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Notes to the consolidated financial statements

Basis of presentation

The consolidated financial statements of Saipem have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and adopted by the European Commission pursuant to Article 6 of EC Regulation No. 1606/2002 of the European Parliament and Council of July 19, 2002 and in accordance with Article 9 of Legislative Decree No. 38/20051. The consolidated financial statements have been prepared by applying the cost method, with adjustments where appropriate, except for items that under IFRS must be recognised at fair value, as described in the ‘Summary of significant accounting policies’ section.
The consolidated financial statements include the statutory accounts of Saipem SpA and the accounts of all Italian and foreign companies in which Saipem SpA holds the right to directly or indirectly exercise control, determine financial and management decisions and obtain economic and financial benefits. The consolidated financial statements also include, on a line-by-line proportional basis, data of companies managed under joint operating agreements.
Subsidiaries performing only limited operating activities are not consolidated. Their non consolidation is therefore not material and does not have a significant effect on total assets, liabilities, net financial position and profit for the year2.
Immaterial subsidiaries excluded from consolidation, associates and other interests are accounted for as described under the heading ‘Financial fixed assets’.
Consolidated companies, non-consolidated subsidiaries, associates and relevant shareholdings as set forth in Article 126 of Consob Resolution 11971 of May 14, 1999 and subsequent addenda, are separately indicated in the section ‘Scope of consolidation at December 31, 2010’.
After this section, there follows a list detailing the changes in the scope of consolidation area from the previous year.
Subsidiaries’ financial statements are audited by independent auditors, who examine and certify the information required for the preparation of the consolidated financial statements. The consolidated financial statements at December 31, 2010, approved by Saipem’s Board of Directors on March 8, 2011, were audited by the independent auditor Reconta Ernst & Young SpA. As the auditor of the Group, Reconta Ernst & Young SpA is responsible for the auditing activities of the subsidiaries, and, to the extent allowed under Italian legislation, when there are other independent auditors, it takes the responsibility of their work. Amounts in these financial statements and the notes thereto are stated in millions of euros (€ million).