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Technip. Module 2 Oil and Gas—Drew Williams. Basic Facts. Energy technology, project management, and maintenance (97% from oil and gas) Headquarted in Paris, France Revenue = 8.2 Billion Euros 11.5 Billion in Assets Employ 38,000 people in 48 countries 2 Major Segments Onshore/Offshore

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Technip

Module 2 Oil and Gas—Drew Williams


Basic Facts

  • Energy technology, project management, and maintenance (97% from oil and gas)

  • Headquarted in Paris, France

  • Revenue = 8.2 Billion Euros

  • 11.5 Billion in Assets

  • Employ 38,000 people in 48 countries

  • 2 Major Segments

    • Onshore/Offshore

    • Subsea—niche area


Products


Original Balance Sheet

*Acquisitions make the comparison across time a problem—accounts must be altered


Original Income Statement

*Acquisitions make the comparison across time a problem—accounts must be altered


Major Acquisitions

  • Global Industries Ltd.

    • December 2011

    • 100% Ownership

    • Sub-Sea know-how

    • Further entry into US and Mexican waters

    • $1.262 Billion Purchase

  • Issues

    • Did not produce 2011 Financials

    • Solution: Use 2010 financials + Extrapolate 2011 Quarterly Income Numbers


Major Acquisitions

  • Stone & Webster Process Technologies

    • Purchase segment from The Shaw Group

    • Refining and Petroleum Chemicals—diversify

    • Further enter US Market

    • $295.3 Million Purchase

  • Isssues

    • No Financials for this Segment within Shaw

      • Purchased a segment of a segment

    • Different Fiscal Year (August 31 Year End)

    • The Shaw Group purchased in Feb 2013

    • Solution: Input=0, cite as flaw in calculation, rely on group members more heavily


Combined Balance Sheet

  • Potential Issues:

  • GAAP vs. IFRS

  • Synergies

  • Currency Translation Changes

  • Different Account Classifications

  • Does not include a major acquisition


Combined I/S

  • Potential Issues:

  • GAAP vs. IFRS

  • Synergies

  • Currency Translation Changes

  • Different Account Classifications

  • Does not include a major acquisition

  • Extrapolation of 2011 numbers


Reformation of B/S and I/S

Line by Line

Bias towards Enterprise

Very little detail—did not dig into accounts

Only glanced at footnotes


Balance Sheet


Non Current Assets

All Enterprise Items

  • Enterprise

  • PPE

  • Intangible

  • Investments in Equity Affiliates

    • JV/Enterprise Investments

  • Deferred Tax Assets

  • Financial

  • Other Financial Assets

  • Available-for-sale financial assets


Current Assets

Investigate further

*Split: Use 2% of Sales

  • Enterprise

  • Inventories

  • Construction Contracts

  • Advances paid to suppliers

  • Derivative financial instruments

  • Trade Receivables

  • Current income tax receivables

  • Other Current Receivables

  • Cash (2% of Sales)

  • Financial

  • Cash (less 2% of sales)


Non Current Liabilities

  • Enterprise

  • Non-Current Provisions

    • Retirement benefits

  • Deferred tax Liabilities

  • Other non-current liabilities

    • Needs to be investigated

  • Financial

  • Non-current financial debts

    • Financing decision


Current Liabilities

Likely includes some financial

  • Enterprise

  • Trade Payables

  • Construction Contracts

  • Derivative Fin Instr.

  • Current Provisions

  • Current Income Taxes Payable

  • Other Current Liabilities

  • Financial

  • Current Financial Debts


Other Items

  • Financial

  • Assets Held for Sale

  • Non-Controlling Interests


Reformed Balance Sheet


Check


Income Statement


Income Statement Accounts


Income Statement Summary

  • Enterprise

    • Revenues

    • Cost of Sales

    • R & D

    • Selling Costs

    • Admin Costs

    • Other Operating Income

    • Other Operating Expenses

    • Income from Sale Activities

    • Charges from Non-Current Activities

    • Share of Income/Loss from Equity Affiliates

  • Financial

    • Financial Income

    • Financial Expense


Other Comprehensive Income

  • Financial

  • Fair Value Adj

  • Enterprise

  • Exchange Differences

  • Cash Flow Hedging

  • Other


Enterprise Tax Expense

Step 1: Take out all Financial Income/Expenses included in EPAT

Step 2: Add in OCI items included in EPAT

Step 3: Net Items

Step 4: Multiply by 33.33% (French Corp Tax Rate)

Step 5: Add/Subtract this number to Income Tax Expense


Enterprise Tax Expense


Financial Tax Expense

Falls out from Enterprise Tax Expense


Reformed Income Statement


Check


Major Issues Summary

  • Don’t account for 1 Acquisition

  • Combinations are Elementary

    • GAAP vs. IFRS

    • Synergies

    • Currency Translations

  • Accounts need to be further analyzed


Questions


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