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Results of operations

Saipem Group-income statement

Year 2009 (€ million) Year 2010 Var. %
10.292 Net sales from operations
11.160 8.4
14 Other income and revenues
14  
(7,227) Purchases, services and other costs
(7,711)  
(1,483) Payroll and related costs
(1,627)  
1,596 Gross operating profit (EBITDAi) 1.836 15.0
(440) Depreciation, amortisation and  impairment (517)  
1,156 Operating profit (EBITi)
1.319 14.1
(100) Net finance expense (110)  
7 Net income from investments
13  
1,063 Adjusted profit before income taxes 1.222 15.0
(288) Income taxes
(344)  
775 Adjusted profit before minority interes
878 13.3
(43) Net profit attributable to minority interest
(50)  
732 Adjusted net profiti 828 13.1
- Gains on disposals 17  
- Taxation (1)  
732 Net profit 844 15.3

Net sales from operations for 2010 amounted to €11,160 million, up 8.4% million compared to 2009, due to greater volumes generated in all sectors of activity.
Gross operating profit (EBITDA)
amounted to €1,836 million, a 15% increase versus 2009, reflecting a very good operating performance.
Depreciation and amortisation of tangible and intangible assets amounted to €517 million, representing a significant increase (17.5%) compared with the previous year, mainly due to new rigs beginning operations, particularly in the Offshore Drilling sector.
Operating profit (EBIT)
for 2010 stood at €1,319 million, a €163 million (14.1%) increase over the previous year. This figure is analysed in detail in the subsequent sections describing the performance of the various business units.
Net finance expense increased by €10 million compared with 2009, mainly due to the increase in net borrowings.
Net income from investments amounted to €13 million, representing an increase compared with 2009.
Adjusted profit before income taxes
stood at €1,222 million, a 15% increase versus 2009.
Income taxes amounted to €344 million, an increase by €56 million compared to 2009, due to the combined effect of increases in both the taxable income tax and in the tax rate, which rose from 27.1% in 2009 to 28.1% in 2010.
Adjusted net profit
stood at €828 million, representing an increase by 13.1% compared with 2009.
Net profit
totalled €844 million. This included the sale of the minority holding (40%) in the French company Doris Engineering sa.

Operating profit and costs by function
Year 2009 (€ million)
Year 2010 Var. %
 10,292   Net sales from operations
 11,160    8.4  
 (8,714)   Production costs 
 (9,361)    
 (100)   Idle costs
 (131)    
 (114)   Selling expenses  (143)    
 (17)   Research and development costs 
 (12)    
 (9)   Other operating income (expenses)
 (10)    
 (182)   General and administrative expenses  (184)    
 1,156   Operating profit (EBIT)
 1,319    14.1  

In 2010, the Saipem Group achieved net sales from operations of €11,160 million, an increase by €868 million compared to the previous year.
Production costs (which include direct costs of sales and depreciation of vessels and equipment) totalled €9,361 million (€8,714 million in 2009). This significant increase was in line with an increase in sales volumes.
Idle costs increased by €31 million, mainly due to lower utilisation rates for Offshore vessels.
Selling expenses of €143 million registered an increase by €29 million compared with the previous year due to an increase in sales activities, particularly in the Offshore sector.
Research and development costs included in operating costs decreased by €5 million.
General and administrative expenses amounting to €184 million were essentially unchanged from the previous year.
Operating profit (EBIT)
increased by 14.1% compared to 2009.