Thank you and good afternoon and welcome to the third quarter results conference call. I’m here with Alberto Chiarini, Saipem’s Chief Financial & Compliance Officer; and Vincenzo Maselli Campagna, Saipem’s New Head of Investor Relations.

As some of you may know, Salvatore Colli has recently taken on a new opportunity within Saipem, becoming Head of Finance, following fourteen years in Investor Relations. As some of you may already know, Alberto Chiarini has recently taken out a new opportunity within Saipem, becoming Head of Finance, following 14 years in Investor Relations.

Today, we will talk you through the financial results, as well as the most relevant operational highlights for the quarter and then we’ll be happy to take your questions. As you know, management has been focused this year on two key objectives.

The first is to build a new backlog of profitable business and the second is to resolve our legacy contracts, while maintaining positive relationships with key clients. This is an area in which management continues to invest a significant amount of time and effort.

I’m pleased to say we had another positive quarter of order intake, with new contract wins building on our exceptional success in the first half. However, the industry has faced significant headwinds in the quarter with the oil price falling sharply to the lowest level since 2011.

Regrettably, that deterioration in the market environment is impacting our ongoing negotiations with clients relating to payments on legacy contracts and we are adjusting our full year net debt targets to €4.7 billion as a result. We are maintaining the rest of our 2014 guidance at the lower end of the range indicated at the beginning of the year.

Overall, Saipem’s operational strengths and the work we have done over the course of this year have successfully rebuilt our backlog in line with our strict commercial strategy and this will underpin our path of recovery in the medium term. But the speed of this recovery will also depend on market conditions.

Turning to our financial results on Slide 7, as a reminder, please note that in all 2014 figures are compliant with new IFRS 10 and 11 accounting principles, regarding the consolidation of joint ventures. 2013 figures have therefore been restated for comparability.

In addition, 2013 numbers are restated in accordance with CONSOB indications pursuant to IAS 8, I think 25 days. In the first nine months of 2014, revenues have been approximately €9.5 billion, on-track to meet our year-end target of €13 billion, with more than 50% of the total coming from E&C Offshore, while E&C Onshore accounted for around 30%.

The E&C Onshore revenues stand at almost €2.9 billion, around 20% lower than the same period in 2013. This is as a result of the more selective approach to new business acquisition we have taken, in line with our strategy of stricter commercial discipline.

The deterioration of the market environment is impacting the stance that some of our clients are taking on negotiations, which is in turn affecting recognition of additional costs incurred by Saipem in the Quarter and therefore E&C Onshore EBIT performance. The ramp-up of new E&C Onshore contracts that we have continued to see throughout this year is not yet able to offset the negative impact of legacy contracts.

In E&C Offshore, we experienced a growth in revenues of some 40% compared with the first nine months of 2013. We also saw further confirmation of the recovery in this division with EBIT of 293 million in the first nine months of 2014 compared to a loss of 9 million in the same period in 2013.

In Drilling, the results are in line with the first nine months of 2013, when taking into account the loss of Perro Negro 6 in July 2013 and the prolonged maintenance of Scarabeo 7 during first half of 2014. In a transition year for Saipem, we have delivered a recovery in the Offshore E&C business and a continued strong performance in Drilling.

While we have made good progress in the quality and quantity of the E&C Offshore backlog, challenges continue and the timing of the recovery on Onshore remains uncertain. Turning to net debt on Slide 8, at the end of September the total stood at €5.1 billion, approximately in line with the position at the end of June.

If we look at the evolution of net debt in the third quarter, the cash flow generated broadly offset the investments and the slight increase in working capital. As we will explain in the following slide, working capital suffered from an increase in pending revenues related to legacy contracts and with respect to our receivables, Venezuela remains a critical area, with exposure in the country further increasing in the quarter.

It must be noted that a significant percentage of our pending revenues and receivables are denominated in U.S. dollars, and therefore the appreciation has also impacted working capital.

As anticipated, we have now adjusted the guidance for net debt to 4.7 billion, this as a result of the increased difficulties faced by the industry that are impacting the timing of resolution of ongoing negotiations on legacy contracts and the relevant payments. Moving to Slide 9, I will now give you an update on the legacy contracts in our backlog.

As already said, due to the unstable and worsening market conditions, recently we have seen a progressive change of attitude amongst clients and negotiations have become more challenging. During the quarter, the total pending revenues has increased to €1.4 billion from €1.2 billion.

The increase is mainly due to three factors. A further deterioration in the relationship with Sonatrach; the recent appreciation of the U.S.

dollar as around 60% of the pending revenues are denominated in dollars; and additional costs incurred as contracts move closer to completion. As we set out in detail at the half year presentation, the majority of the value of legacy contracts is accounted for by five projects.

Of these, work on two projects have now been completed, one of which is in arbitration process. I would like to stress that we still believe that the value of pending revenues we have accounted for is a fair assessment of what is recoverable on these contracts, but I must recognize that the timetable is now more uncertain due to the more rigid approach clients are taking to negotiations.

Our priorities are to maintain strong relationships with clients who continue to award us new contracts or to provide opportunity to tender for further business, while at the same time robustly keep defending our shareholders’ interests. Saipem has made continuous progress in executing its legacy contracts throughout the year, but as a result of bad weather conditions, we experienced some postponement and now we are expecting to have €1.8 billion worth of low margin contracts still to execute during 2015.

2015 is the last year in which these legacy contracts will account for a sizeable portion of our E&C activity, as they are now progressively replaced by new higher margin contracts. As we said in July, we did not expect the pace of new contract awards to continue at the unprecedented level we saw in the first half of the year.

Nevertheless, as we can see on Slide 10 in the third quarter, we were awarded in excess of €1.8 billion of new contracts mainly in E&C Offshore. At the end of September, the backlog amounted to 22.6 billion with more than 50% represented by E&C Offshore.

These figures do not include the new contract announced yesterday amounting to $2 billion. I will give you an update on ongoing opportunities we’re pursuing later in the presentation.

Looking now at the current backlog by year of execution on Slide 11, 40% will be booked in 2015 and some 50% in 2016 and onwards, although we have already announced €9.1 billion for 2015, guaranteeing a comfortable level of workload expected for next year. Of this amount notwithstanding the slight increase versus June, 23% of current E&C backlog to be executed in 2015 is made up by low margin contract, confirming the positive trend towards recovery.

The strong levels of order intake year-to-date support the improvement in visibility and quality across all the businesses beyond 2014. I will now like to give some of the operational details starting with Slide 13.

We already said that third quarter has been another good quarter of order intake, although as we said at the half year the pace of new contracts awards will not continue at the level we saw during the first half. Another important point for me is that the contracts awarded have demonstrated that we’re maintaining strong relationships with our key clients while continuing the negotiation on the legacy contracts.

The first contract I want to highlight is a deepwater SURF project on the Lakach Field in Mexico. This is an important first win for us since it positions Saipem as a pioneer in the new SURF market and in the key region, both of which offer significant growth potential.

This award is very important because it also confirms the very strong relationship with Pemex following the issues we had last year. In addition, we’ve been able to expand the contract we had for two FPSOs, one in Brazil and one in Angola.

And finally yesterday we have announced the award of the EPC contract for the expansion of the onshore production center of the Khurais field in Saudi Arabia, together with new drilling contracts in the Middle East and Latin America, cumulatively values approximately $2 billion. Moving to Slide 14, as we highlighted previously our clients are taking a more disciplined approach to CapEx, together with a focus on cost control.

They are also looking at the option of contractors to be involved from the inception of the project in order to better the project providing end-to0end solution that can minimize cost and time. In order to respond to this growing need Saipem recently entered into a joint venture with Xodus Group and Chiyoda to establish Xodus Subsea.

Headquartered in London this new standalone company will enable us to provide full integrated subsea solutions for our E&C and Offshore Drilling clients to offer increased certainty on project execution and also important, to give Saipem an early view of market opportunities. The subsea market is expected to grow at very attractive rates over the next few years.

Not only Mexico but particularly in the key areas of West and East Africa, in the pressured regions in Brazil and Angola and certain remote and isolated areas in which Saipem has an excellent track-record. With Slide 15, which you are familiar with, we provide an update on the contract schedule in our drilling business.

Looking at this chart you can see that 85% of our deep-water fleet is contracted until the end of 2016. In shallow-water we’re pleased that we have been awarded by Saudi Aramco a three year extension for Perro Negro 7, which sees the vessel fully utilized until the end of 2018, at improved day rates, and further strengthens our relationship with this client.

Discussions are ongoing for the renewal of contract on Perro Negro 4, Perro Negro 8 and Scarabeo 3, which could impact utilization in the short-term. As already mentioned, Scarabeo 7 is now returned to service, after a prolonged dry dock maintenance period during the first half.

As reported three months ago, Scarabeo 5 will be on stand-by during the Q4 at the lower standby rate, as requested by Statoil. Full operations are expected to resume in January next year.

Overall, the sharp fall in the oil price has created uncertainty in the market, which will remain for as long as oil prices remain depressed. But the long-term commitment we have secured to-date should protect us from significant business fluctuations.

In Offshore Drilling, we achieved fleet utilization in excess of 96% and for the remainder of the year utilization is expected to remain stable. During Q3, we signed new contracts for about one-third of the fleet, mainly in Latin America, with duration ranging from 3 months to 2 years.

Moreover, as anticipated in our press release yesterday, we signed new contracts for other 9 Offshore Drilling rigs already operating in the Middle East and Latin America with length ranging from three months to three years. You will remember also this Slide Number 16, illustrating the principal E&C projects for which we have tendered and the opportunities in the market in the short-term, indicatively up to the middle of next year.

The aggregate value of €14 billion of new contracts awarded to Saipem during the first nine months of 2014 confirms as you can see with the green three ticks. Our strong position in the key business areas of trunkline, FPSO construction, field development and complex onshore projects.

The slide also proves that there is no shortage of opportunities and Saipem is targeting an increasing number of projects around the world. The opportunities shown here are for a broad mix of clients and there is a good balance between Onshore and Offshore.

In particular, we are seeing a growing LNG market in the Americas, alongside the legacy projects in Asia Pacific. In the Americas, Saipem this year has applied an increased commercial focus compared to the past, in particular in downstream and major pipelines.

While presently there are a number of contracts out for tender, the more uncertain market environment means it would be more difficult to predict the pace of tenders for future projects while the oil price remains subdued. I would like to recall that guidance provided in February for 2014 was driven by two uncertainties.

The uncertainty around the resolution of legacy contracts on the one hand and the overall operational improvement of the business on the other. As the year has unfolded, we won an unprecedented level of new business, and we have made a strong operational progress.

However, the original difficulties we anticipated have been exacerbated by challenging market conditions, impacting the pace of resolution of legacy contracts, and by a number of one-off events that negatively impacted the profitability of the Company, such as, in the E&C, the accident occurred on the P55 project, and in Drilling the request of standby period for the Scarabeo 5 and the longer than expected maintenance of the Scarabeo 7. With this in mind, I will now take you through our updated 2014 guidance on Slide 18.

On revenues, we maintain guidance of €13 billion. EBIT will be at the lower end of our guidance range, at around €600 million.

We expect net profit to be around €280 million, and additionally, we confirm CapEx for the year of €750 million. Finally, we have revised our previous net debt target of €4.2-€4.5 billion to €4.7 billion.

As I stated at the half year, our full year net debt guidance was predicated on the timing of legacy contract payments which, as discussed, are now taking longer to resolve than hoped due to current market conditions. Moving to the conclusion on Slide 20, we continue to implement the turnaround plan for Saipem.

As we do so, it has been a challenging quarter for the oil services sector and there is no certainty as to how long these conditions will remain. While our continued success in winning new business highlights our commercial strength and competitive advantages, and as our highly skilled engineers continue to execute complex projects around the world, the market environment has changed.

The sharp fall in the oil price is impacting clients’ willingness to commit to new CapEx and the stance they are taking on negotiations for ongoing and/or completed contracts. There is a possibility that the more challenging market conditions that are arising in Q3 will continue into 2015.

However, the strong order backlog, we have already put in place, underpins Saipem's resilience and enable us to execute our recovery strategy with discipline. As we manage our legacy backlog and remain selective in new business acquisition.

Thank you very much and we are ready to take your questions.

Thank you. Yes, it's Fiona at Merrill Lynch.

I had a couple of questions please. Firstly if we can look at Slide Number 9, I would just like to get a little bit of clarity around the numbers on this page.

So your pending revenues number is now at 1.4 billion and that's actually gone up from 1.2 last quarter so I'd like to understand why that number is going up rather than down? And then your backlog for execution next year of these older contracts is now being stated at 1.8 billion whereas over the last couple of quarters that's been at 1.5.

So I'd like to understand are those projects getting bigger, are you adding more projects into those categories for the increase there? And then my last question is around your net debt position.

And I was just hoping you could give a little bit more clarity on how long you are able to run with such a high level of net debt and are there any reasons why you should be ruling out an equity increase at the moment?

Thank you. Yes, it's Fiona at Merrill Lynch.

I had a couple of questions please. Firstly if we can look at Slide Number 9, I would just like to get a little bit of clarity around the numbers on this page.

So your pending revenues number is now at 1.4 billion and that's actually gone up from 1.2 last quarter so I'd like to understand why that number is going up rather than down? And then your backlog for execution next year of these older contracts is now being stated at 1.8 billion whereas over the last couple of quarters that's been at 1.5.

So I'd like to understand are those projects getting bigger, are you adding more projects into those categories for the increase there? And then my last question is around your net debt position.

And I was just hoping you could give a little bit more clarity on how long you are able to run with such a high level of net debt and are there any reasons why you should be ruling out an equity increase at the moment?

Thank you, Fiona. You referenced to Slide Number 9, as we had indicated basically the point of the pending revenue is linked to the fact that we have now considered an increase to 1.4 considering some delay first of all of the negotiation.

They are basically linked the three points that we have indicated in particular to the deterioration of relationship with Sonatrach for which I recall we are completely in the last phase of the last projects that is the Arzew LNG. The appreciation of the dollar that has contributed about 70 million to their value and what I indicated as some extra cost that we have incurred in during the quarter are some of the projects that are moving closer to completion, so Umberto with the second question.

Yes, okay the second question was about 1.8 billion of legacy in 2015 this is due mainly to the delay that we are experiencing in some of these legacy contracts. Particularly as we have pointed out to some of bad weather issues that we have in Brazil on some of the low margin contracts that we took in Brazil mainly P55 and Cabiúnas.

This is certainly a big chunk of the delay. Then we also realized some of the schedule on the onshore legacy contract.

Of this 1.8 billion in 2015, nearly half is onshore and half is offshore and just to give you more detail. As far as the 4.7 billion debt target year-end, yes we realized that this is an important amount.

I cannot answer about some your specific question on equity increase because the process of strengthening our balance sheet is also linked to the consolidation process of E&I, so as you know, we need to understand better and we are monitoring this process to make sure that we -- there is a combination between the refinancing -- potential refinancing exercise and the process of -- and in terms of the consolidation. Because of that we are doing as I said many times, we are doing lot of homework in-house, we are ready to be -- for a potential refinancing of a standalone site and company.

That is not excluding, either equity increase and some other potential means to make sure that we have enough strength in our balance sheet for the future.

Okay. Maybe just a quick follow-up, would you have any indication of timing on when either Saipem or E&I is maybe able to come to the market and maybe explain how do they see the road map for that relationship and also things like refinancing and potential equity issuances?

Okay. Maybe just a quick follow-up, would you have any indication of timing on when either Saipem or E&I is maybe able to come to the market and maybe explain how do they see the road map for that relationship and also things like refinancing and potential equity issuances?

Yes, it's more a question for Amy I would say currently we do not have visibility on the timing but we know that Amy declared this process to declare the consolidation target in July this year. So, I am pretty sure they are auctioning on this site but of course it depends also on the market and on the potential to stay there and how the process is going ahead.

Okay. And thanks very much, I’ll turn it over.

Okay. And thanks very much, I’ll turn it over.

Hi. Haley here from Barclays, very quick question regarding just one line on your front page you mentioned that the market deterioration is impacting legacy contracts yes, but also the execution of new contracts I was hoping you could shed some light or elaborate a bit more on that on that one line?

Thank you.

Hi. Haley here from Barclays, very quick question regarding just one line on your front page you mentioned that the market deterioration is impacting legacy contracts yes, but also the execution of new contracts I was hoping you could shed some light or elaborate a bit more on that on that one line?

Thank you.

Thank you. Well in general a higher rigidity in respect of cost control and cost discipline of our client is of course impacting the negotiation that are related to legacy contracts as well any possible need of extra cost or revision of activity on the new contracts.

This is a general impact that is certainly going to make a much more critical the situation in contracts where a generated -- the contract that generates a need of some variation order or a change, a technical change. This is part of a general attitude that we cannot ignore, we see that particular significant because of the high amount of negotiation on claimant variation order that you have on the legacy.

But certainly we cannot ignore that this is going to be applied in general also to new contracts. There are no contracts that as of start don’t require from review some reassessment.

So this is a normal process of discussion and negotiation that we can anticipate in general on all the contracts.

Okay. Thank you.

And just one other question on your offshore margin it seems to have come down and in Q3 over Q2 and I was just wondering if there was any operational issues for this? Thanks.

Okay. Thank you.

And just one other question on your offshore margin it seems to have come down and in Q3 over Q2 and I was just wondering if there was any operational issues for this? Thanks.

No, as Alberto has indicated before sometimes this indication on the quarter basis could therefore represent a picture of event that are very specific. Certainly what we had, this quarter has been a combination of two factors.

One, I would say both one operational that relates to bad weather condition particularly in Brazil that impacted the activity of a number of vessel on two different projects. And other one that is more an exogenous factor but that goes back straight on the progress of activity that has been like in the case of some of our projects in West Africa the impact of the crisis due to Ebola.

Ebola is a serious matter that as we mentioned also in the last quarter and we’ve been managing, we’ve been managing also taking from our valid position together with the health organization together with our clients as well in Nigeria that has generated a sort of slowdown on the activity because it has impacted specifically on the mobilization of our numerous sources and on the availability of them to de-manning the projects. The situation is now that Nigeria is being since few weeks declared Ebola-free that of course is still encouraging.

We are maintaining all the surveillance and all the systems of control that we had in place, but certainly this means that some all the revenue suspected by certain projects is somehow a little bit shifted.

Okay. Thank you.

I’ll turn it over.

Okay. Thank you.

I’ll turn it over.

Hi. Good evening, gentlemen three questions please.

First of all, on South Stream given the solid deteriorating conditions as a result of sanctions, can you quantify the risk on that project but as in terms of timeline and if you can put a sort of number behind sort of profits that can be incurred if there is a delay in that project due to sanction deteriorating from here? Now the second question is regarding, you talk about legacy projects still having to be unwound what sort of order of magnitude are we talking about if you are not successful in the renegotiation of these projects, is it 100s of millions and if we can just have some ballpark figure in the worst case scenario?

And then thirdly on the drilling unit, what day rates are you assuming longer term for the ultra deep-water rigs and I say that in context to the deterioration in day rates from the last six to 12 months, missing rigs being contracted between 350 to 400, what are you assuming for your long-term day rates?

Hi. Good evening, gentlemen three questions please.

First of all, on South Stream given the solid deteriorating conditions as a result of sanctions, can you quantify the risk on that project but as in terms of timeline and if you can put a sort of number behind sort of profits that can be incurred if there is a delay in that project due to sanction deteriorating from here? Now the second question is regarding, you talk about legacy projects still having to be unwound what sort of order of magnitude are we talking about if you are not successful in the renegotiation of these projects, is it 100s of millions and if we can just have some ballpark figure in the worst case scenario?

And then thirdly on the drilling unit, what day rates are you assuming longer term for the ultra deep-water rigs and I say that in context to the deterioration in day rates from the last six to 12 months, missing rigs being contracted between 350 to 400, what are you assuming for your long-term day rates?

Okay, starting from South Stream the sanctions. First of all the interpretation of sanctions again through action our opinion is that they are not against the South Stream, because the reason that we make it the sanction are heating upstream, oil projects inefficient for Russians.

South Stream is a mid-stream project is a gas project and is certain value for Russia but is also important to preserve the EU energy security. So we said that it is strategic for both.

We have asked an opinion to the Italian minister that is in charge of monitoring the application of the sanction in Italy to get from a go ahead and we have made our solution and we have not received so far neither a stop nor a final reply. In terms of the permitting in the area there has been a certain delay of permitting in Bulgaria but this has not impacted on the working schedule of the project we have the Castoro 6 since that is in Bulgaria doing preparatory activity and these items serving 7,000 is moving towards the Black Sea where it’s scheduled to start activity to arrive by the end of November and middle of November and to start activity in January.

And what happened is they took the project that doesn’t go ahead, besides that we don’t want to comment on specific projects. What I can say and that is particularly valid for this project all our contract contains termination clauses that protects the business and this covers all activities that are carried out so far.

In addition, the majority of our contract including South Stream includes a termination fee that is normally a percentage of the value of the contract. So in terms of the potential impact of what we consider a very unexpected termination of this contract, we have a good element of protection.

We know that one of the suppliers actually one of the European company that supplies pipelines for the project that had already applied to the German authority in terms of clarifying applicability of the sanction or the non-applicability has got a go ahead from the German authority. So we hope that that is a good indication that we could apply on our involvement.

Our match is at risk of our legacy contracts. We don’t consider that what we have booked that is a component of our request to our clients is at a risk.

The risk that we’re indicating today is the fact that the negotiation could take longer that we wanted, that we expected that we needed in many respects to accelerate the recovery of Saipem, but not that we’re losing the ground that is based on technical evidence, on commercial evidence for getting this money paid to Saipem. And I can say that so far luckily we have not been pushed to start arbitration particularly with clients with whom we have a very good relationship today and we judge it from the fact that we’re continuously receiving new contracts from them.

We have started arbitration on a case with Sonatrach with whom relationships are obviously still not good at all. And we’re considering another case for a client that is I would say a one-off contract client.

If is required in order not to put any amount of our pending revenues at risk to start arbitration also with some of our historical client. I think that with the support of the Board I would be more than determined to go ahead on arbitration.

In some cases arbitration is also a good negotiation tool. On the Drilling which is the day rate that we expect, I mean luckily in the offshore as we have indicated that we don’t have this problem for a number of months and in many cases for a number of years.

So really we don’t make plan beyond the 2016 or ’17 to evaluate or to speculate on this. What is clear is that we’re coming from a period of oil price and therefore we come from a period of high rig rates.

If the oil price will decrease the rate will decrease but how much they would impact depends on the evolution of the sector I would say during the full 2015 and for Saipem part of 2016. So it is quite a long shot.

Alright thank you. Just two follow-ups if I may.

First of all what is the size of contracts potential size of contracts that are vulnerable to arbitration? And the second question is, you said you wouldn't rule out potential equity issuance.

Clearly it’s very complicated to the overall identities that covers your net debt between gross, so what's cash and what's debt, so I don't know what the prepayments are on your balance sheet, but could you guide us to an upper limit of what that would be if there was an equity issuance. What is the size that would be acceptable to the Board given if that is one of the many scenarios you are looking at?

Alright thank you. Just two follow-ups if I may.

First of all what is the size of contracts potential size of contracts that are vulnerable to arbitration? And the second question is, you said you wouldn't rule out potential equity issuance.

Clearly it’s very complicated to the overall identities that covers your net debt between gross, so what's cash and what's debt, so I don't know what the prepayments are on your balance sheet, but could you guide us to an upper limit of what that would be if there was an equity issuance. What is the size that would be acceptable to the Board given if that is one of the many scenarios you are looking at?

Well on the first question, how many contracts are eligible for arbitration, how many contracts under, with pending revenues, well all of them, because on all of them we have ground to submit request that is not negotiated could be brought to the decision of an arbiter. We are not looking at anything like that.

We have only one possibly two cases, one is what we announced already last year that is related to some Sonatrach contracts and we are looking at another case in which we are preparing of course all the external support, all the external documentation to submit our request. On all the others we are continuing on the negotiation that nevertheless there is a kind of the requirement in the completion of them are still moving on and they all give positive indication on the fact that we should be able to reach an amicable agreement with the clients.

Hoping to have answered to this question, I’ll let Umberto to tell you about…

Yes, about the right issue it is something that I cannot answer really because currently our debt is 4.7, if we took about gross debt is around 6 billion just to give you the figure.

6 billion?

6 billion?

6 billion, there are many potential ways to think on about the refinancing, they are convertible bonds, there are bonds even in some investment grade bonds, so there are right issues and we need to find the right balance which as I said it will very much depend also on the process of the consolidation because the timing is also very important because we still maintain the target of 2 billion net debt at the end of the 2017 which means that depending on the timing we will need to undergo the exercise of refinancing, we could be in either with more needs or either in a better shape to make it in a smoother way.

And so just to be clear Umberto on the arbitration point, I was actually asking about the contracts that you mentioned will go through potentially to arbitration as to contracts, what is the size of those two contracts? Sorry, I should have been clearer.

And so just to be clear Umberto on the arbitration point, I was actually asking about the contracts that you mentioned will go through potentially to arbitration as to contracts, what is the size of those two contracts? Sorry, I should have been clearer.

The contract that we had in arbitration in one contract as you know NLE which is part of our pending revenues, it is clear that the potential second contract that could undergo through arbitration it is we are not able to sort out issues on the negotiation is the contract of that in that lies is the closer to the end. Because eventually when that contract is completed, either you are paid or you need to go through a dispute resolution.

I will add something in order to help you to understand of, we have indicated that about 80%-85% of our pending revenues are related to these five contracts. So you can appreciate that the amount associated with each of them is a value that is proportionally the component that it makes our 1.4 billion today.

So this is certainly an amount that on arbitration has an importance in order to not be lost if negotiation is not sufficient.

Yes, hi David Thomas, Credit Suisse here. I had couple of questions please.

I am just casting back to first quarter Umberto when you talked around your guidance for the full year '14. And at the time you said you could maintain guidance notwithstanding the issue around P55 and yet today you are raising P55 as a reason for why you are bring down guidance.

So I don't see it is childish but it seems that actually P55 on the drilling activities whereas drilling is actually doing quite well at the moment is not the issues, it all seems to an E&C Onshore. So what does it really deteriorated since even the second quarter?

So that's the first question. And secondly on the working capital, it seems to me that you must be predicting around €400 million reversal of working capital in the fourth quarter if you are going to get your net debt down to 4.7 billion.

It seems like quite a stretch if I can say that, where do you think you are going to get that from these five contracts in the 1.4 billion of receivables? Thanks.

Yes, hi David Thomas, Credit Suisse here. I had couple of questions please.

I am just casting back to first quarter Umberto when you talked around your guidance for the full year '14. And at the time you said you could maintain guidance notwithstanding the issue around P55 and yet today you are raising P55 as a reason for why you are bring down guidance.

So I don't see it is childish but it seems that actually P55 on the drilling activities whereas drilling is actually doing quite well at the moment is not the issues, it all seems to an E&C Onshore. So what does it really deteriorated since even the second quarter?

So that's the first question. And secondly on the working capital, it seems to me that you must be predicting around €400 million reversal of working capital in the fourth quarter if you are going to get your net debt down to 4.7 billion.

It seems like quite a stretch if I can say that, where do you think you are going to get that from these five contracts in the 1.4 billion of receivables? Thanks.

I recap what was the principal under which we issue our guidance at the beginning of the year and certainly we identified a number component that made difficult for us to come out with us a single figure. Certainly, we recognized the fact that the current condition of Saipem made it difficult to account for unexpected operational problems.

When for our first quarter, we referred to P55 we still believe to have certain float to accommodate that loss, but today if we compare the results that we’re projecting with the guidance at the beginning of the year certainly P55 is for 40 million, and above 40 million apart of the reduction that we’re presenting, this in order to confirm a linear logically in what we’ve presented. I’ll let Alberto now to comment.

Okay on the working capital, you’re absolutely right we need to recall around 400 million of working capital in the fourth quarter. This is not based on a simple assumption, but it is based on some actions that are specifically targeting some areas.

The first one is to recover some of the receivables and payment on Wasit project. The second one is to make sure that we finalize all contracts capturing in Brazil on the new project and to make sure that we can cash in a sizeable amount of money.

Then we’re targeting also the solution in Venezuela of one longstanding issue into the nationalization of Tech IREM and we’re expecting some money from there as well as we’re really doing the maximum export to make sure that we also can reduce receivables on the Venezuela purchases and railing . All these actions overall would account for something around 500 million to 600 million, so we expect that with a big chunk of that to be sorted about by year-end and this has a specific action.

But the nationalization was of 15 [ITRA] plant not in particular just because probably before of the 13 [ITRA] issue.

And can I just follow-up with one another question you haven’t restated with your third quarter presentation your medium term guidance you gave in the second quarter, but can you just say that that still remains in place?

And can I just follow-up with one another question you haven’t restated with your third quarter presentation your medium term guidance you gave in the second quarter, but can you just say that that still remains in place?

The guidance that we have restated now?

You gave medium term guidance which I think was really from 2016 onwards.

You gave medium term guidance which I think was really from 2016 onwards.

Okay, sorry, sorry, yes you’re right. Now we’re not changing medium term guidance because medium term guidance are based on the target from the marginality of Offshore, Onshore focus in the medium term and currently our backlog can still sustain those marginality of course as Alberto the only thing that we can see is a further deterioration of the compass and the environment, being the deterioration of the compass of environment more challenging for all of us in the business because of potential less flexibility of the clients in the -- and the more rigid and bureaucratic approach in managing the relationship with all services company.

On the new contract themselves the wins during the year, even the last one I am showing the target of marginality that we had indicating before, notwithstanding the fact that that for the future the game could change slightly or more than slightly, but this is something that we’re monitoring as everybody is doing.

Hi, good evening gentlemen, just a few questions if I may, first of all regarding Wasit which you mentioned there was an article in Trade Press suggesting that may not reach full production and so about a year later after target, is that something that of concern to yourselves is that part of the additional cost that you alluded to in legacy projects, and if not maybe, if you could be a little bit more specific about which project is seeing additional costs? The second question again a follow-up on South Stream regarding the next two pipelines which I know you guys were obviously quite keen to win, given the financing problems regarding that project are we likely to see the third and fourth lines awarded in the near-term or is that something which is probably going to take a bit longer?

And finally just on the net debt, I know you’ve given a medium term guidance on that but would be willing to give an idea of when net debt could be at the end of 2015? Thanks very much.

Hi, good evening gentlemen, just a few questions if I may, first of all regarding Wasit which you mentioned there was an article in Trade Press suggesting that may not reach full production and so about a year later after target, is that something that of concern to yourselves is that part of the additional cost that you alluded to in legacy projects, and if not maybe, if you could be a little bit more specific about which project is seeing additional costs? The second question again a follow-up on South Stream regarding the next two pipelines which I know you guys were obviously quite keen to win, given the financing problems regarding that project are we likely to see the third and fourth lines awarded in the near-term or is that something which is probably going to take a bit longer?

And finally just on the net debt, I know you’ve given a medium term guidance on that but would be willing to give an idea of when net debt could be at the end of 2015? Thanks very much.

Okay. On Wasit Alberto was referring to the expected payments that we have for year-end that are mainly related to the fact that we have a contractual structure where milestone are very far apart and therefore it is not an issue of claim or extra cost but is basically to be able to get the milestone take a structured and paid because being very far apart they can really became of huge amount.

So, if we will be able to get a sector from 100% achievement over certain milestone before 31st of December and we will be able to sustain our target. It we will be paid, I don’t know maybe by 15 of January of course that will have quite a negative impact.

But I cannot relate to your comment about the year, one year delay of the projects, we have specific new issue that they know about Wasit. On the South Stream line 3 and 4, I can confirm that we have already started discussion with the client, so in other words the client is still very determined and going ahead with a program that foresee laying of the two lines one in 2016 and one in 2017 respectively.

What are we doing? We have refined the visibility of our vessels in line with this request and we called out a conference that we will win and with certain tenders that we would stride to participate.

If this wind over would be confirm on the South Stream we will be in a position to offer our vessel for the time being if the decision is postponed maybe by that time we will have our vessel already busy on other projects. What the client is indicating is a potential of order in early 2015, this is what they have even recently confirmed to us because since we have to get clear which availability of vessels we have also for other counter we keep asking them if they are maintaining the program and this is what they say to us.

Okay.

Okay.

Then on the medium term guidance on that I will not give you the figure because we would issue the figure in February 2015 of next year-end in 2015, but what I can tell you that we are determined to maintain the target around billion end of 2017 and this will be achieved in a ramp up way because of course in 2015 we still have legacy contracts and we will in a record rate and more advanced than 2014 but still haven’t recovered and not yet a normalize situation.

Okay. Thank you very much, and sorry just one quick follow-up because I may, regarding the legacy contracts I think you point out milestones and also about Wasit, and could you then be a little bit specific as to the additional costs you mentioned on the how to experience which exact project that was on?

Thank you.

Okay. Thank you very much, and sorry just one quick follow-up because I may, regarding the legacy contracts I think you point out milestones and also about Wasit, and could you then be a little bit specific as to the additional costs you mentioned on the how to experience which exact project that was on?

Thank you.

I think that we cannot give this specific is also there is no one specific project for which this has happened. I would say that on some on the offshore contract under execution during the quarter we have incurred some extra cost related to an activity that is still quite complex and for which there are all this elements that can come to surface that we have considered not to add to our claim.

So basically not to introduce more expected pending revenues, particularly considering the ground that we had and also the attitude that we have to see on our clients. That will then made not probably a fair assessment as we have done on all the remainder of our work pending revenues if we have included also this amount in the pending revenues.

Okay, that’s interesting. Thanks very much gentlemen.

Okay, that’s interesting. Thanks very much gentlemen.

Hi there just a couple of couple of quick questions if I can. Firstly, you said kindly gross debt was about 6 billion, could you confirm that the prepayments that you have roughly on your balance sheet?

Hi there just a couple of couple of quick questions if I can. Firstly, you said kindly gross debt was about 6 billion, could you confirm that the prepayments that you have roughly on your balance sheet?

For within advanced payment?

Prepayments sorry.

Prepayments sorry.

Yes, I have this number and the prepayments are around 700 million.

Okay, that’s great. Thank you.

Then secondly, just looking at onshore E&C backlog for execution in 2015 appears to have sort of comedown through 3Q, I guess this is potentially phasing, but could you talk a bit about what’s happened there please?

Okay, that’s great. Thank you.

Then secondly, just looking at onshore E&C backlog for execution in 2015 appears to have sort of comedown through 3Q, I guess this is potentially phasing, but could you talk a bit about what’s happened there please?

I know you referring, sorry.

So E&C Onshore I think at the half year you were expecting about 2.7 billion of revenues to come through in 2015 from the existing backlog that’s fallen to about 2.3 billion by September 30th?

So E&C Onshore I think at the half year you were expecting about 2.7 billion of revenues to come through in 2015 from the existing backlog that’s fallen to about 2.3 billion by September 30th?

Okay, clear now sorry, this is a result of at least phasing saving of some project schedule, basically this is just an impact of over the period not on the overall value of the contract.

Okay, okay.

Okay, okay.

This particularly some of the contracts that are still in the initial phase that haven’t yet reach a kind of steady pace of execution.

Okay, so it is not related to any one specific project or anything like that? It’s a broad range.

Okay, okay. And then just the last point is a bit of a broader one I guess.

You talk about the lower oil price impacting relationship and sort of ongoing negotiations. I would expect the sort of lower oil price to impact timing of future awards and negotiations around the future awards, but on sort of ongoing projects it seems strange to some extent that it’s impacting negotiations around those projects.

Do you get the sense that clients are already sort of trying to protect cash flows or how do you see the sort of near-term weaker oil prices made those negotiations more challenging?

Okay, so it is not related to any one specific project or anything like that? It’s a broad range.

Okay, okay. And then just the last point is a bit of a broader one I guess.

You talk about the lower oil price impacting relationship and sort of ongoing negotiations. I would expect the sort of lower oil price to impact timing of future awards and negotiations around the future awards, but on sort of ongoing projects it seems strange to some extent that it’s impacting negotiations around those projects.

Do you get the sense that clients are already sort of trying to protect cash flows or how do you see the sort of near-term weaker oil prices made those negotiations more challenging?

Well certainly of the time where the cash flow is potentially decreasing because of lower oil price, the indication that in our oil company comes from the management is starting to minimize expenditure. And of course the expenditure our operating cost, capital expenditures and in the capital expenditure there are certain payments or claims.

So to a certain extent even though the principle under which we were negotiating and the fact that majority of our claims have been in principle has accepted and we were discussing the quantification of them. We have seen a certain rigidity in progressing with the discussion that were in place.

I guess that this is quite normal and I don’t understand why it should surprise that this is happening also on the contract or under execution. Certainly this is an attention that will be given also on new contracts but for the time being that has not stopped the number of tenders as we have indicated and probably we will have to look at managing this project with even more discipline in order to minimize the risk of having growing situation of operational order and claims.

To a certain extent I can say that we’re doing really much stronger due diligence on the new contract in order to be in a position to even anticipate to the client even before we start execution, if we notice that there are weakness that eventually will show up and that will require variation, in order to clarify with them that discussing this is a need and we’ve not intended to enter into commitment already very much into execution without and represent the case as happened us for the legacy contracts.

Can you please provide an update on how you’re seeing vessel utilization 2015 and ’16? I think you said that ’15 South Stream should be in stores, so I guess that’s helping ’15?

But looking in the ’16 if you could give a little bit of an update or flavor for how you’re seeing utilization? I guess a little bit related to that your medium term guidance for offshore 10% to 20% is kind of governed by the share of revenues you are getting from kind of lower margin fabrication contracts, like FPSO new builds, et cetera.

Based on your backlog and the bid pipeline, can you just give us an update on where you think we might be ending up in that range of 10% to 20%?

Can you please provide an update on how you’re seeing vessel utilization 2015 and ’16? I think you said that ’15 South Stream should be in stores, so I guess that’s helping ’15?

But looking in the ’16 if you could give a little bit of an update or flavor for how you’re seeing utilization? I guess a little bit related to that your medium term guidance for offshore 10% to 20% is kind of governed by the share of revenues you are getting from kind of lower margin fabrication contracts, like FPSO new builds, et cetera.

Based on your backlog and the bid pipeline, can you just give us an update on where you think we might be ending up in that range of 10% to 20%?

Okay, about the asset utilization, if we look at our main eight vessel for E&C offshore we have so far a good level of utilization, they are committed up to the end of 2015 and in some cases with a good visibility also beyond. Certainly the activity on part of ’16 and further the year after will depend on the new contracts that either we’re tendering or that we expect to be put on the market.

Certainly as I always presented we have certainly a track-record of strength of some geographic areas and on some longstanding relationship with certain clients and we hope that that will continue to play a significant role particularly at the time when the market could see a slight slowdown. On the second question…

On the margin on the offshore, in the medium term guidance we said that Offshore E&C should be around mid-teens but we also have floaters that are in the single high digit so the margins will depend very much on the mix of floaters and also the mix of the other segment in the offshore because the margins are slightly different depending on a repetitive, if it's current client, if it's a G&I sort of and sometimes also geographically because it is clear that the rate of different competition if you work in the capital where you have the asset flow if you can work in some areas where you are traditionally very well-established also in terms of local term so that margins will depend on these mix. Having said that, 2015 we will still have around 900 million, 800 million legacy we have 1 point, something in the region 1.2 billion-1.5 billion of floaters, the remaining should be E&C Offshore in as we said in the mid-teens.

The year where we believe that this progress on the offshore margin should become close to the mid-term guidance should be 2016.

I guess what I am trying to get a sense of is, I guess your outlook for each of these different parts of the offshore must be evolving at different rates. I mean if you are getting more bearish about SURF or more bearish about heavylift or more bearish about fabrication work.

I mean is there anything to suggest that there are parts that are deteriorating more quickly than you had anticipated and could that have an impact on the likely margins in 2016?

I guess what I am trying to get a sense of is, I guess your outlook for each of these different parts of the offshore must be evolving at different rates. I mean if you are getting more bearish about SURF or more bearish about heavylift or more bearish about fabrication work.

I mean is there anything to suggest that there are parts that are deteriorating more quickly than you had anticipated and could that have an impact on the likely margins in 2016?

Well we have a good record of new contracts that cover I would say almost all the four main components of the Offshore business. Not last Lakach that is a SURF, and not last the fact that we want SURF in Brazil, we are looking at some other options in West Africa.

So even the more important part or higher margin component of our Offshore is for the time being well-supported and that will get in execution during next year towards next year in some cases. There are as Alberto was saying already onboard, the power value of about 1.5 billion of floaters that we have not I mean I am more than happy to have won this part of the offshore certainly as we always say that is presenting a lower margin because it is presenting in many respect a lower risk.

So but we are happy also for this part like to listing projects like the sea line projects, all of them are accepted in line with the kind of fleet that we have with our competencies with our organization so we are always trying to move keeping all of them moving in parallel.

That's clear. Thank you.

That's clear. Thank you.

Hi I have two questions and one is with regards to the Onshore division and other with regards to the Offshore division. In the results you mentioned that on the Onshore engineering and construction division, Saipem is currently not able to cover its fixed cost.

Is it possible for you to elaborate on the cost reduction measures you are considering or carrying out such as headcount reduction or asset divestments? Secondly in Mexico you have the cost in I just wanted to ask can you give us some color on the margins on the contracts you are winning in Mexico.

Should we expect the same experience you have in Brazil where you compromised the margins to gain market share in the new market? Thank you.

Hi I have two questions and one is with regards to the Onshore division and other with regards to the Offshore division. In the results you mentioned that on the Onshore engineering and construction division, Saipem is currently not able to cover its fixed cost.

Is it possible for you to elaborate on the cost reduction measures you are considering or carrying out such as headcount reduction or asset divestments? Secondly in Mexico you have the cost in I just wanted to ask can you give us some color on the margins on the contracts you are winning in Mexico.

Should we expect the same experience you have in Brazil where you compromised the margins to gain market share in the new market? Thank you.

Okay. I will give it back you if you want to answer the first one.

On the other part on the offshore we are working very hard, to make sure that we have an efficient logic of go to location into the yard especially as we know we have this number of yards in Angola, in Congo, in Brazil, in Kazakhstan, in Indonesia carrying along and we are trying to look at the cost of this yard as an opportunity in terms not only of fragrance of a lot accounted but in terms of making fabrication where it got swept. So we can leverage on this possibility to make sure that we fabricate well the cost is lower.

So these are some examples of some of the initiatives, of course we are also making sure that we are not spending money on over acre on ICT cost and all these initiatives are ongoing at the moment.

On the other part on the offshore we are working very hard, to make sure that we have an efficient logic of go to location into the yard especially as we know we have this number of yards in Angola, in Congo, in Brazil, in Kazakhstan, in Indonesia carrying along and we are trying to look at the cost of this yard as an opportunity in terms not only of fragrance of a lot accounted but in terms of making fabrication where it got swept. So we can leverage on this possibility to make sure that we fabricate well the cost is lower.

So these are some examples of some of the initiatives, of course we are also making sure that we are not spending money on over acre on ICT cost and all these initiatives are ongoing at the moment.

Yes, I would like that some of the travelers have virtual gains are actually or is being implemented others are more at the starting phase but most relevant likely one fabrication and like some also on reflected that of operating cost on drilling are already being implemented by the business unit. So, we have to see the result quite soon, other may be have been more of time to became really a cost control project.

But what relate to cash? Well, in general although we say we would like to comment single project but your question is quite specific, so I would just say that compared to the anomaly of some of the first contract we were awarded in Brazil we won in Brazil, Lakach is certainly in line with current market situation.

Great, thank you.

Great, thank you.

Hi. Good evening, gentlemen.

Just two quick questions, what are the risks that some of the legacy contracts challenges is quite exceed is that a material risk and ECS what sort of amount of work we would be talking about? And my second question relates to your comment around incremental the cost of debt if you were to sort of cut the quarter with E&I and you previously said because of that incremental 40 million to 60 million per year has that changed, have you changed from that in the line of the oil pricing than in general the situation you find yourself in and could you just comment on your discussions with potential bidders?

Thank you.

Hi. Good evening, gentlemen.

Just two quick questions, what are the risks that some of the legacy contracts challenges is quite exceed is that a material risk and ECS what sort of amount of work we would be talking about? And my second question relates to your comment around incremental the cost of debt if you were to sort of cut the quarter with E&I and you previously said because of that incremental 40 million to 60 million per year has that changed, have you changed from that in the line of the oil pricing than in general the situation you find yourself in and could you just comment on your discussions with potential bidders?

Thank you.

On your first question you refer to which risk for the legacy in 2015?

I referred to the risk that some of that work actually carries into 2016.

I referred to the risk that some of that work actually carries into 2016.

If you shift into 2015 yes well on the more vendor execution from more vendor work is the amount related to the negotiation, I would say that today we are moving quite well operationally. So therefore in progressing with this project and this is of course an important aspect to support the strength of our negotiation with the client and certainly what we see is the component of longer than expected time of negotiation and in fact we have indicated already some movement to 2015.

On the legacy cost, itself there are some activity that incurred from the maybe like some of the product of presented before of course we make more revenue shift into 2015 that is in the range of the 300 million that I have indicated before.

Among the cost of that well, the only thing I can tell you is that the still conditions environment and the environment for financing is still very favorable in terms of rate. So, I don’t see a huge change of that we made, what I can tell you is that of course we have many banks who are knocking at our doors telling us that they could refinance our at a very favorable rate in the current condition and in a way they out trying and to syndicate up to get the window.

So, I don’t see to-date a higher impact in terms of rating roughly we would be in the range of that will be now. So we could say that my men have done both the right company more or less.

Alberto and just a quick follow-up, I mean in those discussions, do all of them or some of them assuming an equity raise or are you comfortable you can do it with assets as well?

Alberto and just a quick follow-up, I mean in those discussions, do all of them or some of them assuming an equity raise or are you comfortable you can do it with assets as well?

I just want to build on again as to tell you honestly there are quite a few banks that would be really willing to finance the whole of our that simply on financing from banks. But of course this is probably more commercial than real.

Just one question from me, I’d like to reconcile the existing lower margin contracts from the second quarter which was 2.7 for 2014 and 1.5 for 2015. So is it just correct to say you guys worked off 1.7 in the third quarter or has there actually been some push out from 2014 into 2015.

Just one question from me, I’d like to reconcile the existing lower margin contracts from the second quarter which was 2.7 for 2014 and 1.5 for 2015. So is it just correct to say you guys worked off 1.7 in the third quarter or has there actually been some push out from 2014 into 2015.

Yes I think there has been a shift from 2014 to 2015, yes. Because as I said mainly because of bad weather in some of the contracts and some delays that was coming.

So can you give us the number of low margin and contract levels worked off in the third quarter and split that between offshore and onshore please?

So can you give us the number of low margin and contract levels worked off in the third quarter and split that between offshore and onshore please?

No we don’t have this detail at the moment, sorry. Maybe we can provide later.

Just A couple of questions, please, just to clarify your earlier answer on South Stream where the Bulgarian permits were outstanding, where do you stand on those -- where does the contract stand on those permits? And to what extent if those permits are not in place will line one and two be able to fully go ahead?

The second question was just you mentioned in the realm of talking about different financing options, the purchaser option. And I was wondering if you had any -- whether there were any due diligence conversations going on or anything to the Rosneft rumors that have been in the Italian press?

Then on the near term, your order backlog outstanding for Q4 is quite a long way below the implied sales for Q4. It's €900 million or something like that.

And I was wondering if you could give some sort of sense as to how that gap will be filled up in sales versus your guidance, please. Thank you.

Just A couple of questions, please, just to clarify your earlier answer on South Stream where the Bulgarian permits were outstanding, where do you stand on those -- where does the contract stand on those permits? And to what extent if those permits are not in place will line one and two be able to fully go ahead?

The second question was just you mentioned in the realm of talking about different financing options, the purchaser option. And I was wondering if you had any -- whether there were any due diligence conversations going on or anything to the Rosneft rumors that have been in the Italian press?

Then on the near term, your order backlog outstanding for Q4 is quite a long way below the implied sales for Q4. It's €900 million or something like that.

And I was wondering if you could give some sort of sense as to how that gap will be filled up in sales versus your guidance, please. Thank you.

Going in the order, with our South Stream as I said the delays of permitting in Bulgaria, they add in so far any impact on the activities because as you imagine we’re working from two ends, we’re working from the Bulgarian cost and from the Russian cost. And the permits of that we need to start the work, where the one on the Russian side that will be from where the shallow part of the pipeline will be built.

And therefore on the short-term that is not giving any operational impact. The logistic permit that we needed on the Bulgarian cost in order to receive the pipes and to start with Castoro 6 to make the quadruple joint fabrication has been received, so that activity is ongoing.

Then the pipe will be moved across the Black Sea to the Russian side to be start use for drilling. So the picture is clear that for the time being the permits in Bulgaria are not critical and what we needed to do on that side has been done.

On the financing and the process of the consolidation, if I got your question right, I can tell there is no due diligence process at the moment with anybody whatsoever. So at the moment not in any exercise due diligence or negotiations or something like that.

So as I said we’re only doing our homework to make sure that we’re ready whenever there is more visibility. In terms of Q4 backlog probably I can also answer to the previous question which is that we still have 2.2 billion around contract to be executed in the E&C, 1 billion around is legacy and 1.2 b is new contracts.

My question was you have 2.6 billion of order backlog due to the realized in 2014 and your guidance implies about 3.5 billion of revenue. I just want to understand how you make up the difference?

Please.

My question was you have 2.6 billion of order backlog due to the realized in 2014 and your guidance implies about 3.5 billion of revenue. I just want to understand how you make up the difference?

Please.

We have this railing and plus we also normally don’t include in the backlog revenues coming from change order of variation, because these are not included in backlog. So we expect also to have a normal amount.

But in general we’re in line with our coverage ratio and also from previous year so we don’t expect I mean in quite profitable situation so far.

Okay, and so I just take back on the South demand, the Bulgarian permits to get the Castoro 6 in place and operating, there are still to be -- still to arrive has there any European influence on that process?

Okay, and so I just take back on the South demand, the Bulgarian permits to get the Castoro 6 in place and operating, there are still to be -- still to arrive has there any European influence on that process?

No, it is just centered. The Castoro 6 is in Bulgaria and this is doing the proprietary activity including preparing the quadruple joint that needs to take the pipes and to make a section of four pipes in order to be used then for the length.

What is normally since 2014 in the media about permitting relates more to the onshore part of the project that is outside our scope, but for what relates and the fact, so there is a little bit of implication also for the Offshore but critical at the moment.

I have a couple of questions. The first one is on Kashagan.

Do you expect any involvement of Saipem in the substitution of pipes for the well-known problems of leaks of the pipes of the project? And second question, could you please give us an update on the investigations related to Algeria?

Did you receive any documents or any other kind of questions from the DOJ or Italian prosecutors?

I have a couple of questions. The first one is on Kashagan.

Do you expect any involvement of Saipem in the substitution of pipes for the well-known problems of leaks of the pipes of the project? And second question, could you please give us an update on the investigations related to Algeria?

Did you receive any documents or any other kind of questions from the DOJ or Italian prosecutors?

Thank, on Kashagan I can prefer that we are already in discussion with the consortium for analysis of the pinnacle and operational options for laying the two new pipelines that had problem originally. We have of course not only the presence in the count in terms of our joint venture there.

We have the fleet the vessels, the achievement and the competency to run this project for this moment in time. We’re supporting the consortium to finalize the engineering and the schedule details that should bring the consortium to issue a contract hopefully to us by the end of the year in order to have a contract or capable to mobilize as the ice will melt in March-April next year in order not to lose any more time.

And about the litigation…

Sorry, Mr. Vergine, if I may, could you give or take quantify what might be the size of this work for in Kashagan?

Sorry, Mr. Vergine, if I may, could you give or take quantify what might be the size of this work for in Kashagan?

Well, this was the significant second contract in the past also of some issues that are still under not a discussion but evaluation I mean the feasibility of certain options of course considering the urgency of completing this project and completing it in a minimum time possible to that an impact of the cost that a consortium is keen to offset until we have helped them to quantify exactly this cost. And therefore until there we’ll able to understand if this cost is justifiable there is an element of uncertainty on the overall value of the project.

And as I said we have got into this discussion because of our competence on the matter. And we will understand this better I think at the beginning, at the very beginning of the next year.

Okay, on the investigation in Algeria, the situation is not changed from previous discussion on that. In Algeria, everything is silent.

We did not have any specific news. In Milan, Milan Prosecutors have two issues that develop the investigation at least by maximum by next category and we have right on the fact that recently after what is in Italy and as engineers and but are what he wants to put interview about all end also to form employees of Saipem to get the paper and the result of this interrogation in the investigation.

It’s very technical issue in terms of initial procures but actually doesn’t change anything so the investigation will and by end of February. On the DOJ side, we are most likely going to renew the tolling agreement that would be expiring in November and for the first time and we’re cooperating with them whenever they ask some information on the investigation in Algeria even though it is let us say fair to believe that DOJ will wait for the conclusion of investigation of Milan prosecutor.

Okay, thank you.

Okay, thank you.

Yes, good evening. One question for me, please, in the state of the net debt not falling as quickly as you expected and a number of comments earlier regarding the potential equity risk, I'm just wondering whether or not you could say anything around the likelihood of Saipem's Board of Directors approving a dividend for 2014?

Yes, good evening. One question for me, please, in the state of the net debt not falling as quickly as you expected and a number of comments earlier regarding the potential equity risk, I'm just wondering whether or not you could say anything around the likelihood of Saipem's Board of Directors approving a dividend for 2014?

Well you know that in the past the policy has always been to use one third of the net reserves for dividends and I think that the Board will look beginning of next year when it will be time to take a decision about these continuing applying the same policy or evaluating other elements for the time being we have not even started talking with our Board about this issue. So I cannot anticipate which could be the decision that we will have at the time.

Yes, good evening. Two quick questions for me, the first one is on the E&C onshore division.

Could you give us an indication of profitability before fixed costs for the legacy project in this division for 2014? In particular I would like to know if the legacy has a negative gross margin or they are at breakeven.

And the second question, how much are the total amount of legacy in 2014 only for the onshore E&C division?

Yes, good evening. Two quick questions for me, the first one is on the E&C onshore division.

Could you give us an indication of profitability before fixed costs for the legacy project in this division for 2014? In particular I would like to know if the legacy has a negative gross margin or they are at breakeven.

And the second question, how much are the total amount of legacy in 2014 only for the onshore E&C division?

Okay. About the margins -- okay, the legacy contracts are by definition zero margins, because anytime you have a negative margin full life estimated according to the S-11 you have to write it off, so all legacy contracts are zero margins.

Having said that, there is some for negative margin that we are showing at EBIT level in the onshore for mainly two reasons, one reason is that the zero margin on the legacy plus the margin on the other contract, it’s not enough repay the fixed cost of the business unit onshore. And the second reason is that on the onshore contract we incurred during the year we have incurred extra cost so we didn't believe where it was possible to be recovered by the client and other time we have incurred this cost we have written them off.

So there has been also this aspect that this impact of extra cost not recognized worldwide by the client.

On the legacy contracts for sure in 2016 -- in 2015, the amount is approximately 2 billion.

Thank you very much.

Thank you very much.

Okay. Thank you.

And thank you all for attending our conference call and I wish you good night.