banque Eni SA 3 18 1 5

CEPAV (Consorzio Eni per l’Alta Velocità) Uno 3 - 3 -

Eni Insurance Inc - - - 8

Eni Trading & Shipping SpA - 5 - 1

Total transactions with related parties 362 828 230 348

Overall total 635 840 470 385

Incidence (%) 57.01 98.57 48.94 90.39

Financial transactions

Financial transactions as of December 31, 2014 and for the six-month period ended June 30, 2014 were as follows:

(€million)

Dec. 31, 2014 First half 2014

Cash and cash

Name equivalents Receivables

(1)

Payables

(2)

Commitments Expenses Income Derivatives

Eni SpA 87 - 1,798 15,864 (34) - (62)

Banque Eni SA 57 - - 366 - - (9)

Eni Finance International SA 741 - 3,709 - (32) - -

Eni Finance Usa Inc - 14 - - - - -

Eni Trading & Shipping SpA -------

Serfactoring SpA - - 24 - (1) - -

TMBYS SAS -7-----

Total transactions with related parties 885 21 5,531 16,230 (67) - (71)

(1) Shown on the balance sheet under ‘Trade and other receivables’ (€21 million).

(2) Shown on the balance sheet under ‘Short-term debt’ (€1,873 million); ‘Long-term debt’ (€3,064 million) and ‘Current portion of long-term debt’ (€594 million).

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Financial transactions as of and for the six-month period ended June 30, 2015 were as follows:

(€million)

June 30, 2015 First half 2015

Cash and cash

Name equivalents Receivables

(1)

Payables

(2)

Commitments Expenses Income Derivatives

Eni SpA 113 - 2,399 12,373 (40) - (24)

Banque Eni SA 67 - - 200 - - 6

Eni Finance International SA 498 - 4,067 - (38) - -

Eni Finance Usa Inc - - 8 - - - -

Eni Trading & Shipping SpA - - - - - - -

Serfactoring SpA - - 20 - (2) - -

TMBYS SAS -7-----

Total transactions with related parties 678 7 6,494 12,573 (80) - (18)

(1) Shown on the balance sheet under ‘Trade and other receivables’ (€7 million).

(2) Shown on the balance sheet under ‘Short-term debt’ (€2,530 million); ‘Long-term debt’ (€3,477 million) and ‘Current portion of long-term debt’ (€487 million).

Financial transactions also included transactions with Eni Trading & Shipping SpA which are included in the income statement under the item ‘Other

operating income (expense)’.

As the result of a special agreement between Saipem and the Eni Corporate Finance Unit, Eni SpA supplies financial services to the Italian companies of

the Saipem Group, consisting of loans, deposits and financial instruments for the hedging of foreign exchange and interest rate risks.

The incidence of financial transactions and positions with related parties was as follows:

Dec. 31, 2014 June 30, 2015

Related Related

(€million) Total parties Incidence % Total parties Incidence %

Short-term debt 2,186 1,873 85.68 3,037 2,530 83.31

Long-term debt (including current portion) 3,908 3,658 93.60 3,964 3,964 100.00

First half 2014 First half 2015

Related Related

(€million) Total parties Incidence % Total parties Incidence %

Finance income 333 - - 516 - -

Finance expense (373) (67) 17.96 (607) (80) 13.18

Derivative financial instruments (70) (71) 101.43 (19) (18) 94.74

Other operating income (expense) - - - - - -

The main cash flows with related parties were as follows:

(€million) June 30, 2014 June 30, 2015

Revenues and other income 976 890

Costs and other expenses (154) (104)

Finance income (expenses) and derivatives (138) (98)

Change in trade receivables and payables (99) (46)

Net cash flow from operations 585 642

Change in financial receivables (29) 14

Net cash flow from (used in) investing activities (29) 14

Change in financial debt 360 963

Net cash flow from (used in) financing activities (360) 963

Total cash flows with related parties 916 1,619

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The incidence of cash flows with related parties was as follows:

June 30, 2014 June 30, 2015

Related Related

(€million) Total parties Incidence % Total parties Incidence %

Net cash flow from operations 50 585 1,170.00 (852) 642 (75.35)

Net cash flow from (used in) investing activities (323) (29) 8.98 (144) 14 (9.72)

Net cash flow from (used in) financing activities

(*)

414 360 86 .9 6 817 9 63 117.87

(*) Net cash flow from (used in) financing activities does not include dividends distributed, net purchase of treasury shares or capital contributions by non-controlling interests.

Disclosure of interests in joint operations

The table below contains information regarding interests in joint operations that are consolidated using the working interest method as at June 30, 2015:

(€million) June 30, 2014 June 30, 2015

Net capital employed (61) (48)

Total assets 62 88

Total current assets 62 86

Total non-current assets -2

Total liabilities 61 85

Total current liabilities 61 84

Total non-current liabilities -1

Total revenues 19

Total operating expenses (1) (12)

Operating result - (3)

Net profit (loss) for the period - (1)

Significant non-recurring events and operations

No significant non-recurring events or operations took place in the first half of 2015 or the first half of 2014.

Transactions deriving from atypical or unusual operations

No transactions deriving from atypical and/or unusual operations occurred in the first half of 2014 or the first half of 2015.

Events subsequent to period end

Information on subsequent events is provided in the ‘Events subsequent to period-end’ section of the ‘Operating and Financial Review’.

Additional information Algeria

Further to the disclosures provided in the Algeria paragraph of the ‘Legal proceedings’ section, we note the following additional information with regard

to projects under execution in Algeria as at June 30, 2015, with the sole purpose of providing a complete and comprehensive picture of the current

situation:

- funds in two current accounts (ref. Note 1) amounting to the equivalent of €87 million are currently frozen;

- trade receivables (ref. Note 3) totalled €52 million, all past due and not impaired;

- work-in-progress (ref. Note 4) on projects under execution amounted to €154 million;

- deferred income and advance payments (ref. Note 15) totalled €65 million and €1 million, respectively;

- provisions for future losses (ref. Note 20) for projects under execution amounted to €3 million;

- guarantees (ref. Note 32) on projects under execution totalled €546 million.

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Certification of the Condensed Consolidated Interim Financial

Statements pursuant to Article 81-

ter

of Consob Resolution

No. 11971 of May 14, 1999 and subsequent amendments

1. The undersigned Stefano Cao and Alberto Chiarini in their capacity as CEO and manager responsible for the preparation of financial reports of Saipem

SpA, respectively, pursuant to Article 154-bis, paragraphs 3 and 4 of Legislative Decree No. 58 of February 24, 1998, certify that the internal controls

over financial reporting in place for the preparation of the condensed consolidated interim financial statements at June 30, 2015 and during the period

covered by the report, were:

- adequate to the company structure, and

- effectively applied during the process of preparation of the Report.

2. Internal controls over financial reporting in place for the preparation of the condensed consolidated interim financial statements as of June 30, 2015

have been defined and the evaluation of their effectiveness has been assessed based on principles and methodologies adopted by Saipem in accordance

with the Internal Control - Integrated Framework Model issued by the Committee of Sponsoring Organizations of the Treadway Commission, which

represents an internationally-accepted framework for the internal control system.

3. The undersigned officers also certify that:

3.1 the condensed consolidated interim financial statements at June 30, 2015:

a) were prepared in accordance with the evaluation and measurement criteria 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;

b) correspond to the Company’s evidence and accounting books and entries;

c) fairly represent the financial condition, results of operations and cash flows of the parent company and the Group consolidated companies as

of and for the period presented in this Report;

3.2 the interim operating and financial review includes a reliable analysis of the material events occurring during the first half of 2015 and their

impact on the condensed consolidated interim financial statements, as well as a description of the main risks and uncertainties for the second

half of the year. The interim operating and financial review also contains a reliable analysis of the disclosure on significant related-party

transactions.

July 28, 2015

Stefano Cao Alberto Chiarini

CEO Chief Financial Officer and Compliance Officer

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Independent Auditors’ Review report

111

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059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina 112

Headquarters: San Donato Milanese (Milan) - Italy

Via Martiri di Cefalonia, 67

Branches:

Cortemaggiore (Piacenza) - Italy

Via Enrico Mattei, 20

Information for Shareholders

Saipem SpA, Via Martiri di Cefalonia, 67 - 20097

San Donato Milanese (Milan) - Italy

Relations with institutional investors

and financial analysts

Fax +39-0252054295

e-mail: investor.relations@saipem.eni.it

Publications

Bilancio al 31 dicembre (in Italian)

Annual Report (in English)

Interim Consolidated Report as of June 30

(in Italian and English)

Saipem Sustainability (in English)

Also available on Saipem’s website:

www.saipem.com

Website: www.saipem.com

Operator: +39-025201

Design: Gruppo Korus Srl - Rome - Italy

Cover: Inarea

Layout and supervision: Studio Joly Srl - Rome - Italy

Printing: STILGRAF - Viadana (Mantova) - Italy

saipem Società per Azioni

Share Capital €441,410,900 fully paid up

Tax identification number and Milan Companies’

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina III

www.saipem.com

059-112SemSaipem15Ing.qxd 6-08-2015 18:41 Pagina IV

001 058SaipemSem15Ing SA 100 Saipem Sem15Ing

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